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Joe, here's the newsletter that first got me interested...
Be your own judge....
The only glitch....Note the target date for the placement of the CDs for the 5M. This is critical!
GECC To Transform Itself From A TV Programmer
To A Multi-Station TV Broadcaster With Its Final Goal:
A Coast-To-Coast Hispanic TV Network To Serve
The Fastest Growing Body Of TV Watchers in America!
It will all begin when Golf Entertainment, Inc. (OTCBB: GECC) acquires
· Its first 3 TV stations in 2002
· Another 10 TV stations in 2003
· Another 15 TV stations in 2004
GECC will take the first step by raising $5 million in a private placement of 10% convertible debentures. Target Date: May 15.
At this writing, GECC stock is quoted at only 3¢ a share but when the news gets out, look out!
The Grand Plan of GECC features:
· An Initial Competition-Free “Small Market” Approach
· An Immediate Stream Of Revenue To Sustain Growth
· Unique, Quick Low-Cost Transmitter Construction
· Performance Based Employee Compensation
All the details appear in a copyrighted story in the independent online publication, Jack’s Journal (www.jacksjournal.net)
GECC Plans To Create National Hispanic TV Network
Copyright, 2002, Jack’s Journal
May 9 (Jack’s Journal) - Golf Entertainment, Inc. (OTCBB: GECC) plans a bold transformation of itself, from a provider of Hispanic television programming, into a new national Hispanic language TV network, Jack’s Journal learned today.
The company hopes to finance initial steps with a $5 million private placement of 10% convertible debentures.
The grand plan is to initially develop GECC into a small market, multi-station Spanish language TV broadcaster with three stations by the end of 2002 and another 10 stations in 2003, according to a detailed 12-part business plan prepared by GECC management headed by Chairman and CEO Tim Brooker.
The restructuring would immediately boost GECC annual earnings by a factor of 10 from $50,000 last year to $500,000+ in 2002.
A name change for the corporation is anticipated to better reflect the changing nature of the company’s business.
GECC stock languished at 0.03 on 0 volume at mid-week, but the news could change that rapidly.
The expansive plan calls for completion of the Regulation D, Rule 506 private placement by May 15 to accomplish the 2002 goals. GECC will issue common stock as an incentive to debenture purchasers.
Immediately, GECC would acquire a 3-station core with the acquisition of KVAQ-LP, in Springdale, Arkansas, headquarters of GECC, for a final payment of $291,000, plus two Oklahoma stations, KXIV-LP in Oklahoma City for $500,000, and KTZT-LP in Tulsa, for $250,000.
The acquisition targets previously programmed with Hispanic TV Network, which marketed air times at $20 to $40 per 30-second commercial before reverting to Christian, non-profit programming. GECC plans to create an immediate revenue stream by acquiring the properties and marketing the 3-station Springdale-Tulsa-Oklahoma City regional advertising package.
GECC believes it can establish revenue multiples with these properties that will stabilize at book values of $2 million per station after a year of solid operation.
From that 3-station base, GECC plans to obtain FCC licenses build economical pre-fab stations in 10 locations in Arkansas, Mississippi, Tennessee, Alabama and Georgia at an initial expenditure of $200,000.00.
GECC will file license applications for these 10 stations as a minority program provider and ask for expedited application handling. If it encounters delay in any of the target markets, the company plans to immediately seek either to buy or sign a License Management Agreement in that market.
The company believes it can successfully purchase LPTV or Translator licenses in target communities if the original license application is denied or delayed. Programming conversion to Hispanic language programs can start quickly -- within 36-hours of the signing of an agreement with a current licensee. The application and construction projects will take approximately 8 weeks per station.
By spreading the risk across multiple small market areas, management believes the company will be less vulnerable to competition than if it had invested the same amount of capital in one, large, high-volume market such as Los Angeles, Houston or New York.
GECC’s pre-fab, low budget station construction economies are key to its expansion plan. It can completely pre-assemble a transmitter building and UHF broadcast transmitter system in Springdale and assemble the station on site in 4 weeks per site. Tower construction and final installation will take 12 days more.
Constructed of efficient Bally modular transmitter enclosures, each 8-by-11-foot unit will leave the Springdale operations center equipped with a low-cost solid state, easy-to-maintain Itelco 1000 watt UHF transmitter, tuned to the FCC assigned frequency. Serviceable surplus equipment will be sold for cash and the proceeds used to fund the project.
Purchase of 13 such transmitters in one transaction will further markedly reduce our acquisition costs. Solid state efficiency plus the ability to monitor all 13 in a common system for operating problems from an operations center will eliminate the necessity of stationing a dedicated technician at each site, reducing operating costs.
Added construction savings have been achieved by purchasing structurally sound but slightly blemished materials and by relying on used, rather than new equipment items where possible.
Management is operating on the thesis that a "no-frills" approach to initial operations will result in the highest possible potential for success and establishment of the greatest possible value of the company to shareholders.
GECC will integrate and control the total operation by building a Network Operations Center in Springdale, relying on Internet-based fiber inter-station connections to move video data. Raw footage of a commercial from a distant market can be received and edited at the NOC and returned the same day via the Internet.
Satellite expenses of about $70,000 monthly will be avoided. Broadband, carrier class internet connectivity will allow GECC to move NTSC broadcast quality video and CD quality audio directly to the stations for approximately $7,500/month for the whole system.
Executive staff will be compensated at a flat rate of $48,000 per annum. Management believes in compensation tied to performance. No member of management holds stock options, but an employee options plan is being developed. A salary cap of $94,000 per annum will be in effect during any period in which there is private investor capital at risk.
Former CEO and Chairman, Michael Daniels will return to GECC as Senior VP head marketing and to train and deploy a sales force. Daniels successfully led the company in previous years to sales levels in excess of $35 million annually.
Compensation for sales staff will be based solely on performance. Executives will receive 10% of each revenue item. Line level sales staff will receive 20%. The incentive to sell is obvious. Market areas other than Tulsa and Oklahoma City, will each be handled by one full time sales representative.
The system will be operated by a dozen staffers in addition to the commission sales force. Other staff will be needed as the Oklahoma stations are brought online and will peak when GECC begins to develop 15 more markets along the East Coast.
They're going to have it on regular television??
That's a different story then. I didn't research this company a whole lot, but if what you're telling me is what could happen, then they might have something here. I'm going to keep an eye on this one.
Joe, They're not starting new stations. There is one station that they either already own or are about to close on,(without the 5M) and they have two or three others lined up for purchase this year. They gave out descriptions and the purchase price of three stations, all currently operating in the southern farm belt.
To me, this says that the majority of their viewers would be/are migrant farm workers.
They would be much better off if it's not cable or satelite.
You can plug a TV in anywhere with rabbit ears and pick up VHF/UHF stations.........without the added expense.
Again, if they manage to pull off the private CD placement, this could work.......IMO
Do you believe their station will be able to make it on the local cable network? If it's on satellite or some other hard to get/expensive programming, they might not get very many viewers. Cable television is a necessity for a network like that.
It isn't financing as such. They are trying to make a private CD placement for the 5M.
Unconfirmed reports say it's just a matter of crossing the t's and dotting the I's.
FWIW, Spanish language television is already pretty widespread. They just don't have a network.
Here in San Diego we receive three Spanish language stations coming out of Mexico and a "local" station of the Fox Network,(ch 6) is actually a Mexican station as well.
The plan does have merit, if they can pull it off.
Well that's just what we need. Spanish speaking television.
I wouldn't count on the 5M. I hear of lot of situations likes that, but most don't go through. Financing isn't easy to get for some companies.
Joemoney, Now I'm a little confused.
Did you look at GECC at all?
They are dumping any connections with Golf and their next anouoncement may be a name change.
Certainly they will do that soon.
When they get the 5M funds they will purchase three different television stations and convert them to hispanic television.
Their plans are to form the first Hispanic Television Network.
........if they get the 5M........
how is it a steal? I see nothing special about this company. It could be in a free fall.
McDuck, As far as golf goes, I think the current Golf Channel that everyone gets won't be beaten. I watch it often and I think it is very good. It's not likely that a low budget company will steal the show. That's what I said about QBID.
Joemoney
joe, bring them on...ill check them out. look at vlnc at 2.10....a certified steal!!!VLNC
Joe, re: GECC
I saw your post on the new GECC board asking if it was another QBID.,,,,,,,,,Considering that John Hollen is co-manager of that board, I think it's a valid question.....:)
As for Lord Ernie; I've been getting his newsletters for over a year and he usually has some pretty good suggestions.
As for GECC; The answer to your question is.....No, it it not another QBID......unless.
If they have lied about the private placement of some CDs to raise 5M funding, then they've lost my vote.
But, if it happens, and it looks like it will, the stock could take off.
First, they have to get those three stations under their belt.
as usual.....JMHO
Markets Will Be Closed Monday For Memorial Day Observation
http://www.usmemorialday.org/
more: http://dir.yahoo.com/Regional/Countries/United_States/Society_and_Culture/Holidays_and_Observances/M...
Economic Optimism Expected to Buoy Stocks
By Chelsea Emery
NEW YORK (Reuters) - Look for investors to dip their toes back into stocks in this holiday-shortened week as bets on an improving U.S. economy pull cash out of safe-haven pools of gold and bonds.
Don't look for any of that cash to come out of defense stocks, though, as Wall Street stays on guard for potential attacks following warnings from Vice President Dick Cheney that another strike is "almost certain," and as tensions in the Middle East remain white hot.
And while most fund managers expect low interest rates and resilient consumer spending to buoy stocks in coming weeks, lower-than-expected consumer confidence data or an attack could send investors scrambling for the shore again.
"I feel an upswell coming, but it's being camouflaged by warnings of another terrorist attack, bombings in the Middle East and India and Pakistan's nuclear capability," said Ned Riley, chief investment strategist for State Street Global Advisors, which oversees $60 billion. "But if we get through the weekend without significant events, the markets will pick up positive momentum."
The four-day week will bring scant corporate profit reports to guide Wall Street. Retailer Costco Wholesale Corp. (NasdaqNM:COST - News) is among the few companies scheduled to reveal quarterly results.
In the vacuum, investors will scrutinize a raft of economic data, including consumer confidence figures, expected on Tuesday, and productivity statistics, expected on Friday.
Confidence is key because two-thirds of the U.S. economy is propped up by consumer spending, while productivity is important because efficient companies can cut costs and improve earnings growth.
"Confidence numbers will be pretty good and I don't expect it to go down a lot," said James Luke, director of growth equity management at BB&T Asset Management, which oversees $10 billion. "I feel the market is poised to rally here, though I think we'll get away from explosive moves. It's a three-steps-forward, two-steps-back kind of market."
For the week, the Nasdaq composite index (NasdaqSC:^IXIC - News) fell 4.6 percent, erasing almost half of the previous week's rally.
The blue-chip Dow Jones industrial average (CBOT:^DJI - News) lost 2.4 percent and the broader Standard & Poor's 500 index (CBOE:^SPX - News) declined 2.1 percent.
Stock and bond markets will be closed on Monday for the Memorial Day holiday.
ATTACK WORRIES
Fears of more attacks similar to those on Sept. 11 cloud the outlook for stocks and have sent many fund managers pouring cash into defense and gold stocks. The American Stock Exchange defense index (AMEX:^DFII - News) is up about 22 percent this year, while AMEX Gold Bugs index (AMEX:^HUI - News) has more than doubled.
Investors are unlikely to pare these holdings any time soon amid continued turmoil in the Middle East and warnings that New York's landmark Brooklyn Bridge and Statue of Liberty may be targets of Muslim extremists.
Pakistan informed India on Friday it plans a series of missile tests this weekend, adding the tests are not linked to the military standoff on the border with its rival.
"There are terrorism concerns, war in the Mideast and tensions between India and Pakistan -- just name your hot spot," said Bruce Simon, chief investment officer at Glenmede Trust Co.
The firm has boosted its cash holdings in some funds to as much as 10 percent from an average of less than 5 percent in response to global tensions, Simon said.
But should more time pass without strikes in the United States, stocks should resume an upswing, fund managers and traders said.
That is, of course, unless economic data points to weakness in consumer spending or corporate productivity.
"Any substantial deterioration could spook the markets," said John Orrico, manager of the $11 million Arbitrage Fund. "But my sense is that they'll hold onto their (higher) trends and the markets won't be too disturbed."
