Stock Market Predictions

Quest Software to go private in $2 billion deal

Stock Market Predictions

The $23 per share offer represents a premium of about 19 percent to Quest's Thursday close. Shares of the company were trading at $23.69 on Friday morning, indicating that investors are expecting a higher bid.

The deal includes a "go-shop" period of 60 days to solicit other proposals, Quest said in a statement.

Aliso Viejo, California-based Quest will pay Insight -- a private equity and venture capital firm focused on software and internet -- a break-up fee of $4.2 million during the "go-shop" period if it receives a higher bid.

After the 60-day period, the fee will be $6.3 million.

Quest, which makes software that monitors large amounts of data flowing through corporate networks and the Internet, will continue to be led by current Chief Executive Vinny Smith, who took over last month after Doug Garn stepped down citing poor health.

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Joyjeet Das)

Paulson urges Hartford to announce split-up soon

Stock Market Predictions

The billionaire, whose Paulson & Co is Hartford's biggest shareholder with an 8.51 percent stake, has been urging the insurer to spin off its property and casualty unit.

"No one is saying do a spin-off today. We are saying announce a spin-off today and then take the next five to six quarters to close," Paulson said in a presentation filed on Friday with the U.S. Securities and Exchange Commission.

"A spinoff of P&C would unlock significant value," Paulson said in the 24-page presentation aimed at Hartford and its investors. "We believe the combined value would be approximately $31, a 62 percent increase."

Hartford shares closed at $20.07, up 0.75 percent, on the New York Stock Exchange. The stock has tumbled 30 percent over the past year.

Hartford responded by reiterating that it recognizes potential benefits to a separation of the property and casualty and life companies, including those outlined by Paulson.

By putting a date and a number behind his requests for a split-up, Paulson on Friday added more punch to his increasingly vocal demands that the company take dramatic action to revive its flagging share price.

By flexing his muscle, Paulson joins a growing number of hedge fund managers playing a more activist role in calling for change at companies ranging from Yahoo Inc (YHOO.O) to Canadian Pacific Railway Ltd (CP.TO).

His biggest portfolio, the Advantage Plus fund, lost more than 50 percent in 2011 as his largest bets, including Hartford, sagged. Paulson oversees roughly $23 billion in assets.

Paulson, who cemented his credentials as one of the industry's most watched hedge fund managers with savvy bets against the subprime mortgage industry and on gold, has become increasingly public in calling for change at Hartford.

On a conference call in early February, the normally cool fund manager became so agitated when asking about future plans that he ended up shouting at Hartford Chief Executive Officer Liam McGee.

On Friday Paulson tweaked the formal proposal for a breakup that he made on February 14 with the new numbers and plenty of charts and comparisons.

Behind the scenes, Paulson also has met with other investors, urging them to speak up, too.

The presentation is part of what Paulson & Co is using in its "continuing discussions or communications with (Hartford's) management, board of directors and shareholders, and public statements," the hedge fund said in the filing.

As part of the plan, Paulson said Hartford could shut down its variable-annuity operations to save cash and then review the strategy and structure of its life business over the next 12 months.

(Editing by Gerald E. McCormick and Richard Chang)

Zogenix shares slip on weak revenue outlook

Stock Market Predictions

Zogenix's outlook reflected the recent termination of the Astellas Pharma (4503.T) co-promotion agreement, which accounted for 30 percent of Sumavel DosePro sales in 2011, Leerink Swann analyst Joseph Schwartz wrote in a note to clients.

The company had said it would assume commercialization of its treatment for acute migraine and cluster headache -- Sumavel DosePro -- from the second quarter of 2012, after it ended its partnership with Astellas.

For 2012, Zogenix expects revenue of $45.5 million to $48.5 million, compared with analysts' average estimates of $64.9 million, according to Thomson Global Markets I/B/E/S.

Shares of the San Diego, California-based company, which develops drugs for pain and treatment of nervous system disorders, were trading down 15 percent at $2.10 in heavy-volume trade.

(Reporting by Balaji Sridharan in Bangalore; Editing by Brenton Cordeiro)

Anadarko, Algeria set $4.4 billion deal on oil tax

Stock Market Predictions

The settlement with state-run oil company Sonatrach is expected to win approval from Algerian government authorities within the next four months, Anadarko said.

