Companies featured in this edition of the newsletter: ACCP, CBAI, CVM, EMDH, ICLK, IWEB, SIHI, SVUL
Markets resumed their sell off for the fourth consecutive week as trepidation surrounding upcoming earnings reports and continued concerns regarding economic recovery turned many investors into cautious spectators. All told, the Dow ended the week down 1.6%, surrendering 134 points to close at 8146, down 7.2% on the year. The Nasdaq lost 2.3% on the week to close at 1756, trimming its YTD gains to 11.6% while the S&P 500 and Russell 2000 fell by 1.9% and 3.3% respectively, bringing their yearly losses to 2.6% and 3.7%.
Economic concerns once again dominated investors’ attention this week as every positive development seemed to be offset by a negative, leaving investors wondering as to the overall state of recovery. Initial jobless claims came in well below consensus estimates at 565,000, versus expectations of 603,000, but were offset by the belief that the surge in employment was caused by the July Fourth holiday; the good news was further tempered by the recent record high continuing claims of 6.8 million posted two weeks prior. The economic picture was further clouded by the ISM Services report which came in better than expected at 47%, but was regarded with some caution as a number below 50% indicates that the sector is continuing to contract, albeit more slowly. Disappointing consumer sentiment numbers coupled with weak same store sales from retailers added further to the murky economic picture.
Corporate developments provided no clearer indication, as the headline for the week was Alcoa (NYSE: AA) reporting earnings, which again provided room for multiple interpretations. While earnings managed to beat expectations, results were far from encouraging as the company failed to turn a profit and added to the uncertainty regarding the prospects for a recovery by saying that it planned to cut capital expenditures by 50% for 2010, after already cutting them by 50% for 2009. The stock gained 7% following the report as a result of the better than expected quarterly performance, but surrendered those gains throughout the week to close down 5.3%.
What should investors look for this week? Attention will be squarely focused on earnings, as quarterly results are due from a number of notable companies with market moving potential. Things kick off on Tuesday with Goldman Sachs (NYSE: GS) and Johnson & Johnson (NYSE: JNJ) reporting before the bell and Intel (NASDAQ: INTC) and YUM! Brands (NYSE: YUM) releasing after the close. On Wednesday, expect reports from Abbott Labs (NYSE: ABT) and Texas Industries (NYSE: TXI). Thursday will be a busy day with Baxter (NYSE: BAX) Blackrock (NYSE: BLK), Harley-Davidson (NYSE: HOG) JP Morgan Chase (NYSE:JPM), Marriott (NYSE: MAR), and Nokia (NYSE: NOK) reporting before the bell, and Google (NASDAQ: GOOG) and IBM (NYSE: IBM) reporting after the close. On Friday look for results from Bank of America (NYSE: BAC), Citigroup (NYSE: C), General Electric (NYSE: GE), and Mattel (NYSE: MAT).
Economic releases for the week begin with June Treasury Budget data due out at 2:00pm Monday, followed on Tuesday by PPI, Core PPI and Retail Sales, all for June, released together at 8:30 am with Business Inventories for May due out at 10:00 am that same day. On Wednesday, look for CPI and Core CPI for June along with the Empire Manufacturing index data for July at 8:30 am followed by Capacity Utilization and Industrial Production for June at 9:15am, weekly Crude Inventories at 10:30 am and FOMC Minutes from the June 24th meeting at 2:00pm. On Thursday, expect Weekly Initial Jobless Claims due out at 8:30am followed by Net Long-Term TIC Flows for May at 9:00am and Philadelphia Fed data for July at 10:00am. The week rounds out with Building Permits and Housing Starts for June at 8:30am Friday.
Conference schedules will be light in advance of earnings season, but Oppenheimer will host its two day Consumer, Gaming, Lodging & Leisure Conference in Boston beginning on Tuesday, while Dell will hold an Analyst meeting in Austin, TX which also begins on Tuesday.
