A one-page summary of this morning's key market- and stock-moving stories. Headlines link to the original article. Use Wall Street Breakfast as a starting point, and check the original before trading.
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New-Home Sales Jumped 5.3% Last Month as Prices Plunged [Wall Street Journal]
Summary: According to the Commerce Department, yesterday's 9.7% drop y/y (to a median price of $217,000) in new-home prices is the sharpest drop since 1970. Perhaps reflecting a price-bottoming, new-home sales were up for the second straight month, jumping 5.3% (to 1.075M annually). Inventories of unsold homes decreased 1.9% over August, the biggest decline since 2000. Economists from the National Association of Home Builders predicted that prices will continue to drop until at least 2008 -- the first time they have ever predicted a decline -- citing overbuilding, overpricing, and rising inventories. "Permits are in free-fall," David Seiders, their chief economist said, adding he anticipated some kind of housing correction, but "it happened a lot sooner than I expected." David Berson of Fannie Mae said prices may not rebound until 2009, calling them, "out of whack with income growth." Mark Zandi of Moody's though doesn't see a crash as imminent. "Corrections devolve into crashes when bankers dump properties," he said. And that is less likely to happen today, since most homeowners have sizable equity in their homes and are unlikely to default on their loans. In a closely watched report expected to be released today, McGraw-Hill Construction is expected to forecast the first decline in overall construction spending since 1991: a 1% drop in new construction in 2007 to $668B, driven by a 5% fall in new-home construction, and a 3% slide in stores and shopping centers. Construction accounts for almost 10% of economic activity; its contraction could have a ripple effect. Some of the nation's largest homebuilders are downsizing staffs: Pulte Homes Inc. said yesterday it has reduced its work force by about 10% (1,400) since Jan. 1. Centex Corp. said this week that its work force has been reduced by about 10% since April 1. Also yesterday former Fed Chairman Alan Greenspan said he saw "early signs of stabilization" in the housing market, noting that a weekly index of applications for home-purchase mortgages has "flattened" at relatively high levels.
Related links: More WSJ commentary: ECONOMISTS REACT • Home Prices Seen Dropping Through 2007 • Home Prices Keep Sliding; Buyers Sit Tight • Seeking Alpha commentary: New Home Sales: Look at Bigger Picture, Mortgage Applications • David Fry's Daily Market Outlook • Home Prices Plummet, Though California Bucks Trend • Eye On Existing and New Home Sales
Potentially impacted stocks and ETFs: Pulte Homes Inc. (NYSE:PHM), Centex Corp. (CTX), Lennar Corp. (NYSE:LEN), KB Home (NYSE:KBH), DR Horton Inc. (NYSE:DHI), Beazer Homes USA Inc. (NYSE:BZH), Toll Brothers Inc. (NYSE:TOL) • streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB)
TECHNOLOGY AND INTERNET
MySpace, ByeSpace? [Wall Street Journal]
Summary: In an apparent backlash, social networking website MySpace is seeing a decline in visitors and the deletions of pages by members as users tire of the vast community. Like competitor Facebook, MySpace is confronted with the problem of too much success: its population is now so huge that it is no longer effectively linking its target audience to like-minded people. To make matters worse, the site's large hit numbers have lured ad spammers who are effectively alienating the site's faithful. Both MySpace and Facebook lost visitors in September: unique visitors to MySpace fell 4% to 47.2 million from 49.2 million in August, and visitors to Facebook fell 12% to 7.8 million. Seasonality is partly to blame, since the college-student audience is returning to school. But Judit Nagy, VP of consumer insights at Fox Interactive Media, which oversees MySpace, points out that the problem is more fundamental than that: MySpace is "moving from a growth spurt into a phase of maturity," which might imply that the site is approaching saturation. For its part, Facebook has made some strategic moves recently that have irked its users -- particularly its announcement last month that the site will now be open to anyone and not solely to college students. Traffic to MySpace inched up 3.1% in Q3 versus a 45% jump in the same quarter a year ago while Facebook's traffic fell 1.7% versus 11% growth last year. Despite the slowdown, Internet behemoths are still sweet on the sites: Google recently agreed to deliver at least $900 million in ad revenue over 3½ years to News Corp. for the right to broker advertising that appears on MySpace and other sites, while Microsoft has struck a deal to be the exclusive provider of advertising to Facebook.
