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September 21st CEOcast Weekly Newsletter

QualityStocks — Mon, 21 Sep 2009 21:05:50 +0000

Companies featured in this edition of the newsletter: ACTC, CVM, CUR, DKAM, ENZ, IMUC, IWEB, PHC, SVUL, SRCO, SVUL, XSNX Markets extended their winning streak yet again this week, as all ten sectors of the S&P 500 finished in positive territory and markets hit fresh highs for the year once again, despite the lack of [...]

Stock Market News for September 18, 2009 – Market News

Zacks Market Commentaries — Fri, 18 Sep 2009 14:17:05 +0000

After surging to almost one-year highs Wednesday, stocks took a step back as worries that the recent rally has gone too far, too fast resurfaced. Investors pulled out profits even as latest round of upbeat economic data tried to convince them that a recovery is indeed underway. Shares of companies that have led the recent advance failed to find favor amid a lackluster trading session. Although the retreat was modest, it signaled a growing belief that the rally is overextended.

The Dow Jones industrial average declined 7.79 points, or 0.08%, to end the day at 9,783.92. The broad Standard & Poor's 500 Index retreated 3.27 points, or 0.31%, at 1,065.49 and the tech-heavy Nasdaq Composite Index eased 6.40 points, or 0.30%, to end at 2,126.75. On the New York Stock Exchange, declining shares beat those that advanced by eight to seven on volume of 1.52 billion shares. At Wednesday's close, the DJIA stood almost 50% above its 12-year low of last March; the S&P500 at 58%, with the NASDAQ up 68% from its 6-year low.

Shares of FedEx (NYSE:FDX) and Oracle (NASDAQ:ORCL) declined after the companies’ lower-than-expected results. FedEx’s CEO noted plans to up shipping rates by almost 6% in January, a bullish signal of expected volume growth. FedEx fell 2.2% to $76.46 and Oracle declined 2.8% to $21.52. A decline in natural gas prices sent shares of Chesapeake Energy (NYSE:CHK) and Nabors Industries (NYSE:NBR) lower. Chesapeake fell 3.3% to $27.97. Eastman Kodak (NYSE:EK) fell more than 11% after the company announced plans to raise more than $700 million in senior secured notes.

Among the ten S&P 500 industry groups, telecom companies were the biggest decliners, retreating 1.6%, following UBS' (NYSE:UBS) analyst comments suggesting pressure in wireless business. Verizon Communications (NYSE:VZ) retreated almost 3% to $29.51. Moreover, yesterday Verizon's (NYSE:VZ) CEO suggested its wireless operations would consider dividend payments only after debt reductions. Companies that receive a significant portion of their revenues from overseas operations showed strength, with Caterpillar (NYSE:CAT) up 2.4% and Coca-Cola (NYSE:KO) rising 1.4%. Basic materials shares declined 0.8%, oil and gas was down 0.7%, and financials retreated 0.5%

American Airlines parent AMR Corp. (NYSE:AMR) was a major gainer Thursday as its shares surged 19.7% to $8.80 after the company said it secured $2.9 billion in new financing. AMR also said it is working on its flying schedule and would shift flying to more profitable routes.

Today’s calendar contains little of market-moving interest, with the day's quadruple witching expected to results in volatility. Lacking a firm catalyst for the next upward move, the demand for increased risk eased, with the greenback backing off its one-year high against the euro, oil prices down $0.68 to $71.79, and gold up $2.20 to $1015.70.

Zacks Investment Research

September 14th CEOcast Weekly Newsletter

QualityStocks — Mon, 14 Sep 2009 21:16:48 +0000

Companies featured in this edition of the newsletter: CUR, CVM, ENZ, IMUC, MBCI, ONEZ, PHC, SVUL Markets finished in positive territory yet again during this holiday shortened week despite the lack of any significant developments on either the corporate or economic fronts. All told, the Dow gained 164 points to close at 9605, up 1.7% [...]

Stock Market News for September 14, 2009 – Market News

Zacks Market Commentaries — Mon, 14 Sep 2009 14:03:27 +0000

Stock failed to extend their five-day winning run and ended marginally lower Friday as declining oil prices hurt commodities and investors pulled money out of stocks. Bellwether FedEx’s improved outlook failed to cheer investors. Gold prices closed above $1,000 level, indicating investors still want to play it safe. The dollar plunged to its lowest level of the year against a basket of currencies.

After closing Thursday at its highest level since October, the Dow Jones industrial average retreated 22.07 points, or 0.2%, to 9,605.41 on a quiet trading day. The NASDAQ composite index eased 3.12 points, or 0.2%, to 2,080.90, and the broader Standard & Poor's 500 index fell 1.41 points, or 0.1%, to 1,042.73. On the New York Stock Exchange, 1.29 billion shares exchanged hands and about four stocks rose for every three that fell. On the week, the DJIA rose 1.7%, the S&P 500 advanced 2.6% and the NASDAQ was the best performer, rising 3.1%.

This morning’s stock futures are pointing to a lower opening on the Wall Street amid reports of an escalating trade dispute between China and the US. Dow Jones industrial average futures fell 61, or 0.6%, to 9,531. Standard & Poor's 500 index futures fell 8.00, or 0.8%, to 1,029.30, while Nasdaq 100 index futures fell 13.75, or 0.8%, to 1,669.75.

Bond prices were mixed Friday after their impressive performance the previous day. The yield on the benchmark 10-year Treasury note fell to 3.31% from 3.35% late Thursday. The slide in oil prices sent shares of energy companies lower. Exxon Mobil (NYSE:XOM) slipped 1% to $69.98. FedEx (NYSE:FDX) shares jumped 6.4% after the company said it now expects to earn 58 cents a share in the first quarter, compared with its prior view of 44 cents a share. The company said it sees second-quarter earnings of between 65 cents and 95 cents per share, versus its earlier prediction of 70 cents.

For the week all ten S&P500 sectors recorded gains, led by oil and gas (+4.7%) basic materials (+4.6%), and industrials (+4.1%), the sectors considered most economically sensitive. The sectors also closely reflected changes in the dollar trade, which experienced a fall to a 52-week low.

Reports that the United States has imposed a new 35% tariff on Chinese tire imports met with a retaliatory Chinese response as Beijing announced a dumping and subsidy probe into U.S. chicken imports. Such measures, however, are likely to results in trade protectionism that could prove especially damaging to emerging countries' growth prospects.

Companies reporting their results include Best Buy (NYSE:BBY), FedEx (NYSE:FDX), Oracle (NASDAQ:ORCL), and Palm (NASDAQ:PALM). Those scheduled to speak include Fed's Duke on regulatory reform at 8:35 AM ET, Fed's Lacker on financial regulation at 12:30 PM ET and Fed's Yellen on the economic outlook at 3:50 PM ET. President Obama will also address financial market reform as the anniversary of Lehman's demise is acknowledged.

Zacks Investment Research

United Parcel (NYSE:UPS): Upgraded to Overweight at JP Morgan; $70 target established

