The major indices suffered sharp losses and essentially gave back the prior week’s gains, in which that the Dow, Nasdaq, S&P 500 and Russell 2000 surged 4.4%, 3.7%, 4.9% and 6.1%, respectively. The Dow lost 561 point for the week, bringing its year to date loss to 8.2%. The Nasdaq continued to be the worst performing index with a loss of 109 points, to increase its year to date loss to 13.1%. The S&P 500 also continued in a downward spiral with a loss 64 points and year to date loss of 9.3%. The Russell 2000 closed out the week with a 32 point loss and a year to date loss of 8.8%.
Wall Street finished a dismal week as investors grappled with fears about insurers of distressed mortgage-backed bonds and anxiety about the broader economy. The Institute of Supply Management’s non-manufacturing index, released ahead of schedule this week amid concerns that the information had been leaked, reported that the US service sector contracted in January for the first time since March 2003. The index plummeted to 44.6 from 53.2 in December, its largest monthly decline on record and significantly below the median expectations of economists polled by Reuters of 53.0. This was the lowest reading since October 2001 in the aftermath of the Sept 11 terrorist attacks. A reading below 50 indicates contraction. The farther the reading is from the midpoint of 50, the higher the degree of expansion or contraction. There have been only two occasions in the past ten years when the index has dipped into contractionary zone when the economy has not already been in a recession. That is not entirely surprising considering that this index reportedly captures roughly 80%-90% of the economy. This report, which typically doesn’t show such dramatic swings, sparked a broad-based wave of selling activity that was exacerbated by the specter of bond insurer downgrades and the residual impact on the financial sector, which plummeted 8.6%.
Corporate earnings reports did little to assuage investors’ fears. A better than expected fourth quarter earnings report from Disney and word that BHP Billiton raised its buyout offer for Rio Tinto to an eye-popping $147 billion gave the market a little spark on Wednesday. However the negativity persisted as technology bellwether Cisco said it experienced a slower order growth rate in January than the preceding months and warned its fiscal third quarter revenue growth rate would be in the neighborhood of 10% versus Wall Street’s expectation for growth closer to 15%. Also affecting the broader market were the rising oil prices tied to reports OPEC might cut output and renewed concerns about the potential for more writedowns at financial firms, weighed heavily on the action. In other developments, Congress passed a $168 billion stimulus bill that will be signed into law in the coming week.
What should investors look for in the upcoming week? Next week will not see the same level of earnings activity as over the past few weeks, but there will be a few companies reporting results with the ability to impact trading. Monday before the bell Hasbro (NYSE: HAS) and W.R. Berkley (NYSE: BER) will make announcements. Coca-Cola Ent (NYSE: CCE), General Motors (NYSE: GM), Marsh McLennan (NYSE: MMC), Masco (NYSE: MAS), Omnicom (NYSE: OMC), Qwest (NYSE: Q), Schering-Plough (NYSE: SGP) and Applied Materials (NASDAQ: AMAT) will all make announcements on Tuesday. Wednesday will be an important day for investors with Coca-Cola (NYSE: KO), Deere (NYSE: DE), Ingram Micro (NYSE: IM), Mohawk (NYSE: MHK), and Plains All Amer (NYSE: PAA) making announcements. Thursday will follow with a number of important earnings announcements coming from Comcast (NASDAQ: CMCSA), Daimler AG (NYSE: DAI), EnCana (NYSE: ECA), Goodyear Tire (NYSE: GT), Huntsman (NYSE: HUN), Ingersoll-Rand (NYSE: IR), Marriott (NYSE: MAR), Progress Energy (NYSE: PGN), and Express Scripts (NASDAQ: ESRX). Announcements from Abercrombie (NYSE: ANF), Campbell Soup (NYSE: CPB), Hormel Foods (NYSE: HRL) will close out the week on Friday before the bell.
Next week’s economic reports will take on added significance. The January Treasury Budget will be announced late in the afternoon on Tuesday. January Retail Sales will be announced before the open on Wednesday followed by mid-morning announcements of December Business Inventories and the Weekly Crude Inventories. The Weekly Initial Unemployment Claims and the December Trade Balance will be announced Thursday before the bell. January Import and Export Prices, February NY Empire State Index will be announced Friday morning. December Net Foreign Purchases and January Industrial Production and Capacity Utilization will be announced later on in the morning to finish the weekly earnings announcements. Federal Reserve Chairman Ben Bernanke is scheduled to testify before Congress on Thursday. Friday’s action, ahead of a holiday weekend, could be volatile as it marks the expiration of options.
