After starting out strong, the S&P 500 is now down about 1% this earnings season. The average stock that has reported has gone down 0.27% on its report day as well, so while the numbers have come in strong, stocks have reacted very poorly.

Below we highlight stocks that have gone up or down at least 15% on their report days this earnings season. Companies highlighted in yellow are in the S&P 500. As shown, Revlon (REV) went up the most on its earnings report with a gain of 43.3% yesterday. Amazon.com (AMZN) ranks second with a gain of 26.8%, followed by Timberland (TBL), American Superconductor (AMSC, New York Times (NYT), Cardtronics (CATM), and SLM Corp. (SLM). Other notables on the earnings winners list include Lexmark (LXK) and RadioShack (RSH).

McDonald's (MCD), Goldman Sachs (GS), JP Morgan (JPM), Ford (F), Apple (AAPL), J.Crew (JCG)

• U.S. AAA rating not guaranteed. The U.S. could lose its AAA rating if it fails to reduce its deficit over the next 3-4 years, Moody's says. Steven Hess, Moody's lead analyst for the U.S., acknowledges reducing the gap won't be easy: "Raising taxes is never popular and difficult politically, so we have to see if the government can do that or cut expenditures." Earlier this year, markets were spooked after S&P cut its outlook on Britain to Negative from Stable. Meanwhile, Moody's said today European countries' rising debt won't trigger across-the-board downgrades.
• Deep pay cuts coming to TARP recipients. In a plan to be made public within the next few days, the government will order deep pay cuts at the biggest bailout recipients - Citigroup (C), Bank of America (BAC), AIG (AIG), GM, Chrysler, GMAC and Chrysler Financial. The plan targets the 25 top earners at each company, who will see their compensation decline this year by about 50%, while bonus payments will be slashed by up to 90%, to be replaced by stock that they'll be restricted from immediately selling. The plan does not address firms that didn't receive bailout funds, or that have already repaid their loans.
• South Korea's $3.9B oil buy. State-owned Korea National Oil Corp. agreed to buy Canada's Harvest Energy (HTE) for $3.9B - $1.7B for its outstanding shares and the assumption of $2.2B in debt. Shareholders will receive $9.52/share - a 37% premium to Wednesday's close. The deal is South Korea's biggest outbound cross-border deal ever in the Oil & Gas sector, and ranks seventh in global Oil & Gas sector M&A transactions in 2009. Harvest produced 53K b/d in Q2, 70% of which was crude oil and 30% was natural gas. Shares +29.1% premarket to $9.05.
• Bove drops a bomb. Rochdale Securities analyst Richard Bove sent stocks into a tailspin late Wednesday after he downgraded shares of Wells Fargo (WFC) to Sell, despite a consensus-beating Q3. Bove is concerned by the positive impact mortgage hedges have had on Wells' recent results, which "keep coming through for the company whenever it needs to bolster earnings," but are a nightmare for investors who shouldn't look at such activity as generating predictable or repeatable profits. Bove also called the portfolio Wells acquired from Wachovia 'cancerous.' WFC -5.1% yesterday.
• eBay falters on gloomy outlook. eBay (EBAY) posted Q3 earnings that exceeded expectations, but shares traded lower after-hours after its guidance gave a gloomier vision of the near future than many expected (read eBay's Q3 earnings call transcript). eBay has struggled as online shopping habits have shifted away from auctions to fixed-price purchases on sites such as Amazon.com (AMZN).
• Beige Book sees signs of growth. The Fed said most regional economies are on the mend, as home sales rebound and manufacturers restart idled operations. "Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered," the Fed said in its beige book tally. The report also highlighted how heavily businesses are relying on government spending: "There were several reports that the only 'sure' business will come from government stimulus projects, although funding for such projects has been slow to materialize," it said.
• Microsoft's big day. Microsoft's much-anticipated OS upgrade, Windows 7, goes on sale today. The company hopes Windows 7 will gain more traction among retail and corporate clients than its most predecessor, Vista, which was seen as slow and clunky. Analysts say the new OS isn't likely to cause a sudden spike in PC sales, a point conceded by Microsoft CEO Steve Ballmer, who said recently IT budgets "aren't going to rise just because we shipped a new version."
• Twin deals for Twitter. Twitter inked deals to sell the rights to mine its pipeline of 'tweets' with both Google (GOOG) and Microsoft (MSFT) Wednesday, underscoring the growing importance of real time search. Neither would say how much it's paying for the rights to index the millions of daily tweets, considered to be Twitter's most valuable asset. The deals could be the first meaningful revenue for Twitter since its 2006 inception, and begin to answer the much-explored question of "where's the beef?"
• A strong Q3 for China. China's Q3 GDP came in at 8.9%, just below the 9% economists forecast. Separate reports showed industrial production and retail sales also accelerated. China's return to robust growth continues to raise the question of when policy makers will withdraw record fiscal and monetary stimulus in order to avoid another bubble.
• Galleon wind down begins. Managers of Galleon Group's $500M Asia fund are considering buying the unit, sources say. On Wednesday, Galleon told employees and investors it would wind down the firm after its founder was charged with insider trading. Unless the government intervenes, investors likely won't get their money back until Jan. 1, 2010.

