Peak Sales of Merck's Januvia Will Hit $10 Billion

“Bait the hook well; this fish will bite,” quipped Shakespeare’s Claudio in the playwright’s Much Ado About Nothing. To the contrary, investor shouldn’t bite – fears that the recent U.S. regulatory approval of Takeda’s Nesina (alogliptin) will mute the growth of Merck's (MRK-$43.10) Januvia franchise are unfounded. The Japanese drug maker’s DPP-4 inhibitor is attempting to launch on a crowded beachhead – facing established rivals, none of which have scored any notable inroads against Januvia. For example, Tradjenta (linagliptin), launched by Eli Lilly (LLY-$54.89) in June 2011, posted anemic sales in first-half 2012 of just $59.2 million (despite a niche marketing message focusing on alleged benefits for those type-2 diabetics with renal impairment). 

Continue Reading at YCharts: Why New Diabetes Drugs Won't Dethrone Merck's $5.7 Billion Januvia 

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

SunTech Power: Too Much Capacity, Too Much Debt

In terms of megawatt shipment volumes, Suntech Power Holdings (STP-$1.50) is the number three supplier of PV modules, according to analytics firm NPD Solarbuzz. Unlike Arizona-based, thin-film PV module maker First Solar (FSLR-$32.45) and Chinese competitors, such as vertically-integrated crystalline silicon (c-Si) manufacturers Jinko Solar (JKS-$8.93) and JA Solar (JASO-$5.66) –NPD Solarbuzz ranking of 2, 7 and 8, respectively – Suntech assumed too much debt in building capacity.

Continue Reading at YCharts: Debt Bombs Among Solar Stock: Who Has Liquidity to Last?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Energy Majors Vulnerable to Terror Attacks in Africa

Concentration of production and reserve assets in such unstable markets as North Africa and the sub-Sahara means operating profitability of certain energy companies could be adversely impacted in the event of another jihadist attack. Drillers with significant hydrocarbon reserves vulnerable to disruptions in Libya, Egypt, and Nigeria include energy majors Eni SpA (E-$48.30) and Total SA (TOT-$53.11) and U.S.-based producers Apache Corp. (APA-$83.57) and Marathon Oil (MRO-$34.17).

Continue Reading at YCharts: Which Oil Companies Are Vulnerable in the Wake of Algerian Terrorist Attack?


Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

EOG Resources Benefits from Early-Mover Purchases

Like other U.S. natural gas producers, EOG Resources (EOG-$125.03) responded in recent years to slumping natural gas prices by spending heavily to lease unconventional oil plays. Although EOG invested more than $16 billion in just the last three years to acquire and develop shale assets, such as Eagle Ford and Permian Basin in Texas and Bakken acreage in North Dakota, evidence suggests the company hasn’t blown-up its balance sheet to transition its portfolio of natural gas to liquids production.

At September 30, EOG had $1.1 billion of cash on hand, giving the company non-GAAP net debt of $5.2 billion – and a net debt-to-total capitalization ratio of 27%.

Continue Reading at YCharts: Same Strategy, Better Result: EOG Resources Laps the Natural Gas Field

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Sky Is Not Falling at Trina Solar

Fears of an inevitable bankruptcy filing by Trina Solar (TSL-$5.02) are being catalyzed by the necessary refinancing of $778 million in short-term debt and irrational musings that $14 billion in off-balance sheet liabilities will need to be reclassified back on the balance sheet as debt.

Contrary to the hysteria being spread by Chicken Little and her bearish short-sellers, the sky is not falling in at Trina Solar, an examination of its reported finances suggests. As of September 30, the company’s capital structure was on sound footing, with the asset ledger holding some $600 million in unrestricted cash, a working capital surplus of $360.6 million, and only $13.8 million in interest-related servicing costs....

Continue Reading at YCharts:  Short Sellers Disparage Trina Solar, But Our Man Tells a Different Story

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Module Costs Not Falling Fast Enough at Yingli Green

Yingli Green Energy Holding (YGE-$2.95) is aggressively looking to achieve cost savings through vertical integration and technological improvements, from lower energy consumption in ingot casting, water recycling, and reduced waste in wafer yields to higher module efficiencies. In third-quarter 2012, the company brought non-silicon costs down to $0.53 per watt, from $0.66 per watt last year.

