NEW YORK (Real Money) -- Let's talk about two anathemas to this quarterly earnings period: spending and competition.
We know that companies that miss or guide down on any level, whether it be top or bottom line, have just become stock roadkill, bloated bodies on the sides of the highway waiting for short-sellers to get them off the road for a decent burial or at least a dynamite cremation.
We heard the spend-and-competition gambit last night in eBay (EBAY), and it pretty much took your breath away. When you get as monumental a decline in eBay, both in terms of auctions and in terms of the once-fast-growing StubHub, it sends chills down your spine. It's pretty obvious that an auction-value decline of 9% is going to lead to some spend to get that thing going again and the "material deceleration" at StubHub because of "competitive dynamics" sent chills down my spine.
But they must lower fees to protect the franchise. Marketplace margins, still robust at 39.7%, were down 240 basis points from last year because of investments in "trust and marketing" and a lowering of fees. I didn't like the marketing services revenue number, especially in the light of needing to spend to grow.
Or how about 3D Systems (DDD)? Piper Jaffray, which said the company had to sacrifice near-term margin expansion to grow its top line. Why? I thought it had a big moat around the franchise?
The spending at the supermarket level to build out the organic and natural lines is pretty daunting, too. So many companies want to take on Whole Foods (WFM), and its once-dominant position that you have to recognize margins can't stay the same for WFM and its stock price is certainly telling you that. You certainly don't want to own Fresh Market (TFM) or Fairway (FWM) under those circumstances.