The Nine (NCTY) 2Q:2008 results

Revenues were slightly better due to World of Warcraft strength. WoW grew to 91% of total revenues. Other sources of revenue at the company have failed to materialize. EPS came in 12 cents better entirely on non-operational items: better forex, lower tax rate, better interest income. In fact, they missed operating income estimates slightly.

Citigroup and Credit Suisse downgrade this morning citing dependence on WoW and lack of bargaining power at the license renegotiation table.

The Nine (NCTY) reporting tonight

They do online games but none really matter to revenue outside of World of Warcraft which makes up 90 percent of NCTY revenue. Their license for WoW ends pretty soon. Its expected that Activision Blizzard (ATVID) is going to negotate much less favorable terms for NCTY. Don't see why they wouldn't -- NCTY has no negotating power at all -- they're completely dependent. All the analyst models have WoW assumptions for 2009 -- though expectations have been scaled back somewhat.

In theory the olympics will be a drag on online gaming revenue for the month of August which could lead to a shortfall in near-term guidance.

To recap: The license expires at the end of the year. It's already in the models. If ATVID doesn't renew the license at all, NCTY would eventually go to zero.

Seems like bad risk/reward?

Freddie Mac (FRE) still sounds insolvent

Fair value of assets: -5.6 billion.
Dividend cut: 80%.
Proposed capital raise: $5.5 billion.
Value: Worthless.

There are some things money shouldn't buy.

Cisco Systems (CSCO) 4Q:2008 results

Cisco beat by a little on the top and the bottom line. They were constructive on enterprise spending and some analysts have suggested their tone is better. Service provider orders grew at 5%, down from last quarter's 6% and the high teens last year. They said book to bill was comfortably above 1 but drew on deferred revenue which shrunk by 165 mil. They also lowered growth forecasts by a percentage point on a year to year basis for the next two quarters and indicated economic uncertainty will be their bedfellow for the next several quarters.

The stock is rallying on this. I'm not going to be buying it. Good company. Now at that $40 billion dollar threshold -- its a lot harder to grow a 40 billion dollar company. I don't think their claims of 12-15% long-term growth are realistic.

Potash (POT) revisited

Rackable Systems (RACK) 2Q:2008 results

Though revenue was slightly better, gross margins plummeted to the single digits from last quarters mid 20s. The company indicated this was a one-time occurrence and maintained gross margin guidance of 18-21% for the year. They stuck to their full year revenue guidance, too.

They have an outrageous amount of volatility in their model. Last quarter's results seemed to indicate they had stopped seeking low margin business and were content to walk away from business to maintain profitability. This quarter seems to show the exact opposite. IBM, Dell and HP are all targeting the rack server space. The stock at $10 (where its trading pre-opening) is roughly $3 over book so the downside is somewhat limited. Seems like dead money. I keep thinking they make sense as an acquisition for a larger player looking to grow share. Maybe one day I'll be right about that... but not today. Today it gets flogged.

Earnings Estimate Cheat Sheet – August 4, August 5, August 6, August 7, August 8 2008