Earnings: Thur. Before Open

• 3M Company (MMM): Q3 EPS of $1.37 beats by $0.20. Revenue of $6.19B (-5.6%) vs. $5.77B. Shares +1.2% premarket. (PR)
• AT&T (T): Q3 EPS of $0.54 beats by $0.04. Revenue of $30.9B (-1.3%) in-line. Wireless subscribers +2M to 81.6M. Shares +2% premarket. (PR)
• AU Optronics (AUO): Q3 EPS of $0.26 beats by $0.01. Revenue of $3.5B (+8.4%) vs. $3.21B. Operating margin 6.8%. Shares -2.3% in Taiwan. (PR)
• Black & Decker (BDK): Q3 EPS of $0.91 beats by $0.09. Revenue of $1.21B (-23%) in-line. Sees Q4 EPS of $0.68-0.78 vs. $0.50 consensus. Shares +2.2% premarket. (PR)
• Bristol-Myers (BMY): Q3 EPS of $0.52 beats by $0.01. Revenue of $5.49B (+4.4%) in-line. (PR)
• Bunge (BG): Q3 EPS of $1.62 beats by $0.15. Revenue of $11.3B (-23.6%) vs. $12B. Sees full-year EPS of $3.10-$3.50 vs. consensus of $4.69. Says fertilizer business continues to be pressured by high-cost inventory and a weak pricing environment. (PR)
• Celgene (CELG): Q3 EPS of $0.56 beats by $0.02. Revenue of $692M (+16.8%) vs. $671M. Shares +5.4% premarket. (PR)
• Check Point Software (CHKP): Q3 EPS of $0.52 beats by $0.03. Revenue of $234M (+17%) vs. $231M. (PR)
• CONSOL Energy (CNX): Q3 EPS of $0.48 misses by $0.18. Revenue of $1.09B (-6.7%) in-line. Shares -3.1% premarket. (PR)
• Cooper Industries (CBE): Q3 EPS of $0.70 beats by $0.06. Revenue of $1.29B (-25.6%) in-line. "Revenue and orders for maintenance and repair items and product lines that declined rapidly at the beginning of the economic downturn are beginning to improve, while the longer cycle products appear to have now bottomed." Shares -0.3% premarket. (PR)
• Danaher (DHR): Q3 EPS of $0.89 beats by $0.03. Revenue of $2.75B (-14.2%) in-line. (PR)
• Delta Air Lines (DAL): Q3 EPS of $0.06 beats by $0.11. Revenue of $7.57B (+32.4%) in-line. (PR)
• Diamond Offshore Drilling (DO): Q3 EPS of $2.62 beats by $0.32. Revenue of $908M (+0.9%) vs. $874M. Declares special dividend of $1.875/share. (PR)
• Dow Chemical (DOW): Q3 EPS of $0.24 beats by $0.14. Revenue of $12.05B (+6.4%) vs. $11.85B. "The economic outlook for the rest of 2009 appears to be stabilizing with strong growth in Asia Pacific, especially China, and other emerging geographies. The global economy is now on firmer footing, and, in our view, the U.S. economy is beginning a slow and tenuous recovery, with unemployment continuing to be a drag on consumer spending." (PR)
• EMC (EMC): Q3 EPS of $0.23 beats by $0.02. Revenue of $3.52B (-5.3%) vs. $3.45B. Says customers are signaling more comfort spending their IT budgets. Shares +1.5% premarket. (PR)
• Ensco International (ESV): Q3 EPS of $1.05 beats by $0.01. Revenue of $425M (-31.3%) vs. $439M. (PR)
• Entergy (ETR): Q3 EPS of $2.40 misses by $0.08. Revenue of $2.94B (-25.9%) vs. $3.9B. "We continue to experience the negative effects of the slowed economic recovery." (PR)
• Ericsson (ERIC): Q3 EPS of 0.25kr misses by 0.61kr. Revenue of 46.4Bkr (-5.7%) vs. 49.46Bkr. "Sales of network equipment declined due to lower demand in the current tougher market environment. Despite lower volumes, Network margins remain stable." Shares -8.9% premarket. (PR)
• Fifth Third Bancorp (FITB): Q3 EPS of -$0.20 beats by $0.03. Revenue of $M in-line. "The credit environment remains challenging, and we continue to aggressively work to manage risk in the portfolio." Shares -2.1% premarket. (PR)
• Goodrich (GR): Q3 EPS of $1.12 beats by $0.09. Revenue of $1.65B (-7%) in-line. (PR)
• Hershey Foods (HSY): Q3 EPS of $0.73 beats by $0.06. Revenue of $1.48B (-0.3%) vs. $1.54B. "As we look to 2010, we assume the economic environment for consumers in the U.S. and international markets will continue to be challenging." Shares +2.5% premarket. (PR)
• Huntington Bancshares (HBAN): Q3 EPS of -$0.33 misses by $0.05. Revenue of $M in-line. Shares -2.1% premarket. (PR)
• IMS Health (RX): Q3 EPS of $0.40 beats by $0.04. Revenue of $541M (-5.7%) vs. $522M. (PR)
• Janus Capital Group (JNS): Q3 EPS of $0.05 misses by $0.10. Revenue of $228M (-17.4%) vs. $225M. (PR)
• JetBlue Airways (JBLU): Q3 EPS of $0.04 misses by $0.01. Revenue of $854M (-5.3%) vs. $847M. Shares +1.2% premarket. (PR)
• Kimberly-Clark (KMB): Q3 EPS of $1.40 beats by $0.27. Revenue of $4.91B (-1.7%) in-line. Sees full-year EPS of $4.50-$4.60 vs. consensus of $4.26, citing increased cost savings, better organic sales growth and a further recovery in currency exchange rates. Shares +5.5% premarket. (PR)
• Laboratory Corp. (LH): Q3 EPS of $1.22 beats by $0.07. Revenue of $1.19B (+4.4%) in-line. (PR)
• Legg Mason (LM): FQ2 EPS of $0.30 beats by $0.11. Revenue of $660M (-31.7%) vs. $652M. (PR)
• Logitech (LOGI): FQ2 EPS of $0.11 beats by $0.06. Revenue of $498M (-25.1%) vs. $474M. Sees FQ3 revenue of $575-595M vs. $623M. Shares +7.2% in Zurich. (PR)
• McDonald's (MCD): Q3 EPS of $1.15 beats by $0.04. Revenue of $6.05B (-3.5%) in-line. Comps +3.8%, with U.S. +2.5%, Europe +5.8% and the rest +2.2%. Shares +1.3% premarket. (PR)
• Mead Johnson (MJN): Q3 EPS of $0.53 misses by $0.02. Revenue of $700M (-5.8%) vs. $737M. Shares -8.4% premarket. (PR)
