World Markets Simplified

Life Partners Holdings Inc., which may be the subject of a civil action by the Securities and Exchange Commission, said it posted a roughly 60% drop in fourth-quarter revenue and said it would delay filing its 10K annual report while management assesses the value of a key asset.

For the full fiscal year ended Feb. 28, Life Partners provided a preliminary estimate that its net income dropped 22%, to $22.9 million, before a potential impairment charge. It estimated revenue for the full year fell 17% to $93.6 million.

Based in Waco, Texas, Life Partners arranges to buy life-insurance policies from people who no longer need them, then sells fractional shares in those policies to its thousands of retail clients. The clients continue to pay the premiums, then collect when the insured person dies.

Life Partners has been battered by controversy over whether it has provided inaccurately short estimates for how long the insured people are likely to live, a key part of the investment equation. The longer the insured people live, the more the investors have to pay in additional annual premiums. The life-expectancy estimates were the focus of a page-one article in The Wall Street Journal in December.

Last week, the company said it had received a so-called Wells notice from the SEC, which indicated the staff planned to file civil charges against it and two top executives related to the life-expectancy estimates. Such a notice gives potential targets a chance to dissuade SEC from filing the charges.

From the preliminary figures put out by Life Partners, its business has suffered from the controversy, which came to light in the midst of its fiscal fourth quarter. The company's revenue dropped an estimated 60% in the fiscal fourth quarter from the prior year, to $10.3 million, while net income was about breakeven, versus $5.9 million in the final quarter of the prior fiscal year.

The company said it has delayed filing its annual report while management reassesses the value of life policies it holds for its own portfolio. The company estimates it will incur an impairment charge of about $8 million, which would slice almost in half the value of life policies currently carried on its books at $16.6 million. Some of the impairment charge may apply to prior quarters, the company said.

Such a large impairment charge suggests that policies owned by some of the company's clients also may be worth less than they originally paid. In total, Life Partners has said it has sold thousands of clients investments in life policies, also known as life settlements, with a face value of $2.8 billion.

In a regulatory filing Monday, the company said its business had been hurt by "a large market drop in the estimated volume for life settlements generally," the impact of news articles about its business as well as its disclosure of the SEC investigation.

A Life Partners representative said the company had no immediate additional comment. 

( Source: WSJ )

Daily Digest Stockinvestips

Upgrades for May 17 2011 Tuesday:

1) Aecom Tech ( NYSE: ACM) upgraded from hold to buy by Argus.

2) Forward Air ( NYSE:FWRD) upgraded from neutral to outperform by Robert W. Baird.

3) Piedmont Office Realty Trust ( NYSE:PDM) upgraded from sell to hold by Stifel Nicolaus.

4) Terreno Realty ( NYSE: TRNO ) upgraded from hold to buy by Stifel Nicolaus.

5) Washington REIT ( NYSE:WRE) upgraded from hold to buy by Stifel Nicolaus.

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Downgrades for May 17 2011 Tuesday:

1) ECA Marcellus Trust ( NYSE: ECT ) downgraded from outperform to perform Oppenheimer.

2) NYSE Euronext ( NYSE: NYX) downgraded from buy to hold by Argus.

3) Ralcorp Holdings ( NYSE: RAH ) downgraded from buy to hold by BB&T Capital Mkts.

4) Wonder Auto Tech ( NASDAQ: WATG ) downgraded from buy to hold by Maxim Group.

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Coverage Initiated for May 17 2011 Tuesday:

1) Celldex Therapeutics ( NASDAQ: CLDX) coverage initiated with outperform by Oppenheimer.

2) Cintas ( NASDAQ: CTAS) coverage initiated with hold by Stifel Nicolaus.

3) Digi International ( NASDAQ: DGII ) coverage initiated with Buy by Feltl & Co

4) Immunomedics ( NASDAQ: IMMU ) coverage initiated with outperform by Oppenheimer.

5) Iron Mountain ( NYSE: IRM) coverage initiated with Buy by Stifel Nicolaus.

6) Keryx Biopharma ( NASDAQ: KERX ) coverage initiated with outperform by Oppenheimer.