Related links: RBC: MySpace Soon Worth $10-20 Billion for News Corp. • Google's MySpace Deal Is Better Than Reported • News Corp: Pay Attention to the MySpace Factor • MySpace Should Grab Ad Bucks From Google-YouTube • Value of Facebook vs. YouTube - and Why Microsoft Still Doesn't Get It • Why Facebook's Even More Attractive Than YouTube
Potentially impacted stocks and ETFs: News Corp. (NASDAQ:NWS), Google Inc. (NASDAQ:GOOG), Microsoft Corp. (NASDAQ:MSFT) • First Trust IPOX-100 Index (NYSEARCA:FPX), First Trust Dow Jones Internet Index (NYSEARCA:FDN), iShares S&P Global Technology (NYSEARCA:IXN), iShares Russell 1000 Growth Index (NYSEARCA:IWF), iShares Russell 3000 Growth Index (IWZ)
Summary: Reporting on TheStreet.com's recent quarter reads like A Tale of Two Companies. From TheStreet.com's own writeup of its earnings, written by TheStreet.com Staff Reporter Nat Worden, one would think the company posted a quarter filled only with positives. Here they are: the company earned its most ad revenue in six years ($3.7 million), nearly doubled its prior-year period EPS (from $0.06 to $0.11) and reported net income of $3.1 million on overall revenues of $12.9 million (up from $8.2 million a year earlier). Additionally, TSCM posted a 77% gain in advertising revenue, a 49% gain in revenue from subscriptions to premium services and "other" revenue increases of 108%. Based on TheStreet.com's writeup, the fact that shares plunged $1.80, or nearly 15%, on more than five times the normal volume, makes little to no sense. In Reuters' writeup, TheStreet's recent quarter is viewed as being essentially "in-line," with EPS matching Thomson Financial consensus estimates and revenue coming in at just a shade over expectations. Furthermore, analysts quoted in the Reuters piece (something TheStreet's piece failed to include) had the following to say: "In a note to clients, Avondale Partners downgraded its rating on the company to 'market perform' from 'market outperform', primarily citing decelerating traffic and declining subscriber metrics. Analyst Frank Gristina noted page views increased 51 percent over the year-ago period but were down 10 percent sequentially and this could impact advertising revenue." And David Jackson noted that "the Cramer Mad Money effect that has benefited TSCM's stock seems to be waning."
Related links: TheStreet.com Q3 2006 Earnings Call Transcript • David Jackson Says the Cramer/Mad Money Effect is Waning • CNET's Traffic Collapse and TheStreet.com • The Short Case for TheStreet.com • TheStreet.com Q3 Profit Nearly Doubles [paidcontent.org] • Thomson to Sell Unit, TheStreet.com's Q3 Results Disappoint [Yahoo! Indie Research]
Potentially impacted stocks and ETFs: TheStreet.com (TSCM), Morningstar (NASDAQ:MORN), Value Line (NASDAQ:VALU), FactSet Research Systems (NYSE:FDS), Track Data Corporation (OTCPK:TRAC), Interactive Data Corp. (Pending:IDC), EDGAR Online (NASDAQ:EDGR)
Microsoft: Q1 Earnings Up 11 Percent [Business Week]
Summary: Microsoft Corp. saw an 11% rise in fiscal Q1 earnings thanks to stronger sales of server software and some cost savings. For the three months ended Sept. 30, Microsoft earned $3.48 billion, or $0.35 per share, versus the Street's expectation of $0.31 per share. That compares with earnings of $3.14 billion, or $0.29 per share, in the same period a year earlier. Revenue for fiscal Q1 was $10.81 billion, an 11% increase over $9.74 billion a year earlier. Shares rose $0.21 (less than 1%) in after-hours trading. Net income benefited from better-than-expected investment income and a reduction in spending, although the company warns that some of the saved money will be spent in the current quarter on marketing. The company also enjoyed higher-than-expected revenue from server software and the Xbox videogame arm, where revenues shot up by 70%. For fiscal Q2, Microsoft anticipates EPS between $0.22 and $0.24, reflecting a hit of approximately $0.11 to reflect the deferral of about $1.5 billion in revenue to fiscal Q3. The deferral is planned because Microsoft will be offering computer purchasers coupons for free or discounted upgrades to the new versions of its Windows operating system and Office business software. Neither Windows Vista, the company's new operating system, nor Office 2007 will reach consumers until January, and the coupons are intended to entice shoppers to purchase Windows-powered computers as holiday gifts despite their obsolete software.