• Merck (MRK): Q3 EPS of $0.90 beats by $0.08. Revenue of $6.05B (+1.8%) in-line. (PR)
• NCR (NCR): Q3 EPS of $0.19 misses by $0.05. Revenue of $1.14B (-17.7%) vs. $1.22B. Sees full-year EPS of $0.45-0.55 vs. $0.67. "The willingness of customers to invest in Q2... did not spill over into Q3. That said, we were more encouraged by the conversations we were having with our customers about Q4 and 2010." Shares -5.9% premarket. (PR)
• New York Times (NYT): Q3 EPS of $0.16 beats by $0.17. Revenue of $571M (-16.9%) vs. $562M. Shares +2.7% premarket. (PR)
• NII Holdings (NIHD): Q3 EPS of $0.69 beats by $0.14. Revenue of $1.14B (-3.5%) in-line. (PR)
• Nucor (NUE): Q3 EPS of -$0.10 beats by $0.05. Revenue of $3.12B (-58.1%) vs. $2.98B. "Our view remains that there has been little improvement in real demand and the uncertainty in our economy is still very high. We also continue to believe that real demand is in for a long, slow recovery." Shares -0.6% premarket. (PR)
• Occidental Petroleum (OXY): Q3 EPS of $1.14 beats by $0.06. Revenue of $4.1B (-41.9%) in-line. Shares +1.2% premarket. (PR)
• Old Republic International (ORI): Q3 EPS of -$0.283 misses by $0.11. Revenue of $959M (+2.4%) vs. $910M. (PR)
• Philip Morris (PM): Q3 EPS of $0.93 beats by $0.02. Revenue of $6.59B (-5.3%) vs. $6.71B. "While we experienced lower organic volume in the quarter, this was largely anticipated given our pricing actions and the on-going impact of the economic crisis on total consumption levels." Shares +0.75% premarket. (PR)
• PNC Financial Services (PNC): Q3 EPS of $1.00 beats by $0.69. Revenue of $4.05B (+144.7%) vs. $3.8B. (PR)
• Potash (POT): Q3 EPS of $0.82 beats by $0.01. Revenue of $1.1B (-64.1%) in-line. Sees Q4 EPS of $0.65-0.85 vs. consensus of $1.18. "The uncertainty among fertilizer buyers has lasted far longer than we anticipated, but cannot continue indefinitely." Shares -2.9% premarket. (PR)
• ProLogis (PLD): Q3 EPS of $0.21 beats by $0.02. Revenue of $274M (-72.3%) vs. $228M. Shares +2.4% premarket. (PR)
• Raytheon (RTN): Q3 EPS of $1.25 beats by $0.09. Revenue of $6.21B (+5.8%) in-line. Shares +0.7% premarket. (PR)
• Reliance Steel & Aluminum (RS): Q3 EPS of $0.57 beats by $0.11. Revenue of $1.24B (-57.1%) vs. $1.34B. Declines Q4 guidance. "We believe that demand is fairly stable at low levels." (PR)
• Reynolds American (RAI): Q3 EPS of $1.24 beats by $0.07. Revenue of $2.15B (-5.3%) in-line. Shares -0.1% premarket. (PR)
• Ryder System (R): Q3 EPS of $0.50 beats by $0.05. Revenue of $1.26B (-20.3%) in-line. Anticipates the weak overall economic environment and protracted freight recession will continue to impact its performance. (PR)
• Schering-Plough (SGP): Q3 EPS of $0.40 in-line. Revenue of $4.5B (-1.7%) in-line. (PR)
• Starwood Hotels (HOT): Q3 EPS of $0.14 beats by $0.04. Revenue of $1.22B (-20.7%) vs. $1.16B. "It is very difficult at this time to provide any definitive point of view on 2010. While business conditions have clearly stabilized, it is very hard to forecast the pace of recovery, especially rate." (PR)
• SunTrust Banks (STI): Q3 EPS of -$0.60 misses by $0.05. Revenue of $1.94B (-21%) vs. $2.11B. Earnings include $131M writedown on debt. Allowance for loan losses +128M to $3.02B. (PR)
• Sybase (SY): Q3 EPS of $0.63 beats by $0.06. Revenue of $293M (+3.3%) vs. $281M. Shares +2.2% premarket. (PR)
• TASER International (TASR): Q3 EPS of -$0.05 misses by $0.02. Revenue of $26.8M vs. $20.9M. Shares -1.2% premarket. (PR)
• Temple-Inland (TIN): Q3 EPS of $0.24 beats by $0.06. Revenue of $885M (-9.3%) vs. $876M. "As we look forward, economic conditions, while still uncertain, have stabilized and appear to be on a slow path to recovery." (PR)
• Terra Industries (TRA): Q3 EPS of $0.45 misses by $0.07. Revenue of $347M (-56.1%) vs. $356M. Shares +0.8% premarket. (PR)
• Thermo Fisher (TMO): Q3 EPS of $0.78 beats by $0.02. Revenue of $2.53B (-2%) in-line. (PR)
• Travellers (TRV): Q3 EPS of $1.61 beats by $0.30. Revenue of $6.3B vs. $6B. Sees full-year EPS of $5.30-5.50 vs. consensus of $5.28. Raises quarterly dividend to $0.33 from $0.30. Authorizes an additional $6B share buyback. "We remain cautious about the magnitude of rate gains that are achievable in the near term given general economic conditions." (PR)
• Union Pacific (UNP): Q3 EPS of $1.02 beats by $0.02. Revenue of $3.67B (-24.2%) in-line. "Business volumes seem to have stabilized, but at very low levels." (PR)
• UPS (UPS): Q3 EPS of $0.55 beats by $0.03. Revenue of $11.15B in-line. Volume of 927M packages, -2.4%. "I'm encouraged by the signs of economic recovery that are becoming apparent, although we still have a long way to go," CEO Scott Davis said. Shares -1% premarket. (PR)
• US Airways (LCC): Q3 EPS of -$0.83 beats by $0.11. Revenue of $2.72B, including $110 from a la carte revenue initiatives, in-line. Shares +3.4% premarket. (PR)
• Xerox (XRX): Q3 EPS of $0.14 beats by $0.02. Revenue of $3.67B (-15.9%) in-line. Sees full-year EPS of $0.55-0.57 vs. consensus of $0.53. (8-K)
• Zimmer (ZMH): Q3 EPS of $0.88 beats by $0.02. Revenue of $976M (+2.5%) vs. $954M. Shares +1.8% premarket. (PR)

