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Tonight on CNBC’s MAD MONEY, Jim Cramer hosted Doug Novak, CEO of Yum! Brands Inc. (NYSE: YUM), to discuss the economy and the company’s place in casual dining during a major economic slowdown. With brands like Taco Bell, KFC, and Pizza Hut, Cramer wanted to see what was under the hood here. He said the stock is trading at only 14-times earnings and was down over 7%today. He noted a same store sales growth slowdown and squeezedmargins. Cramer has been very positive on this stock before and never really changed his stance before today. This was also one of our own New Defensive Stocks with a growth flare for 2008.
Daily Archives: November 5, 2008
Jim Cramer Takes on Yum! CEO (YUM)
Gears of War 2 Launch Taking Up Other Video Game Money (MSFT, ERTS, THQI, ATVI, TTWO, GME)
In about 36 hours, the highly awaited release of "Gears of War 2" comes to stores for a midnight opening. The Microsoft (NASDAQ: MSFT) Game Studio published game developed by Epic Games Inc. comes on the heels a highly successful "Gears of War" which sold more than 5 million copies. We have started seeing signs that the video game sector might not be so recession-proof, but some of the weakness may be due to the high-demand spending for this game at $59.99 or the collectible limited edition for $10.00 more. The figures are going to be hard to compare, but "Gears of War 2" has a shot at being one of the top video game releases of this year. The game already achieved Gold Status early last month.
Cisco Conference Call Comments: Man Down! (CSCO)
We listened to the Cisco Systems Inc. (NASDAQ: CSCO) conference call, and John Chambers is sounding out the agony of defeat after his comments. He has forecast a very somber sounding opinion essentially calling the recent weeks the most challenging of his career. The sad part is that when managers get this somber, you have to expect it to last a while. Below are the rest of the comments.
Whole Foods Dismal Report Masked By Investment (WFMI)
Whole Foods Market Inc. (NASDAQ: WFMI) posted dismal earnings of $0.01 EPS on revenues of $1.79 billion. Thomson Reuters (First Call) had estimates pegged at $0.13 EPS and $1.81 billion. While this also marked its fiscal year-end, what was more important was the outlook and an investment it received.
Cisco Holds Up Better Than Expected (CSCO)
Cisco Systems, Inc. (NASDAQ: CSCO) has posted earnings of $0.42 non-GAAP EPS on revenues of $10.3 billion. Estimates from Thomas Reuters (First Call) were $0.39 EPS on $10.3 billion in revenues. While everyone is waiting for guidance, this earnings report and other metrics below looks better than many expected.
The 52-Week Low Club (THC)(CGEN)(CRAY)(SGIC)
Tenet Healthcare (THC) Weak quarter and outlook still killing the company. Falls to $2.25 from 52-week high of $6.88.
Compugen (CGEN) Company says it will not issue new equity. Market may not believe it. Off to $.50 from 52-week high of $2.80.
Cray (CRAY) Super computer business must be weak. Tough quarter. Down to $2.42 from 52-week high of $6.99.
Silicon Graphics (SGIC) Bad quarter. New CFO. Sells off to $3.55 from 52-week high of $23.12.
Douglas A. McIntyre
Pandora Opens The Credit Card Receivables Box (BAC, C, AXP)
Everyone has been looking for the next shoe to drop in the financial sector where it ties in with the consumer. Everyone thought this would be credit cards now that primary mortgages, secondary mortgages, autos, personal loans, and more have been getting uglier by the month. That appears to have come full circle now.
Worst Corporate Press Release Of The Day: Comverge (COMV)
Most companies would never think of sending out a press release congratulating the new president. It looks too self-serving and smarmy.
Comverge (COMV) could not help making itself look foolish. The provider of clean energy solutions issued a press release congratulating Mr. Obama "on his commitment to usher in a new era in America’s energy policy — an era that calls upon comprehensive clean energy solutions to power our future. "
To make certain that the company looked like it was aligning itself with all that is right and good, it added Robert M. Chiste, Chairman, President and CEO of Comverge, said, "Comverge is uniquely positioned to support these goals and lead by example while demonstrating the benefits inherent in President-elect Obama’s commitment to a clean energy future. Our clean energy technologies for demand management and smart grid are very cost-effective now, even without government subsidies."
Comverge also believes that first degree murder should be punished by life in prison and that people should not be allowed to smoke in restaurants.
The press relations effort is working, The stock is only off 80% from its 52-week high of $35.25.
Douglas A. McIntyre
Most Overpaid CEO Of The Day: Jeff Ganek CEO Of NeuStar (NSR)
Some days a management cannot do anything right. In the case of NeuStar (NSR), those days have stretched into years.
