Most Asian markets fell more than 2.5% last night. The Tokyo stock exchange was forced to halt trading because the system was overloaded. This is just the latest in a string of technical glitches that have occurred recently on the Japanese exchange.
It's shaping up to be an ugly opening here with stock index futures sharply lower.
Position: none
You knew there had to be a monster buyer of Schlumberger (SLB:NYSE) to move it up like that. Thanks, Fidelity Magellan fund. We saw the same thing happen to UnitedHealth (UNH:NYSE). It is always one big fog fund that moves stocks like this.
Position: long UNH
Okay, I'm a little baffled by Intel (INTC:Nasdaq). How can customers have too much inventory and the company have supply constraints at the same time?
On a related note, if I were an Intel shareholder, I would be writing angry letters over the company's nonsensical $2.5 billion ad and marketing campaign pushing all this "Leap Ahead" and "Viiv" jazz. Earth to Intel -- Most consumer users don't care about what kind of chips are in their computers. The average person wants to illegally download music and check his or her email, not make a figurative leap.
Intel should take that $2.5 billion and put it into product development so it can steal some thunder back from AMD (AMD:NYSE), which has historically been one of the most dysfunctional tech companies out there. Or, at least give the money back to the shareholders that actually own the company.
Position: none
The MBA's Weekly Mortgage Applications Survey rose 2.2% for the week ending Jan. 13. On an unadjusted basis, the Index increased 31.4% compared with the previous week, but was down 10.9% compared with the year-ago period. The four-week moving average for the seasonally-adjusted Index is up 0.8%.
The Purchase Index decreased by 3.0% whereas the Refinance Index increased by 9.9%, its largest weekly increase in more than two months.
The number of ARMs applications as a percentage of all mortgages rose to 30% from 27.8% last week, its largest increase in three months.
The rate for a 15-year fixed mortgage decreased to 5.64% from 5.66%.
Position: none
AMD (AMD:NYSE) reports tonight, with analysts looking for 26 cents a share on $1.67 billion in revenue, which I expect the company to handily beat, at least on the revenue line. AMD has been kicking Intel's (INTC:Nasdaq) butt on the desktop and server side, so be sure to key in on results in notebook computers.
Position: none
Good morning...
Futures are sharply lower but off their lows. S&P futures are down 9.10, Dow futures are down 81 and Nasdaq futures are off 31.5 points, all well below fair value. Japan sold off hard (and closed early) after earnings from Intel (INTC:Nasdaq) and Yahoo! (YHOO:Nasdaq)disappointed after yesterda's close.
News that the security situation in Nigeria (see my comments yesterday) continues to deteriorate and Iran may be brought to the U.N. Security Council has oil trading close to $67 a barrel. Inventory data today may help a bit, but concern over global supply is the focus.
Plenty of earnings today including results from Amphenol (APH:NYSE), AMR Corp (AMR:NYSE), Bank of NY (BK:NYSE), Ethan Allen (ETH:NYSE), Jeffries (JEF:NYSE), JP Morgan (JPM:NYSE), Mellon Financial (MEL:NYSE), Northern Trust (NRTH:Nadsaq), Southwest Air (LUV:NYSE), State Street (STT:NYSE), SunTrust (STI:NYSE) and others. After the bell, look for key numbers from Advanced Micro (AMD:NYSE), eBay (EBAY:Nasdaq) and more financials.
It's a good day to remember your investing and trading discipline. My instinct is the morning swoon will lead to opportunities: follow your rules.
Have a great day.
Position: None
Unfortunately, Mike, AMD is not Intel, and therefore will likely have a minimal impact on the overall trend of the market. What's more, AMD had its blow-up quarter at this time last year (which turned out to be a great buying opportunity), so with Intel sending a bad signal already for the December period, and AMD up more than 100% in the last year, AMD is going to have to deliver more than market share gains tonight to excite investors.
I have a column going up today that will breakdown, again, why I think IBM's earnings 'beat' was more sizzle than steak. I expect harsh criticism from the same people who called me names last quarter when the stock was trading a full 0% from where it is today vs. a 7.8% gain for the S&P 500.
