Today was a light volume and mixed trading day where there was no real feeling for the market being up or down. The G20 meeting yielded no major score for the markets and the Empire State manufacturing number for New York's region was the worst on record.
Bank of America Corp. (NYSE: BAC) was one of the few public companies position that Warren Buffett's Berkshire Hathaway actually trimmed its stake in by about half during the last quarter. B of A shares were down over 6% at $15.32 shortly before the close.
Citigroup Inc. (NYSE: C) didn't quite get the reaction it was hoping for. Vikram Pandit announced the new restructuring plan where the company will let go a total of about 50,000 jobs via attrition, asset sales, and layoffs. Citi announced other cost cutting measures as well. Shares were down almost 5% at $9.07 right before the close.
FedEx (NYSE: FDX) is going to raise the rates on many of its services in January of next year. UPS (NYSE: UPS) is planning the same thing. The price increase from FedEx will be close to 7% .
According toThe Wall Street Journal, "The increases come as shipping companies benefit from slumping fuel costs but are hampered by falling demand."
The move is a very big risk. During a recession, businesses and consumers will find almost any way they can to cut corners. FedEx still has formidable competition from the United State Post Office, which offers its own ground and overnight products.
FedEx is faced with the "damned if you do, damned if you don't" puzzle that most companies in an economic downturn are scrambling to solve. It needs to keep its revenue as high a level as possible. At the same time, it risks losing customers by making clients pay more than they ca afford.
The U.S. Postal System has lost much of its relevance as people move away from sending letters and documents through the mail in favor of electronic transfers and communications. FedEx might just help the USPS pick up some customers, if the old government-supported agency keeps its rates down.
Today started out looking like a great Monday after the Chinese announced a $586 billion stimulus package. Unfortunately, some of this was already in the works and many doubt its projected 8% to 9% growth for 2009 can stave off a recessionary environment ahead. Bonds closed early ahead of Veteran's Day, and are not trading Tuesday.
American Capital, Ltd. (NASDAQ: ACAS) got killed after three major announcements: -$2.63 EPS, a $158 million acquisition, suspension of its dividend. Shares were down over 43% at $7.75 to a new multi-year low right before the close.
American International Group (NYSE: AIG) got a larger lifeline as the old $85 billion package grew to $120+ billion and then to $150+ billion, with some $40 billion coming from the TARP funds at better terms. Shares came off with the market at the end of the day, but were still up 9% at $2.30 right before the close.
UPS opened this morning at $53.98. So far today the stock has hit a low of $52.80 and a high of $55.01. As of 12:45, UPS is trading at $53.53, up $1.61 (3.1%). The chart for UPS looks neutral and S&P gives UPS a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just six weeks as long as UPS is above $40 at December expiration. UPS would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.
UPS hasn't been below $40 at all in the past year and has shown support around $50 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in UPS nor FDX.
UPS opened this morning at $47.68. So far today the stock has hit a low of $47.00 and a high of $48.65. As of 12:55, UPS is trading at $47.46, up $1.07 (2.3%). The chart for UPS looks neutral and S&P gives UPS a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just one month as long as UPS is above $40 at November expiration. UPS would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
UPS hasn't been below $45 except for a few days in the past year and has shown support around $47 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in UPS.
U.S. stock futures once again were lower this morning, albeit more moderately, pointing to another lower start and possibly another down day following Wednesday's declines. Investors concern over the economy remained unabated, especially in light of recent and future corporate profits. This morning, weekly initial jobless claims will be released an hour ahead of the opening bell, and the numbers are expected to show yet another increase. Meanwhile, investors will continue to eye oil prices, which rebounded from a 16-month low to above $67, and foreclosures, which grew by 71% in the third quarter compared with the same period in 2007.
Sony Corp. (NYSE: SNE) drastically lowered profit and sales forecasts for the fiscal year Thursday, blaming weaker electronics sales and the stronger yen. Goldman Sachs Group Inc (NYSE: GS) is joining many other companies recently announcing layoffs as it also plans to cut about 3,260 jobs, representing about 10% of its total staff.
Amazon.com Inc. (NASDAQ: AMZN) reported a 48% climb in profit in the third quarter on strong sales of electronics, beating analyst estimates. But the company reduced its full-year profit outlook. AMZN shares traded down 14% in after-hours action.
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%)
While the credit crunch is making it difficult for businesses to get credit, there may be other reasons you've had trouble getting the line of credit you need. For one thing, you may not be taking steps to build a credit history for your business.
By establishing business credit, you may be able to get larger loan amounts and better rates. What's more, it could be easier to find good suppliers and vendors – as well as to snag customers.
So how do you establish business credit:? Well, here are some steps:
Create a credit profile: Perhaps the top credit agency for small businesses is Dun & Bradstreet (NYSE: DNB). Basically, you complete a credit profile with them through service called the CreditBuilder; you then get a DUNS number, which is what third-parties will request when they do a credit check. All in all, the process is pretty easy.
Keep in mind that it's important to periodically update the file. An incomplete file is often a red flag.
Last week's preview raised the question of whether consumers were turning to comfort foods in these uncertain times, specifically in terms of second quarter earnings of Campbell Soup (NYSE: CPB) and Krispy Kreme (NYSE: KKD). Campbell's strong earnings growth topped expectations, while Krispy Kreme narrowed its loss, though it fell short of estimates.