The dispute centered on Algeria's 2006 law that raised taxes on oil profits in the country.

Anadarko, the biggest foreign oil producer in Algeria with projects that produced 345,000 barrels per day in the fourth quarter, objected to the measure, and said its existing contracts there required Sonatrach to pay the taxes.

Upon the settlement's approval, Anadarko said all arbitration proceedings between the parties will be dismissed.

Under the terms of the settlement, Algeria will supply Anadarko with $1.8 billion in crude oil over the next 12 months.

In addition, Anadarko and Algeria extended their existing production sharing agreement to provide Anadarko with a higher volume of oil that is worth about $2.6 billion over the life of the contract.

Shares in Anadarko jumped 3.8 percent in premarket trading to $86.77 per share.

(Reporting By Matt Daily; Editing by Gerald E. McCormick, Phil Berlowitz)

Green Mountain falls as Starbucks takes on Keurig

Stock Market Predictions

Analysts, however, said Starbucks' new coffee and espresso machine would not be a meaningful threat to Green Mountain, as it would cater to different types of customers.

Starbucks already sells coffee packs under its own label for Green Mountain's Keurig machines, and said on Thursday that it plans to continue that partnership.

"There is (also an) opportunity for complementary high-pressure espresso-based systems," Green Mountain Chief Executive Lawrence Blanford said in a statement on Friday.

Starbucks said its new Verismo single-cup system will make both brewed coffee and espresso beverages such as lattes.

"Verisimo is being positioned primarily as an espresso machine similar to the highly popular, Nespresso machine from Nestle," SunTrust Robinson analyst William Chappell wrote in a note to clients on Thursday.

"While actual prices for Verisimo were not disclosed we would expect it to start around the $250-$300 range, similar to Nespresso and twice that of Keurig ($89-$178 range)," he added.

With the launch of Verismo later this year, Starbucks will become the latest player to beef up its presence in the fast-growing single-serve coffee market dominated by Green Mountain in the United States and Nestle SA (NESN.VX) around the world.

Jefferies analyst Andy Barish said he was encouraged by Starbucks' long-term commitment to the Keurig tie up and that the combination of Via instant coffee, K-Cup refills and Verismo would help the company take share in the nearly $8 billion global single serve market.

Green Mountain controls more than three-quarters of the U.S. market for single-cup coffee. That dominance has been helped by the large network of coffee brands that provide coffee cups compatible with Keurig machines, including Starbucks, Dunkin' Donuts (DNKN.O) and Folgers, made by J.M. Smucker (SJM.N).

"Starbucks is a much more popular coffee brand. So Green Mountain will have to reach out to other premium brands like Peet's (PEET.O) and say, hey: let's do a licensing deal," Greg Harmon, president of Dragonfly Capital Management, told Global Markets on Thursday.

Green mountain, which had expected increasing competition in the single-coffee market, launched a premium line of Keurig brewers, called the Vue, in February.

"The news of Verismo is not entirely unexpected, given Starbucks was noticeably left off the list of participating brands in Green Mountain's new Vue platform," analyst Barish said.

Green Mountain shares were down at $53.90, while those of Starbucks were up 3 percent in premarket trading. Green Mountain's stock closed at $62.40, while Starbucks shares closed at $50.37 on Thursday on the Nasdaq. (Reporting by Mihir Dalal, Arpita Mukherjee in Bangalore; Editing by Viraj Nair)

Diasorin down sharply on outlook disappointment

Stock Market Predictions

Chief Executive Carlo Rosa said in a conference call he expected the vitamin-D testing market to fall between 15 to 20 percent globally in 2012.

"The fall in prices in the United States is sharper than what we expected," he said in the call after the group unveiled 2011 results.

By 1524 GMT, shares in Diasorin were suspended, indicated down 7 percent.

A Milan-based trader said: "The focus is very much on vitamin-D, which is suffering a lot from aggressive prices from competitors which entered the market in the last quarter."

DiaSorin said earlier on Friday net sales rose 8.8 percent in 2011 to 440 million euros, while its core earnings rose 13.7 percent. The group said it expected 2012 sales "in line or slightly higher" than 2011.

Diasorin competes with Siemens AG in the United States.

