Companies featured in this edition of the newsletter: CHIP, CICS, CVM, FMTI, IMUC, INRK, IWEB, ONEZ
Weak data on consumer spending and employment once again raised doubts about the strength of the economic recovery, and helped send investors running for the exits this week as markets finished sharply lower following broad based selloffs in all of the major indices. All told, the Dow ended the week down 259 points, losing 2.6% to close at 9712 and reducing its yearly gains to 10.7%. The Nasdaq underperformed significantly on the week, surrendering 5.1% to close at 2045, paring its YTD gains to 29.7%, while the S&P 500 and Russell 2000 lost 4.0% and 6.3% respectively, bringing their yearly gains to 14.7% and 12.7%. While the Russell 2000 was by far the worst performing index for the week, microcap stocks below the level of the Russell were even hit harder, as investors shunned risk.
While the strengthening dollar appeared to be the main driving force on the week, the Q3 GDP reading released on Thursday seemed to excite investors initially, as markets rallied sharply on Thursday after the GDP Report showed a 3.5% increase in the third quarter, moderately better than expectations calling for 3.2%, and significantly better from a sequential perspective than the 0.7% contraction that was seen in Q2. However, after a day of analysis, investors recognized that much of the gains were driven by stimulus programs such as Cash for Clunkers, and reflected an economy that was still struggling.
What should investors look for this week? Earnings reports begin to wind down as the majority of companies with market moving potential have already reported, but expect results from Ford Motor Co. (NYSE: F) and Sysco (NYSE: SYS) on Monday before the bell. Tuesday morning, look for results from Amerisource Bergen (NYSE: ABC) and Viacom (NYSE: VIA), with Kraft Foods (NYSE: KFT) reporting after the close. Comcast (NASDAQ: CMCSA) and Time Warner (NYSE: TWX) report before the open on Wednesday followed after the close by Cisco Systems (NASDAQ: CSCO), News Corp (NASDAQ: NWSA), Prudential (NYSE: PRU) and Qualcomm (NASDAQ: QCOM). Cablevision (NYSE: CVC), DirecTV (NYSE: DTV) and Thomson Reuters (NYSE: TRI) report before market Thursday, followed after the close by CBS Corp (NYSE: CBS), Starbucks (NASDAQ: SBUX), Sun Micro (NASDAQ: JAVA) and Sunoco (NYSE: SUN).
Economic data for the week begins with Construction Spending and Pending Home Sales for September along with the ISM Index for October at 10:00am Monday, followed on Tuesday by Factory Orders for September at 10:00am, with Auto and Truck Sales for October due out at 2:00pm. On Wednesday, expect Challenger to report on Job Cuts for October at 7:30am, followed at 8:15am by the ADP Employment Report for October, ISM Services for October at 10:00am, Weekly Crude Inventories at 10:30am and the FOMC’s Rate Decision at 2:15pm that afternoon. On Thursday, look for Preliminary Q3 Productivity at 8:30am along with weekly initial jobless claims and continuing claims. Things wrap up on Friday with a slew of labor market data that will most likely be sharply in focus; Nonfarm Payrolls, Average Workweek, Hourly Earnings and the Unemployment Rate, all for October, will be released together at 8:30am followed by September Wholesale Inventories at 10:00am and Consumer Credit for September at 2:00pm.
Conference schedules pick up this week; on Monday Goldman Sachs will host the two day Borse Dubai International Investor Conference in New York and Wedbush Morgan Securities begins its two day Clean Tech & Industrial Growth Conference in San Francisco. The Oppenheimer & Co. Healthcare Conference starts Tuesday in New York while Goldman Sachs hosts a two day Global Industrials Conference beginning on Wednesday in New York. The World Energy Engineering Conference begins that same day in Washington DC and the Lazard Capital markets Technology & Media Best Ideas Investor Day is being held in San Francisco on Friday.
Earnings Preview: interCLICK, Inc. (OTC: INRK), a rapidly growing Internet marketing network, will report results for its third quarter ended September 30th on Wednesday after the market closes. Last week, the company completed a 1-for-2 reverse split in preparation for a Nasdaq listing. Investors will be watching to determine whether the company will be able to continue its torrid growth, and follow the success of some of the larger Internet marketing companies that already reported results. In the second quarter, the company grew revenue by 128% to $10.6 million, which also increased 26% sequentially from the 2009 first quarter. EBITDA was $0.2 million, compared to an EBITDA loss of ($1.6) million in the year-earlier period.The third quarter is seasonally usually stronger than the first two. At the time of the Q2 release, interCLICK said it expects third quarter revenue to exceed $12.5 million and gross margin to approach 50%. For the month of July, interCLICK had revenue in excess of $4 million. Since reporting Q2 results, shares of INRK have gained 28%. The stock closed Friday at $5.43, up 17 cents.
