21 – October – 2008 – 24/7 Wall St.

Daily Archives: October 21, 2008

Broadcom Coming Ahead of Peers (BRCM, QCOM, TXN, INTC)

Broadcom Corp. (NASDAQ: BRCM) has managed to do something that other chip outfits have not been able to manage this quarter by actually beating estimates. Non-GAAP EPS was $0.54 and revenues were $1.298 billion, while First Call estimates were $0.44 EPS and $1.27+ billion in revenues. Even though the company warned of lower profit margins ahead, there are many things that make this a very positive call. At least, compared with its rivals.

Posted on: October 21, 2008 – 4:56 pm in Earnings, Semiconductor, BRCM, INTC, QCOM, TXN

Apple (AAPL): Market Gods Angered By Guidance

The market did not expect much from Apple’s (AAPL) earnings. The shares closed the regular session off 7% to $91.49. It got even worse. After hours, the stock was off again by as much as 3% on weak guidance.

For the Q4, the Street expected $1.11 per share in earnings on sales of $8.05 billion. For the fiscal first quarter ending December, analysts looked for Apple to forecast $1.65 on sales of $10.57 billion. For all of fiscal 2009 ending next September, the average estimate was for $5.73 on sales of $38.79 billion, according to Barron’s

As it turns out, Apple posted revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share. This compares with revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, in the year-ago quarter.

Posted on: October 21, 2008 – 4:14 pm in Earnings, AAPL

Yahoo! (YHOO): Bad, And A Lot Of People Let Go

The market took Yahoo! shares down 6% in the regular session ahead of earnings. For the third quarter, analysts expected Yahoo to post earnings of $.88 on $1.37 billion in net revenue, according to consensus estimates from FactSet Research. That compares with earnings of $.11 and net revenue of $1.28 billion in the same period last year.

As it turned out, revenue excluding traffic acquisition costs was $1,325 million for the third quarter of 2008, a 3 percent increase compared with $1,283 million for the same period of 2007. Net income was $54 million, or $.04 per share, compared with $151 million, or $.11 per share, for the same period of 2007.

Posted on: October 21, 2008 – 3:43 pm in Earnings, YHOO

Yahoo! Earnings Play Second Fiddle To Other Issues (YHOO, GOOG, MSFT, TWX)

Yahoo Inc. (NASDAQ: YHOO) is set to report earnings after the close. First Call has its Q3-2008 estimates at $0.09 EPS and $1.37 billion in revenue. While earnings would seem to be the main focus, there are many side-bar items to keep in mind.

Posted on: October 21, 2008 – 11:16 am in Earnings, Internet, GOOG, MSFT, TWX, YHOO

Is Citigroup (C) The Exception Or The Rule?

Goldman Sachs repeated its opinion that Citigroup (C) is a "sell" and probably would not make a cent until late in 2009. Goldman claims that credit markets are too tough for Citi to make a decent run at getting its write-offs behind it.

Citi’s balance sheet may not look entirely different from those of several other money center banks and brokerage firms. Most made the same risky investment in mortgage-related paper and LBO loans. Most face sharp drop-offs in their underwriting and M&A businesses.

Posted on: October 21, 2008 – 9:44 am in Banking, BAC, C, MER, MS

Ben Bernanke Still Misses the Point

By John Tamny RealClearMarkets

Writing about former Fed Chairman Arthur Burns in his 1998 book, Nixon’s Economy, economic historian Allen Matusow noted that Burns "had no fixed monetary principle of his own, except a determined eclecticism that translated into unsteadiness of purpose." Though he fought against the suspension of the Bretton Wood’s world-dollar standard, in the end Burns was "too ready to sacrifice clarity for surface harmony in the policy directives of the Federal Open Market Committee."

Sun Microsystems, Still Setting in the West (JAVA)

Sun Microsystems Inc. (NASDAQ: JAVA) just cannot seem to get things right and that is more than evident in its shares this morning. Last night, the company warned of lower than expected earnings. Unfortunately, that may just be the start of its issues, and there are very few clear answers.

