Michael Fowlkes
Chapel Hill, NC - http://www.investorsobserver.com
Michael Fowlkes is an options analyst and writer at Investors Observer.
Ford (F) sales plummet in September
September proved to be yet another tough month for American auto maker Ford Motor Company (NYSE: F) as the company saw its U.S. sales drop by a massive 34% during the month.The company noted that we are in the middle of an "atmosphere of caution" as the troubled economic environment, and tightening credit conditions are still taking their tolls on the automotive industry.
We will hear more troubling news later today as more auto makers release their September numbers, and analysts are expecting to hear more of the same from the other major names in the industry. Fellow Detroit auto maker General Motors Corporation (NYSE: GM) is expected to announce sales dropping around 27%, while Japanese maker Toyota Motor Corporation (NYSE: TM) is expected to show a sales decline of around 17%.
Today's news from the major names should really come as no surprise, since we have been hearing much of the same through most of the year. Through August, nationwide sales of vehicles was down 11.2%.
As consumers continue to express their concerns over the overall economy it is going to continue to be tough for car dealers to get shoppers into their showrooms. Bigger incentives should help a little, but until consumers start to turn more positive on the overall economy, it is going to be tougher and tougher to sell them new cars.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
Drivers getting a little relief at the pump
One of the main things that was on most of our minds this summer was the record high gasoline prices that gripped the nation. While prices are still very high on a historic basis, the past month has seen a nice drop in prices, and given drivers a bit of relief when they pull into their local gas stations.According to AAA, gasoline prices fell again today, currently down to $3.683 a gallon for regular unleaded, still pretty high, but much lower than what we were seeing in the middle of summer.
Prices set a high on July 17, with the national average for gasoline going for $4.114 a gallon. While we are all relieved to see prices off their highs, they are still well above where they were at this time last year, when the national average was down at $2.81 a gallon, 31% lower than the current price.
Continue reading Drivers getting a little relief at the pump
August home sales highlight an already rocky housing market
As Washington tries to come up with an agreement on how to solve the current economic crisis, we received more information today on just how bad things are getting, as figures show new home sales were very weak during the month of August.As the credit crunch and falling home values continue to apply pressure to an already weak housing market, the Commerce Department announced today that new home sales in August fell by a sharp 11.5% in August, resulting in a seasonally adjusted sales rate of 460,000 new homes. To find the last time we saw a rate this low, we would have to look all the way back to January of 1991.
As always, Wall Street likes to compare actual numbers to estimates. Had economists been expecting to see a 10% or greater drop in new home sales, that would be one thing, but that was not the case. Going into today's report, economists were expecting to see new home sales fall, though not nearly the 11.5% actual rate, but a much smaller drop of only 1% in the month. So today's reported sales figures are definitely going to add to the confusion that many are feeling regarding the housing market.
Continue reading August home sales highlight an already rocky housing market
Nike (NKE) jumps after hours following Q1 earnings
Shares of sports shoes and apparel giant Nike (NYSE: NKE) are trading up over 5% after hours today, following strong earnings for its fiscal first quarter. As I noted in my earnings preview earlier this week, Wall Street was looking for 92 cents earnings per share for Nike's first fiscal quarter. The company surprised to the upside with a reported EPS of $1.03 a share. While this is down year-over-year from the $1.12 EPS it reported last year in the first quarter, it was still a good quarter considering the current economic environment.
Revenues grew nicely for Nike in the quarter, up a very respectable 17% to $5.4 billion. This also came in above analyst estimates of $5.19 billion.
One aspect of the company's overall business I discussed in the preview was that last quarter the company was able to overcome weak U.S. sales numbers by posting strong growth in international markets. This quarter, too, a weak U.S. dollar has helped boost sales in India and Asia, in particular China, where the recent summer Olympic games were held.
Continue reading Nike (NKE) jumps after hours following Q1 earnings
Berkshire takes big stake in Goldman Sachs
The market has been waiting for billionaire investor Warren Buffet's investment company Berkshire Hathaway (NYSE: BRK.A) to invest in a financial firm, and Buffet announced yesterday that he would invest $5 billion in Goldman Sachs (NYSE: GS). The $5 billion will be used to purchase perpetual preferred stock bearing a 10 percent annual interest rate.
