Sector Investing

[ReturntoSender]

RobBlack.com MarketWrap:

http://www.robblack.com/rb_marketwrap.shtml

The Dow Industrials received a boost after shares of Intel and Home Depot were upgraded. Retail, financial and biotech stocks were the day's best sector performers. The S&P 500 added 9 points (+0.9%) to 998. The Nasdaq Composite gained 18 points (+1.0%) to 1733. The DJIA advanced 83 points (+0.9%) to 9119. More than two stocks rose for every one that fell on the NYSE. Some 1.2 billion shares changed hands on the Big Board, 15 percent less than the daily average over the past three months. It was the slowest full day of trading since May 23. S&P 500 companies boosted second-quarter profit 5.2 percent, on average, according to an analyst survey by Thomson Financial. Earnings will jump by 13 percent in the third quarter and 21 percent in the fourth.

Strong Sectors: department stores, semis, wireless services, application software

Weak Sectors: airlines, disk drive, tobacco

Top Stories . . . U.S. wholesale prices excluding food and energy fell in June for the second time in three months, reflecting cheaper automobiles, computers and appliances, a government report showed.

The U.S. trade deficit held close to the widest ever for a third straight month as demand for non-oil imported goods continued to rise.

General Electric, the world's second-largest company by market value, said 2003 profit will be $1.55 to $1.61 a share, the low end of its forecast range.

Coca-Cola, the world's largest soft-drink maker, said federal officials are investigating a former executive's charges that it inflated sales with improper accounting.

The Securities and Exchange Commission froze the assets of Michael Lauer's Lancer Management Group LLC, saying the hedge fund manager overvalued his portfolio to keep investors in the fund and attract new ones.

Quote of Note . . . ``We have seen some indications that second-quarter earnings will be favorably reported,'' said Tim Ghriskey, who manages the Ghriskey Capital Partners LLC Hedge Fund. Ghriskey said some reports have show an improvement in demand in July. ``These factors are pushing technology prices higher.'' He owns shares of computer-related stocks including Sun Microsystems Inc.

``In order for the market to improve, we need to see stronger economic data and positive earnings revisions,'' said Owen Fitzpatrick, who helps oversee $9 billion at Deutsche Bank Private Wealth Management in New York. ``The most important thing from companies will be the commentary on the rest of the year.''

Fund Flow . . . Trim Tabs estimated that all equity funds had inflows of $2.9 billion in the four business days ending July 9 vs. inflows of $2.5 billion in the prior week. Additionally, equity funds that invest primarily in U.S. stocks witnessed inflows of $2.2 billion compared with inflows of $400 million during the prior week. And bond funds had inflows of $1.3 billion vs. inflows $1.8 billion the prior week.

Rumor Du Jour . . . Market rumor of Comcast interest in Tivo.

Rumor that Macromedia could be acquried by Adobe.

Eco Speak . . . Wholesale prices rose 0.5 percent in June, the Labor Department said. The core rate, which excludes volatile food and energy prices, fell 0.1 percent. Overall wholesale prices rose 2.9 percent in the past 12 months. Finished energy goods rose 3.4 percent in the month, led by a 7.6 percent rise in gasoline prices. Prices of goods in the intermediate stage of production rose 0.5 percent in the month.

U.S. trade with foreign nations picked up in May, pushing the trade deficit up 0.5 percent to $41.8 billion. Exports rose 0.9 percent to $82.1 billion in May on better sales of autos, capital goods and industrial materials. Meanwhile, imports rose 0.7 percent to $123.9 billion in May, the second highest level in the past two years. Foreign producers sold more autos and capital goods, while sales of imported industrial materials dropped as the price of crude oil sank. Imports are benefiting temporarily from the devalued U.S. dollar.

ECO Comment . . . June PPI rose a stronger than expected 0.5% (2.9% year over yera), as the core (excluding food and energy) dipped -0.1% (-0.3% yoy). The annual rate on core growth is approaching the cyclical low of Dec's -0.5% and that's what the Fed's got its eye on. Separately, the May trade deficit of $41.8 compares to an upwardly revised (smaller deficit than previously reported) $41.6 billion in April. Modest change as May exports rose 0.9% while imports rose 0.7%.

