Companies featured in this edition of the newsletter: ACTC, AEN, CBAI, CNLG, CVM, FMTI, ICLK, IWEB, MNDL, PLKH, SVUL, URGP
Cautious optimism seemed to be the theme on Wall St this week, as markets managed to nudge into positive territory for the sixth straight week following a slew of better than expected reports from the financial sector. All told, the Dow ended up 0.6% on the week, gaining 48 points to close at 8131, narrowing its YTD loss to 7.3%. The Nasdaq recorded a gain of 1.2% to close at 1673, up 6.1% on the year, while the S&P 500 and Russell 2000 also managed to post gains, finishing up 1.2% and 2.4% respectively on the week, down 3.7% and 4% on the year.
The story of the week came out of the financial sector, as Goldman Sachs, JP Morgan and Citigroup all managed to beat expectations and report moderately better than forecast quarterly results, which were met with a mixture of trepidation and enthusiasm, as there are still a number of influential companies set to report results in the coming weeks. Goldman used the opportunity to announce an offering of $5 billion in common stock aimed at raising capital in order to reimburse the government for TARP funds it received as part of the Federal bailout.
Despite the reassuring reports issued from the financial sector, negative developments on the economic front served to temper bullish sentiment, as disappointing retail sales for March and some less than encouraging data from the housing sector in the form a 10.8% drop in new housing starts provided room for doubt as to whether the recent upswing is a sign of recovery or just another bear market rally. The upcoming week’s earnings reports should serve to shed further light.
What should investors look for this week? Keep an eye on the preliminary assumptions from the banking industry stress tests which are expected to be released on Friday, as they could have significant market moving potential.
Earnings season picks up at full steam this week: on Monday morning, look for reports from Bank of America (NYSE: BAC), Eli Lilly (NYSE: LLY) and Halliburton (NYSE: HAL), followed by IBM (NYSE: IBM) after the close. On Tuesday morning, expect results from Caterpillar (NYSE: CAT), Coca-Cola (NYSE: KO), Delta Airlines (NYSE: DAL), DuPont (NYSE: DD), Lockheed Martin (NYSE:LMT), Merck (NYSE:MRK), Schering-Plough (NYSE:SGP), United Airlines Corp, (NASDAQ: UAUA), United Technologies (NYSE: UTX), and UnitedHealth (NYSE:UNH). On Wednesday before the bell, look for reports from AT&T (NYSE:T), Boeing (NYSE: BA), McDonald’s (NYSE:MCD), Morgan Stanley (NYSE: MS), Northrop Grumman (NYSE: NOC), and Wells Fargo (NYSE: WFC), with Apple (NASDAQ: AAPL) and eBay (NASDAQ: EBAY) reporting after the bell. On Thursday morning, look for results from AmerisourceBergen (NYSE: ABC), Conoco Phillips (NYSE: COP), Ford Motor Co. (NYSE: F) PepsiCo (NYSE: PEP), Raytheon (NYSE: RTN) UPS (NYSE: UPS), and US Airways (NYSE: LCC), with Amazon.com (NASDAQ: AMZN), American Express (NYSE: AXP) and Microsoft (NASDAQ: MSFT) after the bell. 3M (NYSE: MMM) and Xerox (NYSE: XRX) release Friday morning before the bell.
Economic Indicators for the week begin with March Leading Indicators due out at 10:00am Monday, followed by Weekly Crude Inventories at 10:35am Wednesday. Weekly Initial Jobless Claims are due out at 8:30am Wednesday, followed by Existing Home Sales for March at 10:00am. On Thursday, expect Durable Orders for March at 8:30am and new Home Sales, also for March at 10:00am.
Conferences for the week begin with the New York Biotechnology Association Annual Meeting being held in New York on Monday. The two day Independent Petroleum Association of America Oil & Gas Investment Symposium begins Tuesday and is also being held in New York, along with the Jefferies & Co. Capital Markets A&D Summit which is being held in Houston. On Wednesday, GE holds its annual shareholders’ meeting in Orlando. Johnson & Johnson holds its annual meeting in New York on Thursday.
