Daily Archives: May 7, 2008

52-Week Low Club (AGN, WTR, CTB, ISLE, LPSN, OPTT, SGIC, SNCR)

Today turned out being an ugly day, but there were many stocks that fell sharply to new 52-week lows all on their own without help from the market working against them.

Allergan Inc. (NYSE: AGN) hit a new low today despite showing earnings growth that beat expectations and announcing positive guidance. Shares were at $2.31 after hitting a low of $51.00 intraday. The 52-week range is $52.26 to $70.40. Apparently it takes more than good earnings to boost the health of this healthcare stock.

Aqua America Inc. (NYSE: WTR) missed earnings estimates and suffered adowngrade by Wachovia this morning.  So much for water being the safestinvestment around.  Shares are sitting at $17.42 in the final minutestoday; prior 52-week range of $17.75 to $26.62. This water companyprobably needs a different beverage tonight after today.

Cooper Tire & Rubber Co. (NYSE: CTB) needs a tire change after first quarter income reported this morning dropped. Shares are sitting at $12.72 in the final minutes today. The 52-week range wass $12.85 to $28.50.

Isle of Capri Casinos Inc. (NASDAQ: ISLE) was down to $6.42 in the final minutes today. The 52-week range is $6.43 to $26.03. Who says the house always wins?

LivePerson Inc.’s (NASDAQ: LPSN) weak quarter one earnings and outlook is pushing this stock down to $2.51 compared to a 52-week range of $2.68 to $6.94.

Ocean Power Technologies, Inc (NASDAQ: OPTT) hitting yet another 52-week low today. Shares for this ocean wave renewable power generator are trading at about $8.25 in the final minutes today compared to a prior 52-week range of $8.56 to $19.75. So much for green always being the new gold.  This is actually a post-IPO low.

Silicon Graphics Inc. (NASDAQ: SGIC) dropped after third quarter losses widened. A contract with NASA to supply the next superconductor isn’t enough to pull this stock up. Shares are trading at $7.62 late in the day compared to a 52-week range of $8.00 to $29.73.

Synchronoss Technologies, Inc. (NASDAQ: SNCR) took a massive hit after they released guidance that the company is concerned with revenues by Apple’s (NASDAQ: AAPL) iPhone. Tuesday, the company reported a 17% profit growth at $0.16 EPS on $29.1 million in revenues, meeting estimates; but guidance stank the place up.  Shares were down over 43% to $12.92 in late-day trading on extremely high relative trading volume. The 52-week range was $15.15 to $48.03.

Jon C. Ogg
May 7, 2008

Posted on: May 7, 2008 – 2:50 pm in HI/LOW, , , , , ,

CurrencyShares ETF Launch: Russia, South Africa, Singapore, Hong Kong

Rydex Investments has filed to launch 4 new CurrencyShares platforms. These platforms will allow traders and investors to purchase “Baskets” for the specific currency. Therefore, the share price of each trust will reflect the market value of the specific currency compared to the USD. Shareholders will earn an income if the specified currency appreciates compared to the USD.

Be advised that these tickers below do not look set because the "FX" prefix on each is base part of the ticker and a seperate letter has to be added on the end.  The four new platforms include:

CurrencyShares Russian Ruble Trust (NYSE Arca: FX [  ]) (full filing)
            Each share is worth 2,000 Rubles
CurrencyShares Hong Kong Dollar Trust (NYSE Arca: FX [  ]) (full filing)
            Each share is worth 1,000 Hong Kong Dollars
CurrencyShares South African Rand Trust (NYSE Arca: FX [  ]) (full filing)
            Each share is worth 1,000 South African Rands
CurrencyShares Singapore Dollar Trust (NYSE Arca: FX [  ]) (full filing)
            Each share is worth 100 Singapore Dollars

The acting Trustee is The Bank of New York. JP Morgan Chase Bank, N.A., London Branch will be the Depositor for the Trust. Each platform will initially issue approximately 150,000 shares at various price values as listed below.