The move comes as Goldman is looking to raise $7.5 billion worth of fresh assets. In addition to the initial $5 billion investment, Berkshire also will be receive warrants to purchase an additional $5 billion worth of common stock in the company for $115 a share. The stock closed yesterday's trading at $125.05, and has jumped nearly 7% in after hours trading following this afternoon's announcement.
Continue reading Berkshire takes big stake in Goldman Sachs
Home prices take another dip in July
More bad news for the housing market today, as the Federal Housing Finance Agency announced that home prices in July were 5.3% lower than they were in July of last year. The main culprits leading to lower July prices are, as usual, the large supply of homes available, tighter lending standards, and record foreclosures, that have resulted in sellers slashing prices in order to sell their properties. On a month to month basis, prices fell 0.6% from June to July of this year.
The drop in prices was seen universally in all regions. The only area of the country that saw prices rise on a year over year basis was the West South Central regions.
The credit crisis over the past year has already claimed a couple big name companies, and prompted the Bush administration to suggest a $700 billion bailout for the financial industry.
Continue reading Home prices take another dip in July
Nike (NKE) first quarter earnings preview
Wednesday afternoon following the market close, Nike Inc. (NYSE: NKE) will be reporting its fiscal first quarter earnings, and analysts are looking to see the company show earnings for the quarter of 92 cents per share.The last time that the company reported was back on June 25, when it was able to beat out Wall Street estimates by two pennies, with a reported 98 cents per share for its fiscal fourth quarter, mostly a result of strong international demand, which was able to overcome weak consumer spending that hurt the company at home in the U.S. In fact, to find the last time that the company reported quarterly figures under Wall Street estimates, you would have to go all the way back to its fiscal fourth quarter 2006 when it missed by a penny, with a reported 70 cents per share.
On a year over year basis, should Nike come in with 92 cents per share, it would be a 16.9% drop from the $1.12 that it was able to earn during the first quarter of 2007.
Continue reading Nike (NKE) first quarter earnings preview
Google (GOOG) extends lead in search engine market
For a long time now, when it comes to search engines, Google Inc. (NASDAQ: GOOG) has been the king of the hill, and a new survey shows that Google extended its lead once again during August, taking valuable traffic away from its main competitors Yahoo (NASDAQ: YHOO) and Microsoft (NASDAQ: MSFT).According to comScore, Google increased its dominance during August by attracting 63% of all search engine traffic, up from 61.9% during the month of July. comScore's data was based on 11.7 billion searches in the month, and shows that Yahoo and Microsoft are still unable to tap into the valuable search engine traffic that Google maintains.
Yahoo scored a very distant second place, with 19.6% of all search engine traffic. This was a drop of 0.9% from its July figures. Third place goes to Microsoft, who scored 8.3% of search engine traffic during the month, down 0.6% from the previous month.
Continue reading Google (GOOG) extends lead in search engine market
eBay possibly looking to dump StumbleUpon
It looks like Skype is not the only bad acquisition for e-commerce giant eBay (NASDAQ: EBAY) lately, as TechCrunch is now reporting that eBay is looking to dump another recent acquisition, StumbleUpon.com. According to TechCrunch, eBay has hired Deutsche Bank to help the company unload StumbleUpon, a website recommendation service that it acquired a little over a year ago, back in May 2007.
At the time that eBay purchased StumbleUpon, it paid $75 million for the company, and it is pretty doubtful that it is going to be able to sell it for that amount, probably far less due to the inability to grow its popularity over the past 16 months.
Continue reading eBay possibly looking to dump StumbleUpon
Retailers facing a tough upcoming holiday season
In case you haven't noticed lately, times are tough for the American economy, and this volatility is more than likely going to carry over into the upcoming holiday shopping season, according to the Wall Street Journal (subscription required).In an article today, the WSJ discusses the probability of a grim shopping season, reporting that economists are predicting that retailers are likely to see their lowest sales volumes for the past 17 years. These dark forecasts come from both research and consulting firms Deloitte LLP and TNS Retail Forward Inc., but the scary part is that these predictions were made before the most recent economic troubles, and the harsh reality of what lies ahead for retailers could prove to be even worse than these current predictions.
Let's take a second look at the major factors that are going to contribute to a weak holiday shopping season (granted the list could be made much longer, but let's just highlight the main factors for now):
- High fuel prices, which have fallen over the past month but are still running at historically high levels
- Higher unemployment
- Rising food prices
- Tough housing market
- The credit crunch
Continue reading Retailers facing a tough upcoming holiday season
FedEx (FDX) earnings matches analyst estimates
Shipping giant FedEx (NYSE: FDX) reported its fiscal first quarter 2009, posting EPS of $1.23 a share, a 22% drop year-over-year.The two main reasons for the 22% hit to its quarterly profit are high fuel costs and a slowing U.S. economy, which resulted in a lower demand for the company's express deliveries. Revenues were actually up 8.4% to $9.97 billion.
