Weak Earnings After Hours - Fast Money Recap (7/21/08)

by: Joan Wickham

Recap of CNBC's Fast Money, Monday July 21

On Monday night, Dylan Ratigan started the Fast Money program by saying "tomorrow looks like it's going to open up lower." He said this has to do with a number of companies that reported earnings and/or outlook below analysts' expectations. 

After Hours: American Express (NYSE:AXP), Texas Instruments (NYSE:TXN), Apple (NASDAQ:AAPL), Capital One (NYSE:COF) 

Texas Instruments was down about 9% to $26 after reporting earnings of 44 cents per share while consensus was 45 cents a share. Apple was down by 6% to $156.25 after beating third-quarter guidance by 11 cents but lowering its fourth-quarter guidance -- it now expects to earn $1 a share, compared with analysts' expectations of $1.25. American Express is down about 11% to $36.60 after it reported its second-quarter results below analysts' expectations -- earnings came in at 56 cents a share while analysts expected 83 cents a share.

Jeff Macke said saying “Texas Instruments always misses.” He went on to say how Apple reported good earnings but took a hit from its poor outlook.

Karen Finerman said she disliked how the company missed by a large margin. She still finds the stock attractive but said investors should wait until the stock drops to $35 before considering buying it.

Pete Najarian finds Apple attractive after taking a big hit. He said he feels Steve Jobs could be “"sandbagging,” which means he is offering low guidance only to exceed it later. He said he feels the company “could be a good opportunity” to buy at current levels.

Joe Terranova mentioned there are some trades that can be made as a result of American Express. He said you can use American Express as an indication to short Capital One Financial, since it could potentially report poor earnings as well. He said "using themes that you like and themes you don't like" can make you some profits right now. He suggests it is a way to be market neutral.

Finerman said he did not agree on being market neutral.

Najarian brought up the rally with the coal stocks. He said investors should take some profits on the coal stocks and get back in after a pullback.

Ratigan asked Terranova about oil, what should investors do.
Terranova said "when you see a pullback on oil, it is an opportunity to buy, it's that easy."

Najarian went back to talk about Texas Instruments. He said the company's profits suffered as a result of the weakness in wireless.

Macke brought up how investors should stick with best of breed.
Ratigan interrupted by saying, “I thought you said American Express was best of breed.”
All the panelists disagreed, saying  American Express has upside potential but it is not best of breed. 
Elsewhere in the Market:  Yahoo! (NASDAQ:YHOO), Bank of America (NYSE:BAC), Genentech (Private:DNA), Hasbro (NASDAQ:HAS), Mattel (NASDAQ:MAT), American Express (AXP)

Finerman said she was surprised Bank of America rallied, after surging tremendously last week.
Ratigan brought up how Carl Icahn got a seat in the board for Yahoo!

Najarian mentioned that Genentech is being bought out for $89 a share by Roche. He said that with the stock trading higher than the bid, $93.88, investors expect to get a higher offer.

Ratigan brought up that the movie The Dark Knight set records this past weekend.

Macke mentioned that investors should add on to Hasbro on weakness and should not focus on buying Mattel, which makes Batman toys. He said that since The Dark Knight is more of an adult movie, kids will be buying Indiana Jones toys from Hasbro rather than Batman from Mattel.

Ratigan brought up how the futures look weak because of some companies such as American Express reporting poor earnings.
Yahoo! Drags On: Yahoo! (YHOO), Microsoft (NASDAQ:MSFT)

Jefferey Lindsay, a senior analyst at Sanford C. Bernstein, came on the show to discuss Yahoo!  Judging from Yahoo!'s stock price weakness, especially after announcing that Carl Icahn and two of his nominees are getting board seats, he feels investors do not seem to believe a Microsoft bid will happen. Instead, he said he feels investors are now hoping for some changes to occur internally by restructuring or stock buybacks.

Finerman disagreed and said he feels Icahn will still agitate the board to sell the company to Microsoft.
AT&T Price Cheap? AT&T (NYSE:T)

Ratigan mentioned that AT&T is trading at its lowest level in more than a year.

Najarian finds the stock quite attractive at its current price levels. He said, “Now it is the time to take a look.” He added that the stock is trading at its “cheapest level in 20 years.” He says the stock cheap but says investors don't need to rush into the stock right now, since he feels “you have enough time to get in.”

Macke completely disagreed with Najarian, stating he feels “AT&T is not cheap and simply is not a stock investors should look at.”

Najarian argued that he feels the stock is cheap and said it is highly likely that the company could raise its dividend by the end of the year.

Back to Apple (OTC:APPL)

Najarian changed subjects after Ratigan asked him where he stood on Apple. He said “I would be a buyer of Apple.” However he said investors can use some protection by buying some puts.
Macke pointed out that Steve Jobs was not in the conference call, which could a sign his health is bad.

Ratigan mentioned how the health of Steve Jobs is a private matter. He also said there could be a reason beyond health concerns that detained Steve Jobs from attending the conference call.

Ratigan continued by mentioning the topic of Steve Jobs not being in the conference call. He said an analyst asked the CFO if the reason why Steve Jobs is not in the conference call had to do with his health. The CFO responded by saying, “Steve Jobs health is a private matter.”

However, Najarian said he does not believe Jobs' health is a private matter, since he is running the firm.

Macke agreed with Najarian. But he also said “Apple is smarter than this,” saying the company would not mention Steve Jobs' health knowing how pivotal he is to the firm and its stock price.

Jim Goldman, CNBC Silicon Valley bureau chef, came in the show toward the end, stating, “Steve Jobs is never on a conference call,” since Apple always left that job to be handled by the CFO. 

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