Rydex has already launched 8 similar Trusts for the following currencies:
Euro (NYSE Arca: FXE), Japanese Yen (NYSE Arca: FXY), Mexican Peso (NYSE Arca: FXM), Australian Dollar (NYSE Arca: FXA), Swiss Franc (NYSE Arca: FXF), Canadian Dollar (NYSE Arca: FXC), British Pound Sterling (NYSE Arca: FXB), and the Swedish Krona (NYSE Arca: FXS). As the dollar has largely depreciated compared to many currencies over the past few years, the shares prices for these Trusts has steadily increased since their initial offering.

Rachel Lopez
May 7, 2008

Posted on: May 7, 2008 – 11:31 am in ETF

Will Productivity Gains Boost Layoffs?

This morning was strange on the economic number cycle as far as firstquarter worker productivity is concerned.  The Labor Departmentreleased a figure of non-farm business worker productivity measured asper-hour output being up by +2.2%.  Economists’ estimates were down at+1.5%, which is actually already pretty high.  Manufacturing saw the biggest gain with productivity up 4.1%, with thenon-durable goods manufacturing productivity being up +7.0% and durablegoods manufacturing productivity up at +2.3%.

Simultaneously, labor cost pressures were less at an increase of +2.2%,lower than a +2.8% gain in Q4-2007.  Worker hours were also down acrossthe board, in all major sectors. 

But one thing stands out here that is very obvious.  If employees areworking fewer hours, wages are no longer rising as fast, andproductivity staying this high, everything here is pointing to theability for companies to make more layoffs.  In theory, a 2%productivity gain and a 2% labor cost rise would allow for roughly a 1%additional cut in workers with the company able to maintain roughly thesame cost structure on a static basis.  The world isn’t static, but that is a general estimate.

If this 1% additional layoffs came, it would be far short of the 7million workers in the U.S. that we pondered could get laid off ifthings get extremely worse from current levels.  At some point it getsharder and harder to get more and more milk from the same cows, but sofar that hasn’t occurred.

Jon C. Ogg
May 7, 2008

Posted on: May 7, 2008 – 11:15 am in Economy

CEOs Who Don’t Get Out Often Enough, And Some Who Do

The hallmark of some of the most successful companies over the last fifty years is that the CEOs spent a great deal of their time with customers and at company locations around the world. Probably the two most famous travelers were Willard Marriott and Sam Walton. At one point, Walton visited hundreds of stores a year. If these CEOs wanted to know how they were doing with the consumers who spent money with them, they did not have to check with anyone else in management.

Which CEOs get out often enough and which don’t? Here is the 24/7 Wall St. 2008 list:

Those who should get out more often:

Eddie Lampert, chairman of Sears (SHLD), is pretty busy at his hedge fund. Sears and K-Mart have fallen apart over the last year. Lampert did show up at the annual meeting. He spent most of his time talking about cost cuts and stock buy-backs. A check of Sears PR shows that his comments about his stores and quality of merchandise are very, very rare. Maybe that is because billionaires don’t spend much time at discount chains.

Howard Schultz, CEO and founder of Starbucks (SBUX) is a great one for writing memos about what is wrong with his stores. The most recent letters from headquarters in Seattle were about the company missing earnings. Schultz puts out a series of PRs called the company’s Transformation Agenda Communications. 24/7 has visited a lot of Starbucks over the last year. No one has seen Howard. Maybe he should stop in more often and find out why his same-store traffic is so bad.

Alan Mulally of Ford (F) spends a lot of time talking about downsizing and his new crossovers. The most recent news out of the car company has to do with its commitment to human and labor rights. Tell that to all the people who have been sacked at Ford. If Mulally spent some time with farmers and construction workers he might find out what he could do to help sales of his flagship F-150 pick-up. 24/7 asked some dealers if they had ever heard of Mulally kicking the tires at dealers. None of them even know what he looks like. Sales at Ford could not be running much worse than they are now.

Julian Day at RadioShack (RSH) has a stock that trades near its 52-week low. He also has 4,500 stores. Based on how things are going, his potential customers are going into Best Buy. RadioShack’s website makes a big deal of the fact that Mr. Day was part of the turnaround at Sears and Kmart. That did not turn out too well. One of the company’s recent PRs was about the fact that RadioShack stores are helping consumers make the transition to digital television. Maybe Day should spend more time with customers going over how to "obtain a DTV converter box that will allow an analog television to receive digital signals."

