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Ticker Shock: Electronic Arts, Kodak Scaling Back; Yahoo Cuddling Up to Microsoft?


Wednesday's top stories and stocks with potential to move.


Have you gotten all of your holiday shopping done yet? I haven't - there's just so much to do and so little time. I know you know what I mean.

Asian markets fared well overnight. The Hang Seng was up north of 5% and the Nikkei was up north of 3%. Meanwhile, European markets were showing me some green earlier this morning. Here in the US, we're trading higher at present.

Electronic Arts (ERTS)
On Tuesday at the close, the California-based video-game publishing company said that, due to declining sales, fiscal-year 2009 earnings and revenue will be below the previous guidance offered in October.

EA "does not expect to provide updated financial guidance for fiscal 2009 prior to reporting its third quarter results in early February 2009."

For the record, on October 30th, EA said it was looking for non-GAAP EPS of $1 to $1.40. And that was an issue even then, because it was down from the $1.30 to $1.70 (non-GAAP) guidance it offered up back in July in conjunction with its first-quarter results.

Long story short, my feelings are the same as they were on October 31st: "I don't think it's game over - I think the company will make a comeback… [But] the sell side will be busy ratcheting down estimates, and the shares could be under some pressure as a result."

Yahoo (YHOO)
Ivory Investment Management LP, one of the firm's largest shareholders, is urging Yahoo to sell off its search unit to Microsoft (MSFT).

But will it happen?

I don't know, but I think this could place even more pressure on the board to find ways to enhance shareholder value - which I think would be a good thing. That being said, I'm really beginning to feel that big and potentially positive changes are on the horizon. I think the shares close higher in today's session.

Eastman Kodak (EK)
Kodak withdrew its guidance for "revenue growth, digital revenue growth, earnings from continuing operations, and cash generation" for the remainder of 2008, as well as for the full year - though it does expect all numbers to be below its October forecast.

Kodak "will update investors on business performance when it announces its fourth-quarter and full-year 2008 results on January 29, 2009."

Not good news. But at the same time, I think the stock is kind of attractive in the $7 range. My gut tells me that any pummeling it receives on this news could be short-lived.

General Motors (GM)
A $15 billion bailout of US automakers seems to be a forgone conclusion. I've said it in the past, but I'll say it again: I think the Feds will end up stepping in and getting their hands in the pie - in spite of concerns that some lawmakers may have about ponying up big bucks.

As a result of this speculation, I think the shares will get a goose. But I'm not partying like its 1999, so to speak. I'd be a bit wary of being partners with Uncle Sam.

Have a great day!
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No positions in stocks mentioned.

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