Jim Cramer Blog

Merger talk and earnings dominated the five-day trading week, while an analysts' fears lead to a two-day sell-off of diet company NutriSystem Inc.
Newsprint and coated mechanical paper producer Bowater Inc. said Monday it will combine with Canadian rival Abitibi-Consolidated Inc. to form AtibitiBowater Inc., and the news sent both company's stock Bowater stock soaring. If approved, the deal would close in the third quarter of 2007.
Greenville, S.C.-based Bowater shares rose $5.29, or 24 percent, to $27.44 on Monday, with trading at almost 13 times its normal volume on the New York Stock Exchange. Shares remained steady Tuesday as analysts responded, with trading about six times higher than normal. Volume tapered as the week continued, and Bowater stock ended the week at $27.60.
Abitibi's American shares added 69 cents, or 26 percent, to $3.33 on Monday, with volume likewise at almost 13 times typical trading on the NYSE. Volume remained high for the rest of the week, with the stock edging down slightly to end the week at $3.15, still up 19.3 percent.
Before the bell Tuesday, Citigroup analyst Gregory Badishkanian cut his price target for NutriSystem Inc. shares to $95 from $105, saying the company was heading for volatility after low Web site traffic and weak results from the GNC retail test.
Shares of Horsham, Pa.-based NutriSystem plunged Tuesday, losing $5.79, or 10 percent, to $52.05 on the Nasdaq. Trading was about seven times normal volume, with 12.6 million shares changing hands.
After the market closed, the company said it would surpass Wall Street's profit forecast for the fourth quarter, but fall 10 cents short of analysts' earnings per share prediction for the first quarter. Analysts responding by cutting their price targets, and in Wednesday trading, the stock lost another $8, or 15.4 percent, as 16.6 million shares were traded - about nine times the stock's average.
Trading was four times the stock's average on Thursday, and shares gave up 51 cents more. It closed the week at $43.20, a lost of 25 percent in four days.
Estee Lauder Cos. Inc. said Wednesday that its fiscal second-quarter profit more than doubled from the same period last year. Revenue increased 12 percent, and the New York cosmetic maker also cut costs. The results surpassed analysts' expectations.
The stock shot up to a 52-week high of $48.15 on the way to an NYSE close of $47.50, a gain of $6.17, or 14.9 percent. About 7.8 million shares, six times the average volume, were traded. Trading more than doubled the stock's average Thursday and Friday as Lauder slipped back. It ended the week at $46.13, down $1.37, or 2.9 percent, from Wednesday's close but still sporting an 11.6 percent gain over the three days.
Archer Daniels Midland Co. gained ground Thursday as it reported greater profit from its corn processing sector, driving the company's second-quarter profit up 20 percent. The Decatur, Ill., agricultural processing company's quarterly results beat Wall Street predictions.
Shares gained $3.47, or 10.8 percent, to $35.47 on the NYSE. Trading was more than three times the average volume at 20.7 million shares. The stock lost 20 cents the next day as trading was 50 percent higher than normal to close the week at $35.27.
Rackable Systems Inc. fell hard Friday, as the company said its fourth-quarter profit dropped from last year. The Milpitas, Calif., data storage systems maker blamed stiff competition and rising costs for certain types of memory.
Rackable Systems shares hit a 52-week low of $16.25, and lost $3.65, or 17.9 percent, to $16.69 on the Nasdaq. Trading was about 10 times heavier than normal at 19.7 million shares.
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Labels: ABY, ADM, BOW, EL, NRTI, RACK

A spate of merger news, a handful of positive earnings reports, and a drop in the price of oil helped keep stocks in the black for the first half of today's session, but stocks weakened over the course of the afternoon, and the S&P 500 closed below the unchanged line, while the Dow Jones and Nasdaq eked out small gains. Many investors, however, were looking ahead to Wednesday when the market will pour over the latest statement from the Federal Reserve. The Fed has kept interest rates unchanged at its last four meetings.
Reflecting the growing unlikelihood that the Fed will lower rates any time soon, bonds showed weakness and the 10-year Treasury note traded lower, pushing the yield higher on the day. Meanwhile, after a brief rally in oil spurred in part by the belated onset of cold weather across much of the U.S., traders took profits and drove the price of a barrel of crude down to below $54 a barrel.
In M&A news, Merrill Lynch (NYSE: MER - News) said it will pay about $1.8 billion in cash and stock to acquire First Republic Bank (NYSE: FRC - News), a 44% premium to First Republic's Friday closing price. Citigroup (NYSE: C - News) announced that it will spend $1.13 billion to buy Egg, the online banking arm of U.K. insurance firm Prudential PLC (NYSE: PUK - News).
