FRIDAY, AUGUST 1, 2008..... Wall Street sank Thursday, after weak readings on economic growth and the job market touched off renewed concerns about the financial health of businesses and consumers. The Dow Jones industrial average fell more than 200 points. The Commerce Department's report that gross domestic product grew at a 1.9 percent pace in the second quarter disappointed investors. Economists polled by Thomson Financial/IFR had expected growth of 2.4 percent in the broad measure of the economy's health. Investors were also concerned about Labor Department data saying that the number of people seeking jobless benefits jumped to the highest level in five years. Economists warned the weekly figures can be volatile, however, and some dismissed them as an aberration. A $4.5 billion cash offer from Bristol-Myers Squibb Co. for its cancer drug partner ImClone Systems Inc. kept the Nasdaq composite index from falling as sharply as other indexes. In other positive news, oil prices declined, and an index of Midwestern business activity indicated growth. But Wall Street could not shake off its worries about the economy -- particularly after sobering remarks from Former Federal Reserve Chairman Alan Greenspan on CNBC late in the afternoon. Greenspan said he would be more surprised if the United States did not enter recession than if it did. The comments came after Treasury Secretary Henry Paulson said in a speech in Washington that the economy will continue to grow at a moderate pace for the rest of the year, and the government's $168 billion stimulus package had helped grease the economy's wheels.

But Larry Smith, chief investment officer at Third Wave Global Investors in Greenwich, Conn., said tightness in credit markets and high oil prices continue to weigh on the economy and the stimulus package won't deliver a permanent fix. "Tax rebates have been a very effective way of propping up the economy in the second quarter, and less so in the third quarter," Smith said. "To fix the economic growth problems, you have to restore liquidity to the system." According to preliminary calculations, the Dow Jones industrial average fell 205.67, or 1.78 percent, to 11,378.02, continuing its string of erratic, triple-digit daily swings. Broader stock indicators also declined. The Standard & Poor's 500 index fell 16.88, or 1.31 percent, to 1,267.38, while the Nasdaq fell 4.17, or 0.18 percent, to 2,325.55. During the month of July, the Dow inched up 0.25 percent, the S&P fell 0.99 percent, and the Nasdaq rose 1.42 percent. It was certainly a better showing than in June, during which the Dow dropped 10.19 percent, the S&P fell 8.60 percent, and the Nasdaq lost 9.10 percent.

Bond prices jumped following the economic readings. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.95 percent from 4.05 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose. Light, sweet crude fell $2.69 to settle at $124.08 a barrel on the New York Mercantile Exchange after rising more than $4.50 on Wednesday. Oil has fallen more than $20 since hitting a high above $147 on July 11, raising hopes that inflation pressures could ease. Thursday's stock market pullback follows bets investors made this week that the beaten-down financial sector would rebound and that the Labor Department's employment report on Friday would show a less gloomy jobs market. But other stock rallies have fizzled in recent weeks. Investors have remained concerned about the housing and credit markets, the health of financial companies and the effect of high commodities prices.

The latest GDP reading, which reflected consumers cashing tax rebate checks, still shows the economy grew at a faster pace than the weak 0.9 percent seen in the first quarter. But revised numbers also revealed for the first time that the economy shrank in the fourth quarter last year. The mixed economic figures are making it hard for investors to have much conviction, observers say. "I think in the short run, it's going to be a tug-of-war between the optimists and the pessimists," said Jack Caffrey, equities strategist at JPMorgan Private Bank. "I think both sides are going to be able to find enough information to support their case." At some point one side will give in, he said. "The challenge is, you can't identify what the catalyst is that will change psychology."

Investors sifted through a flurry of quarterly profit reports for clues about the economy. Exxon Mobil Corp. reported second-quarter earnings of $11.68 billion, the largest quarterly profit ever by a U.S. corporation. But the per-share earnings fell well short of Wall Street's forecast, which assumed that record crude prices would push earnings even higher. The stock fell $3.95, or 4.7 percent, to $80.43 and weighed on the Dow industrials. The Walt Disney Co. fell $1.32, or 4.2 percent, to $30.35 after the company reported a slowdown in the U.S. advertising market in the current quarter and weak box office results in the period that ended in June. Motorola Inc. jumped 96 cents, or 12.5 percent, to $8.64 after posting a surprise profit for its second quarter. The company said it shipped more cell phones than in the first quarter.

