Flow buying surges; First Solar soars; Jarden jumps; CANTV extends climb; DaimlerChrysler revs up

By Ronda Fears

Memphis, Feb. 14 - DaimlerChrysler AG spiked Wednesday on the automaker's restructuring plans in the face of $1.5 billion in losses for 2005, including a possible spinoff of the Chrysler division, a whopping 13,000 layoffs over the next two years. Beyond that, as winter weather blanketed much of the Northeast, traders said moods were still tense amid heavy short covering with the Dow Jones Industrial Average hitting a new high.

Moreover, General Motors Corp. and Ford Motor Co. were better, but a trader said those were not related to DaimlerChrysler, as both have been in drastic restructuring mode for nearly two years now. DaimlerChrysler shares (NYSE: DCX) shot up $5.33, or 8.27%, to $69.78. GM (NYSE: GM) added 16 cents to $36.50, while Ford (NYSE: F) tacked on 6 cents to $8.51.

"The Daimler move speaks for itself, but as for GM and Ford, the sentiment is turning around I think to see these stocks as having a good deal of upside, more for GM than Ford probably," said a trader at a bulge bracket firm.

Among other transport issues, Navistar International Corp. rose Wednesday as the heavy truck maker's stock shifted to trading in Pink Sheets from the New York Stock Exchange because of delayed filings for its financials, but traders attributed the gain to short covering. The stock (Pink Sheets: NAVZ) advanced $1.62, or 3.57%, to $47. Warrenville, Ill.-based Navistar said it plans to appeal the NYSE delisting.

Elsewhere, electronic payments processor CheckFree Corp. took a hit Wednesday on its acquisition of Corillian Corp., which provides internet banking software and services, for roughly $245 million, or $5.15 per share - a 49% premium to Tuesday's market. CheckFree shares (Nasdaq: CKFR) lost $1.33, or 3.2%, to $40.29. Corillian shares (Nasdaq: CORI) jumped $1.55, or 44.93%, to $5.

CheckFree's acquisition spree was pressuring the stock as some players thought it was getting too aggressive, one trader said, noting that the deal follows CheckFree's $206 million purchase Jan. 2 of Carreker Corp, which processes digital checks. CheckFree said it will pay for Portland, Ore.-based Corillian with cash and bank debt, and said the purchase will dilute 2007 and 2008 earnings.

But, the trader said he saw CheckFree's move as an answer to Intuit Inc.'s recent acquisition of Digital Insight Corp. Last week, Intuit - a tax and accounting software firm with the TurboTax and Quicken franchises - completed a $1.33 billion buyout of Digital Insight, an online banking service to mid-market banks and credit unions. Intuit shares on Wednesday (Nasdaq: INTU) added 42 cents, or 1.35%, to $31.49.

He said he would be a buyer of CheckFree on the downdraft, as the Corillian and Carreker purchases should add to results significantly beyond 2008 or before "if online banking continues to gain steam at the rate it has been."

Gaining steam certainly could be the catchphrase for solar energy panel maker First Solar Inc.'s massive spike Wednesday, but another trader said alternative fuels were a mixed batch with ethanol producers VeraSun Energy Corp. and U.S. BioEnergy Corp. sharply lower amid.

First Solar reported late Tuesday a fourth-quarter profit of $8.04 million, or 12 cents a share, versus a loss of $7.2 million, or 14 cents a share, a year before, as revenue soared to $52.7 million from $13.6 million. It also boosted its forecast 2007 sales of $310 million to $340 million, up from an earlier projection of about $250 million. The Phoenix-based company also said Wednesday it won a contract to supply solar modules to a 40-megawatt solar power plant slated for construction in Germany. The stock (Nasdaq:FSLR) shot up $9.44 on the session, or 27.54%, to close at $43.72.

Jarden targets speculated

Consumer products company Jarden Corp. posted a higher quarterly profit Wednesday as its reorganization efforts - including a recent high-yield junk bond offering - took hold, and the chief executive said the company is on the hunt for acquisitions. That sparked considerable speculation about who the target might be, one trader said, and he heard the chatter included a unit of Nacco Industries Inc. as well as Salton Inc.

Jarden itself got a big boost from the news, with the stock (NYSE: JAH) jumping 88 cents, or 2.39%, to $37.68. The Rye, N.Y.-based company posted fourth-quarter net income of $35.7 million, or 52 cents a share, up from $2.5 million, or 4 cents a share, a year ago, while sales rose 8.6% to $1.06 billion.

Its brands include Bicycle playing cards, appliance brands Crock Pot, Food Saver, Mr. Coffee, Sunbeam, First Alert smoke alarms and Coleman camping gear. Jarden chief executive Martin Franklin said the company is specifically looking for niche products that would fit in its outdoor-solution business and branded-consumables.

"The speculation is that Nacco's small appliance division would be a good fit, and recall they lost out on the bid for Applica to Harbinger [which merged it with Salton]," the trader said.