Interest rates at 40-year lows and some improved profit reports from companies as diverse as doughnut chain Krispy Kreme Doughnuts Inc. (NYSE:KKD - News) and housewares retailer Williams-Sonoma Inc. (NYSE:WSM - News) have helped boost enthusiasm for stocks.
"You want to own stocks when the economy is improving," said Simon, who expects the S&P 500 to rise by mid-to high-single digits by the end of the year. "Absent terrorism fears, the market would be higher."
http://biz.yahoo.com/rb/020526/column_stocks_outlook_1.html
mikey, My goal this week is to find about 5 small to mid cap stocks trading between 5 & 15. All of them will be nationally listed. I will also post any OTCBB stocks I find to be interesting. But NasdaqSC and NasdaqNM are were the winners are at. I've had VERY good luck with these kinds of stocks. FRTE (no longer exists, bought out by SUNW), STMP, JWEB, HLIT ...and so many others. I had them all.
Joemoney is going to get his research on this week. I will keep you posted. Please post what you may find if you choose to research this week.
joe, got any tips under 10 bucks pps? shorterm preferred
no problem, I'm sure you'll do very well with those two.
Good luck.
Joemoney
thanx joe...im currently 2000 shares long each with a 3-5 year timeframe or nasdaq 5-6000 whichever comes first
mikey, SUNW is still caught in a downtrend, but do it being Sun FREAKIN Microsystems, I don't see why it isn't a good buy. If you're not going to trade it, but keep it for a while, SUNW is a good buy.
CTXS is also a great company, but like SUNW, it is caught in a downtrend. I think both SUNW's and CTXS's downtrends are soon to end, and both of them will be great.
You can't lose with either of them, IMO.
Joemoney
joemoney...your thoughts on sunw at <7 pps and ctxs at 11?tia
Patience my son. In time you will learn of my hidden talents.
<g>
Thats one post.Lets see some more.Pretty good actually.I have been told you actually have some talent other then running your mouth.Lets see it.I am interested and apparently so are your followers,(stalkers),lol.
T/A: RHAT, QCOM, QQQ, MSFT, CSCO, INTC
Red Hat, Inc. (NasdaqNM:RHAT)
Chart 1.1
Chart 1.2
Chart 1.1 is showing a possible bullish wedge on RHAT. You can see the same wedge on the Weekly chart. I would recommend buying this one with a stop @ 4.75. If it goes below that, odds are that it's basically dead. It will have gone below the blue line, which is currently it's short term support, IMO, and is not likely to recover to finish off the wedged rally.
Chart 1.2 is showing that the MACD-Hist is currently swinging upwards and could go positive in the coming weeks. Bullish sign.
QUALCOMM, Inc. (NasdaqNM:QCOM)
Chart 2.1
QCOM is caught in a similar, but not as strong wedge. I would not buy this one under 30, and if bought over 30, put a stop @ 29.50. Buy on skepticism from 30-33, buy on alert @ 34-38.
Nasdaq 100-Tracking Index
Chart 3.1
Chart 3.2
QQQ is caught in a very tight and very unstable wedge(Chart3.1). The odds of this one actually taking off are not as good as the others mentioned, but it is still possible. If it breaks 34, buy. Falls below 32, sell.
However, the odds for the wedge actually look more likely when looking at chart 3.2. The Stochastic is looking at a break out. IMO, 60% chance the wedge will rally.
Microsoft Corporation (NasdaqNM:MSFT)
Chart 4.1
Chart 4.2
MSFT is looking at a very likely wedge(Chart 4.1). Of all the stocks in this report, MSFT is most likely to rally. I would buy this one over 50, but not below. And sell/place stop order if/at it fall/s below 48.
Chart 4.2 is a Stochastic breakout, which even further invests my faith in MSFT wedge. Strong Buy on MSFT, IMO.
Intel Corporation (NasdaqNM:INTC)
Chart 5.1
Chart 5.2
Chart 5.3
Chart 5.1 shows a continuous downward trend which isn't likely to be broken, unless.....
Chart 5.2 shows more resistance, which isn't likely to be broke, unless....
Chart 5.3 is our hero! <Enthusiasm> Another good looking Stochastic breakout. This one will go through, unless the strong resistance it's facing pushes it back down. We'll find out in a few days. If it moves to 34 this week, buy, 30, sell.
Cisco Systems, Inc. (NasdaqNM:CSCO)
Chart 6.1
Chart 6.2
Chart 6.1 shows a possible bullish wedge. The blue line is another possible resistance line, which is still compatible with the wedge. The dark red line is the previous support line. I posted that to show that the support line is now pointing upwards, instead of downwards. Always a positive move, IMO.
Chart 6.2 shows a huge spike in the Stochastic. It is a break out, but looks like it's not going to last. I would stay away from CSCO unless the Stochastic jump continues.
SEC Proposed Rule: Exemption for Certain Investment Advisers Operating Through the Internet
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 275 and 279
Release No. IA-2028; File No. S7-10-02
RIN 3235-AI15
Exemption for Certain Investment Advisers Operating Through the Internet
Agency: Securities and Exchange Commission (the "Commission").
Action: Proposed rules.
Summary: The Commission is publishing for comment rule amendments under the Investment Advisers Act of 1940 that would exempt certain investment advisers that provide advisory services through the Internet from the prohibition on Commission registration set out in section 203A of the Act. The effect of the amendments would be to permit these advisers to register with the Commission instead of with state securities authorities. The amendments are designed to alleviate the burden of multiple state regulation on advisers whose business is unconnected with any particular state and for whom multiple state regulation would be a hardship.
Dates: Comments must be received on or before June 6, 2002.
Addresses: Comments should be submitted in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Comments also may be submitted electronically at the following E-mail address: rule-comments@sec.gov. All comment letters should refer to File No. S7-10-02; this file number should be included on the subject line if E-mail is used. Comment letters will be available for public inspection and copying in the Commission's Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Electronically submitted comment letters also will be posted on the Commission's Internet website: http://www.sec.gov.1
For Further Information Contact: Marilyn Barker, Senior Counsel, or Jennifer L. Sawin, Assistant Director, at (202) 942-0719 or IArules@sec.gov, Office of Investment Adviser Regulation, Division of Investment Management, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0506.
Supplementary Information: The Commission is requesting public comment on proposed amendments to rule 203A-2 [17 CFR 275.203A-2] and to Part 1A of Form ADV [17 CFR 279.1], both under the Investment Advisers Act of 1940 [15 U.S.C. 80b] ("Advisers Act" or "Act").
I. Background
The National Securities Markets Improvement Act of 1996 ("NSMIA") amended the Advisers Act to divide the responsibility for regulating investment advisers between the Commission and the state securities authorities.2 Congress allocated to state securities authorities the primary responsibility for regulating smaller advisory firms that are essentially local businesses, and allocated to the Commission the primary responsibility for regulating larger advisers.3 Section 203A of the Advisers Act4 effects this division by generally prohibiting advisers from registering with us unless they either have assets under management of not less than $25 million or advise a registered investment company,5 and preempts state adviser statutes as to advisers registered with the Commission.6 Advisers prohibited from registering with us remain subject to the regulation of state securities authorities.7
The "$25 million assets under management" test was designed by Congress to distinguish investment advisers with a national presence from those that are essentially local businesses.8 Congress recognized, however, that some advisers should be regulated at the federal level even though they have assets under management of less than $25 million, and gave us authority to permit advisers to register with us if the prohibition would be "unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes" of section 203A.9 In exercising this authority, we relieve advisers from the burdens of multiple state regulation.10
We recently have been asked, by advisers that provide their services through interactive websites and by their counsel, whether we might use our exemptive authority to permit these advisers to register with us.11 These types of advisers, which we will call Internet Investment Advisers, provide substantially all of their advisory services through interactive websites. Clients visiting these websites answer on-line questions about their finances, investment objectives and investment time horizon, risk tolerance, and investment restrictions. The Internet Investment Adviser's computer-based application or platform - an algorithm - processes and analyzes the client's responses to generate the personalized investment advice that is communicated to the client through the website.12 The interactive website may be reached at any time by persons residing in any state or outside the United States.
Most Internet Investment Advisers are not eligible to register with us. They do not have assets under management or advise a registered investment company, and thus do not meet the statutory thresholds for registration with us. Further, most of these advisers either do not qualify to use our existing exemptive rules or, as discussed below, cannot use the exemptions effectively.
Our multi-state adviser exemption permits an adviser that does not meet the statutory thresholds to register with us if, among other things, it would otherwise have to register with the securities authorities of at least 30 states.13 The exemption was designed to permit Commission registration for advisory firms that had offices and clients in multiple states.14 Internet Investment Advisers, however, do not have multiple offices; their multiple state registration obligations turn solely on the residences of their clients. Because an Internet Investment Adviser's clients can come from anywhere, and in any number at any time, as a practical matter, the adviser may need to register in all the states and wait until it has a registration obligation in 30 states before registering with us and canceling its state registrations.15
As discussed above, Congress gave us authority to permit investment advisers to register with us when the prohibition would be unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes of section 203A.16 Internet Investment Advisers, which were not in business when NSMIA was enacted in 1996, appear to be the type of advisory firm for which Congress envisioned we would exercise this authority. Other small advisers with few or no assets under management typically rely on face-to-face contact between clients and advisory personnel at the firm's offices. They are local businesses serving the geographical area in which the office is located. In contrast, Internet Investment Advisers have no physical presence in a community or state. Clients of Internet Investment Advisers have little or no in-person contact with the firm or its personnel, and obtain the adviser's services only through a website. Their activities are, by their nature, not confined to one or a few states that have a distinct regulatory interest in the advisers' operations. In addition, the cost of registering temporarily in all state jurisdictions acts as an impediment to launching these businesses. Requiring these advisers to register in multiple states would appear to be unfair to them and a burden on their interstate commerce. Therefore, we are proposing to amend our exemptive rules to permit these advisers to register with the Commission.
II. Discussion
Proposed rule 203A-2(f) would exempt an adviser from the prohibition on Commission registration if the adviser conducts substantially all of its advisory business through an interactive website on the Internet.17 Advisers registering with us under the new exemption18 would be required to keep records demonstrating that they meet the conditions of the rule.19
We have drafted the proposed rule to make it unavailable to advisers that merely have websites as marketing tools or that use Internet vehicles such as E-mail, chat rooms, bulletin boards and webcasts or other electronic media to communicate with clients.20 Eligibility for the exemption would turn on whether the adviser conducts substantially all of its advisory business through an interactive website. We define "interactive website" in the proposed rule as a website in which computer software-based models or applications provide investment advice to clients based on information that each client supplies through the website.21 We define the term "substantially all" in the proposed rule to mean that at least 90 percent of the investment adviser's clients obtain advice exclusively through the interactive website.22
We request comment on the terms of the proposed rule:
Does the proposed rule differentiate adequately between advisers that merely use the Internet to market their business and those that conduct substantially all of their advisory business through the Internet?
Will the test for "substantially all" appropriately limit the use of the rule, or are there alternative tests that we should consider?
The rule would require that 90% of the adviser's clients obtain their investment advice exclusively through the interactive website. Is 90% of clients the appropriate percentage? If not, what higher or lower percentage should we consider?
Should we require that these clients obtain all of their advice from the adviser through the interactive website? Alternatively, should we consider permitting an adviser to use the rule even if these clients obtain less than all of their advice through the website? If so, what proportion should we require? How would the adviser measure that proportion? What burden would this measurement place on the adviser?
We estimate that as many as 20 advisers may currently be eligible for the exemption provided by the proposed rule amendments. Is this estimate reasonable?
We believe that demand for Internet Investment Advisers' services may grow in the next several years, perhaps as part of the growing demand for advice to pension plan participants. Is this expectation reasonable? How many new Internet Investment Advisers are likely to form to meet any increases in demand?
Are there other types of investment advisers - without assets under management but operating in many states - that face similar burdens? How many of these advisers are there? In how many states do they typically register? Should we also consider exempting them from section 203A?
III. Request for Comment
Any interested persons wishing to submit written comments on the proposed rule amendments that are the subject of this release, or to submit comments on other matters that might have an effect on the proposals described above, are requested to do so. Commenters suggesting alternative approaches are encouraged to submit proposed rule text.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, the Commission also is requesting information regarding the potential impact of the proposed rule amendments on the economy on an annual basis. Commenters should provide empirical data to support their views.
