Atheros Communications (ATHR)

Atheros Communications, Inc. (Atheros) is a developer of integrated semiconductor system solutions for communications products. The Company combines its wireless systems and software expertise with high-performance radio frequency, mixed signal and digital semiconductor design skills to provide integrated chipsets that are manufacturable on standard complementary metal-oxide semiconductor processes. Atheros provide a system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. Its product portfolio includes wireless local area network solutions, personal access systems, also referred to as personal handyphone systems, chipsets, and fast and gigabit Ethernet products. On December 18, 2006, Atheros acquired a 87.7% interest in Attansic Technology Corporation.

Analysts at AG Edwards upgrade Atheros Communications Inc (CWS.ETR) from "hold" to "buy." The target price is set to $36.

In a research note published this morning, the analysts mention that Atheros Communications’ share price has declined by 14% since July 23. Some of the concerns that were apparent during Atheros Communications’ earnings announcement appear unjustified, the analysts say. Going forward, the company is likely to benefit from growth in the WiFi access point market, increased share of the Ethernet controllers and switches market, and growth in the embedded WiFi market, AG Edwards adds.

NEW YORK, July 24 (newratings.com) - Analysts at Needham & Co reiterate their "buy" rating on Atheros Communications Inc (CWS.ETR). The target price has been raised from $31 to $34.

Eagle Materials (EXP)

Analysts reporting to Thomson IBES expect building materials
manufacturer Eagle Materials (nyse: EXP - news - people ) to post
annualized earnings growth of 35% over the next three to five years.
Yet the stock trades for 13-times its consensus earnings estimate for
2007, compared to an average of 15 for its industry peers.

Why so cheap? One culprit here is the housing slowdown. Eagle makes
gypsum wallboard, cement, paperboard and concrete--all items used in
the residential construction industry.

Eagle could still be worth a look now, given resilient demand for
cement for road, bridge and commercial construction. The company
surprised analysts in its latest quarterly filings for Sept. 30, with
earnings 3% above the consensus estimate. Quarterly revenues increased
16% over the same period the prior year; net earnings went up 53%.

Internap (INAP) May Be the Next Akamai - Barron's

It is not Akamai
Dan Rayburn submits: In an article on Barron's website this week, which Seeking Alpha has an annotated article summary of by Judy Weil, Mark Vererka says that Internap (INAP) may be the next Akamai (AKAM). No offense to Internap, but that's an absurd statement for anyone to make. As you'll see below when it comes purely to revenue, numbers don't lie.

It's amazing the amount of analysts who make blanket statements about vendors in our industry, yet then provide no data to back up the predictions and even contradict themselves with the numbers they then use in their articles. For starters, Judy Weil's summary of Mark's article says that "Patent and price battles have seen content-delivery-network giant Akamai and upstart competitor Limelight lose ground." Lose ground to who? How can you make a statement that the number one and number two companies in the space, based on revenue, are losing ground but then don't say who they are losing it to?

The article also says "Internap only recently entered the CDN business with its VitalStream acquisition, and CDN accounts for just 10% of Internap's $192.3 million in revenues." That amounts to roughly $20 million last year for Internap in CDN revenue compared to Akamai's roughly $200 million last year on CDN services and Limelight Networks $60 plus million from CDN services. How do those numbers show Internap becoming the next Akamai? Akamai is doing 10x the CDN revenue Internap is. The fact that the article does not mention that last year, Internap was the number one reseller of CDN services for Akamai also goes to prove that even with the revenue Internap was getting from CDN, it was paying Akamai at the same time. These analysts need to do their homework.

The article does seem to be implying that Internap can become the next Akamai because it says "it (Internap) foresees explosive CDN growth as net users increasingly seek smooth delivery of rich online content." And the other CDN aren't seeing the same growth as well? That's the best reason you have for saying how Internap can grow it's revenue to be that of Akamai? Akamai as a company did over $400 million in revenue last year, Internap did under $200 million. Big difference.

