Good morning, Gentlemen (BTW, I am referring to you guys here on the thread),
FWIW, I think the answer to Andreas' question may be found in the following observations:
(1) Although GTIS beat the estimates by a comfortable margin, we have to remember that these were the revised estimates. I would not construe these numbers to be a "positive earnings surprise" and feel that they would have had to approach or exceed the original estimates for the stock to have run up significantly on the earnings news.
When the estimates for this quarter were originally cut, I had mentioned on this thread that I felt that GTIS would still come in with numbers closer to the high end of the revision, and they appear to have done so. Still, this is not the stellar performance that the street was looking for initially. It is irrelevant what any of us thinks, or what we anticipated, because the stock's movement is entirely determined by the big money, who seem not to be impressed enough to be buying tons of GTIS in the mid 8 level. This is not to say that smart money is leaving, as I haven't checked intraday charts or done any TA yet, but I plan to shortly, and will post if I find any eye-opening stats - I just don't know right now, but wanted to send off a quick reply to Andreas.
(2) Considering the market volatility lately, I would think that the short term players, like myself, have taken their minor profits this am upon realizing that the stock was not going to run up. Longer term players are encouraged, and are probably waiting for the next quarter to make a definitive decision on whether to sell or hold. Many people are expecting a correction, some feel it has begun, so I'm not surprised that some are unwilling to gamble on GTIS right now by risking their principal further given the recent action on the stock.
(3) GTIS is probably not tanking because it has already been hit hard, and there is little room for downside movement, IMO. Some of you may think that there was no possiblity that GTIS could've tanked on this news, but given that several great companies with respectable earnings have been trashed lately, I was prepared for anything. I did not expect GTIS to run this morning, but did not post it on the thread, as I saw no point in making any half-ass predictions. The market will determine the price movement of the stock, and all of our wishing and hoping is not going to change that. So, I was prepared to sell, and did so, reluctantly. I simply felt that my money would be better spent elsewhere now, which is not a bearish view on GTIS per se, it's just how I manage my portfolio. Should GTIS show some real strength in the future, I wouldn't hesitate to jump back in, to either trade or to hold for a longer term play.
(4) We need to reread this sentence from the earnings PR carefully. I suspect that this one fact may speak volumes as to why the stock did not run up this morning, and this is the reason that I refrained from being overly optimistic on the earnings news. Increased revenues are great, but it is the bottom line that counts. If money is being spent as quickly as it is being made, EVEN IF IT'S FOR A LEGITIMATE REASON like furthering the company's position or market share in the future, investors will look to the net profits oftentimes in making investment decisions. They may wait to jump in until the company shows that they are turning megaprofits off of their expenditures - "proof" that it takes money to make money and isn't just irresponsible management. "What have you done for me lately?" Agree or disagree, it makes no difference. This is the way it is, so get with it, or lose money. I am speaking from experience, not trying to be haughty, but I have learned that it doesn't matter how I view balance sheets, it's what the big boys think that moves the stock. Having said all of this, read the following copied passage, and see if what I've said makes any sense:
<<<<Revenues for the fourth quarter of 1996 were $135 million, a 30 percent increase over the comparable 1995 quarter. Net income for
the quarter was $8.5 million, a 16.8 percent decrease from the fourth
quarter of 1995. Earnings per share for the quarter were $.13 versus
$.16 in the prior year.>>>>
Again, my intention is not to upset anyone on the thread, but to try to shed some light on why we're seeing this action in today's session.
Good luck, and good trading to us all,
Vicki |