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1. Apple and Google will be called back to testify before the Senate hearing on digital privacy on Thursday, but this time they'll also be joined by Bret Taylor, the CTO for Facebook. Microsoft won't be on the agenda, but discussions about policies concerning provider collecting data on their users probably will be--the fact that Apple's VP of Worldwide government affairs is there is a give-away on this. Let's hope the politicians are a little better informed this time.

2. The biggest rumor circulating on the wires is that Nokia's smartphone partnership with Microsoft is but the first step in a more complicated dance: Microsoft may be poised to buy the beleaguered Finnish firm's mobile division, with discussions scheduled to begin next week. Nokia's value is above $30 billion, but Microsoft has proved to have deep pockets with its acquisition of Skype...and Nokia has been surprisingly personal in trying to quash the rumor.

3. Facebook is desperate to foist location-based check-ins upon its clients, and has begun automatically merging Places with its promotional Pages system--for at least those Pages whose details contain an actual street address. It's a move to raise the profile of Places, and to drive revenue to Facebook through ad placements, because there's no other reason for Facebook to try this maneuver if Places was successful at self-promotion.

4. Denied their day in court by the Ninth Circuit Court of Appeals, and also barred from ever submitting their claims again, the Winklevoss twins have now vowed to take their appeal over the amount of money Facebook agreed to reward them as a settlement in an IP-ownership claim to the Supreme Court. Their allegation is that Facebook has committed securities fraud as part of the settlement.

5. Proving the interest in e-readers and their evolution into tablet devices, Barnes & Noble has revealed one million apps were downloaded from its own app store for the Nook Color Android device in its first week. The top five selected apps were Drawing Pad, Solitaire, Mahjong, and Angry Birds. Nook users, it seems, are also interested in non-book apps.

( Source: Fast Company )

(GLOBE NEWSWIRE) -- DynaVox (Nasdaq:DVOX), the world's leading provider of communication and education products for individuals with significant speech, language and learning disabilities, today announced results for the third quarter ended April 1, 2011.

For the third quarter ended April 1, 2011, net sales were $28.7 million, an increase of 1.0% compared to net sales of $28.4 million for the third quarter ended April 2, 2010. Sales of the Company's speech generating devices increased 1.3% to $22.7 million, and sales of its special education software were flat at $6.0 million from the prior year.

Gross profit for the third quarter of fiscal year 2011 declined 7.3% to $19.9 million, compared to $21.5 million in the third quarter of the prior year. The Company's gross profit margin was 69.6%, compared to 75.8% in the prior year. The gross margin decline was due mainly to a less favorable device product mix, slightly lower margin on software sales, reduced royalty revenue, and an inventory obsolescence charge of approximately $0.5 million mainly related to a previously acquired product line. Excluding the inventory obsolescence charge, gross margin was 71.2% for the third quarter and 70.9% for the first 39 weeks of fiscal 2011, representing declines of 460 basis points and 440 basis points, respectively, from the corresponding prior-year periods.

Operating income was $3.8 million in the third quarter of fiscal year 2011, compared to operating income of $5.3 million in the same period a year ago. Operating income for the third quarter of fiscal year 2011 included a $1.0 million impairment loss related to intangible assets and fixed assets acquired as part of the Company's product acquisition in July 2009. Operating expenses, excluding the impairment loss, decreased $1.1 million compared to the prior year's third quarter of $16.2 million. Excluding the $0.5 million inventory obsolescence charge and the $1.0 million impairment loss, operating income was $5.3 million for the third quarter and $6.2 for the first 39 weeks of fiscal 2011.

Third quarter GAAP net income was $0.7 million, or $0.07 per share. Adjusted pro forma net income and adjusted pro forma net income per share, as defined below, were $2.6 million, or $0.09 per share, for the third quarter of fiscal year 2011.

Adjusted EBITDA, as defined below, declined 14.0% in the third quarter of fiscal year 2011 to $6.5 million, from $7.6 million in the previous year.

"In spite of the ongoing macroeconomic challenges, during the third quarter we saw some signs of improvements and our consolidated top line was roughly equal to the last year," said Ed Donnelly, DynaVox's Chief Executive Officer. "Sales trends across both devices and software provide validation of our efforts to adapt to the environment as well as the fact that the demand for our products and services remains intact. We are encouraged by the steady sequential upside trend in our U.S. device business, which comprises almost three fourths of our total revenue."

