Before The Bell: Retail Breakup; Software Giant Reports
Disney and Children's Place part ways while investors look for signs in Oracle.
The WSJ reports Walt Disney (DIS) is in advanced talks to buy back a majority of its retail stores from Children's Place (PLCE). A person familiar with the matter said a deal could be reached within weeks to acquire as many as two-thirds of the approximate 350 stores in North America. The remainder of the stores would be closed which would effectively end PLCE's long-term licensing deal and turbulent relationship with Disney. Disney has accused PLCE of multiple breaches of contract and last October agreed to spend $175 million to remodel 234 Disney stores over the next five years. Professor Jeff Macke mentioned Disney recently in All's Well in the House of Mouse.
From the Bull Pen: Professor Macke hasn't been shy about his affinity for Disney. Bulls can play the upside with near-term sell-stops below $30. Wal-Mart (WMT) is another option as the stock broke out of a long-term range. Entry near $50 and sell-stops set below $48.
From the Bear Cave: Bears can play the downside in PLCE; buy-stops above $26.75.
Software Giant Numbers
Oracle (ORCL) reported results for the third quarter last night after the bell. The third largest software maker said earnings per share were inline with estimates at $0.30. Revenues rose 20.7% year-over-year to $5.37 bln below expectations of $5.42 per share. Guidance was inline with forecasts calling for 19-23% annual earnings growth and 15-19% annual revenue growth. According to the WSJ, some were concerned, however, with Oracles sales of new licenses for "business applications" growing just 7%, a sign companies were just maintaining rather the upgrading to new software. "There are chinks in the armors," said Sara Friar of Goldman Sachs. "Nothing is immune in this kind of climate." For more context of the trading environment, read yesterday's Random Thoughts by Toddo.
From the Bull Pen: Bulls see this morning's weakness as a buying opportunity. Sell-stops can be set below recent lows ($18.90).
From the Bear Cave: Bears can play the downside in the tech ETF (XLK); buy-stops above recent highs ($23.30).
Fore more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed skewed to the red with the Hang Seng +0.21%, Nikkei -0.80%, Sensex -0.44%, Taiwan -1.85% and Shanghai -5.42%.
A quick check of Europe finds green with the CAC +1.09%, DAX +1.52%, FTSE +1.09%.
As of 8:30 AM EST, S&P futures +11.70 points to 1347, and Nasdaq futures are higher +5.25 points to 1815.
A Look At Commodities
Commodities are stronger. Crude oil is higher +0.60 to 106.51. Gold is down -1.00 to 948.10. Silver is higher +0.584 to 18.346 and copper is up +7.10 to 382.20.
The dollar index is higher +0.028 to 71.534.
On the Radar
GDP Annualized: 0.6% inline
Personal Consumption: 2.3% vs. 1.9% cons.
GDP Price Index: 2.4% vs. 2.7% cons.
Core PCE (q/q): 2.5% vs. 2.7% cons.
Initial Jobless Claims: 366 k vs. 370 k cons.
Continuing Claims: 2845 k vs. 2885 k cons.
10:00 Help Wanted Index: 20 cons
Click here for the full trading radar.
Good luck Minyans! Have a great day!
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