Advanced Micro Devices (AMD) earnings disappoint, but the news isn't all bad

Filed under: After the bell, Earnings reports, Bad news, Advanced Micro Dev (AMD)

Advanced Micro Devices (NYSE: AMD) -- a major name in the chip sector and the leading rival of the 800-pound Intel (NASDAQ: INTC) gorilla -- slinked into the earnings confessional Thursday to report third-quarter losses that were broader than expected. Specifically, the firm posted a net loss of $396 million, or 71 cents per share.. In its year-ago period, AMD banked a per-share profit of 27 cents per share, equal to net income of $136 million.

What's more, the loss was 9 cents wider than the 62-cent loss projected on Wall Street. While earnings excluding items were not reported, AMD did note that many analysts' estimates failed to account for the $120 million -- 22 cents per share -- in costs that the company swallowed relating to its $5.6 billion acquisition of ATI Technologies. So when this is taken into account, the picture isn't quite as bad.

Continue reading Advanced Micro Devices (AMD) earnings disappoint, but the news isn't all bad

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Before the bell: BSC, MSFT, NYX

Filed under: Before the bell, Microsoft (MSFT), NYSE Euronext (NYX), Bear Stearns Cos (BSC), Blackstone Group L.P (BX)

Main market news here: Before the bell: $90 oil pushes down index futures

The Wall Street Journal reported Friday that in addition to ongoing criminal scrutiny in New York, Bear Stearns (NYSE: BSC) is now under investigation in Massachusetts, as securities regulators examine whether it improperly traded with its two hedge funds that collapsed over the summer.

Microsoft (NASDAQ: MSFT) chief Steve Ballmer said Thursday that rather than buying up rivals and pursuing large takeovers, the software mammoth will focus on as many as 20 small acquisitions yearly.

New York Stock Exchange operator NYSE Euronext (NYSE: NYX) will be added to the S&P 500, replacing Hilton Hotels Corp. -- which was bought out by The Blackstone Group (NYSE: BX) -- and knocking Limited Brands (NYSE: LTD) out of the S&P 100.

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Option update 10-19-07: Baidu volatility Elevated at 90 into EPS

Filed under: Earnings reports, Products and services, Options

Baidu-(NASDAQ-BIDU), a Chinese language internet search provider, is recently up $4.00 to $324 in pre-open trading. The company will report earnings on 10/25. Smith Barney has a $250 price target. November option implied volatility of 89 is above its 26-week average of 56 according to Track Data, suggesting larger price fluctuations.

Vertex Pharma-(NASDAQ-VRTX), is focused on viral diseases, inflammation, autoimmune diseases, cancer, pain and bacterial infection. The company sold off on 10/18/07 after promising trial data from Schering Plough's-(NYSE-SGP) Hepatitis C drug boceprevir was seen as a threat to VRTX's Telaprevir. Option volume was heavy on 54,154 contracts. November option implied volatility of 75 is above its 26-week average of 48 according to Track Data, suggesting larger price fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Wikinvest - anybody can become a market guru

Filed under: Internet, Getting started, Small business, Technology

Back in the late 1990s, Parker Conrad and Michael Sha daytraded from their dorm room. At first, it went very well - that is, until the dot-coms crashed.

Despite all this, they are still stock market junkies. In fact, they have created a unique site for traders to hang out in -- Wikinvest. But this is no fly-by-night operation -- the company recently snagged $2.5 million in venture capital.

However, are wikis really a good platform for this? Even with the success of Wikipedia, there are many failed attempts in the wiki space, right?

"It's important that a wiki focus on a group that is passionate about its category," said Parker. "And that's the case with investing. It's also large. Even though we have been running only for about three months, we have attracted quite a lot of contributors."

It also helps that the Wikinvest site has some cool features. For example, each stock has a 3-point bull and bear case.

What's more, there's a bit of a "long-tail" aspect to things. That is, you can find useful information on obscure stocks.

I'm also impressed with Wikinvest's charts, which allows you to annotate things. So, if there was a big drop in the stock price, you can click the particular section and the get relevant news.

