Author Archive

  • First-Quarter Earnings Parade
    , April 19th, 2007 at 9:47 am

    Lots of earnings this morning. Danaher (DHR) reported earnings of 78 cents a share, one penny ahead of expectations. Sales were up 20% to $2.56 billion, which was also more than expectations. I really like Danaher. It’s a quiet company that consistently churns out the profits. The company also said that it expects second-quarter earnings of 88 to 93 cents a share, and full-year earnings of $3.70 to $3.80 a share. No surprises here.
    Harley-Davidson’s (HOG) earnings were down from last year due to a strike at its York, PA factory, but the numbers were still pretty good. HOG earned 74 cents a share compared with 86 cents last year, and sales dropped 8.3% to $1.18 billion. That sounds rough but Wall Street was expecting even worse, EPS of 72 cents on sales of $1.10 billion. The good news is that the strike is behind them, and their business still looks good.
    UnitedHealth Group (UNH) had earnings of 74 cents a share, after charges, which beat Wall Street’s forecast by three cents a share. The company sees second-quarter earnings of 80 to 82 cents a share, and full-year earnings of $3.42 to $3.46 per share.
    Melissa Davis at the TheStreet.com wrote:

    But investors will no doubt stew over another metric entirely. Notably, UnitedHealth’s all-important medical-cost ratio—reflecting the amount of each premium dollar spent on patient care—for the commercial book of business ticked up to 81.2% in the latest quarter and forced the company to raise its MCR projection for the entire year.
    UnitedHealth offered two major reasons for this troubling development, both of which could worry the market. The company blamed much of the change on inadequate reserves, signaling a rare misstep in this department, and the rest on higher utilization of consumer-directed health plans.

    Yesterday, Amphenol Corp. (APH) reported very good quarterly results. The company made 43 cents a share compared with 31 cents last year. These results beat the Street by two cents a share, although one penny was due to a tax benefit. APH also slightly raised guidance this year to $1.75 to $1.80 per share. The previous estimate was for $1.73 to $1.78 per share. I always like to see a company revise or reiterate future guidance. The better companies don’t leave Wall Street guessing.

  • Yesterday’s Power Lunch
    , April 18th, 2007 at 2:18 pm


    Did he say “Sanjana”?

  • Protecting GM’s Image
    , April 18th, 2007 at 12:26 pm


    It’s funny, but true. GM’s book value per share is $-9.62.

  • Wall Street and the Priceless Pooch
    , April 18th, 2007 at 10:24 am

    Bloomberg interviews Matthew Klein, who has a new book out called “Con Ed.” I apologize for the long quote, but it’s needed to convey my point:

    Klein: I was one of those prototypical Silicon Valley technology entrepreneurs. I was out in Silicon Valley for about 10 years. I started a couple of technology companies. And I raised, oh, $50 million in venture capital. My companies employed around 500 people.
    But where my story differed a little bit from the typical glamour puff-piece you read about in the business press (IRONY ALERT) is that my companies tanked. They utterly stunk up the place. So I went through a period where, in about one day, I had to lay off 400 people. My companies lost millions of dollars. It was an incredibly painful experience; it was incredibly humiliating. And only one good thing came out of that experience.

    (more…)

  • Yahoo Watch
    , April 18th, 2007 at 9:48 am

    After the close yesterday, Yahoo (YHOO) reported earnings of 10 cents a share, a penny below forecasts. The stock is down about 11% this morning.
    I think this is just the beginning. It looks like Panama has been completely overrated. I wish I could say I was surprised. I wouldn’t go near Yahoo until it’s at most $12 a share, which is about 60% below where it is now.
    The AP noted:

    ”When you sift through everything, there is not a whole lot to get excited about right now,” said Cantor Fitzgerald analyst Derek Brown.
    After subtracting advertising commissions, Yahoo’s revenue totaled $1.18 billion. That figure fell about $25 million shy of the average analyst projection.

    Interestingly, the AP story began:

    Investors were f – ) again until the Internet icon‘s disheartening first-quarter results ruined the mood.

    Texting has hit the big time. Although, many news outlets changed it to:

    Investors were falling in love with Yahoo Inc. again until the Internet icon’s disheartening first-quarter results ruined the mood.

    Soon, they may be working Ctrl+Alt+Del into their ledes.
    Seeking Alpha has a roundup of analysts’ reactions to Yahoo’s earnings.
    Business Week writes that Yahoo’s next search will be for a new CEO. The company quotes CFO Sue Decker:

    Chief Financial Officer Sue Decker attributed the decline to the phaseout of Microsoft’s search ad business and rising costs of driving traffic to Yahoo sites.

    That’s like saying “we attributed the decline to our lousy business model.”
    I say that Decker will replace Terry Semel before the summer is over.

