After hitting a one-year high of $38.99 last July, the stock hit a one-year low of $26.48 on Tuesday. TXN opened this morning at $28.72. So far today the stock has hit a low of $28.03 and a high of $29.18. As of 1:05, TXN is trading at $28.65, up 0.59 (1.6%). The chart for TXN looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $25 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 8.7% return in just one month as long as TXN is above $25 at August expiration. TI would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.
TXN hasn't been below $26 at all in the past year and has shown support around $27 recently. This trade could be risky if the company's earnings (due out on 7/21) disappoint, but even if that happens, this position could be protected by the support the stock might find just below $27, where it bottomed over the past month.
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 TXN nor NOK.
Nokia Corp. (NYSE: NOK) shares are up over 7.4% in premarket trading after the world's largest maker of handsets said second-quarter profit fell 61% to $1.75 billion, or 46 cents per share, while sales rose 4% to $20.87 billion. Excluding items, Nokia's profit rose 8% to $2.18 billion. Nokia beat estimates of earnings of 56 cents per share on $20.05 billion in revenue, according to Thomson Financial. The mobile phone maker slightly raised its forecast for the mobile phone industry, saying volume would grow 10% or more in 2008.
Continental Airlines (NYSE: CAL) are up again this morning after climbing 38% Wednesday with the rest of the airline stocks. Continental swung to a second-quarter loss, hurt by record high fuel prices and weakening economic conditions. Still the losses of $3 million, or 3 cents per share, or excluding one-time items totaled $25 million, or 25 cents per share, beat expectations of a loss of 49 cents per share.
Yum Brands (NYSE: YUM) shares are down 4.3% in premarket trading after it reported a second-quarter profit of $224 million, or 45 cents a share. Revenue rose to $2.65 billion from $2.37 billion a year ago. While this beat estimates, and while the company raised its earnings growth forecast for the full year to 12% from 11%, investors were concerned about rising food costs which hurt profit margins in the second quarter.
It seems that Apple Inc. (NASDAQ: AAPL)'s new 3G iPhone was sold out in Germany after less than a week. Deutsche Telekom AG's T-Mobile division sold 15,000 iPhones and it's not clear when Apple will be able to deliver more iPhones for the German market, Financial Times Deutschland reported.
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.
By putting together information from several analysts around the world, Bloomberg figuresApple (NASDAQ: AAPL) sold as many as 425,000 iPhones the first three days the new handset was on the market. Figures show that the earlier version of the iPhone sold 270,000 units in the first two days it was for sale. Apple also has now partnerships with a large number of overseas carriers that were not in place for iPhone 1.0.
Piper Jaffray & Co figures that Apple will sell over four million iPhones this quarter. That means, with some growth, the handset could be on a pace to sell 15 to 20 million units a year.
While the iPhone sales projections are not impressive compared to the 400 million phones that Nokia (NYSE: NOK) sells each year, the fact that the Apple phone can move this many units at its high price is extraordinary. The cellphone market is currently troubled by the falling prices of handsets as more and more sales move to nations like China and India, and units sold in those countries generally go for low prices, leaving manufacturers with low margins.
Apple seem poised to take a very large part of the segment that all companies in the handset business want -- the expensive smartphone, which also brings carriers big data and voice subscription fees. Off to a flying start, Apple may just become a dominant player in the sweet spot of the industry.
Douglas A. McIntyre is an editor at 247wallst.com.
As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.
Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.
Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
Nokia (NYSE: NOK) shares are trading higher today after the company announced it has completed its acquisition of Navteq, a provider of comprehensive digital map information. Nokia hopes the acquisition will help it expand its technology platform. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NOK.
After hitting a one-year high of $42.22 in November, the stock hit a one-year low of $23.58 last week. NOK opened this morning at $25.16. So far today the stock has hit a low of $25.16 and a high of $25.73. As of 11:55, NOK is trading at $25.59, up 0.70 (2.8%). The chart for NOK looks bearish and improving slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $23 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 five weeks as long as NOK is above $23 at August expiration. Nokia would have to fall by more than 10% before we would start to lose money. Learn more about this type of trade here.
