Amazon.com, Inc. (NDAQ:AMZN) is continuing to party like it's 1999 with shares nearly tripling off of their 52-week lows ahead of their earnings report today. Shares are already up in anticipation of strong earnings after Google, Apple and RIM all reported blowout quarters.

Amazon's two previous quarters showcased blockbuster earnings growth, which has led to high expectations for this quarter leading into the holiday shopping season. Sales in the third quarter benefited from the blockbuster release of the last Harry Potter, which drew many readers to the store.

The majority of today's move, however, appears to be shorts covering before the earnings announcement. The online retailer showed 36.8 million shares sold short at the end of September and this could clearly be crippling if Amazon's earnings turn out to be along the lines of Apple or Google.

In the end, strong revenue growth coupled with improving margins as a result of lower costs and higher third-party mixes have resulted in a strong stock during  the past few months. Whether or not this success is already priced in remains to be seen, but this is definitely a stock worth following!

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Netflix Inc. (NDAQ:NFLX) shares rose more than eight percent today after the company's earnings won over shareholders on Wall Street. The surprisingly strong results eased worries that the company's profits were suffering from a lengthy battle with competitor Blockbuster and as a result of a shrewd price cutting strategy that revived subscriber growth.

Revenue for the third quarter rose 15% from $256 million to $294 million while net income rose to $15.7 million from $12.8 million a year earlier. These numbers were validated by free cash flow growth from $22.3 million to $36.1 million. And last but not least, the online rental company managed to increase its subscriber base a whopping 24% year over year and even raised its guidance for next year to include revenues of $1.2 billion on 7.5 million subcribers.

The online rental space has experienced a lot of competition recently that has caused some concern for Netflix investors. Three months ago, Netflix suffered its first quarterly decrease in subscribers while Blockbuster enlisted 600,000 new online customers. Netflix responded by lowering their price by $1 per month, which expanded its sign-ups without damanging profits as the company was able to spend less on advertising.

Analysts also increased their price targets on the company. Lehman Brothers' Douglas Anmuth increased his target to $24 per share while Banc of America's Brian Pitz kept his target steady at $22 per share. Some analysts are concerned that Netflix's upcoming R&D costs along with signs that the company's growth is sustainable and not just the beginning of another damaging price war.

In the end, this is great news for shareholders but whether or not Netflix can build a sustainable strategy around its price cuts remains to be seen. Regardless, this is definitely a stock to watch over the next few quarters!

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Delphi Corporation (OTC:DPHIQ) announced that it's emergence from bankruptcy would be postponed until 2008, according to an 8-K filing with the SEC. The bankrupt auto parts maker said it wants to push back the continued hearing on its disclosure statement two weeks so that it can incorporate potential plan changes.

"Delphi is continuing to work toward emergence as soon as possible and anticipates that the schedule will facilitate emergence during the first quarter of 2008," the company said in the SEC filing. The delay is reportedly due to longer-than-expected negotiations with former parent General Motors as well as several of its key investors including Appaloosa Management.

Delphi filed its reorganization plan on September 6th after much negotiation following its October 2005 bankruptcy. The plan calls for the funding consortium to purchase $800 million in convertible preferred shares and approximately $175 million in common stock of the reorganized company. The investors also are committed to purchasing any unsubscribed common shares after a $1.575 billion rights offering that will be made availale to shareholders.

Delphi's common stock shareholders will be able to get a pro-rata share of 1.48 million shares of new common stock; transferrable rights to buy 45.6 million of the 147.62 million total shares for $1.75 billion; five year warrants to purchase an additional 5% of common shares; and nontransferrable rights to buy about $572 million of shares at $45 per share.

In the end, many are looking forward to seeing Delphi emerge from bankruptcy as it could mean great opportunities to profit. The interesting provisions in this bankruptcy plan also make it very interesting for institutional investors who want a piece of the action. Combined, these factors make Delphi a stock worth watching!

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A majority holder in Ameristar Casinos Inc. (NDAQ:ASCA) announced yesterday that they would undertake and continue to evaluate strategic alternatives that may become available with respect to their holding in the company, according to a Schedule 13D/A filing with the SEC. Shareholders are hoping that these alternatives will unlock value in the company and jump the somewhat stagnant stock price.

The Estate of Craig H. Neilsen, which now ows a 55.2 percent stake in the company, said that since the passing of Craig Neilson they have begun evaluating strategic alternatives for their holdings. These could including a merger or business combination, a transfer or disposition of a material amount of assets, or an open market transaction in the company's common stock.

