Marvell Warns
Posted by Eddy Elfenbein on October 3rd, 2006 at 9:24 am

Just seven shopping days until earnings season starts. The traditional first major announcer is Alcoa (AA), which should have outstanding earnings.
We’re also getting cautionary announcements of what to expect this season. Today’s earnings bomb is brought to you courtesy of Marvell Technology Group (MRVL). The company anticipates that its revenues will fall 10% from last quarter’s total of $574 million.

The anticipated decline in net revenue is largely due to lower than expected demand from a number of the Company’s hard disk drive customers. The Company believes the shortfall of demand is primarily due to a combination of weaker than normal seasonal shipments in the personal computer market as well as excess inventory held by some of its significant storage customers.

If that’s not enough, the company is also looking at its options practices.

Wachovia Closes Golden West Purchase
Posted by Eddy Elfenbein on October 2nd, 2006 at 9:38 am

It’s official:

Banking and financial services company Wachovia Corp. said Monday it closed its acquisition of Golden West Financial Corp. and named three new board members, two of them Golden West officials.
Oakland, Calif.-based Golden West, which operates as World Savings Bank, is one of the largest thrifts in the U.S. Its shareholders will receive 1.051 shares of Wachovia stock and $18.65 cash for each Golden West share they own.
Of the new board members, Jerry Gitt, 63, and Maryellen Herringer, 62, had been directors of Golden West. Timothy Proctor, 56, is the general counsel of Diageo PLC, a London-based beverage company.
Herbert and Marion Sandler, the husband-and-wife team who ran Golden West for much of their 45-year marriage, will continue to advise the new management.

Wachovia (WB) will now appear on the Buy List in place of Golden West Financial. For Buy List tracking purposes, we have to make some changes (someone please double-check my math!).
At the beginning of the year, we added 757.5758 shares of Golden West at $66 each. With the merger, we now have 796.2122 shares of WB, plus $14,128.79 in cash. Going by Friday’s closing price of $55.80 for WB, that cash is being exchanged for another 253.2041 shares. So now we have a total position of 1049.4163 shares of WB with a cost basis of $47.64554.

The Housing Bust–Not So Easy Investing
Posted by Eddy Elfenbein on October 2nd, 2006 at 9:22 am

Henny Sender notes in today’s WSJ that the long-awaited housing bust isn’t developing into a good investing there:

Playing the housing slowdown in financial markets is proving tougher than anyone expected.
Some obvious bets against housing haven’t been working out. Even though housing statistics are sinking, home-builder stocks have risen since July and demand for mortgage-backed securities has held up.
Just last week, the National Association of Realtors made the case for housing bears stronger by reporting that prices of existing homes had fallen for the first time in 11 years.
The Federal Reserve is working against the bears by pausing its campaign of short-term interest-rate rises.
If the Fed were to allow interest rates to get too high, that would raise mortgage costs and could tip the economy into a serious slowdown. That is why some investors believe the Fed might cut rates next time it meets. Long-term interest rates already are falling, which is holding down mortgage costs at a critical time.

New Century Financial (NEW) paid out a dividend of $1.85 a share in September. The company has raised its dividend by a nickel a share for the past several quarters.
To give you an idea of how negative the market is on housing, if we assume that New Century doesn’t cut its dividend, that means that the stock is indicating a dividend yield of close to 19%, which is the equivalent of 2,200 Dow points.

Steve Wozniak on CNBC
Posted by Eddy Elfenbein on September 29th, 2006 at 10:56 am

If you’re getting bored with New High Watch on the Dow, here’s an interesting interview CNBC had with Steve Wozniak this morning.

No Go for MVNO
Posted by Eddy Elfenbein on September 29th, 2006 at 9:18 am

I was curious if Mobile ESPN was going to have an impact. Apparently not.

ESPN is closing down its cell phone company for sports fans after less than a year, planning instead to forge deals in which it provides content to other wireless operators.
The planned shutdown of Mobile ESPN marks the first major bust in a rush of specialized wireless ventures targeting niche audiences they contend are underserved by the Cingulars and Verizons of the world.
ESPN was quick to stress that its change in strategy had no bearing on Disney Mobile, another ambitious foray into the cellular market by parent company Walt Disney Co. that was officially launched just recently.
Disney has so far invested a combined $150 million in developing Mobile ESPN and Disney Mobile, two of the highest-profile and most-heavily marketed efforts to create an “MVNO,” or mobile virtual network operator.
An MVNO doesn’t have its own wireless network. Instead, it puts its brand on another wireless operator’s service — whose name is hidden from the customer — and offers its own lineup of handsets and calling plans.
Going forward, Mobile ESPN will cease being an MVNO and instead seek to provide its sports scores, news and video highlights to other wireless companies with large customer bases.

The Market Reaches All-Time High
Posted by Eddy Elfenbein on September 28th, 2006 at 4:25 pm

Not the Dow. Not the S&P 500. But the Wilshire 5000 Total Return Index (^DWCT).
This is the broadest measure of the stock market’s total retun. It includes several thousand stocks, and it’s adjusted for dividends.
On March 24, 2000, the index closed at 47.84098. Today, it closed at 47.86562.
For the record, the Dow closed at 11,718.45, which is just 4.53 points below its all-time high close from January 14, 2000. We did, however, peak into record territory during the day.
The S&P 500 closed at 1,339.15 which is 12.3% below its record close. Adjusting for dividends, it’s down about 2.5%.

The Election Cycle Begins
Posted by Eddy Elfenbein on September 28th, 2006 at 3:01 pm

You only have one shopping day left to take advantage of the four-year Election Cycle. Major caveat: I don’t put much faith in any of this, but here’s what the data says.
Going back to 1930, the Dow reaches its average bottom on September 30 of the mid-term election year. From that point until September 13 of the pre-election year, the Dow gains an average of 31.6%.
That means that over 95% of the Dow’s four-year gain comes within the first 12 months of the Election Cycle.
After that, the market then gets a bit dicey until May 25 of the election, losing 6.6%. But then things start heating up. The market puts on an impressive 19.4% rally to August 2 of the post-election year.
Then all the troubles start. After August 2 of the post-ection year, the market slides an average of 9.4% until we’re home again–September 30 of the mid-term.

Danaher Hits All-Time High
Posted by Eddy Elfenbein on September 28th, 2006 at 2:20 pm

Forget the Dow, look at Danaher (DHR)! After a few days of heavy fighting, the stock finally took out its May high. Shares of DHR are up 23% for us year-to-date.
From August 9 through yesterday’s close, our Buy List was up 10% compared with 5.6% for the S&P 500.

Second-Quarter GDP Revised to 2.6%
Posted by Eddy Elfenbein on September 28th, 2006 at 9:10 am

The initial estimate was for 2.5%, then it was revised up to 2.9%. Now it’s been cut back down to 2.6% growth.

The Dow & Terrell Owens
Posted by Eddy Elfenbein on September 27th, 2006 at 3:39 pm

December 7, 1973: Owens born in Alabama. Dow rises 3% to 838.05.
October 14, 2002: Sharpie Incident. Dow rises 27 points to 7,877.40.
November 15, 2004: Desperate Housewives Incident. Dow rises 11 to 10,550.24.
September 27, 2006: Owens denies suicide attempt. Dow rises 20 points to 34 points shy of an all-time high.