While it would be premature to say that market conditions are improving for the company, FedEx believes that it is doing everything it needs to do in order to compete and succeed in this current environment. According to the company's CEO, Fred Smith, "FedEx is taking strong, proactive actions to manage through this difficult cycle.''
One method of offsetting rising fuel costs will be implemented in January 2009, when the company will be raising its rates by an average of 6.9% for U.S. and U.S. export services.
Looking ahead, the company raised its second quarter outlook to between $1.40 and $1.40, higher than the $1.35 that analysts consensus, and raised its full year 2009 guidance to between $4.75 and $5.25, versus the consensus of $5.18.
The market is reacting somewhat positively to this mornings report as the stock is up slightly in in pre-market trading.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
Oil inventories drop more than expected
Oil prices have been moving higher today, but have dropped a bit following this week's inventory report that showed mixed signals for oil and gasoline inventories. Oil inventories fell more than expected last week, but gasoline supplies saw a drop that was slightly lower than analysts had been expecting to see. Going into today's inventory report from the Department of Energy, analysts had been expecting a drop of inventories of 3.7 million barrels, but the actual report showed that last week inventories fell by 6.3 million barrels. This is a pretty hefty drop of 2.1% for the week. Gasoline inventories also fell last week, but the drop was a little less than analyst estimates of 3.6 million barrels, with an actual decline of 3.3 million barrels.
One reason why prices have come back a bit is that analysts had believed that the gasoline report would be more bullish since the report covered the week after hurricane Gustave, and leading into Ike when a lot of production facilities were either shut in completely, or at least working a reduced rate. The report indicated that refineries were operating at 77.4% last week, which was slightly below the 77.8% that analysts had been predicting.
Continue reading Oil inventories drop more than expected
Goldman Sachs (GS) slashes its price target for oil
As oil prices continue their downward slide, one of the most bullish banks on oil prices, Goldman Sachs (NYSE: GS), has jumped in and lowered its 2009 price target on the precious crude to $123 a barrel, down $23 from its previous estimate.As we all know, earlier this summer we were looking at record high oil prices, and these high prices hit demand harder than most people anticipated; as a result, the price of oil spiraled downwards. Oil is up a bit today, but even with today's upward move of $2.31, we are still looking at oil trading at only $93.46, which is well below the highs we were seeing back in July when prices moved to a record above $147 a barrel.
Goldman still remains bullish on oil, and expects that prices will ultimately hit its previous price targets, but stated that it now expects that it will take a bit longer for prices to reach those levels than it had previously expected.
Continue reading Goldman Sachs (GS) slashes its price target for oil
Sony issues recall for popular laptop
Sony Corp. (NYSE: SNE) has issued a recall for some of it's popular Vaio laptops today due to an overheating problem that some consumers have encountered with their machines.So far, the company has received 209 reports of the popular machines overheating on users, and in 7 instances, users received minor burns as a result of the overheating laptops.
The computers in question involve 19 models in the Vaio TZ series that were produced between the months of May 2007 and July 2008. According to Sony, the problem is a result of some improper wire connections in the hinge between the laptop body and the the monitor that appears to be wearing out and causing short circuits in the machines.
Of the seven injuries that have been reported, five were reported in Japan, and one in both the United States as well as Italy.
The recalled machines are located all over the globe, with around 373,000 of the computers being sold in 48 different countries. The remaining 67,000 recalled machines were sold in Japan.
If you think that your computer may be a part of this recall, you should definitely contact Sony to find out.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
Ford struggles in August
August was yet another tough month for American auto maker Ford Motor Company (NYSE: F) as the company reported today that during the month, U.S. sales were off by a mind boggling 26.5%.During the month, Ford was able to sell a total of 155,172 light vehicles, which was 3.6% below July's figures of 160,990, which was the worst month for U.S. car sales in the past 16 years.
As expected, truck sales really took a beating last month for the company. With consumers dealing with record high gasoline prices, truck sales have been weak for some time now, and last month the company saw truck off by more than 32%. Its car sales fell by nearly 9%.
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