Daily Archives: November 12, 2008

Tech Holiday Gets Bleak: Intel (INTC) Warns On Q4 (AAPL)(DELL)(HPQ)(RIMM)(BBY)

IntelIt is rare when a company warns about its Q4 numbers on November 12. That made Intel’s (INTC) announcement about the final quarter of the year all the more shocking.

Intel said it now expects fourth quarter revenue to be $9 billion, plus or minus $300 million, lower than the previous expectation of between $10.1 billion and $10.9 billion. Revenue is being affected by significantly weaker-than-expected demand in all geographies and market segments. In addition, the PC supply chain is aggressively reducing component inventories.

The firm’s expectation for fourth quarter gross margin moved to 55% plus or minus a couple of points, lower than the previous expectation of 59% plus or minus a couple of points, primarily due to lower revenue and other charges associated with the weaker-than-expected demand environment.

Taken together with today’s profit warning from Best Buy (BBY) and it is now certain that consumer electronics and PC sales forecasts for the holidays have been crushed.

Intel’s shares fell 7% after to close to $12.55 after moving down 3% during the regular session. The stock has a 52-week low of $13.51 and a period high of $27.99. Apple (AAPL), HP (HPQ), RIM (RIMM), Dell (DELL), and AMD (AMD) are likely to be caught in the vortex tomorrow.

Douglas A. McIntyre

Posted on: November 12, 2008 – 6:16 pm in Semiconductor, , , , ,

Most Overpaid CEO Of The Day: Vikram Pandit Of Citigroup (C)

Data_2Citigroup (C) investors have been remarkably patient with relatively new CEO Vikram Pandit. But, the company’s shares traded under $10 today. The stock has not been that low since 1995.

Pandit earned $165.2 million in connection with the sale of Old Lane Partners, the investment firm Citigroup bought in April 2007. Old Lane later folded because its performance was so poor.

Pandit has now been head of the bank for nearly a year. During that time he has repeatedly talked about turning the bank around, restructuring it to get the yield from its best assets, and getting rid of divisions which are dogs.

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Posted on: November 12, 2008 – 6:05 pm in Uncategorized, , , ,

Grim Reaper Wearing Crocs (CROX)

Crocs_logoCROCS Inc. (NASDAQ: CROX) is a story of the good, the bad, and the fugly.  The maker of ugly fad shoes reported earnings after the close, which technically were no earnings at all.  The company posted a net loss of $148 million, or -$1.79 EPS, but this included charges of $104.1 million for restructuring, goodwill, inventories, and other items.  Revenue fell by 32% to $174.2 million.  Gross margin went from roughly 60% down to 1.4%.

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Posted on: November 12, 2008 – 5:18 pm in Apparel, Earnings, Retail,

Applied Materials, An Upside Surprise, And Layoffs (AMAT)

Applied Materials Inc. (NASDAQ: AMAT) managed to close at what looks to be a decade low, and it was right under $10.00 ahead of earnings. The semiconductor capital equipment giant posted earnings of $0.20 non-GAAP EPS on $2.04 billion in revenue.   Thomson Reuters (First Call) estimates were for $0.14 non-GAAP EPS and $1.94 billion in revenue. 

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Posted on: November 12, 2008 – 4:17 pm in Earnings, Semiconductor, Technology Companies,

Congress To Consider $25 Billion Auto Loan Which Bush Will Veto

Ford1The lame duck members of Congress are trying to get out of town. Their boxes are packed and they are leaving to join law firms in their old districts. Other members of the House just want a month or two off.

The legislative leadership wants everyone to stay around for hearings and a vote on a $25 billion bailout of Detroit. After a lot of hard work, President Bush will veto the legislation. He has already signaled that the car industry is on its own. Paulson could have made the loans. The fact that they did not shows that the administration is not willing to get involved.

Bush is heading back to Texas to run his old ball team, the Rangers. He will be driving a Honda.

Douglas A. McIntyre

Posted on: November 12, 2008 – 3:28 pm in Autos

As Market Plunges, Major Stocks Fall Under $10 (Part 2) (LTD, OMTR, RSH, RGS, SCOR, LUV, SBUX, WFMI)

Burningmoney_2It has been almost impossible for most stocks to avoid the carnageand mayhem of late.  It is interesting just how many widely held stocks have broken under the $10.00 share price level today.  This can screw up optionstrading and begins to genuinely worry investors who were alreadyworried.  Shares never dip under $10.00 because things are great.