The conference schedule will be very active next week. The Goldman Sachs Small/Mid-Cap Financials Services Symposium will take place on Monday in New York City, NY. The three day Lehman Brothers 25th Annual Industrial Select Conference is also scheduled for Monday and will take place in Miami Beach, Florida. Other conferences on Monday include the three day UBS Global Healthcare Services Conference, and the three day Bio CEO & and Investors Conference in New York. Hythiam, Inc. (NASDAQ: HYTM) will present on Tuesday at the UBS event at 3 p.m. Enzo Biochem (NYSE: ENZ) will present at the BIO CEO Conference on Monday at 11 a.m. The Avicena Group (OTCBB: AVGO) will present at 12:15 p.m. CytRx (NASDAQ: CYTR) will present later that day at 1:15 p.m. On Wednesday, Access Pharmaceuticals (OTCBB: ACCP) will present at 12:30 p.m. The Citigroup Retail Conference which will take place on Orlando Florida, Goldman Sachs’ AG Conference located in New York City, the two day Merrill Lynch Insurance Investors Conference in New York City, and the three day Independent Petroleum Association of America OGIS Small Cap Conference being held in Hollywood, Florida will all take place on Tuesday. Thursday’s Credit Suisse Group Software Conference in Boston and the two day Deutsche Bank Small and Mid-Cap Growth Conference in Naples, Florida taking place on Wednesday will close out the week.
Hythiam, Inc. (NASDAQ: HYTM), a healthcare services management company that offers solutions for patients suffering from alcoholism and substance dependencies, announced that it has entered into its first commercial reimbursement agreements with self-insured employer groups and unions that are part of a regional health plan in a state impacted by methamphetamine addiction. Reimbursement will be provided on a case rate basis for treatment and care management components of Hythiam’s PROMETA based disease management offering. The members covered by these payors represent a significant portion of this regional health plan’s population, and will serve as those initially being included in Hythiam’s disease management offering. The third-party payor market represents a substantial opportunity, as it allows the company to leverage its disease management platform without significant additional investment in infrastructure. The stock rose 6 cents, to finish the week at $2.66.
Multiband Corporation (NASDAQ: MBND), the nation’s largest DIRECTV Master System Operator for Multiple Dwelling Units, announced that it has completed the acquisition of a 51% interest in Michigan Microtech, Inc., a Michigan corporation, formerly a wholly owned DirecTECH Holding Company, Inc., a Delaware corporation, subsidiary, for approximately $6.1 million, through the issuance of approximately 1.5 million shares of Multiband’s restricted common stock and a long term promissory note for approximately $2.25 million. The company intends to consolidate Michigan’s operating results beginning in March 2008. Michigan had 2007 unaudited revenue for the first eleven months of its fiscal year of $23.5 million and was profitable. Based upon its past performance, the acquisition will also immediately improve the company’s operating results, and represents the first phase of what the company hopes is the acquisition of all of DirecTECH’s operations. Michigan has significant operations in the Upper Midwest and the combination with Multiband should enhance revenue growth and drive operating efficiencies. Shares fell 3 cents, to finish the week at $2.19.
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 that it has appointed Makhoakhoa Industrial and Energy Group Ltd as its exclusive Value Added Reseller for South Africa. This appointment marks Telkonet’s entry into the South African market, with the partnership reflecting the significant market opportunities for energy efficiency initiatives in the region, against the background of massive power shortages and increasingly routine load shedding. A well-established provider of energy and communications systems, Mak Energy will represent Telkonet’s integrated portfolio of cutting-edge powerline communications and energy management solutions. The stock fell 15 cents for the week, to close at $0.93.
Generex Biotechnology Corporation (NASDAQ: GNBT), the leader in drug delivery for metabolic diseases through the inner lining of the mouth, announced that an Investigators’ Meeting was held in St. Petersburg, Russia for the launch of the company’s global Phase III study for Generex Oral-lyn. The Investigators’ Meeting was attended by more than 150 clinicians and healthcare professionals. The enthusiasm evidenced by the large attendance in St. Petersburg illustrates the European and East European medical community’s interest in this trial. The company is likely to announce additional locations where testing will occur in the coming months. The stock fell 3 cents for the week, to close at $1.33.
Rio Vista Energy Partners L.P. (NASDAQ: RVEP), a company that transports liquefied petroleum gas, filed form 8-K/A with the Securities and Exchange Commission, announced the completion of its acquisition of certain assets from GM Oil Properties Inc. and Penny Petroleum Corporation consisting of the real and personal property interests of GM Oil and Penny in certain oil and gas properties located in Haskell, McIntosh and Pittsburg counties in Oklahoma and 100% of outstanding capital stock of MV Pipeline Company and 100% of the outstanding membership interests of GO LLC. The stock rose $1.57 for the week, to close at $15.31.
Calypte Biomedical Corporation (OTCBB: CBMC), a developer, manufacturer and marketer of HIV diagnostic tests, announced the first sale of its Aware HIV-1/2 OMT rapid oral fluid test in India. The tests were purchased by one of the paramilitary forces of the Government of India. This sale marks a major milestone for the company as its first sale in India and as an entry into the Indian governmental market. The Aware oral fluid test is ideally suited for large institutions such as India’s paramilitary forces which need to protect the welfare of their workforces. The company believes that the safety and ease of use of non-invasive tests such as Aware HIV-1/2 OMT will be instrumental in containing costs and improving efficiencies as India scales up its testing initiatives. Calypte’s Aware HIV-1/2 OMT test is the first and currently only oral fluid test approved in India. The stock remained unchanged at $0.13 for the week.