Forest products companies Bowater (NYSE: BOW - News) and Abitibi-Consolidated (NYSE: ABY - News) agreed to combine in an all-stock deal. Security software firm Symantec (Nasdaq: SYMC - News) said it will pay about $830 million for Altiris (Nasdaq: ATRS - News), a maker of IT software. The offer is a 22% premium to Altiris' closing price on Friday. Bristol-Myers Squibb (NYSE: BMY - News) jumped 5% after a report from a French newspaper said that the company is in merger talks with French conglomerate Sanofi-Aventis (NYSE: SNY - News). And, finally, education services provider Laureate (Nasdaq: LAUR - News) agreed to a management-led buyout deal worth $3.8 billion.
Verizon (NYSE: VZ - News) reported fourth-quarter results, posting a year-over-year decline in net income due to charges related to the sale of several non-core businesses. Excluding those charges, Verizon's results beat estimates by a penny. On the conference call, Verizon execs also said that they were happy to have turned down Apple's (Nasdaq: AAPL - News) offer to be the exclusive partner for the new iPhone because of the onerous terms dictated by Apple. AT&T (NYSE: T - News; formerly Cingular) ultimately agreed to team with Apple.
Toymaker Mattel (NYSE: MAT - News) also reported fourth-quarter results, with net profit rising 3% year over year to 75 cents per share and revenue gaining 14% to $2.11 billion. The results easily beat analyst estimates. However, the company acknowledged that an impressive showing from toys related to the Disney (NYSE: DIS - News) and Pixar film "Cars" would make for tough comparisons in 2007.
In tech news, Intel (Nasdaq: INTC - News) jumped 2% after announcing a technological breakthrough. The world's biggest chipmaker said that it has built working prototypes of new transistors using new materials that improve performance. IBM (NYSE: IBM - News) also announced technology using the new material, the element hafnium. Separately, Hewlett-Packard (NYSE: HPQ - News) moved up 2% after positive comments from several analysts.
By the BullMarket.com Staff

Labels: AAPL, ABY, ATRS, BMY, BOW, C, DIS, FRC, HPQ, IBM, INTC, LAUR, MAT, MER, PUK, SNY, SYMC, T, VZ

Abitibi-Consolidated (NYSE:ABY - News) shares rose after the company agreed to merge with Bowater (NYSE:BOW - News) to form the No. 8 publicly traded global forest-products company. The combined company will have pro-forma annual revenue of US$7.9 billion and an enterprise value of US$8 billion, they said in a statement. The new entity, AbitibiBowater, will be held 52% by Bowater's shareholders and 48% by Abitibi's. In the deal, each Abitibi share will be exchanged for 0.06261 share of the new company. Each Bowater share will receive 0.52 share of AbitibiBowater. David J. Paterson, chairman, president and chief executive of Bowater, will be president and CEO of AbitibiBowater. John W. Weaver, president and CEO of Abitibi-Consolidated, will take the post of executive chairman at the merged entity.
Altiris (NasdaqGS:ATRS - News) shares soared after the company agreed to be acquired by Symantec Corp. (NasdaqGS:SYMC - News) for $830 million, or $33 per share.
British Airways Plc (NYSE:BAB - News) said it welcomed the decision by the cabin crew branch of the T&G union to call off the strikes scheduled for Tuesday and Wednesday and for two 72-hour periods next month. BA said the details of the settlement will be released in due course. BA said it will attempt to reinstate as many flights as it can for Tuesday and Wednesday but regrets that the decision to cancel the strikes has come too late to prevent disruption to the travel plans of thousands of customers.
Countrywide Financial (NYSE:CFC - News) shares extended a recent rally following a report in U.K. newspaper The Financial Times that the company has held talks about an alliance or merger with Bank of America (NYSE:BAC - News).
Cummins Engine (NYSE:CMI - News) said its fourth-quarter net income rose to $189 million, or a $3.75 share, from $167 million, or $3.31 a share, a year earlier, helped by higher engine sales. A Thomson Financial survey of analysts, on average, expected earnings of $3.77 a share for the quarter. Analysts' estimates usually exclude items. The Columbus, Ind., maker of engines said revenue rose to $3.03 billion from $2.75 billion a year earlier. The company forecasts 2007 earnings of $11 to $11.50 a share. Analysts expect earnings of $10.02 for the year, on average.
Educate Inc. (NasdaqGS:EEEE - News) agreed to a management buyout at $8 a share, or $535 million. Private equity firms Citigroup Private Equity and Sterling Capital Partners are also taking part in the deal, which values the Baltimore educational services firm at a premium of 39 cents a share, or 5% over its closing price of $7.61 on Friday. The transaction, which is expected to close in the second quarter, is subject to approval by the company's stockholders. Apollo Sylvan, LLC and Apollo Sylvan II, LLC, holders of approximately 53% of the company's common stock, have agreed to vote their shares in favor of the proposed merger.