Position: none
Will, if AMD (AMD:NYSE) was some kind of bellwether, I probably wouldn't like it very much! When it comes to stocks, I'll take a giant killer over a giant any day. Small companies have everything to gain and big companies have everything to lose.
Position: none
Hope is a dangerous game but can AMD/EBAY dispel INTC/YHOO? Some are betting that way.... I know AMD and EBAY should be good and the expectations have been taken down in the last 24 hours...Livedoor is really weighing on this world's markets improbably at this point..
Position: none
I am not bearish on Google (GOOG:Nasdaq), but I sense a bear case is being built which could be painful in the near-term.
First, Henry Blodget penned a piece about what it would take to get Google to $100. Forgetting that in no way was his piece intended as a forecast of Google hitting $100, different media outlets have picked up the story with clever headlines like "Google to see $100 a share."
Second, the click fraud story, which Blodget has covered well on the web and Wired ran a full feature on recently, could create enough negative PR to take away some of Google's pricing power. If advertisers begin to question the ROI of web investing, traditional ad-mediums such as print will be comparatively attractive.
Third, Yahoo! missed the Street estimates. It didn't "not beat by enough," it flat out missed, which is a double-whammy of bad news. If Yahoo! can't beat despite delivering big growth, how can we expect Google (GOOG:Nasdaq) to beat. And if Google is more expensive than Yahoo! on an earnings basis, Google is going to get hit much worse than Yahoo! did last night on a miss.
There are likely all near-term phenomona, but I wanted to see what other people are saying/hearing today with Google down 20 pre-market.
Position: none
Thanks to a large decline in energy costs the CPI fell by 0.1% vs. forecast of a 0.2% increase, in December
The core rate rose (ex-food and energy) rose 0.2%, in line with estimates.
Position: none
Did Jobs leave anything on the table? I worry about Apple after the run.. and the expiration trap of $80
Position: none
Logitech (LOGI:Nasdaq) reports tonight, with the good folks on Wall Street looking for EPS of 78 cents on $592 million in revenue.
I am positive on the stock long-term, but wouldn't be a buyer ahead of the report. The company's video game results could get hit due to market disruption caused by the Xbox 360 launch, though this could be offset by the booming Harmony remote control business.
Position: none
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Roger Nusbaum |
| What The Hell Is Going On Here? |
1/18/2006 8:48 AM EST
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Japan apparently is on fire. There is looting in the street and martial law has been declared.
What? That's not right? On September 17th 2001 the S+P 500 fell 4.9% in reaction to what I think was the first very meaningful terrorist attack on US soil. The US at that point was facing huge unknowns. 4.9%
In the last two days the Nikkei is down 5.6% because some Internet company had its offices raided. Huh? Something does not add up. I missed the run up in Japan (makes me dumb) so I am missing (makes me lucky) whatever is happening now.
I write on my blog about understanding what a stock is capable of doing in the face of news, good or bad. The same applies to markets. Japan is capable of panicking. This has happened many times in my career. The panics are generally larger than what happens here. Last night there was some panic in Australia. That market dropped 1.6%. That is about as big as I have seen there in the last few years.
If you are going to invest in foreign stocks and plan to do so with more depth than just buying the EFA ETF, you need to study and understand this.
A lot of managers have very heavy exposure to Japan. This type of decline just goes with that territory. By avoiding or underweighting that country you reduce your portfolio's volatility.
Position: none mentioned
Good morning. The open's just gonna be about as ugly as it gets. Think about what that phrase says though. As ugly as it can get. Point is, while I'm not going to be doing much buying (figure I'll cover a little more of short hedges), I'm sure not going to be doing much selling into this morass. Both Intel (INTC:Nasdaq) and Yahoo! (YHOO:Nasdaq) were just on the "bad" side of things. Keep in mind though, that it's early in earnings season. Much too early to extrapolate these two reports (which included a record quarter of sales and earnings at giant Intel) out to the rest of the world. So, anyway, I've got only calls in Yahoo! left (which are now out of the money), as I noted in my "New Trades" column. And same for Intel as I'd noted in the TSC video yesterday. And as emailers keep asking, despite my having been an out and out buyer the last time we had a reaction to earnings like this, I'm just not there today. Easy does it for now.