Estimated Reporting Date	Symbol	Revenue Estimate Current Q	Operating Profit Estimate Current Q	EPS Estimate Current Q	EBITDA Estimate Current Q	Revenue Estimate Next Q	Sequential Revenue Growth Estimate, Percent	Operating Profit Estimate Next Q	EPS Estimate Next Q	EBITDA Estimate Next Q	Revenue Estimate Full Year	Operating Profit Estimate Full Year	EPS Estimate Full Year	EBITDA Estimate Full Year	Revenue Estimate Next Year	Operating Profit Estimate Next Year	EPS Estimate Next Year	EBITDA Estimate Next Year
8/4/2008	ACTS	23.8	4.5	0.10	--	26.7	11.95%	5.3	0.12	--	111.1	30.2	0.48	44.9	112.5	33.7	0.34	29.1
8/4/2008	ACTU	34.0	6.7	0.07	7.6	34.8	2.42%	7.8	0.08	8.8	137.9	27.2	0.30	30.1	154.2	35.0	0.38	38.3
8/4/2008	BLKB	72.7	17.7	0.24	19.7	79.2	8.98%	19.4	0.26	21.8	302.0	72.5	0.98	81.8	350.3	86.9	1.17	93.6
8/4/2008	CMVT	335.1	34.5	0.18	48.5	369.3	10.18%	37.2	0.18	51.7	1,192.4	110.4	0.60	173.6	1,589.7	135.7	0.68	203.8
8/4/2008	DISH	2,920.1	499.9	0.54	771.2	2,986.9	2.29%	513.2	0.54	768.0	11,656.8	2,028.3	2.23	3,147.7	12,439.1	2,198.4	2.51	3,363.8
8/4/2008	MIPS	28.2	4.0	0.07	5.3	29.0	2.87%	4.6	0.07	5.9	104.2	10.4	0.14	14.0	125.4	24.3	0.39	31.2
8/4/2008	RACK	76.2	(1.8)	(0.01)	2.8	91.1	19.52%	(0.3)	0.02	2.6	352.9	2.1	0.16	14.0	399.9	4.8	0.22	--
8/4/2008	RTEC	36.9	(2.3)	(0.03)	--	38.6	4.40%	(0.9)	(0.01)	--	154.6	(4.8)	(0.01)	11.0	186.2	16.0	0.45	--
8/4/2008	SMTL	65.3	4.6	0.10	--	64.5	-1.33%	5.0	0.12	--	241.4	11.1	0.26	18.1	282.3	29.7	0.62	62.5
8/4/2008	STEC	53.1	5.3	0.08	7.0	59.4	11.83%	7.0	0.10	8.2	229.4	26.1	0.37	33.1	283.6	47.4	0.70	48.6
8/4/2008	TMA	71.8	--	0.07	--	79.9	11.29%	--	0.01	--	(1,338.3)	--	(12.00)	--	388.9	--	0.27	--
8/4/2008	VSH	739.7	64.7	0.25	119.2	740.6	0.13%	64.0	0.26	121.1	2,957.2	243.4	0.93	462.2	3,048.6	291.6	1.11	517.4
8/5/2008	AMKR	697.9	87.2	0.28	161.0	740.3	6.07%	106.8	0.35	187.0	2,893.5	405.1	1.34	695.0	3,048.2	453.0	1.38	743.6
8/5/2008	CHKP	200.4	101.7	0.44	104.0	221.2	10.41%	116.2	0.49	123.0	812.0	416.8	1.78	421.0	873.2	448.4	1.94	453.5
8/5/2008	CSC	4,292.9	242.0	0.76	562.7	4,290.3	-0.06%	270.7	0.90	610.5	17,667.6	1,286.9	4.30	2,596.6	18,479.8	1,388.7	4.68	2,738.9
8/5/2008	CSCO	10,309.9	2,968.8	0.39	3,402.4	10,390.2	0.78%	3,001.4	0.40	3,454.7	39,488.9	11,557.4	1.55	13,155.4	43,712.3	12,741.8	1.69	14,439.4
8/5/2008	GLBC	649.5	--	(1.25)	56.0	660.3	1.67%	--	(1.23)	73.0	2,622.9	(70.6)	(4.01)	275.6	2,843.5	5.9	(2.98)	356.4
8/5/2008	INSP	34.9	(1.5)	(0.01)	3.8	36.3	3.97%	(2.8)	(0.01)	4.4	153.0	(3.9)	(0.04)	21.0	158.6	(2.1)	0.26	24.4
8/5/2008	JCOM	61.0	25.8	0.40	28.4	63.2	3.63%	26.9	0.41	29.3	248.1	104.3	1.61	115.6	283.3	124.2	1.87	132.2
8/5/2008	LEAP	477.6	35.3	0.03	130.0	504.3	5.60%	19.9	(0.25)	119.0	1,977.5	99.5	(0.76)	486.1	2,507.3	143.1	(0.05)	605.5
