Research in Motion (NASDAQ: RIMM) is recently down $2.32 to $35 in pre-open trading. RIMM lowered Q3 earnings guidance. Deutsche Bank has a Sell rating on RIMM. RIMM December option implied volatility of 140 is above its 26-week average of 72 according to Track Data, suggesting larger price movement.
Motorola (NYSE: MOT) closed at $4.27. MOT overall option implied volatility of 95 is above its 26-week average of 69 according to Track Data, suggesting larger price movement.
Nokia (NYSE: NOK) closed at $13.64. NOK will host Capital Markets day in New York on December 4. Smith Barney says: "Margin targets to be lowered but how bad will 09 get?" NOK December option implied volatility of 84 is above its 26-week average of 61 according to Track Data, suggesting larger price movement.
Ericsson (NASDAQ: ERIC) is recently up 10 cents to $7 in pre-open trading. Cowen says: "Reducing global handset industry, Sony Ericsson, on further weakness." ERIC overall option implied volatility of 78 is above is 26-week average of 62 according to Track Data, suggesting larger price movement.
Apple (NASDAQ: AAPL) is recently down $2.27 to $89.70 in pre-open trading. Kaufman Bros says "Maintain Buy. We continue to believe AAPL is one of the better names to own in this tough economy given its strong fundamentals." AAPL overall option implied volatility of 74 is above its 26-week average of 56 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Today's atrocious housing data was already a given, and the markets keyed off of additional strength from Friday on the introduction of the Obama Financial team today. We are also coming off of severely oversold conditions and much of the rally seen was technical rather than fundamental.
Here are today's unofficial closing levels: DJIA: 8443.39 (4.93%) NASDAQ: 1472.02 (6.33%) S&P 500:851.81 (6.47)
Berkshire Hathaway Inc. (NYSE: BRK.A) was written up in Barron's after closing at $90,000 on Friday and seeing a low of $74,100 last week. The "financial bible" publication believes that the stock now finally looks cheap. Shares were up almost 4% at $93,300.00 right before the close.
Citigroup Inc. (NYSE: C) was a huge gainer after the government bailout that Wall Street wanted finally came to save the stock. The US Government is injecting $20 billion in fresh capital and will absorb most of the potential losses on a $306 billion pool of high risk assets. The government will also receive preferred shares with an 8% yield and Citi's common stock dividend will go down to $0.01. Shares were up a whopping 60% at $6.04 right before the close.
Jefferies upgraded Buffalo Wild Wings (NASDAQ: BWLD) to Buy from Hold on valuation with the stock down 65% in two months as they believe the company has a "best-in-class fundamental story." The firm lowered its target to $25 from $30.
Morgan Stanley upgraded Sanofi-Aventis (NYSE: SNY) to Overweight from Equal Weight on valuation and believes near-term cost reductions could provide a positive catalyst.
Citigroup upgraded New York Times (NYSE: NYT) to Hold from Sell and lowered its target to $5.50 from $7 on valuation and believes the dividend cut will boost the company's liquidity.
Pantry (NASDAQL PTRY) was upgraded to Outperform from Market Perform at Friedman Billings.
LECG Corp (NASDAQ: XPRT) was raised to Buy from Neutral at UBS.
Thomson Reuters (NYSE: TRI) was upgraded at RBC Capital to Outperform from Sector Perform.
Analyst downgrades:
Jefferies downgraded Suntech (NYSE: STP) to Hold from Buy and lowered its target to $6 from $25 as they believe concerns about a convert refinancing in February 2010 will continue to weigh on the stock.
Credit Suisse cut Ericsson (NASDAQ: ERIC) to Underperform from Outperform due to expectations for a decline in wireless infrastructure spending.
ING downgraded shares of Rio Tinto (NYSE: RTP) to Hold from Buy as they believe it will be challenging for the company to execute asset sales planned at reducing debt in the current environment.
Keefe Bruyette upgraded shares of Colonial Bancgroup (NYSE: CNB) to Outperform from Market Perform on valuation following the recent weakness and believes the company will be eligible to receive TARP funds. Morgan Stanley believes the company's valuation adequately reflects risk to the loan portfolio; the firm raised shares to Equal Weight from Underweight.