IV. Cost-Benefit Analysis
A. Background
The Commission is sensitive to the costs and benefits imposed by its rules. Proposed rule 203A-2(f) under the Advisers Act would permit certain investment advisers that provide advisory services through interactive Internet websites to register with the Commission rather than with the state securities authorities. These investment advisers cannot currently register with the Commission because they do not meet the Act's statutory thresholds, that is, they do not have $25 million or more of assets under management and do not advise registered investment companies.23 Unlike most state-registered advisers, Internet Investment Advisers have no local presence and their activities are not confined to one or a few states; the nature of the Internet makes these advisers' services available to clients in all states, and an adviser's state registration obligations could be triggered without warning within a single day or hour when six or more clients from a single state obtain personalized investment advice from the adviser's interactive website.24 As a practical matter, therefore, Internet Investment Advisers need to register in all states to avoid violating state laws.25
Congress gave us authority to permit advisers to register with us even though they do not meet the statutory threshold if the prohibition would be unfair, a burden on interstate commerce, or otherwise inconsistent with NSMIA's regulatory division between the states and the Commission. We have used this authority to adopt exemptive rules to permit Commission registration of advisers that did not meet the statutory thresholds in section 203A. The rule amendment we are proposing today is designed to alleviate the substantial burden of multiple state registration and regulation for Internet Investment Advisers by permitting these advisers to register with the Commission.
Since most Internet Investment Advisers do not currently register with us, we have limited data on the number of investment advisers that would qualify at this time for the proposed exemption. Based on news articles, however, and for purposes of the Paperwork Reduction Act, we have estimated that perhaps as many as 20 firms would currently be eligible for the new exemption.
Comment is requested on our estimate of the number of investment advisers likely to register with the Commission under the proposed rule.
Commenters are requested to provide views and empirical data relating to the number of these advisers.
B. Benefits
The proposal would benefit Internet Investment Advisers by relieving them of the costs they would otherwise incur if they were required to comply with the registration and other regulatory requirements of 49 states. As discussed earlier, Internet Investment Advisers, as a practical matter, would have to register in all states and then wait until their registration obligations are triggered in at least 30 states before becoming eligible for Commission registration under our multi-state exemption in rule 203A-2(e).26 Adviser regulations and requirements are not uniform and may even be contradictory from state to state. Based on recent discussions with counsel familiar with state adviser registration and regulatory issues, we estimate the cost to an Internet Investment Adviser of complying with the registration and other regulatory requirements of 49 states to be approximately $50,000 annually.27 The benefit of the proposed rule is therefore estimated to total as much as $1 million annually for the 20 advisers that may be eligible for the new exemption at this time.28 Moreover, subjecting these advisers to the cost of registering temporarily in all state jurisdictions and to multiple state regulation acts as an impediment to launching these businesses. The proposed rule would benefit the advisers industry by removing this barrier, and may enable more firms to offer these types of Internet-based services.
The benefits of the proposed rule would also include the savings to the affected advisers from the cost of examinations by multiple states' regulators, as well as the savings to state securities authorities that would no longer examine these firms.
C. Costs
Proposed rule 203A-2(f) would impose certain costs on advisers relying on the exemption. The Commission estimates that the total cost to each Internet Investment Adviser to comply with the recordkeeping provision of the proposed rule would be approximately $138.80,29 such that the total cost for the 20 advisers that may be eligible for the new exemption at this time would be $2,776.30
D. Form ADV
We have not included the benefits or costs associated with filing Form ADV,31 nor benefits or costs associated with the Investment Adviser Registration Depository (IARD). Form ADV is used by the states as well as by the Commission to register investment advisers, such that all advisers registering with either the Commission or a state complete a single Form ADV; advisers may file the form with the Commission or with one or more states. Shifting an Internet Investment Adviser's registration from the states to the Commission, therefore, does not change their basic filing requirement.32 Similarly, state-registered advisers as well as advisers registered with the Commission make their Form ADV filings electronically through the IARD and pay the attendant filing fees.33 Shifting an Internet Investment Adviser's registration from the states to the Commission does not change this filing process or the IARD filing fees.
E. Request for Comment
The Commission requests comment on the potential costs and benefits identified in this release, as well as any other costs or benefits that may result from the proposal.
We encourage commenters to identify, discuss, analyze, and supply relevant data regarding these or additional costs and benefits.
V. Paperwork Reduction Act
A. Recordkeeping
Proposed rule 203A-2(f) would exempt, from the prohibition against Commission registration, certain investment advisers that provide advisory services through the Internet. The proposed rule includes a recordkeeping provision, and therefore contains a new "collection of information" requirement within the meaning of the Paperwork Reduction Act of 1995.34 The Commission staff needs and will use this collection of information in its examination and oversight program. The proposed rule requires advisers registering under the rule to maintain a record demonstrating that substantially all of their advisory business has been conducted through an interactive website. Although we anticipate that most advisers registering under the proposed rule would generate the necessary records in the ordinary conduct of their Internet advisory business, the recordkeeping requirement of proposed rule 203A-2(f) may impose a small additional burden on these advisers. We estimate that this recordkeeping burden should not exceed an average of 4 hours annually per adviser, for a total burden of 80 hours annually.35
We request comment whether the estimate of our recordkeeping burden is reasonable.
The Commission is submitting the collection of information to the Office of Management and Budget ("OMB") in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The title for the collection of information is "Exemption for Certain Investment Advisers Operating Through the Internet" under the Advisers Act. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The collection of information is mandatory, and responses are not kept confidential. The likely respondents to this information collection would be investment advisers that meet the conditions of the proposed rule and register with us.
B. Form ADV
In addition, the proposal would amend Form ADV to add a new category of advisers eligible for Commission registration. The proposed rule therefore would increase the number of advisers that file Form ADV and annual amendments to Form ADV with the Commission. The title for this existing collection of information is "Form ADV" under the Advisers Act. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The form contains currently approved collection of information numbers under OMB control number 3235-0049 (expires June 30, 2003), and the Commission is submitting the amendments to this collection of information to the Office of Management and Budget ("OMB") in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The collection of information is found at 17 CFR 275.203-1, 275.204-1, and 279.1. This collection of information also is mandatory. Responses are not kept confidential. The likely new respondents to this information collection would be the investment advisers that meet the conditions of the proposed rule and register with us.
As new respondents,36 these advisers will increase the total burden under Form ADV, but an Internet Investment Adviser's burden for completing Form ADV would not differ from that for current registrants.37 The currently approved burden of the collection of information under Form ADV is 46,466 hours, and the current average burden for each form is 9.402 hours.38 We estimate that approximately 20 Internet Investment Advisers would register with the Commission under the proposed rule,39 and that each of these advisers would file one complete Form ADV and one amendment annually.40 The increase in the total annual burden for this collection of information would therefore be 455 hours,41 for a total revised burden of 46,921 hours.42
We request comment whether these estimates are reasonable.
C. Request for Comment
Any information received by the Commission related to the proposed rule amendments would not be kept confidential. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments to:
evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility;
evaluate the accuracy of the Commission's estimate of the burden of the proposed collections of information;
determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and
determine whether there are ways to minimize the burden of the collections of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology.
Persons wishing to submit comments on the collection of information requirements should direct them to the Office of Management and Budget, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Room 3208, Washington, DC 20503, and also should send a copy to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609 with reference to File No. S7-10-02. OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication, so a comment to OMB is best assured of having its full effect if OMB receives the comment within 30 days after publication of this release. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7-10-02, and be submitted to the Securities and Exchange Commission, Records Management, Office of Filings and Information Services, 450 Fifth Street, NW, Washington, DC 20549.
VI. Initial Regulatory Flexibility Analysis
The Commission has prepared the following Initial Regulatory Flexibility Analysis ("IRFA") regarding proposed rule 203A-2(f) in accordan7ce with section 3(a) of the Regulatory Flexibility Act.43
A. Reasons for Proposed Action
Section 203A(a) of the Investment Advisers Act of 1940 generally prohibits an investment adviser from registering with the Commission unless the adviser either has at least $25 million of assets under management or is an adviser to a registered investment company. Internet Investment Advisers do not meet the statutory thresholds for registration with us and do not qualify to use our existing exemptive rules. Section 203A(c) of the Advisers Act gives us authority to permit investment advisers to register with us when the prohibition of section 203A(a) would be unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes of section 203A.44 Without this proposed rulemaking relief, Internet Investment Advisers, as a practical matter, may be left with the burden of registering in 49 states, waiting until their registration obligations accrue in at least 30 states, and then registering with the Commission under the multi-state exemption of rule 203A-2(e) and withdrawing the state registrations. The proposed rule would eliminate the unnecessary burden of these temporary state registrations by permitting these advisers to register with us.
B. Objectives and Legal Basis
The objective of the proposed amendments is to alleviate the burden of multiple state regulation on investment advisers that conduct substantially all of their advisory business through interactive websites. Proposed rule 203A-2(f) would achieve this objective by providing these advisers with an exemption from the prohibition on Commission registration. We are proposing this rule pursuant to our authority under section 203A(c) of the Act.45 Section 203A(c) of the Act gives us the authority, by rule or regulation upon our own motion, or by order upon application, to permit registration with us of any person or class of persons to which the application of the prohibition on Commission registration would be unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes of section 203A.
C. Small Entities Subject to Proposed Rule
Under Commission rules, for the purposes of the Advisers Act and the Regulatory Flexibility Act, an investment adviser generally is considered a small entity if it: (i) has assets under management having a total value of less than $25 million; (ii) did not have total assets of $5 million or more on the last day of its most recent fiscal year; and (iii) does not control, is not controlled by, and is not under common control with another investment adviser that has assets under management of $25 million or more, or any person (other than a natural person) that had $5 million or more on the last day of its most recent fiscal year.46 The Commission estimates that approximately 20 investment advisers will likely be eligible to register with us under the proposed rule, and it is probable that all of these approximately 20 investment advisers will be small entities.47
Comment is requested on the number of Internet Investment Advisers that are likely to be small entities.
Commenters are requested to provide views and empirical data relating to the number of these advisers that would be considered small entities.
D. Reporting, Recordkeeping, and Other Compliance Requirements
The proposed rule would impose certain new recordkeeping requirements on Internet Investment Advisers. The proposed rule would not impose any other new or additional reporting or compliance requirements on these advisers, and would significantly reduce certain compliance burdens for these advisers by eliminating the need for these advisers to comply with multiple state regulations. As discussed earlier, most or all of these advisers would likely be small advisers. Under the proposed rule, Internet Investment Advisers would be required to maintain in an easily accessible place a record demonstrating that substantially all of their advisory business has been conducted through an interactive website. The Commission believes that the recordkeeping requirement contained in the proposed rule would not impose a significant burden on Internet Investment Advisers, including small advisers.48
The Commission believes that the proposed amendment to Item 2 of Part 1A of Form ADV would have no measurable effect on Internet Investment Advisers, including small advisers. A new box would be added to Item 2 for Internet Investment Advisers to indicate their eligibility to register with the Commission. An adviser registering with the Commission under the proposed rule would simply check that new box when completing Form ADV.
E. Duplicative, Overlapping, or Conflicting Federal Rules
The Commission believes that there are no rules that duplicate, overlap, or conflict with the proposed rule.
F. Significant Alternatives
The Regulatory Flexibility Act directs the Commission to consider significant alternatives that would accomplish the stated objective, while minimizing any significant adverse impact on small entities, including (i) establishing different compliance or reporting requirements or timetables that take into account the resources available to small advisers; (ii) clarifying, consolidating, or simplifying compliance and reporting requirements under the proposed rule for small advisers; (iii) using performance rather than design standards; and (iv) exempting small advisers from coverage of all or part of the proposed rule.
Regarding the first alternative, the Commission has considered establishing different compliance or reporting requirements for small advisers. Establishing different compliance or reporting requirements would be inconsistent with our mandate to provide a system of public disclosure of investment adviser information. An Internet Investment Adviser that is a small entity, however, by the nature of its business, would likely spend fewer resources in completing Form ADV and amendments, and pay lower filing fees, than a larger adviser.
Regarding the second alternative, the Commission has attempted to clarify and simplify compliance and reporting requirements under the proposed rule for all advisers, including small advisers. It does not appear that the proposed rule can be formatted differently for small advisers and still achieve its stated objective of providing relief from multiple state regulation. The proposal has been designed particularly to benefit Internet Investment Advisers, which are, we believe, generally small entities.
