Amazon Declines

123jump.com Staff
02 Feb, 2006
New York City

Weaker sentiment ruled market as morning batch of earnings from Comcast and Tyco reported lower than estimated earnings. United flys out of bankruptcy and stocks closes 10% below the opening price. Starbucks raises profit forecast on 10% same-store sales gain. Retailers report better-than anticipated sales in January. Amazon, after the close, reported Q4 earnings of 47 cents vs. 82 cents a year ago. stock falls 10%.

U.S. MARKET AVERAGES

Weak sentiment pervaded the market opening that only got a boost as day progressed.

Weaker than expected earnings from Comcast and Tyco, fall in productivity in the fourth quarter outweighed the fall in initial jobless claims for the previous week leaving market weaker at the opening. Mixed batch of earnings and rising cautious sentiment drove major averages in the negative zone for most of the day.

Nation’s retailers reported healthier January same-store sales. A healthy sales gain of 5.4% across all retail categories was reported by sixty companies. Apparel and teen-age retailers were the best performers. Wal-Mart and Target reported 4.7% and 5.2% same store gains. Nordstrom ((JWN)) reported 6% gain whereas Walgreen reported gain of 7.4%.

United Airline ((UAUA)) listed its stock on Nasdaq stock exchange under the symbol UAUA as it emerged from the longest airline bankruptcy of 36 months. The stock issued to unsecured creditors including management, union employees and certain creditors was priced at $15 and opened near $40 but closed below $36.


MOVERS AND SHAKERS

NutriSystem Inc ((NTRI)), weight management services provider, projected Q4 earnings of 16 cents a share and 2005 of 58 cents a share, both views a penny shy of the analyst estimates. The company forecast Q4 revenue of $69 million to $70 million, above analysts'' forecast of $62 million and 2005 revenue outlook of $212 million to $213 million, also above analysts'' expectations for revenue of $206 million. The stock dropped 14.9%.

Research in Motion ((RIMM)), producer of the BlackBerry wireless e-mail system, said it won a round in a patent dispute with InPro, a Luxembourg patent-holding company. RIM said that InPro had asserted that certain BlackBerry products infringed a United Kingdom patent it held. The High Court of Justice, Chancery Division in London invalidated the claims. The stock fell 1.6%.

SiRF Technology Holdings Inc ((SIRF)), semiconductor company, reported Q4 net earnings of $9.6 million, or 17 cents a share, down 44% from $17.1 million, or 33 cents a share, last year on revenue rise of $54.4 million from $27.5 million. Excluding certain items, earnings came in at 21 cents a share compared with 10 cents a share last year. Analysts had forecast earnings of 19 cents a share on revenue of $52 million. The company’s shares climbed 9.6%.

ECONOMIC NEWS

The Department of Labor released its report on initial jobless claims in the week ended January 28 on Thursday, showing an unexpected decline. The 4-week moving average also fell, reaching its lowest level in over five years.

The report showed that jobless claims fell to 273,000 from the previous week''s revised figure of 284,000. Economists had expected jobless claims to increase to 295,000 compared to the 283,000 originally reported for the previous week.

The Labor Dept. added that the less volatile 4-week moving average fell to 284,250 from the previous week''s revised average of 289,000. This marks the fifth consecutive decline for the 4-week moving average, which fell to its lowest level since June of 2000.

The report also showed that continuing claims fell to 2.509 million in the week ended January 21 from the preceding week''s revised level of 2.573 million. With the decrease, continuing claims fell to their lowest level since February of 2001.

Thursday morning, the Department of Labor released its preliminary report on fourth quarter productivity. The report showed that productivity unexpectedly fell during the final three months of 2005.

The report showed that non-farm productivity fell 0.6 percent in the fourth quarter after rising 4.5 percent in the third quarter. The decrease came as a big surprise to economists, who had been expecting growth of about 1.7 percent.

This marked the first decrease in productivity since a 0.4 percent drop in the first quarter of 2001, and it was also the biggest drop since a 0.9 percent decrease in the third quarter of 2000.

The decrease in productivity came as an increase in hours outpaced an increase in output, with hours rising 1.5 percent in the quarter while output increased by only 0.9 percent. In the third quarter, output increased by 4.7 percent while hours edged up by 0.1 percent.

The report also showed that unit labor costs rose by 3.5 percent in the fourth quarter after falling 0.5 percent in the third quarter. Economists had been expecting a more modest increase in unit labor costs of about 2.8 percent.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks closed largely higher, supported by solid Wall Street gains and strengthening dollar after the interest rate rise which is favorable for the Asian exporter-related issues. The Nikkei soared 1.4% to 16,710.55. Among other regional markets Singapore Straits Times rose 0.45%, while Thailand SET dropped 2.1% and South Korea’s Kospi declined 0.1%. The dollar bought 118.24 yen.

European stocks closed in the negative as early gains on upbeat news from Alcatel and Rio Tinto were erased by losses in the oil sector and disappointing quarterly results from Royal Deutsch Shell. The German DAX 30 slipped 1.3%, the French CAC 40 dipped 1.4%, and London’s FTSE 100 dropped 0.9%.

OIL, METALS, CURRENCIES

Crude oil slipped below $65 a barrel after U.S. and European leaders played down the threat of UN sanction against Iran Light sweet crude for March delivery fell $1.88 to $64.68 a barrel. London Brent lost $1.23 to $63.80.

European gold prices hit a 25-year high on oil rise and inflation worries. In London gold traded at $573.10 bid per troy ounce, up from $565.30. In Zurich the precious metal traded at $572.80, up from $566.20. In Hong Kong gold rose $4.95 to close at $572. Silver in New York closed at $9.87, up from $9.79 and gold closed $3.10 up to $572.50 per ounce.

The U.S. dollar traded mixed against other major currencies. The euro was quoted at $1.2093, up from $1.2057. The dollar bought 118.33 yen, up from 117.94. The British pound stood at $1.7794, up from $1.7732.

EARNINGS NEWS

Starbucks reported a 20% rise in Q1 earnings, topping forecasts. It also raised its earnings outlook after reporting a 10 percent rise in January same-store sales.

Tyco International Ltd. ((TYC)) reported that Q1 net income fell 22% on 1.1% higher sales, missing estimates by a penny a share.

Whirlpool Corp. ((WHR)) announced better-than-expected Q4 profit of $1.83 a share on 9% sales growth, beating estimates of $1.70. The company raised 2006 earnings to $7-$7.25 a share.

Cable TV operator Comcast Corp. ((CMCSA)) posted a 69% drop in quarterly profit. The board of directors approved an additional $5 billion stock buyback program