The major indices ended the week higher after each dropped more than 4.0% the previous week. The Dow Jones industrial average went up by 166 points, paring its year to date loss to 6.9%. The Standard & Poor’s 500 Index gained 19 points, reducing its year to date loss to 8.1%. The Nasdaq Composite Index recorded a modest gain of 17 points, cutting its year to date loss to 12.5%. The Russell 2000 gained 3 points, lowering its year to date loss to 8.4%. For the week, the S&P 500 and the Dow both added 1.4 percent. The Nasdaq climbed 0.7 percent and the Russell 2000 rose by 0.4%.
Shares of AIG dropped 12% on Monday after the insurer disclosed it has had some difficulty in valuing a super senior credit default portfolio. AIG’s revelation sparked renewed concerns about the financial sector and the specter that more write-downs will likely be heard from others. Despite those concerns, the stock market continued to edge higher, driven by leadership out of the tech sector, which was highlighted by news that Yahoo! had rejected Microsoft’s $31 per share buyout offer. Another offer this week was made by Warren Buffett who had proposed to assume $800 billion worth of municipal bond liabilities from the three major bond insurers MBIA, Ambac Financial and FGIC Corp. Ambac’s declined the offer recognizing that it would simply strip the insurers of the best part of their business and leave them to still contend with the problems of their structured investment exposure. The market was mostly pre-occupied with some warnings about the downside risks to growth that were sounded by Fed Chairman Bernanke before the Senate Banking Committee. Better than expected earnings news from Coca-Cola and Applied Materials, and a stronger than expected 0.3% gain in January Retail sales provided a spark for a rally on Wednesday. A batch of economic data on Friday that included the lowest reading in a New York region manufacturing survey since May 2003 and the lowest consumer sentiment reading reported by the Univ. of Michigan since February 1992, compounded the concerns for some and knocked the market back in noticeable fashion early Friday. Strikingly, the market made up all of its lost ground and eked out a slight gain on the day due to a late surge of buying interest in the financial sector.
What should investors look for in the upcoming week? Earnings announcements have slowed considerably with only a handful of major names scheduled to report results over the course of the upcoming holiday shortened week, as all of the markets are closed Monday for President’s day. Medtronic (NYSE: MDT), OfficeMax (NYSE: OMX) and Wal-Mart (NYSE: WMT) will make announcements before the bell on Tuesday. Hewlett-Packard (NYSE: HPQ), Integrys Energy (NYSE: TEG), and Whole Foods (NASDAQ: WFMI) will follow with announcements after the market closes. Garmin (NASDAQ: GRMN), TJX Cos (NYSE: TJX), Transocean (NYSE: RIG) and Hertz Global (NYSE: HTZ) will highlight the earnings reports on Wednesday. Thursday will be a relatively busy day with announcements from Asbury Automotive (NYSE: ABG), Barrick Gold (NYSE: ABX), CMS Energy (NYSE: CMS), EMCOR Group (NYSE: EME), JC Penney (NYSE: JCP), MGM Mirage (NYSE: MGM), Quest Diagnostics (NYSE: DGX), Safeway (NYSE: SWY), TRW Automotive (NYSE: TRW), Williams Cos (NYSE: WMB), Community Health (NYSE: CYH), and Express Scripts (NASDAQ: ESRX). Friday will be a very light day with announcements from Huntsman (NYSE: HUN) and PG&E (NYSE: PCG) to finish off the week.
Next week’s economic news and data will be relatively tame, but some mid-week activity could get investor attention. The January Core CPI, January Building Permits and January Housing Starts will be announced before the bell Wednesday followed shortly after by a mid-morning announcement of the Weekly Crude Inventories. The FOMC will be released shortly before the market close Wednesday afternoon. The Weekly Initial Unemployment Claims will be announced before the bell Thursday and the January Leading Indicators will be announced later that morning. Philadelphia Fed is also slated to make an announcement mid-morning Thursday.
The conference schedule for next week looks to be on the lighter side. The Credit Suisse Capital Goods / Renewable Sector Corporate Days will take place on Tuesday in Shanghai. Also on Tuesday will be the three day Morgan Stanley Basic Materials Conference and the four day Roth Capital Partners 20th OC Growth Stock Conference taking place in New York and Dana Point, California, respectively. Pluristem Therapeutics (NASDAQ: PSTI) (Tuesday, 1 p.m. PST), Xcorporeal (AMEX: XCR) (Tuesday 3:30 p.m.), Hythiam (NASDAQ: HYTM) (Tuesday 5 p.m.) and CytRx Corporation (NASDAQ: CYTR) (Wednesday 5 p.m.) are among the companies presenting. The two day Credit Suisse Kazakhstan Conference will take place in London on Wednesday, followed by the Credit Suisse Global Forest Products Conference taking place on Thursday in New York. The four day CIBC World Markets Institutional Investors Conference in Whistler, British Columbia, the two day Oppenheimer & CO. 5th Annual Vail Semiconductor Summit Invitation Only in Vail, Colorado, will also all take place on Thursday. The UBS Aerospace/Defense Conference in Chicago will conclude the week Friday.
