Thursday, May 27, 2010

Market Breadth Numbers...


Impressive Breadth numbers. Nasdaq Advancing Volume 21 times Declining Volume. Market made a little bump higher in the last hour as it became apparent that there would be no selloff. Shorts decided to cover before the close. We need to see a few of these type days in a row to shift the sentiment to positive.

Market closes broadly higher....

Market recap: Stocks zoomed higher and closed at session highs after China reassured investors that it doesn't plan to sell its massive holdings of European debt. Advancers outnumbered decliners more than seven to one on heavy volume.

Dow +284 to 10258
Nas +81 to 2277
S&P +35 to 1103

Lincoln Mercury line to be dropped by Ford....

Mercury is set to join Pontiac, Saturn, Oldsmobile and Plymouth in the great junkyard in the sky, as Ford (F) prepares to kill its "forgotten" 70-year-old brand.

Hopefully they won't get rid of the Mercury girl (Jill Wagner) on their commercials...

I-Phones Being Used more by Businesses....

AT&T Inc (T) said on Thursday that 40 percent of its iPhone sales since the beginning of the year have been to business customers, suggesting that the phone is encroaching on an area dominated by Research in Motion's (RIMM) BlackBerry.

AT&T also generates almost half of its total revenue from business customers, said Ron Spears, the head of the company's business services, at an investor conference.

The company would not say how many iPhones it sold during that period.

Analysts estimate that AT&T, which started selling iPhone in 2007, has about 15 million iPhone users or 17 percent of its total customer base. RIM reported a total customer base of about 41 million for the BlackBerry in its most recent quarterly report.

Earnings Preview for Novell....

Novell (NOVL) is expected to report Q2 earnings after the market close on Thursday, May 27, with a conference call scheduled for 5 pm ET.

Guidance
The consensus estimate is 7c for EPS and $204.85M for revenue, according to First Call. A number of private equity firms have been "kicking the tires" on Novell after the company announced in March that it will review alternatives to enhance shareholder value, including a potential sale of the company. This comes after Elliott Associates' $2B bid was rejected as "inadequate". Elliott already owns 8.5% of Novell. Since then, the Wall Street Journal reported that 20 bidders have been eyeing the company. Last week was the deadline for interested parties to submit bids, but the auction is expected to take longer.

Novell has four separate businesses, each of which could be attractive to a rival technology company. Speculation is that it's unlikely that a tech company would bid for all of Novell. A private equity firm could break up Novell, and either sell off the pieces or run them as standalone businesses. Given this latest auction action, Q2 results will be irrelevant. Nevertheless, management provided Q2 guidance on their last earnings call for a non-GAAP operating margin of 12%-15% and revenue similar to Q1's $202.4M. Novell came in a bit light last quarter, so expectations aren't high for a Q2 upside.

MSFT NOT presenting at AAPL conference...

Microsoft (MSFT) uses its Twitter account to dispel speculation Steve Ballmer will be taking the stage at Apple's (AAPL) June 7 developer conference: "Steve Ballmer not speaking at Apple Dev Conf. Nor appearing on Dancing with the Stars. Nor riding in the Belmont. Just FYI."

Noon Update...

The stock market continues to trade near its session high as only a handful of names are weak with losses. In turn, stocks remain on track for their best single-session percentage gain in two weeks. Despite such an accomplishment, the stock market is up only slightly more than 0.5% week-to-date and down almost 8% month-to-date. Trading volume is strong this session. Advancing volume currently outnumbers declining volume by more than 10-to-1 on the Big Board.

DJ30 +213.19
NASDAQ +58.71
SP500 +25.35

Mortgage Rates Dropping...

The recent flight to safety in Fixed Income is driving down mortgage rates for the fifth straight week, to an average 4.78% for a 30-year fixed-rate loan, Freddie Mac reports.

What the Hell???

A Foxconn Technology worker tried to kill himself Thursday, becoming the 13th person to commit suicide or attempt to do so this year at the company, which makes high-tech products for industry giants such as Apple, Dell and Hewlett-Packard, state media said.

Police said the man survived after cutting himself in his dormitory room at the factory, the official Xinhua News Agency reported. It said the 25-year-old man, surnamed Chen, migrated from central Hunan province and began working at Foxconn two months ago.

The 12 previous suicide attempts at Foxconn Technology Group's operations in southern China involved workers who jumped from buildings. Two survived. Another worker killed himself in January at a factory in northern China.

On Wednesday night, a 23-year-old worker from the northwestern province of Gansu killed himself by leaping from a dormitory balcony. Hours earlier, Foxconn Chairman Terry Gou had led a media tour of the industrial park and promised to work harder to prevent more deaths. Gou said he couldn't sleep at night and dreaded answering his phone in off hours, fearing more news about deaths.

Gou said the company would do everything possible to prevent more deaths. Safety nets were being installed on buildings and more counselors were being hired. He also said all the employees were being divided into 50-member groups, whose members would watch for signs of emotional trouble within their group.

Labor activists accuse the company of having a rigid management style, a too-fast assembly line and overwork. Foxconn denies the allegations.

OMG....

Google has started a trading floor to manage its $26.5 billion in cash and short-term investments.

This strikes me as being quite funny...

Crystal was robbed....

Lee DeWyze won the 9th season of “American Idol” in the final episode for judge Simon Cowell. The ratings for “American Idol” will be down ~9% this season, which Fox Chairman Peter Rice said is “pretty good”, compared to other shows. Cowell plans to return to Fox next year with his new show, “The X Factor.”