Financials . . . FFLC Bancorp voted to increase its quarterly dividend by 30 percent, moving the payout to 13 cents per share from 10 cents. The bank holding company attributed the boost to continued profitability of its First Federal Savings Bank of Lake County, and recent reductions in federal taxes on corporate dividends.

Hartford Financial upgraded at Legg Mason to Buy from Hold to reflect a more upbeat assumption on life earnings and its leverage play on potential asbestos reform. Many of the overhang issues that had caused them to be overly cautious on the name are behind it. The firm believes that the stock's valuation should expand as the life insurance segment outlook brightens while the P&C segment continues to fire on all cylinders. Target is $68.

The Wall Street Journal's "Heard on the Street" column discussed Freddie Mac's federal financial regulator examination of its newly installed chief executive Greg Parseghian's role in its recent accounting problems. Freddie Mac's spokesman states that the company's internal investigation of Mr. Parseghian's potential involvement with its recent woes suggests the answer is no. However, his new position has come under scrutiny given his previous role as the company's chief investment officer were he oversaw the company's $600 billion mortgage portfolio. Investors getting into the stock believe Mr. Parseghian would not have accepted this position had he felt his trading operations which he oversaw had anything to do with the company's earnings issues.

General Electric posted a decline in second-quarter earnings $3.8 billion, or 38 cents a share, from $4.4 billion, or 44 cents a share, a year earlier. GE sees 3rd quarter of $0.39-$0.42, 4th quarter of $0.46-$0.49. The consensus estimate for 3rd quarter is $0.42 and for 4th quarter is $0.48. GE guides full year to $1.55-$1.61 from $1.55-$1.70; consensus $1.60 General Electric said revenue in the second quarter was $33.4 billion, little changed from the year ago period. It said industrial sales were down 9 percent to $17.6 billion "reflecting lower U.S. gas turbine sales at Power Systems." Sales of product services grew 11 percent to $5.6 billion and financial services revenues of $15.9 billion were up 14 percent. CEO Jeff Immelt said: "The year is turning out as planned... As expected, the ramp-down of our turbine shipments in the first half created earnings pressure. However, we are executing with broad-based strength to generate significant growth in the second half. We see nine of 13 businesses growing in double digits and more favorable comparisons in Power Systems and Insurance."

Bankrate recovery highlighted in BusinessWeek. The company's ability to rise out of the dot.com ashes and rally to its current levels is profiled in BusinessWeek article. Revenues are primarily driven through advertising with most of the turnaround attributed to CEO Elisabeth DeMarse taking the helm in 2000. A hedge fund manager not identified in the article points to its forward trading valuations of 26 times 2003 estimates and 23 times estimates with its peer companies trading at 38 times 2003 estimates and 23 times 2004 forecasts.

T. Rowe Price downgraded by Raymond James to Market Perform from Outperform. The firm is saying the stock's potential upside is already reflected in its current value. The stock is currently selling at 25.7x their 2003 est., which is well above its average historical P/E of 21.2x over the last 5 years, and on a relative P/E basis the stock is selling at 136% of the S&P 500 vs. its average historical valuation level of 92%.

Track Data (New York-based financial services company) provides direct access brokerage, real-time financial market data, news, and research to institutional and individual investors through dedicated telecom lines and the Internet. The stock has doubled in the past week, and is beginning to look like TradeStation which seemingly has been making new highs day after day since March as the stock has gone from $2 to $12.50.

Capital One started with a Buy at AG Edwards and $60 target, citing stabilizing credit losses, expansion opportunities, and an attractive valuation.

Homebuilders . . . KB Home authorizes repurchase of up to 2 million additional shares.

Oil & Gas . . . Millennium Chemical upgraded to Buy from Neutral at UBS on valuation. Price target $13.

Transports . . . JetBlue announced intentions to sell $150 million worth of convertible notes to qualified institutional buyers. The company the notes would be convertible into common stock at an initial conversion price of $63.75 a share. Jetblue Airways priced 2.6 million share offering at $42.50.

