The housing data reports will continue to come in today. But more importantly, we will get jobs numbers to provide a picture into that sector of the economy. Most of Wall Street is probably off for the weekend by now and we would imagine that means some of the computers are shut down for the holiday as well. We expect to see light trading from here on out barring any big news like we have already received this week from the likes of Groupon (GRPN), Intel (INTC) and Hewlett Packard (HPQ).
We have economic news due out today and it is as follows:
MBA Mortgage Index - N/A
Initial Claims - 423k
Continuing Claims - 3400k
Michigan Sentiment - Final - 84.5
Leading Indicators - 0.2%
Crude Inventories - N/A
Asian markets finished mixed today:
All Ordinaries - down 0.38%
Shanghai Composite - up 1.07%
Nikkei 225 - up 0.87%
NZSE 50 - down 0.04%
Seoul Composite - down 0.32%
In Europe markets are also mixed this morning:
CAC 40 - up 0.19%
DAX - up 0.09%
FTSE 100 - down 0.05%
OSE - down 0.08%
Watching shares of Best Buy (BBY) trade is like watching a train wreck in slow motion. For as much as we wish to look away, we cannot. Shares fell yesterday (Tuesday) by another $1.39 (13.02%) to finish the session at $11.96/share as the company traded 32.8 million shares. The market already had low expectations, but Best Buy announced that it has lower free cash flow for 2013 as well as a continuation in its deteriorating sales this quarter. The company is experiencing heavy competition from big box discounters as well as online players- at the same time that consumers' tastes are shifting from higher margin products to those sporting thin profit margins. All-in-all we are not surprised that shares hit another 52-week low yesterday.
One bright spot yesterday was Krispy Kreme Donuts (KKD) which saw shares rise $1.77 (23.47%) to close at $9.31/share on volume of 9.4 million shares. The company announced higher same store sales, which keeps intact its ongoing streak of 4 years of rising same store sales, quarter over quarter. Investors were also surprised by the company raising its 2013 full year guidance. It looks like a good story here as the company is using top line growth to drive results and not the cost-cutting implemented by many others to meet their numbers. This will be a name to watch moving forward.
Hewlett Packard was the big story yesterday as shares fell $1.59 (11.95%) to close at $11.71/share on volume of 154.7 million shares after the company announced its earnings yesterday along with the news that there appears to be fraud associated with the acquisition of Autonomy. At this time, and based on forensic accounting, it looks like there were issues with when revenue was recognized coupled with the company improperly accounting for cost of goods sold for hardware the company sold to clients. It looks like a big mess after the charge that HP took for the quarter and one has to wonder how far this sets the company back in its turnaround plan. It is certainly unwanted attention for a company under plenty of scrutiny already with the revolving door for the Chief Executive Officer position and ever changing business strategy. The company also set a new 52-week low yesterday.
Groupon shares rebounded $0.26 (8.36%) yesterday to close at $3.37/share on volume of 30.9 million shares after it was disclosed that the company has a new 9.9% shareholder. Yes it is a vote of confidence, but the purchase does not really change anything in our view at this time. We do not view a new large shareholder as reason enough for readers to initiate a long position in the stock at this time as we think that the company will continue to face headwinds in its growth strategy.
One has to seriously wonder what is going on at Intel these days. The company's CEO will retire in six months and yesterday the company's shares closed down $0.74 (3.65%) to close at $19.51/share while also setting a new 52-week low during the trading day. This probably would have been a lead story yesterday if not for the HP news and the fraud which appears to have taken place there.
Intel dominates the PC and laptop markets while wireless continues to be a weak spot in the company's product offerings. For all the years worth of trying, Intel has relatively little to show for its efforts, but investors have to wonder when the company will finally make inroads into tablets and mobile devices in a significant way and in markets which matter. If the company can begin to steal market share in the U.S, Europe and Asia, then today's prices will look like a bargain. However, if it fails to do this over the next few years, then we may very well see the stock price languish here for years to come.