The ECB talking heads helped push us up yesterday, and today we see markets in Europe mostly higher, but mixed with many of the larger markets having been looking for guidance for most of the European trading day until only recently when further comments gave indices a reason to rise. Asia was up strongly over the night as they reacted to the news out of Europe from yesterday morning. As we have stated for months now, Europe is the key to righting this ship and investors want to find hope that they will get their fiscal mess in order. It will take time, but with the type of bold talk now coming out of the continent maybe real action is not far away.
The economic news up today is the GDP - adv. (Consensus 1.2%), Chain Deflator - adv. (Consensus 1.6%) and the Michigan Sentiment - Final (Consensus 72.0).
Looking at Asian markets we see markets are higher:
- All Ordinaries - up 1.45%
- Shanghai Composite - up 0.13%
- Nikkei 225 - up 1.46%
- NZSE 50 - up 0.45%
- Seoul Composite - up 2.62%
In Europe markets are mostly higher:
- CAC 40 - up 0.99%
- DAX - down 0.08%
- FTSE 100 - down 0.18%
- OSE - up 0.38%
Zynga (ZNGA) had an awful quarter, with investors pushing shares lower by $1.903 (37.48%) to close at $3.175/share on the weak news. Volume spiked to 99.8 million shares as many fled the stock after the latest disappointment. Since the company's IPO shares have fallen almost 70% and it has become quite clear to investors that the business plan is under serious pressure as is largest distribution platform, Facebook, undergoes major changes which has changed the landscape. We owned this stock for a few days around the time of the Facebook IPO and it turned out to be a pretty bad call as we sold for a pretty large loss - one of our worst trades of the year actually - but we are thankful we exited then as it has only gotten uglier for investors since that time. The company is banking on getting real money poker approved for international markets, and in our opinion that is the only thing which will push shares back up to higher levels.
MetroPCS (PCS) saw shares rise dramatically after reporting results from its latest quarter. Shares finished up $2.31 (36.78%) to close at $8.59/share on volume of 32.6 million shares. Investors and analysts were surprised by the results because the company focused on the bottom line rather than customer acquisition this quarter, which gave everyone a glimpse into what this franchise can generate when not being extremely aggressive in their growth plans. The talk now is that the company could once again be a takeover target by someone wanting to use all stock in order to generate more free cash flow for network build out, etc - someone like Sprint. But that would have to be say another year out.
LSI (LSI) closed above $7/share in yesterday's trading after the company reported earnings which beat on both the top and bottom lines. Revenues were up while the company saw earnings down, although still strong enough to beat the analysts' expectations. Shares closed at $7.04/share after rising $0.99 (16.36%) on volume of 39.4 million shares after a few analysts upgraded the stock after the report. The second half of the year should see the company continue to perform well and this was at the center of the analysts' thesis to their reports.
Akamai (AKAM) turned in a solid quarter as the company benefited from the huge push to cloud-based computing. This quarter should give investors reason to buy into the fact that Akamai may be able to maintain their high growth rates. The guidance for next quarter certainly lends credence to that as the company guided to the higher ranges and over for next quarter. All of this great news is why shares rose $6.79 (24.04%) to close at $35.04/share. Volume was 13.8 million, which is about four times above the three month daily average volume.
Looking at a company that was not impacted by any earnings, Sirius XM (SIRI) is now once again above the $2.105/share after having risen $0.025 (1.20%) on volume of 51.8 million. We have had a few emails asking us our opinion and whether we had any updates regarding the price as we had provided over the past few months. The answer is no, as we said the $2.10 level was the upper tier of what we would want to pay before earnings, especially with John Malone sniffing around trying to wring some gains out for his shareholders which could potentially come at the expense of Sirius shareholders. Thus we find ourselves on the sidelines until we have more information to work with, and that will come in early August.