As the World Earns

T'was the season of earnings,
And all 'cross the Street
Some estimates were missed
But many more got beat.
On IBM! On AMD! On Apple!, traders roared,
As the tech giants leapt after-hours. Nay, they soared.

SAN FRANCISCO -- Now that you know why I'm not a poet -- and with regrets to Clement Clarke Moore -- let's talk earnings. What a difference a few hours makes. The hesitation evident during Wednesday's New York session was nowhere to be found in after-hours activity after the aforementioned tech titans each posted earnings in excess of expectations.

Results for IBM (IBM Quote) will likely have the biggest impact tomorrow given the company's stature as both a tech bellwether and component of the Dow Jones Industrial Average. IBM shares traded as high as 122 in after-hours trading, according to MarketXT. Big Blue finished the New York session at 115 1/2. The firm reported fourth-quarter profits of $1.12 a share vs. the consensus estimate of $1.06.

Similarly, Apple (AAPL Quote) reported first-quarter earnings of $1.00 a share vs. the consensus estimate of 90 cents. Everyone's favorite resuscitation story traded up to 113 7/8 after-hours vs. its regular session close of 106 9/16.

Those names -- along with America Online (AOL Quote) -- will likely garner the headlines tomorrow, but don't overlook Advanced Micro Devices (AMD Quote). The chipmaker -- which has had more false starts than Wacky Races -- posted a fourth-quarter profit of 43 cents a share, absolutely walloping the 21-analyst consensus of a penny (yes, just one) a share. AMD was trading at 49 in after-hours vs. its regular session close of 41.

Although such wide discrepancies are rare for a company as widely followed as AMD, Chuck Hill, director of research First Call/Thomson Financial, said the number was "clean" and could have even been 4 cents higher if not for a restructuring charge.

The range of estimates on AMD was from a loss of 11 cents a share to a profit of 26 cents a share, Hill noted, so "right off the bat there was uncertainty" about the quarter. The outrageous divergence from consensus likely resulted from a combination of better-than-expected volume and higher prices, in part because of shortages which followed the Taiwan earthquake, he said. AMD said microprocessor shipments rose 67% from the third quarter, and its average selling prices were around $80 in the fourth quarter vs. $65 in the third.

With estimates around break-even, "small differences" in performance can have a "big difference" on earnings, Hill said. "If you told me Intel (INTC Quote) was 40 cents above consensus, I would have said 'What the hell is going on?' Yes, [AMD] is a surprise but not a huge surprise."

Maybe so, but there's a whole lot of analysts who'll be forced to do some major upward revisions come the morning.

Ah, the morning. S&P 500 futures were up to 1476.40 in the Globex session Wednesday evening, suggesting strength at the opening. The fact the Nasdaq Composite established a new high despite a 7% decline by Microsoft (MSFT Quote) should encourage traders to get more aggressively long than they were Wednesday. Add the rodeo roundup of strong tech earnings after the bell, and it's looking like Thursday will be bullish.

That is, of course, unless the bond market is spooked by the trade deficit figures or jobless claims report (or another surge in oil prices). Or unless the rally proves to be contained to the after-hours session, much as the selloff following Lucent's (LU Quote) profit warning was way back on Jan. 6.

Out of Left Field

Long-standing readers of this column know I love a good conspiracy theory. Here's a lulu.

A market strategist at a West Coast firm contends the only reason Federal Reserve Chairman Alan Greenspan was reappointed to another four-year term -- six months before his current term expires -- is to provide him a free hand to tighten economic policy now, rather than having to take action during the heat of the election.

Not so outrageous, but it gets better.

The source, whose name I'll omit because sometimes sources need to be protected from themselves (and black helicopters), said the decision was made because Bill Clinton doesn't want the Republicans to retake the White House, and thus oversight of the attorney general's office. (Immunity, anyone?)

Wait, there's still more.

The strategist further argued Greenspan -- via a series of rate hikes and hawkish comments -- will send the Comp more than 30% off its all-time high by early May and the Dow down nearly 20% from its record.

Then during the market's darkest hour, he forecast "something" -- like a bank failure or hedge funds getting in trouble or a Chinese devaluation -- will occur, forcing Greenspan to "bail 'em out" with lower rates. That easing (yes, "easing") will re-ignite the economy and send stock proxies back to near all-time high levels by late next year, or just in time for the first Tuesday in November.

Sound crazy?

Well, it is, according to Thomas Gallagher, who follows such political-economic issues as senior managing director for International Strategy & Investment Group in Washington, D.C.

"That's nuts," Gallagher said of the theory, noting it not only suggests the Fed would sell out its independence for political reasons (egads!), but that the central bank can control the economy "like a dimmer switch."

If -- as is widely believed -- Fed action takes six to nine months to filter through the economy, any tightening now will "hit right during the campaign season," he said.

Ah, well -- it was fun while it lasted.