Wall Strip Looks at Crocs (CROX)
Posted by Eddy Elfenbein on 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
Posted by Eddy Elfenbein on April 17th, 2007 at 10:40 am

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.

JOSB’s Earnings
Posted by Eddy Elfenbein on April 17th, 2007 at 10:08 am

Here’s an interesting lesson on how irrational the stock market can be in the short-term. Last week, Bed Bath & Beyond’s (BBBY) stock fell after its earnings report. I follow that stock pretty closely and there wasn’t one single item in the earnings report that came as a surprise. It was basically what any reasonable person should have expected. Yet the shares opened Thursday morning much lower, and they’ve rallied almost continuously since then. Right now, BBBY is slightly above where it was before the earnings report. Looking back at what happened, it just doesn’t make much sense. This is why I try to caution investors against timing the market.
Well, now a similar story has happened with Jos. A Bank Clothiers (JOSB). The company just reported terrific earnings of $2.36 a share, 11 cents more than Wall Street’s forecast. Yet the stock was hit last week on a poor sales report. Now the stock is higher than where it was before.
One of the great things about investing is that doing absolutely nothing can work to your advantage.

Unfortunately, the big jump in JOSB is being cancelled out by the fall in Fair Isaac (FIC).

Today’s CPI Report
Posted by Eddy Elfenbein on April 17th, 2007 at 9:36 am

The bad news is that consumer prices shot up last month. The good news is that it was largely due to rising energy costs. The core rate of inflation, which excludes food and energy costs, was up just 0.1%, less than the 0.2% expected by Wall Street.
Last summer, Ben Bernanke set off a big rally when he said that the Federal Reserve sees core inflation (he uses the PCE) cooling off in 2007. It looks like the Fed was right.

From the Citigroup Conference Call
Posted by Eddy Elfenbein on April 16th, 2007 at 7:04 pm

Courtesy of Seeking Alpha:

Mike Mayo – Deutsche Bank:
And so do you think this quarter is an inflection point with all these savings ahead for this year?
Chuck Prince: Well, I don’t like to predict anymore, Mike. People kind of throw my predictions in my face. I know you wouldn’t do that, but others do, and so I think I would just like to stay away from predictions for right now.

Fair Isaac Guides Lower. A Lot Lower.
Posted by Eddy Elfenbein on April 16th, 2007 at 5:08 pm

Ugh.

Preliminary Second Quarter Fiscal 2007 Results
The company expects to report second quarter revenues in the range of $200 to $202 million in second quarter of fiscal 2007 versus $208.2 million reported in the prior year period. This is lower than the second quarter revenue guidance of $215 million provided by the company last quarter. Net income for the second quarter of fiscal 2007 is expected to total in the range of $20 to $22 million, or $0.35 to $0.37 per diluted share, versus $27.0 million, or $0.40 per diluted share, reported in the prior year period. This is lower than the second quarter GAAP earnings per diluted share guidance of $0.48 provided last quarter.
Revised Third Quarter and Full Year Fiscal 2007 Guidance
Total revenues are expected to be $195 to $200 million for the third quarter of fiscal 2007 with GAAP earnings of approximately $0.33 to $0.38 per share. Full year fiscal 2007 revenue is now expected to be $795 to $805 million with GAAP earnings per diluted share of $1.55 to $1.65. The previously announced sale of our mortgage product line accounts for approximately $7 million to $8 million of the reduced revenue guidance. This full year fiscal 2007 guidance is lower than the guidance of $870 million in revenue and GAAP earnings per diluted share of $2.15 provided earlier by the company.

The shares are down over 11% after hours.

The Talented Mr. Pastorini
Posted by Eddy Elfenbein on April 16th, 2007 at 3:01 pm

Here’s a fun story. Last week, Bloomberg reported that Edward Pastorini was planning to bid for Gold Fields (GFI). The Financial Times’ excellent Alphaville blog, raised some interesting questions. For example, who the fuck is Edward Pastorini? (They used “hell”—British, you know). Google had never heard of him. Alphaville also noticed that Edward Pastorini is an anagram for “Top Insider Award.” Clever, no?
Mr. Pastorini is apparently now quite upset. And what’s the best way to prove you exist? An email of course!