Volume Alert: Shares of internet advertising network interCLICK, Inc. (OTCBB: ICLK), surged 29% on almost ten times average volume last week, perhaps as a result of the beginning of earnings season. The company has had a history of exceeding expectations and increasing guidance. On June 4th, the company said it expects annual revenue to exceed $40 million, which would represent an increase of at least 80% compared to 2008 revenue of $22.4 million. Previously, ICLK expected 2009 full-year revenue to exceed $36 million, which would represent 60% year-over-year revenue growth. interCLICK increased its forecast due to strong demand from advertisers shifting budget towards ROI centric solutions. Full-year gross margin is expected to be at or above the first quarter 2009 level of 47%. Shares gained thirty two cents on the week to close at $1.44, the highest level since mid-October.
CEL-SCI Corporation (AMEX: CVM), a late stage cancer immunotherapy company and vaccine developer, released a letter to shareholders last week highlighting its activities over the past quarter and providing insight into its strategy looking forward. The letter outlined the company’s recently redefined corporate structure, which now includes three separate business units comprised of a vaccines/treatment division, a contract manufacturing operation and a unit focusing on the company’s late stage cancer immunotherapy, Multikine. The company’s efforts relating to prevention and treatment of H1N1 swine flu and related viruses comprises the vaccines/treatment division, which is developing the company’s L.E.A.P.S. technology to combat the spread of swine flu and other variants which have been forecast by some to return in a more virulent form later this year. The contract manufacturing operation hinges on CVM’s recently completed cold fill manufacturing facility in Baltimore, MD which was built to manufacture Multikine for its upcoming Phase III trials, and will be readied for contract manufacturing within the next three months; once ready, the company said it will be the only facility offering cold fill capabilities for contract manufacturing. The third unit outlined in the letter deals with oncology and Multikine, the company’s lead product candidate which has been shown in published studies to be non-toxic, to increase survival by 33%, and to eliminate the tumor in 12% of the patients after only a 3-week treatment. The letter further outlined plans to ensure that its upcoming Phase III trial of Multikine will meet with FDA standards. In related news last week, the company announced that Dr. Eyal Talor, CVM’s Senior Vice President of Research and Manufacturing, was invited to present to the NIH, NCI’s Clinical Center and the Center for Human Immunology, NERD (New Research and Development) Seminar Series on Friday, July 10. Dr. Talor discussed Multikine’s immunotherapy clinical program for cancer, the unique mechanism of action of Multikine (published in the Journal of Clinical Oncology) and the way Multikine imparts the patient’s own immune response with the ability to mount a robust anti-tumor immune response against the tumor. Shares gained a penny on the week to close at $0.39
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 last week that thiarabine, a next generation nucleoside analogue that Access has licensed from Southern Research for the treatment of hematological cancers, has demonstrated remarkable efficacy for prevention and treatment of rheumatoid arthritis (RA) in preclinical animal models. Thiarabine treated subjects demonstrated a broad inhibition of RA, with reduction of both inflammatory and erosive disease parameters, as well as protection from loss of cartilage. The study further demonstrated statistically significant anti-arthritic efficacy comparable to that of methotrexate, a commonly used clinical drug for RA treatment. As a result of these compelling results, ACCP plans to expand its development focus for thiarabine to include RA treatments as well as hematological cancers. Thiarabine has been the subject of two Phase 1/2 solid tumor trials and was shown to have significant anti-tumor activity in addition to its potential applications in treating RA; the company is now working with leukemia and lymphoma specialists to initiate additional Phase 2 clinical trials in acute myeloid leukemia (AML), acute lymphocytic leukemia (ALL), and is actively seeking co-development partners for all applications of Thiarabine. Shares lost twenty two cents on the week to close at $1.85.
