01/02/2007
VOLUME 270
Companies featured in the current edition of the newsletter: ADSX, LANW, LNXGF, MLTC, SFP, VOII
The week ended in an upbeat fashion which was appropriate in what was a banner year for the broader stock market, even if the smallest companies did not participate. Favorable seasonal factors helped all of the indexes extend their gains. The Dow ended the week up 120 points adding its year to date increase to 16.3%. The S&P 500 ended the week up 7, increasing its year to date gain to 13.6%. The Nasdaq closed the week up 14 points and rose 9.5% for the year, while the Russell 2000 closed the up 6 points and was once again the best-performing index for the year, rising 17%.
The market did get a mid-week push from strong news on the housing front. The report last Wednesday showed that new homes sales were up 3.4% in November and up 5.8% in total from the year prior. The housing data supported the hopes of the housing market bottoming. Thursday’s news also involved the housing market with good news coming from the existing home sales reports. Existing home sales were up 0.6% last month, following a 0.5% increase in October. In addition to the strong housing news, consumer confidence rose. While concerns of a January market consolidation are still looming, supportive economic data, a Federal Reserve that remains on “hold” and solid corporate results could support further gains for stocks. Note that stocks have risen in the third year of a presidential cycle every year except once since 1960.
What should investors look for in the upcoming week? It will be another week for limited announcements with only a few notable names reporting earnings. Announcement activity is limited to the end of the week with Constellation Brands (NYSE: STZ) and agricultural technology company Monsanto (NYSE: MON) announcing earnings before the bell on Thursday.
Next week’s economic news and data will be light again due to the New Year’s holiday. All markets were closed Monday in recognition of New Year’s and Tuesday the stock market is closed in honor of former President Gerald Ford. The news for next week will be light, but investors will likely be interested in Fed chairman Bernanke’s talk to economists in Chicago on Friday. Investors can expect to see mid-morning announcements for November Construction Spending and the December ISM Index Wednesday. The FOMC Minutes from December 12th will be announced shortly before the market close and December Auto and Truck Sales will be announced following the close Wednesday. Thursday’s announcements include the weekly Initial Unemployment Claims before the market opens as well as November Factory Orders and the December ISM Services Index shortly after trading commences. The December Unemployment Report is likely to have the greatest impact on the market when it is released on Friday pre-market.
There are no conferences scheduled for the upcoming week.
Small appliance maker Salton, Inc. (NYSE: SFP), said last week that it had issued 701,600 shares of common stock to Harbinger Capital Partners Master Fund I, Ltd. for an aggregate purchase price of $1,754,000 or $2.50 per share and used those proceeds to repurchase from Harbinger $1,754,000 of the company’s outstanding senior subordinated notes due 2008. The company granted Harbinger certain registration rights in connection with the stock issuance. Shares of SFP are likely to remain volatile as the battle between Harbinger and Nacco Industries continues for peer company Applica. Last week, both companies sweetened their bid for Applica to $7.50 per share, although that stock closed Friday at $7.99 suggesting that investors anticipate the company receiving a higher offer. Once that transaction is awarded to one of the bidders, they will likely turn their attention to Salton as a logical acquisition candidate since a combination of Salton and Applica would enable both companies to eliminate significant expenses as the small appliance industry consolidates. Shares of Salton ended the week up $0.10 at $2.25.
VeriChip Corporation, a subsidiary of Applied Digital (NASDAQ: ADSX), filed an amended registration statement (S-1) last week, in connection with its planned IPO of the unit. The amendment was the company’s fourth to the registration statement. The SEC will have to review the registration prior to declaring the offering effective. While the revised statement reflects the significant progress that VeriChip has made since the prior S-1 in late June, the uncertainty surrounding the timing, size and pricing of such an IPO appears to continue to overhang shares of ADSX. Shares ended the week at $1.81, down 7 cents.
