wall street nuggets

Some coolness in the brick and mortar retail world this holiday season has been attributed to expected growth in the online retail world. However, the early evidence of holiday online traffic is not that encouraging with a few execeptions. In most cases we see a significant erosion in online reach (unique shoppers per million online users) with the exception of BUY.COM (unfortunately went private in November 2001). We suspect BUY.COM is succeeding thanks to effective email based marketing campaign and online video product reviews (especially user videos).

A sampling (TARGET CORP [TGT], OVERSTOCK.COM [OSTK], BUY.COM, and AMAZON.COM INC [AMZN]) of the online traffic patterns using a “Reach” metric for the past 3 years, as available through Alexa, follows.

Note that increasing transaction prices will soften the impact, but on balance, the holiday season does not seem to be encouraging for the online retail world.

SMITH & WESSON HOLDING CORP [SWHC] was shot down 15.8% closing at $11.60 after announcing results for the quarter ended October 31^st. The company reported sales of $50.8 million, up 42.9% over the same period last year, and net income of $2.9 million or $0.07 per diluted share, which was well below the consensus estimate of $0.09 per diluted share. It appears that the market was spooked by a sequential decline in the gross margin, without bothering to consider the possibility of seasonality or trends in the margin. It should also be noted that the number of shares outstanding increased about 5% and we would like some clarity on the line item “Other income/(expense)” which hit the bottom line pretty hard. However, when you actually look at the gross margin for the second fiscal quarter year-over-year, it improved from 29.3% last year to 31.2% this year!!! At this point there is actually no evidence of seasonality in the margins, but still, the second quarter margin was only slightly below the average of the previous 8 quarters (31.8%). Given the strong revenue growth, this is definitely the time to pull the trigger.

CREDENCE SYSTEMS CORP [CMOS] (Scientific & Tech Instr) up 25.6% closing at $4.96 after upgrades by Canaccord Adams from “Hold” to “Buy” and by Needham & Co also from “Hold” to “Buy.” Looks like the red ink is near an end and there is probably still some upside potential up to about $7. We would be somewhat cautious regarding the amount of long-term debt.

CATALINA MARKETING CORP [POS] surged 20.1% closing at $29.11 after filing an 8-K announcing it had engaged Goldman Sachs & Co. as a financial advisor, following receipt of an unsolicited private equity offer regarding acquisition of the company. At this point the particulars of the offer are unknown, so it is rather difficult to determine whether the surge presents an opportunity. Looking at the current P/E ratio of about 20, it appears the opportunity that was there is now gone.

MICROVISION INC [MVIS] (Electronics & Semi) took a macro step up 10.6%, closing at $3.02 as MDB Capital Group began coverage with a “Buy” rating.

EXPEDIA INC [EXPE] (Online) exploded up 9.9% closing at $20.46 following an announcement that the company intended to start a stock buyback program on Monday using a Dutch auction. Since the goal is to buy back approximately 10% of the 331 million shares outstanding, there is obviously no opportunity at this point.

ISIS PHARMACEUTICALS INC [ISIS] (Pharmaceutical) up 9.3% closing at $12.13 on volume more that 3 times average daily volume for the past 3 months. Apparently stock was hyped (Changewave Report) with no major news event. Some speculation that PFIZER might want to acquire ISIS given its recent clinical trial results. Given the very encouraging results for ISIS 301012, we are inclined to agree, but it’s beginning to get awfully pricy.

ARENA PHARMACEUTICALS INC [ARNA] jumped 7% closing at $14.14 with volume more than twice the average trading volume for the past 9 months as it announced the pricing of its public offering of 11,500,000 shares at $13.21. Would say this is a speculative but attractive buying opportunity given the product pipeline and liquidity.

MADDEN STEVEN LTD [SHOO] tumbled 7.7% closing at $36.34 following a downgrade by First Albany from “Buy” to “Underperform.” The analyst pointed to the steep discounting for the product line at major distributors. Does look like some disappointing numbers lie ahead. Don’t see much of an opportunity here.

