Earnings Announcements: Novellus (NVLS)

Amgen Inc shares shot up 16 percent to $60.59, one day after the biotechnology company reported positive results for its experimental osteoporosis drug. The S&P healthcare index  rose 1.2 percent.

Investors were reticent to buy aggressively after Tuesday’s selloff as uncertainty over second-quarter earnings loomed. Alcoa Inc , the first Dow component to report, is expected to post its third consecutive quarterly loss after markets close on falling demand for aluminum. Alcoa rose 2.1 percent to $9.61.

After a rally that took the S&P 500 index up 40 percent from 12-year lows in early March, traders are looking for hard evidence that the economy will rebound from a deep recession.

David Sowerby, market strategist for Loomis Sayles in Detroit, said the 2 percent drop in the S&P 500 was prompting tepid buying, but cited anxiousness over earnings.

“Given that the more important economic numbers have been soft the last two weeks, it’s been somewhat of a cold shower for earnings expectations,” he said.

The Dow Jones industrial average rose 36.42 points, or 0.45 percent, to 8,200.02. The Standard & Poor’s 500 Index added 3.64 points, or 0.41 percent, to 884.67. The Nasdaq Composite Index  gained 5.31 points, or 0.30 percent, to 1,751.48.

Raw materials was the leading sector in the S&P 500, up nearly 1 percent after a 2.5 percent slide on Tuesday.

Microsoft Corp was the biggest drag on the Dow industrials. Google Inc said it will launch a new operating system in the second half of 2010, taking on Microsoft’s core business.

Microsoft shares fell 1 percent to $22.30, while Google rose 1.6 percent to $403.09.

Leaders of the Group of Eight richest nations and the major developing powers gathered for a three-day summit in Italy. They are expected to agree the world’s economy is still too weak to remove stimulus measures.

NEW YORK, July 8 (Reuters)

On February 4, I first warned that Google was running out of steam and about to drop.

Then on February 9 I said this.

Google might go up another week – but not pass its trend line resistance at $400 (if it passed $400, I would bail out of my short). It might try to get above, but should fail and drop to $275 or less by summer – a 31% fall.

A month later Google dropped to $289. You would’ve made a healthy 23% gain.

So I hope you pay attention to what I say next about Google Inc. (NASDAQ:GOOG).

What I want to show you is a little timing trick that relies on the 20- and 50-day moving averages.

Every time the 20-day crosses under the 50-day, you sell shares short. And when the 20-day rises above the 50-day, you buy shares outright.

By following this strategy, you would’ve made 43% when the first bearish cross happened in late June of 2008 until the beginning of this year.

Later, when a bullish cross happened (in early January) you would’ve recently sold out of that position roughly flat.

But today, another short-sale signal was triggered by this technique.

Here’s your suggested play: Sell Google short and use a point above the moving averages (like $340) as your stop loss to protect yourself.

If Google takes another leg down (as this very basic system shows it should), we could see Google shares trade for $250 per share.

A trend channel is nothing more than two trend lines – a resistance and support line – that form a “channel” that any given stocks price trades between.

Google’s trend channel began in late November. Every time Google hit the bottom of its trend channel, shares moved higher. And every time it hit the top of, prices would stall out and move lower.

As you can see, Google is now hitting the top of its trend line. Plus, both the Slow Stochastic indicator (under the chart) and the RSI indicator (above the chart) are showing shares as overbought (meaning sellers should flood the market).

One of the best ways to capitalize on this move is by simply buying a Put option which makes money as share prices drop. The move shouldn’t take more than ten days to complete.

Yang was elected CEO in June 2007, his second go-around at that post. Since then, Yahoo’s market value has fallen by more than $20 billion, according to Bloomberg.

To be fair, Yahoo was already losing its market share to Google Inc. (GOOG) and a healthy percent of its share value as a result.

But Yang was brought back to fix that.

