The Dow Jones Industrial Average is down 150 points (at 10:15 a.m.). I guess that it was to be expected as we woke up to news that Goldman Sachs (NYSE: GS) downgraded investment banks. Wall Street is also worried about the outlook for tech stocks after both RIM (NASDAQ: RIMM) and Oracle (NASDAQ: ORCL) reported quarterly results Wednesday, giving a tepid outlook.
Then, final revision of first quarter GDP were released an hour before the open, and while growth was revised upward to 1% from an anemic 0.6% original estimate, the components weren't very encouraging. Consumer spending, which accounts for 70% of GDP, grew by 1.1%, the smallest gain since the second quarter of 2001, which was during the last recession. Also, corporate profits after taxes fell 7.8%, a higher decline than previously estimated. Housing, as measured by residential fixed investment plunged by 24.6%.
Also, looking at inflation, the price index for gross domestic purchases, a closely watched measure of inflation, rose at a 3.6% rate, up 0.1 percentage point from the preliminary estimate. Excluding food and energy, the price index was up 2.3%, which is above the Fed's preferred range of around 1.5% to 2% for that index.
One bright spot, as it has been awhile now, is that exports rose 5.4%, which was much better than the estimate of 2.8 percent in May.
Moving to the labor markets, weekly initial claims, which were also reported at the same time, were unchanged. But -- and a big But it is -- the better indicator, four-week average of new jobless claims, was at the highest level since October 2005 in the aftermath of Hurricane Katrina.
Welcome to the Research In Motion first quarter fiscal 2009 results conference call. (Operator Instructions) I will now turn the conference over to Ms. Edel Ebbs, Vice President, Investor Relations. Please go ahead.
Edel Ebbs, Vice President, Investor Relations
Thank you. Welcome to RIM's fiscal 2009 first quarter results conference call. I'm Edel Ebbs, RIM's Vice President of Investor Relations. With me on the call today is Jim Balsillie, RIM's Co-CEO, and Brian Bidulka, RIM's Chief Accounting Officer.
After I read the required forward-looking statements disclaimer, Jim will provide a business and strategic update. Brian will then review first quarter results, and I will discuss our outlook for the second quarter of fiscal 2009. We will then open the call up for questions. I would like to note that this call is available to the general public by a call-in number and webcast. A replay of the webcast will also be available on the RIM.com website. We plan to wrap up the call before 6:00 PM Eastern this evening.
Net income at the Ontario-based company in the fiscal first quarter rose to $482.5 million,or 84 cents per share, versus $223.2 million, or 32 cents per share, a year earlier. Revenue soared 107% to $2.24 billion as the company shipped about 5.4 million devices. Though these results were impressive, they were not good enough for Wall Street.
Analysts surveyed by Bloomberg News were expecting RIM to report earnings of 85 cents on revenue of $2.27 billion. Moreover, the company forecast second quarter profit of between 84 and 89 cents per share, missing the Bloomberg estimate of 92 cents. The revenue forecast of $2.55 billion to $2.66 billion, however, is slightly better than the $2.44 billion analysts had expected.
The problem that RIM has is that it's not Apple Inc. (NASDAQ: AAPL), which is now trying to lure more corporate customers with the latest version of the iPhone. In baseball terms, RIMM is like the New York Mets, a once mighty team that has fallen on hard times. Apple, on the other hand, is the high-tech world's equivalent of the Boston Red Sox, a once lowly team that now dominates the league.
Picture that the RIM team and the Apple team are playing each other in a real baseball game. RIM is trailing Apple in the bottom of the ninth, the bases are loaded with two outs. RIM management is trying to convince investors that it can hit a home run in this situation, while Wall Street is sure the company will strike out.
RIMM shares are down over 8.5% in after-hours trading to about $130. It closed at $142.336.
RIMM is scheduled to report Q1 EPS today after the market close. RBC Capital has a Outperform rating on RIMM.
RIMM call option volume of 81,369 contracts compares to put volume of 76,284 contracts. RIMM July option implied volatility of 63 is above its 26-week average of 55 according to Track Data, suggesting larger price movement.
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.
Research in Motion (NASDAQ: RIMM) picked up share in the smartphone business in the U.S. during Q1. Apple's (NASDAQ: AAPL) iPhone lost some. That will come as a surprise to most people who see the iPhone as almost invincible. Research firm IDC says otherwise.
Reuters reports, "According to the report, RIM's share of the U.S. market for advanced phones with computer like features such as e-mail rose to 44.5 percent in the first quarter from 35.1 percent in the fourth quarter." Apple's slice dropped from nearly 27% to just over 19%.
While the RIMM product, the BlackBerry, may be good and the company may be building devices for the consumer, Apple may be suffering from the lack of a device that runs on a 3G network. There is a rumor a day about when Apple will come out with the faster device, but, so far, nothing.
The iPhone, with all of its web features, would benefit immensely from the ability to operate on a network that transfers data and video almost as fast as a DSL line. Instead, it runs on a slower 2.5G network.
