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Dell Inc. (NASDAQ: DELL) reports earnings after the close today and we’ll get to see if the solid numbers from rival Hewlett-Packard (NYSE: HPQ) are being seen at Dell during their turnaround as well. First Call has estimates at $0.36 EPS on $15.95 Billion in revenues. As far as what to expect ahead, the coming quarter is expected to be $$0.41 EPS and revenues are expected to be $16.7 Billion. For Fiscal January 2009, estimates are $1.59 EPS on $65.88 Billion in revenues. What is interesting is that since its last report, shares are up roughly 20%, and shares are up close to 35% from the April lows.
Monthly Archives: August 2008
Dell’s Stars Lined Up Into Earnings (DELL, HPQ)
Another Meaningless Internet Number: MySpace (NWS) Overtakes Yahoo! (YHOO) In Ad Views
The online research business has become so crowded that the firms jockey for position by posting nearly meaningless numbers. ComScore took its turn at releasing inane figures saying that advertising views at MySpace (NWS) had passed those at Yahoo! (YHOO). According to Reuters, Fox Interactive’s collection of sites, led by MySpace, drew 56.8 million advertising views in June, compared with Yahoo’s group of sites which had 53.1 million,
New Bank Write-Down From Auction-Rates (C)(WB)(MER)
The auction-rate fiasco is not over for banks. Having bought back about $55 billion of the paper, they are now faced with the reality that the bonds are only worth about $.80 on a dollar. The means the firms who were forced to take them off shareholder hands will probably have to account for $10 billion in losses.
Toyota (TM) Crashes, Again
Toyota (TM) has already cut its sales targets for its fiscal 2008 year. Now it is taking down its forecast for 2009. According to The Wall Street Journal, "Japan’s biggest car maker by sales volume said Thursday that it cut its world-wide sales outlook for 2009 to 9.7 million vehicles from its previous expectation of 10.4 million vehicles that it outlined a year ago."
The reality of the situation is that Toyota may never sell 10 million cars a year again. Ever.
When Will Starbucks CEO Howard Schultz Take $1 A Year?
When times were tough, Apple’s (AAPL) Steve Jobs and Chrysler’s Lee Iaccoca took salaries of $1. Starbucks (SBUX) has just announced that its management will forgo taking raises next year.
Since Starbucks shares have dropped from almost $40 to $16 in less than two years, the gesture seems like a fair one. It may not be of any comfort to the 12,000 people the coffee company fired earlier this summer, but they were sacrificed for better profit margins. It would be hard to find a better reason.
Apple (AAPL) iTunes And The Sherman Antitrust Act
"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal".–The Sherman Antitrust Act, 1890.
Apple’s iTunes is sort of the digital Standard Oil of the 21st Century. Its share of the music download business is breathtaking. The Wall Street Journal writes, "The store sells 90% or more of digital downloads in the U.S., according to people in the music industry."
Memo To The SEC: There Is Nothing Wrong With GAAP
The SEC is proposing that US companies give up the GAAP standard which they have used for financial reporting for decades. American public corporations would move to the International Financial Reporting Standards that are employed by a number of overseas firms now.
The thought behind the change is that investors would be better able to compare US companies with ones based outside the fifty states.
The action to adopt standards used for international company accounting is a shift in the wrong direction, According to the Forbes list of the 2000 largest public companies in the world, over 500 are based in the US.
How Did Imbeciles Come To Run Fannie Mae (FNM)?
One of the first things students get taught in business school is that it is a bad idea to replace senior management in the midst of a crisis, especially if those people have been around for a long time and seem to know what they are doing.
Fannie Mae (FNM) is in the middle of its own trouble, but it has had its problems for some time. Against the conventional wisdom, it dumped some of its top people.
Media Digests 8/28/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, Toyota (TM) cut its 2009 sales forecast by almost 7%.
Reuters reports that Fannie Mae (FNM) changed several of its top executives.
Reuters writes that Starbucks (SBUX) management will receive no raises next year.
Reuters writes that the CFTC will look into reports on the trading of oil futures.
Asia Markets 8/28/2008 (LFC)(PTR)
Markets in Asia were mixed.
The Nikkei rose .1% to 12,678. Asahi Breweries rose 2.2% to 2010. UNY rose 4% to 1172.
The Hang Seng fell 2.2% to 20,988. China Life (LFC) fell 1% to 29.55. PetroChina (PTR) fell 3.3% to 9.96.
The Shanghai Composite rose .3% to 2,350
Data from Reuters
Douglas A. McIntyre
The 52-Week Low Club 8/27/2008 (F)(NEXM)(CEGE)(AMLN)
Ford (F) Oil moves up. Drops to $4.25 from a 52-week high of $9.24.
Nexmed (NEXM) Drug trial problems. Falls to $.23 from a 52-week high of $.1.87.
Cell Genesys (CEGE) Drug trial problems. Plunges to $.69 from 52-week high of $4.67.
Amylin (AMLN) Deaths due to one of the company’s drugs. Dips to $19.92 from 52-week high of $51.10.
Douglas A. McIntyre
Apple (AAPL) iPhone Picks Up Ground On RIM (RIMM)
Apple’s (AAPL) iPhone is doing well in the consumer market, but it now appears to be picking up ground with businesses as well. According to the August ChangeWave survey of IT spending, 17% of respondents planning to buy a Blackberry, Palm (PALM), or iPhone said they would be purchasing the Apple product in the fourth quarter. That is up from 13% in the May poll.