Michael Dell of Dell (DELL) has started selling PCs in retail outlets. The old business model of using the internet and phone to order Dells was not working well enough. Dell does get around the world and has been to Asia and the Middle East to set up new resale chains, but that is not the same as walking through the local Wal-Mart to find out why customers are buying HP or Lenovo PCs instead of his. He did give a nifty speech on "green IT" recently. That should bring people into the Dell retailers.

Joe Moglia of TDAmeritrade (AMTD) may want to hit the sidewalks. His firm fell behind companies like Schwab and Scottrade in the JD Power discount broker rankings. The company has over 100 locations. Schwab’s stock has also done better in the last year. If he can’t get out, perhaps he could take orders from investors in the call center.

Sprint (S) had some great news. Its CEO Dan Hesse put together a deal with Clearwire (CLWR), Google (GOOG), Intel (INTC), Comcast (CMCSA), and Time Warner Cable (TWC) to build a national WiMax network. Unfortunately, many Sprint customers still hate the company. Sprint finished last in the JD Power wireless customer care ratings. It also finished last in the retail sales satisfaction survey. It is nice that the wireless company has put together a plan for its future, but, in the present, customers are walking out the Sprint doors at a dizzying pace. Hesse may want to get out in the field and find out if he can staunch the flow.

Palm (PALM) CEO Ed Colligan better hit retail outlets which carry his smartphones today if he can catch a ride. 24/7 visits to AT&T mobile stores indicated that the RIM (RIMM) Blackberry and Apple (AAPL) iPhone are selling like mad but no one will touch the Palm products. This company is falling apart at the seams. Colligan may want to move from store to store and pitch the product himself. It’s that desperate.

A lot is amiss at Target (TGT). Its stock is down 10% in the last year. Shares of its rival Wal-Mart are up close to 20%. CEO Gregg  Steinhafel may want to do what Sam Walton did and have rallies in a couple of stores a day. March comparable store sales at the retailer fell 4%. The company did sell some credit card receivables to JP Morgan (JPM) and that may have been a good use of management time, but poor sales are not going to be offset by smart financing packages.

And, those who must be getting out enough:

Wal-Mart (WMT) may be one of the best turnaround stories in the last year. Same-store sales are actually running up, which is rare in the industry. Sam Walton invented the "CEO store tour". Does current CEO Lee Scott get around as much? No one could match Walton’s travel schedule.  But, you can find video of Lee at a store visit on the Wal-Mart site. And, the store managers and customers are treated like royalty. They are quoted in the company PRs more than Scott is.

Apple (AAPL) CEO Steve Jobs may not visit retail outlets or Apple stores, but don’t tell that to the people who stand in line for hours to get an iPhone or the latest Mac. The Apple faithful believe that Jobs is a deity who lives in every product and outlet. That seems a bit "Zen" but why try to convince people otherwise. He gets out enough "in spirit."

Mark Hurd of Hewlett-Packard (HPQ) has helped build the king of store-sold PCs. That has helped the company be the largest seller of computers in the world and kept them high on customer satisfaction surveys. HP was recently named one of Wal-Mart’s "Supplier of the Year". Why? Over the course of 2007, Wal-Mart’s sales of HP printer and ink products grew at three times the rate of the industry, and profit in this segment doubled over the prior year. Hurd has to be spending a lot of time on retail. No one gets that good at it otherwise.

James Skinner of McDonald’s (MCD) has been beating the competition to within an inch of its life for two years. McDonald’s is growing faster than the industry, which is hard when you are the largest player. The company has been launching products which carefully target the breakfast and coffee crowd and has been "spot on" when it comes to competitive pricing. Skinner’s picture at the McDonald’s site shows him standing in one of his stores, not sitting behind a desk. If he is not in that store on a regular basis, he certainly knows what goes on there.

Charles Schwab of Schwab (SCHW) may or may not spend time in the company’s retail offices. He actually does something better. He puts his name on almost every piece of marketing the company does. "Ask Chuck". Schwab makes sure every customer knows it is his company, they are investing at a firm where his is responsible because his name is on the door. He even puts a letter online telling people why he is on the side of the investor. Hokey. Maybe. But, it works.