Merrill upgraded Ericsson (NASDAQ: ERIC) and ASML Holding (NASDAQ: ASML) to Buy from Underperform and believes their valuation reflects the worst-case for bad news.
Oppenheimer upgraded Trimble Navigation to Outperform from Perform on valuation as they believe the company's long-term growth story is intact.
Celestica (NYSE: CLS) was upgraded to Sector Outperformer from Sector Performer at CIBC.
KeyCorp (NYSE: KEY) was added to Goldman's Conviction Buy List.
UBS cut Barclays (NYSE: BCS) to Neutral from Buy as they believe capital raises could negatively impact earnings and that the dividend is likely to be cut.
JP Morgan downgraded Discovery Holdings (NASDAQ: DISCA) to Underweight from Neutral based on valuation and the deteriorating economic outlook.
Friedman Billings downgraded shares of Janus Capital (NYSE: JNS) to Underperform from Market Perform and lowered its target to $7 from $23 as they see further risk to the downside following the company's weaker-than-expected results.
LKQ Corp (NASDAQ: LKQX) was cut to Sector Perform from Outperform at RBC Capital.
Affymetrix (NASDAQ: AFFX) was lowered to Sell from Hold at Deutsche Bank.
RightNow Tech (NASDAQ: RNOW) was downgraded at Baird to Neutral from Outperform.
Telefonaktiebolaget LM Ericsson (ADR) (NASDAQ: ERIC), a telecom-related business whose colleagues include Alcatel-Lucent (NYSE: ALU) and Cisco Systems, Inc. (NASDAQ: CSCO), reported earnings for the third quarter. And, unless I miss my guess, the market liked what it saw. As I write this, shares are up over 15%, and the trading volume is high. So, what's going on here?
Well, according to this source, revenue and profit for the quarter went beyond the expectations of analysts. The top line soared 13%. Nothing wrong with that. The bottom line, however, went down 28%, even though it exceeded what was expected. And then there was the gross margin improvement. A lot of times that can work wonders for a company's shares. Gross margin went from 35.6% to 37%. Wall Street was impressed.
Now, this is all well and good, but am I a buyer of Ericsson after the report? No. There are a few things to consider here. First, the global economy is a mess. Second, statements made by management in terms of the near future indicate a cautious stance. Third, there's no way I'm buying a stock that just rallied by a double-digit percentage in this market. Especially not a tech stock. There are harder ways to lose money. The 52-week low on the ADR's is about $6 per share, and I can easily see this one revisiting that level as we continue to get news on the economy throughout the quarter. Obviously, many investors out there disagree with me. But this is not the time to play momentum trader, in my opinion. I'm happy to sit on the sidelines in this case, even if I turn out to be wrong.
Disclosure: I don't own any company mentioned; positions can change without notice.
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%)
Baird upgraded Fifth Third Bancorp (NASDAQ: FITB), SunTrust (NYSE: STI) and Wells Fargo (NYSE: WFC) to Outperform from Neutral citing the ability to raise cheap capital following the Treasury's aggressive policy response.
Suntrust believes Zions Bancorp (NASDAQ: ZION) is disproportionately positioned to benefit from what should be a wave of industry fallout and consolidation over the next few years. Shares were upgraded to Buy from Neutral.
Cadbury (NYSE: CBY) was raised to Hold from Sell at ING Group.
Ericsson (NASDAQ: ERIC) was raised to Neutral from Sell at Goldman.
Genentech (NYSE: DNA) was upgraded at Piper Jaffray to Buy from Neutral.
Ericsson (NASDAQ: ERIC) was upgraded to Add from Hold at WestLB.
JP Morgan upgraded Shire Plc (NASDAQ: SHPGY) to overweight from Neutral to reflect Vyvanse share gains and valuation.
Wachovia upgraded Jefferies (NYSE: JEF) to Market Perform from Underperform because they believe that the recent collapse of the large cap bank sector, Jefferies' cash equity business, and the company's partial privatization as a result of its Leucadia investment will shield shares.