UBS downgraded SouthWest to Reduce from Neutral (target $13) and downgraded Airtran to Neutral from Buy (target $12), saying valuations are getting stretched despite the fact that the discounters continue to gain share aggressively.

Defense & Aerospace . . . Boeing will work with British, Spanish, Austrian and American firms on aerospace fuel-cell technology research. The group, which includes Intelligent Energy, Diamond Aircraft Industries, Sener, Aerlyper and Advanced Technology Products, will work on developing an electric-motor glider that's powered by fuel cell technology. A flight test could come in late 2004 or 2005 and much of the work will be done at Boeing's research operations in Spain.

United Defense awarded $64 million Marine contract. The company received a contract initially funded at $64 million from the U.S. Marine Corps to provide material kits and remanufacture hulls for amphibious assault vehicles for Taiwan under a Foreign Military Sales award. The contract has a potential total value of $128 million.

Lockheed Martin received a $260 million U.S. Army contract to improve the Patriot antimissile battery. The program will include software, testing and modification work, among other areas, with flight tests of the new missile to begin in September 2006.

Food & Beverage . . . The U.S. Attorney's Office has initiated an investigation related to allegations raised in a civil litigation filed in Atlanta by a former Coca-Cola employee, Matthew Whitley. He claims that the company was improperly accounting for sales. Coke said it would cooperate with the investigation.

Coca-Cola informed of investigation by U.S. Attorney that the United States Attorney's Office for the Northern District of Georgia has initiated an investigation arising from the allegations raised in civil litigation recently filed in Atlanta by Matthew Whitley, a former employee. The Company will cooperate with the inquiry.

Tobacco . . . The Wall Street Journal reports Moody's Investor Services believes the rise in popularity of deep discount cigarettes will have an even further effect on pricing pressure. While credit agencies have already cut ratings due to price constraints and litigation, this latest development suggests no upside in outlook anytime soon. The report to be issued today suggests the big four, which consists of Altria Group, RJR, BTI and Loews Corp will see "continued erosion in operating performance and credit ratings".

Consumer Products . . . Avon Products hit a new 52-wk high.

Restaurants . . . Checkers Drive-In Restaurant upped to Strong Buy at Roth. Price target $16.50. The upgrade from Buy is based on strong sales and profit margin momentum and the anticipation of continued gains on both counts. "Checkers currently has perhaps the fastest growing sales and profit margins in the restaurant industry, and at 20.6 times fully taxed 2004 EPS and with an estimated EPS growth rate of 15-20% over the remains extremely attractively priced."

Retail . . . Goldman Sachs upgraded Staples to an "outperform" from an "in-line" rating on belief there's an "improving macroeconomic backdrop for office products retailers."

Wet Seal was downgraded at Wachovia to Underperform from Market Perform, as the shares have appreciated 35.4% over the past 7 weeks vs. a 9.6% increase in the S&P 500, while fundamentals have not improved and have actually deteriorated. The firm believes the stock could trade at 13-15x their 2004 est. of $0.45 (very unclear at this point), which equates to a $6-$7 stock.

Banc of America Securities lifted Kohl's to a "buy" rating from a "neutral," telling clients that the retailer is "biting the bullet on inventory" in the second quarter to benefit the second half of the year. Additionally, BofA said comparisons "ease from here."

Long's Drugs Stores is saying June same-store sales fell 2 percent. Total sales for the five weeks ended July 3 dipped 0.5 percent to $438.1 million from $435.8 million in the same period a year earlier. The firm broke down the same-store sales figure to a 3.2 percent increase for pharmacy sales and a 6.1 percent decrease for front-end sales. It estimates pharmacy same-store sales were dropped by roughly 130 basis points due to the substitution of generic subscriptions for higher priced, name-brand drugs.

Talbots was cut to Neutral from Outperform at CSFB. The downgrade is based on a combination of valuation, expectations and challenges. Target $31.

Too, Inc. was cut to Neutral from Outperform at firm for similar reasons.

Banc of America Securities upped Home Depot to a "buy" from a "neutral," noting that the Dow component has made "real strides" and that "sales are apt to show meaningful improvement as a result." BofA feels that second-quarter comparable sales should "turn positive and continue to accelerate thanks to execution improvements, easier compares and lumber prices." Home Depot has "corrected merchandising miscues" and that "sales are apt to show meaningful improvement."

