When it announced earnings for its last quarter Apple (AAPL) said it expects to earn $.90 to $1 per share on $7.6 billion to $8 billion in sales in the current quarter. Most analysts view that as light, but there are concerns that Apple’s sales of iPhones and Macs may falter.
For the quarter to be strong, Apple will probably have to sell four million iPhones and two million Macs, and 12 million iPods.
What are the chances of that?
GE (GE) is faced with a potential downgrade of its debt from "Aaa" status and angry investors who want to know why the company insists on having a TV network and medical supply company under the same corporate roof.
GE’s shares are now down to $12, off almost 65% in the last year compared to a 34% drop in the DJIA.
GE got a bit of good news today. NBC will post impressive advertising revenue for the Super Bowl.
Macy’s (M) is up against the same hard rock as other large retailers who cater to the middle class, Sears (SHLD) and Nordstrom (JWN). Sales are being crippled by the recession and there are simply too many stores in too many malls and on too many street corners.
Macy’s (M) may layoff as many as a thousand people next week.
Everyone waited last week for the government to set up a "bad bank" last week where banks and major financial institutions would get to sell their toxic debt and credit instruments. So, it won’t shock many of you that there have been problems with this idea.
The prices to be paid for these assets were seen as too high. The "N WORD" for "nationalization" is unfortunately becoming a growing risk for investors. Here is what seers like Julian Robertson, Meredith Whitney, Bill Seidman, Jamie Dimon, Bill Gross, and others have to say about it.
The federal government has put $150 billion into rescuing AIG (AIG), which was once the most profitable insurance company in the world. With financial relationships linking it to banks and brokerages all around the US and overseas, AIG was deemed "too big to fail." When Lehman went out of business it cost its trading and lending partners tens of billions of dollars. AIG’s balance sheet makes Lehman’s look tiny.
But, the $150 billion has not been enough.
NOVA Chemicals (NCX) Bad Q4 and a downgrade by RBC. Falls to $3 from 52-week high of $32.46.
Regions Financial (RF) Downgrade by Bernstein. Runs off to $3.40 from a 52-week high of $25.84.
Synovus Financial (SNV) Bad analyst call. Drops to $3.88 from 52-week high of $13.58.
International Paper (IP) Big quarterly loss. Sells off to $9.06 from 52-week high $33.77.
Fifth Third Bancorp (FITB) Bernstein downgrade sends shares plunging to $2.36 from 52-week high of $28.58.
Century Aluminum (CENX) Company plans to sell more stock. Dips to $3.43 from 52-week high of $80.52.
Douglas A. McIntyre
If you hadn’t gotten your full round of pre-weekend economic gloom, famed investor Julian Robertson of Tiger Management just gave an interview with CNBC’s Erin Burnett. He is cautious about what lies ahead.
If you do not recall, Robertson warned a year ago that the U.S. was headed for a "doozy of a recession." He advised the Obama administration to tell the truth and say there are no quick fixes. If this bailout/turnaround isn’t successful, then a 3- to 4-year economic problem will be much worse than what Japan went through in the 1980s.
It has been some time since the IPO market has been open, but we still see some filings from companies which have the desire to come public such as OpenTable, Inc.
This morning’s quarterly and annual results from Arch Coal, Inc. (NYSE:ACI) have kept the coal fires burning. Arch reported EPS of $2.45 on net income of $354.3 million for the year. Annual revenues hit $2.98 billion. Analysts had been anticipating $2.42 EPS on $2.97 billion in revenues.
The quarterly results were also stirring. Revenues hit $729.9 million and EPS was $0.44. Analysts expected EPS of $0.39 and revenues of $713.9 million. However, compared with 2007, EPS was off by $0.12/share, and that was disappointing. The stock is down almost 5% in early trading.
Smith International, Inc. (NYSE:SII) led the parade of oil field services stocks downhill yesterday. Smith opened Thursday more than $1.50/share lower than Wednesday’s close and finished the day even lower. Schlumberger Limited (NYSE:SLB), Baker Hughes Inc. (NYSE:BHI), Halliburton Company (NYSE:HAL), and Weatherford International Ltd. (NYSE:WFT) all followed suit.
Smith reported soft fourth quarter and full year results yesterday. Non-GAAP EPS amounted to $1.00 on income from continuing operations of $218.6 million and revenue of $3.06 billion. Analysts were expecting EPS of $1.02 on revenue of $3.04 billion.
The company’s CFO noted that Smith has "one of the best cash flow downturn profiles in our industry. Over the coming quarters, we would expect to generate significant free cash flow as the business contracts…." She didn’t explain what that means, exactly, but one could interpret it to mean that as economic conditions worsen, Smith will perform better. Sure, we’ll buy that.
Paul Ausick
SunPower Corporation (NASDAQ:SPWRA, SPWRB) reported strong earnings after markets closed yesterday, and the shares opened almost $4/share higher this morning. Shares are up more than 12% currently.