Driven by industry overcapacity throughout the capacity chain, the downstream decline in the ASP of crystalline-based modules has been more dramatic, falling more than 50% in the last 12-months to just $0.60 per watt by December 2012, according to market research firm ENF. Ergo, capacity expansion and improvements in operational efficiency haven’t helped margins at Yingli.

Continue Reading at YCharts: Solar Outfit Yingli Appears to Be Pulling Our Leg: We’ve Read the Fine Print

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Warren Buffet Aside - Putting A Chill in SunPower

Going forward, SunPower (SPWR-$8.19) hopes to replicate the success of its Antelope Valley project with contract wins for utility-scale projects in new markets, from Australia to the Middle East and Asia, in particular Japan and mainland China. To date, however, its global footprint is nondescript: In the first nine months of 2012, North America and Europe accounted for 68% and 23% of total sales.

Should global market conditions re-balance in second-half 2013, the company still faces the same old headwinds: the presence of cheaper Chinese competitors, like Yingli Green Energy (YGE), and customers highly dependent on public subsidies, whether the nomenclature be tax credits or the once-popular feed-in tariffs. Christopher Blansett, an analyst at JPMorgan Chase (JPM), articulated it best: “SunPower is living off of borrowed time. Eventually, revenue from [these] large projects will end, and new sales will probably be at lower prices.”

Continue Reading at YCharts:  SunPower: Stock Rises 50% on Berkshire Deal: Why That’s An Exit Opportunity

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Is Pfizer Deal the 'Cure-All' for Halozyme Therapeutics

Halozyme (HALO-$7.40) gained more than $147 million in market capitalization on investor excitement that sales from the Pfizer (PFE) collaboration could total $507 million. However, this is an earn-out deal, and most of these millions will only show up on the income statement if – and only if – future development, regulatory and sales-based milestones are reached.

Continue Reading at YCharts: The Story Behind Little Halozyme’s Seemingly Exciting Hookup With Pfizer

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Crazies Good for Business at Smith & Wesson

Human behavior as it is – and irrespective of one’s position on gun control – 2013 will likely be a very profitable year for Smith & Wesson (SWHC-$8.15) shareholders. Nonetheless, given the headlining visibility and public disgust over the paroxysmal spate of massacres still fresh in our collective memory (from the 1999 shootings at Columbine High to the crazed gunman slaughtering moviegoers in Aurora, Colorado this past July), investors are fearful that emotional momentum could force Congress to work with President Obama and enact a meaningful ban on the sale of assault weapons – common parlance, “sporting rifles.”

The recent decline in Smith & Wesson’s stock price, in my opinion, already reflects this worst-case scenario - the total ban of assault weapons with large ammunition clips.

Continue Reading at YCharts:  Why Smith & Wesson Will Likely Prosper Despite Any Gun Control Law

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

McMoRan Exploration Stockholders - Take the Money and Run

Despite the uncertainty surrounding Davy Jones and other ultra-deep wells, Freeport (FCX-$33.50) hasn’t shut out McMoRan Exploration (MMR-$15.69) investors completely. In addition to the $14.75 cash offer per share, the metals miner will issue 1.15 units of a royalty trust that will make payments – should any of McMoRan's existing ultra-deep exploration properties (in development) actually start-up producing natural gas and other hydrocarbons. Further, the trust could be callable in six-years at an implied valuation of $10 per unit (not bad for “dry” properties).

Continue Reading at YCharts: Ingrates! McMoRan Exploration Holders, Given Drilling Failures, Should Grab Takeover Offer

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Is Google In Need of Groupon coupon?

Chicago-based Groupon (GRPN-$5.01) remains a coupon-driven business, just one of many available to online shoppers. Further, a growing number of analytical and survey-based studies report disillusionment with the alleged effectiveness of coupon promotions. In particular, merchants are questioning the long-term profitability of daily coupon ventures, as a low percentage of customers spend beyond the deal value (with even fewer returning for full-price purchases). Evidence is surfacing, too, that shoppers drive up store congestion by waiting until expiry to use their coupons, which negatively affects perceptions of the participating vendors.