For the thirty-nine weeks ended April 1, 2011, net sales declined 7.0% to $75.8 million, compared to $81.2 million in the same period last year.

Gross profit for the first thirty-nine weeks of fiscal 2011 declined 13.1% to $53.2 million, compared to $61.2 million in the same period last year. The Company's gross profit margin decreased to 70.2% from 75.3% in the same period last year.

Operating income for the thirty-nine weeks ended April 1, 2011 was $4.7 million, compared to $15.2 million in the prior year period.

GAAP net income for the thirty-nine weeks ended April 1, 2011 was $0.3 million, or $0.03 per share. Adjusted pro forma net income for the thirty-nine weeks, as defined by the Company, was $2.1 million, or $0.07 per share.

Adjusted EBITDA for the first thirty-nine weeks of fiscal 2011 was $11.2 million, compared to $20.8 million in the same period last year.

For fiscal year 2011, the Company now projects net sales to decline in the range of 6% to 8% compared to the previously expected decline of 10% to 15% from fiscal year 2010. The Company continues to expect Adjusted EBITDA for fiscal year 2011 to be between $19.0 million and $23.0 million and adjusted pro forma net income per share in the range of $0.21 to $0.27 per share.

On the day that European Union finance ministers approved a 78 billion euros ($110 billon) rescue programme for Portugal, Ms Merkel declared that outright debt restructuring before 2013 – when a permanent bail-out fund is in place – would be “incredibly” damaging to the eurozone as a whole.

“It would raise incredible doubts about our credibility if we simply were to change the rules in the middle of the first programme,” causing a flight of investors in government bonds from the euro zone, she told Berlin students.

Private creditors should not be drawn into potential debt-rescheduling until the 500 billion euros European stability mechanism was established in 2013, Ms Merkel argued.

Her views are at odds with those of many in the German parliament – and German economists – who say Greek debt restructuring is inevitable. The chancellor conceded, however, that some form of voluntary agreement of creditors might be possible to ease debt problems in Greece.

At a meeting in Brussels last night, finance ministers pressed Greece to accelerate its privatisation programme and take more steps to shore up finances.

Jean-Claude Juncker, Luxembourg prime minister and head of the eurozone group of finance ministers, said governments might consider adjusting the maturities of some Greek bonds – a process known as reprofiling – but only after Athens demonstrated more progress at tackling its fiscal deficit and ramping up privatisations.

In addition to discussing the eurozone crisis, ministers designated Italy’s Mario Draghi as successor to Jean-Claude Trichet, the ECB president whose term ends in October.

Ministers sought to play down the absence of Dominique Strauss-Kahn, head of the IMF. Didier Reynders, Belgian finance minister, said: “We are going to work on Greece and on Portugal in exactly the same manner as if Dominique Strauss-Kahn were here.”

Privately, however, speculation had begun about who might replace a man who has been central in Europe’s response to the debt crisis. “His personal contribution was important right from the beginning,” one diplomat said. “He was a big asset.”

( Source: financial times )

Holders of US government debt would be willing to miss payments "for a day or two or three or four" if it put the US in a stronger position to pay them later on,

Rep. Paul Ryan told CNBC Tuesday.

"That's what I'm hearing from most people," said the Wisconsin Republican, chairman of the House Budget Committee. "What is more important is that you're putting the government in a materially better position to be able to pay their bonds later on."

Unless the government acts to raise the debt ceiling by Aug. 2, the U.S. will be in default. Ryan, echoing House Majority Leader John Boehner, argued any deficit-reduction plan should include no tax increases and cutting spending by a dollar for every dollar the debt ceiling is raised.

Ryan doesn't expect Congress to reach an agreement by the deadline.

"Look, I don't think we're going to solve 40 years of ideological differences between the two parties by August," he said.

"I think what we ought to do is get a real downpayment, a serious downpayment to the tune of trillions of dollars in spending cuts and savings, with enforcement mechanisms that bank those savings going in so we can buy ourselves some time and space in the credit markets."