Volume Alert: Shares of junior mining exploration company Linux Gold Corp. (OTCBB: LNXGF) rose 8.7% Friday on more than three times average volume after the company said last week that preliminary results of the 2006 exploration program indicate two new and significant gold anomalies were located by geochemical sampling of soils and rocks, one at the head of the Kiwalik River and the other on the lower reach of Quartz Creek. Limited core drilling verified significant base metal mineralization at the Saddle Prospect and indicate gold mineralization at the Quartz Pluton Prospect. Pan samples of alluvial deposits at Dime Creek revealed high-grade placer gold and platinum concentrations, as well, as uranium at the head of Quartz Creek. The results of the 2006 exploration program suggest the potential to locate important deposits of precious and base metals on the Granite Mountain and Dime Creek properties. The preliminary results of the 2006 exploration program indicate two new and significant gold anomalies were located by geochemical sampling of soils and rocks, one at the head of the Kiwalik River and the other on the lower reach of Quartz Creek. Limited core drilling verified significant base metal mineralization at the Saddle Prospect and indicate gold mineralization at the Quartz Pluton Prospect. Pan samples of alluvial deposits at Dime Creek revealed high-grade placer gold and platinum concentrations, as well, as uranium at the head of Quartz Creek. A new gold prospect was found in exposures of oxidized veins within intensely altered plutonic rocks along Quartz Creek at the north end of the claims. Significant molybdenum-uranium mineralization was found in silicified, syenite breccia at the Peace River Prospect where rock samples gave concentrations of molybdenum. The results of the 2006 exploration program suggest the potential to locate important deposits of precious and base metals on the Granite Mountain and Dime Creek properties. Note that the company’s President recently purchased 100,000 shares in the open market. Shares ended the week up $0.03 at $0.25.
VoiceOne Communications, LLC, a subsidiary of VoIP, Inc. (OTCBB: VOII), a leading provider of Voice over Internet Protocol (VoIP) communications solutions for service providers, resellers and consumers, announced that company is providing its patented Click-to-Call technology to power NationwideCash, Inc.’s online customer communications. The company said that after seeing Google use the technology it began to appreciate the potential for using Click-to-Call to as a way to enhance the company’s services. As a leading provider of payday loans, Nationwidecash.com will now be able to increase inbound call traffic and enhance the customer experience. Nationwidecash.com is working with VoiceOne(TM) to improve interaction with its clients and improve e-commerce results by giving consumers the ability to click on one of the icons placed on the nationwidecash.com web site and immediately receive a call from a customer service operator who will respond to their inquiry. VoiceOne will receive a fee each time a user clicks on the icon. The stock ended the week down a penny at $0.30.
Language Access Network (OTC: LANW), a leader in video language interpretation services, announced the company’s Martti™ service is now available at The Ohio State University Medical Center’s Thomas E. Rardin Family Practice Center. Martti will give patients and health care providers access to interpretation services in over 150 languages, including American Sign Language. The availability of the Martti system at the Rardin Family Practice Center is part of Ohio State’s system-wide implementation of the video interpretation service. Patients and health care providers in the Emergency Department at OSU University Hospital have used the system since 2005 and the service was extended to the Labor and Delivery Department at Ohio State’s Medical Center in May of 2006. As the OSU health system updates its infrastructure to accommodate video interpretation, Language Access Network provides audio-only interpretation to 57 departments within the medical center. The Thomas E. Rardin Family Practice Center uses approximately 484 hours of interpretation services annually. The average Martti interpretation lasts approximately 10 minutes and Language Access Network charges per minute for its use. The stock ended the week down $0.20 at $3.30.
Melt, Inc. (OTCBB: MLTC), the owner, operator and franchisor of quick service restaurants operating under the name “Melt Gelato & Crepe Cafe,” continued the company’s major expansion plan with the opening of a new store in St. Louis, Missouri. The new location is the first franchisee-owned location for Melt in the Midwest. The company currently operates in four states and is scheduled to further expand into California, where most of its stores are currently located and to open new locations in Arizona, Nevada, Florida, Massachusetts, Missouri, New Jersey, Pennsylvania, New York, Connecticut, Illinois and Washington in 2007. The stock ended the week at $0.81, up 4 cents.