Insiders' Blog

Shares of Netlist Inc. (Nasdaq: NLST) have been on fire recently on both the hopes of a new technology and possibly a massive short squeeze.

After trading below $1 on Nov 10th shares are now at $7.87. Today's move alone is 39%. Volume has been exploding to the upside with volume at 25 million shares today versus a 3-month average of just 1.3 million shares.

What's all the hype about? Well this company has a new high performance memory product named HyperCloud that can be used in servers, storage and other high performance computer equipment. The company said the HyperCload increases computational power by 50%, increases memory capacity by 100%, reduces server cluster power consumption by 36% and lowers data-center hardware/software costs by 20%. Here is a link to material from the company's recent presentation.

The company will be targeting Teir-1 OEMs with the product. Current clients of other products include Dell (Nasdaq: DELL) and H-P (NYSE: HPQ).

Recently, the company hosted a demonstration of HyperCloud and hopes to start taking orders and manufacturing the product soon.

One thing that always comes up with money-losing tech companies is the cash burn. Netlist started the year with $21.4 million in cash and now has $16.4 million as of the latest quarter. The company also has a line of credit. So while there is no immediate cash need, investors should be fearful of an equity raise although the company has no current plans.

The action in the stock suggests a classic short squeeze, which is a situation created when those that are short the stock, or betting against it, are forced to buy back the shares.

If most of the action in NLST is based on the short squeeze then it is vulnerable for a harsh move down when it is over. When the shorts finish covering there will be no bid-support for the stock.

If the move is more fundamental, with smart tech speculators betting on the promise of the technology, then the NLST story is not over.

Either way, it will be fun to watch and trade over the next few weeks.

Real-Time Market Moving News Two-Weeks FREE http://www.streetinsider.com/premium_content.php

Hewlett-Packard Co. (NYSE: HPQ), or Whacked Platter, shares are trading fractionally higher today ahead of the company's fourth quarter earnings release, which is scheduled for after the market closes on Monday, November 23, 2009. Shares are up 0.5% to $50.09 in mid-day trading.

On November 11, H-P reported their preliminary Q409 results along with a little guidance to moisten the chops of investors. In the release, the company reported an EPS of $1.14 and sales of $30.8 billion. Why the consensus is still at $1.13 and $30.36 billion, respectively, is beyond our guess. H-P also lifted their guidance. However, given that Dell (NASDAQ: DELL) reported a 54% drop in net profit late yesterday, could many of the typical Dell customers be migrating over to H-P's renaissance of quality and ingenuity? This writer thinks, to quote a famous Puddy line from Seinfeld, "All signs point to "yes."

So while the earnings release will not be "new news," maybe the conference call can give investors more reason to hold the stock or convince them to buy more.

Data from Bloomberg has 29 analysts with a Buy rating on Hewlett-Packard, 7 have a Hold, and none have a Sell on HPQ. The analyst consensus price target is $56. The Street high on the stock is $62, and the low is $44.

H-P rose about 9.8% through the fourth quarter, and up about 40% YTD. For comparison, the Computer Hardware industry is up about 121% YTD, so H-P is lagging behind their peers. However, H-P is a pretty gigantic company, so re-growth is a little slower. Dell (NASDAQ: DELL), which has about 25% the market cap of H-P, is up only 54% YTD. Of course, Apple (NASDAQ: AAPL) is up over 140%, and has a market cap about 150% more than H-P.

Just las week, H-P announced the purchase of 3Com (NASDAQ: COMS) for $2.7 billion. I remember it like it was yesterday, sitting in front of my computer, doing some earnings, when out of nowhere an "eek!" emerged from the seat next to me and I realized that HP was slapping Cisco (NASDAQ: CSCO) square in the face by announcing the purchase of 3Com. Needless to say, analyst focus shifted from the upcoming fourth quarter earnings announcement to the new mega-behemoth that was H-P/3Com.

In August, H-P snagged a deal to mange MLP's applications management business. MLP is a German financial services and management company with a market cap of about €827 million (about $1.2 billion).

The U.S. Air Force selected H-P to provide PC's and Workstations as part of its enterprise IT program.

Hewlett was also involved in rumors in October about a possible bid for Brocade (NASDAQ: BRCD).

Some notable analyst rating changes for the fourth quarter include:

Stifel Nicolaus initiated coverage on HPQ in August with a Buy rating and a price target of $52. In mid-October, Nicolaus raised their price target again to $58.

In September, Credit Suisse upgraded Hewlett-Packard from Neutral to Outperform this morning, also raising its price target on the stock from $44 to $55. The firm sees a recovery for H-P’s Printing and Imaging unit in the early part of 2010.

In late September, Goldman Sachs lifted their price target on HPQ to $56 from $50, a 12% increase.