CEL-SCI Corporation (AMEX: CVM), a company engaged in research and development of drugs and vaccines used in the treatment of cancer, released a letter to shareholders last week highlighting the importance of a recent Phase III trial completed by Dendreon Corporation that has significant positive implications for CVM (shares of Dendreon surged 185% last week). In their recent study, Dendreon demonstrated that it had the ability to improve overall survival in those with advanced prostate cancer compared to those who were treated with placebo. The company feels that the significance of Dendreon’s success to Cel-Sci is great, due to the synergies that exist between the two companies’ scientific portfolios designed to harness the human immune system to combat a patient’s own cancer. They further believe that the successful outcome of the Dendreon study lends validity to the field of cancer immunotherapy and should serve to attract new money to the space. Shares gained a penny on the week to close at $0.24.
interCLICK (OTCBB: ICLK) the fastest growing advertising network in the US according to comScore, announced last week that it has appointed Dave Myers, former senior director of advertiser marketplace operations at Yahoo!, Inc., as its new vice president of ad operations. Myers has built and led several high-performance teams and played a key role in accelerating revenues and business growth for major software and Internet companies. At Yahoo!, Myers led the go-to-market and operational integration between Yahoo! and Right Media while managing marketplace operations across the Search and Display business divisions for Yahoo!advertiser marketplaces group (AMG). He will oversee day-to-day operations including media buying, account management, analytics and ad operations at interCLICK. Shares rose 14 cents to close at $0.90 on the week.
Steel Vault (OTCBB: SVUL) an emerging provider of identity security products and services, announced that its subsidiary, NationalCreditReport.com, has surpassed its milestone of 5,000 subscribers, thanks in large part to increased marketing efforts begun in mid February of this year. NationalCreditReport.com specializes in providing consumers with accurate, complete and easy-to-understand credit reporting and monitoring services. Management is pleased with the rapid success of their recently implemented marketing campaign and plans to implement various strategic marketing programs to maintain the steady expansion of their subscriber base. Shares lost two cents on the week to close at $0.37.
IceWeb (OTCBB: IWEB), a storage technology company specializing in Geographic Information Systems (GIS) that provides services to bureaucratic and corporate organizations, announced preliminary results for the period ended March 31, 2009. IceWeb expects to report the highest EBITDA in its history, driven by strong gross margin improvement. The company expects gross margins to exceed 40%, compared to 27% in the first quarter. The record results reflect the company’s recent transition from a reseller of low margin products to higher-margin, value-added proprietary storage solutions and are expected to persist as the company continues to execute on its plan to narrow its focus on marketing value-added products in the space. Shares lost a penny on the week to close at $0.08.
Stem cell developer Advanced Cell Technology (OTC: ACTC), announced last week that it has commenced efforts to gain listing on the Over-the-Counter-Bulletin Board. Advanced Cell is working with auditors to complete quarterly statements and file 10-Q’s for the periods ended June 30, 2008 and September 30, 2008, and a 10-K for the fiscal year ended December 31, 2008. Completing these measures will enable ACTC to apply to relist its shares on the Over-the-Counter Bulletin Board which the company believes will enhance recognition among the investment community by increasing the transparency of their operations. Shares remained unchanged at $0.10 on the week.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a life sciences company focused on evidence-based nutritional solutions, received a letter from the Nasdaq last week indicating that the company currently does not meet the minimum requirements regarding stockholders’ equity for continued listing on the exchange. In order to regain compliance, the company must demonstrate a minimum of $2.5 million in stockholders’ equity; Forbes has fifteen days to submit a plan to regain compliance, at which time Nasdaq may grant an extension of 105 days to demonstrate compliance if the plan is approved. Shares lost three cents on the week to close at $0.33.