Groupon management says that it is addressing such concerns and is working more closely with its merchants to (a) improve profitability (such as, its new mobile payment app, called “Payments,” which will offer more competitive swipe-fees than the 2% - 4% transaction costs associated with traditional charge cards) and (b) design online promotional offerings that increase percentage of coupon redeemers into loyal customers.

Continue Reading at YCharts: Talk of Rekindled Google-GrouponRomance: Our Bucket of Cold Water

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Drilling for Dividends at Breitburn Energy Partners

Contrary to management’s optimistic guidance, an assessment of Breitburn Energy Partners' (BBEP-$18.18) recent financials strongly suggests the oil & gas MLP cannot continue to simultaneously fund day-to-day operations, cap-ex, interest payments and dividend distributions with cash flow from its operations. Fundamental weaknesses include falling net income and free cash flow, lower return on equity, and increasing debt leverage.

To some extent, the company has mitigated crude oil and natural gas price fluctuations with an active hedging program: In 2013, 78% of anticipated production has already been contracted, with oil and natural gas volumes fixed at $92.80 per barrel and $5.96 per mmbtu. The downside to this “price protected” portfolio is an ugly – and unspoken – truth at Breitburn Energy: cash flow growth is dependent on hitting the production target, which in turn, is tied to spudded wells and acquisitions, funded with more and more debt and by secondary stock offerings, which increases the amount of units outstanding and subsequent cash distributions paid out, too....

Continue Reading at YCharts: What’s Up With Breitburn Energy Partners’ 10% Dividend Yield? Our Man Looks Under the Rocks.

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Intel Stockholders Lose - But Otellini Retires a Winner

During Paul Otellini’s tenure as CEO - from the second quarter of 2005 through the third quarter of 2012 – there is no denying Intel (INTC-$19.50) achieved notable financial successes: cash generated from operations of $107 billion; annual revenue growth from $38.8 billion to $54 billion; and, cash dividend payments totaled $23.5 billion.

Digging deeper into the storied legacy of Paul Otellini, however, we find a man who might have been too myopic in transforming manufacturing – both in operations and cost – in his quest for profitable growth. According to Bernstein Research analyst Stacy Rasgon, "Intel’s phenomenal revenue growth over the last couple of years has been out-of-sync with many data points in PCs. Indeed, we find that most of Intel’s growth in PC revenues was not really due to outsized unit growth, but instead from significant upside to pricing.”

Continue Reading at YCharts: Otellini Nicely Milked Intel’s PC-Chip Business, But is Pay Justified With Mobile Strategy a Flop?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Overreaction to FDA - Dynavax' HBV Decision

The Vaccines and Related Biological Products board voted its confidence in the immunogenicity of Dynavax's (DVAX-$2.44) Heplisav by a 13 – 1 vote; however, the committee said in an 8 – 5 decision, with one abstention, that it could not recommend the vaccine for approval to the FDA due to insufficient clinical safety data, especially in certain minority groups.

To ask Dynavax – or any company -- to power the study design specifically tailored to those at minority groups at higher-risk would be cost prohibitive. The biotech has spent more than $300 million (in just the last five years) to move the drug through the pipeline approval process.

If a larger cohort represented by a more diverse ethnic sampling is necessary, how come an under-represented enrollment of blacks (about nine-percent) was sufficient when the FDA positively reviewed GlaxoSmithKline’s (GSK) other adjuvant vaccines, like the Hep-A drug Havrix and the combination DTP-HBV vaccine Infanrix?

Continue Reading at YCharts: Dynavax: Little Stock With a Big Story – Plunge a Buy Opportunity?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Priceline Paddles Upstream with Kayak Software

Though Kayak Software (KYAK-$39.68) is looking to move beyond the meta-search business, its business model is tethered to the “hunt.” In fact, the loss of any airline ticket search business would prove material to Kayak. The company derives 25% of sales from airfare searches. Moreover, management has previously stated in regulatory filings that “a significant number of travelers who use (our) websites and mobile applications for non-air travel services” come to Kayak first to conduct queries on airline ticket pricing information.

 

Continue reading at YCharts: Priceline’s Kayak Deal Has Competitive Pitfalls, But Here’s Why It Makes Sense, Anyway

 

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Carl Icahn - Netflix 'Tomb Raider' or Savior?

