All of the major averages dropped during the past week as a flood of bad news in the financial sector and ongoing concerns about the housing and credit markets weighed on investor sentiment. The Dow dropped 507 points, bringing its year to date loss to 8.8%. Similarly the S&P 500 also posted a loss of 76 points, finishing the week at 1325 and bringing its year to date loss to 9.8%. The Nasdaq continued its slide in the new year recording a 100 point decline, with a year to date loss of 11.8%. The small company-based Russell 2000 index also continued in its downward trend as it fell 32 points. The index is down 12.1% for the year.
While much has been written about the weak overall market, and the depressed valuations of many of the micro-cap and small-cap companies, the term “bear market” has not been spoken widely. However, the Russell 2000 is down 21.4% from its mid-July all-time high. A bear market is often defined as a 20% decline in the price of equities. The Nasdaq is down 18.2% from its Summer highs, the Down down 15.3% while the S&P is off 15.9%.
Stocks ended another painful week for investors, as a disappointing quarterly report from financial giant Citigroup caused the major averages to plunge, and added to concerns that the economy could be headed for a recession. Also adding to the market’s decline were concerns about consumer spending and overall economic activity, after the Commerce Dept. reported weaker than expected retail sales for December. The negative disposition continued with disappointing results from technology bellwether Intel Corp. On the economic front, a government report showed core inflation trends remained steady. Also lending some support to the market were quarterly reports from JPMorgan Chase & Co. and Wells Fargo & Co., which showed that the problems in the credit markets are not being evenly felt by banks. Hurt by a hefty write-down and its exposure to bad mortgage bets, Merrill posted horrid results for the quarter. In other corporate news, Washington Mutual posted a wider than expected loss due to its exposure to subprime mortgages and other bad debt.
What should investors look for in the upcoming week? Next week will be loaded with earnings reports, representing the busiest week of Earnings Season. The week begins with a very active Tuesday as Bank of America (NYSE: BAC), CSX Corp. (NYSE: CSX), DuPont (NYSE: DD), Johnson & Johnson (NYSE: JNJ), United Health (UNH), and Wachovia (WB), all announce their company earnings. Apple (NASDAQ: AAPL), Texas Instruments (NYSE: TXN), Norfolk Southern (NYSE: NSC), and STMicroelectronics (NYSE: STM) will all make announcements after close on Tuesday. Abbot Labs (NYSE: ABT), ConocoPhillips (NYSE: COP), Delta Airlines (NYSE: DAL), General Dynamics (NYSE: GD), Pfizer (NYSE: PFE), Motorola (NYSE: MOT), United Tech (NYSEL UTX), WellPoint (NYSE: WLP), Capital One (NYSE: COF), and eBay (NASDAQ: EBAY) will highlight Wednesday’s announcements. Thursday will be another busy day with AmerisourceBergen (NYSE: ABC), AT&T (NYSE: T), Con Edison (NYSE: ED), Ford Motor (NYSE: F), Lockheed Martin (NYSE: LMT), Nokia (NYSE: NOK), Northrop Grumman (NYSE: NOC), Union Pacific (NYSE: UNP), US Airways (NYSE: LCC), and Xerox (NYSE: XRX) will make announcements before the bell on Thursday. Microsoft (NASDAQ: MSFT), Hartford Financial (NYSE: HIG), and Sun Microsystems (NASDAQ: JAVA) will follow with announcements after close. Harley Davidson (NYSE: HOG), Caterpillar (NYSE: CAT), and Honeywell (NYSE: HON) will finish the week with announcements coming before the open on Friday.
Next week will be slow for economic news and data as earnings reports will dominate most investors’ attention. Thursday will be the sole day for economic data as weekly unemployment claims, existing home sales, and weekly crude inventories will all be announced in the morning.
The conference schedule for next week will be quiet, although on Tuesday JP Morgan will host a High Yield Conference and Sidoti & Company, LLC will host a two-day Emerging Growth Institutional Investor Forum in Palm Beachxx.
Telkonet, Inc. (AMEX: TKO), the leading technology solutions provider for broadband networking, end-to-end service support and energy management, announced its next-generation 200Mbps Telkonet Series 5 powerline communications system, addressing the exacting broadband networking demands of the utility, commercial, education, Government and hospitality markets. Setting unprecedented performance levels for security, speed, QoS and capacity, the new Telkonet Series 5 system combines the company’s proven powerline technology with Intellon’s powerful 200Mbps chip. Telkonet Series 5 takes PLC to a new level, as a viable option for high performance, critical applications, including digital video surveillance, implementations in the utility substation environment, and harsh outdoor commercial installations. Telkonet Series 5 does something completely different – it puts PLC on a completely new level as a next-generation solution that comprehensively addresses the needs of the wider commercial environment. The shares fell 2 cents for the week, to finish at $0.88.
