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Email UpdatesDaily Archives: January 23, 2009
52-Week Low Club (AXP, COF, NILE, CLX, RDEN, FDX, HOG, ISRG, KF, MSCC, PII, RAX, RNWK, STX)
Today’s market looked more like an advanced yo-yo session rather than a regular stock market trading day. Since stocks gapped down so much, there were many new names on the list of 52-week lows. What is interesting is that many other stocks hit 52-week lows but bounced back to being positive on the day.
- American Express (NYSE: AXP) and Capital One (NYSE: COF) both graced the list of lows as GE’s consumer losses only added fuel to the fire.
- Blue Nile Inc. (NASDAQ: NILE) tankola, again. Forget Valentine’s Day this year.
- Clorox Co. (NYSE: CLX) burns investors’ eyes as bad as it burns its client’s eyes.
- Elizabeth Arden (NASDAQ: RDEN) keeps falling after the bad news from it and its peers over the last week and a half. Brittney Spears can’t help.
- FedEx Corp. (NYSE: FDX) keeps dropping.
- Harley Davidson (NYSE: HOG) caught another case of HAGS and is believed to be in trouble all year after earnings.
- Intuitive Surgical (NASDAQ: ISRG) keeps getting pounded. Down close to 70% from highs now. Leonardo DaVinci would now sue over the use of his name.
- The Korea Fund (NYSE: KF) was down almost 7%. We don’t like to put country funds or ETF’s today, but that Kim Chee from last night just didn’t sit well today.
- Microsemi (NASDAQ: MSCC) on earnings warning.
- Polaris Industries (NYSE: PII)… weak HOG sales from Harley, weak motorcycle and snowmobile relative? Works every time.
- Rackspace Hosting (NYSE: RAX)… Racking the Rackers, in the server room….
- RealNetworks (NASDAQ: RNWK), a surprise but think of peers. And when was the last time you bought anything from them?
- Seagate Technology (NYSE: STX) again… with the earnings it put up this week, you can call it Floodgate.
Jon C. Ogg
January 23, 2009
Is Internet Advertising Revenue Falling As Fast As Print? (NWS)(NYT)(YHOO)(MSFT)(GE)(MNI)(GCI)(MHP)(TWX)
According to MINOnline, advertising pages in major monthly magazines are down 20% for issues from the first two months of this year. One of the most popular weeklies, The Economist, suffered ad pages losses of almost 30% through the end of last week.
Newspaper advertising revenue at a number of the largest chains fell by 20% last year, and early evidence indicates that ad sales at dailies at companies such as Gannett (GCI) and McClatchy (MNI) continue to fall at a rate at least that sharp this year.
Now there is evidence that online display advertising at major websites is not doing much better. The theory has been that "new media" would outperform print because it is a more efficient and targeted way to reach selected audiences. When a recession is deep enough, that may not matter.
Cash Pipeline Still Flows at Kinder Morgan (KMP, SRE, COP)
Kinder Morgan Energy Partners L.P. (NYSE:KMP) reported earnings yesterday, and handily missed analysts expectations of $3.4 billion in revenue and earnings per limited partner unit of $0.53. Revenue for the fourth quarter totaled nearly $2.3 billion and earnings per unit came in at $0.26. Still, the stock rose about $2/unit before closing the day at $48.49/unit. The quarterly distribution to limited partners will amount to $1.05/common unit.
Exelon & NRG, Earnings and a Duel (EXC, NRG)
Exelon Corporation (NYSE:EXC) rose nearly 1.5% yesterday after the company reported fourth quarter 2008 EPS of $1.07, up from $0.84 in 2007. Full-year revenue of $18.86 billion was almost $1 billion higher than estimates, and full-year EPS reached $4.13 slightly lower than estimated EPS of $4.17. The company reaffirmed guidance for 2009 for non-GAAP earnings of$4.00-$4.30/share. Exelon also confirmed that it will continue itsefforts to acquire NRG Energy Inc.(NYSE:NRG).
Bad News at Schlumberger, Yet Shares Rise (SLB, WFT, HAL)
Schlumberger Limited (NYSE:SLB) reported a clear miss on quarterly and annual revenue and EPS estimates, but shares rose more than 6%. On top of that, the company expects 2009 to be weak, with drops in North American drilling, and lower "production enhancement" in Russia and "mature offshore basins." The company also expects prices to erode.
Satyam Tries To Save Itself (SAY)
Satyam Computer Services Limited (NYSE: SAY) has become the Enron of India. The troubles over its book-cooking are widely known, and there is very little tangible data about the real value of the company. This is what happens when a company says most of its cash balance is a lie. Somehow, some way, the company’s board of directors is trying to convey that it has things under control.
Harley’s Roadkill Earnings (HOG)
Harley-Davidson, Inc. (NYSE: HOG) is looking about as ugly as you could expect. The motorcycle manufacturer posted dismal earnings, announced a factory mothballing, and announced layoffs. This doesn’t just throw 2009 into the toilet. This economy could end up shunning the company for quite a bit longer than anyone would have expected even last year.
Citi Initiates Coverage on MasterCard (MA) with a Sell; Prefers Visa (V) Over American Express (AXP)
Citi initiates coverage on MasterCard (NYSE: MA) with a Sell and initiates coverage on Visa (NYSE: V) with a Hold, citing decelerating consumer spending due to the global recession.
Citi analyst says, "While we are positive on the business models longer term, we believe the companies will face headwinds from decelerating consumer spending due to the global recession and deleveraging by the U.S. consumer
Top Pre-Market Analyst Upgrades (BBT, EXPD, FLR, JEC, JCG, NOK, SIAL, VMED)
These are some of the top upgrades and positive research calls we have seen from Wall Street analysts this Friday morning:
- BB&T (BBT) Raised to Market Perform at KBW.