With respect to the third alternative, the proposed rule would permit advisers to use performance rather than design standards to meet certain requirements under the Act. The proposal, for example, does not specify the means by which an adviser must maintain its records to satisfy the recordkeeping requirements of the proposed rule.
Regarding the fourth alternative, the Commission has considered exempting small advisers from the proposed rule. Such an exemption would be inconsistent with the intended purpose of the proposal, which is to provide regulatory relief from multiple state regulatory requirements. Small advisers are the primary intended beneficiaries of this rulemaking relief.
The Commission has considered the above alternatives in the context of the proposed rule, and, after taking into account the resources available to Internet Investment Advisers that are small entities and the potential burden the proposal could place on these advisers, has concluded that the alternatives would not accomplish the stated objectives of the proposal.
G. Solicitation of Comments
We encourage written comments on matters discussed in this IRFA.
In particular, how many small entities would be affected by the proposed rule?
What burdens would the proposed rule impose on small advisers?
Commenters are asked to describe the nature of any impact and provide empirical data supporting the extent of the impact.
VII. Statutory Authority
We are proposing rule 203A-2(f) pursuant to our authority set forth in section 203A(c) of the Investment Advisers Act of 1940.49 Section 203A(c) of the Act gives us the authority, by rule or regulation upon our own motion, or by order upon application, to permit registration with us of any person or class of persons to which the application of the prohibition on Commission registration would be unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes of section 203A.
List of Subjects in 17 CFR Parts 275 and 279
Investment advisers, Reporting and recordkeeping requirements.
Text of Proposed Rule Amendments
For the reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulation is proposed to be amended as follows:
PART 275 - RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
1. The authority citation for Part 275 continues to read in part as follows:
Authority: 15 U.S.C. 80b-2(a)(11)(F), 80b-2(a)(17), 80b-3A, 80b-4, 80b-6(4), 80b-6a, 80b-11, unless otherwise noted.
* * * * *
2. Section 275.203A-2 is amended by adding paragraph (f) to read as follows:
§ 275.203A-2 Exemptions from prohibition on Commission registration.
(f) Internet investment advisers. (1) An investment adviser that:
(i) Conducts substantially all of its advisory business through an interactive website on the Internet; and
(ii) Maintains in an easily accessible place, for a period of not less than five years from the filing of a Form ADV that includes a representation that the adviser is eligible to register with the Commission under paragraph (f)(1)(i) of this section, a record demonstrating that substantially all of its advisory business has been conducted through an interactive website.
(2) For purposes of this section:
(i) Interactive website means a website in which computer software-based models or applications provide investment advice to clients based on information each client supplies through the website.
(ii) Substantially all means that at least 90 percent of the investment adviser's clients obtain their investment advice from the adviser exclusively through the interactive website.
PART 279 - FORMS PRESCRIBED UNDER THE INVESTMENT ADVISERS ACT OF 1940
3. The authority citation for Part 279 continues to read as follows:
Authority: The Investment Advisers Act of 1940, 15 U.S.C. 80b-1, et seq.
4. Form ADV (Referenced in § 279.1), Part 1A, Item 2 is amended by revising the introductory text of paragraph A, paragraph A.(10) and A.(11), and by adding paragraph A.(12) to read as follows:
Note: The text of Form ADV does not and the amendment will not appear in the Code of Federal Regulations.
Form ADV
* * * * *
Part 1A
* * * * *
Item 2 SEC Registration
* * * * *
A. To register (or remain registered) with the SEC, you must check at least one of the Items 2.A(1) through 2.A(11), below. If you are submitting an annual updating amendment to your registration and you are no longer eligible to register with the SEC, check Item 2.A(12). You:
* * * * *
(10) are an Internet investment adviser relying on rule 203A-2(f);
(11) have received an SEC order exempting you from the prohibition against registration with the SEC;
If you checked this box, complete Section 2A(11) of Schedule D.
(12) are no longer eligible to register with the SEC.
* * * * *
5. Form ADV (Referenced in § 279.1), Schedule D is amended by revising the heading "Section 2.A(10)" to read "Section 2.A(11)".
By the Commission.
Margaret H. McFarland
Deputy Secretary
Dated: April 12, 2002
--------------------------------------------------------------------------------
Notes
1 We do not edit personal or identifying information, such as names or e-mail addresses, from electronic submissions. Submit only information you wish to make publicly available.
2 National Securities Markets Improvement Act of 1996, Pub. L. No. 104-290, 110 Stat. 3416 (1996)(codified in scattered sections of 15 U.S.C.).
3 See S. Rep. No. 293, 104th Cong., 2d Sess. 3-4 (1996) (hereafter Senate Report) at 4 ("The states should play an important and logical role in regulating small investment advisers whose activities are likely to be concentrated in their home state.").
4 15 U.S.C. 80b-3a.
5 Section 203A(a)(1) of the Advisers Act [15 U.S.C. 80b-3a(a)(1)]. Rule 203A-1(a)(1) increases the assets under management threshold from $25 million to $30 million for registration with the Commission. [17 CFR 275.203A-1(a)(1)]. Upon reaching the $30 million threshold, advisers must register with us. Advisers having assets under management between $25 million and $30 million may opt to register with us. [17 CFR 275.203A-1(a)(2)].
6 Section 203A(b) of the Advisers Act [15 U.S.C. 80b-3a(b)].
7 Section 222 of the Advisers Act [15 U.S.C. 80b-18a]. The prohibition in section 203A against registration with the Commission applies to advisers whose principal office and place of business is in a United States jurisdiction that has enacted an investment adviser statute. See Rules Implementing Amendments to the Investment Advisers Act of 1940, Investment Advisers Act Release No. 1633 (May 15, 1997) [62 FR 28112 (May 22, 1997)], at text accompanying note 83. Currently, 49 states have investment adviser statutes, as do the District of Columbia, Puerto Rico and Guam. Investment advisers in Wyoming and the United States Virgin Islands, which do not have adviser statutes, register with us.
8 See Senate Report at 4-5.
9 Section 203A(c) of the Advisers Act [15 U.S.C. 80b-3a(c)]. See Senate Report at 5. Section 203A was designed to allow the Commission to better use its limited resources by concentrating its regulatory responsibilities on larger advisers with national businesses, and to reduce the burden to investment advisers of the overlapping and duplicative regulation (that existed prior to enactment of NSMIA) by preempting state investment adviser statutes, thus subjecting large advisers with national businesses to a single regulatory program administered by the Commission. See Senate Report at 2-4.
10 The exercise of our exemptive authority permits registration with the Commission and preempts state law with respect to the exempted advisers that register with us.
11 We recognize that other advisers use the Internet in other ways. For example, other advisers may use websites for marketing purposes. See infra Section II of this Release. The proposed rule amendment, however, does not address these other Internet uses.
12 See Andrew Willmott, Legg Mason Nurtures Mass Affluent, FUNDfire, Dec. 12, 2001; Caren Chesler, Technology A Must In Managed Account Mart, FUNDfire, July 27, 2001.
13 17 CFR 275.203A-2(e). An investment adviser relying on this exemption must represent that it has reviewed its obligations under state and federal law and has concluded that it would be required to register as an investment adviser with the securities authorities of at least 30 states. Following registration with us, the investment adviser continues to be eligible for the exemption as long as it can annually represent that it would be required to register in at least 25 states.
14 The multi-state exemption codified exemptive orders that permitted large accounting firms that offered financial planning services to register as advisers with the Commission even though they did not manage assets.
15 In addition to the multi-state exemption, rule 203A-2 [17 CFR 275.203A-2] provides four other exemptions under which advisers register with the Commission, none of which may be available to Internet Investment Advisers. One of these exemptions permits a newly-formed adviser to register with us if the adviser is not already registered or required to be registered with the Commission or with a state securities authority, and the adviser has a reasonable expectation that, within 120 days, it will be eligible to register with us under a different basis. Rule 203A-2(d) [17 CFR 275.203A-2(d)]. This rule was designed for use principally by new advisory firms that have been "spun-off" from existing portfolio management firms and therefore can reasonably expect to have at least $25 million in assets under management within 120 days, and by advisers to new mutual funds that are expected to be operational within 120 days. Internet Investment Advisers, however, typically must register early in their development and testing phase in order to secure venture capital, and typically need more than 120 days to complete development and testing. Many may not even be fully operational within 120 days after registering.
16 See supra note 9 and accompanying text.
17 Proposed rule 203A-2(f)(1)(i).
18 A new box would be added to Item 2 of Part 1A of Form ADV for these advisers to indicate their eligibility to register with the Commission.
19 Proposed rule 203A-2(f)(1)(ii).
20 Internet use of some kind is very common among advisers. Over half of SEC-registered advisory firms, for example, report having at least one web address. A rule permitting all advisers using the Internet to register with the Commission could effectively undo NSMIA's division of regulatory responsibilities between the Commission and the states.
21 Proposed rule 203A-2(f)(2)(i).
22 Proposed rule 203A-2(f)(2)(ii).
23 These statutory thresholds were imposed in NSMIA, which divided responsibility for regulating investment advisers between the Commission and the state securities authorities.
24 Exceeding state-established de minimis numbers for advisory clients may trigger state registration requirements. The national de minimis standard in section 222(d) of the Advisers Act [15 U.S.C. 80b-18a(d)], however, preempts state minimums that are lower than six clients resident in that state during a 12-month period.
25 At this time, 49 states have investment adviser statutes, as do the District of Columbia, Puerto Rico and Guam. Wyoming and the United States Virgin Islands currently do not have investment adviser statutes. Advisers that maintain their principal places of business in those two jurisdictions must register with the Commission.
26 17 CFR 275.203A-2(e). Advisers relying on the multi-state exemption must be required to register with the securities authorities of at least 30 states. After registering with us, multi-state advisers continue to be eligible for the exemption as long as they can represent annually that they would be required to register in at least 25 states.
27 This figure includes the costs of responding to multiple states' comments on filings, as well as the cost of complying with multiple and often disparate state regulations. It does not, however, include the time to complete Form ADV initially and the fees to file Form ADV through the IARD, as discussed below. This figure also does not include state registration fees.
28 20 × 50,000 = 1,000,000.
29 The Commission estimated this figure by multiplying the burden hours to comply with the proposed rule's recordkeeping requirements (4 hours) by an average hourly compensation rate of $34.70. This compensation rate includes overhead and is the rate for an operations supervisor outside of New York City, based on a 2000 study by the Securities Industry Association. The estimate of burden hours is based on the Commission's submission for the proposed rule under the Paperwork Reduction Act and reflects recent discussions with counsel familiar with advisers' recordkeeping issues. See infra Section V. of this Release.
30 20 × 138.8 = 2,776.
31 17 CFR 279.1 (Form ADV).
32 Advisers registered with the Commission, however, complete only Part 1A of Form ADV, while advisers registered with the states must complete both Parts 1A and 1B.
33 Advisers pay filing fees to NASD Regulation, Inc., which operates the IARD system. The filing fees include an initial set-up fee and an annual fee, each of which varies based on the adviser's assets under management. Because Internet Investment Advisers generally do not manage client assets, we expect that they will be eligible for the lowest fee levels of $150 for the initial set-up fee and $100 for the annual fee. See Investment Advisers Act Release No. 1888 (July 28, 2000) [65 FR 47807 (Aug. 3, 2000)] ("Advisers Act Release No. 1888").
34 44 U.S.C. 3501-3520.
35 4 hours × 20 advisers = 80 hours. This estimate is based on recent discussions with counsel familiar with advisers' recordkeeping issues. The recordkeeping requirement does not require extensive data on usage of the website, nor does it specify how an adviser should maintain its records to meet this condition of the proposed rule. The adviser would need only to demonstrate that 90 percent of its clients obtain their investment advice from the firm exclusively through the website. We note that Internet Investment Advisers that conduct their business exclusively through interactive websites would likely need to spend very little time documenting their compliance with the condition. An adviser that also meets in person with some clients or communicates with them through other means may need to spend more time.
36 We note that, because the states as well as the Commission use Form ADV, these advisers will be new respondents for purposes of the Commission's collection of information requirements, but not new users of Form ADV.
37 The proposed amendments would add a new box to Item 2 of Part 1A of Form ADV, so that Internet Investment Advisers could indicate their eligibility for Commission registration. All advisers registering with the Commission must indicate their eligibility by checking at least one box, so the addition of the new box for Internet Investment Advisers will not change the burden of completing the form.
