Posted on February 26th, 2008 by
Technology stocks have been among some of the hardest hit in recent months, but IBM’s new plan to buy back $15 billion of its own stock, boosted the market on Tuesday, and sent the tech giant’s stock up nearly 5% in intraday trading. IBM’s stock prices have fluctuated between its 52 week high of $120 set least September, and a low of around $97. Although 2008 has seen choppy trading, the trend for IBM has been upwards recently.
Analysts are expecting the move to add somewhere around $.05 per share with the move, and are expecting earnings of $8.25 per share on the year.
The move helped change the course of the day’s trading, as the market opened lower on bad news regarding consumer prices on energy and food prices from the labor department.
On the year, IBM is up just under 2% per share, and has a P/E ratio of just under 15.
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Posted on February 20th, 2008 by
Hewlett-Packard (HPQ) blew away estimates this week, raising full year projections by 5%, and sending the stock’s prices soaring on Wednesday. Just before Wednesday’s close, the stock was up 8% on the day, on top of a 3% gain during Tuesday’s after hours trading. The company’s report was glowing in several areas, including the processor division, printers, and laptop sales. According to an article in TheStreet.com:
H-P improved its gross margin 60 basis points overall, year over year, to 24.5%, in part due to price reductions on memory chips in its PC group. The printer group improved operating margin 40 basis points year over year, to 15.7%.
In addition, corporate and business sales, which had been a drain on the company for several years, were up dramatically:
In the enterprise storage and servers group, revenue rose 9% year over year to $4.8 billion. The brightest spot in this group was server blades, which grew 81%. Industry standard servers grew 11%, which accounts for the lion’s share of the group’s revenue. For the second consecutive quarter, business-critical systems were up 1%, after years of decline. Also within ESS, the storage segment was up 10% year over year, with its midrange arrays growing 14%.
At the end of the day, HP looks to be regaining its foothold in the industry. HP’s competitor, Dell, has seen it’s market value reduced by a third over the past few months, and Apple as well has given up some money.
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Posted on February 19th, 2008 by
Fidel Castro has formally given up power in Cuba after over 50 years of rule. What this change means for the Cuban economy is unknown, but likely changes will occur, and reforms to bring the isolated island into the mainstream of the world’s countries will probably be undertaken in the upcoming years.
On Wall Street, investors were quick to find stocks that would be affected the news. CUBA is a closed end fund that invests in many Caribbean countries and stocks, and has major holdings in cruise lines and other tourist related industries. The fund had lost roughly 50% over the last six months, but on the news of Castro’s stepping down was up 20% in daily trading.
TheStreet.com was quick with a video suggesting some other investment opportunities, such as Mexican cellular company America Movil (AMX) and cruise line Carnival (CCL). Obviously, major changes in Cuba probably won’t be enacted overnight, but watching America’s southern neighbor over the next few years for investment opportunities should pay off in the long run.
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Posted on February 12th, 2008 by
Most countries’ indexes have felt the pressure over the past few months due to massive selling. India, seemingly, has taken the wind out of its own sails by passing a new set of rules designed to regulate the amount of foreign funds entering the country. INP, the ETN issued by Barclays that is designed to follow India’s Sensex has borne the brunt of the Indian government’s new regulations. Just a few months ago at its peak, INP was fetching a price of $120 per note. Today, the same stock’s price is going for $74.71. Lawrence Carrel at TheStreet.com has an article analyzing the situation. In it he states:
The SEBI [Securities and Exchange Board of India] also ruled that an investment instrument called a participatory note — a category of investments that includes ETNs — could no longer be based on derivatives by foreign institutional investors.
Unlike ETFs or other kinds of funds, ETNs don’t hold stocks or other securities. Essentially, they are backed by the issuer’s promise to match the return of an index, minus expenses.
That meant INP could no longer issue new shares. And now that the supply is fixed, the share price has been moving out of line with net asset value — sometimes wildly out of line. For example, on Friday, INP’s shares closed at $87.20, or a 3% premium to the daily indicative value of $84.81. This morning, the price tumbled down 16% to $72.93, but recovered to be down 5.5% at $82.50 by midday, a 2.7% discount to the indicative value of the underlying assets.
Shares have traded at a premium of as high as 25% over the past several months.
INP was a favorite of investors who wanted to buy index funds for emerging markets around the world, as recently as a few months ago. Now, INP is a highly volatile security that has been steadily trending down over the past few months. The Sensex itself has taken a massive beating in 2008, having given up nearly 30% of its value in the new year.
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Posted on February 8th, 2008 by
February 7th was the first day of the Chinese New Year. The second day is the day in which people of Cantonese descent open their businesses and pray for luck in business. From Wikipedia:
The Rat (Chinese:?) was welcomed in ancient times as a protector and bringer of material prosperity. It is the first of the 12-year cycle of animals which appear in the Chinese zodiac related to the Chinese calendar. Rat is associated with aggression, wealth, charm, and order, yet also associated with death, war, the occult, pestilence, and atrocities. The Year of the Rat is associated with the earthly branch symbol ?.In Chinese, the word ? may refer to either the rat or the mouse. Therefore, in this context, Year of the Mouse and Year of the Rat are interchangeable terms.