Related links: Microsoft F1Q07 (Qtr End 9/30/06) Earnings Call Transcript • Insight From Microsoft's 10-Q • Microsoft's Earnings from a Value Manager's Perspective • Microsoft Discusses Search and Online Acquisitions • Microsoft Releases IE7, Hopes to Gain Back Browser Market Share • Microsoft: "The Younger Audience Is Our Future" • Microsoft Gets Boost From Xbox Sales [Wall Street Journal] • Tepid Tidings [Wall Street Journal]
Potentially impacted stocks and ETFs: Microsoft Corp. (MSFT) • iShares S&P 500 Index (NYSEARCA:IVV), iShares Russell 1000 Index (NYSEARCA:IWB), streetTRACKS DJ Wilshire Large Cap (ELR)
Summary: Sun Microsystems reported a narrower loss in its fiscal first quarter, losing $56 million, or $.02/share -- beating the Street's -$.04/share estimate -- on a 17% increase in revenue to $3.19 billion, compared to last year's Q1 loss of $123 million, or $.04/share. Sun said its cost cutting efforts and market acceptance of its Solaris 10 operating system and Sun Fire servers are confirmation of its business strategy. Sun gained 2.1% of server market share over the first quarter to 12.9%. Sun also credits its quarterly revenue increase to its acquisitions and growth in its services business. Some analysts are concerned whether Sun's customer base is broad enough to withstand a slowdown in tech spending. Sun's shares gained 1.13% to close at $5.36, setting new 52-week intra-day ($5.48) and closing highs.
Related links: Sun Microsystems F1Q07 Earnings Call Transcript • Additional earnings coverage: Red Herring, Reuters, WSJ • More On Why Sun's Blackbox is the Future of Commoditized Computing • Sun Microsystems' Data Center in a Shipping Container Will Transform Corporate Computing • Prudential Initiates Coverage of IT Hardware Sector, Underweight Sun • Sun Microsystems Shines With Stock Options Disclosure • Sun Still Searching For a Profitable Business Model
Potentially impacted stocks and ETFs: Sun Microsystems (NASDAQ:SUNW), Advanced Micro Devices (NASDAQ:AMD), Dell (NASDAQ:DELL), Hewlett-Packard (NYSE:HPQ), IBM (NYSE:IBM), Microsoft (MSFT), Internet Architecture HOLDRs ETF (NYSE:IAH)
Web upstart causes Utek plunge [St. Petersberg Times]
Summary: A scathing in-depth report on Billionare Marc Cuban's (pictured) upstart website dealt technology transfer company UTEK Corp. a tough blow yesterday as it sent shares tumbling 36%. The purpose of Cuban's site is to expose false or shady financial reporting among publicly-traded companies; he makes no secret of the fact that he shorts shares prior to making the reports public. In this case, Cuban shorted 75,000 shares of UTEK at around $20; shares closed at $12.15 yesterday meaning Cuban stands to have made a hefty 1-day profit of just under $600,000 had he closed out his entire short position. Among the charges leveled against UTEK in the ShareSleuth piece: "the stated values of the stock that Utek received through its technology deals with numerous small companies should be examined closely" since these represent a large portion of its total revenue, as should the company's financial reports. ShareSleuth's last report also had devastating effects - shares of Xethanol dropped nearly 30% following its appearance.
Related links: ShareSleuth.com Article on UTEK Corp. • Sharesleuth's Recent Report Aside, Xethanol was Definitely Overpriced • Xethanol Shares Plummet After Sharesleuth.com Story Appears: Coincidence?