CytRx Corporation (Nasdaq: CYTR), a biopharmaceutical company engaged in the development and commercialization of human therapeutics, announced receipt of a written correspondence from the U.S. Food and Drug Administration providing clarification on the FDA’s decision to place on clinical hold the company’s Phase IIb trial with arimoclomol for the treatment of amyotrophic lateral sclerosis. The correspondence confirmed CytRx’s previously announced understanding that the FDA’s decision pertained to a previously completed animal toxicology study in rats and was not related to data generated from any human studies with arimoclomol. The company also announced that the Securities and Exchange Commission has declared effective the registration statement on Form S-1 filed by CytRx’s majority-owned subsidiary RXi Pharmaceuticals Corporation. The company has established March 6th as the Record Date, at which time existing CYTR shareholders are expected to receive a stock dividend in RXi, in a move that could unlock the value in the company’s RNAi business. Many of the analysts following the company have cited this event as a potential catalyst for shares of CytRx. Shares decreased by $0.26, to finish the week at $1.99.
Volume Alert: Shares of healthcare services company Hythiam, Inc. (NASDAQ: HYTHM) jumped 14.2% last week on more than twice average volume after the company’s CEO made bullish comments at an investor conference about the prospects for a managed care deal. The company recently launched its disease management model, with a focused on managed care providers. Shares ended the week at $3.04, up 38 cents, closing at their highest level in nearly two months.
Generex Biotechnology Corporation (NASDAQ: GNBT), the leader in drug delivery for metabolic diseases through the inner lining of the mouth, announced that the company received an additional regulatory approval letter for the conduct of its Phase III clinical trial protocol for Generex Oral-lyn at an additional 28 clinical sites located in Europe. The significance of this approval is that it represents initiation of additional clinical sites for the pivotal study and permits commencement of screening for suitable patients. More importantly, these additional sites allow for an enrollment of up to 340 study subjects in addition to the sites which have already received regulatory approval to initiate the Phase III study. The company will be conducting the Phase III trial of Generex Oral-lyn in a total of seven countries. An analyst at Rodman and Renshaw noted in a research note that, “We believe pre-commercialization activities in India, filings in Jordan, Kuwait, Qatar, United Arab Emirates and Yemen, which are regions with a high incidence of diabetes, and late-stage Phase III clinical trial preparations in markets outside the U.S., are proof of Generex’s smart execution of its low-risk Oral-lyn commercialization strategy and the company’s leadership in alternative insulin delivery. Thus, we reiterate our Market Outperform rating for GNBT shares and price target of $6 (P/E multiple of 25x our 2012 EPS estimate of $1.62 discounted at an annual rate of 45%).” The stock rose 2 cents for the week, to close at $1.34.
Telkonet, Inc. (AMEX: TKO), the leading provider of innovative, centrally managed solutions for integrated energy management, networking, building automation and proactive service across commercial, industrial and government applications, announced the completion of several financial transactions designed to allow the company to continue to support its growing opportunities and accelerating revenue. The company has recently closed on a $2.5 million accounts receivable financing agreement with Thermo Credit, LLC, a receivables funding company specializing in the telecommunications industry. The funding will allow increased flexibility in meeting working capital needs. Telkonet also made repayment in full on a $1.5 million senior note payable, through the sale of 2.5 million shares of its common stock, which are subject to Rule 144 sales restrictions, to a private investor. There were no warrants or private placement fees involved in the transaction. Shares dropped 15 cents, to finish the week at $0.79.
VeriChip Corporation (NASDAQ: CHIP), a provider of Radio Frequency Identification systems for healthcare and patient-related needs, announced that Xmark’s infant protection systems, led by systems sold under the HUGS brand, protected more than one million infants born in hospitals in 2007. Xmark is a wholly owned subsidiary of VeriChip. The company sees sustained growth of this business in 2008 and beyond as it continues to expand its reach throughout North America and other parts of the world where these systems are less common yet no less important. Shares rose $0.25, to finish the week at $2.31.
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 first quarter fiscal year 2008, ending December 31, 2007. The company reported a net loss of approximately $1.84 million for the quarter compared with an operating loss of approximately $1.1 million during the quarter ending December 31, 2006. Also during the quarter, research and development expenses doubled compared to the three-month period ended December 31, 2006. This is due to the increase in work for preparation of the Phase III clinical study. The stock rose 2 cents for the week, to close at $0.57.
