Archive for April, 2007

• Even CEO Can’t Figure Out How RadioShack Still In Business
  Eddy Elfenbein, April 26th, 2007 at 12:47 pm

  From The Onion:

  The retail outlet boasts more than 6,000 locations in the United States, and is known best for its wall-sized displays of obscure-looking analog electronics components and its notoriously desperate, high-pressure sales staff. Nevertheless, it ranks as a Fortune 500 company, with gross revenues of over $4.5 billion and fiscal quarter earnings averaging tens of millions of dollars.
  “Have you even been inside of a RadioShack recently?” Day asked. “Just walking into the place makes you feel vaguely depressed and alienated. Maybe our customers are at the mall anyway and don’t feel like driving to Best Buy? I suppose that’s possible, but still, it’s just…weird.”

• Earnings: The Good, the Bad and the Very Ugly
  Eddy Elfenbein, April 26th, 2007 at 11:03 am

  This has been a very busy week for earnings. Let’s run down some of the recent reports from the stocks on our Buy List.
  Graco (GGG) reported yucky earnings after the bell on Tuesday. The company made 50 cents a share, which was seven cents below Wall Street’s estimate and a penny less than last year. Not good! Revenue rose just 3% to $197.5 million. The stock dropped 5% yesterday to $40 a share.
  Right after I mentioned that SEI Investments (SEIC) was at a new high, the company reported blah earnings. For the first quarter, SEIC earned 62 cents a share, one penny shy of expectations. Of course, that’s still good growth over last year’s 54 cents a share, but Wall Street wanted better. Me too. The stock fell 3.6% yesterday.
  At least, AFLAC’s (AFL) earnings were a bright spot. The company reported operating earnings of 82 cents a share, three cents more than estimates. Revenue rose 5% to $3.75 billion. The stock rose 4.5% yesterday. That helped ease some of the pain.
  Fair Isaac (FIC) already announced that it would have bad earnings. Well, they were right. Analysts had been looking for 59 cents a share, but the company said it would be 35 cents to 37 cents a share. The results came in at 37 cents a share. The stock dropped last week when the earnings shortfall was announced, so the shares didn’t do much yesterday. I’m not encouraged by this.
  Fiserv (FISV) had a bit of a mixed picture:

  Fiserv first-quarter earnings rise

  Fiserv 1Q profit slips

  Actually, they’re both right. Net income fell, but earnings-per-share rose from 64 cents to 66 cents. Analysts, on average, were expecting 67 cents. I’m not worried about FISV. This is a solid company.
  Varian Medical (VAR) is today’s problem child. The company made 46 cents a share for the first quarter, which was in line with expectations. But VAR’s EPS outlook for next quarter is for 35 to 36 cents, which is well below the Street’s forecast of 45 cents. VAR sees full-year EPS of $1.79 to $1.81 compared with the Street’s forecast of $1.85. The stock is down about 7% this morning.
  Finally, Respironics (RESP) had good news this morning. The company reported earnings of 46 cents a share, one penny better than expectations. RESP also said this quarter’s earnings will be 50 cents to 52 cents a share compared with the Street’s forecast of 48 cents a share. Full year EPS is expected to be $1.74 to $1.76 compared with the Street’s outlook for $1.63.
  Unfortunately, the Buy List hasn’t benefited as much as I hoped from this recent up move in the market. For the year, the Buy List (red line) now trails the S&P 500 (black line), 5.44% to 3.55%. It all turned recently. Since April 5, the S&P 500 is up 3.58% while the Buy List is up just 1.15%.
  

• Lindsay San Looks at Stryker (SYK)
  Eddy Elfenbein, April 26th, 2007 at 8:39 am

  
  Next week, the stock celebrates 28 years since its IPO. Since then, the shares are up 800 fold, or 27% a year, which is even better than Berkshire Hathaway.