VeriChip Corporation (Nasdaq: CHIP), a provider of RFID systems for healthcare and patient-related needs, announced that it expects revenues for 2007 at the high-end of the company’s previously released guidance of $30-32 million. During the fourth quarter of 2007, the company continued to experience strong sales of its healthcare security products, specifically its infant protection and wander prevention systems. Looking back at 2007, VeriChip met or exceeded every qualitative and quantitative measure it established. The stock dropped $0.03, to close the week at $2.04.
Digital Angel (NASDAQ: DIGA), an advanced technology company in the field of rapid and accurate identification, location tracking and condition monitoring of high-value assets, announced it has acquired Geissler Technologies Corporation, a leading developer of next-generation electronic identification and imaging technologies for animals. The acquisition of Geissler Technologies, which will be incorporated into Destron Fearing, Digital Angel’s existing animal applications business, brings back a founder of Destron Fearing, Randolph K. Geissler, who again will become the president of Digital Angel’s animal applications business. This acquisition not only brings new technologies to Digital Angel, but also brings solid contractual relationships with distributors that provide data systems support used to implement animal management programs in support of current and future food safety regulation needs. The combination of Destron Fearing’s history in commercial markets and Geissler Technologies’ technological innovation makes this a powerful partnership to address the ever-changing needs of the industry. The stocked increased $0.15 for the week, to close at $0.67.
Generex Biotechnology Corporation (NASDAQ: GNBT), the leader in drug delivery for metabolic diseases through the inner lining of the mouth, announced that Shreya Life Sciences Pvt. Ltd., the company’s marketing and distribution licensee in India, is rolling out its marketing launch activities for Generex Oral-lyn in the Indian market. The first effort in this marketing launch campaign involves presentations about Generex Oral-lyn to Indian key opinion leaders and endocrinologists in India at closed-door meetings in Mumbai, India. Generex Oral-lyn is a prandial insulin which allows for easy self-administration, precise dosage control, and easy titration which allows for finer individual control. As such, Generex Oral-lyn also makes an ideal supplement at meal times for patients with Type 2 diabetes mellitus in addition to basal or combination therapies based on blood glucose measurements. This demonstrates the company’s commitment to entering this major jurisdiction with the proper educational tools for its marketing purposes and for training amongst physicians who will be the front runners in educating patients living with diabetes. Shares fell $0.03, to finish the week at $1.42.
CEL-SCI Corporation (AMEX: CVM), a company that engages in the research and development of drugs and vaccines used in the treatment of cancer, reported financial results for the fiscal year ending September 30, 2007. The company reported a net operating loss for fiscal year 2007 of $9.3 million versus a net operating loss of $5.3 million in fiscal year 2006. The loss per share for fiscal year 2007 was unchanged at $0.10 compared to fiscal year 2006. The cash from operating activities used during the year was about $4.9 million. CEL-SCI’s assets during the year grew from $9.6 million in fiscal year 2006 to $20.7 million in fiscal year 2007. During the year, CVM received FDA go-ahead for a Phase III clinical trial with its cancer drug Multikine, raised substantial amounts of money and began building a dedicated manufacturing facility for Multikine. It is now looking forward to taking over the completed facility in 2008 and starting the global Phase III trial. The stock fell $0.05, to finish the week at $0.47.
The biotechnology analyst at Broadpoint Capital named CytRx Corporation (NASDAQ: CYTR) “top pick” for 2008 last week, based upon “what we expect to be a pivotal year for the company, with the initiation of two more Phase II trials, Arimoclomol in stroke recovery and Iroxanadine in diabetic ulcers, the spin-off of RXi, CytRx’s majority-owned RNAi subsidiary, and the progress of the Phase II trial with Arimoclomol in ALS. We expect significant upside potential from the current price level, as the spin-off of RXi unlocks the value within CytRx and allows investors to get a better handle on the company’s pipeline with the dual focus on protein misfolding repair and RNA interference,” according to the analyst. Shares ended the week at $2.09, down 33 cents.
Access Pharmaceuticals, Inc. (OTCBB: ACCP), a biopharmaceutical company, that engages in the development and commercialization of products for the treatment and supportive care of cancer and other diseases, and RHEI Pharmaceuticals, Inc., a specialty pharmaceutical company focused on bringing proprietary medicines to the China market, announced the signing of a definitive licensing agreement under which RHEI, which has more than 110 national sales representatives penetrating large volume hospitals, will market Access’s proprietary product MuGard in the Peoples Republic of China and certain other Southeast Asian countries. With an increasing number of patients receiving radiation and chemotherapy in China, the prevalence of oral mucositis is growing. RHEI’s expert capabilities in sales and marketing, manufacturing and regulatory will help to maximize MuGard’s potential in the marketplace. MuGard will fit very well with RHEI’s existing portfolio of products and will benefit from its aggressive marketing programs. Increased efficiency will also be achieved as RHEI will manufacture MuGard in its own GMP facility. Shares fell $0.20, to finish the week at $2.75.