I suspect we'll be seeing more features as time goes by. And, it also looks like Conrad and Sha's hard daytrading lessons will have not been for naught.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

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Newspaper wrap-up: Some see bubble in oil

Filed under: Newspapers, Magazines, Amazon.com (AMZN), Aetna Inc (AET), US Airways Group (LCC), Amgen Inc (AMGN), Bear Stearns Cos (BSC)

MAJOR PAPERS:

• The office of the Massachusetts secretary of state is investigating whether Bear Stearns (NYSE: BSC) improperly traded mortgage-backed securities for its own account with two hedge funds that failed this past summer, without notifying in advance the funds independent directors, reported the Wall Street Journal.
• The Schork Report's Stephen Schork sees an oil correction coming and predicted oil in the $65-$68 range, according to the Wall Street Journal's "Heard on the Street" column.

OTHER PAPERS:

• Insurer Aetna (NYSE: AET) has instituted a tighter reimbursement policy for Amgen's (NASDAQ: AMGN) anemia drugs, creating a setback for Amgen, reported the Los Angeles Times.
• A consortium led by Icelandic investor Baugur is interested in making an offer for Saks (NYSE: SKS), reported the New York Post, but Saks will not consider a sale until the credit market improves.
• From BusinessWeek's "Inside Wall Street" section:
  
• BusinessWeek suggested that US Airways' (NYSE: LCC) poor performance compared to it's competitors makes it an attractive target to be bought.
• Rami Rosen of investment firm Oscar growth believes pacts like Radware's (NASDAQ: RDWR) venture with International Business Machines (NYSE: IBM) will help to drive growth.
• BusinessWeek hailed Amazon's (NASDAQ: AMZN) performance, saying it is one of the few internet companies that has beaten Google (NASDAQ: GOOG).

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20th anniversary of black monday, Wal-Mart's black friday threat & tax relief in 2008 - Today in Money 10/19

Filed under: Google (GOOG), Wal-Mart (WMT), McDonald's (MCD), Caterpillar (CAT), Money and Finance Today, Xerox Corp (XRX), Wachovia Corp (WB)

In the News:

· Jim Cramer Takes a Look Back at the 20th Anniversary of Black Monday

· Oil Prices Soaring Above $90 Impacting Markets

· Google Earnings Soaring as Profit Up 46%

· Google Under Fire Over a Controversial Site

· McDonald's Boosted By International Sales Surge

· Caterpillar Earnings Rise 21%; Outlook Lowered

· Wachovia Profit Falls 10% on Credit Market Conditions

· Xerox Earnings & Sales Top Wall Street Estimates

· Nearly Half of Americans See Recession

· 3M Earings Rise, Even With Slowing Sales

· Jerry Seinfeld's Wife Scores Big Hit Thanks to Oprah

Wal-Mart's Black Friday Threat

Retailer is threatening legal action if Web sites leak its highly-popular Black Friday circular before Nov. 19.

Wal-Mart: Stop leaking Black Friday deals, or else - Oct. 18, 2007

Restaurant Chains Aspire to Hit 1-0-0-0

It took McDonald's 20 years to get there and Starbucks 25 years. The dream of almost every restaurant chain -- to hit 1,000 units -- is happening at warp speed in 2007. At least five chains have hit that number this year. Sbarro and Papa Murphy's got there. So did Panda Express, as did Panera Bread and WingStreet. Even plucky Johnny Rockets, under new ownership, just unveiled plans to multiply its 217 units to 1,000.

More restaurant chains aspire to hit the big 1-0-0-0 - USATODAY.com

Some Tax Relief Coming in 2008

When taxpayers file their 2008 tax returns -- that's in early 2009 for most taxpayers -- they'll enjoy higher personal exemption amounts, a higher standard deduction and wider tax brackets, meaning more money is taxed at a lower rate, the IRS announced on Thursday. The dollar amounts for some tax provisions are revised each year to keep pace with inflation.