ADC Telecomm (NASDAQ: ADCT) was upgraded to Buy from Hold at Kaufman Bros. on valuation following the recent weakness.
STEC Inc (NASDAQ: STEC) and Popular (NASDAQ: BPOP) were raised to Buy from Neutral at B. Riley.
Analyst downgrades:
Merrill downgraded Disney (NYSE: DIS) to Underperform from Neutral and cut its target to $27 from $34 citing the impact from the current economic climate on earnings.
Barclays downgraded IBM (NYSE: IBM) to Equal Weight from Overweight citing the impact from the weakening economy and the company's large exposure to the financial services industry. IBM's target was cut to $108 from $130.
Jefferies downgraded Salesforce.com (NYSE: CRM) to Underperform from Buy on increased risks of deteriorating payment terms and price pressure on renewals. The company's target was lowered to $36 from $75.
Goldman downgraded First Solar (NASDAQ: FSLR) and added shares to the Conviction Sell List.
Banc of America upgraded shares of Pepsi Bottling (NYSE: PBG) to Buy from Neutral on valuation as they expect better leverage in FY09 and believe an overly bearish outlook is priced in. The company's target was raised to $37 from $35.
Goldman upgraded Washington Mutual (NYSE: WM) to Neutral from Sell and said Q3 results were worse than expected but not as bad as the decline in shares suggests. The analyst said WaMu's capital and reserves appear stable and that the company might be able to avoid another capital raise. WaMu's target was raised to $4 from $5.
Greenhill & Co (NYSE: GHL) was raised to Outperform from Market Perform at Wachovia.
F5 Networks (NASDAQ: FFIV) was upgraded at JP Morgan to Overweight from Underweight.
Jefferies downgraded PharmaNet Development (NASDAQ: PDGI) to Underperform from Buy following the lowered guidance as they believe the company's execution and cost control problems have not been solved. The company's target was lowered to $15 from $27.
JP Morgan downgraded shares of Ericsson (NASDAQ: ERIC) to Underweight from Neutral to reflect their weak outlook for the company's Sony Ericsson (NYSE: SNE) handset unit.
Deutsche Bank downgraded shares of Danaher (NYSE: DHR) to Hold from Buy on valuation and concerns about the company's FX exposure.
Best Buy (NYSE: BBY) was cut to Neutral from Buy at UBS.
Portugal Telecom (NYSE: PT) was lowered to sell from Neutral at UBS and to Underweight from Neutral at JP Morgan.
Jefferies initiated Massey Energy (NYSE: MEE) with a Buy rating and $80 target. The firm expects substantial margin improvement, free cash flow, and earnings growth with eastern utility coal inventory levels under pressure and a robust export and met coal market.
William Blair started BioMarin Pharmaceutical (NASDAQ: BMRN) with an Outperform rating. The firm expects strong EPS growth during 2008-2010, thinks the company's pipeline is underappreciated by the Street, and feels expectations have been reset to a reasonable level.
Friedman Billings initiated the Lodging sector with a Market Weight rating, starting InterContinental Hotels (NYSE: IHG) and Marriott (NYSE: MAR) with outperform ratings and targets of $16 and $34, respectively, and Starwood Hotels (NYSE: HOT) with a Market Perform rating.
Citigroup initiated Diamond Offshore (NYSE: DO) with a Buy rating and $126 target.
RBC Capital upgraded Sciele Pharma (NASDAQ: SCRX) to Sector Perform from Underperform following the acquisition by Shionogi.
Merrill believes Alcoa (NYSE: AA) may pursue an acquisition of Alumina Ltd (NYSE: AWC) following recent share weakness. Shares of Alumina were upgraded to Buy from Underperform.
Stanford upgraded shares of Google (NASDAQ: GOOG) to Buy from Hold after channel checks indicated U.S. search market trends have stabilized as they believe GOOG's market share gains are broadening, Q3 expectations are modest and the valuation is near lows. The firm has a $550 target on the stock.
Lowe's (NYSE: LOW) was raised to Buy from Neutral at Goldman.