BJ's Wholesale cut to Sell at Lazard from Hold. The stock is now trading at a 13.9x multiple, which is expensive in the face of declining earnings and cloudy visibility. The firm does not believe this type of unproven turnaround story -- that is a distant No. 3 in its industry -- warrants much above their current 11.5x multiple of a $15 price target; moreover, should BJ need to increasingly discount its membership in order to drive traffic, one could justifiably argue that the co will evolve over time into nothing more than an overgrown grocery store, which trade at an average of 9-10x multiples.

Goldman Sachs upgrades Staples to Outperform from In-Line and resumes coverage of Office Depot with an Outperform rating. The firm sees an improving macroeconomic backdrop for office products retailers relative to their broader Hardlines Retail coverage, assuming that the industrial economy is bottoming; firm views SPLS as the more conservative option of the two, with clearer visibility and less risk, but less upside given peak operating margins and a higher multiple; with ODP, earnings visibility, but they see acceleration in retail sales trends off trough levels and greater potential upside given the stock's lower valuation.

Kohl's was upgraded at Banc of America to Buy from Neutral, as they think KSS made a major positive move yesterday by biting the bullet on inventory since they believe it will allow the company to go into the back half of the year relatively clean. Comps should ease from here, and both competitive and macro pressures should ease in 2nd half 2003. Target is $64.

Healthcare . . . Quest Diagnostics downgraded at CIBC to Sector Underperform from Sector Perform based on valuation, as the stock has exceeded their $60 target. Firm also downgrades the healthcare services group based on valuation, saying much of the good news (moderating cost trends, strong pricing) is currently reflected in stock prices, leaving less room for 2nd half 2003 upside. AET is top pick.

DaVita could be poised for more upside according to BusinessWeek. The article highlights the kidney dialysis services provider in light of its recent 52-week high of 27.58 on July 2. The company has 500 outpatient centers in 33 states treating 45,000 patients. DaVita has turned around ever since new management was put into place in 1999 with controls installed and a cleaning up of the balance sheet. The company used $133 million from overseas assets to cut debt and improve credit. A hedge fund manager sees the company earning $2.09 a share in 2003 and $2.26 in 2004 with a price target of 35.

Thoratec Labs was cut to Peer Perform from Outperform at Bear Stearns based on valuation.

Drugs . . . Dr. Reddy's said a federal court had dismissed the generic drugmaker's suit seeking to remove a legal obstacle to a generic version of Pfizer's blockbuster antidepressant, Zoloft. Dr. Reddy's had asked that the court declare the company's generic Sertraline antidepressant didn't infringe on Pfizer's patent. The court found that Pfizer needed more time to investigate the matter. Dr. Reddy's said it would provide Pfizer with additional information, "and, if necessary, to renew its suit thereafter."

Teva Pharmaceutical was granted tentative approval by the U.S. Food and Drug Administration for fosinopril sodium tablets, the generic version of Bristol-Myers Squibb's Monopril tablets for the treatment of hypertension and the management of congestive heart failure. Annual sales of the brand product, which is made by Bristol-Myers, are approx $269 million.

CV Therapeutics target raised to $43 at Deutsche after company reacquires Ranexa rights.

Biotech . . . Epix Medical said its experimental imaging agent produced encouraging results in late-stage testing. Epix and pharmaceutical partner Schering AG announced late Thursday that their experimental imaging agent improved the detection of vascular disease.

Millennium Pharma's recent dip may have been unwarranted according to Busines Week. BusinessWeek article discusses the recent drop in MLNM stock as a buying opportunity. Its recent fall in price coincided with rumors of the company being takeover bait with Johnson & Johnson as a potential suitor. However, the only announcement with JNJ was its agreement to market its Velcade drug overseas with mixed reviews on the terms of the deal. The editor of "Medical Technology Stock Newsletter" believes the stock can hit 30 in a year in light of its raising the ante by retaining 100% of the U.S. rights on Velcade.