Unlike past proxy battles, Icahn’s $168.9 million invested in Netflix (NFLX-$79.60) is a highly leveraged bet. He controls his stake principally through in-the-money call options: Of 4.7 million shares “bought” in the past 60 days, almost 4.3 million (90%) were two-year call options (at $36.05 a share) purchased at premiums ranging from $18.94 to $24.78 per contract, which expire on September 4, 2014.

If Icahn is serious about turning Netflix’s performance around, he’ll have to spend millions more to convert his “beneficially”-owned stake into actual ownership.

Continue reading at YCharts: Carl’s Icahn’s Netflix Position Made of Cheapy Options: a Not-So-Serious Man

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Monster Beverage's Stock Needs Caffeine Jolt

Although Monster Beverage’s (MNST-$45.50) net sales in the second quarter grew by 28.2% to $592.6 million, gross profit fell 100 basis points to 51.8% due to a 31.9% increase in promotional allowances. Given the frenzied elbowing for domestic share, gross margins at Monster in coming quarters will likely decelerate further.

Although management will deny it, recent adverse publicity due to the Food and Drug Administration launching an investigation into five deaths allegedly tied to Monster Energy drinks means the company will need to improve its “public image.” Ergo, to get in front of a public debate whose aim would be to restrict sales of energy drinks to minors and/or regulate caffeinated-energy drinks, look for Monster to increase the budgets for two line items that fall under operating expenses: merchandise displays and direct/advertising – pressuring net operating margins well into next year.

Continue reading at YCharts: Monster Beverage Stock: There are Problems Beyond the Recent Health Scare

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

How Much is Enough for Workday's Duffield?

Both Workday (WDAY-$50.00) co-CEOs Duffield and Bhusri have had success building and selling software companies during the past twenty years, culminating in the January 2005 sale of PeopleSoft, the world’s second-largest application software company, to Oracle (ORCL) for $10.3 billion. As of September 2012, the 72-year old Duffield had an estimated net worth of $2.1 billion, ranking him 221 on The Forbes 400. At current values, his 44% stake (of the 160.3 million shares outstanding) in Workday has boosted his wealth by an additional $3.9 billion.

Wealth enough to bypass smaller sums? Not entirely, it seems....

Continue reading: Workday Founder Duffield: $3.9 Billion Richer on the Stock, So Why the Small-Time Items?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Workday Stock Price Soars to Stratosphere, For How Long?

With Workday (WDAY-$54.00) management admitting in regulatory filings that profitability is not yet within reach, investors seem fixated only on sales visibility. In the first six months of 2012, revenue grew 118% to $119.5 million. The amount of subscription contract backlog – a sign of future growth – increased $85 million to $325 million on July 31, 2012. The reported operating loss for the period, however, was $46.3 million, which management attributed to “growing pains” (higher headcount and infrastructure build-out costs).

To date, Workday has derived most of its subscription revenue from its proprietary suite of on-demand human resource applications. However, the company is looking beyond its own R&D to ensure its survival in a land of enterprise software behemoths like Oracle (ORCL) and SAP AG (SAP).

Continue Reading at YCharts: Workday IPO Shares Quickly Double: Overheating of Cloud-Computing Stocks?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

How Reasonable Rackspace Hosting's Sky-High PE?

San-Antonio-based Rackspace Hosting (RAX-$64.75) is hoping to differentiate itself from its cloud-computing competitors by developing product offerings built around OpenStack, an open-source cloud platform. The differentiating benefit, according to chief executive Lanham Napier, is that customers wouldn’t be locked into a “static product” like Amazon’s Web Service.

Attracted to the growth-demand story for cloud hosting services, the competitive landscape is getting more crowded. Notwithstanding the plethora of VC-seeded providers flooding the market, better-capitalized companies are planting their roots in Rackspace’s yard too. Competitors include rival cloud solutions providers Equinix (EQIX) and VMWare (VMW); diversified technology companies like Amazon, Microsoft (MSFT), Google (GOOG), and IBM (IBM); and software companies like salesforce.com (CRM).

Read more at YCharts: Rackspace Hosting, an Expensive Stock, Looks Cheap if it’s a Takeover Candidate

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.