Notable Calls — Wed, 09 Sep 2009 10:47:00 +0000

div style="text-align: justify;"JP Morgan is upgrading span style="font-weight: bold;"United Parcel (NYSE:UPS) /spanto Overweight from Neutral this morning. They are raising their price target to $70 (prev. $57)br /br /Firm notes they believe that UPS is viewed as a defensive transport name with less operating leverage and that this perception has been a major driver of the underperformance in UPS stock versus most other transports in 2009TD. In their view, UPS stock has lagged too much, and the stock does not reflect the boost a turn in the U.S. economy would provide to UPS earnings performance and to the stock. They are upgrading UPS from Neutral to Overweight.br /br /span style="font-weight: bold;"Raising rating to Overweight as reward / risk is attractive. /spanRelative to most other transports and many industrial stocks, JP Morgan believes that UPS reflects less anticipation of a turn in the economy, and they believe potential downside risk for UPS stock is modest, while upside potential is significant. They are upgrading UPS to Overweight from Neutral because they believe there is room for UPS stock to reflect a stronger expectation of a cycle turn in order to be consistent with the anticipation reflected in other industrial and transport stocks. They also believe UPS’s operating leverage in a turn may surprise on the upside.br /br /span style="font-weight: bold;"Catch-up opportunity is meaningful—UPS has lagged 80% of Samp;P 500 Industrials. /spanBased on 2009TD performance and also the % move of stocks off their 12 month lows, firm's analysis shows that UPS stock has underperformed about 80% of the industrial stocks in the Samp;P 500. While underperformance versus higher beta names makes sense to some extent, they believe that UPS’s earnings will respond earlier in the cycle relative to many industrials, and the underperformance appears overdone.br /br /span style="font-weight: bold;"Operating leverage in 2010 could surprise to the upside. /spanThe two-year ~600 bp decline in UPS’s total operating margin in 2009 vs. 2007 reflects a much sharper decline in margin performance than we have seen in the past due to both lower revenue and also the effect of unfavorable labor mix (union seniority). While UPS is not typically viewed as a name with operating leverage, JP Morgan believes that gradual reversal of unfavorable factors that drove margin pressure could provide greater than expected margin upside in 2010.br /br /a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_YzBo7Kz5y1M/SqeOFocwD-I/AAAAAAAAALA/29XeY9RsG90/s1600-h/UPS_1.GIF"img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 400px; height: 144px;" src="http://4.bp.blogspot.com/_YzBo7Kz5y1M/SqeOFocwD-I/AAAAAAAAALA/29XeY9RsG90/s400/UPS_1.GIF" alt="" id="BLOGGER_PHOTO_ID_5379424507325845474" border="0" //aspan style="font-weight: bold;"Incrementally positive transport data points are good for UPS. /spanWhile there is not yet a strong turn in transport demand, rail weekly volumes, IATA monthly freight data, and truckload company comments point to incremental improvement in demand. JP Morgan believes that gradual improvement in parcel /express volumes is also likely.br /br /span style="font-weight: bold;"They are introducing their 2011 EPS estimate of $3.50/share and Dec 2010 price target of $70./span JP Morgan's new price target is based on applying a 20x P/E multiple to 2011 estimate of $3.50/share.br /br /span style="color: rgb(255, 0, 0);"Notablecalls: /spanI like this call as JP Morgan has done a good job covering the space. They upgraded span style="font-weight: bold;"Fedex (NYSE:FDX)/span in late June around $50 and the stock is now trading around $70. FDX is generally considered a better name so upgrading it ahead of UPS made sense (amp; it clearly worked).br /br /So now it's time to upgrade UPS, the lesser peer. I suspect this too will work. The upside to JPM's $70 target price is solid and will attract buyers.br /br /span style="font-weight: bold;"All in all, I think UPS can trade up towards the $56 level in the very n-t. Ketchup!/spanbr /br /a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_YzBo7Kz5y1M/SqeN5hfOd1I/AAAAAAAAAK4/wkm8GQjnsy0/s1600-h/FDXUPSPE.GIF"img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 400px; height: 131px;" src="http://2.bp.blogspot.com/_YzBo7Kz5y1M/SqeN5hfOd1I/AAAAAAAAAK4/wkm8GQjnsy0/s400/FDXUPSPE.GIF" alt="" id="BLOGGER_PHOTO_ID_5379424299298748242" border="0" //aspan style="font-weight: bold;"PS: /spanNote how UPS's rolling fwd P/E has almost always lagged FDX's. Only over the past months the ratio has dipped below 1x level.br //divdiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/29297569-6469759558426493490?l=notablecalls.blogspot.com'//div

Monmouth Real Estate Investment Corporation (MNRTA) Reports Strong FFO in Second Quarter

QualityStocks — Thu, 06 Aug 2009 20:50:45 +0000

Monmouth Real Estate Investment Corp. reported funds from operations (FFO) of $3.692 million, or $0.15 per share, for its third fiscal quarter of 2009, ending 6/30/2009. This brings its nine months FFO to $11.89 million or $0.48 per share, excluding non-cash impairment and other one-time charges. Other highlights in the quarter include: • An ending cash balance [...]

Bond Bubble’s Back, USPS in Trouble, Healthcare Tech, Short the Euro and More!

Contrarian Profits — Fri, 31 Jul 2009 14:30:41 +0000

pBond bubble remerges… details behind the gov’s latest debt struggle#8230; The slow demise of snail mail… USPS forecasts record losses#8230; Customized drugs: Patrick Cox on a breakthrough set to revolutionize health care#8230; Bill Jenkins with another sign the euro is overvalued… his price targets below#8230;/p p Just when you thought the bond bubble was being saved for another day…/p p/p pstrongThe government managed to auction $39 billion worth of 5-year debt yesterday… barely./strong Wednesday’s debt sale drew a bid-to-cover ratio of 1.92, the lowest investor demand since September 2008. Low demand forced Uncle Sam to jack up interest rates at the last minute in two separate bond auctions this week #8212; yesterday’s sale and Tuesday’s $42 billion auction of 2-year notes./p pSo what’s an indebted government to do? Manipulate#8230;/p

The Death of Snail Mail

Contrarian Profits — Thu, 30 Jul 2009 18:22:20 +0000

pThe U.S. Postal Service is on track for a record $7 billion deficit this year. That’s more than double last year’s loss./p pPostmaster General John Potter bumped up his previous projection by a billion bucks yesterday, citing the growing expenses of six-day delivery and employee retirement/health care plans. Potter and his team are scrambling to cut costs left and right — from a yearlong hiring freeze to early retirement offers to branch closures. But we wonder… will it even matter?/p p style="text-align: center;"a class="flickr-image alignnone" title="USPS Mail Volume" href="http://www.agorafinancial.com/5min/bond-bubbles-back-usps-in-trouble-healthcare-tech-short-the-euro-and-more/"/a/p pThe Government Accountability Office recently labeled the USPS a “high risk” federal program, and while we’re hard-pressed to think of any risk-free government program, we’re inclined to agree./p pThe Postal Service is facing a perfect storm of business risk: The business is already#8230;/p

What Are The Transports Telling Us? – Investment Ideas

Michael Vodicka — Fri, 24 Jul 2009 05:00:00 +0000

The market has been looking to the financial sector for clues about the health of the economy and the strength of any pending recovery. But this is a departure from the past, mostly because of the group's role in the global economic meltdown that shook the markets last fall.

Historically speaking, other industries have offered more clues about the country's economic health, one of the best being transports.

Transports Are A Leading Indicator

Transports are considered early cycle indicators, with consumer and business spending quickly showing up in the group's results. So while the financials are squarely in the spotlight, the transports deserve some attention too in order to develop a more rounded view of the economic landscape.

Let's take a closer look at some major players operating in different segments of the transports sector.

Federal Express (FDX) has rebounded nicely from its March low of $34, recently topping off above $64. But estimates continue to fall, with the current year down 77 cents in the last 90 days to $2.71. That means this stock trades with a P/E multiple of 23X, a fairly steep premium to the overall market. So what does that earnings multiple get you? Well, the next-year estimate is projecting 40% earnings growth, but CFO Alan Graf recently said that "The operating environment for our first two quarters in fiscal 2010 is expected to be extremely difficult."

Union Pacific (UNP) operates in a different segment of the market than FedEx, servicing corporate/industrial clients. The company's July 23, second-quarter results were respectable, posting earnings of 92 cents against the expected 78. But once again, CEO Jim Young said that he expects it to be some time before the economy recovers. Estimates are down here also, with the current year off 32 cents in the last 90 days to $3.68 per share.

Genco Shipping & Trading Ltd. (GNK) operates as a dry good shipper worldwide. Shares of GNK are up more than 300% since bottoming out late last year, but the next-year estimate is projecting an earnings contraction. The valuation picture does looks solid though with a P/E multiple of 7X. Take a look at the chart below.

Frontline Ltd. (FRO) give us a window into the energy industry, as the company specializes in transporting crude. In spite of crude's big run-up over the last 3 months, estimates for FRO have been slumping, with the current-year down 10 cents to $1.29 per share and the next year down 61 cents to a modest $1.50. In order for the company to send its share price even higher after a nice rebound from recent lows, it will have to consistently produce major earnings growth. Take a look below.

Conclusion

The recent market rally has been awesome, a breath of fresh air to many investors who took a hit earlier in the year when the market crumbled. But optimism must be supported by fundamentals. Right now, the transports are recording respectable results against lowered expectations, but guiding quite cautiously. When you balance out financial sector optimism with the transport sector's caution tone, somewhere in the middle is probably the best place to be.

Additional Resources

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Zacks Earnings Trends Highlights: National Semiconductor, Texas Instruments and FedEx – Press Releases

Dirk Van Dijk — Fri, 10 Jul 2009 13:39:33 +0000

For Immediate Release

Chicago, IL – July 10, 2009 - Zacks Research Director, Dirk Van Dijk says that S&P 500 earnings are continuing to show red ink. He tracks companies on the Zacks.com web site, naming names, while forecasting trends for the months ahead.