James Sinegal of CostCo (COST) isn’t just in the stores. After a fashion, he is the stores. He started the company in 1983. According to the company, he tries to visit every one of the CostCo stores at least once a year. He gets the gold medal for CEOs who spend time in the field.

Douglas A. McIntyre

Posted on: May 7, 2008 – 9:47 am in Management Change, , , , , , , , , , , , , , , , , , , , ,

Can Synchronoss Really Blame iPhone For Its Woes? (SNCR, AAPL, T)

Synchronoss Technologies Inc (NASDAQ: SNCR) looks now like it will be one of the worst seen earnings moves of popular companies in all of this earnings season.  The outsourced device activation provider posted $0.16 non-GAAP EPS and revenues were $29.1 million. 

The company lowered next quarter guidance to $0.10 to $0.11 EPS on revenues of $24 to $25 million.  First Call had estimates of $0.19 EPS and $35.2 million in revenues.

After going back over everything, the company’s weak forecast is being largely attributed to declining revenue from activating Apple Inc’s (NASDAQ: AAPL) iPhone.  The reason isn’t iPhone sales, it is because of unlocked iPhones being hooked up to other carriers where Synchronoss doesn’t get the "activation fee" it gets through AT&T.  The company disclosed that 72% of last quarter’s revenues came from AT&T (NYSE: T), so you can see where the company needs to diversify its customer base much greater.

To try to stave off bad news, the company announced it would repurchase about $25 million worth of stock.  The company now is calling 2008 a transition year with suffering margins as it will invest to support the launch of new strategic customers and transaction types.  It expects 2009 (and beyond) to see the rewards.  The carnage is bad. Really bad.  Shares are down over 40% to $13.20 this morning on almost ten-times normal volume in just 30 minutes.  The prior 52-week trading range was $15.15 to $48.03.

Some may accept that this is really just from the single event of iPhones being unlocked.  But what is obvious as a heart attack is that the company needs to go line up more and more activation deals.  Then it needs to go out and figure out different revenue streams besides activations. This "outside event" won’t be enough to stave off the wave of class action lawsuits that will come by the end of this week (if not sooner).

Have you ever noticed how many of these companies that see huge gains as a result of being a supplier or beneficiary to one of the new hot Apple products end up taking severe haircuts and then staying down for the count?  We have seen this over the years.  Unfortunately, for all of these that fall from grace….. it seems like when you score a huge win from being tied to Apple that you better enjoy it while it lasts.

Jon C. Ogg
May 7, 2008

Posted on: May 7, 2008 – 9:07 am in Earnings, Earnings Warning, Wireless, , ,

Regenerx Looks To Boost Liquidity Via Offering (RGN)

REGENERX BIOPHARMACEUTICALS, INC. (AMEX: RGN) filed for a secondary offering late yesterday to sell some $60 million in a secondary offering of stock and warrants.

Its fully diluted market cap on last look was $92.8 million.  As of April 30, 2008, the aggregate market value of its outstanding common stock held by non-affiliates was approximately $48,048,508, based on 51,553,527 shares of outstanding common stock.  Approximately 27,456,290 shares are held by non-affiliates, and a price of $1.75 based on the closing sale price of the common stock on April 30, 2008.

This biotech is focused on the discovery and development of novel molecules to promote tissue and organ repair.  The company intends to use the net proceeds from the sale of securities to further develop its clinical trials and for general corporate purposes.

You can join our open email distribution list to hear about other secondaries, IPO’s, spin-offs, and other special situation previews.

Jon C. Ogg
May 7, 2008

Posted on: May 7, 2008 – 8:37 am in Biotech, Secondary Offering,

IPO Withdrawal: Harry & David

Harry & David Holdings, Inc. has withdrawn the company’s IPO Filing registration statement and all related exhibits.

The current climate is being blamed for the IPO withdrawal: "…..the Registration Statement has been abandoned due to, among other things, market conditions."

Harry & David Holdings, Inc. was formerly Bear Creek Holdings.  The company is a multi-channel retailer and producer of gift-quality fruit, gourmet food products and other gifts that are marketed under the Harry and David brand. The products include Royal Riviera pears, Fruit-of-the-Month Club, Tower of Treats gifts, and Moose Munch caramel and chocolate popcorn snacks.

