Media Digest 4/25/2008 Reuters,WSJ, NYTimes, FT, Bloomberg from 24/7 Wallst.
According to Reuters, two Chinese citizens have filed a $1.3 billion suit against CNN(TWX) for insulting the people in their country.
Reuters reports that Honda’s net fell and that the company said the yen would hurt results in 2009.
Reuters writes that Microsoft (MSFT) made a final threat that it “reveal new plans” if Yahoo! (YHOO) will not negotiate a buy-out.
Reuters writest that Wall St. was disappointed by Microsoft’s numbers.
Reuters reports that results at American Express (AXP) fell.
The Wall Street Journal reports that the FHA spent $157 million last year to keep lenders from foreclosing on properties. That numbers is likely to rise.
The Wall Street Journal writes that AOL (TWX) is bringing more people to its website but not getting much greater ad dollars from the extra visitors.
The Wall Street Journal reports that banks increased their use of the Fed’s discount window last week.
The Wall Street Journal writes that the compensation for Countrywide (CFC) CEO Mozilo dropped almost 80% last year.
The Wall Street Journal reports that Delta (DAL) and Northwest (NWA) defended their proposed merger to Congress.
The Wall Street Journal writes that Motorola (MOT) handset sales fell 39% last quarter.
The New York Times writes that foreclosures are spreading to affluent areas.
The New York Times reports that Ford (F) posted a surprise profit.
The New York Times reports that inflation hit a 10-year high in Japan.
The FT writes that TPG is in talks with Merrill Lynch (MER) about putting more money into the brokerage.
Bloomberg writes that shares of Ericsson (ERIC) rallied considerably on strong results.
Shorts Stage Big Retreat From Tech Shares (AAPL)(SIRI)(MSFT)(YHOO)(INTC)(CSCO) from 24/7 Wallst.
According to Nasdaq data for the period ending April 15, short sellers moved aggressively out of tech shares. The figure compare with those posted on March 31.
The short interest in Microsoft (MSFT) fell 9.3 million to 109.1 million, perhaps on hopes that it will lower or drops its bid for Yahoo! (YHOO). Shares short in Intel (INTC) dropped 7.3 million to 55.9 million. The chip company’s results showed that PC sales were not slowing as much as has been expected. Shares short in Cisco (CSCO) dropped 6.8 million to 62.9 million. Shares short in RF Micro (RFMD) dropped 4.9 million to 28.7 million and shares short in Finisair (FNSR) fell 6.8 million to 15.8 million.
Shares sold short in Level 3 (LVLT) moved down 6.7 million to 237.2 million. When the company posted earnings a short squeeze appears to have helped shares rally.
Shares short in Apple (AAPL) fell 3.6 million to 18.4 million ahead of its strong earnings.
In the internet sector, shares short in Yahoo! (YHOO) dropped 5.1 million to 36.1 million, perhaps on hopes that Microsoft will raise its offer. Shares short in Ebay (EBAY) fell 4.9 million to 26.2 million.
Short sellers bet right on Starbucks (SBUX) moved up 4.9 million to 39.8 million on a bet which paid off when the company pre-announced poor numbers.
Some investors clearly think there is no turnaournd at Dell (DELL) coming.Short interest in the company jumped 7.2 million to 49 million. Short sellers also see another set of bad numbers coming out of Sun Microsystems (JAVA). Shares sold short in the company moved up 6.9 million to 33 million.
And, a number of investors showed that they do not think a merger will do much for Sirius (SIRI). Shares sold short in the company moved up 20.2 million to 157.9 million
Data from Nasdaq
The First Good News About Oil In Years: Brazil Discovers Oil, Could Open Sovereign Fund from 24/7 Wallst.
The prevailing wisdom is that oil prices will keep rising. One CIBC analyst recently said it will hit $200 by 2010, driving US gasoline prices to $7.
The Brazilians say they will rescue us from all of that. They claim to have found enough oil to power this hemisphere for ages. According to Bloomberg, Brazil has discovered huge deposits of crude. The news agency writes “Brazil’s discoveries of what may be two of the world’s three biggest oil finds in the past 30 years could help end the Western Hemisphere’s reliance on Middle East crude.”