• Dow 13000
  Eddy Elfenbein, April 25th, 2007 at 4:01 pm

  
  Wow, what a day!
  The Dow (^DJI) shot up 135.95 points to break 13000. This comes just 127 trading days after breaking 12000. The index closed today’s trading at 13089.89.
  The bull keeps on charging. I’m too modest to mention that I defended the bull six months ago and again two months ago, so I’ll just play it cool.
  The Dow isn’t the only one partying. The S&P 500 is at 1495.42, only inches away from 1,500 — a number it hasn’t seen in over six years. The Nasdaq is at 2547.89 and is closing in on 2,584 which is a Fibonacci number. I have know idea what it means, but you can use this as a conversation starter.
  What pushed us over the top today is what’s been driving us all along, energy. The S&P Energy Index (^DJUSEN) was up 2.07%. The Morgan Stanley Cyclical Index (^CYC) shot up 1.28% to close at 1,010.56, its first ever close over 1,000.
  Here’s my estimate of how many Dow points each stock has added since October 19 when the Dow broke 12000:
  Honeywell………………………100.85
  Boeing…………………………….99.80
  Altria……………………………….99.06
  IBM…………………………………94.27
  Exxon……………………………..82.81
  Alcoa………………………………66.88
  Merck……………………………..64.20
  McDonalds……………………….63.88
  Coke……………………………….55.51
  JP Morgan Chase………………48.35
  AT&T……………………………….43.80
  DuPont……………………………40.39
  Amex………………………………35.35
  Caterpillar………………………..34.21
  Citi………………………………….31.94
  Disney……………………………..30.31
  Home Depot……………………..29.17
  AIG………………………………….27.39
  United Tech………………………24.71
  HP…………………………………..18.77
  Intel………………………………….9.98
  Procter & Gamble………………..8.37
  Microsoft……………………………5.69
  3M……………………………………4.63
  Verizon……………………………..3.58
  Wal-Mart……………………………2.60
  GE…………………………………….1.06
  Pfizer………………………………-11.05
  GM………………………………….-16.01
  J&J………………………………….-27.31

• Royal Bank-Led Group Bids $98.5 Billion for ABN Amro
  Eddy Elfenbein, April 25th, 2007 at 3:32 pm

  I told you this wasn’t over. Now a group led by RBS is making a counter offer of $98.5 billion for ABN Amro. Barclay’s bid is for about $90 billion.

  Royal Bank of Scotland Group Plc, Santander Central Hispano SA and Fortis offered 72.2 billion euros ($98.5 billion) to buy ABN Amro Holding NV, sparking the biggest takeover battle in the financial-services industry.
  The Royal Bank-led group offered 39 euros a share, with 70 percent in cash and 30 percent in stock, the companies said in a statement today. The group said its approach is 13 percent higher than the all-stock bid ABN Amro accepted from Barclays Plc two days ago. Barclays’s bid was worth 67 billion euros at the time.
  The fight for control of Amsterdam-based ABN Amro, which has branches in 53 countries, centers on its LaSalle unit in Chicago. ABN Amro and Barclays elbowed Royal Bank Chief Executive Officer Fred Goodwin aside by agreeing to sell LaSalle to Bank of America Corp. for $21 billion. Goodwin said today that LaSalle will be a “major piece” of any bid.

  The numbers here are staggering. Let’s see if Barclays makes a move.

• Respironics On Wall Strip
  Eddy Elfenbein, April 25th, 2007 at 9:32 am

• The First Global Bubble?
  Eddy Elfenbein, April 24th, 2007 at 9:25 pm

  I don’t necessarily agree with Jeremy Grantham, but here’s an interesting take on the markets.

  For the last 5 years to this March, in dollar terms, the S&P 500 was up 35 per cent compared with 192 per cent for non-US small cap and 221 per cent for emerging markets. After these moves most diversifying and exotic assets are badly overpriced and the risk premium is the lowest it has ever been.
  In fact, the new global money flows have probably created the first truly global bubble, almost everywhere in almost everything. Particularly noteworthy and the beneficiary of our twin forces are small caps everywhere which on our data are more overpriced, driven by private equity deals, than an overpriced market.

• Dow Flirts With 13000, Gets Number, Never Calls
  Eddy Elfenbein, April 24th, 2007 at 4:32 pm

  
  Close. Oh so close.

• SEI Investments Hits New High
  Eddy Elfenbein, April 24th, 2007 at 3:24 pm

  
  Can’t keep a good stock down. Last year, SEI Investments (SEIC) was the top-performing stock on the Buy List (up 61%).
  I decided to keep it on this year’s Buy List. The stock got slammed last month, but has regained all the lost ground and is now at an all-time high. Earnings come out tomorrow.

• W.R. Berkley’s Earnings
  Eddy Elfenbein, April 24th, 2007 at 11:12 am

  WR Berkley (BER) had a decent earnings. For insurance companies, the key stat you want to see is operating earnings. For BER, operating income came in at 91 cents per share, two cents more than expectations.
  The stock hasn’t done very well over the past year, but the earnings have been good. At one point, BER was over $40 a share (post-split). It’s down again today. The P/E ratio is now under 10.