Friday, March 03, 2006


Morning News of Note:
  • WMT: Wal-Mart Extending Dominance of the Grocery Business Last year, Coca-Cola was preparing to introduce a diet soda, to be called Coke Zero. But executives at Wal-Mart Stores, the nation's largest retailer, thought they had a better idea. They wanted a drink that contained Splenda, the artificial sweetener that had been selling extremely well at Wal-Mart, especially among women shoppers. (Full Story) NY Times
  • GOOG: Google Tries to Reassure Wall Street Google shares may have fallen toward earth in recent weeks, but its executives still think that the sky's the limit for the company's growth opportunities. With the share price down 20 percent from its high this year and investors increasingly skittish, Google offered a detailed and sober appraisal yesterday of its finances and strategy, a presentation meant to reassure investors that as a rapidly growing company, it still saw boundless opportunities to expand its Internet services and advertising network. (Full Story) NY Times
  • TXN: BusinessWeek Online reports Texas Instruments (TXN) cheap semiconductors have put it in a sweet spot as global demand for low-cost phones and digital TVs explodes. Jeffrey Kleintop, chief strategist at PNC (PNC) Advisors, which owns shares, says that the chipmaker stands to gain significantly over the next three years because of a federal mandate that all TVs produced from 2009 onward must be digital. Kleintop says that will keep TI's sales volumes growing fast and margins soaring. TI reached management's targeted gross margin of nearly 50% in 2005, vs. 2004's 45%.
  • Fund Flows: equity funds rptd inflows $2.9bln, ex ETFs inflows $1.96bln, 70% into non domestic equities; ETF flows: SPY $630m, XLF $365m, VO $266m, EWJ $207m, VB $143m, DIA ($663m), XLE ($434m), MDY ($215m); bond funds rptd inflows $1bln, corp fund inflows $467m, HY fund inflows $300m; money mkt funds rptd outflows ($14.969bln) -- AMG Data
  • Mad Money Summary: Jim Cramer opened his show by discussing Diebold (DBD) and how the company will profit from the New York Times running a front page article about the U.S. Government suing New York over its voting system implementation delay. Cramer believes Diebold will get most of NY's voting machine business, and other states could also be sued because of problems upgrading their voting machines. Then Cramer said to ignore the naysayers and invest in cheap stocks like Build-A-Bear Workshop (BBW). Although he does not like the store and calls the concept "insipid," he points out that the company trades at only nine times next year's earnings when the company's cash is factored out of the equation. Cramer then discussed a turnaround story, Broadwing (BWNG). "I hated the company for many years. But things have changed. They now have $1.50 in cash per share, but no one is noticing," he said. Russell Horowitz, the CEO of Marchex (MCHX), then joined Cramer. Marchex helps merchants place effective ads in the most effective places, and then fulfills those advertising needs through partner and proprietary arrangements, Horowitz said. Cramer believes Marchex is a money maker. In the Lightning Round, Cramer was bullish on United Petroleum (UPL), Biogen Idec (BIIB), RF Micro Devices (RFMD), Apple (AAPL), Acadia Pharmaceuticals (ACAD), Tata Motors (TTM), Pain Therapeutics (PTIE), JDSU (JDSU), Regions Financial (RF), Talisman Energy (TLM), Transocean (RIG), Advanced Micro Devices (AMD), CBOT Holdings (BOT), Nabors Industries (NBR), Electronic Arts (ERTS), Marvell Tech (MRVL), Broadcom (BRCM), Conexant Systems (CNXT) and Ciena (CIEN) and was bearish on Sirius Satellite Radio (SIRI), Elan (ELN), Xerox (XRX), Northgate Minerals (NXG), Petco Animal Supplies (PETC) and NutriSystem (NTRI).

Market Comments: The market is a bit weak after the open. INTC preannounced that revenues would be lower this quarter. This is a negative development, even as it has been rumored in the market for a little while now. That's pressuring semis.

Bond yields are up again, with the 10-year hitting 4.67%. And oil is trading above $63, though it is down a little this morning (oil had a big day yesterday).

The combination of rising oil, rising bond yields, and an Intel warning should weigh on the market today. I think it would be pretty surprising if the market were to shake off this selling and finish in the green.

On the flip side, the longer that the SPX consolidates in this 1280-1295 area, the better the chances that it eventually breaks out to the upside and takes out the 1300 level. But let's not get ahead of ourselves.



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