Winners and Losers - January 29th - February 2nd (SIRF,NTRI)

By Albert Phung | February 02, 2007 AAA

Winner:

SiRF Technology Holdings Inc. (SIRF) is riding high this week as its shares have jumped from $24.72 to $30.27 (or a gain of 2.5%). The bulk of the gains happened on Thursday, as the market digested the outstanding news that the GPS component developer released about this 4th quarter's earnings and its outlook Q1 as well.

Despite the fact that equity-based compensation caused Q4 2006 earnings to be lower than the same period a year ago ($0.16 per share versus $0.19 per share), the company announced that its Q1 earnings for 2007 will be in the range of $0.20-$0.23. You may well be wondering where this big source of growth is coming from. According to SiRF, it all has to do with the newest trend of placing GPS chips and other related pieces of technology into cell phones and other wireless products.

Since the ultimate function of a cell phone is quickly becoming indistinguishable, cell phone producers are always on the look out for new bells and whistles to attract people to buy their phones over the competition's products. Just consider the integration of the camera and the mp3 player functions on cell phones, which up until a couple of years ago was non-existent. The next biggest feature could very well be GPS on your phone. Motorola (MOT) and AT&T's (T) T-Mobile are just some of the brands that are implementing SiRF's GPS chip in their products and if this trend starts picking up, SiRF is definitely going to riding this wave of success for a long time.

Loser:

Nutrisystem Incorporated's (NTRI) crash diet continues this week, as its share price shredded another $14.41.

This latest loss from this week can be attributed to news that while the company's quarterly earnings for the fourth quarter of 2006 exceeded analyst expectations, its guidance for the first quarter of 2007 was disappointing. Management released guidance that the firm will be earning between $0.82 to $0.86 per share, compared to analyst estimates of $0.94 per share.

This is just the latest piece of bad news that has significantly slashed the company's share price. Earlier in January, several analysts issued downgrades over concerns that Nutrisystem's growth is slowing. Declining rates of growth is inevitable for all companies and the situation should not be any different for Nutrisystem considering that the company has seen growth well over 2000% over the last few years.

This may suggest that the company will need to change up its game plan a little, however. While its celebrity endorsements and other related marketing ploys have allowed it to reach remarkable rates of growth in the past, it certainly doesn't look like it's working now. Furthermore, the company itself reports that the average person uses the service for around 10 weeks, which isn't too long considering how health club and gyms usually lock up customers for up to a year with annual memberships (even though most new customers don't visit the gym past the first 3 months).

All in all, in the past two weeks, Nutrisystem's share price has fallen from $68.10 to 44.05 as a result of concerns over its future growth. At this rate, the company will have to address these concerns or else its share price will simply continue to slim down.

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