"Nacco had been planning to spin off its appliance business for a merger with Applica. I even heard speculation that Salton itself could be a target, that Harbinger might be pushing for something like this."

Last month, Nacco lost out in a long-fought battle with hedge fund Harbinger Capital Partners for Miramar, Fla.-based Applica Inc., whose products include small household appliances under the Black & Decker brand, such as the Gizmo, and others like Spacemaker.

Nacco, a Mayfield Heights, Ohio, conglomerate, said it formed Apex Acquisition Corp. and had been planning since July 2006 to spin off its Hamilton Beach/Proctor-Silex business in a merger with Applica.

After five rounds of bidding that started at $6 per share in October, Harbinger ultimately won Applica for $8.25 per share and has merged it with Salton, in which Harbinger gained a majority 83% stake following the Applica merger. Lake Forest, Ill.-based Salton makes and markets the popular George Foreman line of electric hot dog and hamburger grills, among other kitchen and small appliances.

Nacco shares (NYSE: NC) were up $2.89, or 2.04%, to $144.81 on Wednesday. Salton shares (NYSE: SFP) slipped 7 cents, or 2.46%, to $2.78.

Flow rumored to eye sale

Flow International Corp. also got a nice bounce Wednesday, which another trader attributed to market chatter that the company was talking with activist shareholder Third Point LLC about its recent suggestion that the company go on the sale block.

"There were some big buys in this one," the trader said.

"Supposedly the company is preparing an official response to Loeb [Third Point chief executive Daniel Loeb], and the word is that the company will put itself up for sale soon."

Flow shares (Nasdaq: FLOW) advanced 44 cents on the day, or 3.89%, to $11.74.

The Kent, Wash.-based maker and distributor of water pumps did not respond to calls from Prospect News on Wednesday.

New York-based Third Point, the largest shareholder of Flow with 13.6%, on Feb 2 urged the company to find a buyer instead of conducting a search to replace its chief executive, who is retiring.

"We believe that the time has come for the company to be sold, rather than seek to continue operating independently under new leadership," Loeb wrote in a letter to Flow, which was filed at the Securities and Exchange Commission on Feb. 2.

Third Point said in the letter that it has had conversations with industry participants and a financial adviser leading them to believe that the company could be sold for a significant premium to the current market price. At the time of Third Point's letter, the stock was at $12.47.

CANTV buyout details lacking

Compania Anonima Nacional Telefonos de Venezuela (CANTV), shares continued to climb Wednesday in the wake of news that the Venezuelan government said it would buy Verizon Communications Inc.'s 28.5% stake in the company, but traders said details of the buyout of the remaining stakeholders was still uncertain, including whether they would get paid the regular dividend.

Thus, CANTV shares remained well below the Verizon buyout level, although the stock (NYSE: VNT) was better Wednesday by 20 cents, or 1.16%, at $17.45.

Verizon said it accepted a $572 million offer from the Venezuelan government, which works out to $17.85 per share, for its CANTV stake.

Chavez's government would boost its stake in CANTV to 35% from the 6.5% with the Verizon purchase. Remaining shareholders include Spain's Telefonica, public stockholders and employees and retirees.

One trader said CANTV holders generally think they will get paid as much as Verizon, but given the uncertainty in dealing with the Venezuela government, the stock is being held back below that $17.85 mark as a cushion.

Venezuela president Hugo Chavez announced in January at his third re-election that he plans to nationalize the country's telecommunications, mining, electric power and oil industries by year-end.

U.S. BioEnergy tanks

Another trader said that while alternative energy stocks are basically in demand right now, such as First Solar, there was a sharp pull back in ethanol producer stocks such as VeraSun because of a downgrade, and that tugged U.S. BioEnergy lower as well. But he said he had several clients buying on the declines.

U.S. BioEnergy (Nasdaq: USBE) fell 51 cents on the session, or 4.28%, to $11.40.

VeraSun (NYSE: VSE) lost 60 cents, or 3.8%, to $15.17.

The trader said VeraSun was downgraded in part because of concerns about high commodity prices, particularly corn, as that is a fuel stock to make ethanol. Inver Grove Heights, Minn.-based U.S. BioEnergy is the largest domestic independent ethanol producer, just ahead of Brookings, S.D.-based VeraSun, so it fell in sympathy with the latter.

March corn ended 2.75 cents lower at $4.0825 per bushel, and December finished 1.75 cents lower at $4.0125 on the Chicago Board of Trade, but the stock trader said corn prices have been rising sharply on anticipation of higher demand.

"There has been some jitters over whether the corn supply is enough to accommodate ethanol expansion, too," the trader said.

But he said he would be a buyer on the weakness as statistics on corn stockpiles suggest there will be plenty. If not, he said that there could be some consolidation in the ethanol production industry that might propel U.S. BioEnergy and VeraSun interest. He said U.S. BioEnergy chief executive Gordon W. Ommen has recently remarked of a likely consolidation in the industry. He also noted that Ommen is a former banker and venture capital investor.

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