Thursday, April 13, 2006

Lofty Expectations

Morning News of Note:
  • WMT: Wal-Mart Sticks With Fast Pace Of Expansion Despite Toll on Sales After decades of relentless expansion in the U.S., Wal-Mart Stores Inc. is cannibalizing its own business in many markets. But the huge retailer says the strategy of opening new stores that compete with older ones is paying off and will continue, despite Wall Street's rising dissatisfaction. When the Bentonville, Ark., company opens new Wal-Mart stores in markets already served by older ones, same-store sales -- sales at stores open for at least a year -- average two percentage points below those for stores free of competing new stores. (Full Story) WSJ
  • VZ: Roses for Shoppers? To Sell TV Service, Verizon Hits the Street In Fairfax County, Va., one of the first places that Verizon Communications Inc. has begun offering television service, the telecom giant is trying out something else new: grassroots sales and marketing. Verizon salesmen are walking door-to-door offering the service to residents. The company has put its logo on pizza boxes and Chinese food takeout containers and given away discounted fuel at a gas station and free coffee to commuters. (Full Story) WSJ
  • PSUN: CEO's Day in the Pacific Sun THE SURF'S BEEN LOW for Pacific Sunwear of California lately but insiders at the company are betting that will soon change. Two executives at the company, including the chief executive officer, bought a total of 30,000 shares worth $657,650 last Friday. Shares of the specialty-apparel retailer have lost a tenth of its value over the past 12 months. The stock currently changes hands for $22.98 a share. (Full Story) BARRONS
  • SNE: Beatles Songs May Help Pay Pop Star's Debts Michael Jackson, the debt-laden pop star, could begin to lose his grip on his most prized asset -- his stake in the lucrative music-publishing catalog that includes 251 Beatles songs -- under the terms of a proposed $325 million debt refinancing, according to people familiar with the matter. The performer, whose star has fallen in recent years, is expected to announce as early as today that he has refinanced loan agreements originally valued at a total of about $270 million with the New York hedge fund Fortress Investment Group LLC, people familiar with the matter say. (Full Story) WSJ
  • GOOG: Google's name in China will be Gu Ge [Harvest Song]-FT.com: Google (GOOG) on Wednesday announced the adoption of a Chinese name, a move intended to help the U.S. search company expand its presence in the world's second most populous Internet market. Eric Schmidt, chief executive, unveiled the new name at a ceremony in Beijing where he also defended Google's controversial decision to censor its new China-based search service to avoid angering Beijing. Google will now be known in Chinese as Gu Ge, which means “harvest song.” China now has more than 110M people online, making it the second most populous Internet market after the U.S
  • Mad Money Summary: Jim Cramer opened his show last night by discussing automation and how it can make mad money. He said the best online banking play is Online Resources (ORCC), which makes online banking and bill payment software. He also likes Digital Insight (DGIN) and Cerner (CERN). Cramer then went in the "Mad Money" mailbag and answered a viewer who wanted to know how he would play NuVasive (NUVA) ahead of its earnings announcement. He said buying a huge position is risky, he would buy half of a position and wait for the announcement. Cramer then recommended Sealy (ZZ), which he sees going to $20. In the Lightning Round, Cramer was bullish on Rackable (RACK), Apple (AAPL), Crown Holdings (CCK), Avaya (AV), Biogen Idec (BIIB), Tom Online (TOMO), Procter & Gamble (PG), Crystallex International (KRY), Illinois Tool Works (ITW), Arena Pharmaceuticals (ARNA), Darden Restaurants (DRI) and Yum Brands (YUM), and was bearish on China Medical Technologies (CMED), AudioCodes (AUDC), Intuitive Surgical (ISRG), Kimberly-Clark (KMB), Oracle (ORCL), Fastenal (FAST) and Applebee's International (APPB).


Market Comments: The market opened on a down note this morning, but it currently making a stab at moving into positive territory. The yield on the 10-year has spiked above the psychological 5.0% level, its highest level since mid-2002. Expect to hear the media focus way too much attention on this. I will have more comments later.

GE reported earnings this morning, but the stock is off a bit. Also, AMD reported what looked like a solid quarter, but that stock is down a full -9%. So although it is still early in the earnings season, it is beginning to look like expectations are running a little high, and merely reporting in-line results is going to cause weakness in your stock.

long GE, GOOG

1 Comments:

At 8:48 AM, Blogger Kevin Shuller said...

It's about damn time that PSUN's management stepped up and put more money where their mouths are. This stock has been languishing over the past year as it has suffered ridiculous multiple contraction. While their comps will still be weak this year as ANF and AEOS are still holding a stranglehold on teenagers' wardrobes, their new footwear concept will probably take off. In the creative community, (a community that seems to usually be 1-2 years ahead of those damn kids) shoes are the hot way to express one's personal style and the best places to get unique shoes is Urban Outfitters. With the brands PSUN is stocking in their new footwear concept, it has the potential to be huge. Or at least warrant more than a 13x multiple. It appears management shares my view.

Long PSUN

 

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