First Republic Bank (NYSE:FRC - News) shares rose after the company agreed to be acquired by Merrill Lynch (NYSE:MER - News) in a cash and stock deal worth about $1.8 billion. The deal, which is expected to close in the third quarter, values First Republic at $55 per share. First Republic is a private banking and wealth management firm focused on high net worth individuals and their businesses. According to a joint press release from the two companies, as of September 30, 2006, First Republic had assets of $10.7 billion, loans of $7.6 billion, deposits of $7.9 billion, and assets under management or administration of $16.4 billion.
Gentex Corp. (NasdaqGS:GNTX - News) shares jumped after the auto parts maker posted higher fourth-quarter profit and sales thanks to increased demand for the company's higher margin mirrors. Mirror shipments rose 5% despite the steep automotive production cuts that slammed the domestic auto industry. Gentex posted a profit of $30.8 million, or 22 cents a share, up from $29.6 million, or 19 cents a share, a year ago. Sales rose 8% to $149.6 million. Analysts polled by Thomson Financial had expected a profit of 18 cents a share on sales of $145.7 million.
HealthSouth Corp. (NYSE:HLS - News) has agreed to sell its outpatient rehabilitation division facility for about $245 million to Select Medical Corporation, a privately-owned operator of specialty hospitals and outpatient rehabilitation facilities, as part of a strategy to position itself as a pure play post-acute care provider. The deal is expected to close in 60 to 90 days, and is subject to closing conditions, including regulatory approval.
Jacobs Engineering Group Inc. (NYSE:JEC - News) said it has approved a 2-for-1 stock split, to be effected in the form of a stock dividend. The additional shares will be distributed on March 15 to shareholders of record as of Feb. 15.
Laureate Education (NasdaqGS:LAUR - News) said its board has agreed to a $3.1 billion buyout led by Douglas Becker, its founder and CEO, and backed by private equity consortium including Kohlberg Kravis Roberts & Co., Citigroup Private Equity and hedge fund S.A.C. Capital Management LLC. Under the deal, announced Sunday, Laureate shareholders would receive $60.50 a share in cash, an 11% premium to the closing price of the stock Friday. Including assumed debt, the total value of the deal is $3.8 billion.
Mattel Inc. (NYSE:MAT - News) reported fourth-quarter net income of $286.4 million, or 75 cents a share, up from $279.2 million, or 69 cents, earned in the final three months of 2005. Average shares outstanding were 384 million in the latest quarter, down from 402.5 million a year earlier. Quarterly sales for the El Segundo, Calif.-based toymaker reached $2.11 billion, up 14% from the prior year's $1.84 billion; currency contributed two percentage points to the growth rate. Worldwide gross sales for the company's Barbie doll brand were up 3%, Mattel said. Operating income for the latest quarter came to $388.7 million, up 21%. Analysts, on average, had been looking for Mattel to earn 67 cents a share on revenue of nearly $1.99 billion, according to estimates compiled by Thomson First Call.
Shares of M.D.C. Holdings Inc. (NYSE:MDC - News) rose after analysts at JMP Securities upgraded the company to market outperform from market underperform. "Based on our analysis, we believe M.D.C. is much closer to the bottom than its peers," wrote JMP analyst Alex Barron in a research note Monday. "Its strong balance sheet and free cash flow generation should put the company in a very strong position to start buying land again once the market bottoms and land prices begin to come down hard."
Molecular Devices Corp. (NasdaqGS:MDCC - News) shares rose after the company agreed to be acquired by MDS Inc. (NYSE:MDZ - News) for $615 million. The deal values Molecular Devices' common shares at $35.50 each in cash, compared to Friday's close at $23.88. MDS said the combined company will have more than 1,100 employees. Excluding items, MDS expects the deal to be modestly accretive in 2007 and significantly accretive in 2008 and beyond. MDS anticipates the transaction will close in the second calendar quarter of 2007. Molecular Devices, a Sunnyvale, Calif., provider of bio-analytical measurement systems, posted revenue of $45.5 million for the quarter ended in September.
Mosaic Co. (NYSE:MOS - News) said second-quarter net income rose to $65.9 million, or 15 cents a share, from $55 million, or 13 cents, a year earlier. The average earnings estimate of eight analysts surveyed by Thomson was 15 cents a share for the latest quarter. The Plymouth, Minn., phosphate and potash company said revenue for the three months ended Nov. 30 rose 2% to $1.52 billion.
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Labels: ABY, ATRS, BAB, BAC, BOW, CFC, CMI, EEEE, FRC, GNTX, HLS, JEC, LAUR, MAT, MDC, MDCC, MDZ, MER, MOS, SYMC