It also goes on to say that "Internap's edge is its proprietary software that has guaranteed 100% reliable internet-routing services and data center hosting (90% of Internap's business), and now guarantees 100% uninterrupted content delivery. The reliability guaranty premium keeps Internap out of CDN price wars while gaining it market share." For starters, that SLA it is referring to is specific to network and data center services, it doe not apply to the CDN services of Internap today. Yes, Internap has confirmed that it intends to offer a 100% SLA specific to CDN services but not until it integrates the VitalStream platform and customers into the Internap network, something Internap is still working on. And even with a 100% SLA, how would that keep Internap or any CDN provider out of price wars? If it is implying that customers will pay more for a 100% SLA, then the article should give details on what is the premium over the going price they are willing to pay. But my guess is that the authors have no idea what CDN pricing even costs in the market.

The article then goes on to compare Akamai's revenue and product line with that of Internap. "Akamai shares fell about 25% last week over forecasts of market-share loss and shrinking orders; Limelight is down about the same this month. Barron's says Internap's Tuesday earnings report will forecast higher growth, lifting its $13.42 shares back towards January's $20 price." Last time I checked, Akamai and Limelight Networks were not in the co-lo and network business and not getting 90% of their revenue from those products, like Internap is. So how can you possibly compare Akamai, Limelight Networks and Internap's overall revenue and stock price fairly? You can't. Their core business and revenue generators are from completely different industries and product lines.

Everyone is entitled to their opinion and who am I to try and tell someone they are wrong? But when you make a blanket statements this article does, back it up with no data, and then don't even look at the data that is out there that proves you wrong, you shouldn't be writing about that segment of any market.

I recently got to sit down with management at Internap and VitalStream to ask about and get an update on their CDN offering and I hope to get to finish my write up of that for my blog this week.

Patent and price battles have seen content-delivery-network [CDN] giant Akamai (AKAM) and upstart competitor Limelight (LLNW) lose ground, while $667 million small-cap rival Internap (INAP) forecasts 30% earnings growth for 2007, 50% higher gross margins and company-wide higher profits. Internap only recently entered the CDN business with its VitalStream acquisition, and CDN accounts for just 10% of Internap's $192.3 million in revenues. But it foresees explosive CDN growth as net users increasingly seek smooth delivery of rich online content. Internap's edge is its proprietary software that has guaranteed 100% reliable internet-routing services and data center hosting (90% of Internap's business), and now guarantees 100% uninterrupted content delivery. The reliability guaranty premium keeps Internap out of CDN price wars while gaining it market share. Akamai shares fell about 25% last week over forecasts of market-share loss and shrinking orders; Limelight is down about the same this month. Barron's says Internap's Tuesday earnings report will forecast higher growth, lifting its $13.42 shares back towards January's $20 price.

Web Hosting Provider, Internap, Enters $15 Million Managed Services Agreement

Atlanta, Georgia - (The Hosting News) - July 30, 2007 - Internet performance network services company, Internap Network Services Corporation, has entered into a three-year business relationship with privately held data center facilities and managed services firm, Quality Technology Services (QualityTech).

Under terms of the agreement, Internap will be the preferred provider of content delivery network (CDN) services and the exclusive provider of IP connectivity services to all of QualityTech's customers, including 350 recently acquired enterprise accounts. The contract represents revenues of approximately $15 million for value-added CDN and IP over the three-year term. This agreement is hoped to significantly strengthen Internap's position as a leader in the Internet solutions category.

James P. DeBlasio, President and Chief Executive Officer of Internap remarked, ''This is one of the largest agreements in Internap's history and another significant win in the CDN/IP space. QualityTech's decision to select Internap for value-added Internet solutions validates our strategy of providing best-in-class, bundled solutions to meet the demands of enterprise customers. We are gratified that an increasing number of high quality service providers, like QualityTech, appreciate the highly differentiated approach inherent in Internap's route optimized CDN and IP solutions. We look forward to providing the industry's best service levels and technology solutions to QualityTech's customers moving forward.''

Through Internap's premium IP service, which uses Private Network Access Points (P-NAPs) to speed Internet traffic from one location to another, QualityTech's customer traffic will avoid the congestion and bottlenecks of traditional single-carrier networks. The service includes proactive technical service and support - all backed by proactive Service Level Agreements (SLAs) for 100% uptime. Internap's CDN is also the industry's only global, high-capacity solution that takes advantage of this unique multi-carrier architecture. Both solutions benefit from Internap's proprietary intelligent route control technology to ensure the consistent, reliable performance of mission-critical applications.