38 See Electronic Filing by Investment Advisers; Proposed Amendments to Form ADV, Investment Advisers Act Release No. 1862 (April 5, 2000) [65 FR 20524 (April 17, 2000)] ("Advisers Act Release No. 1862"). The current average burden per response includes 9,100 filings of the complete form at 22 hours each, plus 13,250 amendments requiring 0.75 hours each. [((9100 × 22) + (13250 × .75))/22350 = 9.402].
39 Our staff has examined approximately six advisers that registered with us and whose business is substantially Internet-based. Because most Internet Investment Advisers are not yet eligible to register with us, however, we believe that there may be as many as 20 firms that could register under the proposed new exemption.
40 The currently approved burden for this collection of information estimates that most advisers registering with the Commission for the first time will file one amendment per year.
41 22 hours to complete a new Form ADV × 20 Internet Investment Advisers = 440 hours. 0.75 hours per amendment × 20 amendments = 15 hours. 440 + 15 = 455.
42 46,466 + 455 = 46,921.
43 5 U.S.C. 603(a).
44 See supra note 9 and accompanying text.
45 15 U.S.C. 80b-3a(c).
46 17 CFR 275.0-7(a).
47 Internet Investment Advisers generally do not manage assets and therefore will not likely have any assets under management. These firms are also generally start-up businesses and may have limited assets; only one of the Internet-based firms our staff has examined reported having total assets of $5 million or more. Consequently, we believe that most, if not all, of the advisers registering with us under the proposed rule will be small entities.
48 Recordkeeping is already mandated for all Commission-registered advisers, including small advisers, under rule 204-2. [17 CFR 275.204-2.] The Commission has estimated, for purposes of the Paperwork Reduction Act, that compliance with the recordkeeping requirements of the proposed rule would take no more than 4 hours annually on average.
49 15 U.S.C. 80b-3a(c).
http://www.sec.gov/rules/proposed/ia-2028.htm
Joemoney, re: ILCC.....
I'm very excited about this company and what they are doing, but I don't feel that a run is eminent.....at least not in the next couple of weeks or so.
Meanwhile, the pps is showing upward movement on strength and I feel it will continue to do so....
Two reverse splits..........
On Monday, 4/8 two companies are scheduled to R/S
MMHD(changing to MMHG),,,,,,, 1:100 R/S
CALA(changing to CALI)....... 1:5 R/S
MMHD, doing the 1:100 R/S as part of the R/M with Midwest Merger Management, is currently .11 with an OS of only 18M
........(please double-check these numbers.....hard to believe..:)
Of the 18M OS, 12M is being issued to shareholders of Midwest.
After the R/S post-split trading should be around $11.00 with an OS of only 180K and a float of about 60K
IMO, incredible!.....If there is the usual post-split selloff, it should move VERY fast.
CALA. doing the 1:5 R/S to qualify for a NAZ listing,(they claim)
current OS is 15.9M,(3.175M post-split)
Trading at 1.27 the post split trading price should be about $6.00
The split announcement came at about 1.19 pps, but it appears that insider leaks had driven the price up from about .26
The truth of this split seems to be in the activities over the past year or so.
They have had to close offices and lay off many employees.
they're in trouble.
If this can be a good short play or not will depend on how low the price drops post-split........
(as usual...JMHO and other opinions are appreciated)
Merger and split.......
...WLSY,(OTCBB 2.75) has just completed a reverse merger with a private company and will be doing a 20:1 F/S(date not announced yet).
Since the current OS is only 4.5M and 15.5M shares will be issued to the carry-over shareholders of the private(surviving) company, the split MUST take place.
Even though the merger/split wasn't announced until about Feb 22, it appears that insiders leaked information about this two months in advance.
Beginning at the first of the year, the price started moving up from a base of .16
Now, it looks like profit-taking is bringing the price back down.
If the split were to take place today, the post-split trading price would be about .1375
IMO, not much area there for a post-split run.
But, if the selloff continues until the split date the pre-split price could be driven back down to the .16 level.
If that happens, the post-split trading price will be about .008 and an opportunity for great post-split profits.
There is potential for a 10-20 bagger..Watch for an entry point.
(as usual,,,JMHO)
Toni
I'm currently watching my failed investment (CTVWF) make somewhat of a comeback. If this company would get their act together, it would be a great buy.
As for larger capped (not priced, lol) stocks, I've been considering PALM and ERICY for a while just because they are trading so low, a 100% gain could be easily aquired in either of those stocks.
I've been in and out of BEAS, but am currently out indefinitely because I'm uncertain about whether or not they will continue bottoming out at 12 or so, or move to 8 like they did earlier last year.
Joemoney
Joemoney, alas! I have no free cash to buy into ILCC and won't until the end of the month.
Then, I plan to go long and look for plays along the way.
I've done quite a bit of research on this company and am very impressed.
The reason they are so cheap is; A...They just did an IPO nine months ago.
They started trading at about 2.00.
Since then, insiders and pre-listing buyers have been taking profits to bring it down to a nickel....but I don't expect it to last long.
Since 1998, when they started the business, they have made no money............until the last three months.
That's when they finally got approval from all the powers worldwide, including the FDA, to start marketing their VitalSAT medical machine.
The company has government funding, some of it in the form of grants(free), and have hired one of three new engineers to begin developing the FlipSAT, as hand held version of the VitalSAT.
They went public nine months ago and have already started to show earnings form sales of the VitalSAT....
This is just the beginning.
Scrooge, did you get any ILCC?
Are you long on this one? They seem to have a few wide trading range which would make them a good stock to trade. Not much volume though.
If you are in this one for the long term, trading it can help you accumulate more (free) shares.
Joemoney
Never mind...I found the answers....This looks very exciting.
Has anyone been watching ILCC?
I recently read a blurb on it and today, took a hard look at it.
Everything about the company looks very good, but there seems to be one problem.
For the last week or so, for no apparent reason, the price has been dropping like a rock........why?
Except for that, this stock really looks like it could jump and run.
Any thoughts?
Stock Buybacks Slow as Optimism Grows
By Nick Olivari
NEW YORK (Reuters) - Stocks are far below their all-time highs, yet companies aren't rushing to buy them up at bargain prices.
That could be seen taken as a sign that companies aren't optimistic about their shares -- but more likely it's another signal that an economic recovery is in the works.
``A lot of buybacks implies there are no other alternatives'' for spending a company's cash, said Anthony Chan, chief economist with Banc One Investment Advisors Corp. which oversees $142 billion in investment funds. But with the economy recovering, companies are investing their cash in real revenue-producing ventures.
Buybacks -- reducing the number of shares trading in the open market -- are generally viewed in the short term as positive for a company's stock price. They increase earnings per share, assuming profits are constant, and bolster the stock in the open market.
While only half of the repurchase programs announced ever come to fruition, according to research firm First Call, some investors suggest that the drop in buybacks may indicate that companies see a better return on their profits in the longer term by plowing them back into the business.
The recent decline in stock repurchases may indicate that ''companies see an economic recovery and there is no better rate of return available than retaining the cash and using it within the firm,'' said Banc One's Chan.
At $34.3 billion, the dollar amount of pending buybacks announced from the start of this year through to March 15 dropped 35 percent from the same period a year ago, according to market research firm Thomson Financial.
That's despite the Standard & Poor's 500 index (NYSE:SPX - news) being 10 points less than where it traded in mid March, 2001, and with the Nasdaq composite index (^IXIC - news) trading down 4 percent, implying stocks overall are about the same price as they were 12 months ago. Both indices are far from the all-time highs attained in 2000, with Nasdaq less than half its best-ever and the S & P average just about three-quarters of its peak.
Still, companies are spending less on their shares, reducing not just the number of buyback programs but also the amount they commit when they launch one, market analysts say.
Recent buyback programs include that of consulting firm Accenture Ltd.(NYSE:ACN - news), which announced a $100 million repurchase program on Feb. 26. New York Times Co. (NYSE:NYT - news) said Feb. 21 that its board of directors authorized $300 million to buy back shares on additional program.
Still, those pale against the last big announced repurchase program, an $8 billion buyback announced by General Electric Co.(NYSE:GE - news) in December, which brought its total buyback authorization to $30 billion.
MARKET NOT IMPRESSED
Stock market investors, for the most part, don't get very excited when companies launch stock repurchase programs.
``Investors are not overly impressed by buybacks for more than a day,'' said Rich Sichel, chief investment officer with Philadelphia Trust Co. which oversees $600 million. ``Companies may see better use for their cash in the long-term by spending on research.''
To be sure, buybacks have their fans and can sway the thinking on Wall Street. For some companies with cash to burn it's a good way to reward shareholders, they say.
Morgan Stanley analysts Henry McVey and Scott Patrick cut their earnings estimates on J.P. Morgan Chase & Co. on Friday, arguing that without repurchases and little revenue growth, there were no big catalysts for a sustained move in the stock.
Other investors say management should be more opportunistic, taking advantage of low share prices when they can to buy back stock.
``There are a lot of money managers out there who are asleep at the switch,'' said Howard Kornblue, a money manager with Phoenix-based ING Funds LLC $20 billion.
``It's the same rationale as any investment situation,'' Kornblue said. ``Buy low and take advantage'' of the price.
ECONOMIC FEARS
While some see a bullish signal in the decline of buybacks, others see it simply as another lingering impact of the weak economy.
``The recession had a negative impact on share repurchase programs,'' said Dan Veru, a money manager with Palisade Capital Management LLC which oversees $2.5 billion in assets.
Some companies may be seeking to retain cash in case corporate profits and the recession have more downside, money managers said.
``But that is precisely when you want to take advantage of a low stock price,'' Kornblue argued. ``You don't have low stock prices when there is certainty and things are looking good.''
Another restraint on buyback plans could be the large number of already-announced repurchase programs still pending, which may partly explain the dearth of announcements so far in 2002, market watchers said.
Through to the first week of March, IBM Corp. (NYSE:IBM - news) had total pending buyback programs totaling $48.5 billion, Intel Corp. had $20.5 billion and Merck & Co. some $20 billion in pending programs, according to First Call data.
Companies like Big Blue tend to use share buybacks as part of their long-term financial strategy -- part of a broader program to increase shareholder value. The world's largest maker of computer equipment spent $44 billion on share buybacks from 1995 through to 2001, about half the amount it spent on research and development, capital expenditure and acquisitions in the same period.
``IBM's share repurchase program is part of an overall program of cash managements and investment,'' said Carol Makovich, vice president of media relations at IBM. ``While we have repurchased our stock since 1995, we have also continued to invest in our business for growth.''
http://biz.yahoo.com/rb/020323/business_bizstocks_dc_2.html
Invesco Vice President Expects S&P 500 To Hit 1400 By Year's End
By: Tom Locke, Of DOW JONES NEWSWIRES
DENVER -(Dow Jones)- Invesco Funds Group Inc. Vice President and economic forecaster Fritz Meyer outlined a bullish outlook that includes a view the S&P 500 Index will rise roughly 20% and hit 1400 by the end of the year.
Driven up by an economic recovery that will boost corporate profits, stocks will see an influx of investment from cash that's now on the sidelines, Meyer told attendees at a Thursday luncheon presentation sponsored by the Denver Society of Security Analysts.
That cash is waiting in the form of money market funds. Toward the end of 2001, money market funds as a percentage of stock market capitalization reached more than 20%, their highest point of the last 14 years, he said.
"Fourteen hundred makes sense to me (for the S&P 500)," Meyer told Dow Jones Newswires after his presentation. He said that stock prices of 21 times 2003 earnings would mean a boost in the S&P to 1400.
He expects the Dow Jones Industrial Average to move more or less in line with the S&P 500, and the Nasdaq Composite Index to move up more than 20% by year end because its moves tend to be more extreme than the S&P 500.
Of course, Meyer has been wrong before. At a TD Waterhouse conference in Denver in June, he told attendees that he expected the S&P 500 Index to rise 20% and hit 1500 by the end of 2001. The index ended 2001 at 1148, down 172 points for the year.
Meyer told Dow Jones Thursday that he was correct in June in predicting a mild recession, but his projection on the S&P 500 was upset by a more severe profits recession than he expected and by the terrorist attacks of Sept. 11 .
If it hadn't been for Sept. 11 , he still believes April of last year would have been the bottom for the market, he said. Now he thinks the market hit bottom on Sept. 21 .