Currently, nothing is set in stone as the group continues to evaluate its strategic alternatives. According to the filing, "There is no assurance whether or when any transaction may result from the Co-Representatives' ongoing review and evaluation." Fortunately, however, it sounds like the shareholder will not be simply selling its shares en masse on the open market.

In the end, there are a lot of possibilities here with the shareholder that now holds a majority stake in the company. Selling all of its shares on the open market would not be a prudent move, so it is likely that the group will attempt a private placement or a strategic transaction that would unlock value in the company's shares (like a merger). Regardless, this is definitely a stock worth watching while this situation unfolds!

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A large Magellan Health Services (NDAQ:MGLN) shareholder demanded that the heathcare company authorize a special one-time dividend of $478 million or $12 per share, according to a press release put out by the activist hedge fund. Shareholders are hoping that the activist hedge fund can unlock value and jump the company's somewhat stagnant shares.

Shamrock Activist Value Fund, which owns a 4.6 percent stake in the company, said in a letter to the board that they believe a return of excess capital at this time would be well received by at least half of the shareholders they surveyed. All surveyed believe that the current balance sheet is sub-optimal and is suppressing shareholder value although they differ on preferred methods of returning capital (namely, special dividends vs. share repurchase).

"We believe that the Board has the opportunity to dramatically improve shareholder value by taking immediate action to optimize the Company's balance sheet," said fund manager Arik Ahitou. "The Company's current forecast projects $12 million of debt and approximately $315 million of unrestricted cash at year end."

Magellan does not agree, saying, "We believe it is prudent to maintain our current capital position. In addition, our cash needs for the business are fairly significant in '07. Given the current incremental usage of cash for a new business and our active acquisition review, we have decided at this point in time not to implement any capital deployment strategies this quarter but we will continue to review and assess this possibility on an ongoing basis as we have stated to you previously."

In the end, the company has access to $1.25 to $1.5 billion in capital from cash on hand and available debt capacity which gives it the financial flexibility to leverage its balance sheet and return some of this capital to shareholders. Clearly, the company will then have enough left over from its credit lines to pursue acquisitions and keep costs under wraps. Whether or not the activist hedge fund pushes this further remains to be seen, but this is definitely a stock worth watching!

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Merck & Co. (NYSE:MRK) shares jumped today after the company announced third quarter proits that soared 62% on improved sales of asthma and diabetes drugs and a lower reserve for product liability litigation. The move marks a continued turnaround for the once-struggling drug company.

"The momentum Merck began to build last year continues, as proven by the strong performance this last quarter," said chief executive Richard Clark during a conference call Monday. "In an increasingly difficult health-care environment, our company has been resilient."

Merck's revenues jumped to $6.07 billion from $5.41 billion a year ago while the company's net earnings came in at 75 cents per share compared to 51 cents a share a year earlier. The company's strongest drug is its asthma treating drug Singulair, which is expected to earn at least $4 billion in 2007.

The big surprise was Gardasil - a vaccine to prevent cervical cancer that was introduced last year. The drug experienced sales of $418 million compared with $70 million a year earlier with year-to-date sales exceeding $1.1 billion. This sets the drug on track to be a blockbuster after only nine months - a great achievement in drug development.

In the end, this is all great news for Merck shareholders. The future success of the company will depend on their ability to launch successful drugs in a harder market while losing some of their key drugs that are expiring. Combined, these factors make MRK a stock worth watching!

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Citrix Systems (NDAQ:CTXS) announced this morning that it has closed its acquisition of XenSource for $500 million which was first announced in August. The move makes Citrix the first company to offer end-to-end virtualization, including application, desktop and server virtualization solutions. The news sent Citrix shares up more than three percent so far today.

"Citrix is now positioned to be a key provider of server, desktop and application virtualization technologies, a market which IDC expects to be worth in excess of $3.4 billion by 2011," said John Humphreys, program vice president, IDC. "Citrix's new end-to-end virtualization offerings augments the company's application delivery strategy and represents the foundational components of the future application delivery environment."

The new virtualization portfolio includes server virtualization with Citrix XenServer, application virtualization with Citrix Presentation Server and desktop virtualization with Citrix XenDesktop. Combined, these solutions enable businesses to essentially run their entire computing platform from one remote server and have computers "dial-in" to the server every time they require access to key programs and applications.

Many investors are bullish on this news as the stock may start to move the same way as VMware, which has exploded in value recently. Citrix shares are trading near their 52-week highs of $42.90 and well off their lows around $26.10. The company trades at a 36x earnings multiple, however, which is substantially lower than VMware's 270x valuation.