As part of the agreement, Internap will take down space in multiple QualityTech world-class data center facilities to help satisfy current and future market demand. QualityTech's data centers feature industry-leading standards for security, environmental control and scalability. The infrastructure will support high power density deployments and is designed to provide maximum power and cooling up to 150 watts per square-foot. As a result, Internap can better meet the high power density needs of enterprises with increasingly complex applications, such as rich media and streaming video.

Mark Waddington, President of QualityTech remarked, ''With our recent growth, QualityTech was at a tipping point and needed to join forces with the right partner to enable our customers' ability to reliably deploy mission-critical applications. As IP-based communications converge and the demand for networked services increases, our combined solution with Internap is a major step towards delivering the highest level of performance for our clients and supporting the unique requirements for emerging technologies such as streaming audio and video.''

QualityTech provides day-to-day IT operational support to improve operational efficiencies, mitigate risks and control costs associated with managing information technology infrastructure. Additional managed services, such as planning and consulting, configuration and implementation are also available to help meet IT requirements for deploying complex Internet applications. Both Internap and QualityTech will provide solutions to enterprises in industries ranging from financial services and e-commerce to gaming, media and entertainment.

Quality Technology Services (QualityTech) is a managed services and IT infrastructure company providing Managed Services, Data Center facilities, and Professional Services to businesses. Services are delivered via a national footprint of secure state-of-the-art Data Centers, a high-performance backbone and content delivery network, and an ITIL certified world-class services organization. QualityTech provides enterprises the ability to deploy, manage and scale their mission-critical IT operations for optimum performance and cost-efficiency.

Internap is an intelligent route control solution, developed to provide reliability, performance and security to the Internet, as well as a global integrated content delivery service, designed to enable businesses to stream digital media over the Internet. The company provides patented and patent-pending technologies that address the inherent weaknesses of the Internet, to enable enterprises to deploy business-critical applications such as e-commerce, VoIP, and audio/video across IP networks. The company provides additional solutions, including video and audio streaming, advertising placement, reporting and analysis, live event broadcasting, media asset management, integrated web hosting and consulting services. Internap currently serves more than 3,000 customers throughout North America, Europe, Asia and Australia.

BHP : A miner to own

For one commodity play? 'Let it be BHP'

Digg It!

Wednesday, 25 July 2007

“The hot Asian markets are keeping demand strong for commodities,” say Mary Anne and Pamela Aden in The Aden Forecast. Here, they look at BHP Billiton (NYSE: BHP). “With interest rates rising around the world and commodity prices moving higher, the commodity currencies were the big beneficiaries. Indeed, the commodity move has been gearing up, one by one. “Some markets will be stronger than others at times, but they are all in a major rise with demand being the driving force, which makes this mega move even more powerful. “China and Asia in general have been booming for many years now. The slowing economy in the U.S. caused concern that the fiery growth in Asia would cool down. It certainly could with time, but so far there are no signs of this at all. 2007 may end up seeing China’s economy expand at the fastest pace in 12 years. “Fear of slowing economies has been putting pressure on the super strong base metals, but demand for raw materials remains high and the surging rise in BHP Billiton is a sure sign of that. We have been recommending BHP and it’s long been one of our favorites because it’s the best way to stay invested in the whole raw materials sector. “Billiton is the world’s largest mining organization. It’s a leader in steel making, it’s the world’s third largest producer of copper and nickel, second largest exporter of coal, fourth largest producer of uranium… and the list goes on. So if you have to buy one natural resource company, let it be BHP.”

BHP Billiton Announces Record June Quarter Production

By Nathan Becker
24 Jul 2007 at 06:27 PM GMT-04:00

St. LOUIS (ResourceInvestor.com) -- Mining giant BHP Billiton [NYSE:BHP] kept with its trend of exceeding expectations as it announced today that it has posted record annual production for eight resources, including copper, nickel and iron ore.

Analysts say the encouraging results could lead to the company’s largest yearly profit.

A ramp up in production from the Melbourne-based miner’s Escondida Sulphide Leach and Spence projects in Chile helped boost copper production by 17% from the June quarter last year.