Quite a diverse group of things for the rat to stand for. Investors in the Chinese economy recently have probably related more to the darker elements that rat represents than the others. Over the past three months, the Xinhua Chinese 25 Index (FXI) has trended steadily downward, as have most Chinese stocks. FXI soared in 2007, but since hitting a high of 219 on Halloween, the index has given up $75 off its share price. Has the bottom been reached? It is anyone’s guess at the moment, but the Chinese economy overall continues to grow, and forecasts predict another double digit year.
TheStreet.com straddles the fence on the issue, saying that investors can count on the Chinese government to prop up failing businesses in event of a crisis, but wonder if some hard times are on the way. Most investors feel that the Chinese story (all 1.3 billion) is a recipe for strength and a huge untapped market, due to have a middle class the size of all of the United States and Europe. On the other hand, will the growth happen too fast, not giving the country the time needed to build a firm base on which to stand. Only time will tell.
Investors in China are hoping that all those prayers for prosperity will be heeded, and the Chinese economy will revert to its 2007 growth.
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Posted on February 7th, 2008 by
Coming off Tuesday’s disastrous 370 point drop, the Dow trended up in the morning, but couldn’t hold the gains in the afternoon. Just before noon, the index was up almost to 12,400 after opening at 12,257, but afternoon selling dropped the index down to its close at 12,200. Cisco and Macy’s reported bad news which contributed to the decline.
Cisco forecasted 10% growth over the next few months, well below the 15% that analysts were expecting. The company released an earnings report that, while in line with analysts’ lowered expectations, still insinuated that the tech sector is weak. The company’s stock was pounded for an 8% loss in after hours trading.
The retail sector suffered also, led downward by Macy’s. Macy’s announced that they were cutting 2,300 management jobs and combining three regional divisions. According to an article on Yahoo!, there was other bad news also:
Meanwhile, Macy’s reported that sales at stores open at least a year, a key barometer of a retailer’s health, fell 7.1 percent in January. Analysts surveyed by Thomson Financial had expected a 5.9 percent drop.
The retail giant’s stock was down over 4% during the day, and gave up almost 2% more after hours.
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Posted on January 26th, 2008 by
Recent companies that have released earnings have had a rough time, to say the least. Apple released a few days ago, and although the tech giant came up short of expectations, much of the fundamental numbers were fairly good. Although profits were up, the company’s stock was punished throughout the week, losing over $30 per share. Intel recently reported and was hammered as well.
This coming Monday, some of Wall Street’s biggest names will report, and what they say may set the tone for the week. Here’s what to look for:
American Express is expected by analysts to announce $.71 earnings per share.
Halliburton is expected to announce $.69 EPS.
Analysts are looking for McDonald’s to announce $.71 EPS.
Verizon is expected to have an EPS of $.62.
These companies represent various sectors of the market, so investors will be watching carefully in order to judge the relative health of the economy.
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Posted on January 24th, 2008 by
Wednesday started off like so many trading days have recently–down. After the opening bell, the Dow spent most of the morning trending down, going almost to the 11,600 mark. Finally, around one o’clock, the trend reversed and the buyers brought the Dow out of its dive. By the end of the day, the turnaround was nothing short of remarkable. Down almost 300 points, the index rallied 600 points to close at 12,270.
Financials made out very well at the end of the day. Bear Stearns gained just over $9 per share, to end up almost 12%. Capital One released its earnings report, and although profits were down 42%, the company’s shares surged ahead over 11%. The quarter was not a good one for the company, but management has acted conservatively to lessen the impact of the credit crisis, and hopes are that the credit card company can sail through the crisis without hitting too many rocks.
Tech stocks were among some of the worst hit after the bell, with Apple down more than $25 in the morning. This coming after losing more than $25 yesterday after the earnings came out. Though the company still took a big hit today, it did manage to shave $10 off the loss to finish down $16, or 10%
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Posted on January 23rd, 2008 by
After seeing world markets taking a severe beating over the past two days (and some longer than that), the Fed stepped in Tuesday and cut the key interest rate .75%, marking the biggest one-time cut in rates since 1982. The Dow dropped like a stone as the markets opened on Tuesday, dipping down over 460 points, before rallying some in the afternoon to close down 128 points, at 11,971.
Many banks and financial institutions gained on the news. Merrill Lynch ended the day up almost 5%, and Bear Stearns, gained over 7%.
Tech stocks didn’t fare nearly as well. After the bell, Apple released its earnings report, and failed to meet expectations. Apple was down over 11% in after hours trading.
Thestreet.com has a write up about the fed cut here.
Herb Greenberg at SeekingAlpha.com, asks the $64,000 question, what if the cuts don’t work…
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Posted on January 22nd, 2008 by
The US markets were closed Monday in accordance with Martin Luther King’s holiday, but financial markets in the rest of the world certainly weren’t celebrating. World markets judged Friday’s lukewarm close along with President Bush’s stimulus package to signs of more rough waters ahead and reacted, or overreacted, accordingly. Almost every major stock exchange ended down, with may posting record lows.
On Tuesday in Asia, the selloff reached a fever pitch, with the Hang Seng down as much as 8%, Jakarta down as much as 10%, and India’s Sensex down more than 12%.
On Monday, every major market ended the trading day down, many having as much as 4, 5, 6% shaved off. According to Bloomberg, about half of the world’s markets entered a Bear market on Monday. Bear markets are defined as when a market drops to 20% below the high of the previous year. This is certainly not a great sign for the upcoming months for long investors. The Fed does meet later in the month, and has stated that they will be ready to help out, but at this point the best anyone can reasonably hope for is a quick bump.
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