Companies featured in this edition of the newsletter: ACCP, ACTC, AIDO, ECOI, GNBT, ITUI, MWAV, PLKH
Investors once again displayed their resiliency in the face of difficult news this week, as negative developments continued to roll in but were mostly taken in stride. All of the major indices reported slight declines this week, but considering the spate of bad news rolling through Wall St, it can be seen as a victory of sorts that markets didn’t decline more precipitously. All told, the Dow ended down 76 points, closing at 8077, down 0.9% on the week and 8.8% on the year-its worst January performance on record. The Nasdaq almost closed even for the week, declining less than one point, but is still down 6.4% on the year. The S&P 500 and Russell 2000 also posted modest losses, closing down 0.7% and 0.2% respectively, bringing their YTD losses to 8.6% and 11.2%.
Investors shook off negative developments on several fronts this week to ease markets into negative territory after a week that could have had much more dire results under worse psychology. Lower than expected earnings reports and cautious guidance from a number of industry leaders coupled with announcements that more layoffs were in store predominated corporate news this week. Caterpillar announced that it would be cutting 20,000 jobs following an announcement that it was lowering fiscal year ’09 earnings per share guidance to $2.50, well short of consensus estimates of $4.50, amid expectations that recessionary conditions would persist for most of the world throughout the year. Other prominent companies reporting plans to pare their workforces included General Motors, Sprint Nextel, Pfizer, Home Depot and Target. It wasn’t all bad news on the corporate front however, as Pfizer announced plans to acquire Wyeth for $68 billion in a show of strength that signaled that there were some companies willing to use their balance sheets.
Economic news was mixed, as there were some positive developments earlier in the week which gave way to some decidedly negative news as the week wound down, with the common theme being relative apathy once again. Existing home sales rose 6.5% in December versus November, and leading indicators were up 0.3% for December, but most likely due to growth in the money supply, essentially rendering the increase void. Median home prices for 2008 fell 9.3%, while consumer confidence hit a record low and continuing claims for jobless benefits hit an all time high. Among the other developments on the week was the announcement that Q4 GDP declined by 3.8%-significantly less than the 5.5% estimate, but still far from reason to celebrate.
What should investors look for this week? Keep an eye on developments in the Senate regarding the passage of the $819 billion stimulus package which passed the House last week. The Senate is expected to vote on the stimulus proposal sometime this week, the results of which could have major implications for the markets.
Another busy week for earnings is on tap with Mattel (NYSE: MAT) and Sysco (NYSE: SYY) releasing before the bell Monday followed by AFLAC (NYSE: AFL) and Pitney Bowes (NYSE: PBI) after the close. On Tuesday look for reports from Archer-Daniels (NYSE:ADM), BP (NYSE: BP), Dow Chemical (NYSE: DOW), Merck (NYSE: MRK), Motorola (NYSE: MOT), Northrop Grumman (NYSE: NOC), PNC Bank (NYSE: PNC), Schering-Plough (NYSE: SGP), and UPS (NYSE: UPS). MetLife (NYSE: MET) and Walt Disney (NYSE: DIS) report after the close. Expect reports from Kraft Foods (NYSE: KFT), PepsiAmericas (NYSE: PAS), Phillip Morris (NYSE: PM), Time Warner (NYSE: TWX) and Time Warner Cable (NYSE: TWC) Wednesday morning. After the close look for reports from Cisco Systems (NASDAQ: CSCO), News Corp (NYSE: NWS), Prudential (NYSE: PRU), Sunoco (NYSE: SUN), and Visa (NYSE: V). Thursday morning expect results from CIGNA (NYSE: CI), Kellogg (NYSE: K) and Mastercard (NYSE: MA). Hartford Financial (NYSE: HIG) and Nationwide (NYSE: NFS) report after the bell.
Economic indicators for the week begin with December Personal Income and Personal Spending Figures due out at 8:30a.m. Monday, along with December Construction Spending and January’s ISM Index at 10:00 a.m. On Tuesday, look for December pending home sales at 10:00a.m. and January Auto and Truck Sales at 2:00p.m. January ADP Employment Change will be released at 8:15a.m. Wednesday, along with January ISM Services at 10:00a.m. and Weekly Crude Inventories at 10:30a.m. On Thursday, expect weekly initial jobless claims, preliminary Q4 Productivity estimates and Q4 Unit Labor Costs at 8:30a.m. followed by December Factory Orders at 10:00 a.m. On Friday, all eyes will be on the Employment Report for January, scheduled for release at 8:30 a.m. followed by Consumer Credit for December at 2:00p.m.