In the end, Citrix is definitely a stock to keep an eye on as it will likely become a key player in the extremely hot virtualization market. Some traders are even considering a pairs trade between the overvalued VMware and the undervalued Citrix given that they are now in the same market. Combined, these factors make CTXS a stock worth watching!

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A large Building Materials Holding Corporation (NYSE:BLG) shareholder is stepping up its pressure on the company to rid itself of chief executive Robert Mellor and promote Sanley Wilson, according to a Schedule 13D/A filing with the SEC. Many shareholders are hoping that the activist can take action to clean up corporate governance practices and unlock value in the struggling company.

Chapman Capital, which controls over 9 percent of the company, demanded the resignation of chief executive Robert Mellor and his replacement with Stanley Wilson. The activist hedge fund insists that the executive's total compensation over the last three years is excessive given today's market conditions. Meanwhile, an insignificant stake in the company only indicates a lack of conviction.

"BMHC’s owners obviously should hold Mr. Mellor neither commendable for yesterday’s homebuilding boom that enriched him, nor accountable for today’s bust that perversely continues to enrich him," said Chapman Capital in a statement. "BMHC’s holding company structure, with Mr. Mellor serving as the Company’s '$6 Million Man' in personal total compensation over the past three fiscal years, is out-of-date and untenable in today’s challenging homebuilding environment."

Problems compounded recently after Standard & Poor's placed BHCM's ratings on "Credit Watch with negative implications" as a result of the board's "corporate governance lapse". Interestingly, the S&P cited the current battle between Chapman Capital and the company in determining this lapse in corporate governance. Clearly, there is an issue that needs to be addressed very soon before shareholders suffer even more.

In the end, the problems facing BMHC is one that can no longer be ignored. The imbalance between the ownership and governance of the company has resulted in a stock price that has declined nearly 60 percent to 2004 levels. The extraordinarily low valuation, trading around tangible book value, should send the board a very clear message of Wall Street's distrust and diffidence in BMHC's management and board members.

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Toyota Motors' (NYSE:TM) lead in the auto market may be in jeopardy after it announced it sold 2.34 million vehicles globally last quarter falling short of General Motors' (NYSE:GM) 2.38 million vehicle sales. The news comes after Toyota shares were already trading near their 52-week lows amid a car recall and a declining spot in the Consumer Reports reliability survey.

General Motors saw most of its growth in South America and China - two hot spots that promise to show a continued growth in auto consumption. The U.S. automaker also saw greatly reduced expenses that came as a result of the company's new UAW contract. And finally, small sedans are starting to sell better in the U.S. leading to higher sales than previous quarters.

In the end, Toyota has the higher hand if you look past the number of sales. GM's profitability falls far short of Toyota, which has mountains of cash to invest in R&D and new model development. In fact, a recent study showed that GM made $2,123 per vehicle less than Toyota in 2006. Meanwhile, Toyota's profit per vehicle increased $1,175 in 2005 to $1,977 in 2006.

Overall, Toyota is still the most profitable car company in the world but continues to face several hurdles. Recent recalls and declining ratings may force it to look into its quality assurances practices and make some changes. Meanwhile, competition from GM for customers is certainly heating up and promises to make for an uphill battle. Regardless, TM is definitely a stock to watch at these low levels!

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Bear Stearns (NYSE:BSC) and China's CITIC Securities agreed to swap $1 billion stakes in each other in a deal that opens doors for business partnerships in both the United States and the hot Chinese market. The news comes after Bear Stearns shares have been punished from a slumping mortgage market, trading nearly 30 percent off of their 2007 highs.

There has been speculation for several weeks that a large investor was going to step up and take a stake in the troubled company. Warren Buffet dispelled rumors that he was considering taking a large stake in the company last week, but many speculated that another large equity investor may get involved with the company. Many investors are disappointed because they were looking for a capital infusion, not simply a breakeven business partnership.

"We are confident that combining our operations in Asia with CITIC Securities will greatly benefit Bear Stearns' global client base and generate substantial new revenues and growth opportunities for the firm," Bear Stearns Chairman and Chief Executive James Cayne said in a statement.

The move does promise to give Bear Stearns a larger foothold in the hot Chinese market that continues to grow at a breakneck pace; however, there has been much talk recently of a bubble in the Chinese market. State-backed CITIC is the largest brokerage in China (and Asia in general) - so it is not likely to experience problems - but IPOs in China are likely to cool down. 

In the end, this is good news for Bear Stearns as it means a much-needed expansion outside of the United States and into a market that is growing extremely fast these days. Any joint ventures in Asia are likely to produce returns that should help shareholder regain confidence in a troubled BSC. Combined, these factors make BSC a stock worth watching!

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