Earnings: Wed. After Close

• Alliance Data Systems (ADS): Q3 EPS of $0.83 misses by $0.51. Revenue of $483M (-5%) vs. $500M. Expects 2010 EPS of $6.00 vs. $6.10. Shares -6.3% AH. (PR)
• Amgen (AMGN): Q3 EPS of $1.49 beats by $0.22. Revenue of $3.8B (-2%) in-line. Raises full-year EPS guidance to $4.90-5.05 from $4.80-4.95, vs. $4.88. Shares -3% AH. (PR)
• Ameriprise Financial (AMP): Q3 EPS of $1.03 beats by $0.39. Revenue of $2B (+20%) vs. $2.1B. Debt-to-total-capital ratio of 18.7%. Shares +1.6% AH. (PR)
• Citrix Systems (CTXS): Q3 EPS of $0.43 beats by $0.02. Revenue of $401M (+1%) vs. $400M. Sees full-year revenue up 8-9% sequentially to $1.73B. Shares -3.6% AH. (PR)
• Covanta (CVA): Q3 EPS of $0.28 beats by $0.04. Revenue of $409M (-7%) vs. $388M. Shares +0.3% AH. (PR)
• eBay (EBAY): Q3 EPS of $0.38 beats by $0.01. Revenue of $2.2B (+6%) vs. $2.1B. Shares -4.9% AH. (PR)
• Equifax (EFX): Q3 EPS of $0.57 beats by $0.02. Revenue of $452M (-7%) in-line. Shares -3.2% AH. (PR)
• F5 Networks (FFIV): FQ4 EPS of $0.50 beats by $0.09. Revenue of $175M (+2%) vs. $164M. Shares +8.1% AH. (PR)
• Fidelity National Information Services (FIS): Q3 EPS of $0.46 misses by $0.01. Revenue of $851M (-4%) vs. $870M. Shares -0.4% AH. (PR)
• Fidelity National Financial (FNF): Q3 EPS of $0.32 misses by $0.02. Revenue of $1.5B (+52%) in-line. Shares +0.2% AH. (PR)
• Intersil (ISIL): Q3 EPS of $0.10 in-line. Revenue of $168M (-23%) vs. $162M. Sees Q4 EPS of $0.14-0.17 vs. $0.13. Shares -2.8% AH. (PR)
• Knight Transportation (KNX): Q3 EPS of $0.16 in-line. Revenue of $173M (-17%) vs. $165M. Shares +1.2% AH. (PR)
• Lam Research (LRCX): FQ1 EPS of $0.03 beats by $0.11. Revenue of $319M (+46%) vs. $288M. Shares +3.2% AH. (PR)
• Newfield Exploration (NFX): Q3 EPS of $1.58 beats by $0.24. Revenue of $375M (-45%) vs. $536M. Shares -0.1% AH. (PR)
• Noble (NE): Q3 EPS of $1.63 beats by $0.10. Revenue of $906M (+5%) in-line. Shares +1.1% AH. (PR)
• Novellus Systems (NVLS): Q3 EPS of -$0.03 beats by $0.01. Revenue of $177M (-29%) vs. $172M. Shares +0.9% AH. (PR)
• OSI Pharmaceuticals (OSIP): Q3 EPS of $0.81 beats by $0.49. Revenue of $111M (+18%) vs. $106M. Shares -1% AH. (PR)
• Pactiv (PTV): Q3 EPS of $0.54 beats by $0.03. Revenue of $839M (-9%) vs. $858M. Shares -0.2% AH. (PR)
• QLogic (QLGC): FQ2 EPS of $0.21 beats by $0.03. Revenue of $132M (-23%) vs. $126M. Shares -2.6% AH. (PR)
• Range Resources (RRC): Q3 EPS of $0.26 beats by $0.04. Revenue of $204M (-67%) vs. $261M. Shares -0.2% AH. (PR)
• Skechers (SKX): Q3 EPS of $0.52 beats by $0.17. Revenue of $405M (+1%) vs. $385M. Shares +5.2% AH. (PR)
• Terex (TEX): Q3 EPS of -$0.95 misses by $0.61. Revenue of $1.2B (-51%) vs. $1.3B. Shares -10.5% AH. (PR)
• TriQuint Semiconductor (TQNT): Q3 EPS of $0.10 in-line. Revenue of $173M (-7%) vs. $178M. Shares -19.9% AH. (PR)
• VMware (VMW): Q3 EPS of $0.24 beats by $0.04. Revenue of $490M (+4%) vs. $474M. Sees Q4 revenue of v$540M-560M vs. $523M. Shares +1.6% AH. (PR)