The company reported quarterly results which were net income totaled $28.4 million, or $.38 per share, compared with $25.7 million, or $.32, in the third quarter of 2007. But, what upset investors was guidance. NSR expects full year revenue of $485 to $490 million. Previous guidance was for 2008 revenue to range between $500 and $515 million
Traders Brace For A Tepid Cisco Earnings Report (CSCO)
Cisco Systems, Inc. (NASDAQ: CSCO) is set to report earnings after the close of trading today. We commented on Monday how it was impossible not to see how little the formal earnings estimates had come down. It seemed as though the crowd of analysts was keeping the bar set way too high when you consider the economy and that the stock had been halved.
The Devon in the Details, a Bunt (DVN, APA, XOM, CVX, COP)
Before the market opened this morning, Devon Energy (NYSE:DVN) reported third quarter net income of $2.6 billion (EPS of $5.92) on revenue of $5.99 billion. After backing out a non-cash gain from derivatives of $1.6 billion, the company’s earnings were $3.09, three pennies higher than consensus estimates. Revenue handily surpassed estimates of $4.02 billion.
24/7 Wall St. Day Trading Alert (SPWRA)(MBI)(ABK)(RDN)(USU)
SunPower Corporation (SPWRA) seemed to pull down the whole solar sector. Details
MBIA (MBI) and Ambac (ABK) got torn to pieces on bad news.
Radian (RDN) surged on good news.
USEC (USU) dropped on particularly bad guidance.
Douglas A. McIntyre
Yahoo! & Google Pact Called Off is GOOD for Yahoo!, Not Bad (YHOO, GOOG, MSFT)
Media reports are saying that Google (NASDAQ: GOOG) walking away from the Yahoo! (NASDAQ: YHOO) search pact is a bad development for Yahoo! and its shareholders. Do not fall for that trickery. This is a great development for Yahoo! and it is great for anyone wanting to find at least some differences in web search results and advertising.
Google is the king, that is obvious. Yahoo! has lost its dominance and is under pressure, which is also obvious. But this pact was a defensive move by Yahoo! management to fend off any attempted re-bids from Microsoft (NASDAQ: MSFT) or to keep any other suitors from buying it on the cheap. It would have essentially put a poison pill over the search and part of the ad business of Yahoo!.
The Knot (KNOT) Gets Ready To Take The Hammer: A $4 Stock?
Online wedding-planning company The Knot (KNOT) has not be doing well recently. When it announces earnings later this week, it may be doing a lot worse.
In the second quarter, net income was $2.3 million down from $4.8 million in the same period last year. Revenue was flat at a little over $28 million. Deutsche Bank and Oppenheimer took a dim view of the numbers and said so.
Disappointing Duke (DUK)
Duke Energy Corp. (NYSE:DUK) shares are trading down on fairly active volume. Earlier this morning, the company reported EPS of $0.33, compared with analysts’ estimates of $0.45. Revenue also was a big miss: $3.5 billion compared with expectations of $3.92 billion.
Foster Wheeler, Transocean: Revenues Up, So Are Costs (FWLT, RIG)
Before market open this morning, major oilfield services players Foster Wheeler Ltd (NYSE:FWLT) and Transocean Inc. (NYSE:RIG) reported third quarter earnings. The short version is both missed EPS estimates, while surpassing revenue expectations.
GMAC: An Explosion In The Boiler Room For Cerberus
Cerberus has invested billions of dollars into the US auto industry. Its best-known deal was its purchase of 80% of Chrysler. That investment is probably worth nothing. Its other highly visible deal was the acquisition of 51% of GM’s (GM) financial arm, GMAC.
News on earnings from GMAC indicates that it may be worthless as well.
Will Level 3 Be Able To Raise Its Shelf Cash? (LVLT)
Level 3 Communications Inc. (NASDAQ: LVLT) is one of the more active stocks for traders in the $1.00 and sub-$5.00 stock land. This week the company filed an interesting automatic shelf registration statement with the SEC for it and certain units under the company to sell any combination of Debt, Preferred Stock, Depositary Shares, Warrants, Stock Purchase Contracts, Stock Purchase Units, Subscription Rights, and Common Stock. How much it will be able to sell and who the underwriters are not known, but there is much more to consider here than just the filing.
Layoffs Spread Beyond Autos And Retail (NT)(HPQ)(DELL)(WHR)
For awhile, analysts had hoped that the biggest layoffs in the economy would be restricted to already troubled industries including retail, automotive, and airlines. At least companies in those sectors were losing money.
But, news out of places like Nortel (NT), Whirlpool (WHR), and Hewlett-Packard (HPQ) indicate the prophylactic job cuts are being made in almost every industry.
Even Dell (DELL), which made over $700 million last quarter and has $8 million of cash on hand is talking about sharply lowering expenses.
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