There was a deep feeling within Yahoo’s ranks that Yang wasn’t fit to continue leading the company out of the mire – or least into a profitable merger/acquisition situation – because he had burned too many bridges trying to get what he felt was the fair value of Yahoo’s shares.

In the year and a half he ran the show, Yang sternly rejected several takeover offers from Microsoft, including a $47.5 billion bid that amounted to $33 a share. The offer valued Yahoo’s share at a 62% premium at the time.

This led to a proxy battle instigated by board member Carl Icahn, who wanted to oust Yahoo’s board of directors and replace it with candidates of his choosing. Icahn – it should be noted – favored a Yahoo partnership with Microsoft over Google.

Earlier this month, Google walked away from a plan announced in June to sell advertisements on Yahoo’s pages after the Justice Department threatened to block the deal on antitrust grounds.

Google already has more than 70% of the search-engine driven advertising market. Yahoo has about 10%, according to BusinessWeek. For Yang, it was a chance to revive falling sales, as profit has dropped in 10 of the last 11 quarters.

And that’s caused the company to shed a lot of dead weight.

Last month, it announced 1,500 job cuts. And, Scott Moore, the senior vice president in charge of the company’s media group, recently announced he, too, is leaving.

In addition to Moore, Yahoo shed five top executives this past summer: Jeff Weiner (executive V.P. of the network division), Brad Garlinghouse (who oversees e-mail and instant messaging), Vish Makhijani (general manager of web search), Qi Lu (top engineer for search marketing) and Joshua Schachter (founder of social bookmarking site, delicious).

So Now What?

Instead of first saying that Yang is stepping down, Yahoo’s news release begins by announcing it has begun a search for a new CEO.

Yahoo Chairman Roy Bostock said the company is searching internally and externally for candidates, and is being aided by executive search firm Heidrick & Struggles.

“Jerry and the Board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level,” Boystock said in the release.

Some of those candidates include Yahoo President Susan Decker. Other names floated include Jonathan Miller, the former chairman of AOL; Dan Rosensweig, once Yahoo’s operations chief; and Meg Whitman the former chief of Internet auctioneer EBay Inc., Bloomberg reported citing UBS analyst Ben Schachter.

Whoever gets the job is getting a difficult one with high expectations.

But one could argue that Yang’s follies lowered expectations. At this point, it’s understood that Yahoo can’t unseat Google as the world’s top search-engine advertiser – at least on its own.

Many board members and shareholders wanted Yang to sell Yahoo to Microsoft. If not that, then find another partnership to gain at least some traction against Google.

Before Yang’s departure, Yahoo’s shares dipped to $9.75, their lowest level since 2003. And on top of all of Yahoo’s problems, the global stock market is bracing for a cold year.

There’s a good chance that the role of Yahoo’s next CEO won’t be leading the company out of its mess, but instead wave the white flag in front of a company that can.

Source: Yang Steps Down, Yahoo CEO Search Commences

Google rubbed more sand in Yang’s eyes Wednesday when it walked away from a plan announced in June to sell advertisements on Yahoo’s pages after the Justice Department threatened to block the deal on antitrust grounds.

Google already has more than 70% of the search-engine driven advertising market. Yahoo has about 10%, according to BusinessWeek.

For Yang, it was a chance to revive falling sales, even if it meant falling on his sword instead of wielding it against its chief rival.

Now, his shareholders are livid. His future is uncertain. And his best option for survival is a partnership with Microsoft Corp. (MSFT) – the company whose generous takeover offer he rebuffed earlier this year.

The dropped advertising deal between Yahoo and Google revealed a major growth problem for each company.

For Google, it shows that the search engine juggernaut has grown so large that it now has far fewer legal avenues of expansion open to it.

For Yahoo, it shows that Yang is running out answers for Google’s market dominance.

Yahoo’s Troubles

Yahoo has had little to cheer about in the past year.

Its sales growth fell to 3% in the third quarter, down from 14% over the same period last year. Profit has dropped in 10 of the last 11 quarters, Bloomberg reported.

