Celgene (CELG) Earnings Preview

Celgene Corporation, headquartered in Summit, New Jersey, is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of novel therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. For more information, please visit the Company's website at www.celgene.com.

The company is due to report Q4 earnings on 01/31/2008 at 9 A.M. Consensus estimates from those polled at Thomson are expecting a profit of 31c on revenue of $390.4M. The consensus range for EPS is 30c to 33c, with a revenue range of $372M to $408.9M, according to First Call. Historical performance for this company speaks volumes, having beaten estimates by at least a penny over the past seven quarters. This trend, along with positive notes both from Citigroup and JP Morgan, should help Wall Street become bullish on the stock which has a 52wk range of 41.26 - 75.44 (currently trading at 54.00).

Another driver for the bulls on the Celgene story in 2008 appears to be the purchase of Pharmion for $2.9 billion in mid November 2007. The deal is expected to be slightly dilutive to earnings in 2008 and accretive in 2009. Celgene is paying more than 10 times Pharmion's revenue of $256 million over the past 12 months. The acquisition furthers Celgene's strategy of becoming a major global player in blood-cancer drugs, since the deal brings together Revlimid, Thalomid and particularly Vidaza, a treatment for pre-leukemia blood-cell disorders -- three therapies expected to generate multiple global revenue streams over the next five years.

It's The Economy...Stupid

So what's the deal with the economy - is it slowing? Are we all going to be out of job? Answers to these questions are hard to come by and can vary from person to person. I'll try to spell out my rationale for why I think we are slowing and support it with some new data that just came out below:

First, Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.6 percent in the fourth quarter of 2007, according to advance estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent.

Second, the US economy has been driven by the consumer and in the fourth quarter, consumer spending slowed to a pace of 2 percent, down from a 2.8 percent growth rate in the prior quarter. For all of last year, consumers boosted spending by 2.9 percent, the smallest increase since 2003.

Third, when average Joe can't drive the economy by consuming goods and services the last ditch to see growth is from businesses small and large so it was alarming when spending by businesses on equipment and software slowed to a pace of 3.8 percent in the fourth quarter. For the year, such spending was up just 1.4 percent, the worst showing since 2002.

Now mind you, I am not an economist and I can't go through all of the numbers but to me it's fairly evident the US economy is in a slowdown of significant proportions. I think it's fair to say that our economy has been driven by consumer spending for as long as I've been around and I'll purpose a reason for the slowdown in spending: average Joe can't leverage his house any longer as a credit card to purchase luxuries such as 50 inch HD plasma TV's, trips to Italy or a new SUV. Average Joe is also desperately trying to pay off credit card debt which has grown dramatically over the last 15+ years "about a month ago, the New York Times examined how the use of credit has taken off dramatically in the United States since 1990. While the number of people holding charge cards grew about 75 percent— from 82 million in 1990 to 144 million in 2003— the amount they charged during that period grew by a much larger percentage: approximately 350 percent, from $338 billion to $1.5 trillion."

I am in no way a doomsday alarmist but some of the statistics out there are worrisome; do I have solutions for this? I think it starts with responsibility of the banks out there not to provide people with more credit and more ways to drown themselves - governance is needed to prevent this from continuing forward. More to come...

While at work today during some downtime I was reading through an article on CNN pertaining to the TSA (Transportation Security Administration) and their recent failures on tests performed by undercover officials. A shocking factoid was learned during said downtime that made lunch go down that much harder: " in tests conducted in 2006 and disclosed to USA Today last year, investigators successfully smuggled 75 percent of fake bombs through checkpoints at Los Angeles International Airport, 60 percent through Chicago's O'Hare International Airport and 20 percent at San Francisco International Airport".

Now most of us have been in this setting recently - you're at the airport - waiting to get go through security and you see a little old lady who can barely walk getting padded down by security - thus thwarting her trip to Minnesota to see her grandson because she might be a bomb wielding terrorist in disguise.

My questions is simply: when is the TSA finally going to address this issue? It's been 6+ years since 9/11 and still to this day failure rates on these tests are that high? It's not only embarrassing but for a sports guy like myself in the most simplistic of analogies I see our Administration as a failed sports franchise such as the New York Jets - a team who lost all but one game this past season after dismal performances in years past. Like the Jets the US Administration is not addressing needs - and in continuing with the sports analogy it is imperative that we address our defensive needs. The administration talks a big game about protecting our borders - start by finally protecting our airports.

So here's my solution: 1) TSA agents must stop their cultural sensitivity; meaning if someone complains of a bad knee or back and has a brace - they must be thoroughly checked anyway - it's then the responsibility of said person to show up earlier before pre-boarding; 2) stop wasting time and energy on searching the elderly - this makes me and I'm sure many other feel less safe because, well let's be honest, if grandma Mabel blows up a 747 well than hell, might as well lock your doors and call it a night folks. 3) Hire qualified, professional, serious people and I say this because again, I don't know about you, but the times I've seen the people working security at airports I thought I was watching an episode of MTV's Real World - young, slightly immature, chatty people who don't invoke fear and respect - it's honestly a joke. 4) fire TSA agents who fail tests - after all the training they are supposed to go through if they can't get it right they are a danger to us as a whole - in this economy I'm sure we can find some people out there who are qualified, hard working and determined to do their job right.

Hello All...

This is the first posting in my new blog which I am using to create an open discussion about everything that we deal with in this world we live in. A little about me: late 20 something New Yorker who works in finance but also dj's and produces music -- this means I'm all over the place; love a good political and economic discussion but will stay up all night discussing bands, musicians and all musical genres. I look forward to this and I hope you do too - best, djn.