Limited Brands (NYSE: LTD) broke $10.00 Monday, and it keeps looking farther and farther away at $8.80.  Candles, body products, and undies… not recession-proof.

Omniture (NASDAQ: OMTR) re-broke the $10.00 barrier this week. Business optimization must not be good when the recession is there whether you optimize or not.

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Posted on: November 12, 2008 – 2:53 pm in HI/LOW, Trading Alert, , , , , , , ,

As Market Plunges, Major Stocks Fall Under $10 (AEO, BCS, C, GLW, DRYS, IPAR, IPCS, LULU)

Burningmoney_3The market message has been the same for the entire last week.  Carnage and mayhem.  But what is interesting is how many household companies and how many widely held stocks have this week or today dipped under the $10.00 stock price.  This is horrible because it screws up options trading and begins to genuinely worry investors who were already worried.  Shares never dip under $10.00 because things are going so well.

American Eagle Outfitters Inc. (NYSE: AEO) broke under $10.00 early Monday and hasn’t been able to look back.   After a same store sales drop of 12% last week, the coolness looks long gone.  Maybe they could do a deal with Gap and really damage themselves.

Barclays plc (NYSE: BCS) hit $9.65 today, which is back to mid-1990’s levels.  The number one position in ETF’s can’t keep the financial giant from ruin.

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Posted on: November 12, 2008 – 2:50 pm in HI/LOW, Trading Alert, , , , , , , ,

Applied Materials Decade-Long Earnings Concern (AMAT)

Applied_materials_logoImagine being the number one semiconductor capital equipment stock in the U.S., and finding your stock trading at a ten-year low.  That is essentially the case for Applied Materials Inc. (NASDAQ: AMAT), and the company has earnings right after the close of trading today.  With semiconductor stocks, tech stocks, and most sectors in the tank, you can imagine the mood for expectations here.

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Posted on: November 12, 2008 – 1:28 pm in Earnings, Semiconductor, Technology Companies,

In the Land of Duh!: Moody’s Downgrades Las Vegas Sands (LVS)

Las_vegas_sands_logoMoody’s had had the corporate debt ratings of Las Vegas Sands Corp.(NYSE: LVS) on review for possible downgrade since mid-July.  Just today, the debt ratings agency announced that it has lowered the corporate debt ratings of the casino operator.  Furthermore, the ratings were also placed on review for possible further downgrade(s).  In mid-July the stock traded as low as the $30’s and rallied later in July and August to see $50.00+ again.  Shares have been trading at under $5.00 today.  When will the timeliness of ratings agencies finally be challenged by oversight or by regulatory agencies?

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Posted on: November 12, 2008 – 12:59 pm in Analyst Calls, Casinos,

Paulson Competely Changes Bailout Plan Without Asking Congress

Treasury_2Hank Paulson almost completely changed the goals of the Treasury’s $700 billion bailout plan. He did so without checking with Congress which appropriated the funds and wanted to check in on Paulson from time-to-time.

He clearly is telling legislator that, since many are lame ducks and most are leaving for the holidays, the he will do what he sees fit to save the economy.

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Posted on: November 12, 2008 – 11:09 am in Economy

The Gathering Storm: The Human Face Of The Growing Financial Disaster

95129cAt the beginning of every alarming recession the question
gets raised whether this one is the next "Great Depression".

The answer is "yes" for the millions of people who have lost
jobs and homes. Their collective numbers have not yet created that
mass effect of tens of millions which would move unemployment to 20% and
allow the coroner to pronounce his sentence.

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Posted on: November 12, 2008 – 10:48 am in Economy

Could Google (GOOG) Drop To $250? (AAPL)(BBY)(DELL)(HPQ)(YHOO)

GoogOver the last year, Google’s (GOOG) shares have dropped from $724.80 to just above $300. There is an argument to be made that they could go much lower, perhaps down to $250. The stock has not traded there since the Spring of 2005.

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Posted on: November 12, 2008 – 10:06 am in Internet, , , , , ,

Utilities Gone Gladiator (EXC, NRG)

Nrg_logoOn Monday, NRG Energy (NYSE:NRG) management rejected an unsolicited buyout offer from Exelon (NYSE:EXC) that would have exchanged one share of NRG for 0.485 shares of Exelon. Exelon probably didn’t expect a different result because it was ready with an exchange offer directly to NRG shareholders.