Hewlett-Packard is expected to report their fourth quarter earnings at 4:00PM EST, on Monday, November 23, 2009. Stay tuned to Streetinsider.comcom's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.

Unless you live under a rock or have not turned on the magic box in your living room for some time, then you have more than likely seen the new-advertising war that has been taking over the airways between wireless communication giants, AT&T (NYSE: T) and Verizon (NYSE: VZ).

Verizon fired the first shot across the bow with several ads stating the things that AT&T's flagship device, the Apple (NASDAQ: AAPL) iPhone, cannot do. The campaign has become known as the iDont commercials which were a promotion for the new Motorola (NYSE: MOT) Droid phone that is an exclusive to the Verizon network. The Droid is the latest on the list of wannabe iPhone killers.

The onslaught continued with the now well-known "there's a map for that" ads that pointed out the limited 3G coverage of the AT&T network, compared to the superior experience customer can receive through Verizon.

In a particularly witty attack, Verizon placed the iPhone on the famous "Island of Misfit Toys" from the beloved Rank and Bass Christmas movie "Rudolph the Red-Nosed Reindeer." The ad brilliantly points out that even thought the device is destined for greatness, it is crippled by the lacking coverage of AT&T.



This move led to a lawsuit filed by AT&T stating that the Verizon ads were "misleading." The temporary injunction that AT&T was seeking was denied by an Atlanta judge on Wednesday.

After running to the teacher like a tattle-tale, AT&T has now mustered up some courage as it called on Luke Wilson to spearhead a campaign of its own. Wilson points out some of the bright spots of the AT&T network, including having the fastest 3G network (where coverage applies), the ability to chat and surf the web, and the company's exclusive rights to Apple's iPhone.



After pointing out the high-water marks of AT&T, Wilson makes a comment about Verizon that has all the wit of a third-grader, in an attempt to insult Verizon.

In the end AT&T is doing what they should have done in the first place by fighting back; however the ads could most definitely use a little more thought behind them.

Many media companies will feel an impact from the announcement by Oprah Winfrey Friday, that her widely popular daytime talk show will be leaving the air in September 2011. Oprah, 55, plans to turn her attention to the new cable network that she is planning to launch in association with Discovery Communications Inc (NASDAQ: DISCA).

"The Oprah Winfrey Show," which debuted in 1986 as a Chicago-based local broadcast that quickly spawned into a media empire. The show is seen in more than 140 countries around the world, as it is one of the television industry's largest money-makers.

The show has long been the financial anchor of local daytime television station through the syndication of CBS Corp. (NYSE: CBS). As advertisers have cut back on money spent for television promoting, ad rates for Oprah's show have remained largely unchanged as 7.1 million viewer tune in per day on average.

The success of the show has allowed her to launch a magazine bearing her name, a book club, and the female-geared Oxygen cable network.

The loss of the Oprah Book club will surely have an impact of the publishing industry as her seal of approval on various book titles have been making instant bestsellers since she began recommending reading material in 1996. Books that are promoted by Oprah bear a seal of approval which is essentially a license to print money for publishers who are lucky enough to receive it.

"She has an integrity and connectivity to her viewership that is unmatched by any other television broadcast personality,” said Stuart Applebaum, a spokesman for Bertelsmann AG's Random House publishing. "Happily she enjoys reading books and wants to persuade her viewership to enjoy them as much as she does."

Oprah plans to be involved with every aspect of programming on "The Oprah Winfrey Network," which is set to be a 50-50 partnership with Discovery. OWN will replace the lowly Discovery Health Channel.

Analysts at Wedbush see a annual revenue loss of $50 million at CBS, noting that slumping ratings for the show would likely have an impact on the advertising rates in the future. The loss of the show could allow local stations to expand regional news coverage, which would save stations money, due to the subtraction of Oprah’s substantial license fees. Wedbush maintains a Neutral rating and a $13 price target.

Shares of CBS are down 2.86 percent to $12.93 in current market movement. Shares of Discovery are down 1.32 percent to $30.71.

StreetInsider.com Best of the Web 11/20/09:

• Recently broke Mike Rowlan and a couple buddies just bought a two-unit apartment building for nearly a million dollars with little money down with the help of the FHA. "It was kind of crazy we could get this big a loan," said Mr. Rowland, 27. “If a government official came out here, I would slap him a high-five."
  
• The Fed's balance sheet liabilities expanded to $2.192 trillion from $2.117 trillion a week ago on an over $70 billion rise in MBS. The Fed's CPFF program staged its first increase in total holdings week over week, from $14.4 billion to $15.1 billion. Foreign holdings increased by $16.7 billion to $2,932 billion.
  
• A Harvard professor says poker skills can translate into the trading world. An increasing number of hedge fund and brokers are scrutinizing professional poker to find talent and analytical tools.