Position: Net long YHOO and INTC
At the risk of invoking a Cody riot, I think Intel was pretty awful, when you consider they just gave guidance in early December and still fell short of expectations. I think this morning's sell off is justified, and it's a reminder that stocks that trade with above market earnings multiples that don't live up to their own expectations will get hammered.
The best thing Intel did last night was decide not to provide mid-quarter updates. Giving a mid-quarter update and missing that number by a wide margin with just weeks left in the quarter serves no purpose.
P.S. A fourth concern with Google (GOOG:Nasdaq) is that it is venturing off the web, and into radio and other different forms of media to generate ad-revenue. While this is likely headline risk, and wont have an impact on its growth rate, it raises the questions as to what does Google know about the online ad market that makes it want to diversify its revenue stream?
Position: none
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Cody Willard |
| Ugly and Awful and other Adjectives |
1/18/2006 9:23 AM EST
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Semantics, I guess, Will. As I noted last night, I have a hard time calling record sales and earnings "ugly" or "awful". I'll save those terms for when the economy reverses again and things really get ugly and awful. Google's heading off multimedia at the pass. Simple as that.
Position: Long GOOG
Not all the news is bad this morning: Andrx Corp, a generic drug maker had news that Wednesday a federal court invalidated patents covering AstraZeneca PLC's Toprol-XL heart drug, clearing the shelf for Andrx's generic version. The company said once approved by the FDA, they may be entitled to six months of exclusive selling rights on the 50 milligram dose of the drug.
ADRX isn't a speculative biotech. Even without this news the company is sitting on $300mm cash, a $900mm enterprise value, and a $100mm in cash flows over the past twelve months. Additionally, activist fund MMI Investments recently filed a 13D filing stating that they felt shares were undervalued. Their average price was 19.50. Shares this morning are trading up about 5-6% to 17.51.
Position: long ADRX
I agree with CW, if you compare Intel's earnings results (absent expectations and company guidance) in a vacuum, they really aren't awful. In fact, they are RECORD! However, no vacuum exists and when the stock is down 10% in pre-market trading, awful seems appropriate. I wouldn't extrapolate from Intel or IBM that the economy is bad or that capital markets and investment are drying up by any means. These are companies that sell to other companies, not consumers. If Apple (AAPL:Nasdaq) said it only sold 9-million iPods, we would have a problem.
Position: none
I don't think investors should view Intel's (INTC:Nasdaq) or IBM's (IBM:NYSE) quarters as indications of economic weakness. These are very mature companies selling into very mature markets, and both have plenty of fleas. Intel is losing market share and IBM is working off a $90 billion market revenue base. What do people really expect out of them?
Position: none
Sure, the Nasdaq is down over 1% but a case can be made the absence of "big" losses this a.m. smacks of complacency, given the news last night from INTC, IBM and YHOO and overnight from Japan. I mean, there's an awful lot of chatter on the site about "buying opportunities" vs. this being a potentially problematic wrinkle in the "earnings are strong" consensus, Barry Ritholtz being a notable exception.
Position: somebody had to say it
IBM, Intel, and Yahoo disappointed, we get it. Oh - don't forget Japan and oil. While not as sensational as those, and in an effort to broaden the discussion this morning, here's a quick follow up.Almost a year ago, I wrote about Amdocs Ltd, saying "As the telecom industry consolidates, the impact of these mega-mergers will be felt by many different companies, creating some big winners -- and losers -- along the way. One company that looks like a winner is Amdocs, a leading provider of customer care and billing systems for telecommunications companies."Yesterday, Sprint Nextel Corp. (S), the third-largest mobile-phone company in the U.S., tapped Amdocs for an eight-year contract to supply billing software. According to the press release, Amdocs had been providing billing software to Nextel since 2000, while competitor Convergys (CVG) had been working with Sprint since 1996. This is a big win for Amdocs, and the stock is at new multi-year highs now on an otherwise ugly day.