Conferences for the week kick off with the two day JP Morgan Global high Yield and Leveraged Finance Conference in Miami. The week long Credit Suisse 2009 Energy Summit begins Monday in Vail. The two-day 30th annual Cowan & Co. Annual Aerospace/Defense Conference starts Wednesday in New York.
New 52-week High: Shares of stem cell developer Advanced Cell Technology (OTC: ACTC) broke out to a new 52-week high last week on nearly 3 times average volume, as stem cell companies continue to remain in focus. We note, though, that ACTC has significantly outperformed many of its peers, as shares have surged 700% this year. By comparison, Geron has gained 58%, while Stem Cells has risen 97%. However, while each of those two companies has returned to trading at levels last seen in 2007, ACTC still trades at less than half of the price it traded for during the majority of that year. Shares ended the week at $0.24, up 4 cents.
VoIp company i2Telecom International, Inc. (OTCBB: ITUI) continues to receive accolades for its highly touted MyGlobalTalk application, as it was named “2008 Product of the Year”, by Internet Telephony Magazine, a leading publication in the field of VoIP services. This is i2Telecom’s ninth award in recent years after receiving Product of the Year Awards in 2004 and 2007 and the Service Provider of the Year Award in 2005. MyGlobalTalk allows users to call any telephone in the world directly from their cell phones using VoIP technology, for a fraction of the cost of traditional long distance services. In related news, the company also announced last week that DiamondPhone, LLC, a network targeted towards the medical office community, will begin hosting ITUI’s internet telephone technology, greatly enhancing the value offered to its customers. DiamondPhone estimates that at least 50,000 lines will utilize its proprietary telephony application by the end of this year’s third quarter. Additionally, DiamondPhone expects to finalize government-subsidized agreements with a number of medical offices for the provision of high-quality phone systems and telecommunications services. The announcement comes following two years of research by DiamondPhone into the VoIP space, who concluded that i2Telecom has, “by far, the most impressive combination of services and backbone for the medical office community,” according to the President of DiamondPhone. The partnership should serve to increase revenue streams for both companies, in addition to providing a significant value proposition for those in the medical community choosing to adopt DiamondPhone’s services featuring ITUI’s VoIP capabilities. The stock gained two cents to close at $0.06 on the week.
Access Pharmaceuticals, Inc. (OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, announced the results of a recent study supporting the efficacy of its proprietary humanized monoclonal antibody (mAb), a class of drug garnering significant attention from big pharma in the form of several large buyouts done in pre-clinical stages. mAb’s work by directly targeting a tumor’s ability to grow itself by inhibiting the body from supplying blood to the cancerous growth. The results of the study suggest that Access’ mAb candidate, Angiolix, attacks tumors through a second mechanism, which other drugs do not, by selectively attacking a protein target called lactahedrin which is found only in solid tumors. This direct protein targeting leads to a more highly concentrated treatment that eradicates proteins specifically ass ociated with tumors and not healthy tissues, which leads to significantly decreased side effects when compared to Avastin, a leading mAb candidate being developed by a major pharmaceutical company. The study also demonstrated that Angiolix is as effective as Avastin both as a standalone treatment for cancer, and in combination with chemotherapy which greatly enhanced both drug’s anti tumor activities. The study suggests that Angiolix may be as effective as its big pharma counterpart, but with significantly less debilitating side effects. Shares ended the week at $0.90, up eight cents.