Adeona Pharmaceuticals (AMEX: AEN), a specialty pharmaceutical company developing innovative late-stage drug candidates for the treatment of autoimmune and central nervous system diseases, announced that it has entered into an agreement to acquire Colwell Clinical Laboratories, Inc., an independent Southern California CLIA-certified clinical laboratory. Founded and in operation since 1946, Colwell is one of the most established independent CLIA-certified clinical laboratories in the State of California, has revenue of approximately $750,000 annually, is a licensed Medicare and MediCal provider, and accepts insurance from most third party reimbursers as well as private payers. Adeona plans for Colwell to remain independent, but intends to incorporate technology useful for the diagnosis, prevention and treatment of conditions that involve metal dyshomeostasis, such as Alzheimer’s, which should fill a significant unmet medical need in the Southern California region. The acquisition is expected to be completed on or before May 31, 2009 and is subject to satisfactory due diligence on the part of Adeona. Adeona has paid a non-refundable deposit of $75,000 and, if satisfied with the outcome of its due diligence, will pay an additional $750,000 at closing on or before May 31, 2009 for all of the issued and outstanding stock of Colwell. Shares lost nine cents on the week to close at $0.45.
Mandalay Media (OTCBB: MNDL), the owner of new media distribution and content companies, announced that their wholly owned subsidiary, Twistbox Entertainment, has extended its partnership agreement with Private Media Group, a worldwide leader in premium quality adult entertainment content. The expanded partnership will result in Private being available in 51 countries though 91 mobile operators with terms that will significantly improve revenue generation through increased exposure and premier positioning. Twistbox Entertainment is one of the world’s leading platforms for the distribution of mobile content and services with direct agreements on carriers across Europe, Asia and the Americas. Twistbox manages more than 350 WAP sites, 70 mobile TV channels and 300 games focused on delivering high quality mobile lifestyle and late night entertainment. Its platform includes tools to expand distribution and discovery including age verification, category specific search and advertising services and an affiliate network that delivers over 500 million advertising impressions monthly. The increased penetration resulting from this expansion in the partnership agreement should reflect favorably in both companies’ balance sheets in coming quarters. Shares lost twenty cents on the week to close at $0.65.
Cord Blood America, Inc. (OTCBB: CBAI), an umbilical cord blood stem cell preservation company focused on bringing the life saving potential of stem cells to families nationwide and internationally, announced last week that revenue for the stem cell collection portion of its business increased 8.7%, or $0.3 million, to $3.4 million for the fiscal year ended December 31, 2008. Gross profit increased approximately $350,000 to $2.3 million in 2008, which was 56% of revenue, up from 34 percent in 2007, and is most readily attributable to economies of scale which have allowed the company to cut expenses by $2.2 million (37%) during the ’08 fiscal year. Shares remained unchanged at less than a penny on the week.
Prolink Holdings Corp. (OTCBB: PLKH), a provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced last week that its next generation ‘ProLink Touch’ GPS system has been named a finalist for “Most Innovative New Technology/Platform” at MediaPost’s 2009 Digital Out-of-Home Media Awards. Prolink Touch is the golf industry’s first cart-mounted “touch” screen GPS system, and joins Wal-Mart and the Big Ten Network as finalists for the award. In other news last week, Prolink announced that Cowboys Golf Club in Grapevine, Texas is the latest course to offer the Prolink GPS system. Located approximately 20 miles from downtown Dallas and Fort Worth, Cowboys Golf Club has been named the No. 1 daily-fee golf course in the Metroplex for seven consecutive years by AvidGolfer Magazine. Designed by architect Jeff Brauer and opened for business in 2001, Cowboys is the world’s first and only NFL-themed club in the world. Shares remained unchanged on the week at $0.08.
Urigen Pharmaceuticals (OTCBB: URGP), a company specializing in the design and implementation of innovative products for patients with urological ailments, announced last week that the TV show The Doctors, a popular program that offers expert medical advice, featured Painful Bladder Syndrome, one of the company’s main treatment focuses. The show follows a patient who suspects that she has PBS as she attempts to finally obtain a definitive diagnosis. Urigen is currently developing a promising treatment for the debilitating disease and believes that shows such as this demonstrate the significant market opportunity that PBS represents. Shares gained two cents on the week to close at $0.09.