8/5/2008	LOOK	18.2	(0.2)	0.01	1.3	18.3	0.55%	0.0	0.02	1.4	73.5	(0.3)	0.05	5.5	81.3	0.7	0.11	6.9
8/5/2008	MFLX	165.3	12.8	0.36	18.9	179.7	8.72%	13.1	0.36	18.9	693.0	60.9	1.67	86.5	804.5	57.2	1.40	84.7
8/5/2008	MVL	131.0	64.6	0.44	64.9	171.7	31.06%	80.2	0.55	79.6	556.2	291.4	1.99	287.4	608.7	275.8	1.97	284.7
8/5/2008	MOLX	869.4	101.5	0.41	165.1	878.2	1.01%	101.1	0.40	164.3	3,325.9	351.6	1.42	597.1	3,569.8	439.3	1.75	688.0
8/5/2008	NILE	74.5	4.3	0.17	5.9	74.3	-0.22%	4.1	0.17	6.0	350.5	23.3	1.03	31.7	404.4	28.4	1.25	37.7
8/5/2008	NNDS	198.0	40.9	0.57	50.6	215.2	8.68%	49.3	0.72	63.6	831.1	191.2	2.66	226.6	919.3	212.5	2.90	244.0
8/5/2008	OPWV	58.9	(2.9)	(0.03)	(1.0)	55.8	-5.37%	(1.6)	(0.01)	2.4	243.2	(16.0)	(0.17)	--	231.2	6.0	0.07	19.7
8/5/2008	PCLN	495.7	87.2	1.41	91.1	550.8	11.10%	128.9	2.05	133.8	1,880.7	343.8	5.54	363.2	2,228.1	456.7	6.95	475.0
8/5/2008	SMSI	23.0	4.1	0.11	5.1	26.5	15.46%	6.5	0.18	7.4	101.1	22.8	0.63	27.4	119.6	31.5	0.83	32.6
8/5/2008	SNCR	24.6	4.5	0.09	6.4	29.2	18.79%	6.5	0.12	8.4	117.0	26.5	0.48	34.5	140.1	36.6	0.66	41.7
8/5/2008	UNTD	120.2	21.4	0.28	35.8	120.0	-0.22%	20.7	0.29	36.6	483.6	86.5	1.18	151.1	466.3	79.2	1.08	148.4
8/5/2008	WBMD	89.1	7.0	0.09	14.2	99.6	11.80%	14.7	0.16	20.9	382.4	46.8	0.55	--	437.9	61.9	0.72	94.1
8/5/2008	WFMI	1,911.2	80.3	0.31	136.7	1,927.4	0.85%	70.3	0.27	129.3	8,164.4	301.9	1.15	558.1	9,453.9	395.1	1.52	690.7
8/6/2008	AIRN	20.6	(7.7)	(0.14)	(6.9)	23.8	15.33%	(6.1)	(0.11)	(5.4)	90.1	(28.2)	(0.50)	(25.0)	128.2	(17.5)	(0.20)	(8.7)
8/6/2008	ALTI	1.6	(7.8)	(0.09)	(7.5)	6.2	279.48%	(5.0)	(0.07)	(7.1)	18.4	(25.5)	(0.31)	(28.3)	23.5	(30.4)	(0.35)	(23.1)
8/6/2008	ANEN	33.0	1.7	0.13	4.0	33.3	0.89%	3.1	0.18	--	130.2	12.6	0.78	--	140.6	15.3	0.88	16.0
8/6/2008	AVT	4,606.9	191.6	0.80	208.2	4,434.0	-3.75%	176.7	0.74	191.8	17,878.7	742.3	3.14	801.2	18,648.6	805.9	3.35	874.3
8/6/2008	BBBB	76.4	9.7	0.12	12.3	82.6	8.13%	14.2	0.19	16.4	314.0	48.2	0.65	57.6	385.1	81.6	1.28	93.0
8/6/2008	CECO	423.2	2.0	0.06	23.8	415.4	-1.83%	9.2	0.10	32.7	1,737.2	71.0	0.62	159.7	1,769.1	95.3	0.72	188.4
8/6/2008	FRE	2,184.9	--	(0.53)	--	2,319.0	6.14%	--	(0.51)	--	8,591.7	--	(2.00)	--	11,166.2	--	0.58	--
8/6/2008	HILL	68.2	(4.9)	(0.12)	--	65.6	-3.81%	(4.2)	(0.10)	--	267.2	(16.6)	(0.36)	--	333.0	13.7	(0.04)	--
8/6/2008	KLIC	182.6	0.4	0.00	--	188.5	3.24%	3.0	0.05	--	773.7	--	0.25	--	778.3	27.7	0.55	--
8/6/2008	MXWL	17.7	(2.9)	(0.17)	(1.9)	18.1	2.67%	(2.5)	(0.16)	(1.4)	72.4	(10.8)	(0.73)	(6.9)	92.9	(4.2)	(0.32)	(1.9)
8/6/2008	ONNN	552.5	90.9	0.19	122.4	567.9	2.80%	99.5	0.21	131.6	2,117.7	359.5	0.81	440.5	2,306.2	429.8	0.95	526.9