Green St. Energy (OTCBB: MWAV), a company developing a portfolio of renewable wind energy assets, continues to develop its wind farm operations in the Tehachapi, California area, as the company has announced that it has entered into an option agreement which gives it the right to purchase an additional 4,840 acres of land in the prolific wind producing region. The announcement follows news that the company’s previously acquired 160 acre tract of land in the area was given a power capacity factor rating of “Excellent” by a leading global energy assessment firm, suggesting that the acreage will provide especially favorable wind shear to be used to generate electricity. Green St. plans to move aggressively towards obtaining the necessary permits to allow wind energy production on its newly acquired acreage and expects resistance to be at a minimum due to a favorable legislative environment and the existing infrastructure of transmission lines in the region, in addition to the increased awareness amongst investors regarding the need for alternative energy sources which could serve to increase access to financing. Shares gained $0.20 to end the week at $0.50.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) participated in the Arab Health Congress last week through its Middle Eastern branch office, Generex MENA (Middle East and Northern Africa). The Arab Health exhibition and congress is the industry’s premier event for Middle Eastern markets, bringing healthcare manufacturers, wholesalers, dealers and distributors together with some of the most important and influential decision makers in the Arab world. Established over three decades ago, the exhibition is generally viewed as a “must attend” global event on the healthcare calendar and offers an ideal environment for companies to showcase their products in one of the fastest growing and most lucrative healthcare markets in the world, estimated at near $100 billion and boasting 16% annual growth. Generex MENA is responsible for over 20 countries and distributors, who have already begun commercializing their over the counter product line; of those countries, eight are actively pursuing regulatory approval for Generex Oral-lyn, the Company’s proprietary oral insulin spray product, and have filed necessary dossiers with their respective regulatory authorities. Shares lost a penny on the week to close at $0.33.
Advanced ID Corp (OTCBB: AIDO), a complete solutions provider in the RFID market with a focus on the tire management industry, has begun to work with several major Brazilian tire and portable gas tank manufacturers through their subsidiary Advanced ID Brazil to incorporate AIDO’s RFID technology into their inventory management systems, according to reports in local publications. In addition to providing fleet management solutions for the tire industry and gas tank inventory management for the gas industry, the company is currently marketing document control and pharmaceutical RFID solutions in response to significant industry demand which the company intends to meet throughout South America. Because Advanced ID Brazil is a full system integrator with significant software capabilities, the company is offering complete solutions in all of its selected markets. Shares gained a penny to close at $0.08.
Prolink Holdings Corp. (OTCBB: PLKH), the world’s leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced that it has greatly expanded its domestic base of installed courses while growing its international presence and entering partnerships with powerful advertising allies in 2008. The company demonstrated sales growth of 23% in ’08, installing their system at a record 125 domestic golf courses, despite operating in an extremely difficult environment. In addition to the record domestic sales posted in ’08, PLKH entered into new partnerships with distributors in key global territories- including Spain, France, South America, the Middle East, India, Southeast Asia and Australasia, expanding its operations to include partnerships spanning six continents. The company expects to see increased ad revenue for 2009 due to newly formed partnerships with several major advertising sales networks both domestically and abroad, including National Advertising Partners, a Fox-owned sales unit representing sports networks across the US, and Neo Advertising, Europe’s leading provider of digital media solutions, who will represent Prolink in Spain and the UK. Expectations for 2009 are high, as the company recently announced the launch of its revolutionary next generation operating system, Prolink Touch, the golf industry’s first cart mounted touch screen GPS course management system. Golfers will be able to access richly detailed flyover views of each hole from any location to assist their shot-making via the touch of ultra-bright screens. Advertisers will benefit as well, thanks to the Touch expansive memory which can hold up to 7,500 ads in a variety of shapes and sizes that will be rotated continuously across the new proprietary custom interface. This new top of the line product offering serves to expand Prolink’s position as a leader in the golf course management industry, as they now are able to provide a full product line at every price point needed in the golf industry worldwide, from local public courses to world renowned resorts. Shares gained a penny on the week to close at $0.09.
ecoSolutions Intl (OTCBB: ECOI), a developer of environmentally friendly consumer materials, announced that it has signed a five year licensing agreement with Hymopack Ltd to exclusively manufacture and sell bags in Canada containing an ecoSolutions proprietary ecoPlastic technology. Hymopack is Canada’s largest manufacturer of plastic bags and supplies many of Canada’s leading retailers including Wal-Mart, McDonalds, Sears, Best Buy and others. The ecoPlastic technology licensed to Hymopack significantly reduces the amount of polyethylene needed to produce plastic bags, thus lowering the environmental impact of the bag while still maintaining its recyclable properties. The stock lost $0.13 to end the week at $0.35.