On the Wires: Adeona Pharmaceuticals (AMEX: AEN), appointed an expert in the area of Age Related Macular Degeneration (AMD), David A. Newsome, M.D., as President of the company’s subsidiary, HealthMine, Inc. Dr. Newsome discovered the link between subclinical zinc deficiency and Dry Age-Related Macular Degeneration during his tenure as Section Chief of Retina and Ocular Connective Tissue Diseases at the National Eye Institute, and conducted and published the first clinical trial to test the potential utility of oral high dose zinc supplementation for Dry AMD, which proved to be highly successful and made oral high dose zinc the current standard of care for Dry AMD. In his new capacity as President of HealthMine, Dr. Newsome will oversee all aspects of HealthMine’s health education communication and information resources dedicated to raising awareness of subclinical zinc deficiency and the risks of chronic copper toxicity in the mature population.
SPECIAL SITUATIONS:
Conolog Corp. (NASDAQ: CNLG) $1.87
The volatile swings characterizing markets of late have left many investors looking for safe, reliable industries where they can put their money without having to worry about the potentially detrimental effects of the recession on markets as they continue to search for direction. Conolog Corp. is a company that operates in such a space, supplying digital signal processors to one of the most recession resistant industries available; global utilities. By operating in a market where customers are typically multi-national conglomerates, Conolog has found a niche that is largely independent of the volatile swings that have been all too common occurrences in markets of late, as their end users typically are not as harshly affected by adverse economic conditions as the average consumer which translates into steady growth for the company despite the difficult economic conditions which they have been operating in.
Conolog derives the majority of its revenues from commercial sales under the trade name of INIVEN, which is a division of the company. One of main product groups designed by INIVEN is the PTR/PDR Teleprotection Series which is targeted exclusively at electric power generators, such as electric utilities and other non-utilities generators, in order to protect their transmission and distribution lines. An example of how this product works should illuminate Conolog’s value proposition. The PTR/PDR Teleprotection Series products are initially installed in pairs, one unit at each end of the electric line. Each unit is connected and in constant communication with the other as they continuously monitor the line for faults. In the event of a fault occurring, such as a downed line or a short circuit, the unit at either end that detects the fault confirms it with the other unit and the electric line is immediately isolated for shut down, averting costly damage and downtime. In addition, the company also offers 4-channel systems (PTR-1500) and 8-channel digital systems (PDR-2000) in addition to the simple dual channel system (PTR-1000) described above.
Conolog appears well positioned to quickly gain market share in the very large market for PTR/PDR Teleprotection products. In the United States alone, there are over 500 large entities generating electricity, including municipal, cooperative, and Federal systems. By installing Conolog’s PTR/PDR systems on both new power lines and existing lines that are not properly protected, these electricity generators can improve efficiency and significantly reduce down time. Conolog has been able to gain significant traction as their products have been well received by their utility customers, which has in turn been rewarded with reorders. The company recently had two back to back months of record sales, directly following announcement of their second quarter results for the period ended January 31, 2009 where sales increased 45% year over year. The company expects further positive growth from the impending release of their CM-100 multiplexer, which is expected to be extremely well received by global utility companies as it will greatly expand application configurations.
In addition to Conolog’s steady trend of positive revenue growth and expanding product line, the company has also recently taken strides to increase their international market penetration, as they received an initial order worth $80,000 from a Chilean utility in March, marking the company’s entry into the South American teleprotection market. As both domestic and international utility companies become increasingly aware of the high reliability and significant value proposition that Conolog’s products offer, sales should continue to expand despite the global economic slowdown, presenting investors with an opportunity to position their money in a company operating in a safe, recession resistant industry poised for continued strong growth.