8/6/2008	PLNR	71.9	(4.5)	(0.26)	--	74.9	4.17%	(3.8)	(0.20)	--	297.2	(15.0)	(0.94)	--	314.2	(11.4)	(0.64)	--
8/6/2008	QSII	52.0	15.8	0.37	17.9	56.0	7.73%	17.4	0.41	19.5	230.1	72.9	1.69	80.9	268.8	89.0	2.00	96.4
8/6/2008	S	9,167.0	(244.7)	0.03	1,919.4	8,989.1	-1.94%	(266.0)	0.02	1,868.3	36,388.2	(1,138.3)	0.07	7,508.2	35,279.1	(376.7)	0.07	7,531.9
8/6/2008	SINA	89.5	22.1	0.40	26.8	98.3	9.80%	25.2	0.43	29.9	360.4	86.8	1.57	105.3	448.3	121.6	2.05	143.9
8/6/2008	TKLC	111.1	10.9	0.15	--	110.9	-0.17%	15.8	0.17	--	467.8	73.2	0.80	84.6	500.3	76.3	0.89	93.1
8/6/2008	TWC	4,329.7	787.8	0.32	1,562.0	4,353.4	0.55%	810.2	0.32	1,606.0	17,328.2	3,176.6	1.27	6,295.1	18,666.6	3,624.7	1.36	6,909.1
8/6/2008	UTSI	603.4	(31.2)	(0.28)	--	237.7	-60.61%	(22.6)	(0.29)	--	1,742.5	(91.2)	(0.44)	--	1,245.5	(24.0)	(0.31)	--
8/6/2008	VRSN	231.4	73.6	0.23	105.7	240.6	3.98%	81.1	0.26	113.7	947.4	312.0	1.00	446.7	1,122.0	447.7	1.59	581.6
8/7/2008	ACS	1,623.8	174.5	0.93	276.9	1,612.9	-0.67%	169.5	0.91	274.7	6,170.5	678.3	3.51	1,066.0	6,641.5	738.4	3.93	1,158.2
8/7/2008	ANSS	110.6	46.5	0.38	52.8	116.6	5.43%	49.1	0.37	51.4	467.2	201.8	1.57	228.3	554.6	244.6	1.84	271.9
8/7/2008	BRKS	132.4	(4.1)	(0.04)	5.0	133.8	1.02%	(1.4)	0.00	6.0	559.1	(7.6)	0.06	28.1	588.5	17.5	0.27	53.0
8/7/2008	CHINA	103.6	1.4	0.01	5.5	103.0	-0.62%	1.9	0.01	6.0	413.3	7.3	0.04	21.1	455.2	23.2	0.16	37.0
8/7/2008	DIOD	115.1	17.3	0.34	24.2	134.4	16.71%	20.7	0.40	28.3	498.0	75.8	1.55	105.0	596.0	104.8	1.92	131.2
8/7/2008	DIVX	21.3	3.3	0.10	5.0	24.8	16.52%	6.0	0.13	7.5	98.1	23.6	0.56	29.4	116.8	32.7	0.66	37.1
8/7/2008	ELX	114.0	24.8	0.21	--	116.3	2.05%	26.6	0.22	--	489.5	131.9	1.12	151.2	491.8	119.2	0.99	157.8
8/7/2008	EMKR	78.5	(3.8)	(0.03)	--	98.9	25.87%	1.4	0.03	--	280.6	(14.3)	(0.21)	--	459.6	25.8	0.38	--
8/7/2008	IDCC	58.5	6.3	0.12	10.8	58.8	0.42%	7.2	0.14	12.4	233.4	31.1	0.57	50.9	248.6	44.8	0.71	59.1
8/7/2008	ITWO	63.7	5.9	0.11	--	64.9	1.83%	7.9	0.23	--	254.4	29.5	0.75	--	261.2	38.3	0.92	--
8/7/2008	KNOT	31.2	3.8	0.09	6.1	28.6	-8.44%	2.5	0.07	5.0	111.4	8.3	0.23	18.3	127.6	19.2	0.43	29.8
8/7/2008	MVSN	149.3	37.6	0.22	47.1	165.9	11.11%	51.2	0.30	60.9	659.6	174.8	1.19	220.0	671.5	264.9	1.75	292.1
8/7/2008	NCTY	66.2	15.3	0.49	24.4	67.4	1.83%	14.8	0.48	25.1	270.8	62.8	1.89	97.0	331.2	63.7	2.08	107.1
8/7/2008	OPTV	26.1	(1.9)	(0.01)	1.7	25.3	-3.05%	(2.3)	(0.01)	1.4	111.1	(0.8)	0.04	13.7	131.1	11.0	0.10	26.8
8/7/2008	WEDC	20.6	1.7	0.07	2.9	21.5	4.38%	2.0	0.07	3.2	80.6	5.5	0.22	9.4	88.7	8.9	0.30	--
8/8/2008	ACLS	82.5	(11.3)	(0.12)	(6.4)	82.0	-0.67%	(11.2)	(0.11)	(7.6)	337.5	(41.9)	(0.39)	(24.1)	374.5	(18.4)	(0.11)	(5.2)
8/8/2008	MSTR	87.3	20.7	1.08	21.0	90.1	3.18%	22.3	1.18	22.0	362.9	84.8	4.46	89.0	400.3	97.2	5.42	110.0