ProLink Solutions, a wholly-owned subsidiary of ProLink Holdings Corp. (OTCBB: PLKH) and the world’s leading provider of Global Positioning Satellite golf course management systems and on-course advertising, announced that it installed its systems at a record number of courses throughout the world in 2007. Last year, 180 golf courses installed, upgraded or renewed their leases on the industry-leading ProLink GPS system. This marked the largest single-year expansion in the company’s history with a 17.6-percent increase from the 153 courses installed in 2006. A total of 10,642 ProLink GPS units were sold or leased in the United States and abroad during 2007. ProLink now enjoys a presence on five continents across the globe in countries including Scotland, Germany, Dubai, South Africa, Spain, Mexico, Japan and England. ProLink’s system is now featured at more than 700 golf properties around the world. The company also terminated its definitive Acquisition Agreement with Elumina Iberica, S.A., Elumina Iberica UK Limited, GP Ads, S.L. and GP Ads Ltd., and the sole shareholders of the Elumina Entities, Kevin Clarke and Mark Smart. The stock remained unchanged at $0.60.
Halcyon Jets Holdings, Inc. (OTCBB: HJHO), a leading broker of on-demand charter aircraft travel services, announced record net revenues of $4.7 million for November and December 2007, an approximate $1.8 million or 38.2% increase over the $2.9 million for the entire third quarter of 2007. The $4.7 million in net revenues for two-thirds of Q4 approximates net revenues for Halcyon’s first three fiscal quarters combined. The significant increase in revenues reflects the continued execution of Halcyon’s strategic initiatives to expand the breadth and range of its charter air transportation services for luxury and business travelers. The stock dropped $0.15, to close the week at $0.50.
Seaway Valley Capital Corporation (OTCBB: SWVC), a company that invests in equity, equity-related, and debt in companies that require expansion capital and in companies pursuing acquisition strategies, announced that its wholly owned subsidiary, Patrick Hackett Hardware Company, reported that its annual sales increased 12.5% in 2007 versus the prior year on particularly strong apparel and footwear sales. The company also announced that it executed a term sheet and is in final negotiations to acquire a regional hospitality company. The company, which has gross assets of approximately $13 million and revenues of just over $5 million, specializes in consumer products and is based in Upstate New York region. This acquisition, if consummated, would be strategic to Seaway Valley on a number of fronts. In addition to the management team that would join Seaway Valley, tremendous opportunities exist for cross selling and promotional efforts among and between these geographically clustered assets. Additionally, certain of these assets represent a platform that the company can immediately assist in positioning for growth inside and outside the region both organically and through additional acquisitions. Shares finished the week at $0.011.
On the Wires: Enzo Biochem, Inc. (NYSE: ENZ), a leading biotechnology company specializing in gene identification and genetic and immune regulation technologies for diagnostic and therapeutic applications, announced that it has appointed former Novartis executive Christine T. Fischette, Ph.D., President of its wholly-owned Enzo Therapeutics subsidiary. Home Solutions of America Inc. (OTC: HSOA), a company that provides restoration, construction, and interior services to commercial and residential properties and Home Solutions Restoration of Louisiana, Inc., the company’s wholly-owned subsidiary terminated the employment of Mr. Scott Sewell as the director of HSRLA. Generex Biotechnology Corporation (NASDAQ: GNBT), the leader in drug delivery for metabolic diseases through the inner lining of the mouth, announced today that it will be participating at the upcoming 2008 Arab Health Congress. The Arab Health Congress will be held between January 28-31 at the Dubai International Exhibition Centre in Dubai, United Arab Emirates. Digital Angel (NASDAQ: DIGA), an advanced technology company in the field of rapid and accurate identification, location tracking and condition monitoring of high-value assets, announced in connection with the merger, Michael E. Krawitz was terminated as Applied Digital’s President and Chief Executive Officer, and as a result, was entitled to severance in an amount equal to $1.7 million under the terms of an Employment and Non-Compete Agreement. VeriChip Corporation (NASDAQ: CHIP), a provider of RFID systems for healthcare and patient-related needs, announced a series of changes to its Board of Directors to remove all overlap between its Board and Digital Angel’s Board. Constance K. Weaver and Daniel E. Penni, who serve on the Digital Angel Board, have stepped down from the VeriChip Board, and Barry M. Edelstein, has stepped down from the Digital Angel Board and joined the VeriChip Board. The new committee composition is as follows: Audit Committee – Paul Green (Chair), Jeffrey Cobb and Barry Edelstein. Compensation Committee – Jeffrey Cobb (Chair), Paul Green and Barry Edelstein. Nominating and Governance Committee – Barry Edelstein (Chair), Jeffrey Cobb and Paul Green.
