Earnings Report - MV News
- Yahoo! (YHOO) reported Q4 EPS of $0.16 vs $0.17 cons on revs of $1.07 bln (in-line). OIBDA was $459 mln vs $452-482 mln guidance. The company guided Q1 revs to $1.04-1.10 bln vs $1.09 bln cons and '06 revs to $4.6-4.85 bln vs $4.80 bln cons.
- Intel (INTC) reported Q4 EPS of $0.40 vs $0.43 cons on revs of $10.2 bln vs $10.56 bln cons. INTC guied Q1 revs to $9.1-9.7 bln vs $10.05 bln cons, gross margin to 59% (+/- a couple pts) vs 60.1 exp, and '06 revs to $41.1-42.3 bln vs $42.33 bln cons.
- IBM (IBM) reported Q4 EPS of $2.11 vs $1.94 cons on revs of $24.43 bln vs $25.51 bln cons. Gross margin was 44.1%. The company reported global service bookings of $11.5 bln vs $11.0 bln exp and global service revs of $12 bln.
Say What? Special "Bottom Line" Edition - Kevin Depew - 3:46 PM
A look at commentary, opinion and analysis from around the world:
- As readers of Kevin Depew and Jeff Macke know by now, today is Ben Franklin's birthday. In the Wall Street Journal, of all places, Vanity Fair columnist Christopher Hitchens says Ben Franklin was the "Socrates of his day." Bottom Line: Some have suggested Hitchens is the Hemlock of his day. Diversionary tactics.
- Meanwhile, in the Financial Times, Jonathan Guthrie examines "Ben Franklin's Way of Business." According to Guthrie, "Franklin was exemplary even in demonstrating that some things are more important than business. For him, these included kicking the British out of America and flirting with young Frenchwomen." Bottom Line: Franklin's multiple liaisons with women were amusingly mischievous. President Clinton's multiple liaisons with women will keep his picture off the $900 dollar bill.
Critters bar the door!!! - Fil Zucchi - 3:10 PM
It's T - 50 min. to the official beginning of the earnings avalanche. Away from Big Blue (IBM) and the Mother Chip (INTC), I'll be looking at a long forgotten elder of semi-land, namely Teradyne (TER).
Aside from the immediate +/- penny issue, there are some concerns that TER might guide next Q orders to around flat. But looking out a bit further, the chatter is that the "back-end" of semi cap equipment (testing and packaging) might be a bright spot for the next several quarters. In addition, TER is also in the process of shedding low margin businesses to improve profitability. Should TER get anywhere close to '06 and '07 estimates (big "should" I grant you), the stock looks mighty cheap.
In the here and now, last Thursday and Friday the Feb 17.50c traded almost 10,000 contracts, most - rumor has it - on the buy side.
Position in TER
Easy whip... - Sanjay Somaney - 3:10 PM
Wipro (WIT) will report earnings for their December quarter overnight in India. The Street is expecting earnings of $0.08/share on revs of $603 mln for the quarter. For March, sell-siders are estimating flat earnings of $0.08/share on revs of $650 mln. I think a penny better for both quarters is doable.
Things I am hearing from my contacts there:
- Pricing is stable with new deals coming at rates higher than average
- Client visits have been strong indicating strong offshoring interest
- BPO transition phase will be completed in this March quarter and the company will be in growth mode for the next 2-4 quarters in BPO.
- New services will lead to strong growth. New services include areas like package implementation, testing and IMS. WIT has deployed about 14,000 employees in these three areas.
- Salary hikes, effective November 1, 2005, could impact margins by 125 bips or so.
Net net WIT numbers will more than likely be decent but given my long-term thesis for Indian IT/BPO I will view any potential sell-the-news type reaction as a positive.
Like I have been saying going into earnings season, Cognizant Technology Solutions (CTSH) and Satyam (SAY) will be good, and WIT okay.
Position in WIT, SAY, CTSH
Volatile personality - Adam Warner - 2:47 PM
The VXO has rallied 12% today, but as Toddo and John Succo have both pointed out, it sure doesn't feel like that much. Well, it's not just anecdotal, rather it's an accurate observation on a return from a long weekend. All things being equal, if the S&P opens exactly unchanged on any morning, and every option on the S&P board opens exactly unchanged, the VXO will "lift" roughly .20. The reasoning is that the options "should" decay in the overnight, and if they haven't, it implies a small lift in volatility.