NOK hasn't been below $23.50 at all in the past year and has shown support around $23.50 recently. This trade could be risky if the company's earnings (due out on 7/17) disappoint, but even if that happens, this position could be protected by the fact that is has dropped sharply over much of the past year and expectations for earnings may be muted.
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 NOK.
Apple Inc. (NASDAQ: AAPL) is opening its online App Store for iPhone software in a move some think is more important than the 3G iPhone launch on Friday. The App Store will let iPhone users choose from over 500 software applications to download, including games, educational programs, mobile commerce and business productivity tools.
In business, and specifically in technology, there are some people who live in the past and can't see beyond familiar and existing systems. Lucky for us, there are the true visionaries, those who innovate and take things further. Steve Jobs is one such visionary.
After seeing the success of Palm (NASDAQ: PALM) smartphones initially, and then the addictive-like relationship Research in Motion (NASDAQ: RIMM) BlackBerry owners have with their handsets, it is no wonder Apple could zero in on what consumers want and give it to them in an intuitive way. That has been Apple's mark all along.
Indeed, the Mac OS has always been touted as being the better operating system, and yet it is Microsoft (NASDAQ: MSFT) with its Windows OS that dominates the market. Many say that Jobs' was overprotective of the software, causing third-party developers to shy away. If that's the case, Jobs has learned his lesson and is amending his stance now with the iPhone software, hoping to achieve a new computing platform.
MOST NOTEWORTHY: Steel Dynamics, Nucor, Nokia and Wachovia were today's noteworthy upgrades:
UBS upgraded Steel Dynamics (NASDAQ: STLD) and Nucor (NYSE: NUE) to Buy from Neutral and added them to their Short-Term Buy list citing oversold valuations and the belief that both will beat Q2 Street estimates and guide higher.
Dresdner Kleinwort upgraded shares of Nokia (NYSE: NOK) to Buy from Add as they believe the company's second half of the year looks strong due to new product launches.
Merrill Lynch upgraded Wachovia (NYSE: WB) to Neutral from Underperform on valuation as they believe credit headwinds are priced into the stock at current levels. Merrill also thinks WB would make a "good fit" for JP Morgan (JPM) and puts a realistic acquisition value on the company of $16-$20 per share.
OTHER UPGRADES:
Verisign (NASDAQ: VRSN) was upgraded at Baird to Outperform from Neutral.
Lehman upgraded Penn Virginia (NYSE: PVG) to Overweight from Equal Weight.
Reuters reports today that Nokia Corp. (NYSE: NOK) has signed up Warner Music Group Corp. (NYSE: WMG) to its "Comes with Music" phone service and music store. Nokia is the world's top phone manufacturer and will be making a direct challenge to Apple Inc. (NASDAQ: AAPL)'s iTunes Store, according to numerous reports. The "Comes with Music" service is the first from a phone manufacturer to "push heavily into content" and "differs from other packages on the market as users can keep all the music they have downloaded" while in yearly contracts with Nokia.
WMG executives allowed the music company to join up with Nokia since the service "is the first global initiative to fundamentally align the interests of music companies with telecommunications companies." Nokia already secured the support of fellow music companies Universal Music Group and Sony BMG Music Entertainment in April, and "Comes with Music" launches later this year. Reuters speculates that the agreements with three of the top four music companies (EMI Group has not signed up yet) will "help Nokia attract smaller music companies and challenge the dominant pay-per-track sales model for digital music." Last year, download sales totaled $2.9 billion; if the 146 million Nokia phones had featured "Comes with Music", those sales would have surpassed the digital market.
Record labels have consistently looked for new methods to challenge Apple's grip on the music industry, and subscription models like "Comes with Music" may finally provide that challenge. Subscription models give the music industry more shares per download since users typically are not allowed to keep tracks downloaded during the subscription. "Comes with Music" is betting against that model since users will be allowed to keep music downloaded, and Nokia and the record companies are no doubt hoping that dynamic will keep those consumers renewing contracts with the service. Reportedly, the subscription for "Comes with Music" will only cost $20 per phone, which on a yearly basis would not be too expensive for unlimited downloads.
