Companies featured in the current edition of the newsletter: CETG, CVM, ENZ, GNBT, ITUI, MNDL, PCFG, SWYV
It was another interesting week on Wall Street, as the bear market rally that started late Friday the previous week extended into early last week, demonstrating the markets’ resiliency in the face of tough news yet again. All told, the Dow ended down moderately, losing 5 points on the week to close at 8629, maintaining its year to date loss at 34.9%. The NASDAQ managed to post a 2% increase, closing at 1540, bringing its YTD losses to 41.9%. The S&P 500 and Russell 2000 both managed to record small gains, closing up 0.5% and 1.6% respectively.
In different times, the headlines from this week could have spurred huge sell-offs in all of the major indices, but given the current environment, it was almost business as usual as investors shook off some major negative developments from both the government and economy that sent stocks trading mostly sideways on the week. Foremost amongst the negative headlines for the week was the failure of the automakers’ $14 billion aid package in the Senate, raising the risk of imminent bankruptcy filings in Detroit. The week also saw media giant Tribune Co. file for Chapter 11, citing weakness in the newspaper industry and a need to restructure about $13 billion in debt. Yields on the 1-month and 3-month T-bills both dipped into negative territory for a time, indicating a willingness on the part of some investors to pay the government to hold their money. Weekly initial jobless claims set another 26-year high at 573,000, while continuing claims also set a new 26-year mark, topping out at 4.43 million. More layoffs are expected in the following weeks as well, as several big names announced the intention to lighten their work forces. Dow Chemical said that it will cut 11,000 jobs, Rio Tinto plans to displace 14,000, and Bank of America unveiled plans to cut 35,000 jobs over the next three years.
While there was certainly more bad news than good last week, the few positive announcements that there were seemed to signal that perhaps there is an end to all this turmoil on the horizon. Procter & Gamble reaffirmed its earnings guidance and core producer prices are moderating. News that President-elect Obama favors a massive stimulus package centering around public works and infrastructure improvements helped catapult stocks on Monday, and speculation that the outgoing administration might use TARP funds earmarked for Wall Street to help the ailing auto industry were also amongst the newsworthy positive developments of the week.
What should investors look for this week? The earnings calendar picks up as several potential market moving companies will be announcing results before the holiday season. Monday will be quiet, but look for results from Best Buy (NYSE: BBY) and Goldman Sachs (NYSE: GS) before the opening bell on Tuesday, with software developer Adobe Systems (NASDAQ: ADBE) releasing after the close. Things pick up Wednesday, with Commercial Metals (NYSE: CMC), ConAgra (NYSE: CAG), General Mills (NYSE: GIS), and Morgan Stanley (NYSE: MS) all reporting before the market opens and Nike (NYSE: NKE) reporting after the close. Carnival Cruise Lines (NYSE: CCL), Discover Financial Services (NYSE: DFS), Fed Ex (NYSE: FDX), and Rite Aid (NYSE: RAD) will all disclose their results Thursday before the market opens, followed by Accenture (NYSE: ACN), Oracle (NASDAQ: ORCL) and Research In Motion (NASDAQ: RIMM) after the close. Cintas (NASDAQ: CTAS) and Jabil Circuit (NYSE: JBL) report before the open on Friday. With both Goldman Sachs and Morgan Stanley anticipated to report disappointing results, investors may want to watch for reaction to those announcements to determine whether the “bad news†has been fully priced into those stocks.
Economic reports for the week begin with the NY State Empire Index due out at 8:30 a.m. on Monday, followed by October Net Foreign Purchases at 9:00 a.m. and November Capacity Utilization and Industrial Production reports at 9:15 a.m. New Building Permits and Housing Starts for November will be released at 8:30 a.m. Tuesday, along with November CPI and Core CPI figures, also being released at 8:30 a.m. Look for the Federal Reserve to announce its decision on interest rates later in the day at 2:15 p.m. Weekly Crude Inventories will be released at 10:35 a.m. on Wednesday. Weekly Initial Jobless Claims are announced on Thursday morning at 8:30 a.m. followed by Leading Indicators for November and December’s Philadelphia Fed Index at 10:00 a.m.
The events calendar will be light this week leading up to the holiday season. Sunoco (NYSE: SUN) will meet with analysts in Philadelphia on Monday, while Visa (NYSE: V) will hold a special meeting of shareholders on Tuesday in San Francisco. Autozone (NYSE: AZO) will be holding a meeting for shareholders in Memphis on Wednesday, and CA, Inc. (NASDAQ: CA) will meet with analysts in New York on Friday.
Life sciences company Enzo Biotechnology (NYSE: ENZ) released its quarterly earnings for the period ended October 31, 2008 last week. The company’s Life Sciences division demonstrated strong growth, as it generated $9.9 million in product revenue, recording a 70% increase over the comparable period in calendar 2007, which can primarily be attributed to organic growth and its acquisition of Biomol, a global manufacturer and marketer of specialty life sciences research products. Total revenue for the quarter were $21.1 million, compared with $19.4 million over the same period in the previous year, an increase of 8%, with the Biomol acquisition contributing $2.8 million in revenue over the quarter. Enzo realized a 26% increase in licensing fees and royalties for the period, generating $2.9 million from those activities. Revenue generated from clinical laboratory services declined to $8.2 million, off 27% from the same period in ’07, despite seeing comparable volume in the demand for those services. This decline is principally due to a combination of increases in competitive pricing throughout the industry and an increase in costs associated with implementing a new billing system for the clinical laboratory services business which the company believes will assist them as they continue to drive this division towards improved metrics for managing the business. The company also said it had completed its Phase IIb trial in Crohn’s Disease was evaluating those results. Shares ended the week at $4.60, down 62 cents.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) announced that results from its clinical trial of a novel immunotherapeutic cancer vaccine being developed by its wholly-owned subsidiary, Antigen Express, Inc., were presented at the 31st annual San Antonio Breast Cancer Symposium last week. The new findings described additional immunological effects of the vaccine, as well as longer-term responses in vaccinated breast cancer patients than were previously reported. Increased immune responses were demonstrated in patients up to a year after vaccination, in addition to a reduction in the numbers of a specific type of cell (T regulatory cells) known to inhibit the immune response. The results of the study suggest that the new compound, AE37, is safe, well tolerated and produces the desired immunological response. In addition to the Phase II efficacy trial for breast cancer, the drug is also currently in Phase I of testing for prostate cancer patients, the results of which are expected out in early 2009. The stock lost 15 cents to close at $0.49 on the week.