Posted on: October 21, 2008 – 8:54 am in Earnings Warning, Technology Companies, JAVA

Kerkorian Dumps Ford (F)

Billionaire, or at least still multimillionaire, Kirk Kerkorian sold a large piece of his stake in Ford (F). The transaction amounted to 7.3 million shares at $2.43 each. The is only a tiny part of the 133.5 million shares that the old man owns.

According to MarketWatch, Kerkorian’s holding company Tracinda will focus on the gaming and hospitality, as well as the oil and gas industries, "in light of current economic and market conditions," They left out the part about Ford being a Chapter 11 candidate.

Douglas A. McIntyre

Posted on: October 21, 2008 – 7:40 am in Autos, F

Fifth Third, At Fourth and One (FITB)

Those hoping for any magic recovery at Fifth Third Bancorp (NASDAQ: FITB) are going to have to wait a little longer. The troubled regional bank is trading lower Tuesday eventhough everyone should have been expecting light earnings. Fifth Third has posted a loss of -$0.14 EPS while First Call had estimates for a profit of $0.18 EPS. Fifth Third said it was considering applying for relief funds under the $700 billion bank bailout TARP plan.

Posted on: October 21, 2008 – 7:38 am in Banking, Earnings, FITB

Major Industrial Earnings Surviving, But Not Thriving (MMM, CAT, LMT)

This morning there have been earnings reports from key industrial and defense stocks from the likes of 3M Co. (NYSE: MMM), Caterpillar Inc. (NYSE: CAT), and Lockheed Martin Corporation (NYSE: LMT). These have all reported earnings that Wall Street appears to be digesting well. None of these numbers are blow-out numbers, but they are also not indicative of the orders at major companies falling off of a cliff into the abyss.

Posted on: October 21, 2008 – 7:16 am in Earnings, CAT, LMT, MMM

Top Pre-Market analyst Upgrades (AUTH, CBRL, CAKE, DRI, KR, LGF, PNRA, PMC, VLTR)

These are some of the top upgrades and positive calls we are seeing this Tuesday morning on Wall Street:

AuthenTec (AUTH) Started At Buy at Stanford Group.
CBRL Group (CBRL) Raised to Outperform at Raymond James.
Cheesecake Factory (CAKE) Raised to Outperform at Raymond James.
Darden Restaurants (DRI) Raised to Outperform at Raymond James.
Kroger (KR) Raised to Buy at Jefferies.
Lions Gate (LGF) Raised to Buy at Jefferies.
Panera Bread (PNRA) Raised to Outperform at Raymond James.
PharMerica (PMC) Started as Outperform at Oppenheimer.
Volterra Semiconductor (VLTR) Raised to Buy at Piper Jaffray.

Jon C. Ogg
October 21, 2008

Posted on: October 21, 2008 – 7:03 am in Analyst Calls, AUTH, CAKE, CBRL, DRI, KR, LGF, PMC, PNRA, VLTR

Top Pre-Market analyst Downgrades (CEO, EXC, LLTC, NRG, PVH, POWI, TXN, WFMI)

These are some of the top pre-market analyst downgrades and negative calls we are seeing from Wall Street this Tuesday morning:

CNOOC (CEO) Cut to Hold at Deutsche bank.
Excelon (EXC) Cut to Hold at Jefferies.
Linear Tech (LLTC) Cut to Market Perform at Raymond James.
NRG Energy (NRG) Cut to Hold at Jefferies.
Phillips-Van Heusen (PVH) Cut to Neutral at JPMorgan.
Power Integrations (POWI) Cut to Market Perform at Raymond James.
Texas Instruments (TXN) Cut to Market Perform at Raymond James.
Whole Foods (WFMI) Cut to Underperform at Jefferies.

Jon C. Ogg
October 21, 2008

Posted on: October 21, 2008 – 7:01 am in Analyst Calls, CEO, EXC, LLTC, NRG, POWI, PVH, TXN, WFMI

Pfizer (PFE) Does Some Good, Viagra Rocks On

Once all of the one-time charges were washed out of the numbers, Pfizer recorded adjusted incomeof $4.2 billion, an increase of 5% compared with $4.0 billion in the year-ago quarter, and EPS of $.62, an increase of 7% compared with $.58 in the year-ago quarter. The firm hit these numbers despite a drop in sales of its Zyrtec and Camptosar products.

