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.
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.
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.
The stock is up 150% over the last year but with its move into the consumer marker BlackBerry maker Research in Motion Limited (NASDAQ: RIMM) is entering the fickle world of consumer trendiness, reported the Wall Street Journal's "Heard on the Street". Analysts are concerned about how big the consumer market can be for them, and then there's Apple Inc (NASDAQ: AAPL) and Nokia Corporation (NYSE: NOK) beating down the consumer path. Smart products will help, but price is an issue, and the shares could face a hard fall.
The Wall Street Journal reported that Wachovia Corporation (NYSE: WB) acknowledged it has hired The Goldman Sachs Group Inc (NYSE: GS) to study its troubled portfolios of mortgages, a move which many believe indicates the bank is gauging the market value of the loans in order to eventually sell them.
OTHER PAPERS:
Lazard Ltd (NYSE: LAZ) was hired by UBS AG (NYSE: UBS) to undertake a strategic review of the Swiss bank's businesses, the New York Post learned.
The New York Post also reported some reported turmoil at Live Nation Inc (NYSE: LYV), following the abrupt departure of the concert promoter's chairman, Michael Cohl. Employees in the unit that was led by Cohl fear that the company will lay some of them off, and CEO Michael Rapino is accused of not being strongly committed to the company's mega-deal strategy.
The Boston Herald reported that its unions were told the newspaper will lay off 130 to 160 workers, under its new plan to outsource printing operations elsewhere in the state.
The week was full of news about handsets. Sprint (NYSE: S) said it would launch an "iPhone killer," a $129 phone from Samsung. Many brokerage firms upped estimates for Apple (NYSE: AAPL) iPhone sales as it appears that the demand for the new 3G version will be tremendous. Nokia (NYSE: NOK) launched its E71 and E66 high-end handsets. Lehman upped its targets for earnings estimates at RIM (NASDAQ: RIMM), the maker of the BlackBerry.
And Motorola (NYSE: MOT) shares hit a five-year low at $7.61. The company did not launch any new products. No one on Wall Street upped forecasts on the company. All that was clear is that the firm is taking a worse beating as each month passes.
Motorola plans to spin-off its handset business and keep its home networking and enterprise operations. The entire company has a market cap of under $18 billion now.
Based on Motorola's last 10-Q, the two units the company is keeping have an annual revenue run-rate of over $16 billion. They should make about $1.7 billion in operating profit in 2008. By many measures, together they would be worth $18 billion on their own.
It is a spectacular sign of how bad things are at Motorola's handset business, that, as an enterprise, it may have no financial value at all. Its market share is dropping too fast and its is losing too much money.
MOT may not even be able to give the operation away for nothing.
Douglas A. McIntyre is an editor at 247wallst.com.
"Wall Street has recently been very negative about Texas Instruments (NYSE: TXN)," notes wireless sector expert Nikhil Hutheesing. In his Forbes Wireless Stock Watch, the advisor explains, "But things may not be as dire as they sounded last month and I think that with expectations down, the company will end up exceeding expectations in the second half of this year."
"One reason Wall Street has been negiative is that TXN's biggest wireless customer, Nokia, announced a fundamental shift, stating it would no longer depend mostly on Texas Instruments for its chips. Ericsson also said it had shifted to a multi-supplier strategy.
"Besides that, in April, at TXN's earnings conference, CEO Rich Templeton talked of a cloudy economy and said that his company had become become more conservative with its outlook for the second quarter.
"Meanwhile, I've spoken with a number of experts in the wireless area who tell me that orders for TI's chips are significantly higher for the second half of this year than they have been in previous years. These orders are even coming from Nokia. (So far, Nokia's muti-supplier strategy has not had an impact on Texas Instruments.)
"In 1999, Qualcomm (NASDAQ: QCOM) went from less than $4 to over $92; but the party came to a screeching halt over the next three years," recalls Chuck Carlson, an expert on stocks that offer dividend reinvestment plans.
In The DRIP Investor, he explains, "The stock has been stuck in a trading range for the last four years. But that looks like it is about to end, as it recently moved to a new 52-week high and is setting its sites on its 2006 high of $53."
"Strong earnings and greater visibility on some litigation matters should pave the way for solid gains in the second half of 2008. Technology stocks should remain among the market's leading sectors, and Qualcomm offers an excellent play in the group.
"Qualcomm generates 90% of its revenue from cell-phone chipsets and license royalties paid by users of its intellectual property. Qualcomm's chips are used in mobile phones and wireless infrastructures around the globe.
"Growth here should remain strong as networks convert to third-generation technology and emerging markets expand and upgrade their infrastructure.
Texas Instruments (NYSE: TXN) shares are trading higher after Nokia (NYSE: NOK) reported that its single-chip plan is still on track despite Infineon (NYSE: IFX), a supplier for NOK, announcing yesterday that it is seeing some delays. TXN is supplying NOK with GSM single chips for its mobile handsets and may be called upon to pick up the slack during this delay. 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 TXN.
After hitting a one-year high of $39.63 in July, the stock hit a one-year low of $27.51 in March. TXN opened this morning at $32.36. So far today the stock has hit a low of $32.32 and a high of $33.00. As of 1:17, TXN is trading at $32.73, up 0.24 (0.7%). The chart for TXN looks bullish 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 October bull-put credit spread below the $27.50 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 13.6% return in just five months as long as TXN is above $27.50 at October expiration. TXN would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
TXN hasn't been below $27.50 at all in the past year and has shown support around $32 recently. This trade could be risky if the company's earnings (due out in mid-July) disappoint, but even if that happens, this position could be protected by the support the stock might find around $28, where it found support over the past two months.
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, NOK, or IFX.
In a reorganization of China's telecom industry, which will change the face of the wireless industry, the country plans to merge two of its largest mobile companies, China Netcom (NYSE: CN) and China Unicom (NYSE: CHU). The new firm will be issued on of the three high-speed wireless licenses that the government plans to grant.
China's two largest phone companies, China Mobile (NYSE: CHL) and China Telecom, will receive the other two contracts.
The news may also be a benefit to handset makers as they rush to offer products for the new 3G networks. Apple (NASDAQ: AAPL) has still not found a home for the iPhone in China.
More competition among carriers will give it a greater chance to strike a good deal. A new market could also give some aid to Motorola's flagging handset sales and to rivals Samsung and Sony Ericsson.
Douglas A. McIntyre is an editor at 247wallst.com.
Navteq (NSYE: NVT) agreed to be purchased by NOK on Oct. 1, 2007 for $78 cash ($7.6 billion). The European Commission is investigating the deal.
NOK June call option implied volatility of 30 and puts implied volatility of 35 is below its 26-week average of 40 according to Track Data, suggesting decreasing price risk.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Nokia (NYSE: NOK) shares are trading higher today after the company unveiled three new mobile handsets. The new phones will begin shipping in the third quarter. 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 low of $24.42 in May, the stock hit a one-year high of $42.22 in November. NOK opened this morning at $29.13. So far today the stock has hit a low of $28.95 and a high of $29.68. As of 1:45, NOK is trading at $29.57, up 84 cents (2.9%). The chart for NOK looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $22.50 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 16.3% return in just five and a half months as long as NOK is above $22.50 at July expiration. Nokia would have to fall by more than 33% before we would start to lose money. Learn more about this type of trade here.
NOK hasn't been below $24 at all in the past year and has shown support around $28 recently. This trade could be risky if the company's next earnings (due out in mid-July) disappoint, but even if that happens, this position could be protected by the support the stock might find around $28, where it has found support over the past few weeks.
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.
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.
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The week was full of news about handsets. 
Nokia
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