CUBIST PHARMACEUTICALS INC [CBST] (Pharmaceutical) also tumbled 7.9% closing at $18.82, following a downgrade by Piper Jaffray from “Outperform” to “Market Perform.” Can’t find any compelling reason for the downgrade so this appears to be a speculative but attractive buying opportunity.

One of the infamous SI white rabbits (defined as late SEC filers) DORAL FINANCIAL CORP [DRL] dropped 10.5% closing at $3.00 apparently due to concerns of long-term viability now that it has straightened out its accounting. Lack of transparency here continues to be a concern.

Daily Sector Performance Chart

Back in the black – but not by much! The average return in the SI universe on Friday was 0.06% with only 48.5% of the universe posting a positive return for the day. 47.3% posted negative returns and 4.2% were unchanged. Big sector moves were posted by Online (up 1%) and Construction (down 1.2%).

“And what will poor robin do then, poor thing?” RED ROBIN GOURMET BURGER [RRGB] flew south dropping 26.1% to close at $34.00 after announcing weak third quarter results, revising guidance downward, and then getting hammered by five separate downgrades. The company reported third quarter earnings of $0.36 per share ($0.42 excluding special charges), compared with $0.39 per share for the same period last year. The consensus estimate had been for earnings of $0.43 per share. Revenue for the quarter was $148.6 million, compared with $114.2 million for the same period last year. Basically the income statement for the third quarter wasn’t all that bad. However, the company now projects full-year earnings to be in the range of $1.62 to $1.67 per share on revenue of between $611 and $613 million, down from previous guidance in the range of $1.74 to $1.83 per share and previous revenue guidance in the range of $615 to $618 million. Perhaps this would have justified about an 8% drop in price. But additional pressure came from the analysts. CIBC World Markets downgraded RRGB from “Sector Outperform” to “Sector Perform,” Friedman Billings from “Outperform” to “Market Perform,” Bear Stearns from “Outperform” to “Peer Perform,” Banc of America Securities from “Buy” to “Neutral” and McAdams Wright Ragen from “Buy” to “Hold.” With 30% revenue growth, I would normally be inclined to judge this as a buying opportunity. However, there is one other area of concern. The balance sheet has an awful current ratio - current assets/current liabilities = .32 - compared with a ratio of about 2 that is much more typical. Of particular concern is the “construction related payables” line item of about $21 million under current liabilities with only $4.2 million in cash and cash equivalents. Looks like long-term debt can be expected to balloon even more in the next couple of quarters.

NEUROCRINE BIOSCIENCES [NBIX] fell off another cliff, dropping 30% to close at $7.72, a far cry from its high of $72.14 on the Ides of March. The drop can be attributed to both third quarter financials and an update on the status of the indiplon (the new insomnia drug being developed by the company). While the company had received conditional approval for the 5 and 10 mg capsules back in May, the FDA rejected the application for the extended-release tablets, which analysts felt had greater sales potential. (Personally, I think it has more to do with what the doctor prescribes than the analyst’s belief that the extended-release tablets are more attractive for some reason.) Basically, the FDA wants more long-term safety and effectiveness studies for the 15 mg extended-release tablets. The NDA for the indiplon capsules for the treatment of insomnia, which will include additional clinical studies on safety and efficacy, is currently targeted to be resubmitted in the summer of 2008! The company is in the process of “formulating a strategy to pursue a sleep maintenance claim for indiplon.” The FDA also wants a separate dose for the elderly population. Before we dose off here, let’s take a quick look at the third quarter numbers (which might induce a case of pavor nocturnus). The company reported a net loss of $39.1 million or $1.03 per share compared to a net income of $26.2 million or $0.71 per share for the same period in 2005. Revenues for the third quarter were $1.1 million compared with $64.7 million for the same period last year. The company expects the net cash burn for 2006 will be about $100 million and expects to end the year with about $180 million in cash, cash equivalents and marketable securities. It is projecting the net cash burn in 2007 to be approximately $80 million. Looking at the pipeline, the only fourth quarter expectations seem to involve some early Phase 2 clinical studies, with no significant revenue generators in the next couple of years. Survival is probably going to require a more “well-controlled burn rate” or external funding strategies. Avoid the falling knife.