EPIX Medical was upgraded at Needham to Strong Buy from Buy. The firm is saying the company's MS-325 Phase 3 trial results were not only outstanding, but were reported sooner than anticipated, which could lead to earlier approval of the drug. The firm raised target to $24 from $17.

Media . . . Credit Suisse First Boston issued cautious comments overnight on AOL Time Warner, saying it expects earnings per share in the second quarter at the media group to decline 15 percent from the year-ago period to 10 cents. "On the cable IPO, we believe that AOLTW management may opt not to attempt it after all, with the reason being that recent asset sales and the surprise $750 million settlement from Microsoft is enough to satisfy the balance sheet critics," CSFB said, adding that: "We think the AOL division is still a major issue, and the potential for any future sustainable growth is unlikely."

Charter Communications is saying certain of its direct and indirect subsidiaries plan to sell a total of $1.7 billion in newly issued senior notes in private placements. The cash proceeds of the combined offering will be used to fund previously announced cash tender offers for a portion of its convertible senior notes, other senior notes and senior discount notes. Charter specifically anticipates up to about $500 million of the proceeds would be used to pay down credit-line debt.

Tech . . . Prudential initiates coverage of the IT Hardware sector with a Market Outperform rating. The firm anticipates a modest recovery in IT demand beginning in 1st half 2004, and expects demand to build through 2nd half 2004 and accelerate into 2005, with U.S. large corporate rebounding first followed by small- and medium-sized businesses, Europe, and Asia Pacific, with a 6-9 month lag. In addition, firm sees growth in Windows- and Linux Intel-based servers at the expense of proprietary RISC/UNIX platforms (benefits DELL), and believes another trend is the drive toward more strategic IT and business process outsourcing (IBM best positioned, HPQ gaining momentum). Initiates coverage of CDWC, DELL, IBM, IM, HPQ, and TECD with Buy ratings, and GTW, AAPL, and SUNW with Hold ratings.

Network Equipment . . . Ericsson saw its second half and 2004 sales forecasts cut by Goldman Sachs, on concerns over a weak third quarter and on a postponement of Chinese 3G contracts. It decreased second half sales estimates by SEK1 billion and 2004 sales by SEK8 billion. Goldman is keeping its EPS estimates in-tact due to its perception that the company's restructuring is ahead of schedule.

Juniper reported 2nd quarter revenue of $165 million (+5% Quarter/Quarter) and EPS of $0.03 slightly beat expectations. Despite B2B >1 and increased deferred revenue, company guided to flat 3rd quarter. Analysts are revising 2003 up slightly to reflect better 2nd quarter and flat 3rd quarter. 2003 revenue now $656 million and EPS now $0.10. 2004 rev and EPS remain essentially flat at $748 million and $0.16, +$.01 due to slight changes to GMs, share count and interest experience. Because company remains committed to driving EPS growth largely through revenue growth, we can't stretch revenues to justify higher stock prices at the current time. Cisco, Nortel, Lucent are the preferred names with more operating leverage.

Pacific Growth cautious on NetScreen's high Asia exposure as JNPR's 10% sequential decline in Asia reflects a slow market in Asia for networking products in the June quarter. Yet the company's 16% growth in North America reflects a pick-up in that mkt for networking products; therefore. The firm believes that company's such as NSCN, which have high Asian exposure and low North American exposure, may be challenged from a geographic perspective.

Semiconductors . . . Thomas Weisel upgraded Intel to "outperform" from "peer perform," and established a $30 price target. Eric Gomberg said check with over 40 chip resellers suggests that optimism appears to be growing that a recovery is underway, which should lead to a gradual rise in information technology products in the second half of the year. Checks suggest growing optimism that an IT recovery is under way, which is likely to result in a gradual uptick in demand for IT products in 2nd half 2003 and a stronger spending environment in 2004. The firm believes the secular shift from desktop PCs to notebooks is accelerating, and they expect margin expansion to be the catalyst for INTC's EPS growth over the next several quarters. Price target is $30. Gomberg is maintaining his second quarter estimates, but raised his third and fourth quarter forecasts to earnings of 16 cents a share and 20 cents a share, respectively, from 14 cents and 18 cents.