IRS inflation adjustments bring some tax relief -- in 2008 - MarketWatch

When Your Dream House Turns Into a Nightmare

For years Americans custom-built homes with pricey extras expecting high returns on their investment. They're in for a letdown.

Dream House or Nightmare? - Newsweek.com

The Man Who Started Foodfight

Seth Goldstein's 'craplet' apps - Happyhour, Appaholic, Foodfight - are already facebook gold. But he's got grander plans.

The man who started the foodfight - Business 2.0

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Google (GOOG) passes Cisco -- Microsoft is next

Filed under: Earnings reports, Analyst reports, Forecasts, Internet, Google (GOOG), Microsoft (MSFT), Cisco Systems (CSCO), Hewlett-Packard (HPQ), Intel (INTC), International Business Machines (IBM), Stocks to Buy

Google (NASDAQ: GOOG) reported its 3rd quarter numbers Thursday and it came through in incredible style. I say style because Google's management does not give guidance to analysts, either annually or quarterly. It lets Wall Street just try and figure it out. The second quarter was "disappointing" to many analysts as Google made the revenue line but "missed" the earnings line because of sloppy expense control. Google management did not agree, but they did the classy thing and just let it go by. Google would have the last laugh. Remember all the talking heads who were negative on the name since the IPO, taking their premature victory laps and claiming Google's super days were over.

I have already stated this in several posts and will re-iterate it: Google is the most relevant company of this decade and probably the next two or three as well. Many people just don't get this name.

Google's earnings for the 3rd quarter just proved again that this company has the perfect storm behind it: growing significant market share IN A GROWING MARKET! Trying to put traditional analytical metrics to this company just will not work. This company will become the most valuable technology company in the world -- only Microsoft (NASDAQ: MSFT) has a larger market capitalization. Google is now at $203 billion, having just passed Cisco Systems (NASDAQ: CSCO) at $199 billion. Microsoft's market cap sits at $292 billion.

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Is the Treasury's Citigroup bailout plan cratering?

Filed under: Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs Group (GS), Politics

The New York Times reports that the recently announced Super SIV plan to buy out Structured Investment Vehicles (SIV) is a thinly disguised effort to bail Citigroup (NYSE: C) out of these poorly constructed off-balance sheet obligations (remember Enron?). It looks to me like the law of large borrowers is drawing the government in to delay Wall Street's inevitable reckoning for the subprime meltdown.

What is the law of large borrowers? If you borrow $100,000 from a bank and you can't pay it back, that's your problem. But if you borrow $5 billion and can't find the scratch, it's the bank's problem. How does this apply to Citigroup?

Citigroup is the biggest sponsor of SIVs, and now that nobody wants to buy the subprime mortgage-backed securities (MBSs) backing the SIV's Commercial Paper (CP), Citigroup can't afford to write down its capital to account accurately for the loss it faces when it is forced to buy back its deeply underwater SIVs.

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No apologies from Overstock's Patrick Byrne this quarter

Filed under: Earnings reports, Management, eBay (EBAY), Amazon.com (AMZN)

Overstock.com Inc. (NASDAQ: OSTK) Chief Executive Patrick Byrne's long, rambling apologies to shareholders for his company's terrible performance usually provide a needed humor break from the pressures of earnings season. This quarter, though, Byrne offered a shorter statement about the company's improving financial performance.

To be sure, the quarter was merely awful instead of disastrous. The company lost $4.7 million, or 20 cents per share, compared with $24.5 million, or $1.19, a year earlier. Revenue rose 3% to $161.9 million. Analysts expected a loss of 39 cents and revenue of $155.1 million, according to Thomson Financial.

In his letter, Byrne sounded ecstatic. The good news isn't shocking given the better-than-expected quarter reported by eBay Inc. (NASDAQ: EBAY) and bodes well for next week's report from Amazon.com (NASDAQ: AMZN). Byrne's missive is reprinted below for all to enjoy.

Dear Investor:

In Q3, we generated positive EBITDA for the first time in a non-Q4 quarter. I believe this validates our view that a profitable business model is emerging, particularly in light of our de minimus capital expenditures ($316K during Q3).