Analyst downgrades:
WestLB downgraded shares of Ericsson (NASDAQ: ERIC) to Reduce from Hold as they believe the company's Q3 earnings could miss expectations.
Lehman downgraded Intersil (NASDAQ: ISIL) to Equal Weight from Overweight based PC exposure and market share loss in notebook power. The company's target was lowered to $24 from $29.
Dean Foods (NYSE: DF) was lowered to Equal Weight from Overweight at Morgan Stanley.
Gilead Sciences (NASDAQ: GILD) was cut to Neutral from Buy at Banc of America.
Citigroup initiated Eastman Kodak (NYSE: EK) with a Sell rating and $13 target. The firm believes 2008 consensus estimates and guidance are too high given the company's headwinds.
GT Solar (NASDAQ: SOLR) was assumed with a Neutral rating and $16 target at Banc of America. The firm believes the risk/reward is balanced at current levels with no significant new polysilicon opportunity. Shares were also initiated at Thomas Weisel with an Overweight rating and $18 target and at UBS with a Buy rating and $19 target.
Citigroup initiated Xerox (NYSE: XRX) with a Buy rating and $20 target and Electronics for Imaging (NASDAQ: EFII) with a Hold rating and $18 target.
Sweden's Ericsson LM TEL Co. (NASDAQ: ERIC) said this morning that it saw a 70% nosedive in profits for its second quarter due to R&D costs as well as activity related to recent acquisitions. Ericsson also commented that its primary business -- mobile equipment and infrastructure -- will likely experience a "flattish" market in 2008.
That didn't sit well with investors, who sank the stock over 5% in Stockholm where the company's shares are traded. The company's ADS price as of this afternoon was hovering right over $11.06 per share, even though the company did see a smallish sales gain of 2% year-over-year. The problem is that its profit was down to $320 million for the quarter compared to over $1 billion during the year-ago quarter.
One of the more interesting twists came from Ericsson's joint partnership in Sony Ericsson, the mobile phone handset company that had a great comeback in the 2005 to 2007 time frame but has seen sales drop sharply in 2008. In fact, Sony Ericsson saw a 97% drop in its recent Q2 earnings due to the company's inability to ship lower-end handsets to the hot mobile phone markets. As a result, Nokia Corp. (NYSE: NOK), was in all the right places to take the market share Sony Ericsson missed by being absent in that space.
MOST NOTEWORTHY: Wachovia, American International Group and BT Group were today's noteworthy downgrades:
Oppenheimer downgraded shares of Wachovia (NYSE: WB) to Underperform from Perform as they believe the outlook is "bleak" for equity shareholders. The firm thinks Wachovia's expenses can't come down fast enough too offset earnings erosion.
Wachovia downgraded shares of American International Group (NYSE: AIG) to Market Perform from Outperform as they believe AIG's CDO valuations worsened in Q2, which could result in a $2B-$7B after tax "valuation adjustment." Wachovia expects the value of AIG's core insurance franchise to be obscured by its credit exposure.
Collins Stewart cut BT Group (NYSE: BT) to Hold from Buy on concerns surrounding the company's fiber network expansion.
OTHER DOWNGRADES:
Nokia (NYSE: NOK) was downgraded to Add from Buy at WestLB; the firm also lowered Ericsson (NASDAQ: ERIC) to Hold from Buy and Alcatel-Lucent (NYSE: ALU) to Sell from Hold.
Third Wave (NASDAQ: TWTI) was cut to Hold from Buy at Deutsche Bank.
AT&T (NYSE: T) was removed from Goldman's Conviction Buy List.
Research in Motion (NASDAQ: RIMM) is recently down $2.32 to $35 in pre-open trading. RIMM lowered Q3 earnings guidance. Deutsche Bank has a Sell rating on RIMM. RIMM December option implied volatility of 140 is above its 26-week average of 72 according to Track Data, suggesting larger price movement.
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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 
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Best & Worst in Money 2008: Most shocking financial collapse
Closing Bell: Stocks slump as AMD, AT&T, GM and Merck decline
Global Q&A: A rocky road, but profits ahead
