MARKET TALK: IBM 4Q Beat Not A Revenue Story
17 Jan 16:17
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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4:17 (Dow Jones) IBM tops EPS view by a penny, but like so many others, it
looks like a cost-cutting effort - revenue was shy of Street expectations by a
billion dollars. Global services revenue fell, and company still sees tough
going on the business front. (TG)
4:11 (Dow Jones) Call it a Post-Enron, Information Age. Calpine (CPN)
suprised some Wednesday by actually answering the question, "What's your spark
spread sensitivity?" Then, Duke Energy (DUK) Thursday unveiled several new
metrics that shed more light on its accounting practices. Admittedly, some of
the new terms are unwieldy - daily earnings at risk, realization period of the
mark-to-market book, and unrealized mark-to-market margin - but more is clearly
better with the spotlight on financial transparency. More sure to come when
others in the sector report earnings. (CCC)
4:03 (Dow Jones) Remember Wednesday's session? Well, turn the color from red
to green and you essentially have Thursday's action. Tech looks good, 27 of the
30 Dow components move up (SBC, AT&T, and Home Depot don't), data support
economic turnaround story, earnings relatively good, and big boys tonight
shouldn't hurt much, either. Sentiment out tomorrow. DJIA adds 141 to 9854,
Nasdaq Comp gains 40 to 1985, and S&P 500 climbs 11 to 1138 (preliminary). (TG)
3:48 (Dow Jones) Richmond Fed President Broaddus is up with a fairly dovish
speech in which he expects recovery, though a bit "softer" than consensus. He
says the worst news on the slowdown appears over and that business spending
prospects look better. (MSD)
3:40 (Dow Jones) Merrill keeps strong buy on Federated (FD) because unloading
Fingerhut will allow the company to focus on its core department-store
business, and earnings will be higher given the negative operating performance
outlook of the Fingerhut business. Federated's valuation is extremely
attractive, Merrill adds, trading at 44% discount to market. Federated shares
off 1.2% at $40.25. (TG)
3:29 (Dow Jones) That IBM and Microsoft (MSFT) are reporting tonight is well
known. Also set to unveil quarterly results after the bell: Nortel (NT), Xilinx
(XLNX), Harley-Davidson (HDI), Avaya (AV), Scientific-Atlanta (SFA), and
Network Associates (NETA). (TG)
3:15 (Dow Jones) A group of funds managed by Gabelli Asset Management (GBL)
will vote its 25.74% stake in favor of a dissident slate of nominees to SL
Industries' (SL) board. The group, which spoke with company officials and the
dissidents, said it believes that the dissidents, if elected, should keep the
company's management and focus on achieving shareholder value and not on
settling disputes. SL shares up 2% at $7.35. (BS)
3:05 (Dow Jones) After the bell, IBM will weigh in with its 4Q earnings
results. As in past quarters, Big Blue is expected to meet the earnings
consensus of $1.32 a share. Analysts say strength will come from IBM's services
business, and from mainframe and UNIX server sales. Weakness is expected from
Big Blue's PC, microelectronics and hard disk drive units. As for the 1Q, Gary
Helmig, an analyst at SoundView Technologies, says the strong dollar will
create some revenue pressures. He expects IBM to discuss that on the company's
earnings conference call later Thursday. (DLF)
2:59 (Dow Jones) The fact that Canadian dollar is languishing near all-time
lows is all the more striking given that its Nafta counterpart - the Mexican
peso - is still remarkably strong. Both are highly leveraged to U.S., over 80%
of total exports from both are U.S. bound, and both stand to benefit
immediately from a U.S. recovery. While part of Mexico's appeal is its ranking
at the top of the emerging market class, investors clearly think there's much
more potential upside for Mexico than Canada. (GMM)
2:45 (Dow Jones) If the unlucky firms with financial ties (not backed by
collateral) to bankruptcy-bound Enron (ENE) get nothing, Citigroup (C) said it
would cost it $228 million. The $228 million charge taken during the 4Q covered
half of its total Enron exposure. Despite those charges and additional losses
stemming from Argentina, the bank posted strong 4Q EPS, up 36% from last year.
Shares up 2.3% at $49.99. (TAS)
2:33 (Dow Jones) Most on the Street expect Microsoft (MSFT) to continue the
tech earnings cheer when it reports 2Q after the close. The consensus calls for
EPS of 43 and revenue of $7.23B, though several analysts have predicted 1c-2c
of upside. Strong sales of Xbox and Windows XP and better-than-expected PC
shipments should provide the boost. As always, the question mark will be
forward guidance. Shares up 2.4% at $69.51. (MLP)
2:22 (Dow Jones) Calpine (CPN) registered with the SEC to boost its mixed
shelf registration to $2.5 billion, but the company doesn't have an immediate
need to issue additional equity, a company spokeswoman said. "We want to have
the financial flexibility," she said. As a result of a recent recapitalization
effort, Calpine expects it has $4.4 billion of cash, credit, and expected cash
flow this year, which is just enough to meet its spending needs for the coming
year. (CCC)
2:15 (Dow Jones) Traders concerns that the Argentina peso would keep on
losing ground are proving valid. Thursday, the peso has weakened to
ARS2.05/USD, down from Wednesday's close of ARS1.85. EUR/USD is $0.8812;
USD/JPY is Y132.40; EUR/JPY is Y116.68. (JRH)
2:08 (Dow Jones) Enough about Enron (ENE), Argentina, and earnings. The
question that's really on investors' minds is: Who gets custody of the red
umbrella logo after Citigroup (C) spins off its Travelers Property Casualty
insurance unit? After all, the little emblem has its roots at Travelers Group,
which merged with Citicorp in '98 to create the present-day Citigroup.
So...it's going to stay at Citi. "I probably invested in more umbrella clothes
than all the people up there put together," Citi CEO Sandy Weill said,
referring to Travelers PC headquarters in Hartford, Conn. Travelers PC will
have to find a new corporate designation two years after the spin-off. (TAS)
1:56 (Dow Jones) Salomon Smith Barney economist Melanie Jani says that
following Thursday's stronger-than-expected jobless claims, January's
employment report should show a rise in payrolls, marking the first gain in six
months (JNP)
1:45 (Dow Jones) Yahoo's 12% gain has left the Internet services sector on
top of the 86 Dow Jones industry groups. Heavy construction, software, heavy
machinery, and trucking round out the top five. Tires, airlines, and biotech
are among the misbehavers. Tires, incidentally, are also the worst performer
over the last week, and among the worst over the past month. Since the close on
Jan. 7, Goodyear (GT) is off about 15%. DJIA up 113 at 9825, Nasdaq Comp higher
by 23 to 1967, and S&P 500 climbs 8 to 1136. (TG)
1:36 (Dow Jones) Fitch analysts say the insurance industry still has several
billions of dollars of asbestos exposure, but that it's a long-term problem and
manageable for property-casualty insurers. Worries about asbestos liability
were spurred last month after a Baltimore jury awarded $30 million ln a verdict
against Haliburton's (HAL) Dresser Industries unit for asbestos-related
injuries. (MCG)
1:26 (Dow Jones) Jefferies sees Lowe's (LOW) growing at a more rapid pace
than Home Depot (HD), which is why the firm downgraded HD to accumulate from
buy. Jefferies notes that Home Depot's share price is 20% higher than Lowe's
and that Lowe's shares are trading at a greater-than-30% PE/G discount relative
to Home Depot. The Dow component's shares "have a better than 20% upside
potential over the next 12 months," Jefferies says, but Lowe's shares have a
better than 40% upside potential during the same period. (GS)
(END) DOW JONES NEWS 01-17-02
04:17 PM |