MOST NOTEWORTHY: Lehman Brothers, Nokia and Intuitive Surgical were today's noteworthy initiations:
Morgan Stanley initiated Lehman Brothers (NYSE:LEH) with an Overweight rating and $31 target. The firm believes Lehman's discount to book value prices in significant write-downs.
Bernstein believes Nokia (NYSE:NOK) will see a slowdown in demand for devices and could loss market share. Shares were initiated with an Underperform rating.
Merriman assumed Intuitive Surgical (NASDAQ:ISRG) with a Neutral rating and believes the tightened credit markets could impact capital equipment spending for small and mid-sized hospitals. They find shares appropriately valued at current levels.
Everyone in the music distribution business wants to be like Apple (NASDAQ:AAPL) iTunes. No wonder. It has over 80% of the market. Rhapsody, a competing download service, said yesterday that its subscribers could play their music on the iPod. It feels that should improve their customer base. Maybe. But, probably maybe not.
Now, Nokia (NYSE:NOK) has signed up Warner Music (NYSE:WMG) to its mobile phone music service. The big handset company has done deals with three of the four largest record labels.
According to the FT, "Consumers who buy Nokia phones featuring Comes with Music will be allowed to download as many songs as they like from Universal Music, Sony-BMG and Warner for a year." Now Warner is on board.
Getting a piece of the iTunes business will be hard, but Nokia probably has a better chance than anyone else. It sells 40% of the world's handsets, over 400 million a year.
But, consumers are used to getting their music from iTunes. Nokia may have a service, and it may have distribution, but it does not have a music brand or product loyalty in the download subscription business.
The loyalty part is important.
Douglas A. McIntyre is an editor at 247wallst.com.
Driving on the LA freeways yesterday, there was a message on the periodic amber signs. That is, drivers will need to use hands-free mobile devices if they want to talk on their cell phones.
And, yes, it's caused a stir (LA folks love their cars and cell phones -- hey, it's a lifestyle here). At the same time, I've almost got into a few accidents because of another driver's cell phone use (and, in some cases, texting).
But, will the new California law make any difference?
Well, according to a piece in the Daily Breeze, the answer may be: it depends.
For example, Larry Rosen, who is a psychology professor at the California State University, Dominguez Hills, believes that the law doesn't address the core problem. Basically, cell phone use -- whether hands-free or not -- is a distraction (known as "inattention blindness").
Of course, there are a variety of studies on the topic. Unfortunately, the conclusions are mixed. In other words, it's pretty tough to isolate cause-and-effect on a large scale.
There is one thing that's certain: the new law should result in a boost in hands-free device sales by such makers as Motorola (NYSE: MOT) and Nokia (NYSE: NOK).
So, to learn more about the new law, you can check out CA Hands-Free.
Handset maker Sony-Ericsson said it is having a tough time. According to The Wall Street Journal (subscription required), "the mobile-phone maker continues to be hit hard by a weakening economy in Western Europe, hurting demand for the mid- to high-end handsets it specializes in."
Of course, another big market for more expensive phones is America, Motorola's (NYSE: MOT) last stronghold. The U.S. company faces a double threat now. It does not have any "hot" model to compete with new products from Nokia (NYSE: NOK), Samsung, or Apple (NASDAQ: AAPL). Now it appears that the recession is cutting demand for phones altogether.
Motorola may already be at a place where its handset operation cannot recover. Revenue in the division is dropping rapidly, and the unit is losing money. Its share of the global market has dropped from 22% two years ago to about 12%. And, the company's stock is down to a 52-week low of $7.20, about 65% down from its 52-week high.
No matter how hard it may be for other companies in the industry, the only firms that may do well over the next year are Nokia and specialized handset makers like Apple. Nokia has about 40% of the global market and sells modestly priced phones in rapidly growing markets including China and India. Apple gets the high end of the market.
In the middle is Motorola, with barely a hope of things getting better.
Douglas A. McIntyre is an editor at 247wallst.com.
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As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from 
Driving on the LA freeways yesterday, there was a message on the periodic amber signs. That is, drivers will need to use hands-free mobile devices if they want to talk on their cell phones.
and 
. He also operates 
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