WHOLE FOODS MARKET INC [WFMI] was crushed 23.1% closing at $46.26 after announcing fourth quarter results that basically met expectations, but revising downward its guidance for 2007. The company reported fourth quarter earnings of $0.28 per share, compared with the consensus estimate of $0.29 per share on revenue of $1.3 billion, up 16% over the same period last year. Comparable store sales increased 8.6% for the quarter. The company is now projecting growth the growth rate for fiscal year 2007 will be in the range of 13% to 17%. Not helping matters was a downgrade by Banc of America Securities from “Buy” to “Neutral.” The company also increased its quarterly dividend payment to $0.18 per share. At this point, we see nothing in the news events that would justify the magnitude of the drop and would have to conclude that this is a buying opportunity.

AQUANTIVE INC [AQNT], an online advertising agency, was down 20.8% closing at $22.73 after announcing third quarter results and revealing turnover issues. The company reported that third quarter revenue was $111 million, up 41% over the third quarter 2005. Net income for the quarter was $13.6 million or $0.16 per diluted share. The consensus estimate for revenue had been $119.15 million and the shortfall was attributed to both a delay in a web project that resulted in the delivery date slipping into the fourth quarter, and some unexpected turnover in the sales force in May. One estimate is that AQNT lost about 5 sales people making up roughly half of its sales force. Downgrades by Merriman Curhan Ford from “Buy” to “Neutral” and by RBC Capital Markets from “Outperform” to “Sector Perform” undoubtedly magnified the hit. Our sense is that the magnitude of the drop is not justified at this time but that the P/E ratio is too high, even given the growth in the online advertising world.

SIX FLAGS INC [SIX] surged 11.2% closing at $6.24 after announcing a strong third quarter. The company reported earnings of $159.3 million or $1.08 per diluted share, compared to $190.2 million or $1.29 per diluted share for the same period last year. Total revenue for the quarter was $540.7 million down 1% from the same period last year, reflecting a decline in attendance that was not quite offset by a rise in revenue per guest. The decline in attendance (12%) was attributed to weather, but presumably also had something to do with the previously indicated increase in ticket prices and higher gasoline prices. The focus on “initiatives designed to foster a family-friendly environment and a more diversified entertainment offering” appear to be bearing fruit in stabilizing attendance during the quarter, but we will have to wait for fourth quarter numbers to be sure. In any case, it is clear that the new initiatives are costing more money. Adjusted EBITDA for the quarter, which excludes the operations of parks planned for closure, was down 7% compared to the same period last year, which does not sound encouraging. On balance, we would like to see one more quarter of results before agreeing that a turnaround is underway.

ELECTRONIC ARTS INC [ERTS] scored big, up 11.8% to close at $59.24 after announcing better than expected second quarter financials. The company announced earnings of $22 million on a GAAP basis, and $65 million or $0.21 per diluted share, on a non-GAAP basis, compared with $0.15 per diluted share for the same period last year, easily topping the consensus estimate of $0.02 per diluted share. Perhaps even more important, the company revised its guidance for the current quarter up slightly, looking for about the same level of sales as last year instead of a 5% drop indicated earlier. Given the record success of Madden NFL 07 and NCAA Football 07, and the NHL® trajectory, it would be hard to miss the lay-up here.

JDS UNIPHASE CORP [JDSUD] jumped up 16.1% closing at $16.58 following the announcement of financial results for the first quarter of fiscal 2007. The company reported a GAAP net loss of $0.22 per share and non-GAAP profit of $0.03 per share, compared to a net loss of $0.34 for the same period last year. The consensus estimate had been for a profit of $0.01 per share (non-GAAP). The stock was upgraded by Deutsche Bank from “Hold” to “Buy” and by Needham & Co. from “Buy” to “Strong Buy.” However, first quarter revenues of $318.1 million falling below the consensus estimate of $322 million. For the second quarter of fiscal 2007, ending December 31^st, the company projects revenues will be in the range of $332 to $352 million, which is in line with the current consensus estimate. Not seeing much more upside potential here.