Position: None
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Jim Cramer |
| Real nice rotation |
1/18/2006 10:16 AM EST
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Real nice rotation in to other high growth sectors today,..plus don't overlook the UNH/PG kind of stuff here
Position: PG UNH
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Guy Lerner |
| Nasdaq Breakout Update |
1/18/2006 10:20 AM EST
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The bullish strategy that I wrote about last week still remains in effect as long as the NASDAQ closes above 2278 level on a weekly close. I suspect that the market will not make things easy and that this 2278 level will serve as a magnet for this morning's gap down opening. A Friday close below 2278 on the NASDAQ means that the support level at 2278 has not held and the recent break out is a fake out.The action of the last two day's certainly puts the sustainability of any upside momentum in to question. On the other hand, the bullish set up just got better in the sense that your risk just got less. For those looking to buy near support, this morning's gap down provided an opportunity.
Position: Long QQQQ
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David Merkel |
| And Now a Word from the Bond Market... |
1/18/2006 10:23 AM EST
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Nothing all that pressing, but since some people like to measure the yield curve between 10 years and 3 months, I would like to mention that the curve has inverted by that measure by 4 basis points. There is a forgettable semi-academic piece by an economist at the Federal Reserve that suggests that this measure of the yield curve is the one most highly correlated with the probability of recession. I want to tell you that this is hooey, because all of the measures of yield curve steepness are highly correlated with each other. The one that was best by a teeny bit was only so because of happenstance.
The curve is pretty flat, but if we get the slightest hint that the FOMC has more than one tightening left, we will get a visible inversion. My suspicion for reasons that I have stated previously, is that absent a blowup somewhere, the inversion will last longer than most expect. That doesn't mean anything bad for the market as a whole, aside from spread-based lenders.
As for today, pretty resilient stock market, don't you think?
Position: none
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Cody Willard |
| Who's Panicking? Bulls or Bears? |
1/18/2006 10:30 AM EST
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I dare say, is that selling panic turning into a "don't get left behind" panic? A lot of underinvested bulls and shorts are thinking, "Oh man, did I just miss the opportunity to buy/cover here?" Also interesting is that Broadcom, PortalPlayer and so many others rallied back from their early trashings. Staying steady here, but trying to gauge the emotions.
Position: Net long brcm, play
Jim,
Interesting anecdote from Florida regarding Centex (CTX:NYSE) offering $100K off their homes. I haven't heard of anything like that down here in South Florida. At this point, many of the new communities in Palm Beach County still have a lot of buzz and homes are being snapped up. However, pricier used homes are sitting on the market for quite a few months. Not long ago they were sold in just a few weeks. I receive a deluge of direct mail pieces from local realtors on a daily basis. Yesterday, for the first time since I moved here (2 1/2 years ago), one of the listings was marked "Reduced".
Position: Long one house in Florida
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Jim Cramer |
| Looks Nationwide |
1/18/2006 10:46 AM EST
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Marc, this is a nationwide promotion, look at this ad for Southern California -- region by region.
Position: none
The VIX hit a high of 12.62 this morning, not a tremendous rise given the opening sell-off. The equity only put/call ratio, which remained very low yesterday, has increased modestly to 0.64 this morning. So the SPX had held the 1275 support level.
The most active options are INTC, YHOO, GOOG. The SemiHoldrs(SMH) are also quite active with February $37.50 call the most active.
Position: none
Jim, Within minutes of my post regarding Florida housing, I received an email from a former colleague with these links to $50,000 off Centex (CTX) homes in Jupiter, FL and $80,000 off in Port St. Lucie, FL. I guess it's not just the used homes that are being reduced. Will winter weary Northerners continue to flock to the Sunshine State and keep home prices elevated or will the next hurricane lead to an exodus from the sunshine state?
Position: Long a pair of Ray-Bans and a set of hurricane shutters.
The final installment of Cult of the Bear is up.
We kept the column short and sweet. If you want more details, see this discussion on The Rising Risk to Earnings.
As to that CNBC appearance . . . First a tractor-trailer gets windblown, and jack-knifes on the George Washington Bridge, closing traffic in both directions. Then a windstorm closes nearly all of the Manhattan bridges. Simply could not make it to the studio by 10:45.
No stress -- all I can do is laugh about it. We rescheduled for tomorrow: same Bat time, same Bat channel.