(Reporting by Massimo Gaia, Andrea Mandala and Michel Rose)

Smith & Wesson's strong outlook triggers rise in shares

Stock Market Predictions

The company, which competes with Sturm Ruger & Co Inc (RGR.N), Glock Inc and Taurus, reported a 60 percent surge in firearm backlog in the third quarter.

"Such a substantial increase in order backlog is a positive leading indicator for near term sales momentum, as the company should fulfill much of this order flow within the next 2-3 quarters," Wedbush analyst Rommel Dionisio wrote in a note.

On Thursday, the Springfield, Massachusetts-based company posted a third-quarter profit that beat estimates for the fourth consecutive quarter.

"Rising market share in handguns, along with robust performance in the tactical rifle business, helped drive impressive 24 percent top line growth," analyst Dionisio added.

Smith & Wesson has also been improving margins by adopting various cost cutting initiatives such as moving operations from its Thompson Center facility to its Springfield facility. It also decided to shed its underperforming perimeter security division in October.

Gross margin increased to 30.6 percent from 24.5 percent last year.

Smith & Wesson shares, which have gained more than 26 percent since the beginning of this year, touched a high of $6.68 in Friday morning trade on the Nasdaq.

(Reporting by Meenakshi Iyer in Bangalore; Editing by Viraj Nair)

Peregrine's cancer drug data disappoints; shares plunge

Stock Market Predictions

The biopharmaceutical company's shares plunged 30 percent to their lifetime low of 63 cents on the Nasdaq. About 4.3 million shares of the company changed hands by 1202 ET, nearly seven times their 10-day moving average volume.

Peregrine said the trial tested its experimental cancer treatment, bavituximab, in combination with standard cancer treatments carboplatin and paclitaxel, against the two chemotherapy drugs alone in patients with frontline non-small cell lung cancer.

The company said patients receiving its bavituximab combination therapy survived for 5.8 months without their disease worsening, while patients on the standard therapies survived for 4.6 months.

However, according to an independent review, bavituximab combination showed median progression-free survival of 6.7 months, compared with 6.4 months exhibited in patients treated with the standard therapies alone.

"The unexpected long progression-free estimate for the control arm based on central reads confounds our ability to fully interpret this secondary efficacy endpoint," a company executive said in a statement.

Roth Capital analyst Joseph Pantginis cut his price target on the company's stock to $7 from $10 citing the progression-free survival "discrepancy," and said the released data "may not drive confidence in the study."

Tustin, California-based Peregrine is currently testing bavituximab as a potential treatment for several other oncology indications, including pancreatic cancer.

Overall survival from this trial is expected to be reported in the second half of 2012, Peregrine said.

(Reporting by Zeba Siddiqui and Vidya P L Nathan in Bangalore; Editing by Maju Samuel)

Anthera halts late-stage heart drug trial, shares tank

Stock Market Predictions

Anthera, which develops drugs to treat cardiovascular and autoimmune disorders, said it halted enrollment in the clinical trial, known as VISTA-16, following recommendation by the independent Data Safety Monitoring Board (DSMB).

"This is a very severe blow. Theoretically, they can do another Phase 3 program once they see what went wrong in this one. But, whether they'll have this opportunity is unknown," Wedbush Securities analyst Duane Nash told Global Markets.

He expects the stock to lose half of its value on Monday.

The Hayward, California-based company was testing its drug, varespladib methyl, in patients suffering from a heart condition known as acute coronary syndrome (ACS), which includes symptoms such as chest pain caused by reduced blood flow to the heart.

"Based on all the evidence we have seen regarding varespladib and secretory phospholipase, and in light of previous study results, we were surprised by the recommendation from the DSMB," the company said in a statement.

The VISTA-16 trial was designed to prove the hypothesis that reduction of inflammation, particularly following an ACS, leads to improved outcomes in patients with cardiovascular disease.

Currently, the best practice to slow coronary artery disease progression and reduce the risk of a subsequent heart attack is directed at the treatment of individual cardiovascular risk factors such as high cholesterol or clotting.

Anthera, which went public in March 2010, is currently testing two other drugs -- for lupus and acute chest syndrome -- in separate mid-stage trials.

Shares of the company were trading down at $2.68 in extended trade. They closed at $6.42 on Friday on the Nasdaq.

