Stocks fell sharply Friday after a series of worrisome economic and corporate reports as well as high oil prices stoked concerns about the health of the economy. The major stock indexes all declined this week as the Dow Jones industrials lost 115 points, bringing its year to date loss to 7.5%. The Standard & Poor’s 500 index lost 22 points to bring its year to date loss to 9.4% and the Nasdaq composite index declined 32 points, exacerbating its year to date loss to 14.4%. The Russell 2000 also declined with a loss of 9 points, to bring its year to date loss to 10.4%.
The week began on a good note, as the major indices rallied Monday on the news Standard & Poor’s took bond insurer MBIA off CreditWatch and affirmed the triple A ratings for MBIA and Ambac Financial. Fed Chairman Bernanke was in the spotlight on Wednesday, as he provided testimony on the economy and monetary policy before the House Financial Services Committee. This week several economic reports come in worse than expected. The new home sales report was joined in the disappointing category by the producer price index, consumer confidence, durable orders, weekly initial claims, and the Chicago purchasing manager’s index. Aside from U.S. Treasuries, commodities were the other big winner on the week. The CRB Index surged 3.5%, led again by increases in oil and gold prices, both of which hit new, non-inflation adjusted highs during the week. Weakness in the dollar, which hit a new low against a basket of major currencies, fed the rally in dollar-denominated commodities. Friday’s session capped off another losing month for the market, which has now suffered a decline in each of the last four months.
What should investors look for this week? There are few notable earnings releases scheduled for next week after a very busy first two months of the year. Staples and Tech Data will announce their earnings before open on Tuesday. AES Corp., BJ’s Wholesale and Costco will make announcements before the bell on Wednesday, followed by announcements from Dillard’s and H & R Block after the close. An earnings announcement from Blockbuster will close out the week Thursday before the opening bell.
The economic calendar for next week will begin Monday with January Construction Spending and the February ISM Index. February Auto and Truck Sales will be released midday on Tuesday. Fourth Quarter Productivity and Unit Labor Costs, January Factory Orders, February ISM Services, and weekly Crude Inventories will be released Wednesday. Later that day, the Federal Reserve’s Beige Book will be released. Thursday brings weekly unemployment claims and January Home Sales. Friday’s February Unemployment Report and the January Consumer Credit Report will conclude the week’s major economic news.
The conference schedule will be busy next week as well, beginning Monday with the three day Citigroup Global Property CEO Conference in Palm Beach, Florida and the three day Morgan Stanley Technology Conference in Dana Point, California. Tuesday, the busiest day of the week will be highlighted by the three-day Bear Stearns Retail, Restaurant & Consumer Conference in New York City, Citigroup Annual Global Industrial Manufacturing Conference in New York City, and the Merrill Lynch Global Automotive Conference, followed by the Credit Suisse-Global Biotechnology Conference in London on Wednesday.
After a lengthy wait, investors who own shares of CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical research and development company that develops human therapeutic products, will finally receive amuch-anticipated dividend in RXi Corporation, the company’s RNAi subsidiary. The dividend, which is scheduled to be paid to shareholders of record as of March 6th, 2008, could provide a boost to CYTR stockholders, as the company hopes that the spin-off of RXi into a public entity will help the investment community recognize the potential for the subsidiary. RNAi has been a profitable area for investors, as shares of Alnylam Pharmaceuticals ($1.1 billion marketcap) are up more than 40% over the last 14 months, while Sirna Therapeutics was acquired for more than $1 billion by Merck. Shares of CYTR fell 25 cents last week to close at $1.80.
Earnings Preview: VeriChip Corporation, a provider of radio frequency identification (RFID) systems for healthcare and patient-related needs, will announce fourth quarter and full year 2007 financial results for the period ended December 31, 2007, on Wednesday after the market closes. The company will hold a conference call to discuss the results on Thursday morning. Since the company reported third quarter results, the stock has declined 36.6%. In January, the company pre-announced full-year revenue, saying that it expects to report revenue at the high-end of its previously disclosed guidance for revenue of $30-32 million. Investors will also pay attention to what the company says about plans to further roll out the VeriMed System, and whether there have been any additional developments surrounding plans for the company’s self-contained implantable RFID glucose-sensing microchip. Shares ended the week at $2.51, up 13 cents. Last week’ close was the highest since December.
Shares of CEL-SCI Corporation (AMEX: CVM), rallied last week, ahead of the company’ Annual Shareholder’s eeting on Tuesday. At the event, the company is likely to provide an update on the construction of its facility located outside of Maryland, which is expected to supply Multikine, for CVM’ upcoming Phase III trial in head and neck cancer. Shares ended the week at $0.64, up 9 cents.
Advanced Cell Technology, Inc. (OTCBB: ACTC), a biotechnology company that engages in the development and commercialization of human stem cell technology in the field of regenerative medicine, announced that it has entered into an agreement with Pharming Group N.V. giving Pharming an exclusive, global license to non-human use of certain patents associated with but not limited to oocyte activation patents held by Advanced Cell Technology. According to the terms of the license agreement, Pharming will pay the company a one-time license fee. Previously, Pharming had a nonexclusive license to these patents. Based in the Netherlands, Pharming Group N.V. is focused on developing treatments for genetic and aging diseases, specialty products for surgical indications, and intermediates for various applications and nutritional products. Although the company did not disclose the licensing fee that Pharming paid, it represents non-dilutive capital. Shares ended the week at $0.22, unchanged.