CEL-SCI Corporation (AMEX: CVM), a company engaged in research and development of drugs and vaccines used in the treatment of head and neck cancer, released a letter to shareholders last week highlighting both the status of the company’s anti-cancer drug Multikine, and the rise in prevalence of cancer worldwide. The letter cited the U.N. World Health Organization’s Agency for Research on Cancer report, which stated that the global burden for cancer has doubled in the last 30 years of the 20th Century, and estimates that the rate will double again between 2000 and 2020 and nearly triple by 2030, making cancer the number one killer worldwide, ahead of heart disease. The report validates the company’s focus on development of Multikine as a potential weapon in the war against cancer and also helps to illustrate the importance of finding a cure in a timely manner. The company is currently in late stage Phase III testing of Multikine, which it believes uniquely positions itself to partner with other companies currently shifting their resources towards development of cancer treatments in response to these alarming increases in the rate of the disease. The drug itself has proven its efficacy over a number of clinical trials and has demonstrated some remarkable results to date. Multikine eradicated all tumors in 12% of patients, and overall, patients receiving the treatment have 50% less tumor cells before chemotherapy or radiation have even begun. The long-term survival improvement was 33%, all without Multikine induced toxicity, an important factor to consider in light of how debilitating some other forms of cancer treatments can be to patients. Shares remained unchanged at $0.34 for the week.
Capital City Energy Group, Inc. (OTCBB: CETG), a diversified oil and natural gas company with three separate divisions, continues to expand its service offerings to reflect its strategic plan to develop a portfolio of core areas that provide growth opportunities in all facets of the oil and natural gas industry, as it announced the acquisition of Hotwell Services, Inc. an emerging oilfield services company operating in the Appalachian Basin. Hotwell will continue to operate under its current name and management team, but will become part of the Capital City Energy Group portfolio of operating subsidiaries. The acquisition provides the necessary infrastructure and support for CETG to accelerate its ambitious growth plans in the Appalachian Basin, an area featuring rich oil and natural gas deposits tactically situated near large markets. The company expects that the acquisition could add as much as $2 million in revenue and $700,000 in net cash flows per month for 2009 according to estimates. The stock lost 15 cents to close at $2.00.
i2Telecom International, Inc. (OTCBB: ITUI), a developer of award-winning patented and innovative high-quality Voice-over-Internet Protocol (VoIP) products and services, continues to receive accolades for its cutting edge VoIP application MyGlobalTalk, as the company was featured by USA Today – the largest circulation daily newspaper in the nation- in a special report highlighting the advantages of VoIP, on Friday, December 5, 2008. The report provided an extensive review of the benefits of VoIP technologies, including the specific benefits which the service provides to long distance and mobile consumers, two user groups directly targeted by MyGlobalTalk. The report was distributed in 750,000 papers in five major metropolitan areas with a projected readership of approximately 1.8 million people, and featured i2Telecom CEO, Paul Arena, and MyGlobalTalk in an article entitled,Taking VoIP Mobile. The company also advertised 20 minutes of free calling time with MyGlobalTalk on the cover of the supplement, anticipating an opportunity to reach a particularly technology savvy audience. Shares ended the week at 5 cents, losing a penny.
Pacific Gold Corp. (OTCBB: PCFG), a company that engages in the identification, acquisition, exploration, and mining of mineral properties, took a major step towards full scale production this week, as they announced that their subsidiary, Nevada Rae Gold, has completed the first phase of plant modifications for the Black Rock Canyon Mine. The company expects to begin production of gold by Q1 of 2009, and anticipates producing 6,500 ounces -$5.3 million based on Friday’s closing price of gold- during the first full year of production. The stock gained half a penny to close just over $0.01.
Seaway Valley Capital Corporation (OTCBB: SWYV), a diversified holding company, announced that North Country Farms, LLC, which it co-founded with upstate New York investors and employees, has begun shipping North Country Farms Premium Pancake Mix and Pastry Flour. One of the area’s the dominant wholesale distributors in the food service business is distributing the product as part of its “Local Foods Initiative.†Additionally, Hackett’s, which is owned by Seaway Valley, is retailing the product at seven of its locations, and wholly owned subsidiary, Alteri Bakery, Inc., anticipates utilizing the product in its pastry line. The stock closed below one penny.
On the Wires: CEL-SCI Corporation (AMEX: CVM) has announced that Dr. Daniel Zimmerman, the Company’s Senior Vice President of Research, Cellular Immunology, and John Cipriano, the Company’s Senior Vice President of Regulatory Affairs, have agreed to become consultants to the Company on an as needed basis, thereby ending their full time employment with the Company. Mandalay Media, Inc. (OTCBB: MNDL) announced the resignation of Robert Zangrillo from its Board of Directors. Mr. Zangrillo has resigned to pursue other opportunities but plans to explore the possibility of working with the company in future endeavors.