We also returned to positive (albeit modest) top-line growth despite halving our marketing expenses. A year ago, I said that we had a laundry list of projects we were working on to improve our marketing efforts. Since then, our marketing dollars have become twice as efficient. We are about one-third of the way through the list; I do not know what the remaining two-thirds will bring.

Expenses are drum tight, product selection is strong, operations are humming, and customer satisfaction is extraordinary. We are superbly positioned for the holiday season.

I look forward to our call, and as always, remain,

Your humble servant,

Patrick M. Byrne

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Analyst upgrades: CNC, EAT, HLIT, IEX and RDS.A

Filed under: Analyst reports, Analyst upgrades and downgrades, Brinker Intl (EAT), Sprint Nextel Corp (S)

MOST NOTEWORTHY: Centene, Brinker International, Harmonic, Idex and Royal Dutch Shell were today's noteworthy upgrades:

• Jefferies upgraded shares of Centene Corporation (NYSE: CNC) to Buy from Hold as they expect the company is benefiting from above 20% revenue growth next year and SG&A leverage opportunity over the next 12-18 months.
  
• Bear Stearns upgraded shares of Brinker International (NYSE: EAT) to Outperform from Peer Perform as they believe Brinker's turnaround efforts can enhance shareholder value.
  
• Friedman Billings raised shares of Harmonic (NASDAQ: HLIT) to Outperform from Market Perform based on the favorable outlook for cable and satellite spending on HD video and other projects.
  
• The firm also upgraded Idex Corporation (NYSE: IEX) to Outperform from Market Perform, citing the company's positive 2008 outlook and solid end markets.
  
• Goldman upgraded Royal Dutch Shell (NYSE: RDS.A) to Neutral from Sell on valuation.

OTHER UPGRADES:

• CIBC upgraded J. Crew Group (NYSE: JCG) to Sector Outperformer from Sector Performer and Parker Hannifin (NYSE: PH) to Sector Performer from Sector Underperformer.
  
• Sprint Nextel Corporation (NYSE: S) was upgraded to Outperform from Neutral at Credit Suisse.
  
• RBC Capital Markets upgraded LaSalle Hotel Properties (NYSE: LHO) to Top Pick from Outperform.

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Cramer on BloggingStocks: Don't fence in growth

Filed under: Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Coca-Cola (KO), Intel (INTC), CIT Group (CIT), Research in Motion (RIMM), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says stocks like CIT need to avoided, not growth stories like Google, Apple and RIM.

At Google (NASDAQ: GOOG) they are not ring-fencing. They aren't ring fencing at Intel (NASDAQ: INTC) either. Or Microsoft (NASDAQ: MSFT) . Or Coke (NYSE: KO) , for that matter.

What's ring-fencing? It's the term being used by financial institutions to keep the mortgage portfolios away from the rest of a company's loan exposure. I first heard it on the CIT (NYSE: CIT) conference call, a company that for lack of a better analogy, really whiffed at the home mortgage game when things got tough. Actually it's not the first time I ever heard the term. We had some long horns at a farm in New Jersey. We had to ring fence them so they didn't gore and kill our horses.

CIT's not a cattle ranch. It's a lender.

On its conference call, where it had to issue equity to cover dividends, you could tell there was a real sense of relief from management. As one of the hardest hit non-bank mortgage originators that is still solvent, CIT put together what amounts to a rescue package that allowed them to sell most of their mortgage portfolio to Freddie Mac (NYSE: FRE) to save their balance sheet and allow them to continue to lend to commercial businesses, particularly transportation companies, their true forte. I am sure if you own CIT you are thrilled that everything worked out and all you did was experience a giant loss on your stock's value.

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Caterpillar's gloomy outlook helps drag down market by triple digits

Filed under: Earnings reports, Bad news, 3M Corporation (MMM), Caterpillar (CAT), Honeywell Intl (HON)

3M Co. (NYSE: MMM) and Honeywell International Inc. (NYSE: HON) today reported better-than-expected third quarter results and raised their earnings guidance. But Caterpillar Inc. (NYSE: CAT) disappointed Wall Street and offered a gloomy outlook for the U.S. economy. That bad news pulled down 3M and Honeywell's shares, as well as pulling down the Dow Jones Industrial Average by triple digits.