Powerwave upped to Buy at Adams Harkness following last night's earnings report. Firm says it expects network expansion announcements from operators such as Cingular, AT&T, and Sprint to offer potential upside to revenue, positively impacting valuation and perception of the group. As such, firm upgrading rating to Buy with a $10 price target, based on 2.5x 2004 sales estimate, a 16% discount to the comp group mean of 3.0x estimated 2004 sales.

Silicon Strategies reporter that Infineon filed an appeal with the U.S. Supreme Court seeking to overturn an appellate court ruling absolving Rambus of fraud for failing to disclose pending SDRAM patents to the JECEC Solid State Technology Association panel while the body was drafting an industry SDRAM standard. An Infineon spokeswoman said the German chipmaker is asking the Supreme Court to find that lifting a fraud verdict against Rambus "is a clear disregard of the appellate procedure."

Powerwave was upgraded to Overweight at ThinkEquity. The firm is increasing the price target to $10 in light of the company's 2nd quarter results. Despite the market remaining "difficult", the analyst believes co is looking to new opportunities within Europe and N. America to fuel growth for PWAV in 2nd half 2003. In addition, the expanded relationship with ERICY should also serve as an impetus to help accelerate growth for 2004.

Nortel is a 57% customer for Powerwave. PWAV management guided for 10-20% 3rd quarter revenue growth, management believes US carriers will spend to improve network quality ahead of mobile number portability deadline in November.

Despite mixed data points, the recovery in Semis that began in mid-'01 continues at a modest rate. Expect most companies to report results that are in-line or better than our projections for June and guide for modest growth. Checks suggest an uptick in telecom could boost growth. We expect guidance to be for growth of 3-6% Quarter/Quarter. There are concerns about 3rd quarter guidance, Texas Instruments and calender year pose risk. Recent channel checks indicate continued weakness due to excess handset inventories. There are concernes this weakness could continue into September. Quarter/Quarter growth has typically been in the 3-5% range based on 10 years of data. However, growth rates can vary dramatically, suggesting September growth is anything but 'normal'.

Cypress Semi’s recent channel checks indicate continued weakness due to excess handset inventories. Weakness could continue into September and believe estimates for CY are at risk. Expect $193.1 million and EPS $.01, below consensus. Reports 7/17.

Xilinx have some concern about XLNX’s end market exposure so expect $315 million and EPS $.13.

Integrated Device continues to be a top Communication Memory pick. Expect $83 million and EPS ($.05). Reports 7/17.

Texas Instruments channel checks indicate continued weakness due to excess handset inventories. There are concerns this weakness could continue into Sept. and believe estimates for TXN are at risk. Wireless exposure 25%+. Expect $2.03 billion and EPS $.06. Reports 7/21.

Altera channel checks suggest ALTR’s consumer, industrial and auto products gained design wins at OEMs. Expect $202 million and EPS $.09. The firm reports 7/21.

Lattice Semi has the potential for upside given telecom-related strength in the firm’s FPGA business. However, channel checks suggest weakness in the lower end of LSCC’s CPLD business will offset some of this strength. Expect $59 million and EPS $.02.

Linear Tech expect $163 million and EPS $.20. Reports 7/23.

Integrated Silicon has the most potential for upside. Strong 802.11g trends benefit ISIL. Expect $172.6 million and EPS $.15. Reports 7/23.

Analog Devices continues to be the top analog pick. Believe the company’s changing DSP strategy has not yet been reflected in stock. Expect $517.4 million and EPS $.21. Reports 8/14.

For National Semi expect $420 million and EPS $.12. Reports 9/5.

Software . . . Although still tepid, a recovery in IT spending is clearly underway as evidenced by government statistics, customer surveys, anecdotal comments and recent company results. Spending priorities continue to focus on doing more with existing systems rather than launching new projects, favoring areas like disaster recovery, security and integration over applications. Based on bottoms up model, combined 2nd quarter revenues for the leading large cap SW companies should show healthy mid single-digit growth and acceleration over recent quarters. Margins should continue to expand, while balance sheets improve further.