Meyer is particularly bullish on stocks, versus other investments, noting they have outperformed over 200-year, 25-year, and rolling 5-year time lines. If $10, 000 were invested in stocks in the S&P 500 Index in December 1975 , it would have been worth $427,515 by December 2001 , versus $125,551 for long-term corporate bonds and $57,600 for Treasury bills, according to Meyer. Inflation during that time would have translated the $10,000 to $34,110.
Signs Of Economic Rebound Plentiful
Among recent positive signs for the economy are manufacturing indexes moving into expansion territory, job growth recorded in February, no slowdown in consumer spending, an inventory-to-sales ratio that's the lowest in two years, growth in real disposable income, a recent fiscal stimulus package and lower oil prices, said Meyer.
The drop in gasoline prices over the last two months has resulted in $35 billion in increased purchasing power, he said, which is greater than the $27 billion loss in purchasing power that would result from the loss of a million jobs.
And there's the impact of lower interest rates. "The market has never not responded to Fed rate cuts," Meyer said.
While the unemployment rate is still high, unemployment figures lag what's happening in the economy, he added.
Taking all that into consideration, Meyer expects gross domestic product to start growing at a 3% to 4% rate in the "not too distant future." That would be getting back to the average of 3.5% growth the U.S. has experienced sine 1950, he said.
Meyer discounts talk of a double-dip scenario in which the U.S. would emerge from recession and then fall back in. Because of improved inventory management and the decline in importance of cyclical manufacturing and agriculture, the U.S. has been in recession less than 10% of the time in the last 25 years, compared with 40% of the time between the Civil War and the end of World War II, he said.
He also is encouraged by the global evolution toward more trade and by demographics. With the peak year for baby boomers having been 1961, peak-year babies are now about 40 years old and have 25 years before the retirement age of 65. Plus, a study of baby boomers two years ago showed 80% don't expect to retire at 65 anyway, he said.
With an economic recovery, corporate profits will jump back dramatically even with only a modest increase in revenue, he said, noting that productivity has remained high.
Meyer also expects technology stocks to perform well this year. He believes businesses have installed only half the technology they need to and that they'll invest in technology to raise profits through greater productivity.
"The spending numbers on tech equipment have already turned," Meyer said.
As portfolio manager of the Invesco Growth & Income Fund - which is among the funds under Amvescap (NYSE: AVZ - news) PLC (AVZ) - Meyer likes certain stocks in tech areas such as servers, switches, software and storage. They include Cisco Systems (NasdaqNM: CSCO - news) Inc. ( CSCO), EMC Corp. (EMC), Sun Microsystems (NasdaqNM: SUNW - news) Inc. (SUNW), Oracle Corp. (ORCL), Siebel Systems (NasdaqNM: SEBL - news) Inc. (SEBL) and BEA Systems (NasdaqNM: BEAS - news) Inc. (BEAS), he said.
-By Tom Locke, Dow Jones Newswires; 303-293-9294; tom.locke@dowjones.com
(This story was originally published by Dow Jones Newswires)
http://biz.yahoo.com/djus/020315/200203151750000627_1.html
I will be writing the Market Outlook this Sunday, the 17th.
Thank You,
Joemoney
Caradoc, what if your opinion of this post?
http://www.investorshub.com/boards/read_msg.asp?message_id=290693
Note that PWTC saw price and volume action yesterday for no apparent reason. See two most recent posts on RB's PWTC board for my midnight musings on what the heck is going on.
http://ragingbull.lycos.com/mboard/boards.pl?board=pwtc
Caradoc
Optimism to Drive Stocks Higher
By Denise Duclaux
NEW YORK (Reuters) - A growing conviction that the nation's economy and corporate profits are gathering strength will take on a life of its own next week, pushing stocks up as investors worry they'll miss out on the rally.
``We have gotten a string of very good data,'' said Jay Mueller, economist and portfolio manager at Strong Capital Management, which oversees $45 billion. ``Almost everything has come in at or better than consensus. The numbers are good, and you really can't keep it a secret anymore that things are looking up.''
Even Federal Reserve Chairman Alan Greenspan adopted a brighter stance toward the U.S. economy, admitting this week an expansion was ``well under way'' and essentially declaring the recession over. With no blockbuster earnings reports expected and no economic data seen rocking the market, Wall Street's improving sentiment may convince more investors next week to ready their portfolios for a rebound.
``We're coming off a week that has seen very good (economic) numbers and that's very bullish,'' said Larry Seruma, senior equities trader for Barclays Global Investors. ``The economy is turning a corner -- that's the consensus across the board.''
Tensions are still running high, analysts warn, as investors remember a string of false rallies over the past two years. Concern that stock prices are getting stretched and worry over unforeseen events will keep a lid on gains -- especially after four straight winning weeks in the blue-chip Dow Jones Industrial average (^DJI - news).
``Let's remember we are one headline on the tape away from having the market be in a bad way again, with all of what is going on in the Middle East and what is going on in Afghanistan,'' said Charles White, president of Avatar Associates, which oversees $2 billion. ``That probably will keep the euphoria in the market down a bit.''
UPWARD MOMENTUM TO LIFT STOCKS
The technology-loaded Nasdaq composite index (^IXIC - news) has scrambled ahead 7 percent this week, while the broad Standard & Poor's 500 index (^SPX - news) rallied almost 3 percent and the Dow snagged a 2 percent gain. The blue-chip Dow average has surged more than 800 points in the last four weeks as economic numbers land stronger than analysts have forecast.
``Right now, our indicators, especially on a shorter-term basis are still positive,'' said Art Huprich, a technical analyst at Raymond James & Associates.
Huprich added he expected next week's ``triple witching'' -- the simultaneous expiration of futures, options contracts and index contracts -- will make for a seesaw market, but stocks should end higher on the week.
``The backdrop is very positive,'' said A.C. Moore, chief investment strategist of Dunvegan Associates. ``We see the Nasdaq probably outperforming in the near term, because that is where the upside leverage would be on an economic recovery. But I think selectivity is going to be increasingly important.''
Indeed, analysts aren't ruling out bouts of profit-taking as the recent rally triggers concerns stocks are getting too pricey. The price-to-earnings ratio -- a key valuation gauge for stocks -- stands at more than 22 times calendar year 2002 earnings and more than 18 times calendar year 2003 earnings, according to research firm Thomson Financial/First Call. That's below 26 in March of 2000 when the S&P 500 hit its lifetime high, but still above the historical average of about 15 to 16 times forward earnings.
``There are certainly things lurking out there that give one cause for reflection at these levels,'' White said.
MORE GOOD NEWS EXPECTED ON ECONOMY
Greenspan's upbeat assessment this week came amid a flurry of reports, including a drop in the jobless rate and a jump in orders in manufactured goods, that point to the end of a recession and the start of a turnaround. The rush of solid data is expected to continue next week. But analysts caution a mild recovery will follow the mild recession that began last March.
``I don't think there is a whole lot of dried tinder to feed a kind of explosive recovery, but I don't think we have severe headwinds either,'' Mueller said. ``So I think we are going to get a fairly middle-of-the-road recovery.''
On Wednesday, the Commerce Department will release retail sales for February. Retail sales are expected to rise 0.9 percent, reversing a dip of 0.2 percent in January, according to economists polled by Reuters. Stripping out sales of autos, economists expect retail sales to climb 0.5 percent, compared with a jump of 1.2 percent in January.
On Thursday, the government will report January figures on business inventories. Economists expect the inventories of U.S businesses to fall 0.3 percent, compared with a drop of 0.4 percent in December.
On Friday, the government is slated to release producer prices -- prices charged at the factory door and farm gate. The U.S. Producer Price Index is expected to inch up 0.1 percent in February, matching a 0.1 percent rise in January, according to a Reuters poll. Excluding volatile food and energy prices, producer prices are forecast to edge up 0.1 percent in February after shedding 0.1 percent in January.
http://biz.yahoo.com/rb/020309/business_column_stocks_outlook_dc_1.html
Economic Data Pushes Dow to 6-Month High
By Haitham Haddadin
NEW YORK (Reuters) - Stocks rallied on Friday, with the blue-chip Dow Jones industrial average hitting a six-month high, after upbeat data on manufacturing, construction and consumer spending raised hopes the economy and corporate profits will rebound soon.
A rosy business outlook from Novellus Systems Inc. (NasdaqNM:NVLS - news), a major producer of chip-making equipment, also helped. Novellus shares soared 14 percent and a sector rally ensued.
``It's an extremely powerful and meaningful rally, based on the economic data, which negate the thought the economy is in recession. That's what the market wants to hear,'' said Peter Cardillo, chief strategist at Global Partners. ``Novellus' bright outlook also added a lot of wood to the fire.''
The Dow surged 262.73 points, or 2.6 percent, to 10,368.86 -- its strongest close since Aug. 27, 2001.
The broader Standard & Poor's 500 Index (^SPX - news) rose 25.05 points, or 2.26 percent, to 1,131.78. The technology-laced Nasdaq Composite Index (^IXIC - news) pulled in a gain of 71.26 points, or 4.12 percent, to 1,802.75.
For the week, the Nasdaq rose 4.54 percent, snapping a four-week losing streak. The Dow average rose for the third straight week, gaining 4.02 percent, while the S&P 500 climbed 3.85 percent.
A key report showed factories had boosted production in February for the first time since July 2000 to meet a wave of new orders as demand for manufactured goods soared. That, plus other data for January showing U.S. consumer spending surged and construction spending grew at its fastest pace in a year, offset a drop in a closely watched consumer sentiment gauge.
``For several months now, the economic data has been stronger than the market,'' said Edward Hemmelgarn, chief investment officer of Shaker Investments, which oversees $2.3 billion. ``People are taking the better economic numbers and, for the first time, believing that that may translate into better corporate (earnings) numbers.''
Semiconductor stocks helped lead Nasdaq's rebound after the update by Novellus, whose shares rallied $5.97 to $48.56. ''There are signs of the downturn going away,'' Novellus Chairman and Chief Executive Richard Hill said. ``We see that February has followed January with continued signs of recovery.''
The Philadelphia Stock Exchange's semiconductor index (^SOXX - news) jumped 11 percent, reflecting gains in the shares of others such as Applied Materials (NasdaqNM:AMAT - news), up $4.51 at $47.98.
``Maybe we can see other companies giving better guidance or even hint at increasing capital spending,'' Cardillo said.
Chip giant Intel Corp. (NasdaqNM:INTC - news) climbed $2.43 to $30.98, helping both the Dow and the Nasdaq. It reported China was set to overtake Japan as its largest Asian customer within two years.
Chartered Semiconductor Manufacturing (NasdaqNM:CHRT - news), the world's third-largest independent foundry, raised its guidance and pointed to a sector rebound. It rose $2.87 to $25.35.
Crown Castle International Corp. (NYSE:CCI - news), the No. 2 wireless tower operator, rose 27 percent, or $1.69, to $7.90, after it reported greater-than-expected leasing revenues for the fourth quarter amid a downturn in the industry.
AT&T Wireless Services Inc. (NYSE:AWE - news) fell sharply as the nation's No. 3 wireless company warned that revenue growth -- excluding a recent acquisition -- will slow due to the weak economy and increased competition. It was the most active stock on the Big Board, slumping $1.49 to $8.60.
Biotechnology companies Invitrogen Corp. (NasdaqNM:IVGN - news) and Protein Design Labs Inc. (NasdaqNM:PDLI - news) sank after each said sales growth in 2002 would be slower than expected. Invitrogen fell $11.52 to $34.12. Protein Design fell 93 cents to $14.94.
PerkinElmer Inc. (NYSE:PKI - news) sank 31.52 percent after the maker of scientific instruments lowered its earnings forecasts and said it would cut 500 jobs and reorganize a unit. Shares plunged $7.25 to $15.75.
But Andrx Corp. (NasdaqNM:ADRX - news) surged 25.29 percent after a federal judge threw out a lawsuit claiming its planned copycat forms of British drugmaker GlaxoSmithKline's drugs Wellbutrin and Zyban infringe Glaxo patents. Andrx jumped $8.46 to $41.91.
A rise in mortgage applications and industrial metal prices, along with a fall in corporate bond yields, helped to push a weekly indicator of U.S. economic activity slightly higher last week, the Economic Cycle Research Institute said.
``It's hanging in at relatively modest growth rates, which is telling you that the recovery is not going to be a gangbusters recovery,'' said Anirvan Banerji, ECRI research director. ``But if it stays here, then we don't see a double-dip recession.''