STELLENT INC [STEL], a global provider of Enterprise Content Management (ECM) software, surged 26.2% to close at $13.40 on the news of yet another ORACLE CORP [ORCL] buyout. The voracious appetite of this orca for enterprise software companies continues to amaze. Given the healthy premiums being paid and concerns about the challenges of assimilating so many different cultures in such a short period of time, some caution should be taken with ORCL. The $74 million in goodwill from STELLENT raised my eyebrows, but when you’ve already got $7 billion in goodwill on the books, what’s another $74 million?

The Daily Sector Performance Chart

Somewhat surprisingly, given the drops in some of the major indices, the average gain in the SigmaInverse Universe on Friday was 0.33% with 53.9% of the members posting positive returns for the day.

The big gainers for the day were Oil & Gas Production (up 2.6%) and Scientific & Technology Instruments (up 1.7%). The big loser was Restaurants (down 1.8%).

Mining stocks were on fire Tuesday with MASSEY ENERGY CO [MEE] up 9.9% closing at $22.90 leading the pack.

AVANIR PHARMACEUTICALS [AVNR] advanced 18.7% closing at $8.49 probably in anticipation of upcoming FDA PDUFA decision (October 30^th) on Neurodex for Involuntary Emotional Expression Disorder (IEED). The company has also initiated a Phase III trial of Neurodex for the treatment of diabetic neuropathic pain.

Online advertising technology provider 24/7 REAL MEDIA INC [TFSM] surged 15% closing at $9.27 buoyed by remarkable growth in online advertising and an upgrade by RBC Capital Markets from “Sector Perform” to “Top Pick.” The upgrade was based on the strength the company has demonstrated in overseas markets and growth expected as a result of a recent joint venture with the advertising company Dentsu to provide Search Engine Marketing (SEM) services in Japan.

A second wave carried NEW RIVER PHARMACEUTICALS INC [NRPH] up another 13% closing at $47.82 following yesterday’s spectacular advance on the FDA approval of NRP 104.

INPHONIC INC [INPC] surged 11.8% closing at $9.16 with the news that GOLDMAN SACHS [GS] had offered the company $100 million in debt financing. INPHONIC operates as an online seller of wireless services in the U.S. through its branded sites like Wirefly.com and through other web sites created and managed by INPHONIC for third party online businesses. The financing has a 9% APR and if accepted would give GS warrants to buy $10 million in common stock, exercisable immediately and expiring on the 5^th anniversary of the closing of the financing. The additional funding could be used to repay existing debt, fund share buybacks or for working capital needs.

PARAMETRIC TECHNOLOGY CORP [PMTC] (aka PTC) surged 8.8% closing at $19.84 after announcing that it expected its financial results for the fourth quarter ended September 30^th, to exceed its earlier guidance. The company is now projecting revenues of approximately $245 million for the quarter, compared to previous guidance of $215 to $225 million. It is also expecting GAAP earnings of approximately $0.22 to $0.24 per share, compared to earlier guidance of $0.15 to $0.19 per share.

Another company raising its revenue guidance for the quarter was the IT consulting company PERFICIENT INC [PRFT] which was up 7.4% closing at $17.21. The company now expects revenues to be in the range of $43.3 to $44.5 million, compared to previous guidance of $41.0 to $43.1 million, representing revenue growth of 79% to 84% over the same period last year. Pretty proficient.

LANDRYS RESTAURANTS INC [LNY] shed 10.4% closing at $28.63 with the announcement that it was selling 120 of its Joe’s Crab Shack (JCS) restaurants to a private equity group for approximately $192 million, including the assumption of certain working capital liabilities, as the company moves to focus on its higher end restaurants, hospitality and gaming assets. It also reported total same store sales for the third quarter came in at about 1%, including a negative 8% same store sales for the JCS division. Given the charges associated with the sale and poor earnings associated with the chain, the company now expects a third quarter loss in the range of $1.65 to $1.85 per diluted share. Unfortunately, it is not easy to determine the fraction of total revenue attributable to the JCS chain. The company’s 10-Q’s and 10-K’s have a very poor segment breakdown, identifying only “Restaurant and Hospitality” and “Gaming” splits of total revenue.