(Reporting by Anand Basu in Bangalore; Editing by Supriya Kurane)

Dynegy examiner report faults dealings, stock sinks

Stock Market Predictions

Dynegy shares tumbled as much as 49.2 percent following examiner Susheel Kirpalani's issuance late Friday morning of his report on the events leading to the bankruptcy of the independent power producer's Dynegy Holdings LLC unit.

While Kirpalani said Dynegy Holdings can win court approval of a Chapter 11 plan, his findings could undermine support for or derail its planned restructuring of more than $4 billion of debt.

It could also spur a push for Dynegy Inc to move the coal assets, which its board had valued at $1.25 billion, back to Dynegy Holdings. This could make the parent company, which did not seek court protection, less valuable.

The transfer took place two months before Dynegy Holdings filed for bankruptcy protection last November 7.

"Throughout the planning and execution of the prepetition restructuring, the Dynegy Inc board favored paths that benefited Dynegy Inc and its stockholders to the detriment of Dynegy Holdings and its creditors," Kirpalani wrote in a 173-page report filed with the U.S. bankruptcy court in Poughkeepsie, New York.

Examiners work for the benefit of creditors, shareholders and the bankruptcy estate, and may investigate such allegations as dishonesty, fraud, incompetence and mismanagement.

Katy Sullivan, a Dynegy spokeswoman, said the Houston-based company is reviewing the report. Dynegy Holdings has said it hopes to emerge from bankruptcy in the summer. The next hearing in the case is scheduled for Monday.

Dynegy had put the holding company into bankruptcy with the backing of some bondholders.

But other bondholders had objected to the unusual restructuring, saying it would protect Dynegy Inc shareholders including billionaire financier Carl Icahn, the Seneca Capital Investments LP hedge fund, and Franklin Resources Inc's (BEN.N) Franklin Advisers unit at their expense. Bondholders typically rank ahead of shareholders in order of priority in bankruptcies.

In afternoon trading, Dynegy shares were down 43 cents, or 36.4 percent, at 75 cents, after earlier falling to 60 cents. They traded at $2.95 at the time of the bankruptcy filing.

Dynegy Holdings bond prices rose roughly two to three cents on the dollar, trading between 66 cents and 71 cents on the dollar, according to bond pricing service Trace.

"ACTUAL FRAUDULENT TRANSFER"

In his report, Kirpalani said many Dynegy officials had been ignorant of the significance to creditors of transferring the coal assets known as CoalCo, while others "knew exactly what was happening" and that Dynegy Holdings creditors could be harmed.

He also said many directors sat on both entities' boards, creating potential conflicts of interest. The examiner said it would be contrary to public policy to let a majority of Dynegy Holdings' directors stay in their roles.

"Reduced to its essence, the transaction transferred hundreds of millions of dollars away from Dynegy's creditors in favor of its stockholders," Kirpalani wrote.

"The conveyance of CoalCo to Dynegy was an actual fraudulent transfer ... and a breach of fiduciary duty" by Dynegy Holdings directors, he added.

Icahn, Seneca and Franklin owned roughly one-third of Dynegy Inc shares prior to the bankruptcy, according to the report. Icahn, a Seneca spokesman and a Franklin spokeswoman did not immediately respond to requests for comment.

The appointment of an examiner had been sought by a US Bancorp (USB.N) unit, US Bank NA, that represents bondholders in connection with leases associated with Dynegy Holdings' purchase of two electric power generating plants in Newburgh, New York.

US Bank has claimed that Dynegy Holdings' board knew the asset transfers were unfair. George Davis, a lawyer for US Bank, did not immediately respond to a request for comment.

Kirpalani is chairman of the bankruptcy and restructuring group at the law firm Quinn Emanuel Urquhart & Sullivan, and was appointed examiner by the U.S. Trustee's office in January.

Examiners' reports have derailed other bankruptcies. For example, an agreement to help Tribune Co (TRBCQ.PK) exit bankruptcy collapsed in July 2010 after an examiner identified possible claims tied to that publisher's $8.2 billion leveraged buyout. Tribune remains in Chapter 11.

In 2001, Dynegy canceled plans to buy Enron Corp as the business and finances of its larger rival deteriorated rapidly.

The case is In re: Dynegy Holdings LLC et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-38111.

(Reporting by Jonathan Stempel in New York; Additional reporting by Michael Erman; Editing by Lisa Von Ahn, Phil Berlowitz)