It looks like CEO Charles Goodyear will leave the company on a positive note as he retires in October shortly after the company’s annual earnings report will be released Aug. 22. Marius Kloppers, current group president of non-ferrous materials, will take over for Goodyear on October 1.

An average of 18 analyst estimates compiled by the Bloomberg News shows that BHP should post a record profit of about $14.3 billion for the year ended June 30 – up from last year’s record $10.45 billion. Analysts at Thomson Financial have projected BHP’s profit to land at about $14.4 billion.

In this year’s June quarter, the company produced 342,100 tonnes of copper, the metal that contributes the most to BHP’s earnings. BHP said its copper sales of 274,280 tonnes should boost earnings by $108 million.

“Strong performances at all operations” drove record annual nickel production, according to BHP’s statement. All nickel operations also closed in on near-record production as well as sales.

The company’s iron ore production set annual production and sales volume records because of a bump in production from the Western Australia Iron Ore property in Brazil resuming normal production after a cyclone in the previous quarter.

Metallurgical coal production was up 21% from the June quarter last year as the BHP’s Hay Point Coal terminal in Australia made up for the negative impact of ongoing port constraints at third party facilities on Australia’s east coast.

BHP also hit production records for natural gas, alumina, aluminium and manganese ore, and the company saw increased annual production for energy coal, diamonds and manganese alloy.

One area in which the company could not produce, however, was uranium. BHP’s report cites variability of ore sources, lower grade and ongoing maintenance at the Olympic Dam project in South Australia as keeping the company from reaching the mark needed to fulfill its contractual obligations. BHP was forced to purchase third-party uranium from the spot market in order to meet its contracts. The speed bump is expected to decrease earnings by $81 million for the financial year.

Petroleum production remained steady with the year ended June 2006, according to the report, despite natural field decline and no major start-ups in the period. Increased seasonal Australian gas demand and improved facility performance kept production from falling, the report said.

Rumours of BHP’s position as a frontrunner to purchase Alcoa [NYSE:AA], which recently lost out to Rio Tinto [NYSE:RTP; LSE:RIO] in an effort to acquire Canadian aluminum miner Alcan [NYSE:AL; TSX:AL], have cooled, and there are whispers that BHP is instead looking to acquire Freeport McMoRan [NYSE:FCX]. A BHP representative did not immediately return phone calls seeking comment.

Buenaventura (BVN) : Miner set to 'take off'

"Compania de Minas Buenaventura (NYSE: BVN) warrants a “double position” in the portlio of Jack Adamo’s Insiders Plus newsletter. Here’s the advisors review of the mining company. “The company announced that it has bought back all its hedges for 2007, 2008 and 2009. The net effect of the de-hedging is that Buenaventura sold 488,000 ounces of gold at $351/oz., far below market price, but comfortably above its cash costs of $246 per ounce. “The difference between the open-market price and the contracted price shows up on the books as a loss, but it is not an actual reduction in cash, but rather an opportunity cost, measuring how much more the company could have received had it not engaged in the hedging activity. In other words, these are non-cash charges against earnings. Cash flow is still excellent. “BVN still has more than 900,000 ounces of gold hedges to work off before it can start making the full price on its production of gold; so, that part of operations will probably take another six quarters to reach full potential. “However, its zinc and silver operations don’t suffer that drawback, and the company continues to throw off loads off cash. Once the gold hedges are gone, the stock should really take off. So far, it’s treating us well enough anyway. Our first position is up nearly 39% in 13 months, and our second is up more than 20% in 11 months. "Incidentally, the workers at the 43.7% company-owned Yanacocha mine reached contract terms this week, averting any danger of a strike. Buy Compania de Minas Buenaventura on pullbacks below $33.”

Buenaventura is taking positive steps to increase shareholder value. The company recently unwinded a portion of its gold hedge book, which will allow it to take advantage of rising gold prices. Earnings estimates for this year have risen 21 cents to $3.28 per share over the past 90 days. Next year's estimates have jumped an even more impressive 54 cents to $3.32 per share. The stock has a terrific ROE of 28%.

Full Analysis

Compania de Minas Buenaventura S.A.A. (BVN) engages in the exploration, mining, and processing of gold, silver, and various metals in Peru and internationally. It primarily produces refined gold, and various metal concentrates, including silver-lead concentrate, silver-gold concentrate, zinc concentrate, and lead-gold-copper concentrate.

