Among the biggest winners in Friday's early trading are
Top Percentage Gainers -- Friday, June 25,
Company Name (Ticker)
*Table includes companies with minimum market
capitalizations of $200 million and three month trading
volumes of at least 100,000 shares. All percentage returns
are listed as of 10:49AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
Oracle makes Quick Progress with Sun
When software developer
announced plans to acquire Sun Microsystems last year, most thought
that CEO Larry Ellison had finally gone too far with the company's
growth-through-acquisition strategy. After all, Oracle is a
software giant, and had little experience selling the kinds of
hardware that Sun Micro sold. Moreover, Sun had become a no-growth
platform that was barely profitable.
Well, score one for Oracle. Fiscal fourth-quarter results that were
released Thursday evening show that Sun is contributing to growth
and profitability already. And that's pushing shares up nearly +3%
in Friday trading. Oracle believes that by adding Sun, it now has a
more comprehensive platform that is opening up more sales
opportunities. The company spent a fair share of its press release
, which would be quite an unusual move -- if it were any company
other Oracle, that is nothing if not brash.
Oracle also noted that Sun could contribute $2 billion in
by next year, which would be well above what most analysts had come
to expect. But it's too soon to sound the all-clear. Sun had lost a
lot of momentum before being acquired, and it's too soon to
conclude after one quarter that Oracle can truly rebuild
for Sun's servers.
Most important for investors, Oracle says that demand in Europe has
been quite strong. I have been speculating that Euro-related woes
would start to hurt U.S. multinationals in the coming
, but that's not the case here. "There's no question the U.K.
government and a number of our big customers have been impacted by
different things in Europe, but we have so many products and so
much diversity in our European base that things are going well for
us so far," said company president Safra Catz on the conference
Action to Take -->
Some of the quarterly strength may be due to an end-of-fiscal-year
sales push. But as is the case with many other tech giants, shares
trade at very reasonable multiples, and Oracle appears set for
continued respectable growth in the near-term. Management's task is
to queue up the next large deal to maintain growth over the
mid-term. Despite Friday's rally, shares look quite attractive.
Accenture's Euro Headwinds
Shares of consulting firm
are showing the perils of doing business in Europe these days. The
company announced on Thursday evening that sales grew +8% in its
fiscal third quarter, but the weaker euro trimmed that figure to
+4%. That should give you an insight as to what we may see as
earnings season gears up in a few weeks.
headwind, analysts applaud the results, and shares are up nearly
+6% in Friday trading. The rebound is a bit of a "relief rally," as
investors had been pushing shares down in recent weeks on
Europe-related concerns. Accenture derives more than half of its
revenue outside of the United States. This has to be seen as a
positive trading sign for many stocks that have also been pushed
down recently on Europe concerns. Perhaps we're set up for a "sell
on the rumor, buy on the news" rally.
Action to Take -->
Regardless of all the background noise, this is a low-growth
business. Analysts at Kaufman Brothers note that the company is
having a hard time securing new contracts, deal sizes are getting
smaller, and competition is intense. "A 7% bookings decline a year
into the economic recovery simply does not support the widespread
thesis that Accenture is a likely beneficiary of a nice cyclical
recovery in IT spend, in our view," they note. Despite the rebound
on Friday, this looks to be one of the slower-growing business
models in the tech consulting sector.
MannKind's Doubters Remain
When it comes to biotech stocks, investors and analysts' emotions
can run high. These stocks trade on perception: will a new drug or
device prove effective or be a dud? -- and major sums of money are
made or lost on that question.
MannKind (Nasdaq; MNKD)
, which is developing an inhalable form of insulin, is a poster
child for this kind of controversy. Legions of diabetics would
surely benefit from no longer needing to use a syringe for insulin.
But the company's detractors say that Afrezza, its key drug, is not
as effective, and won't get the nod from the Food and Drug
MannKind is playing offense on Friday, stating that Afrezza is
comparably effective to injectable forms of insulin, and also
doesn't yield the weight gain seen with injectable insulin. The
company is expected to release its findings on Saturday at the
American Diabetes Association's annual meeting. Shares are up
nearly +6% on Friday in anticipation of that meeting, after rising
more than +10% on Thursday.
Action to Take -->
In addition to diabetes, MannKind also believes that its inhalable
devices can be used as a drug delivery mechanism for cancer
vaccines. Clearly, the company is facing a large market
opportunity, but shares have been dogged by a seemingly tepid
response from the FDA, which has questioned Afrezza's efficacy.
That news pushed shares down sharply a few months ago. I'll leave
it to biotech experts to decide whether these approaches have a
high degree of success. The stock certainly merits further
-- David Sterman
Disclosure: David Sterman does not own shares of any security
mentioned in this article.
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