Today's Markets

Asian and European markets followed the U.S. into the red Thursday. Stock futures are marginally lower.

Q3 2009 Earnings Call Transcript

October 21, 2009 5:00 PM ET

Wow, things went from extremely boring to exciting all the sudden.

Sheesh - when I typed this in the morning, I did not mean it literally.

TriQuint (TQNT) announces earnings Wednesday. The share price has been in a steady uptrend, with various pieces of positive news including a recent defense contract. However, the short base has also been rising, currently standing at 3% from the low of 1% which was touched in August.

To download the whole article click here.

We have a very obvious gap formed yesterday morning that we have to ask "when" does it get filled? This morning Goldman Sachs (GS) obliterated analyst estimates... surely *I* for one was surprised (ahem). But everyone expected this, and the stock did not surge for the 85th out of 93rd session in a row. Google (GOOG) is after the bell and we all know they will beat ... so will IBM (IBM) - they almost always do in the game of "set expectations low, and beat it". IBM also benefits huge from weak U.S. currency. But if everyone knows it, are we going to continue to act surprised? Who knows. Ball remains in bulls' court and "buy every dip" in religious fervor remains the game of the day....


As always its not the news but the reaction to the news. What was striking to me was the non-reaction in gold yesterday... silver did ok, but usually when the dollar goes in for its daily slaughter these both react well. At least of late ... not so much yesterday. Bank of America (BAC) and General Electric (GE) out tomorrow before the bell.

Since we have already examined in previous posts the potential for momentum strategies either using moving averages, 52 week or all-time highs (for more posts on those strategies click here or here), or returns over the past year, I thought the readership of the Scott's Investments blog may prefer a twist. I have partnered with Zacks Investment Research to start providing some additional screens to my readers. So, using the stock screener in Zacks Premium service, I've screened for stocks trading within 5% of their 52 week high (in other words, strong momentum) and also having positive earnings surprises the past two quarters, and also having the highest rating from Zacks, a 1. (Zacks ranks stocks on a scale of 1-5, with 1 being a 'strong buy' and 5 being 'strong sell'; the Zacks #1 Rank List has generated an annual average return of 27% since 1988.)

One idea I had was to only purchase the top rated stocks if the underlying index (S&P 500) was trading above a long term moving average such as the 200 day moving average. This could potentially reduce some upside gains, but could also reduce drawdowns, such as happened in 2008.

TJX Companies (TJX): The Discount Pawn

I tend to get nervous when mainstream publications start touting stocks I like, but I still like the thesis too much to avoid at this point. In fact this is one of the few real secular growth stories I can find. We mentioned this space a few times [Jul 23, 2009: Positive News Out of RF Semi Space - TriQuint Semiconductor, Skyworks Solutions], but one thing I did not touch on is the low stock prices. Don't be fooled by $4-$5-$6 stocks - these are rather large companies; they simply were part of the NASDAQ euphoria in 1999 when a company's stock would rise so quickly it would split 2:1, or 3:1 every 3-4 months. (I was a genius back then, let me tell you...).

So when the bubble burst, you had tons of shares outstanding, and to adjust to a sensible market cap, your stock price has to drop. Honestly at this point, I'd like these companies to do reverse splits ... usually that is a sign of weakness, but not in this specific situation. I usually avoid stocks this low in price because there is a very good reason they are in the $5 range, but again - these are exceptions. TriQuint Semi and RF Micro Devices (RFMD) are both over $1B in market cap!

