It is as if the Paulson bank bailout and Monday’s 11% run up in the market never happened.
The S&P closed today at 907.84, which is within three points of where it closed last Friday. In between, it got up to 1,042.75. For anyone still naive enough to look back with hope at how well things were going a year ago, the index’s 52-week high is 1,552,76. At this moment it feels like the market will never be back there again. Stranger things have never happened.
eBay (EBAY) was dead before it got started. The stock fell 13.6% during the regular session and came with a penny of its 52-week low at $15.01. Investors kept up their pessimism after hours, taking the stock down to under $14 before the company spoke a word about earnings
Analysts expected EPS to be flat at $.41. Estimates were for sales to hit $2.13 billion.
As it turned out, there was something to be excited about. eBay had third quarter revenue of $2.12 billion, up $228 million from the same quarter last year. Net income was $492 million, or $.38 per diluted share, and non-GAAP net income was $592 million, or $.46 per diluted share.
All that Wall St. cared about was the $.38 number
Jones Apparel (JNY) Profit warning. Drops to $9.26 from 52-week high of $23.08.
Liz Claiborne (LIZ) Pulled down by JNY news. Falls to $9.75 from 52-week high of $31.93.
Weyerhaeuser (WY) Tried to raise prices. Customers said "no". Sells down to $37.16 from 52-week high of $78.
Linear Technology (LLTC) Forecast weak for next quarter. Plunges to $20.53 from 52-week high of $37.77.
Yahoo! (YHOO) Wall St. hates internet and possible AOL deal. Down to $11.88 from $34.88.
Douglas A. McIntyre
Sumner Redstone is one of the CEO’s we voted as one of Wall Street’s most entrenched CEO’s in the past. It isn’t that he is so well respected or loved, but it is because he is dug in like a tick. In two different filings Redstone has disclosed sales of CBS Corporation (NYSE: CBS) and Viacom Inc. (NYSE: VIA-B). He isn’t out entirely and still has very large stakes, but it is hard to not wonder if Sumner Redstone’s grip and control over those entities isn’t going to be loosened up if he has to keep selling stock.
eBay (NASDAQ: EBAY) is set to release earnings after the close today. It is still hard getting used to this without Meg Whitman conducting the conference call, but that is just the way of change. Keep in mind that eBay just gave a shareholder event presentation last week and due to the slide in the stock they updated guidance.
Sirius XM (SIRI) CEO Mel Karmazin say he can get his long-term debt refinanced.
According to Reuters, "Sirius XM faces some $1.1 billion in debt in 2009. Of that, about $300 million comes due in February."
Wall St. seems to view it differently and is taking the other side of the bet. SIRI shares are down 5% today. In this credit market no one will touch debt in a company with a big operating loss, unless the coupon is 15%.
Douglas A. McIntyre
AMR Corporation (NYSE: AMR) has posted a net profit of $45 million for the third quarter, which generated earnings at $0.17 EPS. Be advised that this gain does include sale gains and other items. Non-GAAP losses were -$1.39 EPS and First Call had estimates at -$1.40 EPS. Revenues rose 8% from last year’s quarter to $6.4 billion, and First Call had estimates at $6.34 billion. Other revenues from fees and on-board sales rose 14.3% to $577 million. Some of of its metrics actually look pretty good, while others "not so much."
Good deeds should be their own rewards, but in the stock market that it not entirely true. Good earnings, especially in a harsh world, are supposed to yield shareholders something. In the perverse climate of suspicion that has enveloped the market for the last two days, doing good, doing well, means next to nothing.
Linear Technology Corporation (NASDAQ: LLTC) may be causing more damage to chips and technology component stocks than anything else this morning. The maker of high-performance linear integrated circuits showed that revenue increased 1% to a record of $310.4 million over the previous quarter’s revenue of $307.1 million and a 10% gain from a year earlier. Non-GAAP earnings were $0.53 per share, up $0.02 sequentially and $0.08 year-over-year.
Back in May, EnCana Corporation (NYSE:ECA) announced that it would split the company in two. One part would take the company’s oil sands properties and the other would retain the natural gas business. The oil-sands company was to be named Cenovus Energy. This morning EnCana announced that it was delaying the spin-off due to"the uncertainty and volatility in the global financial markets."
Atleast the company noticed.
Alpha Natural Resources (NYSE:ANR) has sold its majority interest in lime manufacturing plant in Kentucky and 17.6 million tons of coal that still needs to be mined. The after-tax gain from the sale of both properties is expected to be about $15 million.
Tomorrow is the day that Cleveland-Cliffs (NYSE:CLF) gets a new name,Cliffs Natural Resources, anticipating completion of its merger withAlpha Natural Resources (NYSE:ANR). When the merger was announced inJuly, it was estimated to be worth about $10 billion. It’s nowestimated to be worth about $4 billion.
