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Showing posts from September, 2007

BigBand announces big revenue miss

Since BigBand Networks (BBND) is part of our model portfolio, I feel compelled to comment on the devastating news released after the close last Thursday.

The company announced that it would encounter a revenue shortfall and be unprofitable in the third quarter. BigBand now expects to report revenue for the third quarter in the range of $35 to $39 million, which is below the company's previous guidance of $54 to $58 million. The lower revenue outlook is due to several factors. BigBand has been deploying switched digital video across an expanding number of customers and configurations. Some of these ongoing deployments have required more software customization and integration than originally expected. In other words, the company underestimated the effort and the timeline. This has impacted their ability to book revenue for some of these deployments in the third quarter. The company also said it experienced a slowdown in Telco-TV revenue, as its "major customer" worked throu…

Introducing the TradeRadar Users Group

This has been a weekend of web site development. First, we updated TradeRadarWeb by rolling out the online version of TradeRadar 2.0 to the site. Now I'd like to announce the inauguration of the TradeRadar Users Group.

We have signed up with Ning.com to create a social network dedicated to the TradeRadar software. Included is a discussion forum and the ability to upload photos or screenshots of stock charts, from TradeRadar or elsewhere. You can even create your own blog entries to describe your progress with your portfolio or your use of the TradeRadar software.

Since we have over 300 people who have downloaded the software, my hope is that we can now begin to collaborate to identify ways to improve the software or to improve our techniques for using it. I am looking forward to users sharing stock picks, tips on using the software, asking and answering questions and reporting problems or anomalies.

See you soon at the TradeRadar Users Group!

Online version of TradeRadar upgraded to Version 2.0

This post is to announce that TradeRadarWeb, the online version of the TradeRadar software, has been upgraded to version 2.0

The primary enhancement is that trend lines are now generated to help confirm BUY and SELL signals. If you're running Microsoft Internet Explorer, click here to run TradeRadarWeb now!

The software attempts to identify reversals in price movement. In the case of a BUY signal, TradeRadarWeb will now indicate whether an initial downward trend exists and whether a subsequent upward trend is in the process of being formed. The trend lines are displayed on the chart screen overlaying the price graph and moving averages.

For more detail, read the post that originally announced the version 2.0 roll-out of the TradeRadar desktop application.

Sallie Mae - JC Flowers deserves a better deal

The student loan industry is resigned to disappointment. President Bush signed a bill today that cuts subsidies and increases grants. The bill will reduce profitability at all student loan lenders. It is a prime reason why the buy-out of Sallie Mae (SLM) by a group led by JC Flowers is facing rocky times. The terms of the deal were set at a time when funding for buy-outs was easily obtained and investors were more willing to accept riskier deals. The increased risk due to this bill and today’s credit market situation where investors are demanding higher risk premiums has put this deal in jeopardy. I agree with JC Flowers -- they deserve a better deal.

How the bill affects student lending

One of the ways lenders make money is through the subsidies paid by the U.S. Education Department on subsidized loans in the Federal Family Educational Loan (FFEL) program. The FFEL program consists of Stafford and PLUS loans. Stafford loans are the first ones financial aid administrators advise studen…

Why I'm overweight tech

Today I decided it was time to climb on board the tech stock bandwagon. Accordingly, I bought the ProShares Ultra Technology ETF (ROM).

I have been a schizophrenic investor for a while now. I have recommended a number of tech stocks in the TradeRadar model portfolio: Cisco, Qualcomm, BigBand; recently I sold SanDisk and Millicom Cellular. All the while I have also been maintaining a position in the Proshares UltraShort QQQ ETF (QID), which essentially comprises a bet against the tech-heavy NASDAQ 100. I picked up QID when the TradeRadar software generated a SELL signal on the QQQQ earlier this year and I have a hard time figuring out if I'm keeping it as a hedge or I'm just reluctant to take a loss. Maybe that's a discussion for a post on investor psychology.

In an case, I am tilting much more toward being bullish on tech now due to several developments including the action in the markets as reflected in the TradeRadar software and the fact that underlying fundamentals for t…

Motorola - too much doubt to follow the buy signal

Today on 24/7 Wall Street, a post titled "A Motorola (MOT) Rally" cast doubt on the stock's recent advance and questioned positive analyst comments. The post is brief so I will quote it in its entirety:

"Motorola's (MOT) shares are up almost 10% since late last month. RBS recently upgraded the shares due to a strengthening handset market and improved products, according to Barron's. Cowen upgraded the stock last week.

Most of the improvement in the share price is based on two theories.

The first is that the overall demand for handsets is rising. But, Motorola may be getting no benefit from this, Its market share dropped from a high of 22% over a year ago to a current level of under 15%. Samsung and Sony Ericsson have taken a great deal of that business. And, Nokia's (NOK) piece of the market is still growing, approaching 40%.

