Here's an update on the top ten most traded stocks:
Company Ticker Percentage Shares Traded Current Price Sirius XM Radio (SIRI) Fell 1.0% $1.92 Cisco Systems (CSCO) Fell 0.5% $14.97 Level 3 Communication (LVLT) Fell 1.9% $2.12 Microsoft Corp (MSFT) Rose 1.1% $24.26 Intel Corp. (INTC) Fell 1.1% $21.19 Micron Technology (MU) Fell 0.4% $7.83 Oracle Corp (ORCL) Rose 1.3% $31.19 Dell (DELL) Rose 0.3% 30,686,142 $16.01 Nvidia Corporation (NVDA) Fell 2.4% 33,541,200 $15.81 Research In Motion (RIMM) Fell 21.5% 107,794,400 $27.25
62,582,300 67,245,400 38,768,300 63,316,900 71,604,000 42,459,600 32,678,400
Sirius XM Radio
Level 3 Communication
Research In Motion
Sirius XM (SIRI) has been on a severe decline over the past several weeks. Fellow Seeking Alpha contributor Rick Dude issued five reasons why he felt the stock was overvalued. I can't say that I agree at all with Rick- not at these low levels. Sirius has been amongst my recent acquisitions in re-shuffling my portfolio this week.
Investors should have every reason to expect new highs in the coming weeks and months. With those expectations, investors should also assume that these new highs will come with high degrees of volatility.
Other concerns for Sirius' recent slide has been linked to the Bedford Report, which last week released its summary on the radio broadcasting industry and suggested that both satellite and conventional radio broadcasters are facing headwinds this spring due greater competition in the car market, and the possibility of an NFL lockout. In addition, new car sales have shown signs of slowing in recent months, limiting the expansion of satellite radio. The report examined the outlook for companies in the radio broadcasting industry and provides investment research on Sirius XM. What it found were concerns that many Sirius investors have shared for quite some time: Sirius' over-dependence on the auto market.
Level 3's (LVLT) stock remains expensive. It has been on a tear over the past three months. I have been one of the biggest supporters of the company and the stock. I had previously written about the excitement that the company had generated when it announced earlier this year its pending merger with Global Crossing. I wrote then how I thought the Global Crossing transaction made Level 3 more valuable or even undervalued upon the announcement. I pointed to how the deal would create a company with a unique capability to meet local, national and global customer requirements in a wide range of markets. By combining the strengths of each company, the new entity will offer enterprise, government, wholesale, content and web-based customers a comprehensive portfolio of end-to-end data, video and voice solutions.
Competition is another major concern, particularly from the likes of Oracle (ORCL). On Wednesday we learned that HP (HPQ) has filed a lawsuit against Oracle claiming that Oracle illegally decided that future versions of its database software won't support a particular line of HP servers. Those servers use a chip called Itanium that Oracle insists is being phased out, a claim that the chip's maker, Intel (INTC), has denied. In the lawsuit, HP accuses Oracle of anti-competitive behavior, breaking a promise to continue supporting Itanium machines and of the use of "strong-arm tactics to coerce customers into replacing their HP servers with Sun servers they do not want." Oracle's foray into the computer hardware market - an HP stronghold - began with its $7.3 billion acquisition of struggling Sun Microsystems last year.
A week and a half ago, a report said that while the U.S. Department of Justice was looking into the bidding over the Nortel wireless patents, they were unlikely to object to Google (GOOG) winning the rights to them. But a new opponent to Google’s bid has arisen. And it’s a familiar foe: Microsoft (MSFT). Specifically, Microsoft is objecting to Google being able to purchase the over 6,000 patents without recognizing Microsoft’s existing licensing agreements on the patents, Reuters reports. As we noted a week and a half ago, these licensing agreements were precisely why Microsoft was the one obvious bidder not competing for the patents — they didn’t think they had to. But the current terms for the winner of the auction doesn’t back up that argument. As of right now, the company that wins the bidding would be able to terminate existing agreements.
Intel has a 5 year P/S average of 3.2, and it currently trades at 2.7 times sales per share. In 2005, 2006 and 2007, the multiples were 4.0, 3.4 and 4.1, respectively. Intel Corporation has been designing and developing integrated circuits since 1968. With a market cap of $118.3 billion, Intel is a behemoth of a company and easily the world's largest producer of computer chips. The company has a defensible competitive moat, unlike chief rival Advanced Micro Devices (AMD). The company drew in $43.6 billion in revenues in 2010, which is an increase of 24.19%, after declining 6.5% in 2009. Net income came in at $11.46 billion (+162.39%). In 2009, profits were only $4.36 billion (- 17.4%). In 2010 and 2009, profit margins were 65.3% and 55.69%, respectively. EBT margins were 36.78% and 16.2%, respectively. ROIC [return on invested capital] climbed to 24% in 2010 after posting only 10.28% in 2009. Clearly, Intel has been doing something right: It holds more than its share of the market. Intel still produces around 80% of the world's CPUs.
Some more notes of praise for Micron Technology (MU) came over the transom today, similar to the bullish piece yesterday by Lazard Capital Markets. Wells Fargo’s David Wong raised his rating on the stock to Outperform from Market Perform, with a “valuation range” of $10 to $12. The stock is currently trading around $8.49. Wong says that contract pricing for NAND flash memory chips and DRAM chips have held up, despite a fall in spot prices. This means fiscal Q3 earnings should probably be 3 cents per share, as opposed to the net loss of 4 cents he’d previously expected. He raised his full-year EPS estimate to 29 cents from 21 cents. There’s still a risk that Micron’s contract prices will “trend down” in the coming months, given what appears to be a soft electronics environment, he writes.
Alternatively, if Micron shipped more than we have estimated in the May quarter and/or if memory prices stabilize sooner than we are currently expecting, there may be reason to raise our estimates at some point in the future.
Technology giant Dell Inc. (DELL) recently posted strong and growing financial results. The company is launching new devices in developing markets and adding new services for business that will fuel the company's growth. It is launching Google's Android-based tablet in China later this summer before introducing it to the U.S. markets. The stock closed at $15.47 on Friday, up $2.3 or 17.51% in the last 90 trading days.
Is RIM running out of juice? RIM (RIMM) shares plunged 14.35% in post-market trading after the BlackBerry maker reported earnings and provided guidance that were both below analyst expectations. RIM said FQ1 net profit slumped to $695M from $769M even as revenue rose 16% to $4.9B, and it lowered its FY EPS outlook to $5.25-$6 from a prediction given in April of $7.50. RIM also said that it had been hurt by product delays and that the launch of its PlayBook tablet "did not go as smoothly as we had planned." Analysts said the company is suffering from an aging product lineup that is inferior to Apple's (AAPL) iPhone and Android devices. Comedian Ronnie Corbett recently declared that 'My BlackBerry is not working," to which the reply was, "What's the matter, it run out juice?" Investors might be wondering the same about RIM.
Disclosure: I am long SIRI, CSCO, MSFT.