Position: zippo
I'd be remiss if I didn't preview Apple one more time (though I did update my stance in this video clip from TSC yesterday....Cramer's doing some video on the same page too, BTW). Anyway, as I noted I wanted to, I'm looking to be a buyer of yet more Apple on weakness. The more I analyze the ways to win (or lose!) with this company, the more bullish I get on the intermediate and long term prospects of the stock. Now that said, I've gotten about 20 emails in the last two days from readers who seem to be uncomfortably long the stock. As you'll see in this weekend's edition of The Cody Mailbag, I keep writing back to them telling them that the only message I can really convey to them is that you should never own so much stock that if it got crushed it wouldn't ruin your life. If you're not comfortable with your position, sell it down until you are. On the other hand, I've gotten about a dozen emails from readers wondering if they've just missed the Apple boat and should they finally buy it. For the record, I don't advise on such specifics. But I do think there's some interesting data to be culled in those anecdotes from RM readers. In the end, there's simply no doubt that the expectations for a monster quarter and strong guidance are there. There's also little question in my mind that Apple's going to deliver that monster quarter. With Apple's history of UPODing (that's Under Promise, Over Deliver....not a new flavor of iPod!) with Jobs at the helm, I am worried that guidance will disappoint. I've been long Apple via calls and/or common since early 2003, and I'm not going to force this position into today's conference call. But I remain a buyer on weakness.
Position: Net long aapl
Okay, so the market isn't so resilient. I'm not big into technical analysis, but rallies that fail in the morning indicate a negative market psychology to me. Maybe this is indicative of some of the overbought weakness that I mentioned on Friday.
Anyway, trade carefully. I don't trade much, so I might nibble on a little weakness here. Premium Standard, Allstate, and Metlife look interesting here. If the Japanese market falls enough, perhaps a little more Japan Smaller Capitalization Fund. I'm in no hurry.
Position: Long MET ALL PORK JOF
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Guy Lerner |
| Gold Pullback Upon Us |
1/18/2006 12:44 PM EST
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I believe that the much awaited pull back is upon us in gold and precious metal shares. Gold could trade down to $530 and most likely to $522 in time. I don't see anything that suggests that the longer term up trend is at jeopardy. This should be a normal bull market pullback.
Position: None
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Steven Smith |
| eBay Options Bracing For Earnings |
1/18/2006 1:31 PM EST
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Trade in eBay options is picking up ahead of this afternoon's earnings report. Most of the activity is focused in the Jan. options, which expire Friday, with the $47.50 calls and $45 puts having traded over 14,000 contracts each. The January options are sporting an I.V. of near 100%, while Feb. I.V. is around 46%/ The stock's 30-day historical is just 26%. No matter what the result expect a sharp decline in I.V. awarded these front month options.
Position: none
A reader writes:
"I was thinking since the phrase "cult of the bear" is being so widely embraced especially on Real Money,maybe you can start using a counter label that that similarly derides the bulls . . .?"
I like the concept of the counter phrase versus cult of the bear. Any ideas as to what the Man-Cow's should be called? Here's my short list:
The Bullish Herd
The Under-performers
Market Cheerleaders
The Hype Brigade
Long & Wrong
The one trick ponies
Happy Talk Squad
If you have any great suggestions, add them here.
Position: one
Barry, that's brilliant. How about "The Heresy Herefords"
Position: My father is long about a dozen herefords at any given time.
It's an intriguing start for the mobile phone reporting season. Two Top Five brands came in with slightly short of sizzling volumes. Samsung and Sony Ericsson were both in the 28-29% year-on-year volume growth range - good, but below the likely 30-37% global volume growth of the quarter. More Jennifer than Angelica. In the recent past, one of these names has beaten or matched the market growth in each quarter. Oddly, Samsung had only 1% sequential volume growth moving from 3Q to 4Q - in contrast, Sony Ericsson blazed into the fourth quarter with 17% sequential growth.
This might be good news for the mobile content industry in the sense that Sony Ericsson's edge over Samsung was anchored in advanced audiovisual technologies. SE has had the first substantial commercial hit in the music phone sector with its Walkman phone series, debuting after mid-3Q. SE also moved its focus from 1.3 megapixel camera phones to 2 megapixel models perhaps a step faster than Samsung. Samsung remains a little thin when it comes to mobile software - music distribution, email, etc. aren't the current focus. Could the winter momentum shift from Samsung to Sony Ericsson illuminate the growing consumer appetite for mobile content?