The company operates four mines comprising Julcani, Recuperada, Uchucchacua, and Orcopampa; and holds controlling interests in mining companies, which own the Ishihuinca, Antapite, Shila-Paula, and Colquijirca mines. Compania de Minas Buenaventura also owns an electric power transmission company; an engineering services consulting company; and interests in various mining companies.

BVN reported solid first-quarter results that grew 38% on an operating income basis. Net income fell, but only due to an un-winding of 483,000 ounces of gold from the hedge book in March. This has a one time negative effect of $55 million.

In 1Q07, net sales were US$150.8 million, a 47% increase when compared to the US$102.7 million reported in 1Q06 mainly due to higher volumes of lead and zinc sold, as well as an increase in the realized prices of gold, silver, zinc and lead.

In late-May, the company completed an additional partial reduction of its gold hedge book by unwinding a total of 248,000 ounces for all of its 2009 gold commitments. Total payment for this transaction was US$87 million, which will be partially financed via local debt. On May 15, 2007, the Company eliminated all of its 2007 and 2008 gold commitments (240,000 ounces).

The total reduction in gold commitments for both transactions totals 488,000 ounces, which represents 35% of the total Hedge Book. This is important because it should be accretive to earnings and also accretive to the company's net present value in an environment where gold is rising.

“Compania de Minas Buenaventura had a weak fourth quarter, with earnings down 19%, due mostly to lower yields and output at its Yanacocha joint venture with Newmont Mining. This news overshadowed the 48% increase in EPS for the year.

“The drop in earnings from Yanacocha is definitely a concern. There were work disruptions at the mine in addition to lower grade ore. Since the work stoppages have ceased, it remains to be seen how earnings come in next quarter.

“In any case, at $3.36 in earnings per diluted share, the stock is dirt cheap, trading at less than 8-times earnings. New production coming on line from Buenaventura’s affiliates should offset some or all of the Yanacocha shortfall going forward. The risk-to-reward ratio here is still excellent. Buy BVN up to $33.”

Investing in water: Frishberg's A-list stocks

Digg It!

Friday, 13 July 2007

“Unlike other resources, there is no substitute for water,” says BizRadio Network host Daniel Frishberg, who along with chief trader Karl Eggerss, has compiled a special report on the water sector. Here, the two investment advisory experts offer a trio of ideas from their A-list of most important and best-positioned stocks for those seeking exposure to this sector. “The largest of the water group is Suez SA (NYSE: SZE). This is a French company that provides environmental services such as water treatment, distribution and waste managementThe market cap is over $75 billion right now and it is proving to be a very stable company. “This company isn’t under the radar as it’s near an all-time high. It’s not one to chase necessarily but might be worth buying on pullbacks. It has a 2.74% dividend yield and the return on equity is over 22%. This company has the resources and market cap to buy up some of the smaller companies in the group to continue to grow. “At the other end of the industry spectrum is Basin Water (NASDAQ: BWTR). This is a California based company that is one of the more speculative picks on this list. However, it has big potential. “This $130 million company designs, builds, and implements systems for the treatment of contaminated groundwater. The company has developed a proprietary, scalable ion-exchange wellhead treatment system for that contaminated groundwater. “Remember that only part of the issue with the global water shortage is about access to usable water. The other part of the problem is contaminated water. And this small company may have the technology to treat it. “Their sales the last 3 years have an average growth rate over 100% and is scheduled to be profitable in 2008. They are heavily shorted right now, meaning there are a lot of investors betting against this company. Be careful; as with any technology company, if it flops, the company could go under. “Danaher Corp. (NYSE: DHR) isn’t a pure water play but provides a lot of the equipment to monitor and test other equipment in the water industry. It would be comparable to a supplier of dental equipment to the dentist. "Most of their sales come from the U.S. but the real growth is aboardy. This is a solid company with margins over 44%. They continue to grow and yet they still are not very expensive when compared to their level of profits. “In addition, the stock is cheap when we look at the historical price paid compared to cash flow. Both their sales and earnings per share have been accelerating since 1999. The stock is attractive right now as it hasn’t moved since November 2006."