Continue reading Schwab's bad advice about sector investing

Schwab's bad advice about sector investing originally appeared on BloggingStocks on Wed, 03 Jun 2009 15:20:00 EST. Please see our terms for use of feeds.

Most investors consider Dell Computer (NASDAQ: DELL) a dog of a company. Since the firm's founder, Michael Dell, took over as CEO, his only real skill seems to be cutting costs. The firm has lost market share in the PC category and is behind companies like Hewlett-Packard Company (NYSE: HPQ) and International Business Machines Corp. (NYSE: IBM) in the server business.

Continue reading Is the market wrong about Dell?

Is the market wrong about Dell? originally appeared on BloggingStocks on Wed, 08 Apr 2009 16:45:00 EST. Please see our terms for use of feeds.

Discount broker E*Trade (NASDAQ: ETFC) will run its famous "talking baby" TV ad during the Superbowl. It won't help the failing company. The stock is still a "sell."

E*Trade shares change hands at $1.18. That is down from a 52-week high of $5.79. For the fourth quarter of last year, the company reported a net loss of $276 million, or $0.50 per share. And, E*Trade's operating interest income, a key measurement of its health, keeps dropping. The firm said it had applied for money from the TARP but admitted there was no guarantee it would be successful in securing that funding.

Continue reading Superbowl ad won't save E*Trade

Superbowl ad won't save E*Trade originally appeared on BloggingStocks on Sat, 31 Jan 2009 14:10:00 EST. Please see our terms for use of feeds.

Continue reading Would investing more for retirement now help you sleep better at night?

Would investing more for retirement now help you sleep better at night? originally appeared on BloggingStocks on Wed, 12 Nov 2008 18:06:00 EST. Please see our terms for use of feeds.

It turns out that Charles Schwab (NASDAQ: SCHW) and TDAmeritrade (NASDAQ: AMTD) may have sold auction-rate securities by using misleading marketing about whether or not the instruments were "cash equivalents." According to The New York Times, the "point of sale" activity at the discount and retail brokerages is similar, they said, and some of the discount brokerage firms use financial advisers or may have improperly listed information on their websites.

Schwab argues that it was only an "agent" and did not slant the marketing of auction-rates one way or the other.

It is safe to predict that Andrew Cuomo, the New York State Attorney General, will get discount brokerage firms to buy the auction-rate paper back from their customers. Cuomo can probably find some marketing material where the nature of the securities was represented the wrong way.

But, Cuomo's actions have stepped over the line. In all probability, many discount brokerage customers bought the auction-rates on their PC without seeing any information about whether their liquidity could be undermined. Discount brokerage customer often do their own research.

Cuomo won't care. He won't try to find out which people got their auction-rates without being attracted to them by marketing. He will get the discount firms to buy all of the paper back. The companies do not want years of litigation.

Cuomo is running for governor, or perhaps the U.S. Senate. He does not have time to pause for such details.

Douglas A. McIntyre is an editor at 247wallst.com.

Discount brokers may be caught up in auction-rate scandal originally appeared on BloggingStocks on Sat, 16 Aug 2008 11:40:00 EST. Please see our terms for use of feeds.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Amazon.com Inc. (NASDAQ: AMZN) net income nearly doubled, topping Wall Street estimates.
• American Express Co. (NYSE: AXP) Q2 earnings fell well short of analysts estimates on credit crisis.
• Amphenol Corp. (NYSE: APH) beat Q2 expectations and offered Q3 and full-year guidance.
• A.O. Smith Corp. (NYSE: AOS) beat Q2 earnings estimates and boosted its full-year guidance.
• Apple Inc. (NASDAQ: AAPL) beat Q3 estimates but offered lower-than-expected guidance.
• Bank of America Corp. (NYSE: BAC) Q2 earnings tumbled but still beat Wall Street expectations.
• Boeing Co. (NYSE: BA) Q2 results missed estimates but it reaffirmed its full-year guidance.
• Broadcom Corp. (NASDAQ: BRCM) crushed expectations but offered muted guidance.
• Caterpillar Inc. (NYSE: CAT) posted better-than-expected Q2 earnings and offered guidance.
• Ceragon Networks Ltd. (NASDAQ: CRNT) reported strong earnings on increased global demand.
• Charles Schwab Corp. (NASDAQ: SCHW) topped Q2 estimates on rises in new accounts and assets.
• CME Group Inc. (NYSE: CME) better-than-expected Q2 results lifted the share price from a 52-week low.
• Crocs Inc. (NASDAQ: CROX) revised its Q2 and full-year guidance downward on market conditions.
• EI DuPont de Nemours & Co. (NYSE: DD) Q2 results beat expectations due to strength in agriculture.
• Ericsson LM TEL Co. (NASDAQ: ERIC) Q2 profits tumbled due to costs of R&D and acquistions.
• E*Trade Corp. (NASDAQ: ETFC) had a bigger-than-expected Q2 loss on Fannie Mae (NYSE: FNM) losses.
• Ford Motor Co. (NYSE: F) posted a record quarterly loss, mostly one-time charges.