The Dow muscled right through a key technical ``resistance'' level at 10,300. A close above that level, technical analysts now believe, opens the way to tackle resistance at 10,400 to 10,500.
Resistance -- a level where sellers are likely to emerge -- is now set at 10,500 for the Dow, 1,850 for Nasdaq, and 1,132 for S&P, according to Schaeffersresearch.com.
Support -- where buyers are expected to swoop in -- is at 1,750 for Nasdaq, 10,200 for the Dow, and 1,120 for the S&P. The levels are key elements of technical analysis, which studies prices, volume and charts.
http://biz.yahoo.com/rb/020301/business_markets_stocks_dc_16.html
Keep an eye on ISIS
(NASDAQ:ISIS)
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=ISIP&sid=7666&time=
Profile: http://bigcharts.marketwatch.com/quickchart/qsymbinfo.asp?sid=7666&time=8&freq=1&symb=IS....
NOTE: Ticker symbol has recently changed and Yahoo has not updated it, go to Bigcharts.com or Pinksheets.com to get a quote.
Isis Pharmaceuticals' GeneTrove(TM) Division Initiates Target Validation Collaboration With Merck & Co., Inc.
http://biz.yahoo.com/prnews/020221/lath009a_1.html
Revenue in the quarter rose to $21.7 million from $7.9 million a year ago
more: http://biz.yahoo.com/rf/020207/n07146358_1.html
Stocks to Sing Accounting Blues
By Elizabeth Lazarowitz
NEW YORK (Reuters) - The stock market, which has been singing the blues most of this year, will carry that tune into this week as Wall Street's persistent accounting anxiety and investors' glum mood help push stocks lower.
Signs that the U.S. economy is making a comeback could offer the stock market a pick-me-up with a slew of economic data set for release and a speech on the economy by the nation's top central banker on tap.
But it won't be enough to lift the gloom now gripping investors with no relief in sight from the nagging worries about dubious bookkeeping and mounting debt in the U.S. telecom sector that have been plaguing stocks for weeks, analysts said.
``The unfortunate thing for the bull (market) case right now is that the economy is probably out of recession, but now this accounting cloud is really holding things back,'' said Nat Paull, portfolio manager at New Amsterdam Partners, which oversees about $1 billion.
Investors will be awaiting confirmation that the U.S. economy grew faster than previously reported at the end of last year, with fourth-quarter U.S. gross domestic product data due early next week.
Earnings news is likely to take a back seat to other issues, although investors will be tuned in for results from retailers like Gap Inc. (NYSE:GPS - news), Home Depot Inc. (NYSE:HD - news), Lowe's Cos. (NYSE:LOW - news), Target Corp. (NYSE:TGT - news) and Federated Department Stores Inc. (NYSE:FD - news)
Bankrupt high-speed communications firm Global Crossing Ltd. , whose accounting practices are under review by federal regulators, also is set to report results this week.
ECONOMIC PICTURE BRIGHTENS
After months of fretting about recession, economists have been scrambling to raise their forecasts for U.S. growth, increasingly convinced by signs like better retail sales and a narrower trade gap. These signals have raised hopes that the recession that began last March will be short and shallow.
The GDP data, along with reports on personal income and spending, consumer confidence, the manufacturing sector, durable goods, existing and new home sales and construction spending could underpin stocks, analysts said.
Federal Reserve Chairman Alan Greenspan will grab the spotlight when he gives his twice-yearly testimony on the economy to Congress, speaking before the House Financial Services Committee on Wednesday and later testifying before the Senate Banking Committee.
``I still think the market is going to be very concerned with not only accounting issues, but the fact that the market's just been rather weak lately,'' said Jeffrey Kleintop, chief investment adviser at PNC Advisors. ``Investors are just going to be content to sit on the sidelines.''
NO TIME FOR FUNKY BOOKKEEPING
The still developing scandal surrounding bankrupt energy trader Enron Corp. has kicked off a string of earnings restatements and investigations into the validity of Corporate America's accounting that have raised questions about whether some stocks are fairly valued.
Investors are more carefully combing through companies' financial statements before they buy and are ready to run for cover at the first hint of impropriety, analysts said.
Those jitters, along with persistent concerns about bad debt at telecom firms like Qwest Communications International Inc. (NYSE:Q - news), have pummeled the market in recent weeks.
Last week, the Nasdaq Composite Index (^IXIC - news) sank 4.4 percent in a holiday-shortened week. The Dow Jones Industrial Average (^DJI - news) ticked up just 0.65 percent and the Standard & Poor's 500 (^SPX - news) fell 1.3 percent.
Year to date, the Nasdaq is down 11.6 percent, the S&P 500 is off 5.1 percent and the Dow is down 0.5 percent.
The technical outlook also offers little encouragement for better days ahead, analysts said. In eight out of the past 11 bear markets, stocks have climbed off their lows, only to give back a big chunk of that gain before heading significantly higher again, Kleintop said.
If history is any guide, the S&P 500 will test the area around 1,069, giving up about half of the gains it made from three-year lows hit on Sept. 21 to the recent highs of early January, he added.
``There's a negative sentiment and anything negative ... in the accounting area could knock the market down,'' said David Dreman, chairman and chief investment officer of Dreman Value Management, which oversees about $7.5 billion. ``Even if the economic news is only slightly less favorable than expected or slightly under estimates, that could have dampening effect.''
DATA TO FLOOD MARKET
The government's report on fourth-quarter GDP, due on Thursday, is expected to show a rise of 0.8 percent, according to a Reuters poll. The initial 0.2 percent reading surprised the market, which was expecting a contraction in growth.
A day ahead of that, investors will examine a report on January durable goods orders, particularly for the data it provides on capital spending. Durable goods are expected to have risen by 1.6 percent in January after a 1.7 percent gain in December.
More crucial numbers will flood in on Friday, when the Institute for Supply Management, formerly known as the National Association of Purchasing Management, releases its closely watched manufacturing sector survey.
Economists predicted the industry trade group's monthly index rose in February to 50.9 -- indicating growth for the first time since July 2000 -- from a January reading of 49.9.
A report on consumer confidence, put out by a private research group, The Conference Board, will also catch investors' attention next week.
The Consumer Confidence Index, set for release on Tuesday, is widely expected to have halted its rise in February, partly because of the sagging stock market. Economists predicted it fell to 96.8 in February, after a reading of 97.3 in January.
http://biz.yahoo.com/rb/020224/business_column_stocks_outlook_dc_1.html
Interesting....Shattering A Stock Split Myth
By David Simons
The reputation of reverse stock splits is the opposite of the good-news image of regular splits. Often, though, the perception is overdone and obscures investment opportunity.
Reverse splits, which reduce shares outstanding, most frequently are used to keep a stock's price above the minimum required to maintain Nasdaq listing. They are viewed as desperate acts by companies that are clueless about reversing their fortunes.
The common impression is that the gambit usually fails and the stocks end up in penny stock purgatory on the Nasdaq bulletin board. The record of reverse splits done last year is far better--made all the more surprising by the persistence of the bear market.
Reflecting the market's continued downturn, the number of companies doing regular splits last year fell 58% to 214, while reverse splits doubled to 106, according to Thomson Financial/First Call.
Of the reverse splits (excluding U.S.-listed foreign shares), 84 are still trading that split when their shares were near or below Nasdaq's $1 minimum. (Six were acquired, four went out of business and six split to facilitate such transactions as spinoffs and special dividends.) Contrary to the popular perception, nearly three-quarters have maintained a post-split price above $1.
Of course, merely staying listed isn't investment opportunity. On a pre-split basis, the average price has barely budged from 52 cents. But 39 of the stocks have risen since their reverse splits--up an average 66%, with all but nine of those up at least 20%. (The 45 losers are down 84% on average, but half remain above the listing cutoff.)
No clear pattern separates the winners and losers--not even market timing. The dozen stocks that reverse-split near the market lows in the month following the Sept. 11 tragedy today are equally divided among gainers and decliners.
The most visible reverse splitters have been beleaguered dot-coms. Yet they accounted for just one-fourth of the 2001 tally, and their post-split performance has actually been better than the total--10 of the 23 are up an average of 79%, with the decliners down 63%.
As the examples accompanying the table describe, the opportunity was in ignoring the reverse-split stigma and focusing on each situation individually. Still, playing reverse splits is risky speculation, not investment. Most of the price-performance winners are small companies that haven't established business track records beyond recent reversals of fortune, and now also bear an albatross of per-share losses being amplified due to split-reduced share count.
Clickherefor reverse-split winners and losers.
2001 Reverse-Split Winners And LosersSources: Thomson Financial/First Call, Nasdaq and company reports. *Based upon split- adjusted price the day before the split. ** Also split 1:3 03/06/00. Winners Price 01/23/02 Change Since Split* Split Date
Snowball.com ** $5.25 317% 1:6 09/24
United Online 5.16 165 1:5 09/26
Corrections Corp. of America 16.29 89 1:10 05/18
j2 Global Communications 4.30 91 1:4 02/08
Quotesmith.com 2.50 16 1:3 03/07
Losers
NetRadio 0.02 -99 10:45 06/14
InterWorld 0.25 -94 1:50 05/22
Network Commerce 0.12 -94 1:15 06/18
Finet.com 0.41 -82 1:12 02/20
2001 Reverse-Split Winners Gallery Snowball.com
The operator of sites targeting young adult interests has the distinction of doing two reverse splits in 2001.
Following the first, at 3-to-1 when shares were at 34 cents, Snowball's price sank like a stone. In September, with shares at 21 cents (down from the split adjusted $1.02), a 6-to-1 reverse split was administered. The price then drifted downward until mid-November, when hoopla about launch of Microsoft's Xbox game console began. Suddenly, investors noticed that Snowball.com operates the largest independent Xbox gaming site, launched a year earlier to update devotees about developments. Snowball.com shares rolled uphill from $1 to $6 in two months. That's not to say Snowball.com is a slam-dunk. Its third-quarter operating loss was $2.9 million on $2.1 million in revenue.United Online
Investors greeted September's merger of Internet service providers Juno and Netzero skeptically. The sub-$1 price of each was remedied by a merger structure that had the effect of a 1-for-5 reverse split.
Recently, there's been optimism about the attractiveness of the company's $9.95 per month unlimited access in the slow economy, and that significant operating economies from the merger will be realized. Though the third quarter's combined operating loss was 56% better than the second quarter, it was $18 million, and United Online hasn't projected profit earlier than December 2002.Corrections Corporation Of America
The prison operator broke out to a 21-month high after a 1-for-10 reverse split in May. The rise came on perception that the company, which has a history of difficulties that include high-profile escapes, has gotten its big houses in order. Third-quarter loss was $5.7 million on $248 million in revenue.J2 Global Communications
Shares of the enhanced-messaging provider soared 91% since reverse-splitting last February. Created by the November 2000 merger of struggling Efax.com and Jfax.com, the company turned the corner in the third quarter and reported a small profit, excluding merger amortization.Quotesmith.com
Despite gaining 16% since its March split, shares of online insurance broker Quotesmith.com are 26% below the $3.37 per share of cash held by the company as of Dec. 31. Cost cutting in 2001 slashed losses to $521,000 by the fourth quarter, enabling the now $18 million cash hoard to last for nine years. Nonetheless, the company still forecasts a losing 2002--under $1 million on revenue of $11 million.
Investors remain skeptical that self-motivated online buying of insurance can ever amount to more than a speck in a market dominated by personal contact selling--particularly of life insurance, which has been Quotesmith.com's focus. Founded in 1984 to provide insurance pricing data to agents, the company has sold just 105,000 policies since beginning online direct selling in 1996. The impact of recent expansion to automobile and homeowners' coverage--and the December acquisition of insurance research site insure.com--has yet to be seen.
That doesn't sound like a real winner. Still, stocks selling at large discounts to cash rarely stay that way for long if the burn rate remains low.
Agree or disagree? Clickhereto discuss the issues raised in this column.
http://biz.yahoo.com/fo/020125/0125simons_1.html
SEC CHARGES A GEORGIA INVESTMENT ADVISER AND ITS CONTROLLING SHAREHOLDER WITH
FRAUD
The Commission announced today that it has filed a complaint in the
United States District Court for the Northern District of Georgia
against John Raymond Linney Clain and his investment adviser firm, Saint
James Asset Management, Inc., both of Alpharetta, Georgia. The
complaint alleges that between 1998 and 2000, Clain and Saint James
misappropriated approximately $920,000 from sixteen clients. The
complaint also names Clain Family Corporation, a Georgia company, as a
relief defendant.