Eastman Kodak Co. reported a second-quarter profit but the results missed Wall Street's forecast. The stock declined $1.13, or 7.2 percent, to $14.64. In other news, Wall Street applauded Bristol-Myers' offer $60 per share for ImClone, a 30 percent premium to ImClone's closing price of $46.44 Wednesday. Bristol-Myers, which already owns about 17 percent of ImClone, is a U.S. partner for the colon and head and neck cancer drug Erbitux. ImClone surged $17.49, or 37.7 percent, to $63.93. Bristol-Myers slipped 39 cents to $21.12. Declining issues outpaced advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 1.45 billion shares.

Shutterfly Discusses Q2 Results and Outlook;
Falls to New 52-Week Low
Shares of Shutterfly, Inc. (SFLY) hit a new 52-week low on Thursday after the Company reported second quarter 2008 financial results for the period ended June 30, 2008. Net revenues totaled $35.4 million, a 19% year-over-year increase. GAAP net loss per diluted share was $(0.16), as compared to $(0.10) in Q2 2007. The Company’s financial expectations for the third quarter included net revenues to range from $33 million to $36 million and GAAP diluted loss per share to range from ($0.15) to ($0.30). For FY08, the Company expects net revenues to range from $225 million to $240 million and GAAP diluted income per share to range from $0.01 to $0.20. On a non-GAAP basis, diluted income per share is expected to range from $0.30 to $0.50. Jeffrey Housenbold, President and CEO of Shutterfly, explained in a conference Wednesday night, "Despite a tough economic enviroment, we delivered our 30th consecutive quarter of year-over-year revenue growth and better-than-expected gross and net margins. While we are not satisfied with our top line growth, we are confident that our compelling suite of products and services and continued innovation positions us well to continue leading in these early and large markets." "We are focused on improving free cash flow in a sustained and long term manner. During the first half of 2008, and especially Q2, we are beginning to realize leverage in our business model. This leverage and our disciplined expense management demonstrates that we can achieve sustained margin improvement in a competitive marketplace." Mr. Housenbold added, "We continue to build for the future. We are strengthening our brand and franchise, and we are innovating with new products and services to increase our customers’ loyalty and evangelism of Shutterfly. We are also incubating a sponsorship in advertising and commercial printing business. If successful, both initiatives have the potential to deliver new revenue streams, higher margins and increased free cash flow." "we are making smart and well-considered decisions that balance both the short and long term objectives. We are building on our market leadership by investing in products, services, people and processes. We are demonstrating strong fiscal and operational discipline, and we are subjecting every aspect of the business to intense cost management scrutiny." Mark Rubash, CFO of Shutterfly, added, "We have been working very hard to insure that every dollar goes to its highest and best use. As evidenced by our improved profitability this quarter, these efforts are beginning to yield sustainable operating leverage. We are improving our manufacturing cost structure; increasing our use of outsourcing; implementing more efficient production techniques; and leveraging our scale across all of our materials and shipping vendors. On the technology side, we have improved our platform architecture; integrated new storage solutions; and organized for rapid innovation and development cycles. We have also optimized our sales and marketing initiatives." He concluded, "Although we don’t know how long these economic conditions will continue, we are confident in our strategy. We will continue to build on our long track record of industry-leading innovation, quality and execution." Piper Jaffray downgraded SFLY to Neutral from Buy and cut the price target to $10 from $18. The firm said it downgraded the shares to reflect slower consumer spending and the high negative operating leverage implied in Q3 guidance. Intellect Neurosciences Obtains EU Patent re ANTISENILIN(R) Monoclonal Antibody Intellect Neurosciences, Inc. (ILNS) has obtained a European patent relating to the Company’s ANTISENILIN(R) monoclonal antibody platform for the treatment of Alzheimer’s disease. The claims of the issued patent cover the ANTISENILIN(R) "free-end specific" antibodies that bind to beta amyloid and use of the antibodies in preventing or inhibiting the progression of Alzheimer’s disease. The technology is designed to promote the clearance of beta amyloid which accumulates to reach toxic concentrations in the brains of Alzheimer’s patients while reducing the potential for adverse side-effects. Importantly, such drugs avoid binding and thereby potentially interfering with the functions of the Amyloid Precursor Protein, which is an important physiological regulator in the body implicated in controlling essential brain functions as well as blood coagulation. The Company has granted a royalty-bearing license to Wyeth and Elan Pharma International Ltd. regarding patents and patent applications related to antibodies and methods of treatment for Alzheimer’s disease, including Bapineuzumab, currently in Phase 3 clinical trials.