Continue reading Earnings highlights: The Q2 crunch continues

Earnings highlights: The Q2 crunch continues originally appeared on BloggingStocks on Sat, 26 Jul 2008 12:40:00 EST. Please see our terms for use of feeds.

When E*Trade Financial Corp. (Nasdaq: ETFC) had its meltdown, I considered buying but I was too chicken. I mean, can you really blame me? When it got caught up in the financial crisis, the term "falling knife" never felt so accurate. A 52-week range between $2.08 and $25.79 is a pretty scary thing; to see what I mean in graphic format, feast your eyes on the chart.

Lately, though, I've been warming up to the idea ever so slightly of taking a shot on E*Trade. I can't say I possess strong conviction yet, but I'm not necessarily afraid of owning financial stocks. In fact, as an example, I own Newcastle Investment (NYSE: NCT), an idea that Sheldon Liber talked about recently, one that has a pretty frightening yield. E*Trade is a significant name in the online-brokerage industry, and its brand is valuable. When I saw the company falling off a cliff last year, my instinct to buy started to kick in, insisting that it isn't going to go the way of the dodo. Plus, takeover theories began, further fueling my fascination. In the end, I took no action.

Now, though, the stock has bounced nicely off its lows. And it reported January data yesterday that had a couple of good data points. Daily average revenue trades are up 18.8% for the month-to-month timeframe, and they increased 21.5% year-over-year. End-of-period retail accounts were flat month-to-month, and were up 6.2% year-over-year. Total retail client assets did decrease, however -- year-over-year, they declined over 12%. And, hey, for whatever this is worth, its Super Bowl "Talking Baby" ads apparently were a hit.

At any rate, I'm a bit more sanguine on E*Trade's stock potential. I may not buy just yet, but the closer it gets to $6 or $7 a stub, the better the chance it has, in my mind, of going to double digits again. Sure, Schwab (NASDAQ: SCHW) and TD Ameritrade (NASDAQ: AMTD) are the safer broker bets, but I can't help looking at E*Trade.

E*Trade: Is there a case here? originally appeared on BloggingStocks on Thu, 14 Feb 2008 14:00:00 EST. Please see our terms for use of feeds.

A look at the Nasdaq short interest on December 14, compared to November 30, shows that bets against discount brokers rose sharply. Short interest in E*Trade (NASDAQ: ETFC): moved up 3.9 million shares to 53.7 million, according to data from the exchange. That might have been expected, given the financial company's problems with mortgage related securities.

But, shares short in TD Ameritrade (NASDAQ: AMTD) jumped 8.2 million shares to 17.8 million, and short interest in Schwab (NASDAQ: SCHW) moved up by 6.1 million shares to 28.7 million. Both figures are a fairly large percentage increase.

The simple explanation for the rise may be that both stocks have done better than financial shares as a whole and are ready for a pull-back. Schwab's stock is up over 30% this year. Ameritrade is up just under 25%.

But there are two other possible explanations, both a bit more unsettling. One is that a bear market would likely hurt earnings at discount brokers. A recession early next year could cause individual investors to pull in their horns. The other theory is that the two firms could have balance sheet problems of their own. This is less likely, since neither company has made any disclosures to that effect.

Whatever the reason, a fairly large amount of money is being gambled that the discount brokerage stocks have peaked.

Douglas A. McIntyre is an editor at 247wallst.com.

Short interest grows in discount brokers: SCHW, AMTD originally appeared on BloggingStocks on Thu, 27 Dec 2007 09:40:00 EST. Please see our terms for use of feeds.

I've been writing about finance for longer than I care to admit (okay, 15 years, which feels like a long time, even if Floyd Norris might scoff). But one of the most surprising news flashes of my career has to be when I read in mid-November this year that E*Trade was tanking on concerns the company could go bankrupt.