Potentially impacted stocks and ETFs: UTEK Corp. (UTK)
Summary: Sprint Nextel shares rose 6.66% yesterday on what was generally perceived as a weak earnings report. The company reported a 52% decline in 3Q net income, on a loss of local revenue contributions from its local telephone business, which was spun off in May. The wireless-service provider also reported a sharp fall in subscriber growth from the second quarter, adding only 233,000 new subscribers total (vs. 700,000+ last quarter), including cancellations (which increased from 2.1% to 2.4%). Sprint's new subscriber growth paled in comparison to Cingular Wireless' announcement it added 1.4 million new subscribers during the last quarter. Verizon Wireless is also expected to announce sizable gains to its wireless subscription service, though it has yet to officially report on the matter. On the conference call, Sprint explained the weak subscription numbers a result of its plans to focus on higher-credit customers, in an effort to boost profitability. Sprint is also undertaking capital expenditures that will cut into margins in the near term including improving its network infrastructure to improve call quality, a plan to offer aggressively priced cellular phones in the fourth quarter, and an acceleration in its wireless-broadband deployment. None-the-less, full-year capex forecasts of $7 billion to $7.1 billion were maintained. Will all the negatives, Sprint only missed consensus EPS estimates by 1 cent leading investors to breathe a sigh of relief that things weren't worse and bid the shares up $1.18, or 6.66% to $18.90, in composite trading.
Related links: Sprint Nextel Q3 2006 Earnings Call Transcript • Sprint's Defection Rate Spells Trouble • Sprint Nextel: All You Need is Patience • Rob Black's Telecom Stock Report • Sprint Nextel Net, Hit by Unit Spinoff, Tumbles by 52% [WSJ]
Potentially impacted stocks and ETFs: Sprint Nextel (NYSE:S), Verizon (NYSE:VZ), AT&T (NYSE:T), BellSouth (BLS), Comcast (NASDAQ:CMCSA) • Vanguard Telecommunication Services (NYSEARCA:VOX), Wireless HOLDRS (NYSEARCA:WMH)
Matsushita Electric Profit Doubles on Plasma TVs [Bloomberg]
Summary: Second-quarter profits for the world's largest consumer-electronics maker, Matsushita Electric Industrial Co., more than doubled (79B yen / $670M) from a year earlier. Matsushita stretched its lead in plasma TVs by expanding capacity and focusing on high-definition models; it sold 780,000 plasma TVs in the quarter, more than the combined total of rivals LG Electronics Inc. and Samsung Electronics Co. Plasma TV is a $21.6B industry; global sales are forecast to rise another 43% this year. Sales revenues of flat-screen sets increased 22%; in units-sold, the company reported a 70% increase. The company clobbered consensus estimates of 55B yen; pre-earnings, its shares closed down 1.8% yesterday, and have slid almost 10% in the past six months, vs. a 2.6% drop in the Nikkei. Matsushita retained its 23% growth forecast.
Related links: Earnings Conference Call Transcripts: AU Optronics Q3 2006, LG.Philips Q3 2006, Philips Q3 2006, Sony F2Q06 • LG. Philips Q3 Earnings Summary • Sharp Q2 and 1H Earnings Summary • Sony Q2 Earnings Summary • The LCD Glut Continues As Industry Leaders March Forth Clueless • N. Korea Threat Helps Japan's Exporter Stocks via Weaker Yen • LCD TV Battle Heating Up in Japan • Japanese Tech Stock Weekly Update • Plasma's Bad Quarter - Good News For LCD • Matsushita's Upside Could Be Limited
Potentially impacted stocks and ETFs: Matsushita Electric Industrial Co. Ltd. (NYSE:MC), AU Optronics (NYSE:AUO), Hitachi (HIT), Koninklijke Philips Electronics NV (NYSE:PHG), Sharp Corp. (OTCPK:SHCAY), Sony Corp. (NYSE:SNE) • BLDRS Asia 50 ADR Index (NASDAQ:ADRA)
Summary: Exxon Mobil, enjoying the fruits of high crude prices, posted Q3 earnings of $10.49 billion -- the second-largest quarterly profit ever recorded by a publicly traded U.S. company. Exxon Mobil is on track to end the year up $40 billion, the highest annual profit ever recorded in the U.S. Net income was $1.77 per share for the quarter, up from $9.92 billion, or $1.58 per share, a year ago, and besting Street expectations of $1.59. XOM shares rose $0.46 to $71.47 yesterday after rising to a new 52-week high of $72.33 earlier in the session. Revenue fell to $99.59 billion from $100.72 billion a year ago, but the quarterly figure still exceeded the annual GDP of several major oil producing nations, including the United Arab Emirates ($98.1 billion) and Kuwait ($52.76 billion). The bulk of the company's profits come from oil and natural-gas production outside the U.S., with rising production in Africa, the Middle East and Russia offsetting shrinking output in the U.S., Canada and Europe. The average price at which Exxon sold a barrel of oil was $65.14, up 12% from a year earlier, but nearly flat compared with Q2 -- suggesting that the heady days of astronomical oil prices may be drawing to a close. Royal Dutch Shell PLC said its Q3 profit fell 34% to $5.94 billion even as revenues rose 10% to $84.3 billion, ConocoPhillips reported a 2% profit rise to $3.88 billion, and BP PLC reported a 3.6% drop in earnings to $6.23 billion.