MANAGEMENT COMMENTS ON RECORD Q2 EARNINGS: Shares of iCAD, Inc. (ICAD) were higher on Thursday after the Company reported record financial results for the three months ended June 30, 2008. Total revenue for the second quarter of 2008 was $10.5M, a 73 percent increase compared with total revenue of $6.1M for the second quarter of 2007. The Company posted net income of $2.4M, or $0.06 per basic share, compared with a net loss of ($866,000) or ($0.02) per basic share in the second quarter of 2007. The Company expects total revenue for the second half of 2008 to be in the range of $21M to $22M. On a full year basis, total revenue is projected to be in the range of $38M to $39M. The Company also expects to achieve second half gross margins consistent with or better than Q2 of 2008 of 83.6 percent, and anticipates operating expenses for the second half to be between $14.5M and $15.3M and weighted more heavily in the fourth quarter. Darlene Deptula-Hicks, Executive Vice President and CFO of iCAD, commented in a conference call, "We delivered extraordinary revenue growth this quarter along with strong bottom line earnings and positive cash flow. These record results represent our eighth consecutive quarter of comparative financial improvement." Ken Ferry, iCAD’s President and CEO, added, "These results underscore that our growth strategy and financial controls are on track in delivering meaningful results. We believe that we are well-positioned to take the business to the next level of growth and continued profitability for the rest of 2008 and beyond." "Even with this continued strong growth, only 38% of U.S. mammography systems have converted to digital technology, leaving considerable room for growth in the coming years. In addition, our international business demonstrated strong growth this quarter. In the first half of 2008, our international business has nearly doubled versus last year," noted Mr. Ferry. He concluded, "Our goal moving forward is to deliver strong net earnings in the low-to-mid teens range, while increasing investment in new business segments. In achieving this balance, we believe that we can expand our addressable market in a timely manner and sustain our growth in earnings trajectory."

ENTERS AGREEMENT TO ACQUIRE FIVE COMMUNITIES FOR $62.5M: Emeritus Corporation (ESC) has entered into an agreement to acquire five communities currently leased by the Company for a purchase price of $62.5 million, plus estimated closing costs of approximately $2.8 million. The five communities are comprised of 432 units and are located in Ohio, Florida, California and Michigan. The Company intends to finance this transaction through mortgage debt equal to approximately 75% of the purchase price, seller-provided financing of $10.0 million, and the balance from the refund of certain security deposits and cash on hand. The seller-provided financing is for a term of 3 years at an annual interest rate of 8.0%, increasing annually by 25 basis points, and monthly payments equal to accrued interest plus a $40,000 monthly principal payment.

ACQUIRES TIAPAMIL COMPOUND: Ore Pharmaceuticals Inc. (ORXE) has acquired from Roche the clinical-stage compound tiapamil. Ore Pharmaceuticals had previously identified potentially novel therapeutic uses for tiapamil in central nervous system (CNS) disease and recently filed for patent protection regarding the use of the compound. The Company plans to further develop tiapamil, and will select the most appropriate of several potential indications, prepare for Phase II clinical trials, and initiate out-licensing activities.

COURT ISSUES MARKMAN ORDER IN LITIGATION: Cabot Microelectronics Corporation (CCMP) announced that the United States District Court for the District of Arizona issued its patent claim construction, or "Markman" Order, in Cabot Microelectronics’ ongoing patent infringement litigation against DuPont Air Products NanoMaterials, LLC. In a Markman ruling, a district court hearing a patent infringement case interprets and rules on the scope and meaning of disputed patent claim language regarding the patents in suit. In the recently issued Markman Order, the Court adopted interpretations that Cabot Microelectronics believes are favorable to Cabot Microelectronics on all claim terms that were in dispute in the litigation. The litigation involves DA Nano’s manufacture and marketing of certain CCMP slurries that the Company believes infringe five patents owned by Cabot Microelectronics. The affected DA Nano products include certain products used for tungsten CMP. Cabot Microelectronics is seeking damages and injunctive relief against DA Nano in the litigation.

ANNOUNCES ACQUISITION: Ness Technologies, Inc. (NSTC) has signed a share purchase agreement to acquire 100% of the shares of Logos a.s., a privately-held, Czech-based leading IT services and consulting company. For the fiscal year ended March 31, 2008, Logos generated revenues of EUR29.7 million and was profitable. Logos has approximately 570 employees.

AWARDED 18.2M EURO MAINTENANCE AND REPAIR CONTRACT: Telvent (TLVT) has been awarded with the Maintenance and Repair of the Electronic Toll Registry System for the MTA Bridges and Tunnels E-ZPass System. The contract is valued at approximately 18.2 million euros. The contract involves the upgrade, enhancement, and maintenance of an E-ZPass electronic toll collection system, with electronic E-ZPass and manual collection lanes. Telvent will implement its Remote Operations and Maintenance System (ROMS), an operations and maintenance monitoring tool, which will improve maintenance and operations efforts, further increasing system availability for MTA Bridges and Tunnels E-ZPass patrons.