E*Trade (NASDAQ: ETFC)? Bankrupt? I've seen discount brokerages come and go, but E*Trade has long been one of the survivors. It was up there, knocking on king Schwab's (SCHW) door, leaving competitor TD Ameritrade (AMTD) snapping at it heels. Or so I thought.

But it turns out that was the way things were before the mortgage market went bust. And before CEO Mitch Caplan decided to place a big bet on residential mortgages. Caplan, formerly head of a bank that E*Trade acquired, became CEO in 2002.

Continue reading Money Losers of 2007: E*Trade's Mitch Caplan steps down

Money Losers of 2007: E*Trade's Mitch Caplan steps down originally appeared on BloggingStocks on Sun, 23 Dec 2007 14:40:00 EST. Please see our terms for use of feeds.

The problem is that if the broker's mortgage securities investments are as severe a problem as some analysts think, the company may not be worth more than the $3.46 where the stock traded a few days ago. Those buying into the rally could be burned if an offer is well below the current price.

Any deal would probably be based on selling the customers of the discount brokerage unit and keeping the damaged securities on the balance sheet within the remaining public company. There is no guarantee that the cash paid for the customer base would not be eaten up if the market for these distressed securities drops further.

E*Trade may be worth over $5, but it could also be worth a lot less.

Douglas A. McIntyre is an editor at 247wallst.com.

Buyout chatter lifts E*Trade (ETFC) shares originally appeared on BloggingStocks on Fri, 23 Nov 2007 12:15:00 EST. Please see our terms for use of feeds.

How vulnerable is your mutual fund to the ongoing mortgage meltdown? In this series, BloggingStocks contributor Lita Epstein, author of more than 20 books including Trading for Dummies and The Complete Idiot's Guide to Improving Your Credit Score, digs into mutual funds' holdings looking for securities with exposure to the currently shaky credit markets.

After reviewing funds from Bank of America, JPMorgan, and Fidelity, companies that have been mentioned in some of the SIV bailout stories, I looked to see if other bond mutual funds also had significant exposure to the credit markets tied to this mortgage and asset-backed securities mess. While I can't guarantee that I located all the ones with significant exposure to this mess, here are some key players:

Eaton Vance Low Duration A has the riskiest position by far of all the ones I look at this morning. As of 04/30/07, this fund held 79.93% of its assets in mortgage pass-through securities. More than 75% of its holdings are in bonds rated BB and B. Its yield of 5.5% certainly doesn't justify this risk. If you are holding this fund, you could find a safer bet with similar yields.

As of 9/30/2007, Credit Suisse Short Duration A held 15.43% of its assets in mortgage pass-through securities, 13.86% in collateralized mortgage obligations, and 12.82% in asset-back securities. That's slightly more than 40% of its portfolio in the type of credit markets now showing signs of trouble.

Continue reading Mutual funds and the mortgage mess: Credit Suisse, Eaton Vance, Hartford, Principal, and Schwab

Mutual funds and the mortgage mess: Credit Suisse, Eaton Vance, Hartford, Principal, and Schwab originally appeared on BloggingStocks on Mon, 22 Oct 2007 19:10:00 EST. Please see our terms for use of feeds.

E*Trade (NASDAQ: ETFC) closed at $14.21.

• ETFC lowered its EPS guidance, increased its provision for loan losses. ETFC will take additional security impairments and exit and restructure some non-core business.
  
• Goldman Sachs (NYSE-GS) lowered its 12-month price target to $16 and removed ETFC from its Americas Buy list. Smith Barney says: "If its bank regulators took a more holistic view of ETFC's regulatory capital, it could result in a forced deleveraging."
  
• The Wall Street Journal reported on 8/22 that TD AmeriTrade (NASDAQ: AMTD) is in merger talks with ETFC. Jana Partners & SAC Capital Advisors LLC in late May encouraged ETFC and AmeriTrade or Schwab (NASDAQ: SCHW) to consider a combination.
  
• ETFC overall option implied volatility of 60 was above its 26-week average of 44, according to Track Data, suggesting larger price fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Option update: E*Trade (ETFC) volatility elevated after lower guidance originally appeared on BloggingStocks on Tue, 18 Sep 2007 09:04:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• Barron Online's (subscription required) "Inside Scoop" column reported that Charles R. Schwab sold 800K shares of Charles Schwab Corporation (NASDAQ: SCHW) for nearly $16M this past Friday.
• The Wall Street Journal (subscription required) reported that the human rights organization Human Rights Watch has released a report alleging that Wal-Mart Stores Inc (NYSE: WMT) spied on unions and violated other federal labor laws.
• The Wall Street Journal reported that Carl Icahn took out a full page ad to get the attention of Motorola Inc (NYSE: MOT) shareholders who will vote on board members at Monday's company annual meeting.
• The Financial Times (subscription required) reported that Sony Corporation (NYSE: SNE) Pictures Entertainment has formed a new division for the production of international films.

