Wall Street to Main Street: News, Views and Commentary: May 25, 2006

It’s Thursday May 25, 2006, and yesterday presented the debut of Vonage (NYSE: VG) on the New York Stock Exchange and a pin was put in the balloon. The stock was priced at $17, the first trade, which was done by the CEO, kicked off the debut. Shortly after that first trade the stock began to tumble a bit and at the end of the day it closed $14.85 down from its debut price.

Some attribute this to investor fears as the IPO was marked as oversubscribed but as we mentioned yesterday the reason for the oversubscription was that Vonage put aside a piece of the IPO for some of their loyal customers. This is the first pure play in the Voip arena and investors are probably just trying to get their arms around this one. Even though Vonage has lost money since inception they have been ramping up their customer base over the past 12 months while companies like Verizon (NYSE: VZ) and Time Warner (NYSE: TWX) have jumped in headfirst.

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General Motors (NYSE: GM) was upgraded to a Buy by Merrill Lynch (NYSE: MER) analyst John Murphy and he gave GM a price target of $37. This was and still is our turnaround situation for 2006 on Wall Street to Main Street since the $19 range. The company is trimming the fat across the board and they are in survival mode which looks to be what will make this turnaround happen sooner than later. This is an American Icon that we are speaking about, with Toyota (NYSE: TM) and Honda (NYSE: HMC) expanding globally you can bet that this is just adding fuel to the fire that is burning deep within the driving forces of GM, the team of Rick Wagoner and Jerry York seems to be key. We also should let you know that GM is looking to re-launch the Camaro, the muscle car that was discontinued to compete with Fords (NYSE: F) popular Mustang.

CBS (NYSE: CBS) and radio shock jock Howard Stern who defected to Sirius Satellite Radio (NASDAQ: SIRI) have reached a settlement. CBS filed a lawsuit against Stern citing that while he was on the air that he misappropriated millions of dollars of airtime promoting Sirius. The terms of the settlement have not been disclosed as of yet but it’s a victory for CBS. Sirius shares have slide over the past several months going from the $7 range to below $4 a share. The initial boost to the stock in anticipation of Howard Stern’s arrival has faded and now it’s all about the content. Although Stern met his enrollment mark and got paid handsomely for that, he actually only brought over a portion of his former listener base. So where is Sirius headed? Unless they develop content that is so compelling that listeners cannot do without it they are at a standstill. XM Satellite (NASDAQ: XMSR) even went to the point of placing one of their programs on traditional radio to keep listeners interested and that stock has also fallen from grace.

Movers and Shakers

Some major movers in yesterday trading session include Payless Shoes (NYSE: PSS) which traded up $3.77 to close at $24.65, General Motors (NYSE: GM) which traded up $2.03 to close at $26.51, Dycom Industries (NYSE: DY) traded up $1.28 to close at $21.19, DreamWorks Animation (NYSE: DWA) traded up $1.51 to close at $27.10, Ansoft Corp (NASDAQ: ANST) traded up $2.04 to close at $20.57, AngioDynamics (NASDAQ: ANGO) traded up $2.50 to close at $26.57, and Daktronics (NASDAQ:DAKT) which traded up $3.86 to close at $44.36.


Due to market conditions we found it necessary to make our readers/listeners aware of companies that have been taking a little spanking, some of these stocks may be at a discount but you need to do your research, look at the charts and make sure that nothing fundamentally has changed with the company and whether it is just being dragged by the market or not. There are companies that are actually a slave to the Dow and present buying opportunities.

Some stocks that traded down yesterday include Perdigao (NYSE: PDA) which traded down against yesterday as the stock fell an additional $1.54 to close at $15.20. Yesterday we told you that PDA stated the tremendous drop in export revenues and that is affecting the stock today. The 52 week low is $12.88 and its on its way there unless something material changes its direction but a 22% drop in exports revenue is significant. Over the month of May the stock has come down from a high of $23.89 and dropping.

Meridian Gold (NYSE: MDG) dropped $2.59 to close at $29.14, it has come off a high of $36.69 which it hit on May 10, 2006. Now this run to $36.99 is attributed to rising Gold prices as well as other precious metals, but as Gold prices drop, as do the stocks that mine the precious metal. The stock may have a slight bounce but it will more than likely drop down a few more points before it starts some upward movement. It broke its potential base of $29.36 and unless something material happens with the company then you have to look at gold prices and the trading pattern of the stock. The next downward stop could be $28.00, if it breaks that level then it may trade down as low as $25. So if you are in this one you need to be very in tune to the company and the industry at this point.

The Intercontinental Exchange (NYSE: ICE) dropped again yesterday, it traded down $4.63 to close at $54.31. It may slip down another point or so before it begins to work its way back up. The stock has been free falling since May 11, 2006 when it traded as high as $79.17 so we may be basing out in the $53 to $54 range. Keep in mind that the run to $79 started in the $53 range, so a bounce from there would not be a shock.

Libbey (NYSE: LBY) continues to slide, the stock shaved off another $$1.51 to close at $12.24 in yesterdays trading session. It broke through its support base and unless something material happens with the company it could very well slide to the single digits. The last support based was $12.94 and it broke that on the downside.

Other stocks that traded down yesterday include Midway Games (NYSE: MWY) which traded down 92 cents to close at $8.95, NorthStar Neuroscience (NASDAQ: NSTR) traded down $2.02 to close at $13.48, Sonic Solutions (NASDAQ: SNIC) traded down $1.76 to close at $15.17, Escala Group (NASDAQ: ESCL) a stock that fell from grace is now a dead cat bouncing as it closed at $7.57 down 87 cents and Home Solutions America (AMEX: HOM) traded down $1.24 to close at $11.96.

Analyst Upgrades/Downgrades

Recent Analyst upgrades include General Motors (NYSE: GM) which was upgraded to a Buy by Merrill Lynch, eBay (NASDAQ: EBAY) was upgraded to an Overweight from a Neutral Weight by Prudential Equity Group, Imperial Tobacco (NYSE: ITY) was upgraded to a Buy from a Neutral by UBS, Wal-Mart (NYSE: WMT) was upgraded to a Buy from a Neutral by Banc of America Securities, KLA-Tencor (NASDAQ: KLAC) received a bump up from Banc of America as they upgraded the stock from a Sell to a Hold, Harbor Florida Bancshares (NASDAQ: HARB) was upgraded to a Buy from a Neutral by Janney Montgomery Scott, and GSI Commerce (NASDAQ: GSIC) was upgraded to a Buy from a Hold by Stifel Nicolaus.

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