Stock Market Chumps..........10-26-06
Renovis Inc. (RNVS)
| Last Trade: | 3.85 |
| Trade Time: | 1:38PM ET |
| Change: |  10.35 (72.89%) |
The stock plummeted $10.46, or 73.7 percent, to $3.74 on the Nasdaq in morning trading, on more than 30 times average volume. Shares set a 52-week low of $3.59 just after the market opened -- marking an 85 percent drop from the stock's 52-week high of $24.01, set March 20.
The news also pulled down American depositary shares of AstraZeneca, Britain's second-largest drug maker. The stock lost $5.05, or 7.6 percent, to reach $61.32 in morning trading on the New York Stock Exchange.
AstraZeneca was Renovis' exclusive licensee for stroke treatment candidate NXY-059, which failed to reduce stroke-related disability in patients and didn't improve the neurological status of stroke victims in a late-stage trial. The results from the study, called SAINT II, were a reversal from previous results seen in a study called SAINT I.
"Unfortunately, the data are clear and although we will continue to review the results (from the study), we understand AstraZeneca's decision to discontinue development," said Renovis President and Chief Executive Corey S. Goodman.
CIBC World Markets analyst Bret Holley downgraded the stock to "Sector Perform" from "Sector Outperform."
"We find these results disappointing, given the lack of consistency with the SAINT-I results," Holley wrote in a note to investors. "While we consider Renovis a quality company, given that the lead program is preclinical, we don't expect Renovis to outperform over the next 12 to 18 months."
The company's lack of a product in clinical development was also an issue for Goldman Sachs analyst May-Kin Ho, who lowered his price target to $5 but maintained a "Neutral" outlook on the stock.
Renovis is partnering with Pfizer to develop VRI antagonists for the treatment of pain and inflammation, but that product won't likely enter Phase I clinical trials until 2007, or later, Ho said in a note to investors. Risks for the company continue to include dependence on corporate partners.
South San Francisco, Calif.-based Renovis separately announced third-quarter earnings Thursday morning, reporting a slightly wider loss that came in better than Wall Street expectations. The company said it is focusing on internal research programs in the wake of the discontinued development program with AstraZeneca.
Utek Corp. (UTK)
| Last Trade: | 12.31 |
| Trade Time: | 1:35PM ET |
| Change: | 6.70 (35.24%) |
| Last Trade: | 3.58 |
| Trade Time: | 1:40PM ET |
| Change: | 1.83 (33.83%) |
| Last Trade: | 14.39 |
| Trade Time: | 1:40PM ET |
| Change: | 5.12 (26.24%) |
Ellison posed a challenge to Linux software leader Red Hat Inc. late Wednesday by announcing that Oracle would begin offering maintenance services for Red Hat products -- and charge less for that than Red Hat does. Red Hat shares were crushed by the news.
Redwood Shores-based Oracle expects to offer discounts of at least 50 percent. The threat wiped out more than one-quarter of Red Hat's market value -- nearly $1 billion -- amid Thursday's deepening investor worries about the much smaller company's ability to withstand the challenge.
The assault on Red Hat continues Ellison's aggressive efforts to build upon the market clout that Oracle already amassed as the world's second-largest software vendor behind Microsoft Corp.
Oracle has spent about $20 billion snapping up other business software makers during the past two years, sometimes refusing to take no for an answer. In the biggest deal of the lot, Oracle launched a hostile bid for PeopleSoft Inc. that took 18 months to complete.
If Red Hat's stock continues to falter, the company could become increasingly vulnerable to a takeover. Oracle executives refused Wednesday to say if they might be interested in buying Red Hat.
"I don't think this will kill Red Hat," Ellison said Wednesday in response to a question from a packed audience attending the biggest convention in Oracle's 29-year history. "This is capitalism. We are competing."
Global Equities Research analyst Trip Chowdhry believes Red Hat might turn into a prime takeover target, but predicted IBM Corp. is more likely to be the buyer than Oracle.
Investors are convinced Oracle's attack will hurt Raleigh, N.C.-based Red Hat.