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 terminated the distribution agreement with its European distributor Elumina Iberica as a result of multiple breaches, including non-payment, under the distribution agreement. ProLink will support the installed base in the region until a new distributor is appointed. The company has had preliminary discussions with parties interested in distributing the ProLink system in Europe. The company also announced that it has commenced litigation against Elumina Iberica. Shares rose 3 cents for the week, to close at $0.63.
Volume Alert: Shares of Home Solutions of America, Inc. (OTC: HSOA), a company that provides restoration, construction, and interior services to commercial and residential properties, jumped 33% on Friday on more than three times average volume after the company in a regulatory filing said it had settled its initial claim on the Vista Royale Condominiums component of the Florida Insurance Guarantee Association construction recovery claim, for $35 million. After deduction for monies previously paid as well as payments to the Vista Homeowner’s Association, certain legal fees and payments made to select subcontractors, the company received approximately $14 million. The company has two additional unresolved claims with FIGA for work completed on the Delmar Condominiums and Tropic Villa Condominiums in Florida which the company continues to pursue. The company also entered into a Forbearance Agreement with its lenders under its Revolving Credit Facility, Term Loan and Letter of Credit Facility. Under the Forbearance Agreement, the company paid $10.1 million in principal from the FIGA proceeds, which reduced the outstanding amounts due under the facilities to $39.9 million, in exchange for the lenders agreeing to forego taking any action permitted under the original credit facility until July 1, 2008. Shares increased by 13 cents, to finish the week at $0.68.
Collexis Holdings, Inc. (OTCBB: CLXS), a leading developer of high definition search and knowledge discovery software, announced that the company has acquired Lawriter LLC, which owns nationally acclaimed legal research service Casemaker. Total consideration for the acquisition was $9 million, including cash, common stock priced at $0.75 per share and future financial obligations, plus an earnout arrangement. Casemaker is an affordable legal information option for government agencies, law firms, law schools, judges, and lawyers throughout the United States. The synergy of Lawriter’s Casemaker legal data and Collexis technologies will provide users with enhanced avenues of research. After its acquisition, Lawriter Inc. announced that it has acquired an additional legal library consisting of 3.5 million documents to add to Casemaker. This expansion will provide increased coverage of federal and state court cases. The addition of this impressive library to the current 7.5 million document library of Casemaker will make it one of the largest legal libraries in the small to medium size legal market segment. Shares fell 2 cents to close the week at $0.43.
Global Clean Energy Holdings (OTC: MLSC), announced that a market maker has recently submitted to FINRA the materials necessary under Rule 15c2-11(a)(5) of the Securities Exchange Act of 1934 to allow its shares of common stock to become eligible for trading on the OTC Bulletin Board. The company believes that a listing on the Bulletin Board, when approved, will increase interest among the investment community in the company’s stock. Currently, the company’s common stock trades on the Pink Sheets. The company also announced that it has changed its name to Global Clean Energy Holdings, Inc. The company’s common stock will continue to trade on the Pink Sheets under its current ticker symbol MLSC, until it is relisted on the OTC Bulletin Board. The new name reflects the company’s focus in the development of non-food based feedstocks used for the production of biofuels. The stock fell a penny for the week, to close at $0.025.
Cord Blood America, Inc. (OTCBB: CBAI), the umbilical cord blood stem cell preservation company focused on bringing the life saving potential of stem cells to families nationwide and internationally, announced that it believes the trend established in 2007 for states to legislate that consumers should be made aware of the advantages of umbilical cord blood storage will continue in 2008 and beyond. The company looks forward to more states requiring their health department to inform families about the benefits of umbilical cord blood storage, which is safe and non-controversial. Shares remained unchanged, closing at $0.016.
VoIP, Inc. (OTCBB: VOIC), a global provider of advanced patented Voice Over Internet Protocol communications and services, announced that it has launched RazrClick, a PPC advertisement network utilizing its proprietor patents. RazrClick will focus on gaining market share in the rapidly growing Pay-Per-Call advertising market. With Pay-Per-Call, advertisers get the power of the Web while still connecting with customers on the phone. Associated with that decision, it suspended all of its telecommunications network operations including all current revenue generating operations. The company also reduced its workforce by 25 persons, eliminating most of its network operations and software engineering staff. The stock remained unchanged at $0.01 for the week.
On the Wires: Michael S. Browne resigned as Chief Financial Officer and Chief Operating Officer of ProLink Holdings Corp. (OTCBB: PLKH), the world’s leading provider of Global Positioning Satellite golf course management systems and on-course advertising, in order to pursue other opportunities. Xcorporeal, Inc. (AMEX: XCR), a medical device company that is developing an extra-corporeal platform of products that might be used in devices to replace the function of various human organs, announced the appointment of Daniel Goldberger as its Chief Executive Officer.