While the discoveries may not push oil prices back to $50 a barrel, they could help to keep crude from hitting that predicted $200. One of the oil fields appears to contain eight billion barrels of crude. The other has 33 billion, which would make it the third largest oil deposit in the world.
The Brazilian claim becomes even more spectacular. Petrobras, the country’s big oil company, says the field can product enough oil to “supply every refinery on the U.S. Gulf Coast for 15 years.”
The oil fields are far out in the ocean, so drilling them will be difficult, but certainly not impossible.
It maybe hard to separate fact from fiction in terms of how large the new discoveries actually are, but all expert agree that they are mammoth.
The news should come as some great relief. It may give the West some leverage with OPEC. The Brazilians could certainly undercut the cartel to pick up business. Even at $80 a barrel, the South American country would be making tens of billions of dollars a year.
Now, all that remains is for Brazil to create its own sovereign fund with the money it makes from the oil. Then it can buy some American banks.
Asian market recap- Asia Markets 4/25/2008
Markets in Asia were mixed.
The Nikkei rose 2.4% to 13,863. Sony (SNE) rose 5.3% to 4780. Toyota (TM) rose 3.1% to 5290.
The Hang Seng fell .6% to 25,518. China Netcom (CN) fell 2.3% to 23.10. China Petroleum (SNP) dropped 2% to 5.26.
The Shanghai Composite fell 7% to 3,558.
BIDU had earnings last night. BIDU reports Q1 EPS 67c vs. consensus of 60c
Reports Q1 revenue $81.9M vs. consensus of $75.39M. Sees Q2 revenue $111M-$114M vs. consensus of $100.6M. BIDU upgraded to Buy from Hold@SBSH
Citigroup upgraded BIDU following Q1 results and guidance. Target to $415 from $350.
POT: Estimates raised on higher Potash prices@JPMS
JP Morgan expects potash prices to increase to 250/mt in 2008 and $280/mt in 2009. The firm raised POT’s 2008 EPS to $10.50 from $8.95 and 2009 EPS to $18.50 from $11.75. Shares are Overweight rated.
SOHU: Believe SOHU & SINA should discuss a merger@SUSQ
Susquehanna believes SOHU and SINA should discuss a potential merger and prepare for the next three years. The firm said SINA’s and SOHU’s portal model faces a lot of challenges from Web 2.0 sites and vertical players. The firm said a combined entity would be very competitive given SINA’s management’s media background and SOHU’s management’s IT background. The firm expects SOHU to report a strong Q1/Q2 and has raised its price target to $68 from $61. Shares of SOHU are Positive rated.
MSFT had earnings last night that were inline. MSFT reports Q3 EPS 47c vs. consensus of 44c
Reports Q4 revenue $14.45B. vs consensus $14.5B MSFT expects Q4 EPS 45c-48c vs. consensus 48c
Expects Q2 revenue $15.5B-$15.8B vs. consensus $15.56B. Expects FY08 EPS and revenue $2.13-$2.19 vs. consensus $1.87 and $66.9B-$68B vs consensus $60.18B, respectively.
AXP: Reports better than expected Q1@BEST
Bear said Q1 results were a pleasant surprise and that the company has not experienced any difficulties funding its business. Shares are Outperform rated.
MA and V are already moving premarket…here is the pre earnings run.
Now upping their use of the Fed’s discount window: Commercial banks-WSJ
A shift appears to be on as investment banks slow the use of a Fed direct lending program, while U.S. commercial banks use it more, according to the Wall Street Journal. Lending to commercial banks as of Wednesday was $13.46B, strongly up from $8.83B for the previous week. The average daily borrowings were the highest since the September 11, 2001, terrorist attacks. On March 16, the Fed began to lend to investment banks from the discount window, which is typically reserved for commercial banks, which are more stringently regulated.
UPL upgraded to Overweight from Market Weight@TWPT
Thomas Weisel upgraded DNR citing higher oil and gas price forecasts. Target to $108 from $89.