RIM’s (RIMM) Blackberry continues to be in the lead with 79% of buyers planning to buy its products in the fourth quarter, but that is down from 82% in May.
A Tiny Ray Of Hope In Russia (BP)
In the midst of the military and political fiasco in Georgia, it would be easy to believe that Russia could withdraw from a number of contracts it has with the West.
It appears that Moscow is prepared to honor a deal which many observers believe that it controls through allies of the Kremlin, the arrangement behind the joint venture called TNK-BP. According to Reuters, "The crisis at TNK-BP, which produces a quarter of BP’s worldwide oil output, hit the headlines after BP accused the Russian side of using 1990s-style corporate raider tactics to grab control of the venture."
Oil in China: Producers, Up; Refiners, Down (CEO, PTR)
Two of China’s largest oil companies announced earnings for the first half of 2008 today. CNOOC Ltd. (NYSE:CEO), the country’s second largest producer, reported a sales increase of nearly 64% over the first half of 2007, and net profit growth of 89.3% over the same period. PetroChina (NYSE:PTR) reported an earnings drop of 38% compared with the first half of 2007.
24/7 Wall St. Most Overpaid CEO Of The Day: Cell Genesys (CEGE) CEO Stephen A. Sherwin, M.D
Cell Genesys CEO Stephen A. Sherwin, M.D made $1.3 million last year, with $577,500 coming from base salary. He did so well, in the eyes of the board, that his base was raised to $602,500. Who knows how well he will do with bonuses and perks.
CEGE blew up today. The company ended a clinical trial of its prostate cancer vaccine GVAX because patients who were treated with the vaccine were dying more frequently than those only given a standard treatment.
China Mobile (CHL) Success Likely To Be Short Lived
China Mobile (CHL) announced extraordinary results for the first half and it is not likely to repeat them in the future.
CHL’s 54.8 billion yuan ($8 billion) in net profit in January-June compared with 37.9 billion yuan in the first half of 2007. Revenue rose 18% to $28.7 billion.
Top Pre-Market Analyst Upgrades & Downgrades (EXPO, EHTH, INCY, RIGL, WBD, AMR, AMLN, BKUNA, NGG)
It is getting pretty thin in analyst coverage as we get closer to Labor Day, but these are the upgrades and downgrades we are seeing this Wednesday morning:
- Exponent (EXPO) Started as Buy at SunTrust.
- eHealth (EHTH) Started as Buy at Merriman Curhan Ford.
- Incyte (INCY) Started as Buy at Citigroup.
- Rigel (RIGL) Started as Buy at Citigroup.
- Wimm-Bill-Dann Foods (WBD) Raised to Buy at UBS.
- AMR (AMR) Cut to Sell at Citigroup.
- Amylin Pharma (AMLN) Cut to Neutral at Baird.
- BankUnited (BKUNA) Cut To Sell at Stifel Nicolaus.
- National Grid (NGG) Cut to Equal Weight at Lehman.
Jon C. Ogg
August 27, 2008
Conoco (COP) Exits Gas Station Business: A Lost Opportunity
Conoco (COP) is selling its gas stations, following Exxon (XOM) out the exit door. Perhaps there is a greater fool; a company that thinks it can make money on a business that Conoco believes is dying.
According to The Wall Street Journal, “ConocoPhillips is expected to sell the remainder of its 600 company-owned gasoline stations to closely held PetroSun West LLC for $800 million.”
Refining and selling gas and diesel has become the ugly end of the oil business. Crude comes off the ships and through the pipes at $120 a barrel. The refined products are so expensive that consumers and businesses cannot afford them. Gas at $4 may seem high, but it is not profitable for Big Oil.
Nokia(NOK): The Best Chance To Chase The Apple (AAPL) iPhone
The new Apple (AAPL) has plenty of challengers. Samsung has made the “Instinct” for Sprint (S). Early word is that it is selling well. T-Mobile will be the first cellular provider to come out with a handset powered by the Google (GOOG) Android mobile operating systems. RIM (RIMM) will launch new versions of its Blackberry aimed at the consumer market.
The world’s largest handset company, Nokia (NOK) refuses to be bested. Its entries into the high-end handset market will show up this month. The new products will be able to access the internet through fast wireless 3G networks and will have multi-media capacity for music and video.
A Coup De Grace For The Banking Industry
Aside from bad mortgage-backs securities bets, a dying LBO business, auction rate securities, and deteriorating credit card debt, the banks and brokerages may be up against their largest challenge yet. They have to pay back or roll over hundreds of billions of dollars of debt between now and the end of the year.
Fannie Mae (FNM) and Freddie Mac (FRE) have to refinance $223 billion in paper by the end of September, but they are hardly alone. As money center banks and brokerages prepare to manage maturing debt during the second half, they will be faced with much higher interest rates. The credit crunch has done too much to drive the appetite for risk out of the market. Some of the larger financials could see their annual debt service rise by several billion dollars.
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Today’s top tickerspy Indexes Domestic Telecom ... +2.6% Stem Cell Stocks +2.3% Pain Management S... +2.1% Ethanol and Biofu... +1.9% Savings and Loan ... +1.8% 
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