Friday, April 28, 2006

Microsoft Malaise

Morning News of Note:
  • CME: Heard on the Street... Hot Stock Finally Takes a Hit Shareholders of Chicago Mercantile Exchange Holdings Inc. are finding out that it is fun to ride a tiger. The trick is getting off without a scratch. For the CME, one of the best-performing stocks in one of the best-performing sectors of the market, this hasn't been a great week (Full Story) WSJ
  • AAPL: Apple patent relates to iPod wirelessly working with a TV On April 27, the US Patent & Trademark Office revealed an Apple patent titled “Image scaling arrangement,” originally filed October 2004. The interesting aspect of this patent relates to the iPod wirelessly communicating with a television. (Full Story) Macsimum News
  • GOOG SINA: Why Google Could Gobble Up Sina As Google (GOOG ) spreads its wings in China, many think it may try to buy Sina (SINA ), the country's top Net portal. With its online ad business projected to grow 30% to 35% annually for the next three years, Sina is a "very attractive target" for Google, says Jane Hsieh of investment firm Clay Finlay, whose $7 billion portfolio is heavily invested in China, Japan, and Korea. (Full Story) Business Week
  • RIMM NOK PALM: RegHardware reports over 16.7 mln 'smart mobile devices' were shipped worldwide in Q106, up 55% on the same period a year ago. The Asia-Pacific region has now overtaken Europe, Middle East and Africa in sales of smart mobile devices. Asia-Pacific represented 46% of all shipments during Q106, compared to 39% for E.M.E.A. and 15% for the Americas. Globally, despite a sequential fall in quarterly smart mobile shipments, leader Nokia's (NOK) YoY growth of 60% meant the Finnish firm increased its mkt share slightly, helped by demand for popular multimedia models such as the N70. RIM (RIMM) made substantial gains to strengthen its position in second place, growing at 85% and overtaking Palm (PALM) both globally and in the US mkt for the first time. During the quarter PALM posted slight growth and estimates that Treo smartphone shipments were up 44% compared to a year ago. However, the Treo has yet to gain traction outside the US and, more worryingly, the co experienced a sharp decline in handheld sales.
  • Mad Money Summary: Jim Cramer opened his show discussing the health care sector. He said investors should get into these stocks while the sector is out of favor. He suggested two health management companies, Matria Healthcare (MATR) and Healthways (HWAY). Then he suggested Nektar Therapeutics (NKTR), which makes the diabetes drug Exubera. Cramer did warn that Nektar was a trade, not an investment. Cramer then welcomed UnitedHealth Group (UNH) CEO William McGuire to the show. Cramer said despite Aetna (AET) taking the entire health care sector down, he still believes UnitedHealth Group is a winner. In the "Lightning Round," Cramer was bullish on Weight Watchers (WTW), Devon Energy (DVN), Caterpillar (CAT), Nokia (NOK), Sealy (ZZ) and Penn National (PENN), and was bearish on Sirius (SIRI), Nutrisystem (NTRI), Xerox (XRX), Novell (NOVL), Suntech Power Holdings (STP), Albany International (AIN), Motorola (MOT), Bausch & Lomb (BOL) and Pinnacle Entertainment (PNK).

Market Comments: The Microsoft news is weighing on the market this morning, which would likely be trading higher otherwise. After a down open, the SPX has climbed back into positive territory.

1Q GDP came in strong as expected (+4.8%), while the Employment Cost Index came in better than expected (+0.6%). The ECI is a pretty broad measure of inflation, in terms of labor costs, so it is good to see that it isn't rising too quickly.

MSFT's report was really disappointing, and the stock is reflecting it this morning (although even this selling looks overdone). The strongest reports I saw last night included ISRG, RACK, AGP, HET, and CAM to name a few.

long MSFT


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