A very strange day - financials, especially those rescued by the government are flying today - everything from AIG to Fannie Mae to Bank of America. Meanwhile technology stocks are weak by and large after being the market's favorite for weeks. And somehow I've been stopped out of 3 long positions. (Looks like Ocwen Financial (OCN) was pummeled since I sold it yesterday morning)

Won't try to explain it, there is no explainin' anymore. This is what the algorithms are doing today - respect it. Our 4 hour correction is over and it's time to cream some bears, it appears.

I keep staring at my limit buy orders lower on these 3 names and they look fruitless at times ...

It is obvious money is moving into this group, and as long as the market doesn't fall off the stool bench, they look like they are going to be serious winners here in the next move up. When stocks act immune to the indexes during down days, that's a very good sign. While I placed starter positions in TriQuint Semi (TQNT) and RF Micro Devices (RFMD) last week, while hoping for a pullback (that assumed the market would correct one of these days), the other slot to buy these is on a breakout over a range. My dream scenario was...

I am starting "placeholder" stakes in TriQuint Semiconductor (TQNT) and RF Micro Devices (RFMD) - combined with our already held Skyworks Solutions (SWKS), I have the 3 main players in this niche. [Jul 23: Positive News Out of RF Semi Names: TriQuint Semiconductor and Skyworks Solutions] RFMD just put up a 7 cent quarter Thursday night, when analysts were in for zero. Annualize .07 and 28 cents and you have decent value for a stock under $5.

Both these stocks have popped post earnings and I want to build larger stakes lower. But I am going to do a 0.5% combined stake between the two, so they are on my sheets and stay in front of my eyes. My watch lists are so immense I tend to lose stocks in them so this way they are front and center. The last player in this group (and the smallest) is Anadigics (ANAD) which reports next week. Haven't looked at that name since 2001 perhaps.

No major fireworks out of Skyworks Solutions (SWKS) after hours so the stock is mildly up premarket. When I bought Skyworks, I mentioned the "group of 4" [May 12, 2009: Beginning Skyworks Solutions (SWKS)

• Goldman is TARP-free at last. Goldman Sachs (GS) became the first major bank to completely shed its bailout ties, paying $1.1B to redeem the government's TARP warrants and calling the Treasury's valuation 'full and fair' given the government's support of the financial system. With the warrant redemption and the $318M Goldman paid in dividends on its $10B TARP aid, taxpayers received a 23% annualized return for the nine-month transaction.
• S&P flip-flops on ratings. Standard & Poor's unexpectedly switched its rating of some bonds backed by commercial mortgages, upgrading the bonds to AAA just days after the same bonds had been sharply downgraded. The unusual move further damaged S&P's credibility and unsettled investors in the $700B market for commercial mortgage-backed securities [CMBS]. The reversal came after S&P realized bonds with a shorter lifespan were less risky than similarly structured bonds with a longer lifespan, a mistake that could reflect a basic misunderstanding of the way cash flows are distributed across CMBS.
• Bristol-Myers buys biotech firm. Bristol-Myers Squibb (BMY) agreed to acquire Medarex (MEDX), the biotech firm it already owns a 2% stake in, for $2.4B in cash. Bristol-Myers said the $16/share deal, which marks a 90% premium to Medarex's closing price on Wednesday, buys it proven antibody discovery technology and rights to an immunotherapy the companies developed. MEDX +89% premarket (7:00 ET).
• Intel fights antitrust fine. Intel (INTC) is fighting back against a record €1.06B ($1.45B) fine levied by EU antitrust regulators in May, saying the fine violates protections granted by European human rights law. Since the EU antitrust body handles both the investigation and judgment of a given case, companies don't have the opportunity to fully defend themselves as they would in a court. However, the appeal is a bit of a long shot as no EU antitrust appeal has ever won on this argument.
• Amazon's shoe-in to online apparel. Amazon (AMZN) will buy online shoe retailer Zappos.com for around $928M, an aggressive expansion into online apparel after Amazon's solo attempts at selling footwear were unsuccessful. Zappos is known for its fiercely loyal customer base, good customer service and free shipping/free returns policy. AMZN +0.6% premarket (7:00 ET).
• Bair wants large firms to pay. FDIC's Sheila Bair is scheduled to testify before the Senate Banking Committee this morning, and will ask lawmakers to impose fees on the country's biggest financial firms. Bair wants Congress to create an industry-supported Financial Company Resolution Fund which will provide working capital and cover unanticipated losses if the government has to wind down a failed firm. In addition to minimizing government outlays, this would also "provide an economic incentive for an institution not to grow too large."
• SEC targets pay-to-play. The SEC voted unanimously to propose rules preventing investment advisers from managing public programs for two years if they make political contributions. The proposal is an attempt to curb pay-to-play practices, in which public contracts are awarded to those who make political contributions.
• Chrysler warns on dealership legislation. Chrysler warned it could face liquidation for a second time if lawmakers move forward with a plan to reinstate terminated dealership agreements. The House of Representatives has already approved a measure to restore contracts with 789 dealerships, but the bill's future in the Senate is less certain.
• Moody's rebuffed in Berkshire sale. Moody's (MCO) fell 10.3% in after-hours trading following a disclosure by Berkshire Hathaway (BRK.A) that it sold 7.99M shares of the ratings company this week. Though Berkshire remains Moody's largest shareholder, the sale reduced its stake by 17%. Moody's has reported a profit decline for seven consecutive quarters.
• Porsche CEO, CFO resign. Porsche's CEO Wendelin Wiedeking and CFO Holger Haerter both resigned from the company with immediate effect, after coming to "the conclusion that the further strategic development of Porsche... is better off, if they are not on board as acting persons," said a company spokesman. The move is expected to facilitate a merger agreement with Volkswagen (VLKAY.PK).
• eBay beats as Paypal, marketplace show signs of life. eBay (EBAY) managed to beat quarterly earnings expectations (see details below), even as profit fell 29% and revenue fell 4%. The company's PayPal online-payments unit continued to grow strongly and a decline in eBay's core marketplace leveled off.
• ING may sell private banking unit. ING Group (ING) reportedly hired JPMorgan Chase (JPM) to advise it on the possible sale of its private banking business in Europe and Asia. A deal could be worth over $1B.
• House prices rise. The FHFA House Price Index was up 0.9% in May vs. -0.2% consensus, after falling 0.3% in April (revised). Nationwide prices are down 5.6% from a year earlier, and 10.7% from the April 2007 peak.