This coming week should bring reports from more food-related companies, from cereal maker General Mills and food packager CongAgra to grocery chain Kroger, to the parent companies of restaurants Cracker Barrel, Olive Garden, Red Lobster, Carl's Jr., and Hardees. Also look for reports from tech-related companies such as Oracle, Adobe, and Palm, as well as from financials Morgan Stanley and Goldman Sachs, and from economic bellwether FedEx.
Here's what analysts surveyed by Thomson Financial are expecting from some of the companies reporting earnings this week, as compared to their results from the same period of last year:
The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.
Six of the eight did well and two did not, and of course one of those two was a disaster. Among the losers, I do not think anyone is fretting about UPS, which is still one of the few triple-A rated companies along with Berkshire Hathaway. It has been well reported that the slowing economy and higher fuel prices have been the major culprits affecting UPS's earnings. In the case of WaMu, it's demise has also been well reported, but at the time I recommended it WaMu had a stellar reputation of growth and high yield for over two decades. There is no hiding, it turned out to be a lousy pick and an ANTI-SAFE Haven
Washington Mutual(NYSE: WM) closed Monday at $4.21 down from $45.50; a 98% loss.
Fortunately the remaining six picks have done very, very well. If you had bought the pool, the average gain over the last two years would have been 7.14%. Adding the dividends over the two years would have raised this to 13.14%.
This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Big Brown below in the comments.
The simplicity of a brand name or symbol confers status on a company. Decades ago, the symbol might literally have been a stock symbol: the oldest companies got one letter ticker symbols from the New York Stock Exchange. United Parcel Service (NYSE: UPS) now gets that status by taking an entire color: brown. (Granted, it's not a primary color like IBM's Big Blue, but it still shows the company's clout.)
The company first started using its trademark brown trucks in the 1920s when it delivered appliances and other goods for department stores, says Mike Brewster, author of Driving Change: The UPS Approach to Business. Pullman brown was a good choice because "their department store clients wanted the company to be more under-stated, because the stores didn't want the fact that they no longer had their own trucks highlighted." That, and the dark trucks were easier to keep looking clean.
Brown is much more than a truck color now. It's the uniform. It's the logo. It's what the company calls itself in commercials. UPS employees bragging about their loyalty will say they "bleed brown." This year the company sponsored a horse named Big Brown, which won two-thirds of the Triple Crown.
But, hard as it is to believe now, UPS almost gave up its trademark color. "The company almost changed the color in the '90s during one of several re-brandings, but decided to stick with brown, much to the disappointment of many in the company," says Brewster. "But the 'What can Brown do for You?' campaign has given the color new life at the company."
U.S. stock futures were a little higher this morning following Friday's rally. Oil futures have been rising again due to the Russian-Georgian conflict and the dollar retracted from the five-month high set Friday. Global markets were mostly higher although China's hit a 19-month low.
This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Roadway below in the comments.
Once or twice a year, the family and I take a long, cross-country drive to one vacation spot or another. So when I heard that that the nickname of the freight hauler Roadway Express was "always on the Road and in the Way," I knew exactly what that meant. It never seems to fail: just as I'm about to catch up to a semi truck, it suddenly swings over into my lane, the passing lane, and then spends the next five to ten miles inching past a very slightly slower truck. In the meantime, I get a nice close-up view of the Yosemite Sam mud flaps, while impatient traffic builds up behind me.
According to their website, Roadway Express, now a division of YRC Worldwide Inc. (NASDAQ: YRCW) has been on the road and in the way since it was founded in 1930 by a pair of brothers hauling freight between Akron, Ohio, and St. Louis, Missouri. By the end of its first decade, it had offices in 22 cities and operating revenues of more than a million dollars. After the Interstate system was established, that expanded to 65 cities and more than $40 million in operating revenue from nearly 1,000 trucks. The company celebrated its 75th anniversary in 2005, and now delivers to all 50 states, Puerto Rico, Canada, and Mexico with more than 8,500 trucks.
Some may view the sun as rising while others see it setting. Before you send me your rant that the pain has just begun and I am foolish to believe the recent market upswing is anything but a short term reprieve, let me share a few thoughts.
Today Wachovia Corp (NYSE: WB) reported a loss of $1.30 a share compared to the average analysts' guess of $1.27 a share. WB lost almost $9 billion, is cutting the dividend and will layoff 6,400 employees. All bad news -- and still the the stock and the DJIA are up!
At the same time, oil is trading down about $4 a barrel during the busiest driving time of the year because people are actually conserving gas. The market is working. It should also be noted that after the Bush administration spent over seven and a half years stating various preconditions to establishing relations with Iran, last week they decided to send an envoy and start a dialog. It may be good or bad politics depending on your view -- but it is only good for the stabilization of oil prices.
Today was a light volume and mixed trading day where there was no real feeling for the market being up or down. The G20 meeting yielded no major score for the markets and the Empire State manufacturing number for New York's region was the worst on record. 
Wall Street's optimism in 
While the credit crunch is making it difficult for businesses to get credit, there may be other reasons you've had trouble getting the line of credit you need. For one thing, you may not be taking steps to build a credit history for your business.
Last week's preview
The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.
This post is one in a series on prominent company nicknames. 
U.S. stock futures were a little higher this morning following Friday's rally. Oil futures have been rising again 
This post is one in a series on prominent company nicknames. 
Some may view the sun as rising while others see it setting. Before you send me your rant that the pain has just begun and I am foolish to believe the recent market upswing is anything but a short term reprieve, let me share a few thoughts.
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