Key Points from Van Dijk's Latest Earnings Assessment

Early reporters (May fiscal quarters) doing much better than expected
Second-quarter total net income expected to be down 36.8% year over year
Staples only sector expected to post positive growth in second quarter
Six sectors expected to decline more than 25%
Financials expected to rebound after disastrous 2008
Median EPS growth in second quarter expected to be -14.8%
Third-quarter expected to be down 22.3% year over year
Full year 2009 expected to fall 13.7%, which implies strong growth in fourth quarter
Bottom-up estimate for S&P 500 is now $59.60 in 2009 and is starting to rise.
S&P 500 now expected to earn $74.09 in 2010

The Zacks Revisions Ratio: 2009

The revisions ratio reversed course, falling after a long string of steady increases. The reversal brought it from the abysmal lows of 0.20 last winter (i.e. 5 cuts for every increase) to a high of 1.29 two weeks ago. Last winter, in individual sectors, the cuts were often in excess of 10:1.

The current reading is on a very low number of total revisions, which is quite normal for this time of the quarter. However, it is sort of like a stock that moves on low volume. It's good if the stock moves up, but you have less conviction about its significance than if it is on high volume.

Tech has moved up substantially in the revisions ratio rankings in large part due to the strength in the Chip industry. Some of the real standouts in terms of large numbers of estimate increases leading to very large increases in mean estimates are National Semiconductor (NSM) and Texas Instruments (TXN).

The weakness in the Industrial sector was most apparent in some of the transportation related companies, like FedEx (FDX).

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Then, when changes are discovered, they’re applied to help assign more than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2 Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary stock-picking system continues to outperform the market by a nearly 3-to-1 margin.

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Stock Market News for July 7, 2009 – Market News

Zacks Market Commentaries — Tue, 07 Jul 2009 14:09:34 +0000

US stocks pared early losses to end the day mixed as a fall in commodities and oil prices worried investors, but a late rally in some blue chips sent conflicting signs about the strength of an economic recovery. Mood was cautious on the Street Monday as markets looked for fresh direction ahead of the second-quarter earnings which begin this week.

The Dow Jones industrial average rose 44.13 points, or 0.5%, to 8,324.87, and the broader Standard & Poor's 500 index edged up 2.30 points, or 0.3%, to 898.72. The technology-laden Nasdaq declined 9.12 points, or 0.5%, to 1,787.40. Among DJIA components, 19 closed higher while six of the ten S&P 500 industry groups advanced. On the New York Stock Exchange, declining issues beat advancing ones by a three-to-two margin.

Among DJIA components, American Express (NYSE:AXP), up 5.6% and Merck (NYSE:MRK), up 3.3% led on the upside. American Express gained after Stifel Nicolaus upgraded its rating on the firm (NYSE:AXP), noting the company the best positioned of credit-card issuers to endure the regulatory changes, advising as well that worries of bad debt are easing. Dupont (NYSE:DD) shares added 2.2% and Proctor & Gamble (NYSE:PG) gained 2.1% on their safety play appeal. However, as commodities declined, Alcoa (NYSE:AA) slid 6.1% ahead of its quarterly post after the markets closed Wednesday.

Bank of America (NYSE:BAC) shares declined 3.9% following a Credit Suisse (NYSE:CS) report that warned of worse-than-expected loan losses likely impacting the company's second-quarter results. Nevertheless, financials rose 1% with Bank of NY Mellon (NYSE:BK) adding 2.9%, Goldman Sachs (NYSE:GS) gaining 2.1% and JP Morgan (NYSE:JPM) rising 1% on news that Moody's (NYSE:MCO) may lift its rating on Brazil debt, lowering banks' exposure risk. FedEx (NYSE:FDX) gained 3.2% to $56.04 after head of the company's international business said he saw signs of an economic rebound in the second half of the year.

Amid lingering worries about the pace of an economic recovery, commodity and material issues proved to be a drag as crude prices plunged to a five-week low of $64.05 after hitting an eight-month high of above $73 per barrel last week. Among the ten S&P500 industry groupings, basic material shares fell 1.9% and oil and gas declined 1.3%. Technology shares eased 0.5%, as Apple (NASDAQ:AAPL) fell 1.0% and Microsoft (NASDAQ:MSFT) edged 0.7% lower, even as chipmaker Samsung projected a fivefold profit increase for the quarter. A bullish report on semiconductors was also issued this morning, as Bank of America/Merrill (NYSE:BAC) upped its ratings on the sector, estimating 21% 2010 revenue gains versus 14%, and upgrading Intel (NASDAQ:INTC), Marvell (NASDAQ:MRVL) and LSI (NYSE:LSI) to "buy" and Maxim Integrated Products (NASDAQ:MXIM) and National Semiconductor (NYSE:NSM) to "neutral." Sprint Nextel (NYSE:S) jumped 3.5% after receiving a ratings upgrade on strength of its Boost prepaid mobile telephone contracts.

Remarks from Obama advisor Tyson who noted a second stimulus package should be planned "on a contingency basis," and aimed at infrastructure investment may underscore remarks from Vice President Joe Biden Sunday complaining of a worse-than-anticipated economic legacy from ex-President Bush as well as the possibility of a second stimulus.

Zacks Investment Research

Words from the (investment) wise for the week that was (June 22 – 28, 2009)

Prieur du Plessis — Sun, 28 Jun 2009 08:37:06 +0000

“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe. Although very little commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included.

Boeing’s Flight Delayed – or Canceled?

Jim Musselwhite — Thu, 25 Jun 2009 18:14:18 +0000

By Guest Author: Adam Lass (www.taipanpublishinggroup.com) Anyone who has ever flown on most any commercial airline is familiar with this scenario: Your plane is supposed to depart in the next few minutes. The big board says the flight is on time. The lady behind the counter is all smiles. But you haven’t actually boarded or anything. In [...]

Boeing’s Flight Delayed – or Canceled?

Contrarian Profits — Thu, 25 Jun 2009 15:45:56 +0000

pBA obviously can#8217;t land its 2009 numbers. So when does arrogance become fraud?/p pAnyone who has ever flown on most any commercial airline is familiar with this scenario: Your plane is supposed to depart in the next few minutes. The big board says the flight is on time. The lady behind the counter is all smiles./p pBut you haven#8217;t actually boarded or anything. In fact, as you squint out the window, you can see that emthere is no plane available to board/em, a fact that the oblivious clerk seems unable or unwilling to acknowledge./p pThirty minutes after your takeoff slot has come and gone, the ubiquitous screens that decorate the departure lounge#8217;s walls suddenly blur, flicker and light up with the announcement that#8230;/p

Wednesday’s Market Recap (06/17/09)

Bullish Bankers — Thu, 18 Jun 2009 02:16:17 +0000

The markets closed at mixed positions today as the DJIA and S&P 500 ended down 0.09% to 8,497.18 and 0.14% to 910.71 respectively, while the NASDAQ was up 0.66% to 1,808.06. Commodities traded up as Gold inched up $3.80 to $936.00 on news of a financial overhaul. Crude Oil bounced up to $71.03 and Natural [...]

Company News for June 17, 2009 – Corporate Summary

Zacks Market Commentaries — Wed, 17 Jun 2009 14:28:05 +0000

* Economic bellwether FedEx (NYSE:FDX) reported earnings of 64 cents a share, ex-items, beating estimates of 51 cents on a 20% drop in revenues to $7.85 billion from $9.87 billion

* According to a WSJ report, Goldman Sachs (NYSE:GS) has reportedly delivered a letter to congress advising of plans to repay funds borrowed under TARP sometime tomorrow. JP Morgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) are expected to repay their borrowings as early as today

* According to a WSJ report, Sanofi-Aventis (NYSE:SNY) is seeking a mega-deal in the US, which could include such possible candidates as: Bristol-Meyers-Squibb (NYSE:BMY), Amgen (NASDAQ:AMGN), Allergan (NYSE:AGN), or Biogen (NASDAQ:BIIB)

* Nucor (NYSE:NUE) said it expects a second-quarter loss of 55 cents to 65 cents a share, versus estimates of a 69 cent loss, citing benefits from cost cuttings and recent strengthening in order entry

* Texas Instruments (NYSE:TXN) received an analyst upgrade from Merrill Lynch, expecting strong margin expansion. Price target was raised to $27 from $18

* Qualcomm's (NASDAQ:QCOM) rating was lifted to a "conviction buy" at Goldman Sachs (NYSE:GS) with a price target of $53

Zacks Investment Research

Zacks Earnings Preview: Adobe Systems, Best Buy, Carnival, FedEx and J.M. Smucker. – Press Releases

Zacks Market Commentaries — Mon, 15 Jun 2009 13:38:50 +0000

For Immediate Release

Chicago, IL - June 15, 2009 - Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Adobe Systems (ADBE), Best Buy (BBY), Carnival (CCL), FedEx (FDX) and J.M. Smucker (SJM). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Every day, Zacks.com makes 4 stock picks available, free of charge. To see them, go to http://at.zacks.com/?id=3567.