I challenge FTAlphaville to produce even one iota of irrefutable proof that I am not Edward Pastorini and that our offer for Gold Fields is not genuine. Send us your IRREFUTABLE PROOF. Now I hope you will have the decency to give us as much truthful coverage as you gave us negative coverall in your publications. You owe us a public apologiy [sic]. Just because we loathe the media and prefer to remain behind the scenes – with good reason when there are idiots like you out there – that does not mean that we are not genuine. We are waiting for your public apology and for your 100% irreefutable [sic] proof that I am not Edward Pastorini and that our offer for Gold Fields is not real. We’re waiting. Send us your NEW article now – or do you not ever admit your mistakes?

Varian Medical: A Smart Buy
Posted by Eddy Elfenbein on April 16th, 2007 at 1:05 pm

Varian Medical Systems (VAR) took a big hit on Friday, dropping 7.3% on news of lower revenue guidance. But the stock’s defenders are coming out in full force. Joshua Lipton of Forbes noted the positive views of many analysts:

In a client note, Citigroup analyst Amit Bhalla wrote that while North America has not displayed signs of weakness in past quarters, the results do appear explainable.
The North America miss, Bhalla wrote, was due to timing of customer buying patterns and had the quarter been one week longer, orders would have been $20 million higher and total North America oncology net orders would have been flat, instead of down 10%.
Bhalla said, “As was the case in Europe last quarter, the company does not believe that it has lost orders to competitors in North America and we believe this to be the case as well.”
Bhalla maintained a “buy” rating on the shares. He lowered his price target by $2 to $60.
Standard & Poor’s Equity Research analyst Robert Gold also continued to believe that Varian is a wise buy.
In a client note, Gold wrote that he was disappointed by the 10% decline in U.S. oncology orders.
“However, we believe an increased size of average orders, and a slightly more competitive market are extending the selling cycle a bit and have pushed some booking into the third-quarter,” Gold wrote.
He said that he still sees full fiscal 2007 revenues of about $1.8 billion and earnings per share of $1.83. He maintained a “strong buy” opinion on the shares.

The S&P 500 Hits 6-1/2 Year High
Posted by Eddy Elfenbein on April 16th, 2007 at 10:33 am

So much for the Shanghai Surprise from seven weeks ago. The market has now made up everything it lost, and is at a fresh 6-1/2 year high. The index is still over 4% from the all-time reached in 2000. The good news is that the S&P is inches away from being in the black for the decade (and century and millennium).

Tom Wolfe Leads Off for Portfolio
Posted by Eddy Elfenbein on April 16th, 2007 at 9:45 am

Tom Wolfe looks at the New Masters of the Universe:

While fathers all over America tend to become overzealous, even violent, these days in trying to turn their children into little sports superstars, in Greenwich a father who is one of these people will try to take control of every element in a game: his child’s teammates, their coach, the opposing team’s coach, its players, and most definitely the referees. In a famous instance, one of these people came to watch his teenage daughter play in an ice hockey game against a team from neighboring Port Chester, New York, a town known in Greenwich as the place where one’s plumbers, electricians, computer swamis, roofers, glaziers, air-conditioning mechanics, wall-to-wall-carpet humpers, and household servants live. The man began bellowing so loudly, nobody at the rink could shut out the sound. He upbraided the referees for their poor eyesight and worse judgment. He told his daughter’s coach how to play her and all her teammates and kept him abreast of his mistakes in strategy. He scolded the Port Chester coach and the players for their incessant cheating and malicious roughness. Finally a Port Chester player, a big girl, an Amazon on ice, skated to the stands, charged up the stairs on her skates, and accosted the Mouth, putting her gloved fist six inches from his face and saying, “If you don’t shut the fuck up, I’m gonna come back and beat the shit outta you!” He shut up. The tales are endless: the hedge fund founder desperate to get his son into one of Greenwich’s socially swell private schools who clips a six-figure check to the first page of the application, witlessly forcing the school to reject both his son and his check or lose all credibility—