The company's stock plunged $5.05, or 25.9 percent, to $14.46 during Thursday morning trading on the Nasdaq Stock Market, where Oracle's shares fell 6 cents to $18.56.
Red Hat Chairman Matthew Szulik downplayed the threat to his company, hailing Oracle's move as a positive development for Linux -- an alternative to the dominant Windows operating system that fuels Microsoft's profits.
"There are always concerns, but keep in mind that Oracle ... acknowledged that Red Hat is the technical leader in the market," Szulik said. "We still have a rich product pipeline. We will compete."
Chowdhry thinks Wall Street's concerns about Red Hat are justified. He predicted Oracle's move will trim Red Hat's revenue by about $40 million to $50 million annually. Red Hat's revenue in its last fiscal year totaled $278 million -- a fraction of Oracle's $14.4 billion in revenue.
"Oracle has outsmarted Red Hat," Chowdhry said.
Oracle's challenge comes just a few months after Red Hat trumped Oracle by buying open-source software maker JBoss Inc. for $350 million.
Red Hat's handling of the JBoss deal was just one of several factors that irritated Oracle, Chowdhry said. He believes Red Hat made a crucial mistake by bragging that its Linux products would turn software into a commodity, prompting Ellison to attempt to counterattack.
Ellison said he is more interested in accelerating the open-source movement than crushing Red Hat.
Because much of Oracle's propriety software is designed to run on the Linux operating system, Ellison believes the company will make more money if more major corporate customers embrace open-source software.
Oracle's push into Red Hat's market won't affect financial results for at least the next few quarters, Chief Financial Officer Safra Catz told analysts during a Thursday meeting.
But Ellison's cutthroat tactics could position Oracle to hire away Red Hat's top talent since those workers are more likely to be worrying about their job security, said software industry consultant Joshua Greenbaum.
"Larry plays a hardball game," said Greenbaum, who runs Enterprise Applications Consulting. "This shows he hasn't lost his touch for savvy moves or drama."
Ellison's flair has paying off recently as both Oracle's profits and stock price have been climbing.
Oracle's market value has increased by $34 billion this year, a gain of more than 50 percent that has increased Ellison's net worth by about $8 billion.
NetLogic Microsystems Inc. (NETL)
| Last Trade: | 19.33 |
| Trade Time: | 1:42PM ET |
| Change: | 5.17 (21.10%) |
For the quarter ended Sept. 30, the company on Wednesday reported a profit of $3.4 million, or 16 cents per share, down from $3.6 million, or 19 cents per share, last year, even as revenue climbed up 3 percent to $26.6 million.
Jeffries & Co. analyst Adam Benjamin, who has a "Buy" rating on the stock, cut his 2007 earnings estimate to $1.01 per share, from $1.46 per share, and lowered revenue guidance for the year to $102 million from $131 million. Analysts currently expect the company, on average, to post 2007 earnings of $1.47 per share on $129.5 million in sales.
Caris & Co. analyst Nicholas Aberle, cut his rating on the stock to "Above Average" from "Buy" and said an inventory correction, as well as the delayed release of a new product, may weigh on the company over the near-term.
"(A) U.S. inventory correction and fading Asia demand (may) materially impact fourth-quarter results," Aberle wrote in a note to investors. "NetLogic provided December quarter guidance which was much softer than expected, with revenues expected to fall roughly 13 percent quarter-over-quarter to $23 million, thereby driving earnings per share down to 24 cents per share."
Analysts polled by Thomson Financial expect the company to post, on average, earnings of 35 cents per share on $28.2 million in sales.
Shares of NetLogic, which have traded between $18.69 and $45.03 over the last year, were down $5.37, or 22 percent, at $19.11 in afternoon trading. Earlier in the session shares set a new 52-week low of $18.66 on the Nasdaq.
Luminex Corp. (LMNX)
| Last Trade: | 15.99 |
| Trade Time: | 1:43PM ET |
| Change: | 4.19 (20.76%) |
posted by doublezero @ 11:01 AM
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