"The third-quarter earnings that are coming out are the worst but we don't see a sharp bounce-back,'' Christina Bank & Trust's Scott Arminger told Bloomberg News. ``Financial earnings will be pretty mediocre for a couple of quarters going forward.''

The maker of Post-It notes and countless other products reported net income of $960 million, or $1.32 per share, compared with $894 million, or $1.18 per share, a year earlier. Revenue rose 5.5$ to $6.2 billion. Excluding one-time earnings profit was $1.29 compared with $1.17 a year earlier. Analysts expected profit of $1.28 and revenue of $6.29 billion, according to Thomson Financial. 3M raised its earnings forecast to $5.54 to $5.62 for this year, compared with previous guidance of $5.40 to $5.60. It expects full year sales growth excluding the divestiture of the branded pharmaceutical business of 7% to 8%.

Honeywell's profit rose 14% to $618 million, or 81 cents per share and revenue rose 10 percent to $8.74 billion, helped by strength in its commercial aviation, defense and space markets. The results beat Wall Street consensus expectations of 82 cents on revenue of $8.59 billion.

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Analyst downgrades: HBC, AZN, ELOS, TLB, BKUNA and FED

Filed under: Analyst reports, Analyst upgrades and downgrades

MOST NOTEWORTHY: HSBC Holdings, AstraZeneca, Syneron Medical, Talbots, BankUnited and First Fed Financial were today's noteworthy downgrades:

• UBS downgraded shares of HSBC Holdings(NYSE: HBC) to Neutral from Buy on valuation, rising customer defaults and slower growth at the company's the U.S. consumer-finance unit.
  
• UBS also downgraded AstraZeneca (NYSE: AZN) to Sell from Neutral, as they believe the company faces major risks from drug approvals, competition and lawsuits.
  
• Merriman downgraded shares of Syneron Medical (NASDAQ: ELOS) to Neutral from Buy following the company's Q3 earnings preannouncement due to near-term margin erosion and growth drivers that remain four quarters away.
  
• CIBC downgraded shares of Talbots (NYSE: TLB) to Sector Performer from Outperformer as they believe 2H07 expectations are too high given the current weakness in the Missy space.
  
• Friedman Billings downgraded BankUnited (NASDAQ: BKUNA) to Market Perform from Outperform and FirstFed Financial (NYSE: FED) to Underperform from Market Perform based on credit trends that are eroding faster than anticipated.

OTHER DOWNGRADES:

• Merrill downgraded JMP Group (NYSE: JMP) to Neutral from Buy.
  
• Baird downgraded Cabela's (NYSE: CAB) to Neutral from Outperform.
  
• Societe Generale downgraded Business Objects (NASDAQ: BOBJ) to Hold from Buy.

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Analyst initiations: SPLS, ODP, GSB and CYTR

Filed under: Analyst reports, Office Depot (ODP), Staples Inc (SPLS), Analyst initiations

MOST NOTEWORTHY: Staples, Office Depot, GlobalSCAPE and CytRx were today's noteworthy initiations:

• Jefferies initiated shares of Staples Inc (NASDAQ: SPLS) with a Hold rating and $22-$24 target. The firm finds the current valuation fair given the increased risk of excess store growth in the industry, increased promotional activity and deceleration of employment growth.
  
• Jefferies expects shares of Office Depot Inc (NYSE: ODP) to trade sideways given the company's accelerating store growth, greater promotional activity and execution issues. The firm resumed coverage with a Hold rating and $22-$24 target.
  
• Soleil started shares of GlobalSCAPE Inc (AMEX: GSB) with a Buy rating and $12 target, as they believe the company has the opportunity to grow revenues around 35%-40% annually and is an attractive acquisition candidate for suitors who address the corporate networking infrastructure marketplace.
  