The Week's Events

We will see initial second-quarter numbers with Adobe Systems (ADBE), Best Buy (BBY), Carnival (CCL), FedEx (FDX) and J.M. Smucker (SJM) reporting this week. Notably missing from the group are the investment bankers, the surviving members of which have changed to traditional calendar quarters.

Though there are five S&P 500 companies reporting, the earnings calendar is pretty light. Just 23 companies are confirmed to report.

Conversely, the economic calendar is fairly busy. We'll see the producer and consumer price indexes, housing data and the Phili Fed survey.

Monday: Empire State manufacturing index, NAHB housing index
Tuesday: May housing starts and building permits, May PPI, May industrial production and capacity utilization
Wednesday: May CPI, weekly crude inventories
Thursday: May Leading Indicators, Phili Fed survey, weekly initial jobless claims

Fed Chairman Ben Bernanke will speak at a financial literacy summit in Washington, D.C. on Wednesday morning. Also speaking this week are Chicago Fed President Charles Evans, Governor Daniel K. Tarullo, Governor Elizabeth Duke and Governor Kevin Warsh.

On Monday morning, Evans will talk about the financial crisis with the Executives Club of Chicago Joint Committee. Also on Monday morning, Tarullo will appearing at a bankers' convention on Monday morning to discuss risk regulation. That evening, Duke will lecture about the Fed's response to the financial crisis at the Women in Housing and Finance Annual Meeting.

Warsh will speak to a different bankers' convention on Tuesday. He will discuss economic policy and the financial markets.

Friday is a quadruple witching day, meaning option and futures contracts will expire. This could lead to higher volatility.

What should be interesting to see is whether we get some end-of-quarter window dressing by fund managers. Many have been sitting on the sidelines - as is evident by the light volume - and are likely underperforming their benchmarks. This raises the possibility that we could see managers buying "good" stocks to make their portfolio holdings look better.

Keep an eye on commodities and bonds. Commodities have been very strong and treasury yields may come down after having just set short-term highs.

Companies That Could Issue Positive Earnings Surprises

Adobe Systems (ADBE) has delivered positive surprises during 7 of the last 9 quarters. (Its fiscal first-quarter numbers matched expectations.) Though the consensus earnings estimate is unchanged at 28 cents per share, the most accurate estimate is higher at 30 cents per share. This suggests another good report could be forthcoming. Adobe is scheduled to report on Tuesday, Jun 16, after the close of trading.

Best Buy (BBY) has benefited from the demise of Circuit City, having topped expectations for 2 consecutive quarters. Three of the covering brokerage analysts think the company may deliver another upside surprise and have raised their fiscal first-quarter estimates as a result. These revisions have led to a most accurate estimate of 34 cents per share, which is a penny better than the consensus earnings estimate. Best Buy is scheduled to report on Tuesday, Jun 16, before the start of trading.

Companies That Could Issue Negative Earnings Surprises

During the past few weeks, 2 analysts have cut their fiscal fourth-quarter profit forecasts on FedEx (FDX). The negative revisions have resulted in a most accurate estimate of 47 cents per share, which is 5 cents below the fiscal fourth-quarter consensus earnings estimate. FDX has missed twice during the past 4 quarters. FedEx is scheduled to report on Wednesday, Jun 17, before the start of trading.

Charles Rotblut, CFA, is the senior market analyst for Zacks.com.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +26%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 111% annually (-0.8% versus +8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros by going to http://at.zacks.com/?id=3568.

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Zacks Investment Research

FedEx Needs You… Not the Unions

Andrew Snyder — Tue, 09 Jun 2009 19:13:14 +0000

pAfter a pro-labor Congress took over Washington and the fall of Detroit, the nation’s largest employers are doing all they can to keep unions at bay. FedEx (NYSE:strong/strongstronga href="http://www.google.com/finance?q=fdx" target="_blank"FDX/a/strong) has unveiled a campaign like no other. /p pIf you want to run a multi-billion dollar international conglomerate these days, you had better have a few high-ranking friends in Washington. If not, this administration appears ready to do anything and everything it can to wipe you and your shareholders out./p pThe battle that is brewing between strongUnited Parcel Service (NYSE:a href="http://www.google.com/finance?q=ups" target="_blank"UPS/a)/strong, strongFedEx (NYSE:a href="http://www.google.com/finance?q=fdx" target="_blank"FDX/a) /strongand Capitol Hill is a perfect example./p pWhile the two companies have business models that are very similar and are direct competitors with one another, their respective labor forces look quite different./p pBecause it#8230;/p

The Truth Behind the Second Valley Theorem

Contrarian Profits — Thu, 04 Jun 2009 13:56:12 +0000

pV-Shaped Bottom or Second Valley? The truth can earn you 79%. Watching economists attempt to find consensus can be like watching a burlap sack full of cats – lots of sound and apparent action, but precious little benefit./p pUnfortunately, you eventually have to open the sack full of angry cats to find out how it all comes out. And then there#8217;s that part about going to jail (or hell) because you put cats in a burlap sack./p pNot that I would ever do something like that. This is really just one of those mental exercises. But I do watch economists a lot. I guess someone has to./p pstrongThe One Real Question /strong/p pThe big argument this week: #8220;The V-shaped bottom#8221; versus #8220;The Second Valley.#8221;#8230;/p

Ronn Motor Company, Inc. (RNNM.PK) Finalizes Testing and Production Design of Hydrogen Injection System

QualityStocks — Fri, 01 May 2009 13:30:55 +0000

Early this week, Ronn Motor Company, Inc. announced that it has completed testing and final production design for its new H2GO(TM) real time hydrogen injection system. Frigette Energy Systems and Ronn Motors executives have been conducting evaluations this week to prepare for a preliminary focused manufacturing and distribution roll-out to the general public. Ronn Maxwell, CEO [...]

SmallCap Sentinel: Beyond the Headline

Stuart T. Smith — Wed, 01 Apr 2009 13:50:14 +0000

LAS VEGAS, April 1, 2009 (GLOBE NEWSWIRE) — A headline yesterday for Ronn Motor Co. (Pink Sheets:RNNM) announced that a FedEx fleet operator will be running a test of Ronn’s H2GO hydrogen fuel system on fleet vehicles in April, hoping to find fuel efficiency increases that it can take fleet-wide. Clearly, this is a dramatic [...]