DYNAVAX TECHNOLOGIES CORP [DVAX] dropped 11.1% closing at $7.15 as apparently some of the speculators who bought shares in the hastily put together offering of 7.13 million shares on October 4^th cashed in on the New England Journal of Medicine article published after the close on October 4^th, claiming that Dynavax’s allergy therapy appeared to be effective in the treatment of ragweed allergic rhinitis. Marc Lichtenfeld of the TheStreet.com raises some very interesting questions regarding the timing of the offering

INFOCUS CORP [INFS] lost 20.1% closing at $2.39 after announcing that third quarter revenues would be between $78 and $82 million, compared to $130.32 million for the same period last year, and well below the consensus estimate of $120 million. The company will propose specific cost cuttings when it reports final third quarter results. The company has retained Banc of America Securities to evaluate a range of strategic alternatives, which presumably includes the sale of the company, although it appears premature to speculate on a specific transaction at this time. Given the company’s patent portfolio and market share, it appears there might be an interesting long opportunity at this point.

Overall, the average return in the SI Universe on Tuesday, 10/10/2006, was only 0.27% with 51.2% of the members posting positive returns for the day. For the second day in a row, Alternative Energy was a positive outlier and Mining (as noted above) was up dramatically (4.45% on average).

AUTOBYTEL INC [ABTL], a major online automotive marketing services company, shot up 25.4% closing at $3.20 probably due to a 13D/A filing with the SEC containing a letter from Liberate Technologies (LT) (one of the largest shareholders), recommending either a restructuring and streamlining of the company, or a sale of the company, with a preference for the first option. Observing no real growth in the online reach of the autobytel.com site since the end of 2005, we see a real need for more effective demand creation. The video reviews are a step in the right direction, but being forced to watch a competitive video before the one you actually want is totally obnoxious (not to mention really stupid, since you will never be able to effectively measure ad effectiveness). The “My Autobytel” page is also a step in the right direction, but the full potential of collaboration on the consumer side fails to be communicated. We find LT’s recommendation interesting, but are not sanguine regarding the possible sale of the CRM software component given the current environment in the auto dealer world, and would like to see ABTL’s response.

COOPER TIRE & RUBBER CO [CTB] up 15.1% closing at $11.20 following the release of an 8-K filing describing a recovery plan involving cost cuttings of $70 million and inventory reductions of $100 million.

EQUIFAX INC [EFX] was up 12.1% closing at $36.34 following a press release in which it revised its guidance for calendar year 2006, from a range of $1.90 to $1.99 per share to something in excess of $2.00 per share. It also lowered its expenditure target for capital expenditures and reaffirmed its previous guidance for revenue growth of 7% to 10%.

BORDERS GROUP INC [BGP] shot up 7.2% closing at $20.60 with an upgrade by Credit Suisse from “Neutral” to “Outperform.” However, Credit Suisse also downgraded BARNES & NOBLE INC [BKS] on Friday from “Neutral” to “Underperform.” While BKS took a big hit at the open, it had almost fully recovered by the end of the day, whereas BGP’s response exhibited considerable hysteresis. The likely explanation is that the reasons given for the BGP upgrade (confidence in new CEO, conservative accounting, etc.) may have been relatively new factors, while the BKS downgrade factors (options related legal issues, competition, etc.) may have already been priced in.

QUICKSILVER INC [ZQK] slid down 10.8% closing at $12.17 after meeting earnings expectations for the third quarter which came in at $0.04 per share compared with $0.20 per share for the same period last year. However, the company revised its fourth quarter earnings guidance to $0.51 per share, including stock compensation expenses. The consensus estimate had been $0.54 per share for the quarter. WR Hambrecht initiated coverage Thursday with a “Buy” rating, but on Friday Morgan Keegan downgraded the stock from “Outperform” to “Market Perform.” Mercurial markets!