- Expeditors International (EXPD) Raised to Neutral from Sell at UBS.
- Fluor (FLR) Started as Buy at Jefferies.
- Jacobs Engineering (JEC) Started as Buy at Jefferies.
- J. Crew (JCG) Raised to Equal Weight at Barclays.
- Nokia (NOK) Raised to Hold from Sell at Societe Gednerale.
- Sigma-Aldrich (SIAL) Raised to Neutral from Sell at Goldman Sachs.
- Virgin Media (VMED) Raised to Overweight at JPMorgan.
Jon C. Ogg
January 23, 2009
Top Pre-Market Analyst Downgrades (ABH, AMFI, CME, LPX, MA, MSCC, NOK, V)
These are some of the top downgrades and negative research calls we have seen from Wall Street analysts this Friday morning:
- AbitibiBowater (ABH) Cut to Underperform at Raymond James.
- Amcore Financial (AMFI) Cut to Market Perform at KBW.
- CME Group (CME) Cut to Market Perform at Bernstein.
- Louisiana-Pacific (LPX) Cut to Sector Perform at CIBC.
- Mastercard (MA) Started as Sell at Citigroup.
- Microsemi (MSCC) Cut to Market Weight at Thomas Weisel.
- Nokia (NOK) Cut to Neutral at Nomura.
- Visa (V) Started as Hold at Citigroup.
Jon C. Ogg
January 23, 2009
GE (GE): It Would Be Hard To Be More Disappointed
The market has been pushing down GE (GE) expectations for weeks. It has taken the stock to a multi-year low and left investors thinking that the big conglomerate would be crippled by its financial unit and slow growth in it infrastructure. Some analysts do not see a recovery until next year.
GE posted numbers that were worse than expected. For the year, revenue was $183 billion, up 6%, and earnings were $18.1 billion, down 19%. For Q4 net income dropped 46% to $3.65 billion, $.35 a share, from $6.97 billion, or $.66 a share in the same quarter last year. The quarterly numbers included $1.5 billion of after-tax restructuring and other charges
Fiat And Chrysler: The Hunter Loses It Way
The idea that Fiat would buy 35% of Chrysler at least made a modest amount of sense. It would give Fiat an outlet to sell its small cars in the US. Chrysler could get capital to retool some of its factories to build more fuel-efficient vehicles.
A day after the two companies announced that they were in talks it became clear that its success would depend on more capital from the US government. Congress might ask Fiat to put up some of that money. It might look bad for America to finance an Italian firm’s US-based enterprise.
Pfizer (PFE) And Wyeth (WYE): A Merger As A Way To Fire People
Companies, even really big ones with hundreds of thousands of employees, can only fire so many people. At some point the core functions like accounting and marketing need enough personnel to keep operations running. The layoff machine runs out of fuel.
Pfizer (PFE) has already fired thousands of people. Most recently it cut 800 researchers and 2,400 sales personnel. The drug firm probably would have been more brutal if it could have been.
The U.K.’s GDP Shrinks The Most Since 1980
Data released from the U.K. shows the economy there has not been in as bad shape since Margaret Thatcher was Prime Minister showing the recession is biting there harder than expected.
GDP fell 1.5 percent from the previous quarter, according to the Office of National Statistics. That’s worse than the 1.2 percent decline predicted by economists surveyed by Bloomberg News. Since GDP has now shrunk for two quarters, the U.K. has now joined the recession "club."
Google (GOOG): It’s The Current Quarter That Counts
Google’s (GOOG) fourth quarter was better than expected. Revenue was up 18% and operating income rose 33%. The search company is starting to control costs better. The overall figures were better than expected. Wall St. was happy.
The quarter just ended says almost nothing about what is about to happen to Google. Looking at the company’s prospects for the next year or two, it is the first quarter of 2009 that counts.
Why Earnings Don’t Matter (IBM)(GOOG)(MSFT)
In a relatively stable economy, quarterly earnings releases and public company forecasts can be useful guides to Wall St. Corporations can actually look out a three to six months and forecast how their business should do with some degree of accuracy. But, as securities analysts have shown time and time again, missing projections is commonplace even when the business world is at peace.
The fourth quarter earnings which are coming out now and the forecasts for next year are as useless as a boat in a drought. Google (GOOG) has a quarter which was better than expected. Because it is in a fast-growing segment of the internet, it would be reasonable to assume that its trajectory would continue up. Actually, there is just as much of a chance that the slowdown in advertising spending will damage Google’s business.
IBM (IBM) also reported extremely good earnings and said 2009 would be at least as good. Only one of its five major businesses would need to get into trouble for that forecast to come unglued. If sales in its hardware operation fall apart, its earnings forecasts could be off by a significant amount. All of those investors that looked at IBM as a good gamble would end up losing money.
Media Digest 1/23/2009 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, Samsung had its first ever quarterly loss.
Reuters reports that Pfizer (PFE) is in takeover talks with Wyeth (WYE), a deal that would be worth $60 billion.
Reuters reports that a good bank/bad bank system would lead to nationalization.
Reuters reports that the new Treasury Secretary designate believes that China has manipulated the Yuan.
Reuters writes that Google (GOOG) beat earnings estimates.
Asia Markets And Europe Open 1/23/2009
Markets in Asia were sharply lower.
The Nikke fell 3.8% to 7,745.
THe Hang Seng was of ..4% to 12,603.
The Shanghia Compoite dropped .7% t0 1,991.
In Europe, at the open, the FTSE was down .3% to 4,014. The Dax was down .4% to 4,203.
Data from Reuters and MarketWatch
Douglas A. McIntyre
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