Even in a rising market, MOT's market share may be continuing to fall.

The second line of thinking is that new models will replace …

Software-as-a-Service stocks in long-term uptrend

The most famous of the SaaS stocks is Salesforce.com (CRM) and certainly its CEO Marc Benioff has been outspoken and flamboyant in his announcements that SaaS is the next big thing and his company is in the vanguard of the movement.

In many ways, SaaS is the next big thing and the large-cap software companies like SAP and Microsoft are making attempts to play in this sector.

What many investors may not have noticed is that there is a group of smaller companies that, as start-ups, committed to SaaS as a primary vision and have been quietly reaping the rewards ever since.

These firms include: Taleo (TLEO), Concur Technologies (CNQR), Ultimate Software (ULTI) and Omniture (OMTR). These four stocks have more than doubled since September 2005. They are all small caps trading on the NASDAQ. Three have rather similar charts with Omniture setting itself apart from the others by tripling over the time frame. Let's take a closer look at each one.



Taleo

The focus of Taleo is human relations, spec…

Interactive Ads - Google one-ups Yahoo again

Google's (GOOG) press release describing the expansion of a beta program for what are being called Gadget Ads has again shown that Google is unparalleled at melding technology and advertising to benefit its bottom line. Gadget Ads are mini-web pages or "widgets" that can be embedded within publisher pages.

I have written in the past on Yahoo's (YHOO) Smart Ads and how, by more precisely targeting site users and adjusting ad content accordingly, they provide a much desired evolution of the banner or display ad format.

Though Smart Ads and Gadget Ads are not really the same, I think it is fair to say that Google has seen the challenge of Smart Ads and has chosen to leapfrog Yahoo by rolling out its own update to the display ad format.

The evolution of the Gadget Ad --

One of the trends on the Internet over the last year or so involves software developers creating "widgets" which can be hosted within web pages and blogs. Widgets can be pretty much anything that ca…

Homebuilders jump on rate cut - move is overdone

Today Reuters reported the following:

"Home builder sentiment fell for a seventh straight month in September as tougher mortgage requirements hindered sales from bloated inventories, the National Association of Home Builders said on Tuesday.

The NAHB/Wells Fargo Housing Market index declined 2 points to 20, matching the record low of January 1991 when the economy was in the throes of a recession, the NAHB said in a statement. But an interest rate cut by the Federal Reserve on Tuesday offered the industry hope, the NAHB's chief executive said."

After the Fed cut both the Fed Funds rate and the discount rate by 50 basis points today, the SPDR HOMEBUILDERS ETF (XHB) took off and registered a 5% gain on the day. The 24/7 Wall Street blog reports that the Jim Cramer "Mortgage Madness" portfolio was the best performing group today. Beazer Homes (BZH) was up 18% on the day!

Was that performance warranted or was it "irrational exuberance?" The home builders are d…

Mobile ads are all the rage but where to invest?

It seems that there is a mini-boom going on with mobile marketing companies. There are acquisitions taking place left and right and there are tons of start-ups jumping into the space.

In May of this year, AOL acquired mobile-ad startup Third Screen Media and Microsoft (MSFT) bought French mobile-ad firm ScreenTonic. Last year VeriSign (VRSN) bought m-Qube. This week, Nokia (NOK) bought Enpocket.

As we have written in previous posts, Google is moving rapidly toward mobile search ads while Yahoo is rumored to be eyeing several startups and has already launched mobile display-ads.

It reminds me of the buy-out activity we saw recently where online advertising companies were being purchased by some of the same acquirers listed above. I thought it might be a good idea to look for public companies in the mobile advertising or marketing space that might be good acquisition targets.

Three themes emerge --Here are the main points of what I found:

1. The pickings are slim in the public stock markets …

Poor Netscape - less Digg, more AOL

In what can only be termed a setback, AOL has announced that it is converting its Netscape Internet property from a social news site to a portal.

Combining Netscape's brand with the social networking flavor-of-the-day was supposed to create a "Digg-killer" and, of course, generate millions of ad impressions for AOL advertisers. In an interesting twist, Netscape used both community ratings and "anchors" who acted like editors to highlight the best stories or moderators to ensure highly ranked news items were clean and spam-free. Apparently, it didn't work out to the satisfaction of AOL management.

The social news site will live on at Propeller.com but it is not clear how much support it will receive from its parent. The three million or so page views per day that the Netscape domain was racking up will now be seeing an AOL-like experience.