Aspire Misery Index for the Week Ended February 13, 2009

Small Cap Pulse — Sat, 14 Feb 2009 20:39:00 +0000

January 13 - We have to say that the pace of dour news slowed a bit this week, a trend that we are hopeful will continue. However, there is still much misery out there, and expectations are that the underlying fundamentals of the U.S. economy will continue to erode as businesses circle the wagons around their cash positions and remaining available credit, which will result in more jobs lost. Our expectations for this recession are for it to run pretty deep in light of the fact that there is so much consumer infrastructure built in the U.S. which just needs to be shut down as consumers, we hope, begin finding more of a balance and start saving. Savings rates as a percentage of disposable income have fallen in recent years to 0.4% and when consumer credit gets factored in, it turns negative. This was an unsustainable pace. We are hopeful that Washington is learning the lessons and will begin advocating a more balanced approach for the nation. Obamarsquo;s stimulus plan seems to get it, because if consumers, who represent more than 70% of GDP arenrsquo;t going to be the ones that get economy kick-started again, government investments in infrastructure just may. And at least in this case this is a move towards investments in asset bases like our energy infrastructure, which just may create more jobs down the road. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Consumer Confidence ndash; The Michigan Consumer Confidence Survey said its confidence rating slid to 56.2 in February from 61.2 in January. The record low was set in May, 1980 at 51.7.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Job Cuts ndash; KV Pharmaceutical (700 jobs), Beazer Homes (300 jobs), GM (150 jobs and then announced another 10,000 jobs for the year ndash; so, with 3,400 U.S. jobs), FedEx (900 jobs), InterContinental Exchange (40 to 55 jobs), Wal-Mart (700-800 jobs), Zenith National (100 jobs), Sensata (100 jobs), Alcon (260 jobs), Greenbriar (150 jobs), Toro (100 more jobs), Bryan Cave (laying off 58 lawyers and 76 staff), TRW Automotive (45 jobs), BlueScope (53 jobs),nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Weekly Jobless Claims ndash; The Labor Department reported that 623,000 initial claims were filed last week, higher than expectations of 610,000. Continuing claims rose to 4.81 million from 4.78 million ndash; the highest level since records began back in 1967.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Samp;P Performance ndash; Samp;P sales fell 9.8% in the October-December period and on average, companies lost $10.44 per share.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Business Inventories ndash; Business inventories fell by 1.3%, more than the 0.9% expected.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Ratings Downgrades ndash; Moodyrsquo;s cut the oilfield services sector, Moodyrsquo;s cut Cisco, Samp;P cut Hartford Financial, Samp;P cut Starbucks, Moodyrsquo;s cut CNA, Samp;P cut Freescale Semi, Samp;P cut Unisys, Samp;P cut Estee Lauder, Samp;P cut Cytec, Fitch cut Textron, Moodyrsquo;s cut Ameristar, Moodyrsquo;s cut FelCor, Fitch and Moodyrsquo;s cut Alcoa,nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Chapter 11 ndash; Crescent Oil, Samp;K Famous Brands, Charter Communications, Midway Games, Aleris, Pliant Corp.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Bank Closings ndash; Regulators closed Sherman County Bank in Nebraska, Riverside Bank of the Gulf Coast in Florida, and Corn Belt Bank and Trust Co. in Illinois, bringing the number of failures so far this year to twelve. Twenty-five banks failed last year.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Housing Industry ndash; The National Association of Realtors said the median sales prices of homes declined in 134 out of 153 metropolitan areas in the Q4, compared with the Q4, 2007. The nationwide median home sales price was $180,100, down 12% Y/Y. Hawaiirsquo;s foreclosure rate in January rose 174% Y/Y.nbsp;nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Publishing Industry ndash; The Audit Bureau of Circulations said that combined single-copy magazine sales at newsstands and other retail outlets are down 11% for the second half of 2007. Overall circulation was basically flat on 2008 over 2007.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Retail Sales ndash; The Commerce Department said that retail sales grew 1% in January. Expectations were for a 0.8% decline.nbsp;nbsp; middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Trade Deficit ndash; The Commerce Department said the trade deficit in December fell 4% to $39.9 billion, from $41.6 billion in November. For the year, the deficit contracted by 3.3% to $677.1 billion. pa href="http://feeds.feedburner.com/~a/smallcappulse/feed?a=9KhKUr"img src="http://feeds.feedburner.com/~a/smallcappulse/feed?i=9KhKUr" border="0"/img/a/p

Advertising Cutbacks Reveal Firms Ripe For Shorting

Contrarian Profits — Fri, 23 Jan 2009 12:06:56 +0000

pWhen firms stop advertising, it is a sure sign of distress says strongAdam Lass/strong. He says strongGeneral Motors /strong(NYSE:a href="http://finance.google.com/finance?q=GM" target="_blank"GM/a) and strongFedEx /strong(NYSE:a href="http://finance.google.com/finance?q=NYSE%3AFDX" target="_blank"FDX/a) will be conspicuous by their absence at this year#8217;s Super Bowl. As they struggle to survive the crisis, Adam says both companies a ripe for shorting right now./p pThis from a href="http://www.taipanpublishing.com" class="alinks_links"Taipan/a Daily:/p blockquotepLet me check my list:/p pThe Olympics? Nubile Chinese child-athletes took the lion#8217;s share of the medals, but Baltimore hometown hero Mike #8220;The Fish#8221; Phelps stood on the top tier more often than any other human ever./p pThe Presidential election? A done deal back in November. Heck, in my neck of the woods, sulky Republicans were already sporting #8220;Impeach Obama#8221; bumper stickers as early as October./p pThe Inauguration? In-the-tank reporters gushed on#8230;/p/blockquote

Cash In On Bailouts With Mini-Dow Trading

Investment Education Staff — Sun, 21 Dec 2008 16:26:47 +0000

President Bush has been on the TV a lot lately. Too late for him to go down in history as a good president, but we will give him credit for trying. The Pres. has assured us all that we can grow our economy by spending more money. He even sent us each a few hundred to help us do that. One has to wonder if that was a set up for what was to come.

Cash In On Bailout

Investment Education Staff — Sat, 20 Dec 2008 11:19:02 +0000

Stocks Steepen Declines At Witching Hour

Daniel Shepard — Thu, 11 Dec 2008 20:28:15 +0000

Wednesday December 10, 2008 Navivest Considering the dire initial jobless claims employment number that we got today, which showed that unemployment was at a 26 year high, stocks were impressively resilient for most of the day, with either a very modest loss or brief forays into positive territory. However, at around 3PM, we saw the declines start to [...]

The Story Of A Great Depression Success

Contrarian Profits — Thu, 11 Dec 2008 14:22:07 +0000

pLast Friday was the 75th anniversary of the repeal of Prohibition. It seems we can’t escape looking back over our shoulders at the 1930s./p pWe teeter closer to the sequel no one wants to see: Great Depression II. We got horrible news on the job front last week. Unemployment climbed to 6.7% as the nation lost another half a million jobs in the month of November alone. It was the worst rack of numbers in 34 years. One in 10 American mortgages is now either behind on its payments or in foreclosure./p pBusinesses are cutting back. Consumers are cutting back. Commodity prices have collapsed. The stock market is down more than 40% this year. When we close out the books for 2008,#8230;/p

The Faux Bottom, Housing Worsens, Newspapers in Trouble, An Oversold Sector, and More!

Contrarian Profits — Wed, 10 Dec 2008 13:43:43 +0000

pur “Obama Rally” forecast… will things “get worse before they get better” or vice versa?#8230; Print in the doghouse… Tribune Co., New York Times and McClatchy looking desperate#8230; Still no bottom in sight for housing… foreclosure, refi and pending home sales data all down#8230; Anecdotal evidence of tough times to come… Wiggin house, office burglarized#8230; a href="http://www.contrarianprofits.com/articles/author/chris-mayer/" class="alinks_links"Chris Mayer/a with a sector sell-off that’s gone too farbr / strongEnjoy the rally… for now./strong “Things are going to get worse before they get better,” the president-elect’s been saying all week. We suspect he’s right. But the Obama Rally is likely to have some legs first./p p class="BodyCopy" align="left"The Dow surged 3.5% yesterday after an equally notable gain Friday. Just about every stock got a boost, but materials, energy and infrastructure#8230;/p

Market Panic Is Your Opportunity For Long-Term Profits

Contrarian Profits — Tue, 09 Dec 2008 12:44:58 +0000

pMarket panic creates great opportunities for discilpined investors, says strongGreg Guenthner/strong. A sense of fear and urgency is causing widespread sell-offs in the stock market. But this short-term relief from leaving the market also slams the door shut on long-term profit opportunities./p pThis from Penny Sleuth:/p blockquotepInvesting in the stock market is an all-out war. No, we’re not referring to the madness on the trading floors or the tug of war between buyers and sellers. Investing is actually a war against our own impulses./p pAn e-mail exchange with a colleague of mine sums it all up perfectly: “Sure, the market may go lower,” he writes, “but the lesson is that people are always doing the opposite thing than what they should be doing.”#8230;/p/blockquote

FedEx Shares Plunge After Hours On Guidance

Daniel Shepard — Mon, 08 Dec 2008 22:46:58 +0000

Monday December 8, 2008 Navivest Shares of FedEx (FDX) are getting battered in after hours trading Monday evening, after the company announced that it is cutting its 2009 full-year profit guidance to a range of 3.50 to $4.75, from its prior guidance of $4.75 to $5.25. For the Q2 period ending November 30th 2009, FedEx announced that it [...]