• Cytrx Corporation (NASDAQ: CYTR) was initiated with a Buy rating and $6 target at Oppenheimer, as they are optimistic regarding the market potential of arimoclomol in amyotrophic lateral sclerosis and sees several catalysts approaching over the next 12-18 months.

OTHER INITIATIONS:

• Deutsche Bank started shares of Alliance Imaging Inc (NYSE: AIQ) and Pediatrix Medical Group Inc (NYSE: PDX) with Hold ratings and target of $10.50 and $70, respectively.
  
• Credit Suisse started shares of Accenture Ltd (NYSE: ACN), Genpact Limited (NYSE: G) and Cognizant Technology Solutions Corporation (NASDAQ: CTSH) with Outperform ratings and targets of $50, $20 and $53, respectively.

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NYSE Euronext (NYX) soars on addition to S&P 500 and S&P 100

Filed under: Major movement, Good news, Indices, NYSE Euronext (NYX), Hilton Hotels (HLT), Options, Technical Analysis, Limited Brands (LTD), S and P 500

NYSE Euronext, Inc. (NYSE: NYX) is surging today after Standard & Poor's announced that NYX will replace Hilton Hotels Corp (NYSE: HLT) in the S&P 500 after the market closes Oct. 24. S&P also announced that NYX will replace Limited Brands (NYSE: LTD) in the S&P 100. Joining these indices means that any mutual funds that track the index will need to buy shares, which should cause much higher demand over the next few months. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NYX.

After hitting a one-year high of $112.00 in November, the stock sagged to a 52-week low of $64.26 in August. NYX opened this morning at $86.20. So far today the stock has hit a low of $84.93 and a high of $86.39. As of 10:40, NYX is trading at $85.07, up $2.43 (2.9%). The chart for NYX looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $65 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 2 months as long as NYX is above $65 at December expiration. NYSE would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.

NYX hasn't been below $65 by more than a few cents in the past year and has shown support around $80 recently. This trade could be risky if the company's earnings (due out on 11/2) disappoint, but even if that happens, this position could be protected by the increase in demand for shares as well as strong support around $70, where the stock bounced in September.

Brent Archer is an options analyst and writer at Investors Observer.

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McDonald's (MCD) trades flat following earnings

Filed under: Earnings reports, Good news, McDonald's (MCD)

Shares of McDonald's Corporation (NYSE: MCD) are trading flat in today's market after reporting its third quarter numbers this morning. The stock is currently down slightly, falling 0.1% to $56.71, down $0.08.

As we noted in our earnings preview earlier this week, analysts had been expecting to see the company report 81 cents per share during the quarter, and the company actually showed earnings for the quarter to be slightly higher at 83 cents a share.

So why is the stock not moving higher in today's action? Simple... the stock had already been priced to report 83 cents a share after the company set this as its target goal last week.

Overall, it was a great quarter for the fast food giant. Global same store sales rose by a nice 6.9 percent during the quarter, marking the seventh consecutive quarter of increases in same store sales. The U.S. market had its eighteenth straight quarter of same store sale increases.

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Boston Scientific (BSX) almost triples earnings estimates

Filed under: Major movement, Earnings reports, Good news, Boston Scientific (BSX), Options, Technical Analysis

Boston Scientific Corp. (NYSE: BSX) reported its Q3 earnings this morning, soundly beating analysts' expectations. Not counting $435 million expenses related to acquisitions and asset sales, Boston Scientific's profit in the latest quarter was 20 cents per share, while analysts were expecting just 7 cents per share. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BSX.

After hitting a one-year high of $18.69 in January, the stock slipped to a 52-week low of $12.11 in August. BSX opened this morning at $14.08. So far today the stock has hit a low of $14.06 and a high of $14.65. As of 10:50, BSX is trading at $14.52, up 67 cents(4.8%). The chart for BSX looks bullish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $12.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just 3 months as long as BSX is above $12.50 at January expiration. Boston Scientific would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.

BSX hasn't been below $12.50 by more than a few cents in the past year and has shown support around $13.80 recently. This trade could be risky if today's earnings are not as rosy as they seem at first glance, but even if that happens, this position could be protected by strong support just below $14, where the stock just bottomed.