AIRTRAN HOLDINGS INC [AAI] lost altitude on Friday, slipping 11.1% to close at $9.49 following an 8-K filing in which it lowered guidance for the third quarter citing a softening in demand which became apparent by the end of August. The softening was attributed to the threat of terrorist attacks, tropical storm Ernesto and increased competition on the east coast. The company expects the trend to continue and projects third quarter revenue per available seat mile (RASM) to be “in a range of the low single digits year over year,” compared to previous guidance in the high single digits. It also had some good news indicating that non-fuel cost per available seat mile (CASM) was expected to decline 3% to 5% in the quarter and that the all-in fuel costs should be within a range of $2.28 to $2.33 per gallon (obviously on the high side given the drop in oil prices over the course of the last two days). But of course, as the market is prone to do lately, the good news apparently was filtered out and only the drop in demand was heard. The company does plan to reduce growth in the 2007 to 2008 time frame to get RASM higher, apparently anticipating continued pricing pressure from competitors. Given the relatively high P/E ratio, we do not see a significant opportunity at this time.

VOLT INFORMATION SCIENCES INC [VOL], a provider of both staffing and telecommunications and information systems, was down a shocking 15.1% closing at $34.66, after announcing financial results for the quarter ended July 30^th. While the company reported earnings of $0.53 per share compared to $0.32 per share for the same period last year, the consensus estimate had been for earnings of $0.62 per share. Revenue for the quarter was $584.9 million which also fell considerably shy of the consensus estimate of $605 million.

The Daily Sector Performance Chart provides clear evidence that we generally ended the week on an upbeat except in Mining (down on average 2.5%) and Oil & Gas Production (down on average 2.3%).  The decline in oil prices with crude settling at $66.25 per barrel, the lowest level in the past 5 months.  The average return for all 3,588 members of the SigmaInverse Universe was 0.27% with 58.1% posting a positive return for the day.

PEGASUS WIRELESS CORP NV [PGWC] plummeted another 30.6%, losing over half of its value in the last two days of the week, to close at $2.38. Fail to see a long term opportunity. No Victory here.

TAKE TWO INTERACTIVE SOFTWARE INC [TTWO] tumbled 7.3% closing at $11.31with the decline probably due to several factors covered in the recent press release. There appears to be some confusion regarding the product release schedule. The August 31 press release indicates that Grand Theft Autos: Vice City Stories for the PlayStation Portable and Bully for PlayStation 2 are still on schedule for release in October 2006, despite what may have been reported elsewhere, and both would have an impact on fourth quarter revenues IF released in October. However, there are no “Coming Soon” banner ads for the GTA Vice City game on the Take-Two site, so it appears there may be some cause for concern. The company also announced new grand jury subpoenas for documents related to stock option timing and that its filings with the SEC would be further delayed pending completion of its internal review of stock option grants. While the company announced third quarter revenues of $240 million that were in line with the consensus estimate of $241.62, it did not release earnings estimates. The real damage was probably due to its statement that “the current analyst consensus EPS estimates for its fourth quarter are too high.” Hopefully the full 10-Q for the third quarter will help to clarify the picture. At this point, there are too many unknowns.

VALASSIS COMMUNICATIONS INC [VCI] continues to suffer the consequences of its ill fated proposed acquisition of ADVO INC [AD] dropping 6.2% in Friday (the second drop in excess of 6% in as many days) to close at $18.49. ADVO INC [AD] on the other hand advanced 8.8% closing at $31.09, indicating yesterday’s precipitous drop may have been an overreaction. Both are likely to be victims of legal distractions for the foreseeable future.

VERIFONE HOLDINGS INC [PAY] was on fire climbing 23% to close at $28.47 following the announcement of strong third quarter results with earnings of $0.28 per share, which exceeded the consensus estimate of $0.26 per share, and prompted an upgrade by Raymond James from “Market Perform” to “Outperform.”

INTERGRAPH CORP [INGR] jumped 17.5% closing at $43.90 on the announcement that it had agreed to be acquired by a private equity group for about $44 per share.

