Minyanville contributor Adam Katz dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
Texas Instruments (NYSE: TXN) reported disappointing results and Sun Microsystems (NASDAQ: JAVA) preannounced negatively. Last week, IBM (NYSE: IBM) followed through with their positive preannouncement and Google (NASDAQ: GOOG) outperformed expectations.
What we are seeing is a divergence in where dollars are flowing. With company web sites largely representing the most effective and quantifiable marketing tool, it should come as no surprise that GOOG has revenue streams that are reasonably insulated. (This is not a call on GOOG because I believe the market is also pricing in the fact that the hyper growth days are behind them).
With respect to IBM, infrastructure software has been the primary driver behind the top line growth and growth in margins. In the meantime, the disappointment that we are seeing from TXN and JAVA should be reasonably expected as you are seeing slowing demand for hardware (in part driven by virtualization which by definition lowers hardware requirements) and TXN which, leveraged to consumer communication devices, is also taking a pause.
JP Morgan lowered its 2009 North American light vehicle production estimate by 13% to 11.2M and Europe by 10% to 19M. The firm upgraded Borg-Warner (NYSE: BWA) to Overweight from Neutral citing balance sheet and revenue growth.
Jefferies upgraded shares of Kroger (NYSE: KR) to Buy from Hold and raised its target to $32 from $28 as they expect the company's value image to benefit in the current environment.
Leerink upgraded AMAG Pharma (NASDAQ: AMAG) to Outperform from Market Perform on valuation as they believe current data is sufficient for some form of first cycle approval of Ferumoxytol.
Watsco (NYSE: WSO) was raised to Perform from Underperform at Oppenheimer.
UBS upgraded Invitrogen (NASDAQ: IVGN) to Buy from Neutral.
Analyst downgrades:
Jefferies downgraded shares of Whole Foods (NASDAQ: WFMI) to Underperform from Buy and lowered its target to $9.50 from $23 on the worsening macro environment, which they believe is "overwhelming" the company's ability to drive even flat comps in Q4 and FY09.
Deutsche Bank cut Texas Instruments (NYSE: TXN) to Hold from Buy and lowered its target to $19 from $28 following the company's worse-than-expected outlook, as they expect shares to be range bound.
Banc of America downgraded the Dry Bulk Shipping sector to Equal Weight from Overweight to reflect the "depressed" charter rate environment, tighter credit markets and the weakening macroeconomic outlook. The firm downgraded Britannia Bulk (NYSE: DWT), Navios Maritime (NYSE: NM) and TBS International (NASDAQ: TBSI) to Neutral from Buy.
Eaton (NYSE: ETN) was lowered to Underperform from Neutral at Merrill Lynch.
AXA (NYSE: AXA) was downgraded at JP Morgan to Neutral from Overweight.
Aracrus (NYSE: ARA) was downgraded to Underweight from Equal Weight at Morgan Stanley.
U.S. stock futures were lower Tuesday morning, indicating Wall Street is poised for a tough start after the Dow rallied 413 points Monday. Corporate earnings gave way to signs of a thaw in money markets and a possible second stimulus plan helped sentiment Monday. Today it will be all about earnings as several Dow industrials are due to report as well as other big names.
American Express Co. (NYSE: AXP) reported late Monday, saying its profit fell 24% in the third quarter due to less spending by cardholders and as more are having trouble paying off debt. Still, the drop was less than expected and AXP shares are up 4.7% in pre-market trading.
Pfizer Inc. (NYSE: PFE) shares are also trading higher in pre-market -- 2.3% higher -- after it reported results this morning. The world's biggest drugmaker's profit tripled because of higher sales of the pain pill Lyrica and lower costs from the 11,000 job Pfizer had cut last year. The results beat estimates.
Dupont deNemours & Co. (NYSE: DD) shares, however, are trading 1.9% lower in pre-market trading after the chemicals giant cut its 2008 earnings view after reporting third-quarter profit that beat analyst estimates.
Caterpillar Inc. (NYSE: CAT) and 3M Co. (NYSE: MMM) are two Dow components that have also just reported earnings.
U.S. stock futures jumped higher Monday morning as investors gain more confidence in the different government actions taken to stabilize financial markets. Global shares advanced overnight following measures taken worldwide. Indeed, the three-month U.S. dollar LIBOR, a measure of the rate at which banks lend to each other, dropped to 4.06% from 4.42%.
Also, investors will be keeping an eye on Federal Reserve Chairman Ben Bernanke testimony before the House Budget Committee on the economic outlook and financial markets at 10:00 am EST, same time as the release of the September leading indicators.
As OPEC prepares for a production cut and oil rose to above $74 per barrel, earnings season on Wall Street continues in full swing this week:
Mattel Inc. (NYSE: MAT) reported third-quarter results this morning. Mattel's income rose, but not enough and it missed expectations.