Related links: ExxonMobil Q3 2006 Earnings Call Transcript • Oil Prices Headed Back Up After the Midterm Election • Oil Inventories On the Rise: Where's the Shortage? • Oil: Prices and Producers -- Where They're Headed • Oil Majors Hunker Down for Leaner Days • Results at Exxon, Shell May Augur Growth Slowdown [Wall Street Journal]
Potentially impacted stocks and ETFs: Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDS.A), ConocoPhillips (NYSE:COP), BP plc (NYSE:BP), Chevron Corp. (NYSE:CVX) • WisdomTree LargeCap Dividend (NYSEARCA:DLN), WisdomTree Total Dividend (NYSEARCA:DTD), streetTRACKS DJ Wilshire Large Cap (ELR)
TRANSPORTATION AND AEROSPACE
Ford Sees China Driving Future Amid U.S. Retreat [Wall Street Journal]
Summary: In an interview in China with the WSJ, Ford chairman Bill Ford Jr. spoke candidly about the automobile business and how Asia, and specifically China, will likely become more important than the U.S. domestic market. Ford is finishing construction of two factories in China with its Japanese partner Mazda and a local partner, one for engine production, and the other for assembly. Mr. Ford commented, "There's going to be no market like China for us. We're barely scratching the surface." The firm's purchase of auto parts in China for assembly use in the U.S. is seen growing to $2.6-$3.0 billion this year, compared to $1.6-$1.7 billion last year. Aside from China, Ford said any other talk of new alliances is a distraction. Given the firm's cash needs, Ford said he plans to sell Aston Martin sometime next year, but has no plans to sell Jaguar. He affirmed Jaguar's problems are business- and not quality-related. Ford also recognized the shift in consumer demand for smaller cars, putting the U.S. more in line with European and Asian markets.
Related links: Excerpts of WSJ Interview • Ford Bleeds $5.8 Billion in Q3 • Toyota Speeds Ahead of Competition in China • Ford: SEC Comment Letter Slipped Through The Cracks • Detroit Gets it Right This Time • A Blow To Ford In The Battle Between Auto and Parts Manufacturers • Ford's Burn Rate Worries Analysts • Barron's Nine Tips for Ford's New CEO • Ford Q3 2006 Earnings Call Transcript
Potentially impacted stocks and ETFs: Ford (NYSE:F), General Motors (NYSE:GM), DaimlerChrysler (DCX), Toyota (NYSE:TM), Honda (NYSE:HMC), Nissan (OTCPK:NSANY)
Unsold cars rile mega-dealer [Detroit Free Press]
Summary: On the brink of a World Series loss, Motown woke up to another piece of devastating news this morning: Mega auto dealer AutoNation will be ordering 30% less vehicles in the fourth quarter from the Big Three auto manufacturers. Owner of 333 dealerships nationwide (186 of which are for Big Three vehicles), Auto Nation is an important determinant of how many cars Detroit can produce. AutoNation blamed the Big Three and the way they "under-report inventory" for its poor performance during the recent quarter. The Big Three have defended the way they report inventories as "accurate." None-the-less, all three have announced cutbacks in production for the upcoming quarter due to an undeniable inventory glut. For the quarter, Auto Nation said net income fell 30% to $85 million, or 40 cents a share, from $121 million, or 45 cents a share, a year earlier. It also reported that higher interest rates increased the cost of carrying extra inventory - most of it from the Detroit auto makers - by $14 million. Revenue fell 2.2% to $4.96 billion; shares finished down 0.62% in composite trading on the earnings news.