You can join our open email distribution list to hear about other secondaries, IPO’s, spin-offs, and other special situation previews.

Jon C. Ogg
May 7, 2008

Posted on: May 7, 2008 – 7:58 am in IPOs

Secondary Offering Weighs on Itron (ITRI)

Itron Inc. (NASDAQ:ITRI) announced after yesterday’s close that it will sell 3.4 million shares of common stock in an at the market public secondary offering.

Yesterday’s closing price was $94.47 per share, so gross proceeds will be in the vicinity of $321 million.  Itron said it plans to use $250 million of the proceeds to repay a portion of  outstanding non-convertible debt and the rest will be used for general corporate purposes.

While this will effectively be a spot secondary in result, this is under an existing shelf filing.  The funds are expected to close on or about May 12, 2008, so shares should be sold today.  Itron produces meters that read electricity, gas, water, and heat usage for utilities; and various other associated metering products for residential, commercial and industrial, and transmission and distribution customers.

Goldman, Sachs & Co. is the sole underwriter in this offering.

Itron’s market cap was $2.9 Billion as of yesterday and as of December 31, 2008, the company had $1.578 Billion in long-term debt and total liabilities were carried as $2.29 Billion.

You can join our open email distribution list to hear about other secondaries, IPO’s, spin-offs, and other special situation previews.

So far, shares are down a little more than 2% in pre-market trading at $92.47.

Jon C. Ogg
May 7, 2008

Posted on: May 7, 2008 – 7:43 am in Secondary Offering, Utilities,

Top 10 Pre-Market Analyst Calls (WTR, BYD, CNET, CTRP, GOOG, SOLD, NITE, NYX, SOHU, VDSI)

These are ten of the top analyst calls we are focusing on this morning:

  • Aqua America (NYSE: WTR) cut to Market Perform at Wachovia.
  • Boyd Gaming (NYSE: BYD) started as Sell at Banc of America.
  • CNET (NASDAQ: CNET) started as Buy at Kaufman Bros.
  • Ctrip.com (NASDAQ: CTRP) cut to Neutral at Piper Jaffray.
  • Google (NASDAQ:    GOOG) started as Buy at Kaufman Bros
  • Housevalues (NASDAQ: SOLD) raised to Buy at Cantor Fitzgerald.
  • Knight Capital Group (NASDAQ: NITE) cut to Equal Weight at Lehman Brothers.
  • NYSE Euronext (NYSE: NYX) raised to Buy at Deutsche Bank.
  • Sohu.com (NASDAQ: SOHU) cut to Hold at Deutsche Bank.
  • VASCO Data Security (NASDAQ: VDSI) raised to Buy at Jefferies.

Jon C. Ogg
May 7, 2008

Posted on: May 7, 2008 – 7:01 am in Analyst Calls, , , , , , , , , ,

OPEC Will Drive Down Oil Prices

The operating theory of most oil analysts and economists is that OPEC will let prices go up and up. Nothing could be further from the truth.  Goldman Sachs has said oil could spike to $200 a barrel sometime in the next two years, but that won’t happen.

Oil is now at $120 and on its way up. The kings and princes in Saudi Arabia and Dubai are adding to their wealth at the rate of tens of billions of dollars a year. Their plan has been to hold demand and accuse speculators and the dollar of pushing up prices. They don’t want to discuss demand increasing in China and the emerging markets and slower production from big exporters like Russia, Mexico, and Venezuela.

The ministers of OPEC are greedy, as they should be, but that are not boobs or buffoons. The know that there is a tipping point when oil prices will move inflation from the category of concern to the column of disaster. They know what inflation can do. They help create the last big wave in 1973. That also increased unemployment to over 8% in the US and worse in other developed countries.

A real global recession is no better for OPEC than it is anyone else. The cartel wants fairly even consumption. Spikes up and down are not suited for a systems with fixed production, shipping, and refinery operations. The current infrastructure is not set up for big swings in oil use.

