23 – October – 2008 – 24/7 Wall St.

Daily Archives: October 23, 2008

Alan Greenspan: The Federal Reserve In Exile

Liars and thieves have always been popular figures in America. Is there another country where Billy the Kid and John Dillinger would be more well-known and highly regarded by the average citizen than Woodrow Wilson or Lyndon Johnson?

Most people love a man who can tell a good tall tale especially when he pulls the wool over the eyes of those who consider themselves especially powerful and intelligent. There is nothing wrong with making a Congressman look like a clown.

When Alan Greenspan stepped down as Chairman of The Federal Reserve in 2006 after being in charge for a decade, it was immediately clear that it was important for him to be considered more powerful and well-regarded as his successor, Ben Bernanke. His means for staying in the limelight was his magnum opus "The Age of Turbulence". He traveled the world speaking at universities, economic conferences, and book parties

Posted on: October 23, 2008 – 7:28 pm in Economy

EMS Earnings War: Flextronics Vs. Celestica (FLEX, CLS)

After today’s close, we got to see earnings from two key electronics manufacturing services firms. Flextronics International Ltd. (NASDAQ: FLEX) and Celestica Inc. (NYSE: CLS) both look cautious on the surface as the economy is slowing down, but the valuations here are signaling some astronomical and historic readings which are almost unheard of. That is the state of the market today, so calling for any bottom just on valuation would be an amateur’s game. Traders are at least taking some notice after the reports.

Posted on: October 23, 2008 – 4:13 pm in Earnings, Technology Companies, FLEX, SANM

Juniper Networks, Impressive Growth Under the Circumstances (JNPR)

Juniper Networks, Inc. (NASDAQ: JNPR) has posted earnings and shares are rising in after-hours trading. The networking equipment operator said that net revenue for the third quarter rose 29% to $947.0 million, with GAAP net income of $148.5 million, or $0.27 per sgare. It also reported a 45% gain to non-GAAP net income of $175.6 million, or $0.32. First Call had non-GAAP estimates of $0.30 EPS and $927.4 million in revenues.

Posted on: October 23, 2008 – 3:35 pm in Earnings, Technology Companies, JNPR

Microsoft Earnings, When Less Is More (MSFT)

Microsoft Corporation (NASDAQ: MSFT) has reported earnings and the management of expectations here is probably about as fair as any investor in today’s climate could hope for. The software giant posted earnings of $0.48 per share and $15.06 billion in revenue. First Call consensus estimates were for earnings of $0.47and $14.78 billion in revenue. The company had given previous guidance of $0.47 to $0.48 EPS on $14.7 to $14.9 billion in revenue, while estimates at the time from First Call were $0.49 EPS on $15.06 billion in revenue. What is interesting here is the guidance and the tone of the initial comments out of management before the conference call.

Posted on: October 23, 2008 – 3:18 pm in Earnings, Software, Technology Companies, MSFT

The 52-Week Low Club (CHB)(BDC)(LVS)(DHI)(PHM)(LVLT)(CDNS)

Champion Enterprises (CHB) Moody’s downgrade. Drops to $1.80 from 52-week high of $13.30.

Belden (BDC) Net income falls and forecast drops. Falls to $13.48 from 52-week high of $59.48.

Las Vegas Sands (LVS) Economic concerns hurting casinos. Sells down to $8.09 from 52-week high of $148.76.

D.R. Horton (DHI) More home builders losses. Plunges to $4.59 from 52-week high of $17.95.

Pulte Homes (PHM) Another home builder. Drops to $7.06 from 52-week high of $17.32.

Level 3 Communications (LVLT) Loses money on flat sales. Plummets to $.60 from 52-week high of $4.48.

Cadence Design Systems (CDNS) May have to restate earnings. Drops to $2.42 from 52-week high of $21.92.

Douglas A.McIntyre

Posted on: October 23, 2008 – 2:51 pm in HI/LOW, BDC, CDNS, CHB, DHI, LVLT, LVS, PHM

Can SIRIUS Avoid OTC or Pink Sheets? (SIRI)

This is a bear market and a recession, yet it still feels like Winston Churchill calling the actions of Russia as "a riddle, wrapped in a mystery, inside an enigma." When you look at SIRIUS XM Radio Inc. (NASDAQ: SIRI) this becomes only too evident. We rarely cover penny stocks, but SIRIUS has only over the last month become a penny stock. Today is even worse. Shares touched $0.25 right after 2:00 PM EST today.