Last month, it announced 1,500 job cuts. And, Scott Moore, the senior vice president in charge of the company’s media group, recently announced he, too, is leaving.

In addition to Moore, Yahoo shed five top executives this past summer: Jeff Weiner (executive V.P. of the network division), Brad Garlinghouse (who oversees e-mail and instant messaging), Vish Makhijani (general manager of web search), Qi Lu (top engineer for search marketing) and Joshua Schachter (founder of social bookmarking site, delicious).

In the past year, the company’s stock value has more than halved – from just under $30 per share to under $15 a share, including hitting a 52-week low of $11.25 last week.

During that time, Yang sternly rejected several takeover offers from Microsoft, including a $47.5 billion bid that amounted to $33 a share. The offer at the time valued Yahoo’s share at a 62% premium.

This led to a proxy battle instigated by board member Carl Icahn, who wanted to oust Yahoo’s current board of directors and replace it with candidates of his choosing. Icahn – it should be noted – favored a Yahoo partnership with Microsoft over Google.

“I don’t regret any minute of what happened, even though it wasn’t the most fun thing to go through,” Yang said Wednesday at a press conference, Bloomberg reported.

What’s Next for Yahoo?

With or without the deal, Google’s market dominance will grow. Nothing has slowed it down thus far, and competition such as Yahoo, Microsoft, Time Warner Inc.’s (TWL) AOL, and IAC/InterActiveCorp.’s (IACI) Ask.com aren’t gaining any ground.

Yahoo’s only fighting chance is to team up with one or several of them

Yang’s only real chance may be going back to deal with Microsoft.

“To this day, I’d say the best thing for Microsoft to do is buy Yahoo,” Yang said during an appearance at the Web 2.0 conference in San Francisco, Dow Jones reported. “We’re willing to sell the company.”

Of course, there’s no guarantee Microsoft is still interested.  At the very least, the company could still be jaded from repeated rebuttals in the past year. And the fact that Yahoo also is in talks with AOL won’t help.

JPMorgan Chase & Co. (JPM) analyst Imran Khan wrote in a research note that a good solution would be fir Yahoo to sell its search operations to Microsoft, a deal Microsoft previous proposed and Yahoo rejected.

Striking that kind of a deal would save Yahoo an estimated $1.4 billion and allow it to focus on its aesthetics, such as ad displays, Khan said.

“We think continued investment in search, at the expense of display investment, has given competitors the opportunity to bite into Yahoo’s leading display ad market share,” Khan wrote.

But Yahoo’s board – many of them already feeling slighted by Yang – may consider another move: Have Yang walk to plank.

Since Yang climbed back aboard as Yahoo’s CEO in June 2007, the company’s sales, market share, and market value have all decreased.  That doesn’t bode well for a CEO who could have avoided another horrendous quarter and shareholder insurrection simply by agreeing to Microsoft’s $47.5 billion bid earlier this year.

Source: Yahoo! Searching for Answers After Google Walks Away from Ad Deal

• Siemens AG (SI) put aside nearly $1.3 billion to settle charges that it bribed government officials around the world to win contracts. The concessionary provision will affect earnings for the year ended Sept. 30, Bloomberg reported.

• Internet titan Google Inc. (GOOG) announced Wednesday (yesterday) that its wariness for antitrust-related legal battles ultimately killed discussions with Yahoo Inc. (YHOO) about forming an advertising partnership, the New York Times reported. The breakdown reopens the door for a possible Yahoo-Microsoft Corp. (MSFT) relationship, which also has its share of starts and stops.

• Enbridge Inc. (ENB) announced quarterly profits rose 88% and net income spiked $130.4 million, or 41 cents a share, for the third quarter, Bloomberg reported. Canada’s largest pipeline company said volume increased 33% on the Athabasca liquid pipeline system, a major artery into one of the world’s most oil rich fields.