Why Obama Will Get More Change Than He Bargained For

Contrarian Profits — Fri, 05 Dec 2008 13:22:15 +0000

p align="left"We are in a transition between the old profligate energy economy and the new economy of relative scarcity, saysstrong James Howard Kunstler/strong. He is not convinced the President-elect Obama is fully aware of the dramatic changes that lie ahead for America. Even if he were, says James, he#8217;d probably be crucified for daring to talk about it./p p align="left"This from Whisky #38; Gunpowder:/p blockquote p align="left"A lot of readers are twanging on me for refraining to castigate President-elect Obama for deeds yet undone. They’re discouraged by the advisors and cabinet secretaries he’s picked, ostensibly because the crew coming in are Washington “insiders,” meaning they can’t possibly see or do things differently./p p align="left"My own starting point for this is the belief that in the years just ahead any#8230;/p/blockquote

Calculating Gross Margin for Apple’s iPhone (4Q08)

Turley Muller — Tue, 18 Nov 2008 02:57:00 +0000

span class="Apple-style-span" style="font-weight: bold;"APPLE INC (nasd:AAPL) /spanAccording to my calculations, deferred revenue booked from Q4 iPhone sales carries a 55.5% gross margin. Gross margin on the deferred revenue (DR) booked from the first generation model averages about 29%. The average gross margin for total booked DR is 47.8%.br /br /I derived this number from the “deferred expense under subscription accounting“ that Apple disclosed in its annual filing (10-K) in conjunction with the deferred revenue (under subscription accounting) also reported. I used some rather extensive math to come up with the 55.5% number which I discuss below.br /br /Apple’s ”Non-GAAP“ figures it provided for Q4 implies that 3G iPhone GM was 47.8%. According to the 10-K, GM for iPhone deferred revenue not yet recognized in income is also 47.8%. Coincidence? Not likely. Since the deferred revenue carried on the balance sheet includes both the original and 3G models, that GM should differ from the GM implied by Q4 Non-GAAP numbers that solely comprise of 3G unit sales. We know that the GM on the 3G model is much higher than the first model.br /br /So why is the GM according to Apple’s Non-GAAP figures the same as the GM derived from the 10-K? Apple included estimated future warranty expenses in the adjusted cost-of-goods sold (COGS), which inflates Non-GAAP COGS and understates GM. The amount of estimated expense is at Apple’s discretion. In my opinion, Apple overstated the Non-GAAP COGS adjustment for the sake of conservatism, but also to obscure the true iPhone GM. Normally, under GAAP accounting (subscription), Apple recognizes iPhone warranty expenses as incurred. However, Apple added its estimates for future warranty liability into the COGS adjustment, and I believe management was very conservative.br /br /The gross margin on the iPhones sold in Q4 that will be recognized over the coming seven quarters is 55.5%. There will be some warranty expense incurred, yet I expect it to be relatively small. It’s likely that most of the warranty liability is incurred during the period sold. If a unit is defective, the problem usually surfaces shortly after it’s purchased.br /br /I estimate the normalized gross margin is even higher, possibly north of 60%. Thus, iPhones sold in 1Q09 and beyond will carry higher GMs, assuming ASPs remain constant. iPhone GMs for Q4 were abnormally compressed due to elevated shipping costs, adapter recall, and other various expenses related to the global introduction of the new 3G model.br /br /span class="Apple-style-span" style="font-weight: bold;"Gross Margin- Non-GAAP Reported Q4:/spanbr /For the first time, Apple provided adjusted figures showing the actual iPhone sales/income earned in the quarter. Until Q4, Apple always gave the GAAP numbers that uses subscription accounting for iPhone sales. Instead of recognizing the actual revenue earned for the quarter, it is spread over 24 months and amortized on a straight-line basis. Using normal accounting methods, total revenue would have been 3.787B higher, or 11.682B. Cost of goods sold (COGS) increases 1.975B to 7.161B. Overall gross margins improve from 34.7% (GAAP) to 39.0%, which equates to a 47.8% GM for the iPhone adjustment ([revenue adjustment - COGS adjustment] / revenue adjustment).br /br /However, the 47.8% figure is not the true iPhone GM. First, the adjustments include AppleTV sales, yet that amount is believed to be quite small relative to the iPhone, thus the effect is probably very minimal. Second, and most important, is that Apple included the estimated warranty costs for over its full life in the COGS adjustment.br /br /a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_kaO6aTrkklM/SSIvJioQOtI/AAAAAAAAAcE/Op6fBhoIlNk/s1600-h/iPhone+DR-1.png"img style="cursor:pointer; cursor:hand;width: 382px; height: 189px;" src="http://3.bp.blogspot.com/_kaO6aTrkklM/SSIvJioQOtI/AAAAAAAAAcE/Op6fBhoIlNk/s400/iPhone+DR-1.png" border="0" alt="" id="BLOGGER_PHOTO_ID_5269826354937871058" //adivspan class="Apple-style-span" style="font-weight: bold;"br //span/divdivspan class="Apple-style-span" style="font-weight: bold;"iPhone Gross Margin- Deferred Revenue/Costs Reported in 10-K:/spanbr /Without knowing the amount of deferred iPhone cost booked in a quarter, it’s impossible to calculate iPhone gross margins. Apple’s quarterly filings discloses the iPhone portion of deferred revenue which is reported was a liability on the balance sheet, but Apple never broke out the iPhone related deferred costs that is included in an asset account. The actual amount of iphone revenue earned in a quarter can be determined by adding the change in DR account (+) the amount of iPhone revenue recognized in income. To find the actual product costs, we need the change in deferred costs. In its annual filing, Apple disclosed the amount of iPhone related deferred cost on the books at the end of Q4, but we don’t know the Q3 number.br /br /Using the DR amp; DC at year-end, an average GM (of all iPhone sales) can be found. At year-end, Apple had $5.78B in DR and $3.02B in DC on its books, which translates into a 47.8% gross margin for all the iPhone sales still be amortized. Since Apple gives the figures for current (less than 1yr) and long-term accounts, we can gain additional insight into iPhone margins. For the iPhone sales that will be recognized within a year, the average GM is 45.1%, and for the non-current portion, the GM is 51.9%.br /br /The reason for the 7% difference is due to 3G sales, which carries a much higher margin than the original iPhone. Almost all the non-current DR amp; DC is related to the 3G, since iPhones sold in 4Q07 amp; 1Q08 have moved from the non-current to current bucket. Only a small portion of Q2 sales would be left in non-current, and Q3 sales were low, thus the figures classified as non-current are almost entirely associated with 3G sales. The actual percentage of 3G models can be estimated from the change in DR from Q/Q compared to the actual ending balance. Current DR increased 2.129B to 3.518B, which means 60.5% of current DR is from 3G. Long-term DR increased 1.63B to 2.62B, but the actual amount of 3G classified as non-current is higher because of the portion of legacy iPhone revenue recognized for the quarter. I estimate that 320M of DR was recognized in Q4. Roughly 86% of non-current DR is from 3G sales./divdivbr /a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_kaO6aTrkklM/SSIvJZt36tI/AAAAAAAAAb8/9g6fmmObZ6Y/s1600-h/iPhone+DR-2.png"img style="cursor:pointer; cursor:hand;width: 400px; height: 102px;" src="http://1.bp.blogspot.com/_kaO6aTrkklM/SSIvJZt36tI/AAAAAAAAAb8/9g6fmmObZ6Y/s400/iPhone+DR-2.png" border="0" alt="" id="BLOGGER_PHOTO_ID_5269826352545524434" //a/divdivbr /span class="Apple-style-span" style="font-weight: bold;"Actual 3G iPhone Gross Margin Calculation/span:br /With the figures for (1) average GM for both current and long-term [45.1% / 51.9%], and (2) the percentage of units which are 3Gs for both classifications [61% / 86%], I solved for the “true” 3G iPhone gross margin by setting up 3 simultaneous equations. The goal is to find the GM number (for both the 3G units and the legacy units) that produces the same combined gross margin for all three classifications (current, non-current, total). As I mentioned above, I solved for the percentages or “weights” of each model represented in the amount of deferred revenue reported on Apple’s balance sheet. Using those weights, the solution I found was 3G gross margin of 55.1% and 29.2% GM for the original model units. When the 3G amp; legacy gross margins are multiplied by the percentage weights for all three classifications (Total, Current, Non-Current), the products equal the same gross margin extracted from Apple’s 10-K.br //divdivbr //divdiva onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_kaO6aTrkklM/SSIvJJ_HevI/AAAAAAAAAb0/7orngn0ia8A/s1600-h/iPhone+DR-3.png"img style="cursor:pointer; cursor:hand;width: 400px; height: 330px;" src="http://4.bp.blogspot.com/_kaO6aTrkklM/SSIvJJ_HevI/AAAAAAAAAb0/7orngn0ia8A/s400/iPhone+DR-3.png" border="0" alt="" id="BLOGGER_PHOTO_ID_5269826348322880242" //abr //divbr /(1) Total deferred: 47.8(all)= .71(MGN[3G]) + .21(MGN[2.5G])br /(2) Current Deferred: 45.1(all) = .61(MGN[3G]) + .39(MGN[2.5G])br /(3) Non-Current Deferred: 51.9(all) = .86(MGN[3G]) + .14(MGN[2.5G])br /br /span style="font-weight:bold;"Conclusion:/spanbr /If my math is correct, the gross margin on the DR booked from 3G iPhones sold in Q4 (Sep 08) is 55.5%. This means over the next seven quarters, Q4 iPhone sales that will be recognized in current earnings contribute 55.5% GM. Yet, gross margins on units sold going forward will materially exceed the 55.5% generated on Q4 sales.br /br /The rationale for thinking the normalized GM will be higher is due to excess product expense related to the roll-out. Shipping costs were abnormally inflated due to pressures created by supply shortages. The elevated expenses were due to more shipments of smaller lot sizes expedited at quicker delivery times. In short, distribution costs weren’t optimized, yet it’s better to spend a little more to make a sale, than to try to contain costs and forego a sale. For example, iPhones ordered through ATamp;T direct fulfillment were being delivered individually by FedEx. In addition, Apple stores were receiving smaller shipments but more frequently, on an as-needed basis, so that some stores don’t get too much stock leaving others short. Now that demand and supply factors are in balance, Apple is able to reduce distribution expense by shipping larger lot amounts, less regularly at non-expedited speeds.br /br /Another item inflating product costs was the power adapter recall. Not only does this cause material costs to increase, shipping and packaging costs were likely unfavorably impacted as well.br /br /Going forward, I foresee rising margins resulting from efficiency gains in distribution along with lower product costs resulting from falling component prices and scale benefits. Another item of note, the end of September Apple began selling unlocked iPhones online to Hong-Kong for roughly $685/$799 (free shipping). These prices are quite higher than what Apple receives on other iPhone sales. It’s possible that Apple can do decent volume through the Hong-Kong channel given the propensity for iPhones to find their way into grey markets, such as China, Thailand, Vietnam and others. It’s interesting that Apple decided to sell unlocked, open carrier iPhones only to Hong-Kong which makes one wonder if this is a direct response to the stubbornness of Chinese carriers.br /br /Massive iPhone margins provide Apple with the ability to reduce selling price and still earn a generous profit. Apple has a key advantage over other mobile handset makers that don’t have nearly as high GMs. I expect Apple to eventually lower iPhone prices, but given the iPhone’s superior value proposition, a price cut shouldn’t be needed for some time. However, that doesn’t preclude Apple from doing so just to make competitors life difficult.br /br /Apple could use the colossal iPhone margins to subsidize price reductions on other products if needed. Given the difficult economic environment, this is a very beneficial arrow for Apple to have in its quiver to draw upon.div class="feedflare" a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=5QNVN"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=5QNVN" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=mqWKN"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=mqWKN" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=nhihN"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=nhihN" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=2SfcN"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=2SfcN" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=gPVkn"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=gPVkn" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=Yixcn"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=Yixcn" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=BuJXn"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=BuJXn" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=poJwN"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=poJwN" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=1zoYN"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=1zoYN" border="0"/img/a a href="http://feeds.feedburner.com/~f/FinancialAlchemist?a=1zoYN"img src="http://feeds.feedburner.com/~f/FinancialAlchemist?i=1zoYN" border="0"/img/a /divimg src="http://feeds.feedburner.com/~r/FinancialAlchemist/~4/466564442" height="1" width="1"/