GTXI May volatility Elevated at 131 into data GTXI, Biopharmaceutical Company, is recently up $1.36 to $16.68. Acapodene (prostate cancer treatment in PIN Phase 3 data release is expected soon. GTXI call option volume of 8,369 contracts compares to put volume of 562 contracts. GTXI May option implied volatility is at 131, June volatility is at 105, August volatility is at 89. GTXI average option implied volatility over the last 26-weeks is 103 according to Track Data, suggestin larger price movement.
I am strangling this overweight long going into the data release.
DO: Company is well-positioned for growth@JEFF
Despite Q1 results Jefferies views as disappointing, the firm thinks that higher rig replacement costs and higher deepwater dayrates will enable the company to post impressive EPS growth over the next two years. The firm maintained their Buy rating.
RIMM’s new 3G BlackBerry may be delayed until August-Fortune
Research In Motion (RIMM) is reportedly going to delay the launch of its new hotly anticipated 3G BlackBerry phone, which the company is developing for AT&T (T). The phone, originally supposed to be launched in June, may not be released until as late as August, inside sources say.
BUCY reports Q1 EPS $1.09 vs. consensus of 97c
Reports Q1 revenue $517M vs. consensus of $551.92M.
RIO reports Q1 EPS 41c vs. consensus of 52c.
Reports Q1 revenue $8.05B vs. consensus of $8.74B.
MEE reports Q1 EPS 52c vs. consensus of 33c
Reports Q1 revenue $644.6M vs. consensus of $609.93M. The company projects 2008 produced coal shipments will be between 41.5M and 43M tons, with average produced coal realization between $61.00 and $63.00 per ton.
Pre-Market Movers: Ahead of the Bell from flyonthewall.com
Once again the pre-market session is extremely active with a large number of stocks moving on earnings-related news. We will cover highlights of stocks trading at over $10 only as a result. The biggest volume mover this morning is Ericsson (ERIC), trading up +19.8% after it beat lowered expectations for earnings. Microsoft (MSFT) is trading down (-4.5%) after it missed expectations in its earnings report last night after the close. Progenics Pharmaceuticals (PGNX) is trading up +18.9% after the FDA granted approval for the company’s Relistor. This news will likely positively impact Wyeth (WYE). Apple (AAPL) is trading up +1.2% continuing its move up yesterday following earnings reported Wednesday night. Yahoo (YHOO) is trading down (-1.1%) in sympathy with the down move in Microsoft (merger arbitrage related). SanDisk (SNDK) is down (-0.6%) on no specific news this morning. Baidu.com (BIDU) is trading up +5.3% following better than expected earnings last night. The shares have been following Google (GOOG) higher since its earnings announcement. Lehman (LEH) is trading up +1.66% on a relatively lukewarm piece in the WSJ this morning on the prospects for share price recovery. Research in Motion (RIMM) is trading down (-0.7%) after a piece in Fortune suggested the company may delay the introduction of its much anticipated 3G BlackBerry phone. :
Apple to introduce new iMacs next week?-GeekSugar
According to GeekSugar’s tipsters, Apple (AAPL) will most likely unveil new iMacs to their product line-up. The announcement for the new iMacs, which will likely be at the same price point as current models and receive a hard-drive increase, could occur on Tuesday.
MYGN August volatility Elevated into Alzheimer’s data MYGN closed at $40.35. MYGN’s Flurizan (Alzheimers treatment) data is expected in May/June 2008. MYGN is scheduled to release Q3 EPS on May 6. MYGN May option implied volatility is at 40, June is at 64 and August is at 81; above its 26-week average of 52 according to Track Data, suggesting larger price uncertainty.
Will keep an eye on.
Today my focus will be on the 4 Horsemen plus BIDU and big time hawk on MA and V. I am planning tentatively to strangle overweight long on V and MA going into earnings, trying to catch some pre earnings run on them both hopefully. MA earnings is before the bell monday and V is after the bell Monday. We are awaiting data on GTXI for prostate cancer and have a strangle overweight long there as well. DECK did really good on earnings but the option premiums were not very good going into the event. OIH and energy will be watched with some geopolitical events going on. I am keeping an eye on GS and the brokers with financials(XLF).
Stay focused on your goals and keep strong and positive. Watch the market tides and look for high probability plays and setups. Great day and great Luck to you!
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