Doctor Jack's Stock Medicine

[Jack Haddad]

Amd

Bought 2 blocks at 20.33, and wrote 200 Nov 20 calls at 1.45/contract.

Sold 2 blocks at 21.37, and bought back the calls at 1.75/contract for a net of 73 cents/share times 20,000 shares

[Jack Haddad]

Amd

Bought 2 blocks of AMD at 20.06, and wrote 200 Nov 17.50 calls at 2.95/contract

Sold 2 blocks at 21.33, and bought back the calls at 3.95/contract for a net of 27 cnets/share times 20,000 shares.

[Jack Haddad]

Imcl

Bought 2 blocks of IMCL, and wrote 200 Nov 30 calls at 1.50/contract. The resistance of 30 and support of 28 should hold well for the premium on the calls to vanish completely.

Sold 2 blocks of IMCL at 31.45 and bought back the 200 Nov 30 calls at 2.10/contract for a net profit of 1.04/share times 20,000 shares.

[Jack Haddad]

Mrvl

Two separate rumors involving the fate of Marvell are circulating: In one scenario, Marvell is a leveraged buyout target by private-equity firms, andThe other has chip giant Texas Instruments swallowing Marvell. While there isn’t a shred of evidence that any of the above two is true, anything is likely to happen when a stock falls in access of 60% since Feb of 2006… Just ask The fund manager at Whitman Capital. His 100 mill fund is about to get liquidated as a result of a large MRVL holding. I know that the fund has held it since the stock was at 58/share.

[Jack Haddad]

Yhoo

Bought 3 blocks at 23.01 to 23.06 and wrote 300 Nov 22.50 calls at 1.30/contract. The stock is cheap and undervalued, despite the slump in not meeting Wall Street expectations.

Sold 3 blocks of YHOO at 26.16, and bought back 300 22.50 calls at 3.75/contract for a net profit of 67 cents/share times 30,000 shares.

[Jack Haddad]

Dia

Re-shorted 2 blocks of DIA at 121.03

[Jack Haddad]

Dia

Re-shorted 2 blocks of DIA at 121.03

Covered at 120.80

[Jack Haddad]

Tso

Bought 3 blocks of TSO at 62.95, and wrote the Nov 60 calls at 4.40/contract

[Jack Haddad]

Slb

Bought 2.5 blocks of SLB at 61.61 and sold 250 Nov 60 calls at 2.80/contract.

[Jack Haddad]

Tso

Bought 3 blocks of TSO at 62.95, and wrote the Nov 60 calls at 4.40/contract

sold 3 blocks at 63.62 and bought back 300 Nov 60 calls at 4.90/contract for a net profit of 27 cents/share times 30,000 shares.

[Jack Haddad]

Slb

Bought 2.5 blocks of SLB at 61.61 and sold 250 Nov 60 calls at 2.80/contract.

sold 2.5 blocks of SLB at 62.19, and bought back the Nov 60 calls at 3.20 for a net profit of 18 cents/share times 25,000 share

[Jack Haddad]

Slb

Bought 1 block of SLB at 62.30 and wrote 100 Nov 62.50 calls at 1.75/contract

[Jack Haddad]

Mrvl

Bought 7 blocks at 17.78 to 17.80, and wrote 700 Nov 18.75 calls at .55/contract. Strange strike price.

[Jack Haddad]

Mrvl

Bought 7 blocks at 17.78 to 17.80, and wrote 700 Nov 18.75 calls at .55/contract. Strange strike price.

Sold 7 blocks on MRVL at 18.33 to 18.35, and covered the calls at .65

[Jack Haddad]

Mrvl

Ladies and gentlemen,

For those who are looking to accumulate a severely undervalued technology company, you ought to consider MRVL; the stock has lost nearly 60% since Feb of 2006 as a result of buying INTC’s Communications Business for 600 million, and for options backdating. However, none of these two factors shoulf pose a threat to the technology of this company. Besides, the shares have already discounted the news.

Marvell is a fabless provider of chips for communications networking. Their parts are used on small form-factor drives. Seagate in its last quarterly conference call talked about the fact that the only areas showing above-expectations growth right now are notebook drives and small form-factor drives. They also are supplying parts for 802.11 [wireless networking] products, although they haven’t announced who their consumer-electronics customers are yet. That should really pick up for them starting in the third quarter of this calendar year. For Dell, Cisco and Intel, they supply chips used in local-area-network interface cards. They also have a networked-switch-component business. For Western Digital and Seagate, they provide core technology for the interfaces on their drives.
Backing out the cash, the company was selling at at 22 times next year’s earnings when the stock was at 39. Now, It sells at under five times this year’s net revenue, or about three times expectations for next year, with very high margins. Marvell has been growing far faster than the overall chip market, with sales expected to reach $2.4 billion in the January 2007 fiscal year, up from $1.7 billion in fiscal 2006 and $1.2 billion in fiscal ‘05. And almost all of that has come from organic growth, rather than acquisitions.

Mavell said the deal will give them a strong position in the market for processors used in smart phones. The Intel business changing hands includes a processor used in Research in Motion’s Blackberry 8700 device, and another processors used in the Palm Treo and Motorola Q phones.

The comunications business that MRVL bought from INTC has about 1,400 employees, and has been generating about $100 million a quarter in revenue; the company said the Intel unit has margins lower than those Marvell has been reporting. In a conference call with analysts this morning, the company said it expects that starting fiscal 2008 it will expect long-term gross margins of 50% and long-term operating margins of 24%. In a company where the top execs still control 20% of the stock, management is not out there doing stupid acquisitions. They are willing to take a short-term earnings hit for a deal that will be accretive in the long haul.

For those looking for an entry at today’s price, consider buying the shares while hedging them with the Nov 18.75 strike calls at nearly 70 cents/contract. That gesture will give you a .70 cent/share downside protection, providing you the opportunity and the affordability to dollar cost average, should the stock decline. Thereafter, I would buy more shares and hedge with the 17.50 strike price.

All in all, if you can risk a 2 point downside in exchange for a 20 point upside on a stock, MRVL is a great pick!