Ryan, who will announce later Tuesday whether he will run for the retiring Herb Kohl's Senate seat, said that if there's "an issue that is unresolved between the two parties — health care, for example — we're going to have to go to the electorate and let them choose in 2012."

Sino Clean Energy Inc

Company produces and distributes coal-water slurry fuel -- a coal grade believed to be environment friendly.

The China-based company also backed its full-year earnings outlook of $1.43-$1.57 per share, on revenue of $170 million.

Its annual production capacity rose 35 percent to 1.1 million metric tons and had 47 customers under supply agreements, compared with 30 last year.

Revenue was $45.4 million, a year-over-year increase of 52.8%

Gross profit was $24.8 million, a year-over-year increase of 84.2%

Gross margin increased to 54.6% from 45.3% for the first quarter of 2010

Income from operations was $20.2 million, a year-over-year increase of 83.1%

Operating margin was 44.6% compared to 37.2% for the first quarter of 2010

Net income was $14.4 million, or $0.41 and $0.40 per basic and diluted share, respectively, an increase of 79.7% from $8.0 million, or $0.23 per basic and diluted share a year ago

Cash totaled $87.9 million as of March 31, 2011

"Despite the usual challenging weather conditions in the first quarter, we are pleased to report a strong start to 2011 both in terms of top line growth and profitability, driven by the increase in bromine prices. For the three months ended March 31, 2011, our average selling price for bromine was approximately $4,596 per tonne compared with approximately $2,470 per tonne in the corresponding quarter last year. However, the remarkable increase in price was slightly offset by a decrease in production volume due to more frequent maintenance of our bromine production facilities due to stricter environmental and safety requirements from the government on production and a slight reduction in purchase orders due to high prices. Despite commanding a higher price per tonne compared to last year, crude salt sales volume increased year-over-year, thereby supporting our performance in the quarter," said Xiaobin Liu, Chief Executive Officer of Gulf Resources. "Our chemical business also experienced moderate growth in the first quarter of 2011, mainly from environmentally friendly oil and gas exploration chemicals and agricultural intermediaries."

Gulf Resources' revenue was $45.4 million for the first quarter of 2011, an increase of 52.8% from $29.7 million for the first quarter of 2010. The increase in net revenue was primarily attributable to the strong performance of the Company's bromine and crude salt segments.

Revenue from the bromine segment was $30.1 million, or 66.4% of total revenue, an increase of 76.7% from $17.1 million in the corresponding period last year. The increase in revenue from the Company's bromine segment was mainly due to an increase in the average selling price of bromine.

Revenue from the crude salt segment was $5.0 million, or 11.1% of total revenue, an increase of 77.6% from $2.8 million in the corresponding period last year. The increase in revenue from the Company's crude salt segment was mainly due to an increase in the average selling price and sales volume of crude salt.

Revenue from the chemical products segment was $10.2 million, or 22.5% of total revenue, for the first quarter of 2011, an increase of 4.1% from $9.8 million in the corresponding period last year. The increase in revenue from the Company's chemical product segment was mainly due to solid demand for environmentally friendly oil and gas exploration chemicals and agricultural intermediaries.

Gross profit for the first quarter of 2011 was $24.8 million, an increase of 84.2% from $13.5 million for the first quarter of 2010 and gross profit margin for the three months ended March 31, 2011 was 54.6%, compared to 45.3% for the corresponding three-month period last year. The improved gross profit margin was due to a rise of margin percentage in the Company's bromine and crude salt segments.

Sales, marketing and other operating expenses for the first quarter of 2011 were $24,012 compared with $20,698 for the corresponding quarter last year. The increase was mainly due to increased commissions.

General and administrative expenses for the first quarter of 2011 were $4.3 million, compared to $2.3 million for the first quarter of 2010. The increase was mainly due to $3.1 million in non-cash expenses related to employee stock options and warrant expenses related to professional services fees.

Research and development expenses were $180,337 for the first quarter of 2011 compared with $125,202 for the corresponding period last year. The increase was mainly due to research activities related to the Company's new waste water treatment chemical additives. The research and development expense incurred for the new production line constructed by third parties and the consumption of bromine produced by SCHC during the three-month period ended March 31, 2011 were $21,553 and $30,068 respectively.