Posted on: October 23, 2008 – 2:35 pm in Media, Satellite, SIRI

Adjusting Expectations On Microsoft Earnings (MSFT)

Software giant Microsoft Corporation (NASDAQ: MSFT) is set to report earnings after today’s close. First Call has estimates pegged at $0.47 EPS and $14.78 billion in revenues. As with most companies, the focus is going to revolve on what lies beyond tomorrow rather than what has happened.

First Call has estimates for next quarter pegged at $0.55 EPS and $17.96 billion in revenues, and the estimates for Fiscal June-2009 are $2.11 EPS and $66.51billion. What we want to do is bring this expectation more in-line with today’s climate and you will see we are outlining this below.

Posted on: October 23, 2008 – 12:25 pm in Earnings, Software, Technology Companies, MSFT

Solar Paradise Woes: Order Cuts, Sooner Than Expected (DUK, FSLR, SPWRA, STP, ESLR, LDK)

There has been quite a bit of data calling for a supply glut in 2009 with oversupply patterns existing in 2010 and beyond. This seems counterintuitive if you consider the trends toward alternative energy, but some fresh data on Duke Energy Corp. (NYSE: DUK) may signal more pain on the way for some of the major solar players.

Posted on: October 23, 2008 – 11:21 am in Alternative Energy, Utilities, DUK, ESLR, FSLR, LDK, SPWRA, STP

Raytheon Files To Raise Up To $3 Billion (RTN)

Raytheon Company (NYSE: RTN) has just filed an open shelf registration statement with the SEC to sell up to $3 billion in any combination of securities in the form of debt securities, common stock, preferred stock, and warrants.

Posted on: October 23, 2008 – 10:36 am in Defense, Secondary Offering, RTN

Has National Oilwell Varco Bottomed? (NOV)

National Oilwell Varco, Incorporated (NYSE: NOV) reported earnings this morning, and if you have followed stocks in the oil patch you are quite aware that the company has been far from immune to the sharp pullback in oil prices. Excluding charges and disruptions, the oil rig maker and equipment giant posted $1.44 EPS rather than the First Call estimates of $1.30. Even after items, it reported earnings of $1.32 Basic EPS and $1.31 Diluted EPS.

Posted on: October 23, 2008 – 10:14 am in Earnings, Oil & Gas, NOV

The Death Of The New York Times (NYT)

It is astonishing, but even the online revenue at the newspaper operations of The New York Times Company (NYT) has stopped growing rapidly. It is almost certain that the newspaper group excluding internet revenue is losing of money.

The entire NYT across of of its businesses made hardly any money at all. Preliminary third-quarter operating profit decreased to $10.0 million from $28.1 million in the third quarter of 2007.

Posted on: October 23, 2008 – 10:01 am in Old Media, NYT

Greenspan: Predictions from the Crypt

If you have had a hard time swallowing the direct plain English of the modern Federal Reserve heads, help is on the way. Former Federal Reserve Chairman Alan Greenspan is speaking to the House Government Oversight and Reform Committee today. The committee is holding a hearing titled, “The Financial Crisis and the Role of Federal Regulators” at 10:00 AM EST in Washington D.C.

Posted on: October 23, 2008 – 9:11 am in Economy, Regulation, Alan Greenspan, Ben Bernanke

The False Death of Trickle-Down Economics

By John Tamny RealClearMarkets

It’s fashionable in certain economic circles to mock the notion of trickle-down economics, the process whereby success enjoyed by the wealthy accrues to those not wealthy. As recently as August economist Jared Bernstein wrote that "Trickle-down economics died yesterday at 10 AM," and in a column last year recent Nobel Laureate Paul Krugman asked "Where’s My Trickle?"

Jupitermedia Sends Online Images to Getty Images (JUPM)

Jupitermedia Corp. (NASDAQ: JUPM) is seeing a massive surge pre-market, and this may help the company adequately fend off many of its issues. The company has announced that it has entered into a "definitive stock purchase agreement to sell" its Online Images business to Getty Images, Inc. for an aggregate purchase price of $96 million in cash.

Private equity firm Hellman & Friedman owns Getty Images after taking it private earlier this year. If you will recall, the two companies had been in merger talks in the past for far higher prices. Those talks quickly broke apart.