The complaint alleges that Clain and Saint James obtained over $960,000
from sixteen clients between January 1998 and October 2000 by
misrepresenting that the clients' money would be used to purchase
various securities. Without the clients' knowledge or permission, Clain
used the money primarily to fund the operations for an Augusta, Georgia
company in which Clain had an interest, Alternate Energy Resources, Inc.
The complaint also alleges that Clain used misappropriated funds to
purchase two cars and a diamond ring, and to pay the mortgage on his
house. Clain Family Corporation, which is controlled by Clain, now owns
one of the cars. It also alleges that the defendants' misconduct
included providing clients with materially false and misleading periodic
account statements that represented falsely that they had bought
specific securities for the clients, when in fact they had.
The SEC's complaint charges Clain and Saint James with violations of
Section 17(a) of the Securities Act of 1933 and Section 10(b) of the
Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The
complaint also charges Clain and Saint James with violations of Sections
206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks
permanent injunctions against Clain and Saint James as well as an order
compelling disgorgement of ill-gotten gains, along with prejudgment
interest and civil penalties. The complaint seeks return of ill-gotten
gains from Clain Family Corporation, the relief defendant. [SEC v.
Saint James Asset Management, Inc. and John Raymond Linney Clain,
Defendants and Clain Family Corporation, Relief Defendant, Civil Action
File No. 1:02-CV-426, N.D. Ga.] (LR-17363)
http://www.sec.gov/news/digest/02-15.txt
Company has purposely remained debt free since its beginning. Had $35 million line of credit with Gleneagle (UGH!!) but didn't use a penny of it and ended up cancalling it. Dilution (selling new shares to keep going, apparently) has averaged $2 million shares per year. Iinventor Alvin Snaper registers to sell shares every year. Since he's in mid-seventies and as far as I know gets nothing form his previous patents, my guess is that this is what he lives on.
With low overhead business model of collecting licensing fees, it shouldn't take much cashflow to end the dilution.
On the plus side, largest single shareholder is CEO Lee Balak who recently added another 100,000 shares to his position and waives his salary. Shareholder Wolf M (Meyerfeld?) bought in at the $200,000 level more than a year ago and went to work for no salary doing marketing. Word is that he will be confirmed as a corporate director at next stockholders meeting which would make sense since he's so involved. Wolf posts on RB as "Lolabito." I razzed him a bit about transposed letters because he was trying for "little wolf" in Spanish which would have been "Lobolito." Since he was born in Germany, I guess his Spanish isn't worth bragging about.
Fairly dispassionate ("faint praise") assessment followed by current status from "Nitetrade" who has been in and out of PWTC 3 or 4 times over the last couple of years:
http://ragingbull.lycos.com/mboard/boards.cgi?board=W.T.BEAR&read=7470
http://ragingbull.lycos.com/mboard/boards.cgi?board=W.T.BEAR&read=7699
Nitetrade and I have exchanged emails with me freely admitting thatso far he has made more on PWTC than I have. For example, when it hit 1.03/1.06 but next morning failed to go higher and only showed 1.01/1.03 we both knewthat as a "trade" it was time to bail. He sold his whole position and took nice profit. I sold only half because I'm determined not to be out of it when big news finally happens.
Just my approach....
Caradoc
Does PWTC have any dilution or any other dangers?
The company can make the best product, but dilution is pollution.
Joemoney
The rule that BB stocks are for trading, not holding, is an excellent one to follow. 99.99% of them are trash: either scams from the start or at best somebody's dream hoping to come true. You'd probably be better off "investing" in your cousin's new restaurant. Despite this well-deserved nasty reputation (or maybe because of it?) the rare exceptions to the rule (the few that have any chance at all of becoming "real companies") offer the only opportunities I'm aware of for achieving gains measured in thousands of percentage points. Of course, even most of them don't make it because they have to resort to convertible debentures for financing (death spiral!!) or else print shares to stay alive hoping to make it before share value gets diluted to zero.
DNAP is great for trading. Bought at/near the lows, it's a triple whenever genetic approach to health is a hot subject. Given their relationship with ORCH, it could make long holders wealthy if ORCH's approach is successful. And if that happens, it should give a better percentage return than ORCH.
Just my (ongoing and boringly repeated) opinion, but PWTC has the highest perceivable odds of providing huge returns if held long.
Caradoc
Small Cap Gold Index
From a fellow poster:
http://finance.yahoo.com/q?s=AAUK+ABX+ADRRF.OB+AEM+APLL.OB+ASL+ASWRF.OB+AU+AZC+BENGB.OB+BGO+BVN+BWLR...
Bush Decides Saddam Must Go
President Bush will oust Iraq's Saddam Hussein, and ordered agencies to devise plans to remove him, the Philadelphia Inquirer reported. Unnamed U.S. officials said Bush decided Iraq's nuclear, chemical and biological weapons programs are too threatening to U.S. security. A senior U.S. official told the AP Bush's top advisers were developing ouster strategies, including military.
Source: IBD's Top 10
Bristol Seeks Merck Data on Cancer Drug
By Ransdell Pierson
NEW YORK (Reuters) - Bristol-Myers Squibb Co. said it has asked German drug maker Merck KGaA to share its clinical data on experimental cancer drug Erbitux, but declined to say whether it aims to use the European data to bolster Bristol's own uncertain chances of winning U.S. approval for the medicine.
Erbitux is being developed in the United States by tiny New York biotech firm ImClone Systems Inc. (NasdaqNM:IMCL - news) and its partner Bristol-Myers (NYSE:BMY - news), whose relationship has soured since U.S. regulators in December refused to accept ImClone's marketing application for the promising medicine.
Bristol-Myers recently demanded it be given primary responsibility to negotiate the marketing application with the FDA, following ImClone's failure. ImClone rejected the demand.
``We have reached out to Merck and have told them we are interested in getting access to their data on the trials they are doing. It's very useful data to have,' Bristol-Myers spokesman Wilson Grabill told Reuters.
ImClone said Bristol-Myers had not informed the company about its request for the Merck data, nor how Bristol-Myers intends to use it. Bristol-Myers declined to elaborate on their action.
``I wouldn't want to speculate how we would use the (Merck) data,' said Grabill, whose firm is entitled to 40 percent of U.S. profits from Erbitux if it is approved by the FDA. ImClone would keep the remaining 60 percent under their $2 billion co-marketing deal announced last September.
An ImClone spokesman dismissed speculation by one industry analyst that Merck would likely demand royalties from ImClone and Bristol-Myers if they were to use Merck's clinical data for their U.S. marketing application for Erbitux.
ImClone said a provision in its contract requires both ImClone and Merck to provide their respective clinical data to each other for regulatory submission without charge.
``ImClone has all this already, and as ImClone's partner, so has Bristol-Myers,' he said. ``There's no reason for them to get it separately.'
Richard Evans, a Sanford Bernstein drug analyst, said earlier that Merck would no doubt want to be paid handsomely for sharing its data with Bristol-Myers and ImClone, possibly to the tune of hundreds of millions of dollars.
``Merck would definitely want royalties on U.S. Erbitux sales. They'd want to be paid either a sizable fixed fee or a smaller fee plus a percentage of Erbitux revenues,' Evans said.
Merck (quote from Yahoo! UK & Ireland: MRCG.F), which is not related to U.S. drug giant Merck & Co. (NYSE:MRK - news), agreed in 1998 to pay ImClone $60 million for the exclusive rights to sell Erbitux in all global markets, except North America. Profits are to be split in Japan.
ImClone and Merck then designed and conducted their own separate trials of the drug for colon and head-and-neck cancer.
But while ImClone's colon cancer trial was scorned by the FDA, Merck said its own studies have gone so well it expects to win European approval of Erbitux next year.
A source familiar with the U.S. clinical trials said Bristol-Myers apparently hopes it and ImClone can submit Merck's European data to the FDA to get Erbitux approved in the United States if the FDA continues to reject ImClone's own U.S. data.
``The Merck data is Bristol-Myers' backup plan. Their main plan is to see if the FDA will go ahead and accept ImClone's data. But if that fails, they could present the Merck data to the FDA and ask if it meets the FDA's standards for approval,' the source said.
Officials from the FDA and Merck could not immediately be reached for comment.
The FDA usually requires two well-controlled clinical trials before it will approve new medicines, but is typically willing to accept only one such trial for cancer drugs.
http://biz.yahoo.com/rb/020213/business_health_bristolmyers_erbitux_dc_1.html
HP Profit Beats Raised Forecast
By Peter Henderson
SAN FRANCISCO (Reuters) - Hewlett-Packard Co. (NYSE:HWP - news) on Wednesday reported first-quarter profits above Wall Street expectations it had raised last week, as consumers snapped up personal computers and printers.
The Palo Alto, California-based company said the results proved management's case it can successfully integrate takeover target Compaq Computer Corp. (NYSE:CPQ - news), but it tempered expectations for the current quarter, saying consumer spending could slow and earnings would fall slightly.
HP posted a net profit of $484 million, or 25 cents per diluted share, for the first quarter ended Jan. 31, up from $141 million, or 7 cents per share, in the year-earlier quarter.
Excluding one-time items and accounting adjustments, HP posted a profit of $564 million, or 29 cents per diluted share, compared with $812 million, or 41 cents per share, in the year-ago quarter.
Sales fell to $11.4 billion from $12.4 billion in the year-earlier quarter.
Analysts polled by research firm Thomson Financial/First Call had forecast operating earnings of 18 cents to 27 cents per share on sales of $11.1 billion. On Feb. 4, HP had said it would substantially beat the existing consensus of 16 cents per share.
Shares in Hewlett-Packard rose to $21.31 in after-hours trade on the Island system, bringing their gain on the day to 2.5 percent. The shares had closed at $20.98 on Nasdaq.
Kevin McCloskey, a portfolio manager at Federated Investors in Pittsburgh who is wary of the merger, said the results topped expectations but did not convince him of the merits of the $22.5 billion deal.
``HP has some good businesses, Compaq has some decent businesses and they think putting one and one together gets two or maybe even three. But I'd say we're not that positive that would happen,'' he said.
Hewlett-Packard said the strong personal computer sales to businesses and consumers returned the total PC business to profit, and digital imaging and outsourcing showed strength.
Profitability rose in imaging and printing, personal computers and IT services, driving the earnings per share surprise.
COMPANY CREDITS COST-CUTTING
Chief Financial Officer Bob Wayman said HP's two-and-a-half year campaign of cost cutting was finally paying off.
``We have been working and working on getting expenses sized to the changed environment and then you see a little bit of an uptick in revenue, and voila, you see a big improvement in the bottom-line,'' he said on a conference call with investors.
Hewlett-Packard has traditionally seen revenue rise in its second quarter from its first, but Wayman said that with corporate spending still slow and economic prospects uncertain, revenues and earnings per share were both likely to decline.
Earnings per share would be consistent with analyst consensus forecasts of around 25 cents per share, he said in an interview.
``The outlook is either disappointing or conservative, depending on how you look at it. But I think most people were expecting revenues to be up sequentially in Q2,'' said Sanford Bernstein analyst Toni Sacconaghi.
Andrew Scott, of Needham & Co., was more positive, saying holiday sales boosted the first quarter. ``It stands to reason they will have more cautious guidance because you're not going to have the digital Christmas phenomenon.''
The results marked the second quarter in a row that HP beat analyst expectations, after a year of disappointments, and Chairman and Chief Executive Carly Fiorina took the opportunity to buttress her arguments for the merger.
``Our execution these past two quarters demonstrates that we're ready to take this decisive step,'' she said in a statement.
``We know our business better than anyone else,'' she added in a conference call. But, she said, ``a lot more is needed. And with Compaq, we have a detailed plan.''
HP says the merger with Compaq will create a computer and services powerhouse, while opponents including founding family heir and dissident director Walter Hewlett say the deal will bloat the company's personal computer business and sap resources better focused on high-end products.
Hewlett said the results simply proved that HP did not need Compaq -- or its low profit PC business. ``We believe HP needs to focus on its strengths,'' he said in a statement.
Hewlett-Packard stock is down about 10 percent from the close on Aug. 31, the last day of trade before it announced plans to merge with Compaq, while rival International Business Machines Corp. has gained about 8 percent since then.
http://biz.yahoo.com/rb/020213/business_tech_hewlettpackard_earns_dc_4.html
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