As a result, income from operations for the first quarter of 2011 was $20.2 million, an increase of 83.1% compared to $11.1 million for the corresponding quarter of 2010. Operating margin was 44.6% for the first quarter of 2011, compared to 37.2% for the first quarter of 2010.

For the first quarter of 2011, the Company incurred other income of $56,613 compared to $75,585 for the corresponding quarter last year mainly due to the charge of capital lease interest expenses.

Income taxes were $5.9 million for the first quarter of 2011, an increase of 89.0% from $3.1 million for the first quarter of 2010. The Company's effective income tax rate was 29.2% compared to 28.2% in the year ago period.

Net income was $14.4 million for the first quarter of 2011, an increase of 79.7% from $8.0 million for the first quarter of 2010. Basic and diluted earnings per share in the first quarter of 2011 were $0.41 and $0.40, respectively, compared to $0.23 per fully diluted share in the first quarter of 2010. Weighted average number of diluted shares for the three months ended March 31, 2011 was 35,590,982 compared with 34,762,991 for the three months ended March 31, 2010.

As of March 31, 2011, Gulf Resources had cash of $87.9 million, current liabilities of $19.3 million, and shareholders' equity of $212.2 million. As of March 31, 2011, the Company had working capital of $98.3 million and a current ratio of 6.1. For the three months ended March 31, 2011, the Company generated $21.7 million in cash flow from operations, primarily attributable to net income, and used $3.1 million in investing activities to reconstruct and renovate the bromine production facilities and channels acquired under capital lease in the first quarter of 2011. These projects were financed by opening cash balances as of December 31, 2010 and cash generated from operations during the first quarter of 2011.

In early April 2011, the Company started regular operations at its new production line of wastewater treatment additives after completing pilot testing in the first quarter. The Company expects positive cash flow from operations in the second quarter of 2011.

In March 2011, the Company announced financial guidance for fiscal year 2011. The Company expects revenue to range from $195 million to $198 million and net income to range from $64 million and $66 million for the fiscal year 2011. This represents growth in revenue of between 23.2% and 25.1% and growth in net income of between 24.8% and 28.7% compared to the previous year. This guidance does not take into account any impact from potential acquisitions.

In April and May 2011, the Company provided supporting documents disputing allegations related to the reliability of its filings with the SEC alleged by Glaucus Research Group and distributed on Seeking Alpha on April 26, 2011.

Moving forward in 2011, the Company is focused on maximizing sales in light of the higher bromine prices, while gradually ramping up additional bromine and crude salt production capacity. With the added capacity from the wastewater treatment chemical additive production line, the Company also expects a higher contribution to growth from its chemical product segment.

"Carefully monitoring utilization in order to manage the proper operation of our production assets is our primary focus these upcoming quarters, as high prices may impact customer orders. We still target an overall utilization rate of 65-75% for 2011, although we expect some quarter to quarter fluctuation as production tends to be higher in the second and third quarter compared to the winter months due to the pick-up of manufacturing activity after Chinese New Year," said Mr. Liu. "In terms of bromine prices, we expect prices to remain around current levels for the remainder of the year as we consider that the market may need some time to adjust to the significant price increases in the second half of last year. However, we believe that ongoing demand supply imbalances in the region should effectively prevent any price decreases for bromine."

The Company reaffirms guidance of revenue between $195 million and $198 million and net income between $64 million and $66 million for 2011 as issued on March 28, 2011.

None of these factors are one time events and will get repeated frequently over the next two years. And while annual inflation marginally eased in Apr '11 due to a favorable base, the monthly rise in the WPI was fairly steep and broad-based. We expect inflation in the 8-10% range in 1HFY12. The RBI is likely to raise repo rate by 25bps on 16 Jun '11.

Policy outlook. Despite some softening in Apr '11, inflation continues to be considerably above the RBI's comfort zone of 4-5% for the past 17 months. The aforementioned factors rule out an immediate softening of inflation. In view of this, we expect the RBI to raise the repo rate by 50bps in remaining-FY12e, of which 25bps hike is expected on 16 Jun '11.