Thursday, January 26, 2006

Earnings Season Mania

Morning News of Note:
  • FDC: First Data to Spin Off Western Union to Shareholders First Data Corp. said it plans to spin off 155-year-old Western Union, the world's largest money- transfer business, in a transaction that may be valued at more than $20 billion. Western Union, which built the world's first trans- continental telegraph line during the Civil War, will become a separate company led by Christina Gold, 58, Denver-based First Data said today in a statement. First Data expects to complete the transaction as a tax-free distribution to shareholders in the second half of this year. (Full Story) Bloomberg
  • GM: General Motors Has Fifth Straight Quarterly Loss Amid Cuts General Motors Corp., the world's biggest automaker, reported its fifth straight unprofitable quarter and first annual loss since 1992 as market share losses to Toyota Motor Corp. and other rivals force plant closings and job cuts. The loss was $4.78 billion, or $8.45 a share, compared with a loss of $99 million, or 18 cents, the same quarter a year earlier, Detroit-based GM said in a statement today. (Full Story) Bloomberg
  • MSFT: Microsoft to Expand Web Research Microsoft Corp. is opening two research labs focused on Internet-related technologies, a sign of the company's determination to catch up to Google Inc. and other Web rivals. The Redmond, Wash., software maker yesterday said it will pull engineers from its MSN online service and central research labs to form two new research groups. (Full Story) WSJ
  • WMT: Greenspan Opposes Bank Loophole As Wal-Mart Seeks Charter, Fed Chairman Aims to End Exemption for Corporations Federal Reserve Chairman Alan Greenspan is opposing a regulatory loophole that allows corporations to own banks, thrusting himself into the middle of an effort by Wal-Mart Stores Inc. to establish a bank. Mr. Greenspan's salvo, outlined in a 12-page letter to Congress that was reviewed by The Wall Street Journal, is the latest in a controversy over the separation of commerce and banking. Wal-Mart, the Bentonville, Ark., retailer, is trying to obtain a state banking charter in Utah, using precisely the exemption in the banking laws opposed by Mr. Greenspan. (Full Story) WSJ
  • Mad Money Summary: Cramer believes that Sirenza Microdevices (SMDI), which makes Sirius' hardware, may be a good way to play Sirius Satellite (SIRI) without paying for Howard Stern's huge salary. When asked if there was a similar derivative play for XM Satellite Radio (XMSR), Cramer said the play would be STMicroelectronics (STM), but since he is not as concerned with XM's costs, he believes the best way to play XM is to just buy XM. The positive earnings from Jacobs Engineering (JEC) led Cramer to discuss companies in infrastructure, such as Foster Wheel (FWLT), Fluor (FLR) and Shaw Group (SGR). He said that the best overlooked infrastructure play is Willbros Group (WG). Asked about Suncor (SU), Cramer said that the company is levered into alternative energy, and when oil comes down, the sector could weaken slightly. Cramer also suggested another way to make money in India, by buying Reliance Industries in Bombay. The company said it will invest in retail, and should not have much competition in the market because of laws against investment from foreign department stores. Answering his Mad Money mailbag, Cramer told a reader that he still believes that Google (GOOG) will hit $500 on its way to $600 despite its run in with the Justice Department. He told the viewer if he was worried, he should take a little off the table before Google reported earnings. In the lightning Round, Cramer was bullish on APPB, E, JDSU, AMTD, EPEX, BTU, RHEO, CHK, IGT, AHC, OXY, MO, DESC, CBS, SAP, CRM, GRP and TXN and was bearish on MFB, AFL, ECA, PGIC, PANC, DIS and NOVL

Market Comments: A better than expected durable goods report helped the market open nicely higher this morning. Of course, earnings season continues to be a mixed bag, or a minefield if you will.

AMGN reported okay earnings and the stock sells off. CVD reported pretty good earnings and the stock is up big.

JNPR reported disappointing results and the stock is getting hammered. DOW reported disappointing results and the stock is even.

Energy stocks continue to sell off, while financials are rallying. Tech and retail remain mixed. Tonight we get important reports from MSFT, BRCM, and SNDK.



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