The Charles Schwab Corporation (NASDAQ: SCHW) posted a 4% earnings drop down to $0.26 EPS, which is after a $0.04 item for previously disclosed charges. Revenues fell 3% from Q3-2007 down to $1.251 billion, but pre-tax profit margin rose 0.2% to $39.9%. First Call had estimates at $0.24 EPS and $1.28 billion in revenues. All in all, its core metrics are still holding up well even if Schwab’s clients are feeling the pinch.
Wells Fargo & Company (NYSE: WFC) is following Jamie Dimon’s lead this morning with better results than other banks. The only "AAA" rated bank posted $0.49 EPS vs. $0.41 estimates. Revenues were $10.38 billion versus $10.96 billion estimates. It is also still growing if you can believe it in this environment.
Even if people are feeling poor or are poor, they can still buy a soft drink. Coca-Cola (KO) proved that today with strong earnings. It is extremely good news for companies which sell extremely inexpensive goods to consumers. The best of it is that the ripples may even extend to low-end food chains like McDonald’s (MCD).
Coca-Cola reported third quarter earnings per share of $0.81, an increase of 14 percent versus the prior year quarter on a reported basis
JPMorgan has come out with some changes in its technology and imaging sector today. The firm wants to be defensive right now with steady revenue streams and steady margins. It is cautious on PC sales, printing, and servers.
Apple Inc. (NASDAQ: AAPL) and IBM (NYSE: IBM) were both raised to Overweight from Neutral.
The firm is positive on storage on a relative basis to other spots in tech right now. Hewlett-Packard (NYSE: HPQ) and EMC Corp. (NYSE: EMC) were also maintained overweight ratings.
PC-maker Dell Inc. (NASDAQ: DELL) was kicked while it’s down as shares were downgraded to Neutral from Overweight as it continues to struggle and lag. Lexmark (NYSE: LXK) saw its shares downgraded to Underweight from Neutral. NetApp (NASDAQ: NTAP) was downgraded to Neutral from Overweight.
Jon C. Ogg
October 15, 2008
JPMorgan Chase (NYSE: JPM) has just released earnings and Jamie Dimon is showing he is a better manager even than the most positive reviews have given him over the years. The banking giant made $0.11 EPS on $14.74 billion in revenues. First Call had estimates at -$0.21 EPS and roughly $16 billion in revenues.And the individual metrics are looking much better than peers.
Now that the government has done its best to address the credit and banking crisis by putting $700 billion into the American financial system, the economy faces what is likely to be a very long recession. It will almost certainly be deepened by falling home prices which have not found bottom. The loss of equity in housing, tight credit, and dropping corporate earnings virtually always lead to substantial layoffs across a number of industries. A recent survey by Workplace Options said that nearly 50% of US workers fear for their jobs
The early victims of a slowdown, especially when there has been inflation in fuel and other energy costs are almost always the auto and airline industries. Virtually every carrier has already cut its flights by 10% or more and laid-off thousands of people. Detroit has been going through a systematic downsizing for more than two years, cutting tens of thousands of positions. Daimler laid off more people this week and a GM (GM) merger with Chrysler could cost more jobs.
The federal budget deficit hit $455 billion for its September fiscal year. That is up $389 billion from the year before. The deficit will certainly get a lot worse. The bank bailout is not just expensive, it is not over. If housing prices continue to fall, write-offs for mortgage-backed paper and consumer loans will rise sharply.
Then, there is the matter of lost jobs. If unemployment goes to 8%, another two million to three million people could be out of work. The tax base will be eroded. IRS receipts will go down. Even taxing the wealthy won’t make up the difference unless the tax increases to 100% of their income.
Paulson’s plan to put $250 billion into nine banks, whether they want the money or not, is really supposed to do as much for financial firm customers as it is for the companies themselves. The theory behind the credit crisis is that no one would loan anyone else a dime for a cup of coffee. To make matters worse, Citigroup (C) would not loan money to Bank of America (BAC), even overnight.
Treasury’s plan may work in part. It could allow big banks to weather more write-offs as they have to mark down more securities, especially those tied to mortgages.
Intel (INTC) said it loved its past and hated its future. The Age of Romance must be over. These sentiments are supposed to be the other way around.
The world’s largest chip company said third quarter earnings were up 12%. But Intel CEO Paul Otellini said in a call with analysts that the financial crisis is "creating some signs of stress that may impact our business."
Microsoft’s Steve Ballmer made similar comments two weeks ago. Since he is usually in high spirits, that is an especially bad sign.
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