The mobile content market is facing a major test in 2006. US household spending on the mobile phone bill has ballooned from roughly $50 to around $75 since 2000. Similar spending expansion has taken place in other countries - driven by people yanking their landline phones off the wall, getting a second household cell for the missus, etc. We're now facing the apocalyptic battle of various cable and satellite services trying to boost their monthly household bills from $40-50 to a higher orbit - while mobile operators try to hike the bill somewhere closer to $100. They're all ready to gut hogs ranging from movie to magazine to gaming industries to hit these goals - which they must do in order to succeed.
France Telecom's nasty warning from last week illuminated how unstable the service provider landscape remains - but shifting content delivery modes may help keep the portable gadget market on a high gear. It was somewhat stunning to see Sony Ericsson's average sales price dipping by nearly 10% considering the pricey Walkman range blossomed to more than 10% of overall volumes. Despite the ASP tumble, SE hiked its margins during 4Q with the aid of better volumes and some clever manufacturing gimmicks. Nevertheless, it's spooky how the dawn of the music phone era and 2 megapixel camera phones was accompanied by an ASP decline this steep. This was a quarter where SE actually had a measurable edge over its competition, which was a little sluggish in bringing new tech to mass market. There's little doubt that the ASP outlook is going to remain the number one topic of this phone vendor earnings season.
Position: none
I wish this rally had started an hour later, too much time for the sellers to regroup and sell...
Position: none
Rally is beige book related--another piece of ammo for those who think there 's only one more rate hike
Position: none
I feel strongly that Japan is right, right into this sell-off. Buy half if you have to, but they are really trashing this market for reasons that have to do with mechancis and chicanery NOT earnings...
Position: none
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Cody Willard |
| Japan's Markets and Economies |
1/18/2006 2:45 PM EST
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For a year or so on this site, I've been bullish on Japan (and as that column details, extremely bearish on China). With Japan's markets up more than 30% since I started writing those Japan pieces, I can't agree with Jim that the recent trashing is a buying opp. I think the Japanese markets could cool, or fade, or stick rangebound for a while now. That said, I do think Japan's economy will be a huge driver for the world's economies in the next decade. Much moreso than any of their communist-regimed neighbors.
Position: None
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Dan Fitzpatrick |
| Housing: Time to Move In or Out? It Depends! |
1/18/2006 2:54 PM EST
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I see a lot of complexity in the homebuilding sector now. Close to home, housing prices in San Diego County declined about 10% in December. I know that the major homebuilders in San Diego and Riverside Counties have increasingly high inventories, although I haven't seen the $100K Blue Light Specials yet. In fact, many subdivisions are sticking to the "use our lender" credit only. Declining sale prices vs. sticky asking prices -- How do you reconcile the two? I suspect that this inconsistency is a function of future supply. Here, there is just not that much left to develop, so price reductions are not that prevalent.
The takeaway for me is that these huge reductions are region specific. Last year Pulte (PHM) dropped prices by 25% overnight in Las Vegas. The homebuilders got crushed because most folks didn't see that coming. This time around may be different. I wonder how much this slowdown is already factored into the stock price of market-specific stocks? They don't trade together.
Beazer (BZH) is in a strong uptrend and hit an all-time high last week that went largely unnoticed (probably because they do not install Apple iPods in the kitchen). Beazer is in big in the San Joaquin Valley -- one of the least recognized markets where demand continues to outstrip supply). On the other hand, Toll Brothers (TOL) is trading at a big discount to last year's high. As most folks know, they specialize in high-end product.
If the Fed is close to being done, that cannot be a negative for the homebuilders.
So this sector looks extremely complex to me -- I think it's risky to be bearish on the sector...and I think it's risky to be bullish on the sector. The companies are too dissimilar. I'd be interested in buying Beazer on a pullback, but would need much more price data before moving on HOV and TOL. Both are in potential head & shoulder patterns (bearish argument), or are currently consolidating at lower prices (bullish argument).
In sum, I think it's very difficult to have a strong bias one way or the other on this sector unless you truly understand the specifics of the group. While there are probably easier trades out there, I can't find many right now.
