Dow falls to 2002 watermark; Enzon spinoff stuck on back burner; Whole Foods' stock on the move

By Cristal Cody

Tupelo, Miss., Feb. 19 - The economic stimulus package and other initiatives taken this week to fix the crumbling economy failed to jumpstart investors' enthusiasm, and the Dow Jones Industrial Average fell Thursday to its lowest level since October of 2002.

The Dow shed 89.68 points, or 1.19%, to close at 7,465.95 after losing 300 points earlier this week.

The S&P 500 index fell by 9.48 points, or 1.20%, to 778.94, and the Nasdaq Composite index lost 25.15, or 1.71%, to end the day at 1,442.82.

Deal action took a back seat Thursday while investors studied company earnings.

Shares of Whole Foods Market, Inc. shot up $3.46, or 37.24%, to close at $12.75 Thursday after first-quarter profit beat estimates by a penny per share and the shares were upgraded to "buy" by two analysts.

Meanwhile, Jeffrey H. Buchalter, chairman and chief executive officer of Enzon Pharmaceuticals, Inc., said Thursday that he supports two new board nominees.

Also on Thursday, investors sent shares of Sirius XM Radio Inc. down 2 cents, or 13.79%, to close at $0.125 after the Nasdaq Stock Market granted the company's request to distribute new preferred stock.

Enzon board nominees 'add value'

Buchalter said on an investors' conference call Thursday that the two directors up for nomination to Enzon's board will bring something new.

"I think it will add value. It's good to have a fresh perspective," he said.

At the same time, though, Buchalter said, "I stand on statements made in the past. This existing board is very effective, and these are well-qualified directors. We'll see where things go."

The Bridgewater, N.J.-based biopharmaceutical company said on Jan. 28 that the board nominated Alexander J. Denner and Richard C. Mulligan for election at the next shareholders meeting.

Denner is the managing director of groups affiliated with billionaire investor Carl Icahn. He previously was the chairman of the executive committee of ImClone Systems Inc. until ImClone was sold in December.

Mulligan is a genetics professor at Harvard Medical School and the director of the Harvard Gene Therapy Initiative.

DellaCamera Capital Management, LLC, which holds about 7.6% of outstanding Enzon shares, said in a letter sent earlier this month that the company should immediately add the candidates to the board to help improve the operating and stock price performances.

In December, the company abandoned a plan to spin off the biotechnology business into a separate public company.

Ian Sanderson, an analyst with Cowen and Co., said in an interview with Prospect News that the company's spinoff plans have been set aside, at least for now.

"They're putting it on the back burner until basically the credit markets free up," he said. "At this point, [shareholders want] oversight to make sure they don't throw good money after bad for the pipeline development and try to maximize development for cash flows of the specialty pharmaceutical business."

The company on Thursday reported a loss of $0.5 million, or 1 cent a share, for the three months ended Dec. 31, compared with profit of $0.3 million, or 1 cent a share, for the fourth quarter of 2007.

Enzon shares fell a penny, or 0.16%, to close Thursday at $6.30.

Shares have traded from $2.95 to $9.85 over the past year.

Whole Foods stock predicted to rise

Austin, Texas-based Whole Foods said it earned $32.3 million, or 20 cents a share, in the quarter ended Jan. 18, compared with $39.1 million, or 28 cents a share, in the same period a year ago.

Jefferies & Co. raised the price target on the stock to $13.00 from $11.00, and Pali Capital raised the target price to $15.00 from $8.00 a share.

The natural foods and organic grocer is in settlement negotiations with the Federal Trade Commission to settle antitrust concerns over the 2007 acquisition of rival grocer Wild Oats Markets Inc.

Whole Foods could be forced to rebrand some of the Wild Oats stores it acquired with their former name.

The negotiation is scheduled to continue through March 6.

On April 6, the trade commission is set to hold an administrative trial on the Wild Oats acquisition.

Sirius XM moves to pay Liberty

New York-based satellite radio provider Sirius XM plans to give 12.5 million shares of preferred stock that will be convertible into a 40% stake of the company to Liberty Media Corp. in exchange for $530 million in loans to pay off a portion of its debt.

"While the Nasdaq rules generally require shareholder approval prior to the issuance of securities that are convertible into more than 20% of the outstanding shares of a listed company, the company is relying on an exception in cases when the delay in securing shareholder approval would seriously jeopardize the financial viability of the enterprise," Sirius XM said in a statement on Thursday.

Shares of Liberty Media, an Englewood, Colo., entertainment company, gained 15 cents, or 2.80%, to close at $5.50 on Thursday.

Mentioned in this article:

Enzon Pharmaceuticals, Inc. Nasdaq: ENZN

Liberty Media Corp. Nasdaq: LCAPA

Sirius XM Radio Inc. Nasdaq: SIRI

Whole Foods Market, Inc. Nasdaq: WFMI

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