Earnings: Thursday Before Open

• 3M (MMM): Q2 EPS of $1.20 beats by $0.26. Revenue of $5.7B (-15%) vs. $5.4B. Adjusts guidance for FY '09 - sees EPS of $4.10-4.30 vs. prior guidance of $3.90-4.30. Shares +1.3% premarket (7:40 ET). (PR)
• Alexion Pharmaceuticals (ALXN): Q2 EPS of $0.20 beats by $0.04. Revenue of $92M (+55%) vs. $89M. Shares +1.9% premarket (8:00 ET). (PR)
• AT&T (T): Q2 EPS of $0.54 beats by $0.03. Revenue of $30.7B (-0.4%) in-line. Shares +2.9% premarket (7:45 ET). (PR)
• Bristol-Myers Squibb (BMY): Q2 EPS of $0.56 beats by $0.09. Revenue of $5.4B (+3.5%) vs. $5.3B. Issues upside EPS guidance for FY '09 of $1.95-2.05 vs. prior guidance of $1.85-2.00. (PR)
• Bunge (BG): Q2 EPS of $2.28 beats by $1.57. Revenue of $11B (-23.5%) vs. $12B. (PR)
• Celestica (CLS): Q2 EPS of $0.11 beats by $0.01. Revenue of $1.4B (-25%) in-line. (PR)
• Celgene (CELG): Q2 EPS of $0.46 in-line. Revenue of $629M (+10%) vs. $621M. Shares +8.9% premarket (7:45 ET). (PR)
• CME Group (CME): Q2 EPS of $3.37 beats by $0.14. Revenue of $648M (+15%) vs. $652M. (PR)
• Danaher (DHR): Q2 EPS of $0.89 beats by $0.01. Revenue of $2.7B (-19%) vs. $2.8B. (PR)
• Diamond Offshore Drilling (DO): Q2 EPS of $2.79 beats by $0.15. Revenue of $946M (-0.8%) vs. $942M. (PR)
• EMC (EMC): Q2 EPS of $0.18 beats by $0.01. Revenue of $3.3B (-11%) vs. $3.2B. Sees FY '09 EPS of $0.82 vs. &0.78 consensus. Shares +4.8% premarket (7:30 ET). (PR)
• EnCana (ECA): Q2 EPS of $1.22 beats by $0.25. Revenue of $3.8B (-49%) vs. $4.4B. (EnCana news release (.pdf))
• Fifth Third Bancorp (FITB): Q2 EPS of $1.15 vs. consensus of -$0.34 (may not be comparable). Tier 1 ratio of 12.9%. Shares +7% premarket (7:30 ET). (PR)
• FLIR Systems (FLIR): Q2 EPS of $0.35 in-line. Revenue of $278M (+6.5%) vs. $297M. Shares +1.9% premarket (7:50 ET). (PR)
• Ford Motor (F): Q2 EPS of -$0.21 beats by $0.27. Revenue of $27.2B (-34%) vs. $24.8B. (PR)
• Goodrich (GR): Q2 EPS of $1.15 beats by $0.04. Revenue of $1.7B (-8%) in-line. (PR)
• Hershey (HSY): Q2 EPS of $0.43 beats by $0.08. Revenue of $1.2B (+6%) vs. $1.1B. (PR)
• Huntington Bancshares (HBAN): Q2 EPS of -$0.40 misses by $0.22. Increased provision for credit losses 42% from Q1 to $413.7M. Tier 1 capital ratio of 11.86%. Shares -3.1% premarket (7:50 ET). (PR)
• ITT Educational Services (ESI): Q2 EPS of $1.87 beats by $0.14. Revenue of $317M (+29%) vs. $307M. (PR)
• JetBlue Airways (JBLU): Q2 EPS of $0.05 beats by $0.03. Revenue of $807M (-6%) vs. $800M. (PR)
• Kimberly-Clark (KMB): Q2 EPS of $1.16 beats by $0.22. Revenue of $4.7B (-5.6%) vs. $4.6B. Issues upside FY '09 EPS guidance of $4.10-4.25 vs. $4.12 consensus. (PR)
• Newmont Mining (NEM): Q2 EPS of $0.43 misses by $0.04. Revenue of $1.6B (+7%) in-line. (PR)
• NII Holdings (NIHD): Q2 EPS of $0.79 beats by $0.23. Revenue of $1.1B (-4%) vs. $1B. (PR)
• Omnicom Group (OMC): Q2 EPS of $0.75 beats by $0.01. Revenue of $2.9B (-17%) in-line. (PR)
• PNC Financial Services Group (PNC): Q2 EPS of $0.14 vs. consensus of $0.45 (may not be comparable). Revenue of $4B (+95.5%) vs. $3.65B. (PR)
• Potash Corp. (POT): Q2 EPS of $0.62 misses by $0.07. Revenue of $856M (-67%) vs. $981M. Issues downside Q3 EPS guidance of $0.80-1.20 vs. $1.56 consensus. Issues downside FY '09 EPS guidance of $4.00-5.00 vs. $5.24 consensus. Shares -2.3% premarket (6:50 ET). (PR)
• Raytheon (RTN): Q2 EPS of $1.24 beats by $0.11. Revenue of $6.1B (+4%) vs. $6.2B. (PR)
• Starwood Hotels & Resorts Worldwide (HOT): Q2 EPS of $0.22 beats by $0.05. Revenue of $1.2B (-23%) in-line. Issues downside guidance: sees Q3 EPS of $0.06-0.10 vs. $0.21 consensus, FY '09 EPS of $0.65 vs. $0.76 consensus. (PR)
• Terra Industries (TRA): Q2 EPS of $0.81 misses by $0.10. Revenue of $453.5M (-46%) vs. $568M. (PR)
• Thermo Fisher Scientific (TMO): Q2 EPS of $0.74 beats by $0.08. Revenue of $2.5B (-8%) vs. $2.4B. (PR)
• Wyeth (WYE): Q2 EPS of $0.94 beats by $0.09. Revenue of $5.7B (-4%) vs. $5.6B. Issues upside FY '09 EPS guidance of $3.48-3.58 vs. prior guidance of $3.33-3.53. (PR)
• Xerox (XRX): Q2 EPS of $0.16 beats by $0.05. Revenue of $3.7B (-18%) in-line. (PR)