• According to a New York Post exclusive, Microsoft Corporation (NASDAQ: MSFT) has emerged as a contender to buy Internet ad company 24/7 Real Media Inc (NASDAQ: TFSM), along with ad firm WPP Group (NASDAQ: WPPGY).

Newspaper wrap-up 4-30-07: Microsoft looking at 24/7 originally appeared on BloggingStocks on Tue, 01 May 2007 09:17:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• CIBC is positive on the pharmacy benefit managers group given increasing generic utilization, continued growth in specialty pharmacy, improving mail-order penetration and share repurchases. CIBC initiated Express Scripts, Inc (NASDAQ: ESRX) with a Sector Outperformer and $104 target as the firm expects continued strong performance as the company benefits from positive secular industry trends, and initiated Medco Health Solutions (NYSE: MHS) with a Sector Performer and $82 target on valuation.
• BMO capital started E*Trade Financial Corp (NASDAQ: ETFC) and TD Ameritrade Holdings Corp (NASDAQ: AMTD) with Outperform ratings.
• Cathay Financial started J.B. Hunt Transport (NASDAQ: JBHT) and Knight Transportation (NYSE: KNX) with Neutral ratings.

• BMO started Charles Schwab Corp (NASDAQ: SCHW) with a Market Perform rating
• Citigroup started NYSE Euronext (NYSE: NYX) with a Buy rating and $113 target.
• AG Edwards initiated shares of La Jolla Pharmaceutical Co (NASDAQ: LJPC) with a Buy rating and $11 price objective.

Analyst initiations 4-10-07: ESRX, JBHT and NYX were initiated today originally appeared on BloggingStocks on Tue, 10 Apr 2007 11:31:00 EST. Please see our terms for use of feeds.

As Tom Taulli wrote earlier today, the number of accounts being infiltrated by computer hackers in Eastern Europe and Asia continues to rise, and your accounts at an online brokerage firm may be at risk. While E*Trade, TD Ameritrade, Schwab and Fidelity have promised to reimburse customers who lose money in their accounts due to fraud, the problem continues to grow. Who knows what the thieves will do with the information once they've gotten it by infiltrating your account?

E*Trade reported on a conference call last week that it spent $18 million in the third quarter to compensate customers affected by trading fraud, according to a report from Bloomberg. TD Ameritrade also admitted to losses, but gave no numbers. We may get more details when it reports its numbers, expected later today. Charles Schwab told Bloomberg that it didn't see "anything unusual enough to warrant a financial disclosure." Well, if I were a Schwab customer and my account were infiltrated, I certainly would consider it important enough for disclosure. I hope Schwab is being more candid with its customers. Fidelity did not comment on Bloomberg's story.

Bloomberg also reported that the FBI, the SEC and the NASD are trying to unravel exactly what is happening and how its being done. There are actually two types of fraud they are seeing. One is a classic "pump and dump," where hackers are opening an account in someone else's name and using it for illegal trading to pump up a stock. The person whose name was used for the account looks like the one responsible for the crime. Was the information used to open the account initially obtained by infiltrating an account at another online broker? No one knows for sure yet how it's done. The second type of fraud is straight theft, where hackers use personal information such as social security numbers to break into accounts. Once they have control, they sell securities and then wire the proceeds outside the U.S.

Javelin Strategy and Research of Pleasanton, California, estimates that identify theft will cost Americans $56.6 billion this year, according to Bloomberg. That doesn't even begin to account for the time it takes to clean up the mess after you've been a victim of identity theft. It can take years and hundreds of hours to get your financial history back on track. Good information about how to prevent identity theft and what to do if you are a victim is available from the U.S. Department of Justice.

Are your online accounts safe? originally appeared on BloggingStocks on Wed, 25 Oct 2006 11:35:00 EST. Please see our terms for use of feeds.

Online trading margins heading lower originally appeared on BloggingStocks on Wed, 11 Oct 2006 09:15:00 EST. Please see our terms for use of feeds.