Related links: AutoNation Q3 2006 Earnings Conference Call [Audio] • Autonation: Detroit Needs To Get Real • TXU, NewsCorp, AutoNation Top List of Hedge Fund Pullouts in 2Q'06 • AutoNation Profit Falls as New Car Sales Dip [MarketWatch] • AutoNation to Slash Detroit Orders [WSJ]
Potentially impacted stocks and ETFs: Auto Nation (NYSE:AN), Ford (F), General Motors (GM), DaimlerChrysler (DCX), United Auto Group (NYSEARCA:UAG)
Summary: GM, facing fierce competition from Toyota, will spend $9 billion in savings from cost cutting to produce fuel efficient cars that can match those of the leading Japanese automaker. GM's loss this quarter totaled $115 million, and the company said that its expenditures were greater than its sales. Although the company enjoyed a 77 percent gain this year, the biggest in the Dow, its shares fell after a downgrade from John Murphy of Merill Lynch & Co. GM is designing a hybrid-electric car with a rechargeable battery, better engines and hydrogen fuel-cell models that emit water vapor. Its popular Silverado pick-up truck will be released as a hybrid vehicle which can be recharged when not in use and run on a gasoline engine when the batteries wear out.
Related links: Japan's Big-3 Auto to Further Expand Fuel Efficiency • Hybrid Mileage Comes Up Short [Wired News]
Potentially impacted stocks and ETFs: General Motors (GM) • Competitors: Toyota (TM), Ford (F), Daimler-Chrysler (DCX)
Ticketmaster Prepares to Vault Into China [Wall Street Journal]
Summary: Ticketmaster, a division of IAC/InterActiveCorp., has won exclusive rights via a joint venture with a Beijing municipal government affiliate and a local sporting events promoter, to supply tickets for the 2008 Beijing Summer Olympics. The Games will have a lasting effect, not only from the billions of dollars being poured into infrastructure and construction, but also on event marketing and the ticketing business, which are still in their infancy, and mostly local operations. Note too, that less than 5% of the Chinese population have credit cards. Thus, Ticketmaster sees a huge opportunity in China. Its president and chief operating officer commented, "We are committed to a long-term investment in China." Ticketmaster founder Albert Leffler explained, "The timing was such that we weren't ready to go into China until now, and China wasn't ready until now for our model." Ticketmaster's overseas revenue last year was more than 25% of its $950 million in sales. Ticketmaster has partnered with Bank of China to facilitate ticket payment and pick up.
Related links: Ticketmaster Enters the Ticket Auction Business • IAC's Ticketmaster Results Bullish for Hollywood Media • For more on Ticketmaster, read Ticketmaster parent company IAC/InterActiveCorp's most recent conference call transcript. Also, see Jim Cramer's take on IACI.
Potentially impacted stocks and ETFs: IAC/InterActiveCorp. (IACI), First Trust Dow Jones Internet Index ETF (FDN)
Summary: Bristol-Myers reported a 65% drop in its third-quarter earnings because two of its leading drugs, Plavix and Pravachol faced fierce competition from generics and last year's report was inflated by a one-time gain. The popular drug company earned $338 million or 17 cents a share from July to September, down from $964 million or 49 cents a share a year ago after selling its North American consumer products business. Sales of the cholesterol drug Pravachol fell 64 percent to $192 million after losing patent protection, and blood-thinner Plavix dropped 36 percent to $630 million. A Federal investigations into the conflict over Plavix's patent might uncover security violations, as former CEO Peter Dolan was fired after documents in his office revealed undisclosed dealings with Canadian drugmaker Apotex to keep its generic Plavix off the market. Bristol-Myers denies joining Plavix inventor Sanofi-Aventis in an illegal deal with Apotex. In addition, the company is being investigated to determine whether it violated the terms of a consent order from the SEC following an accounting scandal in 2004.