• The FCC voted 5-0 in approval of Sprint Nextel Corp’s (S) June purchase of Clearwire Corp., MarketWatch reported. The merger is critical to the survival of both, as they claimed to be unable to build a mobile wireless Internet network that could compete with rival AT&T (T).

• GMAC Financial Services, a division of General Motors Corp. (GM) said yesterday (Wednesday) that its third-quarter loss widened to $2.52 billion. GMAC had a loss of $1.6 billion during the year-earlier period. Third-quarter revenue fell 24% to $1.72 billion from $2.25 billion. GM reports earnings tomorrow (Friday).

• Time Warner Inc. (TWX) reported net income of $1.07 billion, or 30 cents a share, for the three months ended Sept. 30. Revenue was at $11.71 billion, relatively unchanged from last year’s  $11.68 billion. The company reported 18% growth in profits from continuing operations.

• Molson Coors Brewing Co. (TAP) yesterday (Wednesday) announced a 28% increase in third-quarter profit. The company reported third quarter net income of $173.2 million, or 94 cents per share, up from $134.7 million, or 74 cents per share, a year ago.

• News Corp. (NWS) said yesterday (Wednesday) that first-quarter net income dropped 30% from a year ago. Net income fell to $515 million, or 20 cents per share, compared with $732 million, or 23 cents per share, in the year-earlier period. Revenue rose 6.3% to $7.5 billion.

Source:Global Investing Roundups Thursday, November 6th, 2008

But while Yang insists the deal will generate an extra $800 million a year in revenue, shareholders and analysts alike are skeptical the company will be worth the $33 a share Microsoft Corp. (MSFT) was offering just months ago.

In accordance with the deal reached last week, ads from both Google and Yahoo will appear on Yahoo’s search results. Yahoo has acknowledged that Google is more efficient in targeting online search audiences, estimating the larger search engine generates up to 70% more revenue per click for its ads. And it hopes that access to Google’s AdSense technology will enhance its own targeting capabilities.

According to Yahoo, the deal could boost cash flow by $250 million to $450 million in the first 12 months of implementation.

Google, on the other hand, will receive added revenue from having its ads posted on the country’s No. 2 search engine.

“Clearly, it is time to move on, and we believe that this agreement with Google does so by strengthening our competitiveness,” Yang said in a statement.

What Yang would like to move on from is a $44.6 billion failed takeover bid from Microsoft that would have netted Yahoo shareholders $33 a share.

Yahoo- which has suffered through eight straight quarters of declining profits- rejected Microsoft’s offer Feb. 11, saying it substantially undervalued the company’s worth. The original $31-per-share offer valued Yahoo at a 62% premium on Feb. 1.

After its second bid was rejected, a frustrated Microsoft turned its back and walked away. This infuriated Yahoo shareholders who had seen the bid as the company’s last chance to regain profitability. A contingent led by Carl Icahn instigated a proxy battle, seeking to oust Yahoo’s current board of directors and replace it with candidates of his choosing.

Icahn owned 10 million Yahoo shares and options to buy 49 million as of May 15, Bloomberg News reported. Investors BP Capital LLC Chairman T. Boone Pickens and hedge-fund manager John Paulson are reportedly backing his slate of nine directors, which includes himself and former Viacom Inc. (VIA) chief Frank Biondi Jr. The attempted coup has major ramifications for the Google deal in that it will be void should Icahn win the battle.

Also, if Microsoft- which Icahn has worked desperately to woo back into discussions- changes its mind and makes another off for the company, it will have to pay Google $250 million to end the partnership.

In addition to interference from activist investors, the deal will also have to clear regulatory hurdles as it couples the nations two largest search engines. Both companies have said the deal does not require regulatory approval, but that they would delay its implementation for up to three and a half months to give the U.S. Department of Justice a chance to review it.

