Two Ways To Play: Microsoft's Silver Lining
Will weakness spell opportunity for tech giant?
According to Bloomberg, Microsoft (MSFT) fell nearly 6% in after-hours trading last night after the software giant said sales of Windows dropped 24% last quarter and forecast earnings that may miss analyst estimates. Net income fell 11% to $4.39 bln, or $0.47 per share, $0.03 better than consensus estimates of $0.44. Revenues were flat, up 0.4% year-over-year to $14.45 bln vs. $14.5 bln cons. Analysts said the shortfall in revenues was due to the company cutting prices on Windows sales in areas like China where piracy rates remain strong. But one bright spot in the quarter was its Xbox video-game console where sales doubled forecast jumping 68% to $1.58 bln. Professor Jeff Macke mentioned Mister Softie in yesterday's Macke's Movers.
From the Bull Pen: Those bullish MSFT can use today's weakness as an upside opportunity just as Professor Macke had mentioned. Sell-stops can be set below $29.50.
From the Bear Cave: An option for tech bears may be the tech ETF (XLK); entry can be near $25 with buy-stops above.
The WSJ reports Starbucks (SBUX) is overhauling its entertainment business and plans to refocus on coffee. The senior VP of entertainment has left the company and its chief technology officer will now lead that segment. Further, SBUX will hand over management of its Hear Music record label to Concord Music Group. Entertainment had been one of the company's strongest efforts in recent times in addition to being CEO Howard Schultz' pet project. But some analysts believe the focus ultimately ended up being a distraction and hurt its coffee business. Just yesterday, SBUX shares plunged 10% after the company said earnings will likely come in lower than previous forecasts. For more, see Professor Jeff Macke's Macke's Movers: Starbucks' Missteps.
From the Bull Pen: Starbucks is looking more appealing to value players. Bulls can play the upside with sell-stops below $15.40.
From the Bear Cave: Bears can look elsewhere for a downside play like Papa John's (PZZA); buy-stops can be set above $27.
For more ideas, check out Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed with the Hang Seng -0.64%, Nikkei +2.38%, Sensex +2.42%, Taiwan -0.47% and Shanghai -0.71%.
A quick look towards Europe finds the CAC +1.54%, DAX +1.55%, FTSE +0.42%
As of 8:50 AM EST, S&P futures are higher +8.7 points to 1394, and Nasdaq futures are up +9.25 points to 1930.
A Look At Commodities
In commodities, crude oil is up +0.97 to 117.06. Gold is lower -2.8 to 884.00. Silver is higher +0.125 to 16.785, and copper is lower -0.50 to 389.00.
The dollar index is higher +0.210 to 72.745.
On the Radar
10:00 U. of Michigan Confidence: 63.5 cons.
TGI Friday! Good luck!
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