  • Warren Buffett, Hell Inch Closer to Rendezvous
    , April 18th, 2007 at 7:48 am

    gp%5Bvm%20%3D0949f.jpg
    Fortune asks if Warren Buffett is “helping to support genocide in Darfur.”

    Berkshire has become a target of the divestment campaign because it owns 2.3 billion shares of PetroChina Co., a subsidiary of the state-controlled China National Petroleum Corp. (CNPC). CNPC has extensive operations in Sudan; it owns a major stake in Sudan’s national oil consortia.
    China and Sudan are engaged in a marriage of convenience. For its part, China gets oil – Beijing purchased more than half of Sudan’s oil exports in 2005. China’s growing demand for energy has led the Chinese to cultivate close relationships with many oil-rich African nations.
    In return, Sudan gets money, weapons and political backing from China. Because about 70 to 80 percent of Sudan’s oil revenue is funneled into its military, China’s oil assets in Sudan are “an undeniable and well-documented enabler of Khartoum’s genocidal policy in Darfur,” according to the Sudan Divestment Task Force.

    Hmm…seems like a bit of a stretch to me. I’m not so sure Warren can take the blame on this one. Now, about that annoying Cockney gecko….

  • Breaking: The S&P 500 Is in the Black for Millennium
    , April 17th, 2007 at 7:00 pm

    It took awhile, but the S&P 500 is now positive for the millennium. In your face, bears! It’s also up for the century. And decade! (All in one day, woo!)
    The S&P 500 closed today at 1471.48 which is just 0.15% higher than the December 31, 1999 close of 1469.25.
    That’s 7-1/4 years for 0.15%.
    Of course, the bad news is that inflation has increased by 22% since then. Meaning, today’s 1471.48 is more like 1206. But dividends have added about 12.5% (not much, but we’ll take it).
    But not all stocks are flat. The story of the decade, I mean millennium, is small-cap and value.
    Here’s a rundown of some major indexes since December 31, 1999:
    S&P 600 Small-Cap Value…………129.84%
    S&P 600 Small-Cap………………….115.01%
    S&P 400 Mid-Cap Value……………109.02%
    S&P 600 Small-Cap Growth……….98.15%
    S&P 400 Mid-Cap………………………97.07%
    S&P 400 Mid-Cap Growth…………..84.92%
    Dow Utilities……………………………..82.35%
    Dow Transports…………………………70.70%
    Morgan Stanley Cyclical……………..68.33%
    Russell 2000……………………………..64.23%
    Morgan Stanley Consumer………….36.02%
    S&P 500 Value………………………….29.95%
    Dow………………………………………….11.10% (29.03% w/divs)
    Russell 3000………………………………8.19%
    Wilshire 5000…………………………….7.95% (20.49% w/divs)
    Russell 1000………………………………4.60%
    S&P 500…………………………………….0.15%
    S&P 100………………………………….-15.04%
    S&P 500 Growth………………………-23.75%
    Nasdaq…………………………………….-38.15%
    Nasdaq 100……………………………..-50.51%
    Here’s how the 10 S&P 500 Industry Sectors have fared:
    Energy……………………………………..128.23%
    Financials…………………………………..52.87%
    Materials……………………………………50.94%
    Utilities……………………………………..46.96%
    Staples……………………………………..34.99%
    Healthcare…………………………………27.57%
    Industrials…………………………………20.99%
    Discretionary……………………………….3.97%
    Telecom……………………………………-48.75%
    Tech………………………………………..-54.70%

  • Johnson & Johnson’s Earnings
    , April 17th, 2007 at 11:48 am

    Last March, I wrote that shares of Johnson & Johnson (JNJ) looked cheap. Not a bad call. The stock was around $57 and today it’s up to $65. The company just reported very good earnings. J&J earned $1.16 a share (after charges) compared with analysts’ forecasts of $1.04. The company now sees 2007 earnings of $4.02 to $4.07 a share, compared with the Street’s forecast of $3.90.
    By the way, J&J was one of the final stocks cut from my 2007 Buy List.

  • Wall Strip Looks at Crocs (CROX)
    , April 17th, 2007 at 11:41 am


    Ugly shoes, but a nice looking chart. Call me a skeptic. I tend to shy away from fad-like products. There’s no accounting for taste. But I have to admit that the company, and the shares, have performed very well.

  • The Pound Hits $2
    , April 17th, 2007 at 10:40 am

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    You know your currency is in rough shape when even the British pound is doing well against it. Today, the pound reached $2 for the first time in 15 years.
    By the way, that big plunge on the chart in 1992 is when Britain dropped out of the ERM. It’s believed that George Soros made over $1 billion that day.