Cordia Corporation (OTCBB: CORG), a global communications service provider of traditional CLEC and Voice over Internet Protocol technologies announced that Cordia LT Communications Pvt. Ltd., its joint venture with LT Overseas Ltd., a public company traded on the Bombay Stock Exchange, has been granted a fifteen year nationwide license to sell IP telephony and ISP services throughout India. With well over one billion people, and a massive need for communications infrastructure investments, India is becoming one of the world’s most important communications markets. Cordia LT gives the Cordia Corp. a ground floor opportunity to play a central role in the deployment of IP based communications networks and services in India and to take a significant share of the emerging market for IP communications services in India. The company also announced that it has signed a global reseller and network peering agreement with BTI America LLC., a wholly owned subsidiary of Manila, Philippines based Bayan Telecommunications Inc. The agreement provides for network interconnection between Cordia and Bayan, the second largest Philippine landline provider, which will allow unlimited calling from Cordia’ international network to Bayan’ wire-line and wireless customers sold by Cordia. Shares ended the week at $0.56, up 4 cents.
Ceragenix Pharmaceuticals, Inc. (OTCBB: CGXP), a biopharmaceutical and medical device company focused on infectious disease and dermatology, announced that Cohen Independent Research Group has initiated coverage of the company with a Strong Buy recommendation. The report covers the company’ platform technologies in the treatment of atopic dermatitis and antimicrobial coatings for medical devices. The company recently entered into a deal with a subsidiary of Dr. Reddy’s Laboratories Limited, to commercialize EpiCeram, a prescription topical cream for treating atopic dermatitis and other dry skin conditions, in the United States. Shares ended the week at $0.95, up 13 cents.
GreenShift Corporation (OTCBB: GERS), a developer of clean technologies, said last week that it had begun to produce crude corn oil at its 1.5 million gallon per year corn oil extraction facility co-located at Western New York Energy, LLC’ 50 million gallon per year corn ethanol production facility in Medina, New York. Western New York Energy began operations in December 2007 and is the first operating ethanol plant in the Northeastern U.S. The Western New York Energy extraction facility is GreenShift’ssecond operational corn oil extraction facility and it brings GreenShift’stotal current annualized corn oil production capacity to more than 3.0 million gallons per year. GreenShift recently closed on a revolving line of credit that is sufficient to build an additional 10.5 million gallons per year of corn oil extraction capacity. These new facilities are expected to become operational in a staggered fashion over the next nine months and will bring GreenShift’s annualized corn oil production to more than 13.5 million gallons per year.
Volume Alert: Shares of Stem Cell Innovations, Inc. (OTCBB: SCLL), surged 50% on Friday on 40 times average volume. Does somebody know something? The company has said nothing for months, and the stock has languished around one cent for months. The stock traded more than 70 million shares on Friday, closing at its highest level in approximately four months. Shares ended the week at $0.018.
InfoSmart Group, Inc. (OTC BB: IFSG), a leading recordable digital versatile disc manufacturer in Hong Kong and Brazil, provided an update on its strategic plans regarding the Blue-ray Disc format. As it has been widely reported, the Blu-ray Disc format has taken a commanding competitive advantage over the HD DVD format. InfoSmart initiated discussions with Sony and Philips on a Blu-ray Disc licensing agreement in January 2008, and the company is also in discussions with one of the two Blu-ray Disc producing machine vendors to initiate an agreement regarding their Blu-ray production machines, and is currently testing and planning for their installation. InfoSmart has discussed their strategic plan concerning Blu-ray with their current customers in Brazil and other parts of the world. Based on the current DVD market and existing DVD players, the company foresees there would be at least a 3-5 year period for the current HD DVDs to remain in the market before they are transitioned which will protect current market pricing and the expanding production capabilities of InfoSmart. InfoSmart believes that the change to Blu-ray provides a good opportunity for the company to make higher profits, while they maintain their competitive edge in leveraging the Brazilian market through their local manufacturing base and tax-driven advantages in the traditional DVD market. Shares rose 2 cents last week to close at $0.27.
MSTI Holdings, Inc. (OTCBB: MSHI), a carrier class communications technology company specializing in providing quad play services to residential, hospitality and commercial properties, announced that its wholly-owned subsidiary, Microwave Satellite Technologies, Inc., has entered into an amendment to its current agreement with Trump International Hotel and Tower Condominium, under which the parties have extended MST’s service provider agreement through June 30, 2013 at One Central Park, a luxury condominium hotel in Manhattan. Under the agreement, MST will provide expanded services, including the launch of MST’s IP-based Video on Demand solution into the high-end hospitality market. MST will also install the next-generation infrastructure that will support the fastest Internet connections available commercially. The agreement can be extended further by mutual agreement of the parties. Shares ended the week at $0.64, up 9 cents.
Smart Energy Solutions, Inc. (OTCBB: SMGY), a developer and manufacturer of the innovative Battery Brain electronic controller for vehicle and marine batteries has developed and is launching a new high capacity Battery Brain for the truck and bus markets. The company worked with several major truck and bus fleet maintenance managers to develop and test this product. This new product can pay for itself in less than six months by reducing battery related service calls and delaying battery replacements due to deep cycling when batteries run down. Battery Brain can eliminate valuable lost time, and lost revenues, by reducing the number of vehicles stranded due to a dead battery. The product also provides a warning when batteries are reaching the end of their life cycle so that battery replacement can be scheduled. In addition, to encourage use of the new product, the company has initiated a National Introduction/Installation Program available for major commercial fleets, motor carriers and bus companies. Shares rose 5 cents to close at $0.24.
On the Wires: VeriChip Corporation (NASDAQ: CHIP) announced it has added Steven R. Foland to its Board of Directors.