Posted on: October 23, 2008 – 8:23 am in Internet, Media, Mergers and Buy Outs, Private Equity, Getty Images, JUPM

Level 3 Working On Debt & Free Cash Flow (LVLT)

Level 3 Communications, Inc. (NASDAQ: LVLT) has just reported earnings and there is enough to challenge the bulls and bears alike. The wholesale dataline carrier posted earnings at -$0.08 EPS on a net loss basis and revenues on a consolidated basis were $1.07 billion. First Call had estimates at -$0.09 EPS and $1.07 billion in revenues.

Posted on: October 23, 2008 – 7:44 am in Earnings, Internet, Telecom, LVLT

Potash Almost Smells Better Than Natural Fertilizer (POT)

Potash Corp. of Saskatchewan (NYSE: POT) is seeing a recovery this morning. The potash and fertilizer giant posted earnings at $3.93 EPS vs. $3.57 estimates on a 136% revenue gain.

The company is also forecasting in-line guidance for 2008 with a range of $12.00 to $13.00 EPS vs. $12.55 estimates, although likely at the low-end of those estimates. It sees 2008 potash gross margin to exceed the 2007 level by roughly 250%.

Posted on: October 23, 2008 – 7:19 am in Agriculture, Earnings, POT

Early Bird Analyst Upgrades (AEO, BPL, GMR, ITRI, PNR, TCK, URBN)

These are some of the top analyst upgrades we are seeing from Wall Street firms this Thursday morning with more than two hours to the open:

American Eagle (AEO) Started as Outperform at Oppenheimer.
Buckeye Partners (BPL) Raised to Neutral from Sell at Goldman Sachs.
General Maritime (GMR) Raised to Overweight at JPMorgan.
Itron (ITRI) Raised to Overweight at JPMorgan.
Pentair (PNR) Raised to outperform at Baird.
Teck Cominco (TCK) Raised to Buy at Goldman Sachs.
Urban Outfitters (URBN) Started as Outperform at Oppenheimer.

Jon C. Ogg
October 23, 2008

Posted on: October 23, 2008 – 6:32 am in Analyst Calls, AEO, BPL, GMR, ITRI, PNR, TCK, URBN

Early Bird Analyst Downgrades (ADCT, ACL, AMMD, BGH, CNB, CNW, ERTS, FCX, NAT, OSG, PCU, STM)

These are some of the top analyst downgrades we are seeing from Wall Street firms this Thursday morning with more than two hours to the open:

ADC Telecommunications (ADCT) Cut to Underweight from Overweight at JPMorgan.
Alcon (ACL) Cut to Neutral from Overweight at JPMorgan.
American Medical Systems (AMMD) Cut to Market Weight at Thomas Weisel.
Buckeye Group Holdings LP (BGH) Cut to Neutral at Goldman Sachs.
Colonial Bancgroup Inc. (CNB) Cut to Neutral at JPMorgan.
Con-Way,Iinc (CNW) Cut to Neutral at Baird.
Electronic Arts (ERTS) Cut to Sell at S&P Equity Research.
Freeport-McMoRan (FCX) Cut to Neutral from Buy at Goldman Sachs.
Nordic American Tanker (NAT) Cut to Neutral at JPMorgan.
Overseas Shipholding (OSG) Cut to Neutral at JPMorgan.
Souhern Copper (PCU) Cut to Sell at Goldman Sachs.
STMicroelectronics (STM) Cut to Hold at S&P Equity Research.

Jon C. Ogg
October 23, 2008

Posted on: October 23, 2008 – 6:30 am in Analyst Calls, ACL, ADCT, AMMD, BGH, CNB, CNW, ERTS, FCX, NAT, OSG, PCU, STM

Dow Chemical’s (DOW) Perfect Pitch

Dow Chemical (DOW) reported earnings today. Beyond all the numbers, segment earnings, and geographic data, there was only one important thing. "In our view, we will likely see a global recession through most of 2009."

The forecast has special weight coming from Dow. It is not just a $60 billion company. It is a firm which does business in a substandial number of sectors and does it in almost every country in the world.

Posted on: October 23, 2008 – 5:55 am in Earnings Warning, DOW

Goldman Sachs (GS) Cuts 10%

The media is reporting that Goldman Sachs (GS) will cut 10% of its workforce, or about 3,000 people. Since the firm has been at the summit of its industry for decades, the move says a great deal about what is coming in the financial world.

Goldman has been the market leader in M&A, underwriting,and proprietary trading for some time. If the firm was simply looking back at its relatively poor earnings, it would not be cutting now. The management at Goldman is too smart. It would have taken people out a year ago.

Posted on: October 23, 2008 – 5:40 am in Banking, GS

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