Microsoft expect unearned revenues to grow Quarter/Quarter by over $100 million after two Quarter’s of decline and overall revs to show steady growth to $7.85 billion (+8%), with pre-options expensed EPS of 23¢ (vs. 21¢). Reports 7/17. Analyst meeting 7/24.

Computer Associates total revenues should be $805 million (+5%) with a GAAP loss of $.03 and operating EPS of $.09. Reports 7/23. The User group meeting next week seeing much higher attendance.

Veritas should deliver another strong Quarter that is above guidance and Street and potentially above our high-end estimates of $400 million (+10%) in revenues, with GAAP EPS of $.13 and operating EPS of $.17. Reports 7/23.

Verisign should finish in line with expectations of $265 million (-17%) in revenues, with a GAAP loss of $.03 and fully-taxed operating EPS of $.14. Reports 7/24.

Group 1 Software expects first-quarter earnings of $1.5 million to $1.8 million, or 9 to 11 cents per share. Two analysts are currently looking for a profit of a dime per share in the period. Revenue, however, is projected at between $23.6 million and $23.9 million for the period, a range the company said is below its full-year outlook for growth of 10 to 12 percent due to an inability to close a number of expected transactions, particularly in its DOC1 division. The marketing software firm reaffirmed its outlook for the year though, saying some delayed deals have already closed in July and that its sales pipeline remains satisfactory.

Business Objects defended by Pacific Growth. The firm receives confirmation that Sales VP Americas, Bill Robinson, is no longer with BOBJ. Firm views this as an relatively irrelevant data point, and BOBJ should be bought on the weakness created by this news.

JMP maintains underperform on Siebel System with a price target $6. Yesterday the Superior Court in San Mateo County cleared the way for a lawsuit brought by the Teachers' Retirement System of Louisiana (TRSL) to proceed to trial on Nov 3. The firm says their understanding is that this lawsuit has 2 primary causes: 1) TRSL claims that SEBL directors breached their fiduciary duty to the stockholders by authorizing excessive compensation for Mr. Siebel, and 2) TRSL alleges that thousands of directors' stock options were issued in 1999 and 2000, but were concealed from stockholders. Firm believes the trial is likely to add to SEBL's legal expenses, result in further depositions and interrogatories that could distract mgmt and board members, and reinforce the perception that SEBL must improve its corporate governance.

Siebel told analysts Friday that in light of its recent decision to end one-on-one interviews with investors and analysts, the company is asking analysts to submit all questions by e-mail ahead of its earnings conference call on July 22. The move is meant to ensure all company information is "distributed in an open, publicly available manner," Siebel wrote to analysts. "We will attempt to address as many of these questions or concerns as possible during the call," the company wrote.

Articles of Note

Please note the "Articles of Note" section has moved to the front page of www.robblack.com.


--------------------------------------------------------------------------------

Disclaimer: Due to the nature of the Internet, 2020insight.com and Goodwyn, Long & Black (GLB) does not make specific trading recommendations or give individualized market advice. Information contained in this publication is provided as an information service only. 2020insight.com and (GLB) recommends that you get personal advice from an investment professional before buying or selling stocks or other securities. The securities markets and especially Internet stocks are highly speculative areas for investments and only you can determine what level of risk is appropriate for you. Also, readers should be aware that GLB, its employees and affiliates may own securities that are the subject of reports, reviews or analysis within this publication. We obtain the information reported herein from what it deems reliable sources, no warranty can be given as to the accuracy or completeness of any of the information provided or as to the results obtained by individuals using such information. Each user shall be responsible for the risks of their own investment activities and, in no event, shall GLB or its employees, agents, partners, or any other affiliated entity be liable for any direct, indirect, actual, special or consequential damages resulting from the use of the information provided. I am a long-term bull with positions in many of the names that I report on. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. 2020insight.com and Goodwyn, Long & Black Investment Inc. relies on information provided by corporations, news services, in-house research, published brokerage research, Edgar filings, and also may include information from outside sources and interviews conducted by ourselves. Readers should not rely solely on the information contained in this publication, but should consult with their own independent tax, business and financial advisors with respect to any investment opportunity, including any contemplated investment in any security.