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Posted on: November 12, 2008 – 9:39 am in Mergers and Buy Outs, Shareholder Issues, Utilities, ,

Penn West Posts Big Numbers on Hedging Gains (PWE)

Penn West Energy Trust (NYSE:PWE) this morning reported third quarter revenues of $1.235 billion and earnings per diluted unit of $2.73. The company stated that the quarterly net income of $1.062 billion was "primarily due to gains on risk management activities," but it does not specify the hedging gain. However, in the same period in 2007, the company reported net income of just $138 million.

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Posted on: November 12, 2008 – 9:34 am in Earnings, Oil & Gas,

IBM Venturing Into Broadband Over Power Lines (IBM)

Ibm_logo_nycIBM (NYSE: IBM) is going into a new initiative, which is actually an old initiative which had been thought of as dead on arrival: Broadband Over Power Lines.  Big Blue is partnering with International Broadband Electric Communications, Inc.

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Posted on: November 12, 2008 – 8:51 am in Internet,

Arguments Still Valid Oil Will Go Back To $100

Tx00338coilwellgusherodessatexasposWith oil moving in the direction of $50 a barrel, analysts keep moving their target price for crude lower.

The argument is simple. A huge global recession will undermine demand in the nations which consumer the most oil, particularly the US and China. Word of China’s new $600 billion stimulus package was actually met with another drop in crude prices. Economists are that pessimistic about the medium-term prospects for the mainland.

The minority report on oil prices is compelling although it has been lost in the excitement about gasoline prices moving back toward $1.

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Posted on: November 12, 2008 – 8:38 am in Oil & Gas

Best Buy, Worst Buy (BBY)

Best_buy_logoBest Buy Co., Inc. (NYSE:BBY) has issued an earnings warning this morning.  The electronics and home appliances retailer is noting a fall in consumer spending, driven by the recent turmoil in the financial markets and other macro economic factors.  Uncertainty regarding future consumer spending has limited its ability to project revenue for the critical holiday shopping season and the balance of the fiscal year.

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Posted on: November 12, 2008 – 8:20 am in Consumer Electronics, Earnings Warning, Retail,

Wall St. Gets Ready For GM (GM) Bailout And Disappointment

Gm20jpeg20imageGM’s (GM) shares are up almost 15% to over $3.25 on new hope and old rumors that the government will bailout the company. Both Obama and a number of members of Congress are pushing for Treasury to put $25 billion into the troubled car maker.

What investors may be missing is that a huge package will probably included preferred shares. GM’s current market cap is only $1.7 billion. That means common shareholders will probably be wiped out and can watch their stock go to $.25.

Douglas A. McIntyre

Posted on: November 12, 2008 – 8:07 am in Autos,

Qualcomm (QCOM) Means To Bring The Internet To The World

PcIt may be a way to make money, but it could also change the dynamics of how tens of millions of people get information about the outside world.

Qualcomm (QCOM) announced a new PC alternative to make high-speed wireless Internet access more widely available and affordable in emerging markets. The Kayak PC alternative leverages the widespread availability of 3G wireless broadband to bring Internet connectivity to markets where wired Internet access has often been difficult to access or unaffordable. It fills the niche that exists between desktop PCs, which normally require landlines or separate accessories for connectivity, and Internet- capable wireless devices.

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Posted on: November 12, 2008 – 7:36 am in Internet,

Top 10 Early Bird Analyst Upgrades & Downgrades (BBBY, BTI, PAG, VRTX, MT, STD, CRXL, FMCN, MR, OWW)

These are the ten early bird analyst upgrades and downgrades we have seen early this morning with two and a half hours until the market opens:

  • Bed Bath & Beyond Raised (BBBY) Raised to Neutral from Sell at Goldman Sachs.
  • British American Tobacco (BTI) Raised to Buy at Goldman Sachs.
  • Penske Automotive (PAG) Raised to Buy at Goldman Sachs.
  • Vertex Pharmaceuticals (VRTX) Started as Buy at piper Jaffray.
  • Arcelor Mittal (MT) Cut to Sell from Buy at5 Citigroup.
  • Banco Santander (STD) Cut to Underweight at JPMorgan.
  • Crucell (CRXL) Cut to Hold at ING.
  • Focus Media (FMCN) Downgraded at Citigroup and Goldman Sachs (likely others as well).
  • Mindray Medical International (MR) Downgraded at Citigroup and Goldman Sachs.
  • Orbitz Worldwide (OWW) Cut to Sell at Goldman Sachs.

Jon C. Ogg
November 12, 2008

Posted on: November 12, 2008 – 7:06 am in Analyst Calls, , , , , , , , , ,