“This collaboration between two technology giants and direct competitors for Internet advertising and search services raises important competition concerns,” Sen. Herb Kohl (D-Wisc.), chairman of the Senate Antitrust Subcommittee, said in a statement. “The consequences for advertisers and consumers could be far-reaching and warrant careful review, and we plan to investigate the competitive and privacy implications of this deal further in the Antitrust Subcommittee.”

Microsoft has said in the past that a deal between Yahoo and Google would consolidate more than 90% of the search ad market.

However, even if the deal goes through, Yahoo is basically relying on its biggest rival for growth. Both Merrill Lynch & Co. Inc. (MER) and Citigroup Inc. (C) have cut their estimates on Yahoo’s stock price saying advertisers will likely shift more spending over to Google.

Yahoo’s stock fell as low as $21.83 a share, Friday, down more than 7% from Thursday’s close. Even if the deal lives up to Yang’s billing, it seems unlikely the stock will reach the $33 a share Microsoft had offered any time in the near future.

“This [deal] just reaffirms the view that Yahoo, and particularly Jerry Yang and [cofounder] David Filo, blew it,” Mark May, an analyst at Needham & Co. told Bloomberg. “It’s going to be hard for Yahoo to come back from blowing what might be, looking back, the major milestone in Yahoo’s corporate history.”

Source: Yahoo Grasping at Straws with Google Deal

According to Bloomberg: “Yahoo said yesterday it scrapped talks after Microsoft refused to pay the $47.5 billion it offered last month. Instead Yang unveiled a partnership with Google Inc. While that deal may add $800 million to annual sales, it may not be enough to revive the stock, said analyst Colin Gillis of Canaccord Adams.”

“Microsoft originally offered $31 per share in either cash or Microsoft stock, a 62% premium to Yahoo’s Feb. 3 closing price. It boosted the bid to $33 a share, appraising Yahoo at approximately $47.5 billion, but Yahoo refused to accept anything less than $37,” says Jason Simpkins of Money Morning

[In April] Yahoo reported a first-quarter profit of $542 million, or 37 cents per share, up from $142 million, or 10 cents per share last year. It was the company’s first profit increase in nine straight quarters (more than two years).

But a big reason for the jump was a one-time gain of $401 million – a windfall from the sale of Yahoo’s stake in Alibaba.com Ltd.’s (PINK:ALBCF), which came from the Asian Internet company’s initial public offering (IPO).

Excluding one-time items, Yahoo reported earnings of 11 cents a share.

Even with the profit increase, the company continued to lose market share to nemesis Google Inc. (GOOG), the leader in Internet search. Yahoo accounts for 21.3 % of all U.S. searches according to comScore Inc.

That compares with a near 60% sway for its rival, Google, which defied Wall Street’s first-quarter expectations by expanding its revenue nearly four times faster than Yahoo. While Yahoo’s sales climbed 14% last quarter, Google posted a 46% jump in revenue. In April, Yahoo all but acknowledged Google’s victory by outsourcing a small portion of its search advertising to its competitor on a two-week trial basis.

If Yahoo continues using Google’s search advertising system, it will be abandoning its own “Panama” ad system. Launched in February, the Panama initiative set the company back millions of dollars. Even so, it continues to lag behind Google’s AdSense in terms of revenue per search query.

As it worked to bulk up its search capabilities, Yahoo had earlier shelled out $1.63 billion for Overture Services and $235 million for Inktomi. That’s close to $2 billion for search engine service specialists that would for, all intents and purposes, be rendered moot should Yahoo ultimately outsource even more of its search-related business.

While some analysts believe a bigger deal with Google may already be in the works, any serious collaboration between the United States’ two largest web portals would very likely run afoul of U.S. antitrust restrictions.

Google already places ads on more than 67% of searches. The addition of Yahoo would expand its influence to 89% of searches, according to statistics from Hitwise. Microsoft said last month that Google would command more than 90% of the search advertising market.

“While Yahoo may pursue a Google search partnership as a way to appease shareholders through enhanced cash flow, we believe such a deal would face intense anti-trust scrutiny,” Clayton Moran, an analyst with Stanford Group Company, told IDG News Service. “In addition it would cede control of search to Google.”