ProLink Holdings Corp. (OTCBB: PLKH), the world’s leading provider of Global Positioning Satellite golf course management systems and on-course advertising, reported strong preliminary fourth-quarter revenue for the period ended December 31, 2007. PLKH had record Q4 revenue which was in excess of $6.0 million, a significant increase compared to the same period in fiscal 2006 when the company had revenue of approximately $3.8 million. The fourth quarter is seasonally a slower period for the company as many of the golf courses in the Eastern and Midwestern parts of the country are closed. Gross margin of approximately 52% for the period was up over 100% as compared to the fiscal 2006 fourth quarter. A significant increase in new system sales and upgrades, advertising revenues and greater adoption of the ProLink System contributed to the higher revenue and improved profitability. The company also said that Arcadia Bluffs Golf Club now features the ProLink Solutions ProStar GPS system used at many of the world’s most famous golf courses. The system will be extremely helpful in managing the cart fleet and keeping pace of play moving. In fact, The stock remained unchanged for the week at $0.55.
Advanced Cell Technology, Inc. (OTCBB: ACTC), a biotechnology company applying cellular technology in the emerging field of regenerative medicine, announced results from a 23-patient study of ACT’s myoblast therapy for the treatment of congestive heart failure presented at the International Society for Cardiovascular Translational Research World Symposium in San Diego, CA. The results of the study demonstrate long term cell survival in heart failure patients as well as strong quality of life improvements. Moreover, ACT’s myoblast trial has been the only cell-based, FDA-approved human clinical trial that has not required the administration of anti-arrhythmic drugs or assist devices, which is in contrast to trials for bone marrow-derived and other adult stem cell therapies. The company remains encouraged by the data presented and believes the positive 12-month data represents another step in its process of initiating a Phase II human clinical trial for myoblast therapy. The company also plans to privately offer up to $3,000,000 of convertible promissory notes and use the net proceeds to fund working capital, including costs associated with planned clinical trials. The stock decreased 6 cents for the week, to close at $0.19.
MSTI Holdings, Inc. (OTCBB: MSHI), a carrier class communications technology company that specializes in providing “quadruple play” services consisting of video, voice, Internet and Wi-Fi to multi-tenant unit and multi-dwelling unit residential, hospitality and commercial properties, announced that its wholly-owned subsidiary, Microwave Satellite Technologies, Inc., has expanded its current customer base by offering its services to 220 apartment homes in the new North Tower of the Shore Condominium Residences at Newport. The company also entered into a Securities Purchase Agreement which prohibits it from issuing shares of common stock or common stock equivalents until 90 days after a registration statement registering all of the common stock underlying the Debentures and Warrants is declared effective by the Securities and Exchange Commission. Shares dropped $0.10, to finish the week at $0.53.
Global Clean Energy Holdings, Inc. (OTC: MLSC), an emerging renewable energy company focused on the production of feedstocks used for the production of biofuels, has delivered its first test shipment of Crude Jatropha Oil to Allegro Biodiesel Corporation’s biodiesel production facility in Pollock Louisiana for processing into biodiesel fuel. Global Clean Energy Holdings is developing Jatropha plantations in Latin America. The two companies have entered into a testing and processing agreement to convert Jatropha Oil into biodiesel fuel that meets all relevant ASTM and EU specifications. The stock rose $0.014 for the week, to close at $0.042.
The Board of Directors of 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, dismissed Rosenberg Rich Baker Berman & Company, P.A. from its position as Seaway Valley Capital’s independent registered public accounting firm. The company instead retained the firm of Dannible & McKee, LLP to audit its financial statements for the year ended December 31, 2007. The stock remained unchanged at $0.01 for the week.
Carbonics Capital Corporation (OTCBB: CICS), a company that provides applied engineering and technology transfer services based on clean technology and process innovations that enhance manufacturing efficiencies, improve resource utilization and minimize waste, announced its name change from GreenShift Corporation toCarbonics Capital Corporation and a 1 for 20 reverse stock split, which increased the corporation’s authorized common stock from 200,000,000 shares, $.001 par value per share, to 520,000,000 shares, $.001 par value per share. The price of the stock changed by $0.14 due to a 1 for 20 stock split, to close at $0.15 for the week.
For those still following the saga of Home Solutions of America, Inc. (OTC: HSOA), a provider of restoration, construction and interior services to commercial and residential customers, the company late Friday provided an update on its operations and financial condition. For those who did not see it, the company basically reiterated much of the information that was previously reported in a regulatory filing, but also included that its backlog should not be relied upon, along with previously announced contractual announcements. Perhaps more disturbing is the fact that the Audit Committee’s Internal Investigation, which has prevented the company from filing its third quarter financial results, is still not completed, suggesting that it could continue to drain precious resources that the company needs to operate and delay relisting on the Bulletin Board. In addition, the company disclosed that it has received subpoenas with respect to its books and records, hardly suggesting that external investigations are likely to conclude quickly. The stock dropped by $0.10, to finish the week at $0.52.