A step backwardsAOL indicates that they are reacting to user feedback but, judging by comments on the Netscape blog, a numb…

Qualcomm loses again

Today it was announced on the Barron's web site that Qualcomm (QCOM) had lost Motorola (MOT) as a customer. Motorola has long included Qualcomm chips in their handset products. That relationship has ended. Freescale Semiconductor, a current Motorola supplier, will be picking up the slack short-term and Texas Instruments (TXN) will become the eventual long-term replacement.

We have written a number of previous posts on Qualcomm since the company became part of the TradeRadar model portfolio. Selection of QCOM was in large part based on long term expectations that its patent portfolio would allow it to prosper as telecom companies made an expected shift toward Qualcomm's technologies as they migrated to "3G" WCDMA standards. We made the point that to a certain extent we were "buying on bad news" as Qualcomm stock was down mostly due to its legal situation. Since then we have taken Qualcomm management to task for the ineffective handling of the lawsuits in whic…

TradeRadar software version 2.0 released

This post is to announce the release of the newest version of the TradeRadar software. The major new feature in version 2.0 is the addition of trend lines. It is available on the TradeRadar Download page in two versions: a full install and a simple upgrade.

The software attempts to identify reversals in price movement. In the case of a BUY signal, TradeRadar will now indicate whether an initial downward trend exists and whether a subsequent upward trend is in the process of being formed. The trend lines are displayed on the chart screen overlaying the price graph and moving averages.

The software has removed two indicators, Variance and Slope, and replaced them with Angle of Attack (AOA) and Trend Diff. These two new indicators display the angles associated with the trend lines. AOA shows the angle the first trend line makes with the horizontal. The Trend Diff indicator shows the angle the second trend line makes versus the first trend line; i.e., it measures how steep the reversal is…

Chart action: Jobs data changes everything

Last week I wrote that the daily charts of the major averages were beginning to show potential inverse head-and-shoulder patterns. That would typically be a strong bullish signal in the world of technical stock analysis. I also wrote that the weekly charts were less conclusive and we would need to see the averages move decisively above the necklines of the patterns to confirm the new bullish trend.

Tuesday the markets did indeed move up but Friday saw a plunge that left all the averages below the previous week's levels.

Now it looks like we will once again test the support of the 200-day moving averages while investors gauge the strength of the Goldilocks economy and wait for the expected rate cut when the Fed meets on September 18.

The word "recession" is starting to show up in blogs and news articles now. It wasn't so long ago we had upward revisions in GDP, mild reads on inflation and a feeling markets were stabilizing. Was the jobs data really so bad? Was it unexpec…

REITs headed for trouble, again

The latest Census Bureau monthly report on construction spending shows two trends moving in opposite directions. It is no surprise to see single-family residential construction spending going down month after month. Yet it is somewhat of a surprise to see spending for office, lodging, shopping centers, shopping malls and multi-family dwellings holding reasonably steady or in some cases even showing modest increases (see chart below).



The continued strength in the commercial sector despite the general real estate malaise and the recent fall-off in deal-making implies developers are making a huge bet on strength in the economy making all this new commercial property profitable.

In contrast to the positive attitude exhibited by the commercial real estate developers, Bloomberg reported the following items today:

"Prices of U.S. commercial real estate could fall up to 15% in what would be the worst decline since the 2001 recession"

"In July, investors bought the fewest commercia…

New release of TradeRadar software on the way

You may have noticed I am not posting as often lately. I am busy on a new release of the TradeRadar software and it's taking some time.

I am adding a trending feature. The software will calculate and display two underlying trends: the initial trend from the start to the maximum or minimum price point on the chart (what I refer to as the inflection point) and then another trend from the inflection point to the end of the chart. Angles will be calculated and used to drive the red/yellow/green indicators on the Dashboard screen.

Stay tuned for the release of the desktop version first; I expect to release it a week or so before the online version. As usual, there will be a full install and a simple update. I also hope to release a new set of training videos soon.

Lots to do...

ETF charts at crossroads

Looking at some of the ETFs we track, we are seeing some interesting developments starting to play out on the charts. It is looking suspiciously like there are head-and-shoulders patterns forming on a number of charts. The head-and-shoulders is traditionally viewed as a strong indicator of a reversal about to happen with the inverse H&S pointing to a rally and the standard H&S pointing to a downturn.

Here are some comments on the chart patterns we see emerging using traditional technical analysis rather than the TradeRadar software (click the "charts" link to view the three charts for each ETF at stockcharts.com):

Dow Diamonds (DIA, charts) - inverse H&S is forming on daily chart. With Friday's action DIA closed just above its downward trendline but still below its 50-day MA. Looking at the weekly chart, however, things are not quite so hopeful as the pattern is indeterminate. The point-and-figure chart looks like a triangle is being formed. Hard to say what d…