Earnings: Wednesday After Close

• Alliance Data Systems (ADS): Q2 EPS of $0.95 misses by $0.07. Revenue of $460M (-9%) vs. $481M. Sees Q3 EPS of $1.34 in-line. Maintains 2009 EPS guidance of $5.15 vs. $5.00. (PR)
• Amdocs (DOX): Q3 EPS of $0.53 beats by $0.05. Revenue of $690M (-16%) vs. $679M. Sees Q4 EPS of $0.47-0.51 vs. $0.48. Sees Q4 revenue of $670M-690M vs. $668M. (PR)
• Citrix Systems (CTXS): Q2 EPS of $0.39 beats by $0.01. Revenue of $393M (+0%) vs. $387M. Sees Q3, FY09 revenues flat vs. 2008. (PR)
• Covanta Holding Corp. (CVA): Q2 EPS of $0.21 beats by $0.01. Revenue of $376M (-11%) vs. $391M. Reaffirms 2009 EPS $0.65-0.80 vs. $0.71 and adjusted EBITDA of $500M-540M. (PR)
• C.R. Bard (BCR): Q2 EPS of $1.23 beats by $0.02. Revenue of $625M (+1%) vs. $634M. (PR)
• eBay (EBAY): Q2 EPS of $0.37 beats by $0.01. Revenue of $2.1B (-4%) vs. $2B. Sees Q3 EPS of $0.34-0.36 vs. $0.35. Sees Q3 revenue of $2.05B-2.15B vs. $2B. (PR)
• Equifax (EFX): Q2 EPS of $0.57 in-line. Revenue of $455M (-9%) vs. $453M. Sees Q3 EPS of $0.52-0.57 vs. $0.59. (PR)
• Equinix (EQIX): Q2 EPS of $0.44 beats by $0.11. Revenue of $213M (+7%) vs. $209M. Sees Q3 revenue of $221M-225M vs. $220M. Sees FY09 revenue of $860M-$875M vs. $861M. (PR)

• E*TRADE Financial (ETFC): Q2 EPS of -$0.22 beats by $0.09. Total loan loss allowance was flat at $1.2B, or 5% of gross loans receivable. (PR)

Q2 2009 Earnings Call

July 22, 2009 05:00 PM ET

Highly regarded banking analyst, Meredith Whitney, upgraded Goldman Sachs (GS) to a buy and financial stocks were off to the races as Monday’s top market leading sector. Now that the stage has been set, the market will take the bulk of its cues from earnings as quarterly reports and guidance increase.

Volume was mixed on the two major exchanges: NYSE volume -0.92% below average and Nasdaq Composite volume +2.12% below average.

Last week (7.2.09), XLNX lowered its guidance to -5.5% below Street expectations. A press release stated that the shortfall was due to "supply constraints on certain Virtex-5 devices that are in high demand." We noted that the high demand was consistent with recent data, esp surrounding China 3G infrastructure, and also noted that the Virtex-5 was manufactured at the 65nm node, which only accounted for 11% of UMC's revs. We reasoned that 65nm was a mature process, and thus yield issues were unlikely. This morning, a DigiTimes article, citing UMC's CFO Chi Tung Liu, confirms this.

Thus we reiterate our positive stance on several names:

Huntington Bancshares (HBAN)

Mad Mail: TriQuint Semi (TQNT), Apple (AAPL), RF Micro (RFMD), Skyworks Solutions (SWKS), Qualcomm (QCOM)