Analysts had expected SunPower to record revenue of $396.8 million and non-GAAP EPS of $0.57. The company came in with revenue of $401 million and non-GAAP EPS of $0.70. SunPower said than 2009 non-GAAP revenues would be in the range of $1.6-$2.0 billion, and fully diluted EPS would be in the range of $2.20-$2.80. Analysts estimates for 2009 are revenues of $1.88 billion and EPS of $2.64, about the midpoint of SunPower’s own projections.
SunPower’s solid report boosted competitor First Solar, Inc. (NASDAQ:FSLR) as well this morning. Still, First Solar shares are off 52-week highs by about 56%, and SunPower stock is off nearly 70% in the same time period.
The companies are looking to get a boost from the US government’s economic stimulus package. Because the details of that package are still murky, recovery in share prices is cautious. But since November, the trend line is slightly up.
SunPower noted that it is "encouraged by the commitment" of the new President and the new Congress to renewable energy. That’s all well and good, but that and $4 will get you a tall latte.
Paul Ausick
Piper Jaffray & Co. downgraded Under Armour (NYSE: UA) from neutral to sell. Its lowered its price target by $1 to $16, citing near term headwinds for domestic discretionary spending and deteriorating gross margin.
Piper’s analyst says, "We believe in the long term growth prospects for UA; however, near term headwinds for domestic discretionary spending coupled w/ gross margin deterioration from unfavorable mix and premium price point product does not justify the current multiple on our est. for earnings in FY09."
This morning, we got see two of the "biggest of the big" in the Big Oil complex report earnings. You are seeing much more conservative earnings from Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX).
The government reported that fourth quarter GDP contracted at an annual rate of 3.8%.That does not approach the 7.8% in the second quarter of 1980 or the 10.4% post-war record set in the first quarter of 1958. The consensus estimate among analysts was for a 5.4% drop.
The fourth quarter number was helped somewhat by a build-up in inventories. Real final sales for domestic product, which excludes inventories, decreased 5.1% in the fourth quarter. This is the biggest drop since 1980.
One of the concerns that economists probably have is whether some of the effects of consumer spending and corporate investments have slipped into the current quarter. If so, that will have to be added to GDP contraction which is already almost certainly much worse than in Q4. Based on early statistics about consumer confidence, employment, real estate prices, and capital spending a GDP contraction in the range of 10% should not be a surprise.
These are some of the many pre-market downgrades and negative calls we have seen from Wall Street analysts this Friday morning:
Allstate (ALL) Cut to Underweight at JPMorgan.
AstraZeneca (AZN) Cut to Hold at Citigroup.
E*TRADE (ETFC) Cut to Underperform at Raymond James.
Fifth Third (FITB) Cut to Market Perform at Bernstein.
Juniper Networks (JNPR) Cut to Neutral at Piper Jaffray.
Qualcomm (QCOM) Cut to Hold at Societe Generale.
Regions Financial (RF) Cut to Market Perform at Bernstein.
Ryanair (RYAAY) Cut to Hold at Citigroup.
Sepracor (SEPR) Cut to Sell at Piper Jaffray.
Starwood Hotels (HOT) Cut to Perform at Oppenheimer.
Timken (TKR) Cut to Hold at KeyBanc.
Time Warner Cable (TWC) Cut to Sell at Collins Stewart.
T. Rowe Price (TROW) Cut to Underweight at JPMorgan.
Under Armour (UA) Cut to Sell at Piper Jaffray.
Veolia Environnement (VE) Cut to Sell at Citigroup.
Zenith National Insurance (ZNT) Cut to Market Perform at FBR; Cut to Perform at Oppenheimer.
Jon C. Ogg
January 30, 2009
These are some of the top pre-market analyst upgrades and positive calls we have seen on Wall Street this Friday morning:
Jon C. Ogg
January 30, 2009
One of the largely hidden signs of the progress of the recession is whether goods are being shipped from one city to another and from one country to another. What is not shipped is not put up for sale.
Fedex (FDX) and UPS (UPS) have said that their businesses are faltering, but the situation may be getting much worse than that.
The auto industry and government have floated a few ideas to jumpstart car sales.
Among these are subsidizing low cost car loans. Another is to pay car companies a piece of the purchase price of each new car so The Big Three can drop prices and still profit.
The Administration is looking at a hybrid plan to save the nation’s banks. It world involve buying some toxic assets from the firms and putting them into a "bad bank." The value of other assets would simply be guaranteed by the government.
The program is something right out of the Mad Hatters Tea Party.
As the global recession hits the electronics industry, NEC has decided to fire 20,000 people worldwide.
According to The Wall Street Journal, "Japanese electronics giant NEC Corp. says it plans to slash at least 20,000 jobs world-wide in an effort to cut 80 billion yen ($890 million) in costs over the next two years."
Douglas A. McIntyre
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