So far, the economy has favored OPEC. No major country has fallen into deep recession. Inflation is more a concern in China and India than in the US, but their GDPs are growing faster meaning that they can more easily absorb the costs, at least for now. An idle oil infrastructure is expensive to maintain.

The tipping point. It may not come at $120, but somewhere North of that, gas moves to $5 very quickly, It was $3 late last year. That affects China as much as the US. The central government in the world’s most populated country can underwrite bringing in $100 oil and pushing it out of refineries at sub-market prices for oil and diesel. It keeps China’s transportation network moving. It feeds the 10% GDP growth driven by exports. But, what happens when other economies slow and exports are harder to come by? That also makes it harder for the Chinese government to come by the money to process oil on the cheap.

In the US, inflation is already robbing the general population of capital it needs for basics. Gas plus mortgage costs have eroded consumer spending. If unemployment moves up, the cart falls over and a recession could become deep and long.

OPEC’s machinery gets broken if oil demand takes a sharp plunge. If oil prices move up another 10% to 15%, the odds of that happening go higher geometrically

Douglas A. McIntyre

Posted on: May 7, 2008 – 5:17 am in Oil & Gas

Take-Two (TTWO): Time For Electronic Arts (ERTS) To Walk

It looks like Take-Two Interactive (TTWO) will sell $500 million of its new game "Grand Theft Auto IV" the first week that it is on the market. That is better than most expectations. It will help the company make the case that the buy-out offer larger rival Electronic Arts (ERTS) has made is too low.

It cannot be said that the news is not good for TTWO. According to The New York Times "The company is expected to report it sold six million copies of the graphically violent game, 3.6 million of them on the first day."

Electronics Arts has offered $25.74 per share for Take-Two. The company’s stock trades about a $1 below that. The good news may push it up some.

Take-Two traded at just above $17 before ERTS made its offer. The most curious thing about the bidding dance is that no other company has come to the table with an offer. Take-Two does not fit well with any other company. Electronics Arts can make TTWO worth $25 or so. That does not appear to be the case for anyone else.

The M&A mavens learned something from Steve Ballmer this weak. Walking away from a bid when the prey has no other real options can be a huge advantage. He did it with Yahoo! and dropped the portal’s price by 15% in one day. All that is holding Yahoo!’s shares up is the hope that Microsoft might come back.

Electronic Arts has seen the "Grand Theft Auto IV" numbers. TTWO will take them as an excuse to ask for a higher price. If EA management has any insight, they will walk away this week and watch the Take-Two stock drop to $20. Then they can start negotiations again on a more reasonable basis.

Douglas A. McIntyre

Posted on: May 7, 2008 – 4:51 am in Mergers and Buy Outs, , , ,

Sprint & Friends: Revenge Against The Phone Companies

Sprint (NYSE: S) was dead and being lowered into the grave when the big firms which really hate the phone companies came in and exhumed it  At this point Verizon Wireless and AT&T (T) are the hegemonic players who have locked up cellular service in the US. Between them, they have 130 million subscribers. Their customer bases are rising. Sprint’s is not. Their profits are spectacular.

Dislodging leaders from the high ground takes more than a modest assault. Sprint would not have been able to do it on its own. Bring on Google (GOOG), Intel (INTC), Comcast (CMCSA), and Time Warner Cable (TWC). They will put over $3 billion into a joint venture between Sprint’s broadband operation and WiMax start-up Clearwire (CLWR).

Sprint is actually a bit player in the new venture. If it did not exist, the companies supporting the new plan would have to have created it. Sprint is in on the deal because it is convenient to use their current WiMax plan and customer base as a vehicle to get at the two largest cellular providers.

The new alliance is a real problem for Verizon Wireless and AT&T. They have been about to bundle cellular service with their landline, TV, and broadband products. For crying out load, one of them even has the Apple (AAPL) iPhone.

Google doesn’t have much use for the iPhone. They want a G-Phone which runs their software. Now they can run it off the new WiMax wireless broadband network which they are helping to build. It is a much cheaper alternative than buying spectrum from the FCC at a price of $4 billion. It gets them a home for their handset-based operating system, Android.

Comcast and Time Warner get some revenge against their telecom rivals for coming into their backyards with fiber TV service. Intel (INTC) is putting money in because it wants to sell chips for WiMax devices.