BRISTOL MYERS SQUIBB CO [BMY] was up 5.5% on Friday with the news that it had been granted an injunction preventing the Canadian pharmaceutical company APOTEX from further distribution of a generic form of Plavix. BMY closed at $22.95, probably due to the upgrade by AG Edwards from “Sell” to “Hold.” It appears that the damage for 2006 is already a fait accompli given that APOTEX has been distributing the generic equivalent since August 8^th and the heavy dependence of BMY on Plavix, which makes up 24% of net sales according to the most recent 10-Q. Some analysts are raising 2007 estimates, based on the strong likelihood that the company should regain Plavix protection until 2011.

The week ended on a positive note, across the broader market with most gains concentrated in the Russell 1000 area. The average return for the day was 0.29% with 55.5% of the SigmaInverse Universe posting positive returns. The big gainers for the day were Manufacturing (up 1.76% on average) and Oil & Gas Production (up 1.6% on average).

PEGASUS WIRELESS CORP NV [PGWC] was wingless on Thursday as it fell 33.4% closing at $3.43. Could have something to do with The Motley Fool article Don’t Bet on This Horse by Seth Jayson from last week.

ADVO INC [AD] reentered the ad-mosphere dropping 22.3% closing at $28.59 following the lawsuit by VALASSIS COMMUNICATIONS INC [VCI]. We’re not sure exactly why, but VALASSIS issued a press release pointing to a very heavily redacted version of the complaint. As if it didn’t incur enough pain back on July 6^th, VALASSIS dropped another 6.1% on Thursday, closing at $19.72.

BANK JOS A CLOTHIERS INC [JOSB] collapsed 16% closing at $23.93 after reporting a very disappointing comparable store sales drop of 6.1% in August, compared with an increase of 12.9% for the same period last year. The second quarter financials will be released September 7^th and a conference call has been scheduled for 11:00 a.m. EDT.

BLYTH INC [BTH] lit the candle at both ends shooting up 25.5% and closing at $21.48 after announcing second quarter results. The company reported an operating loss of $27.7 million for the second quarter which included a one-time non-cash goodwill impairment of $36.8 million. Excluding one-time events, the operating profit for the second quarter this year was $9.0 million or $0.22 per share, compared with $11.4 million last year. The consensus estimate had been for a loss of $0.04 per share. The company also reported a loss of $68.6 million during the second quarter from its discontinued European operations, most of which reflects impairment charges related to its Gies and Colony operations which have been sold. Finally, the company raised its earnings guidance for the full year to $1.35 to $1.40 per share, excluding discontinued operations and goodwill impairment charges. On balance, it looks like a cleaner picture, but we do not see any significant revenue growth going forward.

Milwaukee based, mining equipment maker, JOY GLOBAL INC [JOYG] jumped 21.5% closing at $43.54 after announcing its results for the third quarter ended July 29^th. The company reported earnings of $1.53 per share, which included a one time tax-related benefit of $0.90 per share, which would still imply earnings of $0.63 per share, well above the consensus estimate of $0.58 per share and last year’s earnings of $0.25 per share.

A leader in digital video systems, SEACHANGE INTERNATIONAL INC [SEAC] was up sharply 8.3% closing at $8.45 after announcing a very strong second quarter, swinging to positive earnings of $0.02 per share, when the consensus estimate had been for a loss of $0.08 per share. The consensus estimate had been for revenues of $37.06 million, but came in at $45.4 million for a 73% increase over the previous year.

TIVO INC [TIVO] rose 7.7% closing at $8.25 as it announced second quarter (ended July 31^st) results that exceeded the consensus estimates. The company announced a loss of $0.07 per share, which was better than the consensus estimate of a loss of $0.14 per share, and revenues for the quarter at $52.88 million were better than the consensus estimate of $51.26 million. However, the balance sheet continues to look awful, with a weak current ratio, uncomfortable long-term debt, and negative shareholder equity (and getting worse). Groan! Negative cash flow and ballooning legal expenses (recorded in G&A) are also not good signs. We find the decline in TiVo-owned gross additions from 77 thousand last year to 74 thousand in the second quarter this year to be very disappointing. Love my TiVo box, but can’t recommend the stock!

It was nice to end the month on a positive note.  The average return for the day was 0.23% with 53% of the members of the SigmaInverse Universe posting a positive return for the day.