Sue the Fed, Dubai in Trouble, Coming Food Crisis and More!

Contrarian Profits — Wed, 12 Nov 2008 17:46:53 +0000

The Fed’s first credit crisis lawsuit… who’s suing and why, AmEx, Fannie Mae unload more financial follies… government “fixes” problem with more taxpayer dollars, Chris Mayer with a credit crisis byproduct (and opportunity) that could affect the entire world, China announces big stimulus plan… so why did commodities fall? A hefty chink in Dubai’s armor, Plus, Dan Amoss with a once-favored investment theme due to be back in the spotlight soon

Here’s a curious development that may be worth watching: Bloomberg is suing the Federal Reserve.

Last week, we took a look at the Fed’s bulging $2 trillion balance sheet. And if you’re a long-suffering 5 Min. reader, you know our futile recounting of the weekly Fed lending programs… all the abbreviations and…

SkyPostal Networks, Inc. (SKPN.OB) Enters Parcel Post Market through Launch of PuntoMio Brand

QualityStocks — Wed, 22 Oct 2008 12:31:37 +0000

Today before the bell, SkyPostal announced that it has launched a new parcel logistics service under the PuntoMiobrand. PuntoMio.com provides online international shopping assistance, international transport, customs clearance and delivery to cross-border shoppers. Albert Hernandez, SkyPostal President and CEO, stated, “In line with our growth strategy, we are leveraging our established private postal network to enter [...]

Guest Article: Shedding Light on Dark Marketing

Fred Fuld — Mon, 20 Oct 2008 03:10:00 +0000

Shedding Light on Dark Marketing
By Dr. Tracy Tuten,
Author of Advertising 2.0: Social Media Marketing in a Web 2.0 World

Dark Marketing is slowly making its way into the advertising lexicon, and for good reason. Rock bands like Nine Inch Nails and burger giant McDonalds (MCD) have unleashed its brand engagement and reinforcement capabilities with results marketing chiefs can cheer.

But, for many in the industry, the term is still more likely to conjure an image of Darth Vader opening a bag of Cool Ranch Doritos instead of what the concept delivers: legions of brand enthusiasts actively participating in an artfully designed and carefully executed brand marketing campaign that spans countries and continents.

It's powerful stuff.

Here's a brief primer, and, for brands that can, a "how-to-market darkly" checklist.

Let there be Light

Dark Marketing isn't sinister, but it borders on covert. At its core is the alternative reality game [ARG], a complex, creative and purposeful scenario that brings brands to life.

ARGs are interactive narratives that comprise fiction and nonfiction, mystery and detection and scripted and unscripted activities that invite participation. The games unfold on (and are made possible by) multiple forms of traditional and online media. ARGs may use telephones, e-mail, outdoor signage, t-shirts, television, social networks, music, blogs and more to introduce an engaging storyline, motivate behavior, reveal game clues and advance the narrative in ways that hold player interest.

Take, for example, Microsoft's (MSFT) "I Love Bees" campaign used to promote the launch of Halo 2, a hit video game. It's a great illustration of how ARGs go under the radar of traditional marketing to rally consumers to the brand.

Microsoft launched the game by FedEx-ing (FDX) jars of honey to several Halo players. A few days later, the promotional trailer for Halo 2 referenced a Web site, ilovebees.com/xbox.com. The Web site provided lists of pay phone numbers, GPS coordinates for the phones and times when each listed number would be called, driving the curious to find the phones and answer the calls. The calls delivered additional clues that advanced the ARG, promoted Halo 2 and reinforced the brand.

From the start of the game until its conclusion (with players earning a preview experience of the Halo 2 game), players and observers visited the I Love Bees Web site for updates on the narrative and new clues about the game. Independent Web sites and forums sprang up, generating game theories, conspiracies, storylines and, of course, marketing buzz.

Not for Everyone

ARGs work best for brands with target markets that enjoy the aspects of interactive, social games with online components. Commenting on why "I Love Bees" was so successful for Microsoft, James Hilton, creative director for AKQA, the agency that developed the ARG, said, "It worked well for Xbox because its audience is inclined to investigate further, hack into sites and solve problems." There must be a good fit between the brand, the meaning the brand wishes to communicate, the target market and the story and plot that anchor the ARG.

After determining fit, roll up your sleeves. ARGs demand substantial work -- from initial conception through planning and execution. Further, because the storyline can change depending on response from players, ARGs require agility, quick writing and responsiveness from game architects (known as puppet masters) through the game's conclusion.

Additionally, if player response takes ARGs in unintended directions, marketers charged with tightly controlling brand meaning may find themselves taking unwanted risks.

Finally, compared to some marketing options, an ARG's reach can be small. For example, measures of Audi's success with an ARG referred to reaching 500,000 people. A display ad on the MySpace homepage, for example, could have reached millions. Of course, the attention and involvement components are entirely different for these two examples, and it is important to consider the entire range of benefits and disadvantages associated ARGs and other marketing activities.

Getting to the Dark Side

ARGs engage brand enthusiasts, drive publicity and create buzz. They allow brands to tell their stories creatively, interactively and virally. If you're ready to give one a shot, follow these guidelines:

* Have a story to tell. ARGs are first and foremost an interactive story that should be captivating, dynamic and inviting.
* Ensure that there is a clear match between the brand, the target audience and the notion of an interactive game.
* Plan, plan, and plan more. Begin by assessing how the ARG can facilitate accomplishment of the brand’s marketing goals. Then figure out the back story (the pregame narrative), the primary narrative, and the forward story. Perplex City (http://seasonone.perplexcitystories.com/story.html) offers a detailed overview of its architects' planning process.
* Reveal the story narrative over time using obscure clues and messages that will require player interaction to decipher the scenes.
* Include plot lines that are nonlinear and can be revealed sporadically. The development of the narrative must not be predictable and must not rely on a linear unfolding of events to make sense.
* Design a story that will enhance the sense of reality in the story. Players should not be reminded of the game but should be invited to make the game part of their reality.
* Utilize a variety of media, and carefully design game elements to leverage the characteristics of the delivery medium. Past ARGs have utilized code on T-shirts and posters, Web sites identified in video trailers, posts to blogs, e-mail, text messages and mass media advertising.
* Be prepared to change the direction of the narrative in response to player input and response to past clues and events.
* Commit to the ARG and its management. ARGs take time and continued involvement and management as the story unfolds.
* Consider an agency with ARG experience, including 42 Entertainment, Mind Candy and McKinney & Silver.
* Measure the effectiveness of the ARG based on the objectives for the promotional campaign, not just according to game participation.

As TIVO, iPods and the Internet continue squeezing traditional advertising methods, dark marketing strategies will become a bigger part of the mix.

And for marketers that get it right, this dark side promises plenty of sun.

©2008 Dr. Tracy L. Tuten

Author Bio
Dr. Tracy L. Tuten is Associate Professor of Marketing at Longwood University and the author "Advertising 2.0: Social Media Marketing in a Web 2.0 World
." Tuten's research interests include Web-based survey methods, branding and identity, and online advertising. She serves on the editorial review board for Psychology and Marketing.

SkyPostal, Inc. (SKPN.OB) Takes Mail Delivery to another Level

QualityStocks — Fri, 03 Oct 2008 17:01:21 +0000

SkyPostal Networks, Inc., (SKPN.OB), the Miami-based international mail distribution company specializing in the hand delivery of mail and periodicals into Latin America, has a stated mission: “To provide our customers with a consistent, secure, and reliable mail delivery service of the highest standards”. Since their founding in 2002, they have been able to do exactly [...]

FedEx to Face China Anti-Dumping Investigation?

Biz China Update — Sun, 28 Sep 2008 23:40:47 +0000

FedEx' Express division in China has cut its prices by up to 40 per cent in recent months, a move that has resulted in a growing market share and a monthly loss of RMB50m, The Economic Observer reports. Chinese competitors, who see their existence in danger, are now reportedly urging...

FedEx May Face Anti-Dumping Investigation

Biz China Update — Sun, 28 Sep 2008 22:08:47 +0000

FedEx' Express division in China has cut its prices by up to 40 per cent in the last months.This resulted in a growing market share and a monthly loss of RMB50m, The Economic Observer reports. Chinese competitors see their existence in danger and urge the government to start an anti-dumping...

Earnings results and economic reports – Week 38.

Vlada Kynsky — Mon, 15 Sep 2008 08:47:00 +0000

Stock markets in Asia and Europe opened sharply lower after Lehman Brothers (LEH) announces bankruptcy. Another news is about Merrill Lynch (MER) which was surprisingly bought by Bank of America (BAC). From Big five financial firms only Goldman Sachs (GS) and Morgan Stanley (MS) remain. These two will release earnings results this week.

Monday:
Economic Empire (1.4) CU & IP (79.6%, -0.3%)
Earnings Titan Machinery (TITN), Discover (DFS), Pall (PLL)

Tuesday:
Economic CPI & Core (0.2%, 0.0%), FOMC Statement
Earnings Best Buy (BBY), CBRL (CBRL), Goldman (GS), Kroger (KR), AAR (AIR), Adobe (ADBE), Darden (DRI)

Wednesday:
Economic Weekly Crude, Bldg P’s & Starts (925K, 950K)
Earnings General Mills (GIS), Morgan Stanley (MS), CKE (CKR), Dress Barn (DBRN)

Thursday:
Economic Weekly Claims, Leading Indicators (-0.2%), Philly Fed (-10.0)
Earnings Carnival (CCL), ConAgra (CAG), FedEx (FDX), Cintas (CTAS), Oracle (ORCL), Palm (PALM)

Ike, Lehman and Market Volatility – Analyst Blog

Zacks Market Commentaries — Sun, 14 Sep 2008 16:29:16 +0000

The calendar had caused me to anticipate volatility this week.

Goldman Sachs (GS), Morgan Stanley (MS), FedEx (FDX) and Oracle (ORCL) will release quarterly results. The Fed will meet on Tuesday. (No change in rates is expected, but given the Lehman situation, there is a small possibility that a quarter-point cut could be announced.) Friday is a quadruple-witching day, meaning the simultaneous expiration of options and futures contracts.

Now, the markets will also have to contend with the aftermath of Hurricane Ike and the fallout from Lehman Brothers.

As former Houstonians, my wife and I spent a lot of time this weekend on the phone with friends and family. At this point, we have no idea what condition my wifes parents house is in. (They live in Houstons southern suburbs.)

We do know that there has been extensive wind damage. Several friends talked about trees blocking streets in their neighborhoods. The Houston Chronicle published a non-flood insured damage estimate of between $6 billion to $16 billion.

Excluded from this number is the additional damage caused by Ike as it moved through the Midwest and towards the east. (The sump pump in my Northern Illinois house has been running all weekend.) Property & casualty firms and reinsurers such as Progressive (PGR) and XL Capital (XL) could be under pressure this week.

In regards to energy, the initial reports suggest the refineries fared pretty well. Valero (VLO) had some plants running over the weekend, BP (BP) had one powered by generators, while Exxon (XOM), Marathon (MRO) and ConocoPhillips (COP) were trying to restore power. Ahead of the storm, 14 refineries that provide 22% of the nations refining capacity shut down, according to the Houston Chronicle.

Given widespread electricity outage throughout the metro area, refineries could have staffing issues over the next several days or weeks, however.

Negotiations over Lehman (LEH) are continuing today. Barclays (BCS) appeared to be the front-runner, but has since pulled out. The Feds refusal to provide insurance against any losses related to Lehmans bad assets appears to be the biggest stumbling block.

The difficult negotiations are going to put additional pressure on AIG (AIG), Merrill Lynch (MER) and Washington Mutual (WM) to find additional funding, if not acquirers. (The Wall Street Journal is reporting that Merrill and Bank of America (BAC) are holding merger discussions.)

Investors who paid attention to the Zacks Rank and our equity research reports, would have been cautious enough to stay away from beleaguered financial firms. Negative earnings estimate revisions have signaled ongoing problems throughout this year.

Warren Buffet is credited as saying "buy fear, sell greed". The current market environment is providing a "buy fear" environment for long-term investors. Rather than sitting on the sidelines, investors should actively research stocks.

You dont have to buy stocks on Monday, but if you want to build wealth, you should build and maintain a watch list of stocks you would buy if the price were right.

Read the full analyst report on PGR

Read the full analyst report on XL

Read the full analyst report on VLO

Read the full analyst report on WM

Read the full analyst report on XOM

Read the full analyst report on COP

Read the full analyst report on MRO

Charles Rotblut, CFA, is the Senior Market Analyst for Zacks.com.

The Trading Day Ahead – 09/10/08

Daniel Shepard — Wed, 10 Sep 2008 03:26:19 +0000

At 10:35 AM today, we will be getting the Crude Oil Inventories numbers for the week ending 09/06/08. This will be the first report to reflect the effects of hurricane Gustav and depending on whether or not Wall Street wants to discount this special circumstance, we could see a spike in oil prices. Ahead of [...]

Fedex Raises Q1 Estimates

Daniel Shepard — Tue, 09 Sep 2008 23:08:52 +0000

After the stock markets closed today, Fedex (FDX) announced that it was raising its earnings guidance for the first quarter ending August 31st, to $1.23 per diluted share, from prior guidance of $0.80 to $1.00. The company also reaffirms guidance of $4.75 to $5.25 per diluted share for the full year 2009. According to Alan B. Graf, [...]

SkyPostal Networks, Inc. (SKPN.OB) – Bringing Top-Notch Service to the Mail Industry

QualityStocks — Wed, 03 Sep 2008 23:34:47 +0000

SkyPostal, Inc. (OTCBB: SKPN) is an international mail distribution company specializing in offering hand delivery of mail and periodicals into Latin America and Caribbean (LAC) region. The company is persistent on providing their customers with a consistent, secure and reliable mail delivery service of the highest standards into Latin America through the use of [...]

Deere (DE) Earnings – Why I’m Avoiding Equipment Stocks

Trader Mark — Wed, 14 May 2008 15:59:00 +0000

On this week's earnings preview I wrote this in regards to Deere (DE):Major ag equipment player Deere (DE) - I don't own the equipment stocks anymore; at some point the rising cost of steel, petrol products and the like will be hurting the bottom line ...