Viagra and Lipitor continued to do well, a bit of a commentary on life in the US in 2008.

Posted on: October 21, 2008 – 6:14 am in Pharmaceuticals, PFE

As Chrysler Walks From GM (GM) VW May Be In The Footlights

GM (GM) may not be able to come up for the money to marry Chrysler. The deal could involve firing 60,000 people and paying their severance. The process of putting the two companies together would probably take more than a year. Forcing together IT structures, product management, and accounting systems is high-risk work and another expensive undertaking.

Chrysler and its largest shareholder, Cerberus, needs a partner. Chrysler sales in North America are down as much as 30% compared with last year, and Cerberus is most likely sick of writing more checks.

Posted on: October 21, 2008 – 5:21 am in Autos, F, GM

Why Apple (AAPL) Is The Best Stock In The World

Apple (AAPL) is not the best stock. Google (GOOG) is. Or, maybe it is a tie.

Apple will release its earnings into the jaws of one of the great economic slowdowns in memory and analysts think it EPS will rise to $1.11 from $1.01 last year. Some forecasters even put their quarterly guess as high as $1.19. Revenue is expected to go up 29% to $8.05 billion.

By those measures, the stock is dirt cheap, trading at just above $98, down from a 52-week high of $202.96.

Posted on: October 21, 2008 – 5:03 am in Consumer Electronics, AAPL, MSFT, T

American Express (AXP): Consumer Not In A Coma

To hear some economists talk, the consumer does not have a dime and Christmas will not come this year. No one has cash for anything beyond gas, heating oil, mortgage payments and a loaf of bread once a week.

American Express (AXP) earnings were hardly robust, but they beat analysts’ estimates which pushed the stock way up. The credit card company’s income dropped 24% to $815 million, which is still a lot of money.

Posted on: October 21, 2008 – 4:37 am in Earnings, AXP

The Paulson And Bernanke Follies

A cabinet secretary is a person who has taken a job which they believe is the crowning honor of their career until they realize that they cannot do it and will never be what they able to. They continue in their work because they are a slave to their pride and their misplaced loyalty. They have been played for a fool, but cannot admit that to their friends or to the public.

The Secretary of the Treasury, Henry Paulson, is one of the most wealthy men in America, like most of the men who ran Goldman Sachs. He could have bought the mayorship of some large city, the governor’s mansion , or a senate seat like his peers Michael Bloomberg and Jon Corzine. Instead he followed other men from private finance who went into government. An equally large number of the people who run agencies and departments of the federal administration came from academia. Ben Bernanke could have remained the chairman of the economics department at Princeton. He might well have become an Ivy League president, which primarily involves fund raising and gives the personal access to the private homes and jets of immodestly wealthy alumni.

Posted on: October 21, 2008 – 2:52 am in Economy

Media Digest 10/21/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Japan markets were higher on a broad government bailout plan.

Reuters reports that Merrill Lynch (MER) will cut 500 trading jobs.

Reuters writes that low retailer prices and competition are cutting Apple (AAPL) iPhone prices and AT&T (T) margins.

Reuters reports that Bernanke showed support for a second US economic stimulus package.

Posted on: October 21, 2008 – 2:47 am in Press Digest, AAPL, AIG, AXP, BA, CSCO, DELL, GM, HAL, JAVA, MER, NFLX, TXN, VA

Asia Markets And Europe Open 10/21/2008

Markets in Asia were mixed.

The Nikkei rose 3.3% to 9,306. Canon moved up as the yen weakened.

The Hang Seng fell .8% to 15,206. China Mobile (CHL) dropped on poor earnings.

The Shanghai Composite was down .8% to 1,959.

The FTSE opened up 1.5% to 4,348. The CAC 40 was higher by 1.3% to 3,493 and the DAX rose 1.4% to 4,905.

Data from Reuters