Moody's still not out of the woods....

Greenlight’s David Einhorn is still shorting Moody's (MCO). Einhorn has been critical on Moody’s decision making process, and noted that S&P has some of the same problems. Einhorn also believes that the European debt crisis could also bring more problems for the rating agencies.

Monsanto down as Roundup patent expires...

Monthly chart on Monsanto doesn't look pretty since announcement that Roundup patent is expiring.

Disney axes the Soap Channel...

DIS will close their 10 year old cable channel SoapNet, which will be replaced by Disney Junior in 2012. Programming on the Disney Channel and ~24 Playhouse Disney international channels will be re- branded as Disney Junior next year.

I was wondering if anyone actually watched reruns of Soaps at night.

What up with Yahoo???

Stock is down fractionally this morning while the rest of Tech is rallying big time. You have to wonder about Carol Bartz directing F-Bombs at a reporter in a live interview on Tuesday.

There has to be some hidden pressure there....

Oil Rig Insurance rises....

WR Berkley (WRB) is boosting premiums on deep water oil rig insurance by ~40% after the large oil spill in the Gulf.

No surprise here, but at least you now have a name.

Austrailia may soften mine tax....

Australia may soften blow of mine tax – Australia left the possibility of concessions to its 40% super profits tax after newspapers said it would change the way the tax is calculated to give a little support to miners. The gov’t currently defines “super profits” as any return on assets above 5.3%, but that could be doubled to 12%.

This would be big, as many mining stocks have sold off hard since the tax was proposed. Stocks like Rio Tinto (RTP), Cliffs (CLF) and Freeport (FCX) should be beneficiaries.

Caterpillar sold out of mining equipment....

CAT - Mining equipment sold out until next year – Not even halfway through 2010, CAT has already sold out of some of its largest mining vehicles due to rising commodity prices and is now taking orders for 2011 delivery. Although the momentum was strong early this year, recent price drops in commodities over the past few weeks might suggest the rally is short lived.

Netapp gets two upgrades....

Netapp Inc. (NTAP) price target raised to $39 from $36; rating neutral at BOFA Merrill. Price target raised to $38 from $36; rating equal-weight at Barclays

Coinstar lowers forecast....

Coinstar Inc. (CSTR). The redbox owner sold its electronic payment services business to InComm for $40 million and cut its second-quarter forecast to account for the sale. The company now expects earnings from continuing operations of 28 cents to 32 cents a share, on revenue of $363 million to $383 million for the quarter.

Not sure why they reported this the way they did. The company IS receiving $40 Million in Cash...unless they made a bad deal, this is probably good news.

Earnings released last night....

Jo-Ann Stores Inc.(JAS) said its first-quarter profit more than doubled to $18.2 million, or 66 cents a share, from $8.6 million, or 33 cents, a year ago. Revenue rose 4.4% to $480.3 million from $460 million. Same-store sales increased 4.1% from a year earlier.

McKesson Corp. (MCK) said it raised the quarterly dividend by 50% to 18 cents a share. The dividend will be paid on July 1 to shareholders of record on June 10.

NetApp Inc. (NTAP) reported fiscal fourth-quarter income of $145.1 million, or 40 cents a share, compared with a profit of $68.4 million, or 21 cents a share, for the year-end period. Revenue rose to $1.17 billion from $879.6 million.

Jamba Inc. (JMBA), parent of the Jamba Juice smoothie retail chain, reported a first-quarter net loss of $7 million, or 13 cents a share. In the year-earlier period, Jamba lost $10.2 million, or 19 cents a share. Sales fell to $80.4 million from $88.8 million partly due to a lower store count.

Earnings due today....

Costco (COST) is expected to report earnings of 66 cents a share in the first quarter, according to analysts surveyed by FactSet Research.

Tiffany (TIF) is forecast to report earnings of 35 cents a share in the first quarter.

J.Crew (JCG) is projected to report earnings of 57 cents a share in the first quarter.

H.J. Heinz Co. (HNZ) is likely to report earnings of 64 cents a share in the first quarter.

Guess Inc. (GES) is expected to report earnings of 49 cents a share in the first quarter.

Jones Soda to be sold in WalMart stores....

Jones Soda (JSDA) up a whopping 62% premarket after inking a deal with Wal-Mart (WMT) to sell its products in WMT's 3,800 U.S. stores. Jones says customers' biggest complaint had been "that people can’t find Jones Soda near them."

JNJ could face criminal charges...

FDA is considering criminal charges against Johnson & Johnson (JNJ) following its wide-ranging recall of children's Tylenol and other medicines.

Costco Beats....

Costco beats by $0.02, reports revs in-line (COST) 55.98 : Reports Q3 (May) earnings of $0.68 per share, $0.02 better than the Thomson Reuters consensus of $0.66; revenues rose 12.5% year/year to $17.78 bln vs the $17.62 bln consensus. Comparable sales for 3Q increased 10%.

Good Morning...

At 8:35 am:

S&P futures vs fair value: +15.00. Nasdaq futures vs fair value: +31.30. Stock futures are off of their morning highs, but they continue to trade with strength in the wake of the latest dose of data. The second estimate for first quarter GDP showed that the economy expanded at an annualized rate of 3.0%, which is down from the 3.2% increase that came with the advance estimate.