Verichip Corporation (NASDAQ: CHIP), a provider of radio frequency identification systems for healthcare and patient-related needs, which recently announced its intention to acquire identity security provider Steel Vault to form PositiveID Corp, a provider of identification technologies and tools for consumers and businesses, announced last week that it will present developments regarding its in vivo glucose-sensing RFID microchip and virus triage detection system for the H1N1 virus at the ID World International Congress in Milan, Italy, which runs from November 3-5. The ID World International Congress is the most comprehensive showcase on the evolving world of RFID, biometrics and smart card technologies, and is the only international forum that looks at the automatic identification industry as a whole, offering a full-scale and complete vision of social, technological and business aspects related to the deployment of the automatic identification systems. Shares lost 33 cents on the week to close at $1.54.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a life sciences company focused on evidence-based nutritional solutions, announced last week that the European Union has approved a health claim for plant sterols that supports the company’s current cholesterol reduction claim and further validates the inclusion of Reducolâ„¢ in various food products. This recent Commission Regulation will enable products that incorporate Forbes patented cholesterol lowering ingredient, Reducol, to make a label claim that states, “Plant sterols have been shown to lower/reduce cholesterol. High cholesterol is a risk factor in the development of coronary artery disease.” Reducol is sold in various food products in the EU including margarines, yogurts, yogurt drinks, milks, and cheeses. Shares lost 3 cents on the week to close at $0.40.
CEL-SCI Corporation (AMEX: CVM), a developer of vaccines for the prevention and treatment of infectious diseases and a late-stage oncology company, announced last week that it has received more than $10 million over the past 60 days from the exercise of warrants by investors to purchase the company’s common stock. These additional funds increased the gross proceeds raised in the last 60 days to approximately $30 million, which the company has indicated that it expects to use towards its pivotal Phase III clinical trial with its cancer drug Multikine and to accelerate the development of its LEAPS compound for the treatment of H1N1 hospitalized patients. Since the beginning of the year, the company has been able to strengthen its balance sheet significantly, raising gross proceeds in excess of $43 million and eliminating its Series K convertible notes which had an initial principal value of $8.3 million. Shares lost 26 cents on the week to close at $1.05.
ImmunoCellular Therapeutics (OTCBB: IMUC), a clinical-stage company that is developing immune based therapies for the treatment of brain and other cancers, announced significant positive results from its Phase I clinical trial evaluating the safety and efficacy of ICT-107, the company’s dendritic-cell based cancer vaccine product candidate for the treatment of glioblastoma multiforme (GBM), the most common and aggressive form of brain cancer. Data for the trial, which was presented at the Congress of Neurological Surgeons annual meeting in New Orleans last week, demonstrated significantly improved median progression free survival time compared to the current standard of care. Patients in the trial demonstrated a median progression free survival time of 19 months 12 months longer than the historical progression-free survival time for GBM patients of 6.9 months. In addition to the significant improvement in median progression free survival time, seven of the 16 patients involved in the trial continue to show no signs of tumor recurrence, while three have gone more than two years with no disease progression. With 80% of patients (13 of the 16) still alive at a median time of 20 months, it is too early to determine the median overall survival time for this trial, but historically, only 26.5% patients survive two years under the current standard of care; ICT-107 was also well tolerated, with no significant adverse events reported during the trial. Shares lost 12 cents on the week to close at $1.02.
Volume Alert: Shares of IceWeb (OTCBB: IWEB), a leading provider of storage solutions and on-line cloud computing application services, gained 6% on almost twice average volume last week following the announcement that it has partnered with Saratoga Data Systems, Inc. to integrate their Flume Data Acceleration product into Iplicity Cloud Storage Appliances. IceWEB will bundle or integrate Flume Network Optimization software into its core Iplicity product suite in order to solve a problem delaying wholesale migration into cloud storage. The problem being addressed relates to the large volumes of data that need to be migrated from private networks to cloud storage which far exceed what can be transferred electronically in a reasonable period of time. By integrating Flume protocols within Iplicity, IWEB has developed a solution that significantly accelerates the transfer of large amounts of data across long distance, high latency networks, in a secure, encrypted, and guaranteed error free fashion. The company believes that this will eliminate the current need that many providers have to rely on manually copying data at the remote customer site and then shipping that data on physical devices to the provider’s location and downloading that data onto their cloud infrastructure. The companies expect that this partnership will make Iplicity a more attractive offering by allowing rapid transfer of large amounts of data simultaneously to multiple distinct cloud storage providers, thus greatly enhancing functionality and overall efficiency. Shares gained a penny on the week to close at $0.17.
ONE Holdings (OTCBB: ONEZ), a green process manufacturer of high quality health supplements, organic fertilizers and pesticides, released consolidated results for fiscal 2008 and the first 6 months of fiscal 2009 for its recently completed acquisitions last week. The consolidated acquisitions generated net income during 2008 and the first 6 months YTD in excess of $7.1 million and $3.4 million respectively, with operating income of $10.5 million and $5 million respectively. Revenue for 2008 and the first 6 months YTD was $35 million and $16.5 million respectively; gross margin was 41% throughout. The company has accrued total assets in excess of $38 million as of June 30, 2009 with shareholder’s equity reaching $28.5 million. Management has indicated that it expects to outperform its first half ’09 results due to the second half of the year being a traditionally busier period. Shares lost a penny on the week to close at $1.24.
Carbonics Capital Corporation (OTCBB: CICS), a company that provides applied engineering and technology transfer services based on clean technology and process innovations that enhance manufacturing efficiencies, announced last week that the company has executed an agreement with Great Plains Oil & Exploration, LLC to lease Carbonics’ oilseed crush plant in Culbertson, Montana. The arrangement is part of a liquidation of the facility ordered by the Montana Department of Agriculture in relation to an outstanding debt that was incurred for an oilseed shipment in 2008 that the company was unable to pay for due to an inability to renew its working capital line of credit during the second half of that year. Great Plains is leasing the facility to further development of their oilseed production program and plans to use the facility as an important hub in their network of camelina growers in eastern Montana and western North Dakota. Shares remained unchanged at under a penny on the week.