Moran does not believe Yahoo’s stock will reach the $37 a share value over the next 12 to 18 months.

There have also been rumors that Yahoo will join forces with Time Warner Inc.’s (TWX) AOL or News Corp.’s (NWS) Fox Interactive Media business units. According to the details that have emerged so far, Time Warner would merge a large portion of AOL’s operations with Yahoo and make a cash investment in exchange for a 20% stake in the resulting company. Yahoo would use that cash infusion to buy back some of its own stock.

However, when it comes to Web-search market share, AOL currently ranks fourth, behind Google, Yahoo and Microsoft. So the company that emerged from that combination would be more of a content player than it would be a competitive Web-search firm.

“I’m looking for Microsoft to get aggressive with a buying spree,” Gartner analyst Allen Weiner told IDG. “I think Microsoft should do something quickly to show the world that [the] Yahoo bid wasn’t a setback.”

The company could try to strike a deal of its own with Time Warner or News Corp., or perhaps even with the trendy Facebook.com. Other analysts suspect Microsoft may be beckoned back to Yahoo’s rescue if the company fails to right its course by year’s end.

“Should Yahoo miss expectations in 2008, we would not be surprised to see MSFT come back to the table,” said RBC Captial analyst Ross Sandler.

Just listed as one of BusinessWeek’s “Top 50 ‘Hot Growth Companies’” for its innovation and versatility in a tough economic environment, my Hot Stock Pick for this week is a firm that provides consulting services and technology solutions.

Just a small sampling of its diverse client list includes: Yahoo!, the U.S. Department of Defense, Bank of America, the California Department of Fish and Game, BP, the U.S. Environmental Protection Agency, GlaxoSmithKline, the City of San Jose California, Nike, the United Nations Industrial Development Organization, San Jose, Costa Rica, the Australian Greenhouse Office, Google, the U.S. Joint Forces Command, and Rolls Royce.

This U.S. company assists in the analysis and implementation of programs related to four trends: energy and climate change, health and human services, defense and homeland security, and finally, environment and infrastructure.

These specialties brought them over 1,500 contracts in 2007 valued at around $560 million.

Close enough for government work

Headquartered in Fairfax, Virginia, this company has another five offices around and within Washington, D.C. The Washington Post was just named it as one of the largest companies in the D.C. metro area.

It was also named one of the “Top 100 Government IT Contractors” by Washington Technology this year.

Federal agencies accounted for roughly 27% of revenues in 2007. 65% came from state and local governments, with the other 8% made up of commercial and international clients.

What is this paragon of the pentagon?

ICF International, Inc. began in 1969 as the Inner City Fund – a venture capital firm dedicated to financing inner city business. In 1972, the company was reorganized into a consulting firm and became ICF Incorporated. In 2006, the company went public as ICF International, the new name emphasizing its global presence and increased scope.

Growth strategies that work

ICF does not hesitate to acquire companies that promise to boost its client base, geographic reach and service offerings. In 2007, they closed four acquisitions and have already completed another in 2008.

Recession? What recession?

Because of this focus on expansion, both geographic and operational, ICF has not awarded dividends — and does not intend to anytime soon.

It’s a good thing the stock price is so attractive and the company fundamentals so strong.

A recession-proof stock with great profit potential

For Q1 of 2008, ICF’s revenue came in at $175.1 million, as compared to $151.7 million the in the first quarter of the prior year.

Management is confident that ICF International can continue on this profitable path. They predict 2008 full year revenues, with the company’s existing portfolio of business, to be at least $690 million.

No shrinking violets, they.

And that’s something I like to see in these market doldrums.

I recommend you buy shares of this recession-proof stock, ICF International, Inc. (ICFI:NASDAQ) at or under $22. I can see this stock easily going up 25% over the next 10 months.

Source: The Perfect Recession Proof Stock