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 it has entered into a definitive agreement with a health care fund under which CBAI has secured a $7.5 million investment capital commitment. The funds may be drawn down through the sale of Series A Preferred Stock once a registration statement is filed and declared effective under the Securities Act of 1933. Proceeds from the investment are anticipated to be used to fund new stem cell initiatives, potential acquisitions, and working capital needs. The company expects that when coupled with internally generated revenues, this latest financing should be sufficient to fund operations into the foreseeable future. In related news last week, CBAI also announced that it has signed a lease for a 17,000 square foot building in Las Vegas, Nevada, for a state-of-the-art laboratory for the storage of multiple stem cell products including umbilical cord blood stem cells. The new state-of-the-art lab will be built within a mile of the nation’s fifth largest airport, providing easy access and significantly cutting shipping costs. The newly acquired laboratory space is expected to greatly enhance CBAI’s future capabilities as it will enhance scientific expertise supporting future research and product development, in addition to making the company eligible for stem cell research grants. The company has hired noted immunologist Dr. Geoffrey John O’Neill as its new Laboratory Director and Brian Pockett as Vice President of Laboratory Operations. Dr. O’Neill has over 75 publications to his credit while Mr. Pockett has more than 30 years professional experience in operations, business development, marketing, sales and financial and grant development. Shares ended the week unchanged at less than a penny despite trading abnormally high volume.
Emerging Media Holdings (OTCBB: EMDH), the U.S. parent company for Media Alianta and Analiticmedia-Grup (AMG) subsidiaries, one of Eastern Europe’s top television advertising and production companies, announced last week that it has completed the acquisition of a 60% interest in privately-held Genesis International, a rapidly growing Eastern European infrastructure company, for $4.8 million. Genesis had unaudited revenue for the 12 months ended December 31, 2008 of $18.5 million, and is expected to be fully integrated into EMDH’s operations by the end of its fiscal quarter ended September 30, 2009. Genesis is one of Romania’s fastest growing infrastructure companies, and the acquisition is expected to reflect immediate gains in sales, assets and earnings, as Genesis has a backlog of work totaling $29.9 million as of June 30, 2009. This latest acquisition reflects EMDH’s growth strategy featuring two solid business foundations to build upon; the addition of Genesis allows the company to become a major participant in Romania’s rapidly developing economy while still being able to capitalize on their steadily growing media business. Shares remained unchanged at $0.51 on the week.
Volume Alert: Shares of SinoHub (OTCBB: SIHI) a company providing world-class supply chain management services with transparent information access for participants in the electronic components supply chain in China, jumped ten percent on almost three times average volume, perhaps due to increased interest in the company’s fundamentals. The company posted impressive Q1 results for the period ended March 31, 2009, with revenue and net income up 56% and 83%, respectively, over the three months ended March 31, 2008. Total revenues for the 2009 first quarter rose to $18.1 million from $11.6 million in the first quarter of 2008. Net income for the 2009 first quarter advanced to $2.0 million, or $0.08 per fully diluted share, from $1.1 million, or $0.06 per fully diluted share, in the year earlier period.Shares ended the week at $2.74, up twenty four cents.
Steel Vault (OTCBB: SVUL) an emerging provider of identity security products and services, announced last week that its NationalCreditReport.com subsidiary grew its subscriber base from 10,205 active subscribers at the end of May 2009, to 15,564 active subscribers at the end of June 2009, representing a month-over-month increase of 53% percent. The company attributes the rapid growth in subscribers to increased marketing efforts and the peace of mind provided to subscribers through the enhanced protection against identity theft that the service provides. NationalCreditReport.com specializes in providing consumers with accurate, complete and easy-to-understand credit reporting and identity theft prevention monitoring services, which, after an initial trial period, is available to subscribers for a monthly fee. Shares gained three cents on the week to close at $0.28.
IceWeb (OTCBB: IWEB), a storage technology company specializing in Geographic Information Systems (GIS) that provides services to bureaucratic and corporate organizations, announced last week that it will release its IPLICITY 2.0 Enterprise Platform (IEP) at the upcoming ESRI International User Conference in San Diego from July 13-17th. The platform is designed to provide for simple, cost effective ESRI application systems deployment using a geographic information system (GIS). These solutions allow GIS clients to accomplish more by providing a turnkey solution for the ESRI based systems. InLINE products provide transparency, allowing the client to focus on their core requirements of performing geospatial analysis, managing spatial information efficiently, and providing for the dissemination of relevant information via maps and Web or intranet. IWEB expects that the release will be well received at the conference which drew more than 20,000 attendees last year. Shares gained two cents on the week to close at $0.07.