Apple losing ground. Who would have ever believed it?
According to internal company and agency documents, the Wall Street Journal reported that the FAA is investigating into why AMR Corporation's (NYSE: AMR) American Airlines ordered mechanics to skip specific safety instructions to detect damage to planes from potential lightning strikes.
Yahoo! Inc (NASDAQ: YHOO) is trying to quickly put the finishing touches on a search advertising deal with Google Inc (NASDAQ: GOOG) as billionaire Carl Icahn launches a proxy fight for control of Yahoo's board, according to the New York Post. Yahoo! hopes to announce a deal with Google to create an open platform system within the next week, two inside sources said.
The New York Post reported that a partnership of MGM Mirage (NYSE: MGM) and investment company Dubai World may seek to buy the Drake Hotel site from developer Harry Macklowe. If a deal is reached, MGM and Dubai World would assume $580M in defaulted debt and interest, inside sources said.
RIMM announced the introduction of BlackBerry Bold smartphone.
Smith Barney says: "We expect its 3G capability will help drive strong international growth for RIMM. We expect AT&T (NYSE: T) will be the first domestic carrier to offer the Bold."
RIMM call option volume of 77,745 contracts compares to put volume of 45,526 contracts. RIMM June option implied volatility of 45 is below its 26-week average of 57 according to Track Data, suggesting decreasing movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
"I'm like Ma Bell, I got the ill communication." -- Beastie Boys
When considering these two particular companies, it is important to note their roots as offspring of the famous "Ma Bell" network. The Bell System, which has produced the most complex ongoing series of mergers and break-ups in the history of the United States, is the origin of the companies that are now AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), as well as competitor Qwest Communications International (NYSE: Q). A lot has changed since those early times -- remember, after all, that the second "T" in AT&T stood for Telegraph. Now phones are the latest devices to be made supercomputers. AT&T has its exclusive deal with the Apple Inc. (NASDAQ: AAPL) iPhone, while Verizon slings the Research in Motion Ltd. (NASDAQ: RIMM) BlackBerry.
Since wireless is the way of the future, the wireless divisions of these companies is the most hotly contested, and the focus of this "Battle of the Brands." It is important to note that despite Verizon Wireless bearing solely Verizon's name, it is not owned by just them, it is a 55%-45% joint venture between Verizon and Vodafone Group (NYSE: VOD). It is also important to note that AT&T Mobility is the service formerly known as Cingular, which was acquired by AT&T in 2006 when it bought BellSouth for $86B.
Monday marks the 8th anniversary of the NASDAQ reaching its' all time high. I remember the day quite clearly as it was a Friday and I got married on that Sunday. From March 10th 2000 to early Oct. 2002, the NASDAQ dropped about 78%, even with a bit of a comeback over the last five years, the index is still sitting over 55% under the all time high.
In fact since the recent high at the end of October, the index has shed more than 22%. What does all this mean? While we may not see a return to all-time NASDAQ highs for another decade, the index has again gotten very cheap. It could be that the index is setting up for a move to the upside. After all, this past Friday, the NASDAQ easily outperformed the DOW, and I think we are going to start seeing a rotation into technology names.
Tech earnings haven't been to bad. All the pundits will say that with a recession, tech spending will get cut. Go into your nearest Apple (NASDAQ: AAPL) store and there are no signs of a recession. Check out the earnings for Research in Motion (NASDAQ: RIMM), things look okay. Heck, Google (NASDAQ: GOOG) is starting to look interesting as a value stock.
It may not happen tomorrow, but for long-term investors, technology maybe a place to think about investing.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/9/08.
Almost everyone would expect that Nokia (NYSE: NOK) would have the top spot among handset companies in the last quarter of 2007. Indeed, the big European company took over 40% of the market, up from about 36% the year before, according to research firm Gartner.
It also isn't surprising that Motorola (NYSE: MOT) did poorly; still, the magnitude of the drop was shocking. From that last quarter of 2006 to the last quarter of 2007, Motorola's global share fell from 21.5% to 11.9%. This allowed Samsung to move into the second spot with an 11.3% share.
The most remarkable numbers in the Gartner survey show the rise of expensive smartphones. Apple (NASDAQ: AAPL)'s iPhone took a 0.6% share of handsets sold, even though the product is not even a year old and is one of the most costly products in the market. RIM's (NASDAQ: RIMM) BlackBerry moved onto the top-10 list with a share of 1.2%.
If the trend away from less expensive phones and toward handset with more features continues, it would not be surprising to see RIM and Apple hitting market shares of closer to 5% at the end of this year. And that would be in a slowing market. According to the FT, "Global handset sales rose 16 percent in 2007, to 1.2bn devices, but Gartner estimates the market will grow by 10 percent in 2008."
Douglas A. McIntyre is an editor at 247wallst.com.
The Dow Jones Industrial Average is down 150 points (at 10:15 a.m.). I guess that it was to be expected as we 
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Research in Motion
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Research in Motion
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