Hasbro (NYSE: HAS) reported a 14% drop in third-quarter profit, but it beat expectations.
Halliburton (NYSE: HAL) swung to a loss in the third quarter, but managed to beat earnings expectations by a penny excluding charges. Revenue in the quarter rose 24%.
SanDisk (NASDAQ: SNDK), American Express (NYSE: AXP) and Texas Instruments (NYSE: TXN) report third-quarter results after the closing bell.
Wall Street's optimism in last week's preview about the earnings of tech stocks wasn't misplaced, as there were many more positive surprises than negative ones among the stocks we looked at. This week will bring plenty more data for investors in and watchers of the sector to mull over. Apple Inc. (NASDAQ: AAPL), AT&T Inc. (NYSE: T), and Microsoft Corp. (NASDAQ: MSFT), for example, are expected by analysts surveyed by Thomson Financial to post modest earnings gains from a year ago, to $1.11 per share (on $8.1 billion in sales), $0.72 per share (on $31.3 billion in sales), and $0.47 per share (on $14.8 billion in sales) respectively. All three of these companies ended the week closer to their 52-week lows than highs, and analysts on average consider them each a buy.
Here's a look at some of the week's biggest expected earnings gainers and decliners in the sector:
Baidu.com Inc. (NASDAQ: BIDU): $1.25 per share (+44.0%) on revenues of $134.7 million (+103.2%)
Broadcom Corp. (NASDAQ: BRCM): $0.44 per share (+38.6%) on revenues of $1.3 billion (+33.8%)
QLogic Corp. (NASDAQ: QLGC): $0.31 per share (+29.0%) on revenues of $170.0 million (+21.2%)
FLIR Systems Inc. (NASDAQ: FLIR): $0.32 per share (+28.1%) on revenues of $275.2 million (+44.0%)
Juniper Networks Inc. (NASDAQ: JNPR): $0.30 per share (+26.7%) on revenues of $927.4 million (+26.2%)
Waters Corp. (NYSE: WAT): $0.75 per share (+17.3%) on revenues of $391.6 million (+11.1%)
It really did not matter what happened in the broader market. Washington Mutual (NYSE: WM) and Lehman (NYSE: LEH) were dismantled by the credit crisis. There are still plenty of questions about whether either will make it. Both stocks hit multi-year lows.
FedEx Corp. (NYSE: FDX) traded up after raising guidance for earnings in the coming quarter, and said it was reaffirming its Fiscal earnings because the benefits of lower fuel prices were being offset by a weak economy and therefore weaker orders. Shares were up 3.8% in the final minutes of trade.
GFI Group (NASDAQ: GFIG) traded down over 25% after the firm announced its negotiations with Tullet Prebon have fallen apart and no merger is going to take place. As the firm is active in OTC derivative contracts and as the number of players is rapidly sinking, the value is perceived as far less on a go-it-alone strategy.
After nearly erasing all of Monday gains on Tuesday, it seems investors were going to try again today. U.S. stock futures pointed to a higher open as Wall Street eyes are all focused on Lehman Brothers and whether it could calm investors' concerns somewhat. But after the Lehman announcement came out, stocks turned mostly to red. Meanwhile, oil prices rose Wednesday after OPEC said it would cut output, ahead of weekly inventory data. And in Europe, the European Commission cut its growth estimate for the euro area this year. Lehman Brothers Holdings Inc. (NYSE: LEH), which caused great concern yesterday and its stock plunged 45%, said it will announce its Q3 results today, a week early, in an attempt to calm investor concern about its capital needs following the failed talks with Korean Development Bank. Lehman will also outline plans to shore up its balance sheet. It could spin-off its prized investment management business and sell devalued mortgage assets. Already the stock is up nearly 25% in pre-market trading as of 7:20 am. Lehman has just announced a $3.9 billion loss during the third quarter due to wrong-way bets on mortgage securities and other risky assets.
Another deal that fell through caused GFI Group Inc. (NASDAQ: GFIG) tumbled 17% to $7.99 in extended trading yesterday. Tullett Prebon Plc, the second- biggest broker of transactions between banks, and GFI, the largest interdealer broker of credit derivatives trades, ended merger discussions after failing to reach an agreement on terms.
Apple Inc. (NASDAQ: AAPL) shares closed nearly 4% down Tuesday after Steve Jobs, joking about the obit that was accidentally published, announced several new iPod models and a deal with NBC Universal, a unit of General Electric (NYSE: GE) to sell programming on the iTunes store. Despite the jokes, Jobs health remained in focus, and many say he looked better than in the previous event and more energetic. The market wasn't that impressed though with the event as most of the announcement were largely expected. AAPL shares have been trading up 1% in pre-market action.