Brent Archer is an options analyst and writer at Investors Observer.

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Apple takes a bigger slice of the PC pie

Filed under: Earnings reports, Apple Inc (AAPL), Technology

Well it's harvest season here in New England, and the Macintoshes are ripe. But in Silicon Valley, it looks like Apple (NYSE: AAPL)'s Macintosh brand is the fruit filling in the PC market pie. According to TheStreet.com, Apple's Macintosh is gaining market share.

How much? In the third quarter, Apple's Mac computers accounted for 6.3% of all PCs sold, up from 5.7% a year earlier, according to IDC. This growth means that Apple pulled further ahead of its competitors as it increased its lead as the third-ranked player in the market, a position it took over earlier in the year.

This gain in market share should help Apple when it reports on Monday, as the Macintosh has been accounting for a greater share of Apple's own profit pie. In the first nine months of the company's fiscal year, the Mac accounted for 41% of the company's total revenue, up from 36% during the same time last year.

It's a tasty time to own Apple shares. The question for investors is whether Apple -- trading at a Price/Earnings to Growth (PEG) ratio of 2.6 (on a P/E of 49 and earnings growth forecast of 19% to $4.48 in 2008) -- is ripe for harvest or hot to hold. What do you think?

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Apple.

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Wachovia (WB) falls after missing estimates

Filed under: Earnings reports, Bad news, Industry, Wachovia Corp (WB), Options, Technical Analysis

Wachovia Corp. (NYSE: WB) is falling after the company announced its third quarter earnings this morning. The bank's profit fell 10%, hurt by $1.3 billion in losses and write downs related to the recent credit crunch. The company's earnings per share came in at 89 cents, well short of Wall Street expectations for $1.03 per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on WB.

After hitting a one-year high of $58.80 in February, the stock fell to a 52-week low of $44.83 in August. This morning, WB opened at $46.98. So far today the stock has hit a low of $46.82 and a high of $47.67. As of 11:00, WB is trading at $47.34, down 80 cents (-1.7%). The chart for WB looks bullish but deteriorating slightly, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $55 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in 3 months as long as WB is below $55 at January expiration. Wachovia would have to rise by more than 33% before we would start to lose money. Learn more about this type of trade here.

WB has not been above $55 since May and has shown some resistance around $52 recently. This trade could be risky if the Fed action in two weeks gives the financial sector a boost, but even if that happens, this position could be protected by the resistance the stock formed when it topped between $52 twice in the past month.

Brent Archer is an options analyst and writer at Investors Observer.

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When will Google (GOOG) split its shares?

Filed under: Rumors, Google (GOOG)

With Google (NASDAQ: GOOG) reporting record quarterly revenue yesterday, the company's shares are now sitting at a touch under $640 as of yesterday afternoon. Oddly, Google shares did not spike up in after-hours trading on Thursday afternoon after yet another stupendous quarter for the company, with recession and economic fears still in the minds of some investors, even with Google continuing to conquer the internet world.

But at the current share price level, would Google be willing to split its shares (5-for-1, perhaps) in order to make its listed instruments more accessible to non-institutional investors? Google's IPO price in August 2004 of $85 per share was ratcheted down from over $100 for just this reason, and the shares were sold under dutch auction format in order to give anyone and everyone access to them right on IPO day. Could Google be wanting to revive some of that nostalgia now that its shares are in the stratosphere?

Although Google shares closed at under $640 yesterday, premarket trading this morning is looking at Google shares sitting at $653 (up over 2%), and analysts are raising targets -- again -- to the tune of $720 and even $900. Google's shares have been on a virtual roller coaster in the last 16 hours, and today's action will see more of the same. A share split for Google would also relieve some of the public tension (and attention) on the valuation perception of a single share of Google stock, which some say is bad for the company and the sector (let's call it "hype days"). Where do you sit? Would a split be a good thing for the company and the internet sector as a whole? Or, possibly more importantly, is Google looking for more retail ownership of its shares?

[via] BloggingStocks