Related links: Bristol-Myers' Board Behaved Responsibly in CEO Dolan's Departure • Peter Dolan Ousted[Forbes]
Potentially impacted stocks and ETFs: Bristol-Myers (NYSE:BMY), Sanofi-Aventis (NYSE:SNY)• Competitors: Merck (NYSE:MRK), Novartis (NYSE:NVS), Pfizer (NYSE:PFE)
Summary: Comcast's earnings report yesterday was everything analysts and investors had hoped for and then some. Discounting the gains from its recent acquisition of Adelphia Communications, the cable company's profits doubled from last year's third quarter. Revenue shot up 22% from 3Q05 to $6.43 billion. Analysts had previously estimated profits of 19 cents a share on $6.41 billion in revenues. Comcast posted earnings of 58 cents a share on $1.22 billion of net income. Indeed, the "triple play" subscriptions seems to have helped Comcast hit the home run that analysts had expected. With residential market tucked away, the company plans to target business customers next. As Wall Street cheers on the cable market, Comcast stock is now up 50% ytd and making its way to a 5-year high. Shares reached $40.51 in yesterday's trading, boosted by the stellar earnings report.
Related links: Conference Call Transcript: Comcast Q3 2006 Earnings Call Transcript • Comcast's Q3 Earnings Could Scare Competitors • Comcast's Beat Quarter Boosts Charter Communications' Shares • Threatened by Internet Video, Cable Providers Strive to Compete • WSJ: Comcast's Net Climbs 46%, Boosted by Adelphia Assets
Potentially impacted stocks and ETFs: Stocks: Comcast (CMCSA), DirecTV Group Inc. (DTV), EchoStar Communications Corp. (NASDAQ:DISH) • ETFs: SPDR O-Strip (OOO), Vanguard Consumer Discretionary VIPERs (NYSEARCA:VCR), iShares Dow Jones US Consumer Services (NYSEARCA:IYC)
Summary: There has been no slowdown in business activity among stock exchanges, even cross-border, as talks between the Tokyo and New York exchanges seem to be progressing towards a capital and operational tie-up. The Nihon Keizai Shimbun reported today that the NYSE has proposed a plan for establishing mutual 10% stakes by 2009. Although the NYSE declined to comment, both exchange heads have made positive comments publicly on establishing a business relationship. One of the motivations behind a tie-up is attracting Asian startups, especially from China, and furthering cross-listings would also be an option. The WSJ mentions some hurdles that exist to forming an alliance, including the fact that the TSE is a private company. The Nasdaq and Japan's Jasdaq recently signed a cooperation agreement.
Related links: WSJ: NYSE and Tokyo Exchange Discuss an Alliance • U.S. Exchanges Continue To Trim Expenses Through Consolidation, M&A Activity • Tokyo Stock Exchange Favors Euronext-NYSE Deal (NYSE:NYX) • Jasdaq, Nasdaq Tie-up Planned • CME Profits Beat Street -- Shares Fall on "Even Higher" Expectations • Jim Cramer comments on NYSE after CME, CBOT merger • CME/CBOT Merger Creates World's Biggest Derivatives Exchange • CME/CBOT to Merge Into $25B Derivatives Exchange • Mating Season for the Big Exchanges • NYSE Group and Nasdaq Fighting for Increased Market Share, European Expansion
Potentially impacted stocks and ETFs: New York Stock Exchange (NYX), Nasdaq (NASDAQ:NDAQ)
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Macro: A Contingency Plan If the Market Breaks Down
Long ideas: L-3 Communications: Playing Defense
Short ideas: Panera Bread: Puffed Up on Couponing
Internet stocks: Will An "Intimate Address" From Jim Cramer Fix TheStreet's Problems?
Retail: Krispy Kreme: Who Knew Something Yesterday?
Jim Cramer: Latest stock picks
Earnings conference call transcripts: Sohu.com • PortalPlayer • McAfee • Akamai Technologies • Lattice Semiconductor • Biosite • Digital River • Wendy's • Xcel Energy • Compuware • Vertex Pharmaceuticals • Bankrate • 1-800 Flowers.com • Gold Fields • Celgene • NCR • MedImmune • ExxonMobil • Millennium Pharmaceuticals • Sony • Comcast • Sprint Nextel • Dassault Systemes • Taiwan Semiconductor • Altria Group • Business Objects • GSI Commerce • Cirrus Logic • Cadence Design Systems • Microchip
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