Corporate earnings aren't that bad and are surprising analysts. Oil prices are falling just as quickly as they rose. If you are a contrarian investor, you must have a big grin on your face.
Common wisdom had it that markets were going to keep dropping, that the price of crude would hit $200 a barrel, and that bank after bank would go bankrupt. But what's happened? The opposite. Bank earnings aren't as bad a feared, crude has fallen to under $130 and suddenly investors are a bit more optimistic.
Even when we get bad news, like earnings from Apple (NASDAQ: AAPL), Texas Instruments (NYSE: TXN) and others, the market is able to hold up. Industries that just a week ago were being left for dead suddenly came roaring back to life. For investors who like to dabble in out of favor stocks, this market is a dream come true. Battered sectors such as financials, airlines, and even autos have surged over the last week. Who would have dreamed that airline stocks would actually stage a rally? What's interesting is that even with their recent move these sectors are all still trading significantly off their highs, meaning that potentially we have much more room to run.
MOST NOTEWORTHY: Texas Instruments, SanDisk and Brocade were today's noteworthy downgrades:
Merrill Lynch downgraded shares of Texas Instruments (NYSE: TXN) to Neutral from Buy after the company reported lower-than-expected Q3 results due to concerns regarding elevated inventory levels and rising raw material and labor costs. Merrill lowered their target to $27 from $32.
Citigroup cut SanDisk (NASDAQ: SNDK) to Sell from Hold after the company reported a Q2 miss and offered lower-than-expected guidance. Citigroup lowered their target price to $14 from $20.
JMP Securities downgraded Brocade (NASDAQ: BRCD) to Market Perform from Outperform following the company's announcement to buy Foundry Networks, Inc. (NASDAQ: FDRY) for $19.25 per share.
OTHER DOWNGRADES:
ArthroCare (NASDAQ: ARTC) was lowered to Market Perform from Outperform at William Blair.
JP Morgan downgraded Assured Guaranty (NYSE: AGO) and Lenovo Group (LNVGY) to Neutral from Overweight.
Stocks futures are lower Tuesday morning, indicating U.S. stock markets will start on a down note following weak outlooks and disappointing financial results from several companies including Apple and American Express. With oil steady and no economic data out today, Wall Street will focus on earnings.
Apple Inc. (NASDAQ: AAPL) reported after the close Monday a record quarter that beat analyst estimates, posting a 31% surge in earnings. Mac and iPod sales satisfied investors, while iPhone sales were somewhat on the lighter side. What concerned investors most was the very weak guidance Apple gave, which was weak even by Apple's standards of lowballing. Other issues included margin squeeze and Jobs health. Apple shares were 10% lower in Frankfurt and premarket trading. American Express (NYSE: AXP), said late Monday its second-quarter results fell 38% due to the weakening economy. The company, which missed projections, caters to the more affluent who have good credit, and yet even this company felt the pains from the slowing economy. AmEx earned 56 cents per share compared to estimates of 83 cents per share. The company's stock tumbled AXP shares are down over 12% in premarket trading.
Also reporting Monday after the close were Merck & Co., Inc. (NYSE: MRK), Texas Instruments (NYSE: TXN) and SanDisk (NASDAQ: SNDK). MRK shares are down over 6.6% in premarket trading as the company said it would stop give guidance of results. TXN shares are also declining over 10.5% in premarket trading after it gave a disappointing forecast. SNDK shares are plunging over 16% in premarket trading after it swung to a Q2 loss, missing analyst estimates.
This morning we'll have another wave of earnings, and already started were DuPont and Wachovia.
Minyanville contributor Adam Katz dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit 
.gif){kind=logo}
U.S. stock futures were lower Tuesday morning, indicating Wall Street is poised for a tough start after the Dow rallied 413 points Monday. Corporate earnings gave way to signs of a thaw in money markets and a possible second stimulus plan helped sentiment Monday. Today it will be all about earnings as several Dow industrials are due to report as well as other big names.
U.S. stock futures jumped higher Monday morning as investors gain more confidence in the different government actions taken to stabilize financial markets. Global shares advanced overnight following 
Wall Street's optimism in 
After nearly erasing all of Monday gains on Tuesday, it seems investors were going to try again today. U.S. stock futures pointed to a higher open as Wall Street eyes are all focused on Lehman Brothers and whether it could calm investors' concerns somewhat. But after the Lehman announcement 
So the sky isn't falling. .gif){kind=logo}
Stock picks and pans for troubled times: RIMM, ED, ISRG, GLW, LEA, SLB, GOOG ...
Is Berkshire Hathaway better than S&P Index?
Closing Bell: Torch Passing on a Friday Rally