Position: None in stocks mentioned.
UNH a laggard ahead of the quarter! How ridiculous!! Aetna and wellpoint outperforming...outrageous!!!
Position: UNH
I wouldn't be surprised to see UnitedHealth (UNH:NYSE) become a real battleground stock this year. It definitely isn't cheap, and a lot of its growth has been through acquisitions, the pace of which should slow. How many deals they can make without running into DoJ trouble?
Position: none
I agree with you Michael -- I just don't know when the HMOs stumble. These financials have grown nicely and they've had great stock performance since the scare of Hilary-care due to lower cost trends, strong employment/growing enrollment, and M&A synergies while benefiting from rational behavior from the Blues who have privatized or smartened up. These winds are fading and the last wind, Medicare, will become less of a contributor in 2007 and beyond (and we don't know how profitable Medicare will be either). At some point, they will go back to becoming financials again (with the requisite multiples). UNH is the best of the group but gets the best multiple too...
Position: none
Earnings barrage hitting. The standout so far is STX, though I've no feel for what's priced in there already. Great numbers at a glance though. Amdocs looks fine, as usual. Great company. More coming. Stay tuned.
Position: No positions
eBay hits. It's probably best described as OK (though I know 307 emailers and 3 contributors will parse my phrasing and find problems with it). Anyway, the stock's down about a buck, but we'll see how it trades tomorow. Guidance is a little "light," as if the quotes meant something. More coming.
Position: net long ebay
And the hits, they keep on coming. Apple's guidance is waaaay too light vs. expectations and consensus. Amazing underpromise there. Again. I'd remind everyone how the stock got crushed last time after hours, only to rally huge afterward, but that's just too cute for my taste. Sigh.
Position: Net long AAPL
On the other hand, AMD is monstronormous. Both the results and the guidance. They are just on fire.
Position: No positions
Seagate had no problem beating analyst projections for the fiscal second quarter, earning 57 cents a share vs. 56 cent estimates on revenue of $2.3 billion vs. estimates for $2.2 billion.
Guidance was even more impressive. The company expects 55 cents in Q3 vs. Street estimates for 45 cents a share on revenu of $2.25 billion vs. estimates for $2.06 billion. I'll take that over Intel (INTC:Nasdaq) at 20x and IBM (IBM:NYSE) at 15x.
This quarter reminds me of the joke I heard from a handful of analysts a few months back about the hard drive cycle being over and pricing running against these companies. Wait, they were serious.
In all seriousness, any weakness in drive pricing going forward should be mitigated, to a certain extent, by STX's purchase of Maxtor announced a few weeks back. Less suppliers should drive greater pricing power. Also, this drive cycle is not about PCs, it's about consumer products, DVRs, and soon to be released hard drives in flat-panel televisions.
STX said full year 2006 EPS will be between $2.20 and $2.25, so you are buying this stock at just 11x estimates now.
Still a buy, in my view, but have to wait for the call.
Position: none
The AMD (AMD:NYSE) numbers look very good. EPS of 45 cents excluding charges on $1.84 billion in revenue vs analyst expectations of 26 cents on $1.67 billion. Guidance looks VERY nice too. Can't wait to see how this one trades tomorrow. I guess the folks at Intel (INTC:Nasdaq) are gonna need a few drinks tonight!
Position: none
Apple always crushes guidance, always!!! so i wouldn't sweat it for this much...
Position: none
Well, this Apple call is going very well. I'm not trying to buy after hours yet, but I will look to buy weakness tomorrow. Again, I just don't want to force things right here right now. Only thing I know for sure right now is that it most definitely is indeed earnings season! More tomorrow.
Position: Net long AAPL
Hate hearing so many analysts agreeing that Apple has just totally lowballed the guidance. But it is what it is. Lots of chatter about supply-chain constraints in the nano. That's like screaming "Apple's component suppliers are gonna have a blowout quarter." You know a lot of those names already if you've been following me (PLAY and SNDK, for example). And I'm officially giving the "star of the night" award to Lam Research (LRCX:Nasdaq). Which, for some unexplainable reason, I don't own.
Note: Lam Research ticker corrected.
Position: Net long AAPL, PLAY, SNDK
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