Multiply this .20 by 4 for the holiday weekend, and we would see a .80 lift in the VXO this morning without anything happening.
Now is this realistic? Sort of.
Friday closing prices factor in that 4 calendar days will pass before we trade again, so thus we often see artificially low option quotes at the end of a week, provided there is not much expected on the news front beyond the SNL Weekend Update. Those same "low" bids Friday at 4 PM seem like high bids at 9:30 AM Tuesday to the VXO calculators, but to any of us, it feels as if volatility has moved little.
That being said, the Volatility Sisters all sit in overbought territory, so it reads bullish right now no matter how we got here.
Flashback! - Bill Meehan - 2:23 PM
This day in market history...
- Closing levels 9 years ago found
- DJIA: 6833.10
- S&P 500: 776.17
- Naz: 1349.05
- Crude: 25.40
- Gold: 355.75
This day in Minyanville history...
- Toddo then ran off to Oakland for the long weekend A Naked Bear!
In other news...
- In 1991, Operation Desert Storm began as General Schwarzkopf gave the go ahead for air strikes on Baghdad
"It would not be altogether absurd if a man were to thank God for his vanity among the other comforts of life" - Benjamin Franklin - Jeff Macke - 12:56 PM
Happy 300th Birthday to America's Coolest Founding Father Benjamin "B. Frank" Franklin! In honor of Ben's birthday, his quote on Vanity, and in appreciation of Ben's first published work being a series of letters to the editor written in the guise of a middle-aged woman named Silence Dogood, I'm spending the day dressed in a fairy tale evening gown and staring at myself in the mirror.
While doing so I feel pretty and free, rather than "deeply troubled," thanks in large part to Ben.
As the pragmatic creator of one of America's first lotteries, I think Ben would like me to note Google's (GOOG) one point rise today. Maybe some of you King George-Loving Bears don't like that but that's just how guys like me and Ben prefer to Roll.
Position in GOOG
Calms and Storms - Todd Harrison - 12:35 PM
The Minx slinks through the dew as Boo attempts to turn the screws. With market breadth steadily red (2:1), all eyes are on S&P 1275 as the obvious level du jour. My sense, for what it's worth, is that support will hold into the close and shift the risk to the overnight variety.
We spoke last week about several elements --increased volatility, non-confirmations by the piggies, the disconnect between perception and (geopolitical) reality--and some of those concerns seem to be weighing on the tape. I've still got the "Big V" thing going (positive gamma) as, from where I sit, the games have only just begun.
Is that all there is? - Kevin Depew - 10:45 AM
Was that the lift? The market just slipped to new lows after a brief lift off the open. Meanwhile, no rest for the weak as Semis continue to lead the downside action as the SOX is off 1.7%. Financials aren't far behind, the XBD and BKX are both off better than 1%.
On the upside, energy, natch, is the winner with the OSX up 1.5% and the iShares DJ US Energy ETF (IYE) up 1/6%.
It's still early, but under the hood we'll be looking to see if there are new sell signals beginning to outnumber new buy signals, a necessary precursor to a sea-change away from a demand controlled market.
Housing hotline - Herb Greenberg - 8:43 AM
Stories in the San Diego Union-Trib this morning about a cooling of housing prices in this sizzling market. Median prices here rose JUST 7.6% last year, down from 21.1% the year before.
Three is the Magic Number - John Succo - 8:20 AM
We had been handicapping the GDT/BSX/JNJ (notice how I have now changed the order of the names) so well up until now.
This is a great example of human nature, of businesses making decisions not on value, but other "intangible" criteria. I am sure the BSX team is rationalizing this bid, but I have to believe that someone somewhere just got pissed and threw the gauntlet down.
I think they will live to regret this bid.
Anyway, my options trade is now done. Luckily for me I was out buying some July 70 calls very cheaply to set up an off trade after the deal. I bought calls and was going to sell stock a little higher to set up a long volatility trade for after the deal.
This move still cost me some money, about 10% of the profits I have accrued so far.
So be it. On to the next trade.
Position in GDT and JNJ
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter