Market Focus on Earnings

123jump.com Staff
20 Apr, 2006
New York City

Market is slowly but surely refocusing on earnings. General Motors stock gained 10% on loss of 57 cents vs. $2.22 a year ago. EBay after reporting lower earnings lost 9%. Intel faced a barrage of questions on chip inventories, lower gross margins and coming price war in the conference call. Altria and Bank of America rose a fraction.

[R]3:30PM GM trades up 10% and eBay trades 9% lower.[/R]
Earnings finally managed to rise on top of investors. Flood of earnings continued for the third day of this week. Intel and Motorola did not meet investor’s expectations. eBay fell close to 9% on lower earnings and weaker guidance. eBay discussed the roll out of eBay Express during the conference call. The company also stated that Paypal is now approximately 25% of the company revenue. Skype, Internet based audio service added 20 million new users.

Intel ((INTC)) reported lower earnings and declining revenue for the first quarter and also guided lower revenue in the second quarter. During the conference call the company accepted that it has lost market share in the last three quarters to Advanced Micro Devices and that it will take two more quarters to work through the inventory build of chips. The company also sounded optimistic tone that the in the third and fourth quarter on the strength of new products at 65 nanometer level will increase sales.

General Motors stock rose 10% on lower loss of 57 cents vs. $2.22 per share on revenue rise of 14% to $52.2 billion. World-wide auto operations reported a net loss of $929 million vs. $1.98 billion. The North American Auto operation reported a loss of $987 million compared to $1.74 billion loss a year ago. The current quarter loss includes a healthcare related charge of $1 billion, pre-tax.


[R]12:30 European markets finished mixed.[/R]
European markets closed mixed, reflecting strong earnings results from mobile giant Nokia, positive news from the French media company Vivendi Universal, and a sharp decline in metals prices. Technology stocks rallied after Nokia rose 6% on net profit jump of 21% and 29% sales growth. Semiconductor stocks like Infineon and STMicroelectronics also provided support. The German DAX 30 led advancers, rising 1.1%, followed by the French CAC 40, up 0.9%, while London’s FTSE, lost 0.1%, dragged by 4% decline in the stock of Randgold Resources, Vedanta Resources, and Rio Tinto.

Crude oil prices retreated on profit taking after reaching record-high of over $74 a barrel in London. Light sweet crude May delivery declined $1.27 to $70.90 a barrel. London Brent dropped $1.24 to $72.50. European gold came off record highs on heavy profit taking. In London gold fell to $613.30 per troy ounce from $627.20. In Zurich the precious metal slipped to $614.80 from $627.35. In Hong Kong gold surged $21.40 to close at $645.40. Silver fell to $12.80 from $14.40. The U.S. dollar traded higher vs. major currencies. The euro traded at $1.2295, down from $1.2380. The dollar bought 117.54 yen, up from 117.28. The British pound was quoted at $1.7763, down from $1.7915.

[R]11:30AM The Dow and S&P advanced. The Nasdaq fell..[/R]
In late morning trading the three major indices turned in a lackluster performance. The tech-heavy Nasdaq posted a modest decline, while the Dow and the S&P 500 moved higher. Some technology stocks showed notable weakness helping to drag the sector lower. Networking stocks moved considerably lower, with Juniper ((JNPR)) turning in one of the sector''s worst performances. Losses by biotechnology and internet stocks also contributed to the downward move by the Nasdaq. Gold stocks were other notable decliners as investors turned to profit taking after the price of the precious metal retreated from $649 to $619 an ounce. Energy stocks were also driven down by decrease in oil price and consolidation of recent gains. Crude for May delivery was last traded down $0.82 at $71.35 a barrel. Among advancing stocks, shares of General Motors (GM) rose by 7% supporting the Dow. Hewlett-Packard ((HPQ)) and Merck ((MRK)) also posted notable gains. The health insurance and utilities sectors showed considerable strength, with Aetna ((AET)) and Health Net ((HNT)) helping to lead the health insurance sector higher. In late morning trading, the Dow Jones industrial average rose 61.15, or 0.54 percent, to 11,339.92. The Standard & Poor''s 500 index rose 1.28, or 0.1%, and the Nasdaq composite index fell 9.13, or 0.39%. Bonds were lower, with the yield on the 10-year Treasury note at 5.04, up from 5.03% Wednesday.


[R]10:30AM Sensex in India close at record high above 12,000.[/R]
Sensex jumped 143.57 points or 1.2% to settle at a new high of 12,039.55 on the heels of 9% rise in Reliance Industries Limited. However rally failed to broaden to the rest of the stocks in the index, only 12 of 30 stocks in the index closed higher. Daily turnover in the market was slightly lower at $1.1 billion. Sensex has been adding every successive 1,000 points gain in fewer and fewer days. It took only 19 sessions to rise from 11,000 to 12,000. Reliance Industries Limited rose 9% at close to Rs. 994.40 on the news that Chevron is likely to increase its share in the Krishna-Godavari oil fields. Stock traded up on a large volume of 6.3 million shares. Unsubstantiated rumors kept market buyers on the edge as the local newspaper reports are still unconfirmed.

Several stocks registered gains as Reserve Bank of India allowed foreign investors to raise their stakes in Hindi language newspaper publisher Jagran Prakashan and electric power trader PTC India. Jagran rose 8% to close at Rs. 308 and PTC rose 6% Rs. 69. Hexaware technologies rose 6% on earnings rise of 69% and Satyam Computer rose 2% ahead of earnings release. Most software stocks however fell after a sustained rally for the last three days. TCS lost 1.2%, Infosys dropped and Wipro edged lower 1.4% at close. Biocon, local biotech firm, reported earnings rise of 1.5% on earnings rise of 14%. Tata Steel rose 6% Rs. 646 and Tata Motors rose 3% to Rs. 951 at close. Tata Motors had faced volatile trading in the last ten days of trading on rising price of petrol and crude oil.


[R] 9:45AM Stocks opened mixed.[/R]
Stocks opened in a lackluster fashion at the start of Thursday session. Quarterly earnings released by General Motors ((GM)) and Merck ((MRK)) lifted the Dow Jones index, but record-high oil process hurt the broader market. General Motors gained 7% after the automaker reported its sixth straight quarterly loss, but record revenues. Drugmaker Merck & Co. reported an 11% jump in Q1 profit. Transportation stocks advanced, supported by earnings news. The railroad sector sent the group up with Union Pacific ((UNP)) rising on better-than-expected quarterly earnings. CSX ((CSX)), extended yesterday’s gains made on the back of positive earnings news. Trucking companies also showed strength, including a gain of more than 3.5% from J.B. Hunt Transport Services. The gold sector stood out as the worst performer in early trading, reflecting profit taking after the rally over the past week that took the sector to a new peak. Meanwhile, the housing sector moved further down, extending Wednesday''s weakness. In the first hour of trading, the Dow Jones industrial average rose 11.13, or 0.1%. The Standard & Poor''s 500 index fell 0.70, or 0.05%, and the Nasdaq composite index fell 6.98, or 0.29%. Bonds were flat, with the yield on the 10-year Treasury note at 5.03%.


[R]Initial jobless claims fell deeper-than-expected.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended April 15, showing that claims fell more than economists had been expecting. The report showed that initial claims fell to 303,000 from the previous week''s unrevised figure of 313,000. The decrease exceeded the expectations of economists, who had been expecting a more modest decline to 310,000. The 4-week moving average also fell for the week, dropping to 305,250 from the previous week''s unrevised average of 307,500. With the decrease, the moving average moved lower for the fourth consecutive week. The report also showed that continuing claims rose to 2.439 million in the week ending April 8 from the preceding week''s revised level of 2.421 million


[R]9:00 AM Stock futures indicated a positive opening.[/R]
Stock futures pointed to a higher start, lifted by quarterly reports from a number of big companies. Shares of Apple ((AAPL)) gained in pre-market trading on better-than-expected Q2 earnings, citing strong sales of its iPod players. Apple reported earnings for the quarter of 47 cents per share on $4.36 billion in revenue vs. expectations of 43 cents per share on $4.52 billion in revenue. Nokia ((NOK)) also moved higher after reporting strong Q1 profit and sales growth. The company also said that it increased its device market share to 35%. Shares of Intel ((INTC)) also moved higher, despite reporting lower Q1 earnings and forecast Q2 and full year sales below analyst estimates. General Motors ((GM)) gained after the company reported narrower profit loss for the Q1. Other companies which released earnings were eBay ((EBAY)), Continental Airlines ((CAL)), Merck ((MRK)), Bank of America ((BAC)), and UPS ((UPS)).

Crude oil prices jumped over $72 on petroleum report which showed declining crude and gasoline stocks. Light sweet crude May delivery climbed to $72.49 a barrel. London Brent hit a record high of $74.22. European gold extended gains over $600 on strong energy market and geopolitical worries. In London gold climbed to $644.50 per troy ounce from $627.20. In Zurich the precious metal rose to $642.53 from $627.35. In Hong Kong gold surged $21.40 to close at $645.40. Silver fell to $14.30 from $14.40. The U.S. dollar traded higher vs. major currencies. The euro traded at $1.2349, down from $1.2380. The dollar bought 117.55 yen, up from 117.28. The British pound was quoted at $1.7831,down from $1.7915.

General Motors, ((GM)), automaker, reported a Q1 loss of 57 cents a share, up from loss of $2.22 a share a year-ago. Q1 included a $1.20 a share charge for a healthcare settlement for its retired workers. GM added that special items came to an increase of 37 cents a share, including its sale of stake in Suzuki. The company said its adjusted loss, including the health care charge but excluding the special items, totaled 94 cents a share. The company didn’t meet analysts’ forecasts for a GM loss of 44 cents a share. GM announced that sales advanced 14.1% to $52.2 billion.

EMC Corp, ((EMC)), storage networking company, reported Q1 earnings of $275.2 million, or 11 cents a share, up from a profit of $269.8 million, or 11 cents a share a year-ago. If not for charges and expenses related to stock option compensation, the company earned 16 cents a share in Q1, up from a year-ago equivalent profit of 12 cents a share. Analysts expected a profit of 11 cents a share, including the options expense. Revenue advanced 14% in Q1. The company also added it plans to buy back up to $2.5 billion worth of its common stock through the rest of this year.

Textron Inc, ((TXT)), provider of products and services in industry, reported Q1 net income advanced 33% to$1.26 a share, from 91 cents in the year-ago period on 16% revenue growth. Earnings from continuing operations almost doubled to $1.19 a share against 61 cents. The company topped analysts’ views for earnings of $1.06. Revenue grew to $2.63 billion from $2.27 billion.

Bank of America Corp., ((BAC)), banking services company, reported that its net income grew 14% to $4.99 billion from $4.39 billion a year ago. Earnings per share remained unchanged from the same period last year at $1.07. Q1 results include 5 cents a share in expenses for a new rule for options accounting. The company beat analysts’ expectations for the company to earn $1 a share, including the options expensing cost.

Marriott International Inc, ((MAR)), hotel operator, reported that Q1 net income dropped 55% to 29 cents a share, in the wake of a one-off after tax charge of $105 million resulting from the adoption of new accounting rules. Adjusted net income advanced 31% to 76 cents a share, topping on that basis analyst estimate of 72 cents a share. Total revenue for Q1 advanced 7% to $2.71 billion. The company added that hotel industry supply in North America is growing modestly, but it is taking a greater share of new hotels being developed internationally.

Schering-Plough Corp, ((SGP)), pharmaceutical producer, reported that Q1 earnings tripled to 24 cents a share, from 7 cents a share in the year-ago period on 7.7% higher sales. Q1 figure includes 2 cents for costs of stock-based compensation. The company topped analysts’ estimate of 14 cents for Q1.

Nokia Corp, ((NOK)), maker of mobile phones, reported Q1 net profit advanced 21% to 0.25 euros a share from a year ago owing to 29% sales growth. Mobile phone sales grew 30% to 5.87 billion euros while enterprise solutions sales dropped 39%. Operating margin dropped to 14.4% from 15.1% a year ago. Nokia''s device market share advanced by 3 percentage points to 35%.

Orbital Sciences Corp., ((ORB)), commercial and military rocket manufacturer, reported Q1 net income advanced 43% to 14 cents a share on 15% revenue growth, beating analysts forecasts for earnings of 12 cents a share.

Danaher Corp, ((DHR)), manufacturer of industrial tools, reported Q1 net income of 67 cents a share, up from 58 cents in the year-ago period. Adjusted profit for Q1 came at 66 cents a share, up about 20%, while sales totaled $2.14 billion, up 17.5% from $1.83 billion in the prior year quarter, including growth from existing businesses of 7.5%. The company beat analysts’ estimates for earnings of 65 cents a share.

Barnes Group, ((B)), maker of precision metal components, reported Q1 net income advanced 61% to 73 cents a share on 9.5% revenue growth. The company now envisages 2006 earnings between $2.55 and $2.65 a share, up by a nickel.

[R]8:15AM European average advanced at mid-day.[/R]
European markets posted gains at mid-day, reflecting strong earnings results from mobile giant Nokia and positive news from the French companies like Vivendi Universal and Groupe Danone. Technology stocks were leading gainers as Nokia rose 6% on net profit jump of 21% and 29% sales growth. Semiconductor stocks like Infineon and STMicroelectronics provided support. The French CAC 40 led advancers, rising 0.7%, followed by the German DAX 30, up 0.4%, and London’s FTSE, up 0.2%.

[R]7:45AM Asian markets closed mixed.[/R]
Asian-Pacific benchmarks closed mixed with the Nikkei reversing from yesterday’s advance to finish down 0.2% to 17,317.53. The Japanese index was dragged down by new record-high oil prices which hurt energy-sensitive stocks like Oji Paper which dropped 2%. Banking stocks also stood out among losers, ending a winning streak earlier in the week with Mizuho Financial Group falling 1.3%. In addition, economic data showing that trade surplus fell for the first time in four years further weighed. However, strong commodities stocks helped limit losses with Nippon Mining Holdings fell 1.35. Across the region, South Korea’s Kospi dropped 0.4%, Singapore Straits Times lost 0.3$, while Hong Kong’s Hang Seng added 0.1% on metals stocks.