The next generation of wireless broadband will make the current 3G deployments seem very slow. Verizon and AT&T are not far along in articulating and building out their technology to attack this market. That give the WiMax program an important head start.

Sprint did not do much other than being in the right place at the right time. Now it will be the backbone of the first real assault on the national leadership that the phone companies have in the cellular business. The new investors are motivated by profit, and they are motivated by vengeance. It is a mix which should make the thing work.

Douglas A. McIntyre

Posted on: May 7, 2008 – 4:39 am in Telecom, , , , , , ,

Wall St. Misreads Disney (DIS) Results

Disney (NYSE: DIS) certainly did well in the first quarter. Walt Disney himself would have been proud.

Revenue at the entertainment company moved up 10% to $8.71 billion. EPS rose 35% to $.58.

Wall St. opened the champagne and passed around the caviar. The Disney theme park business, which analysts view as a proxy for consumer spending, posted a revenue increase of 11% to $2.725 billion.

Of course, no one bothered to read the fine print. Easter moved into the first quarter this year. Last year it was in the second. No matter. Nice jump in sales anyway.

The total increase in Disney theme park revenue was well under $300 million.Given the shift in Easter, the number was probably closer to flat. That should indicate that consumer spending is at least OK, but only first class fools would think that is true.

Going to Disney Land probably costs most people a few thousand dollars. Id done completely on the cheap, it may be less. For Dad and Mom and two kids, the plane tickets must be over $1,000. Some people drive and save some money. Hotel rooms at the resorts are probably a couple of hundred dollars a night. The hot dogs and drinks in the parks are some of the most expensive in the world.

The Disney website shows a three-day pass to Disney Land is about $150 per person.

All of this is a long-winded way of saying that trips to the Disney resorts are not something the average man on the street can afford these days. With gas close to $4 a gallon, airlines raising ticket prices to stay out of Chapter 11, and people worried about their jobs, the folks going off to see Mickey are probably well-off compared to most families.

Take a look at the guy going to Disney Land. He drive a $35,000 car. He and his wife both work. He has on a Ralph Lauren shirt. He even tipped the doorman at the hotel.

He is not the guy economists are worried about.

Douglas A. McIntyre

Posted on: May 7, 2008 – 4:19 am in Earnings,

Media Digest 5/7/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Cisco (CSCO) has a good quarter but was cautious about the future.

Reuters reports that Sprint (S) and Clearwire (CLWR) will announced a $12 billion project for national broadband service.

Reuters writes that Paulson thinks the markets are emerging from their crunch.

Reuters reports that the Fed will seek to pay interest on bank reserves.

Reuters writes that one of the Fed’s members said inflation is having a corrosive impact on the economy.

The Wall Street Journal reports that the West is concerned about Russia’s new sovereign wealth fund and where it may try to invest.

The Wall Street Journal writes that analysts are now predicting $150 oil which would drive gas prices to $4.50.

The Wall Street Journal writes that Disney’s (DIS) results defied the economic slowdown.

The Wall Street Journal reports the Countrywide (CFC) promised to improve its practices as its testified before Congress.

The New York Times writes that Take-Two (TTWO) probably sold about $500 million of it Grand Theft Auto IV game in the first week it was out.

The FT writes that Dubai will begin to invest in emerging markets due to concerns in the West that its fund may want to influence policy in companies in which it invests.

The FT writes that Goldman predicted oil could move above $200.

Bloomberg writes that Countrywide is pulling home equity loans in Las Vegas.

Douglas A. McIntyre

Posted on: May 7, 2008 – 2:46 am in Press Digest, , , , , ,

Asia Markets 5/7/2009 (LFC)(SNP)

Markets in Asia were mixed

The Nikkei moved up .4% to 14,102. Mazda was up 2.8% to 472. NEC was up 4.9% to 535.

The Hang Seng fell 2.4% to 25,638. China Life (LFC) was off 3.8% to 33.90. China Petroleum (SNP) was down 4.3% to 8.15.

The Shanghai Composite dropped 4.1% to 3,579.

Data from Reuters

Douglas A. McIntyre

Posted on: May 7, 2008 – 2:28 am in International Markets, ,