Well, someone stepped in something unpleasant this morning.
Our friends at "The Squish" (as my friends and I have called Microsoft for years) were supposed to report earnings this afternoon after the close. Apparently someone leaked something, so they did a surprise announcement before the market opening today.
To say the numbers weren't good would be an understatement. Earnings per share were $0.47 versus expectations for $0.49 and last year's $0.50. Sales were only up 1.6% for the quarter. Personal computers just aren't selling well (unless it's an Apple)... and I hear the beta version of Windows 7 is already more popular than Vista ever has been, so people are waiting for the formal release before they buy.
There have been rather vigorous rumors floating around the Seattle area for weeks now about a large and looming layoff at Microsoft. This is a big deal since they have never laid anyone off, even when the tech bubble burst in 2000. This morning they confirmed that there will be layoffs of up to 5,000 people over the next 18 months. Since I'd personally heard 15,000 I suppose only 5,000 is a bit of a victory. Either way, it will certainly change the landscape in Seattle. Let's see, we've lost Washington Mutual, the Seattle P-I newspaper (probably all gone, goodbye), and now folks from Microsoft.
Looks like this economic malaise might actually be getting serious or something.
Thursday, January 22, 2009
Wednesday, January 21, 2009
Selling apples on street corners
Apparently our great grandparents were onto something when they sold apples on street corners during the Great Depression. While I've never seen their quarterly earnings reports from that period, I know there were a number of folks who supported their families that way, at least for a time.
Fast forward to today and whatever we're calling this economic scenario: apples are still selling better than expected. After the market close Apple Computer (AAPL) announced earnings of $1.78, slicing and dicing the analyst's expectations for $1.39. I'll admit that I wasn't blown away by the traffic in their stores on Black Friday, but they did have some of the more consistent traffic over the holiday period.
Technology "toys" are obviously still big business. And the iPhone was one of the few must-have items this year.
I still don't believe that all technology is going to be able to press out numbers like these, but it's nice to know a few surprises to the upside are still possible.
Fast forward to today and whatever we're calling this economic scenario: apples are still selling better than expected. After the market close Apple Computer (AAPL) announced earnings of $1.78, slicing and dicing the analyst's expectations for $1.39. I'll admit that I wasn't blown away by the traffic in their stores on Black Friday, but they did have some of the more consistent traffic over the holiday period.
Technology "toys" are obviously still big business. And the iPhone was one of the few must-have items this year.
I still don't believe that all technology is going to be able to press out numbers like these, but it's nice to know a few surprises to the upside are still possible.
Friday, January 16, 2009
Lucy, you got some 'splaining to do
Bank of America liked what Uncle Sam was serving so much that this week they came back to the feeding trough yet again. To date, the US tax payers have flung $138 b-b-billion to BofA.
Admittedly, I'm sometimes a bit simple in how I view the world, but I thought the TARP money was necessary to prevent the collapse of the financial system. I was a proponent of it under those circumstances. But someone PLEASE explain to me why a company who took a major amount of TARP money... TWICE... is still allowed to pay a dividend to the common equity shareholders who should be accepting the risk inherent in owning stocks!!
I'll just sit here quietly and wait for your answers. My inbox is open.
Admittedly, I'm sometimes a bit simple in how I view the world, but I thought the TARP money was necessary to prevent the collapse of the financial system. I was a proponent of it under those circumstances. But someone PLEASE explain to me why a company who took a major amount of TARP money... TWICE... is still allowed to pay a dividend to the common equity shareholders who should be accepting the risk inherent in owning stocks!!
I'll just sit here quietly and wait for your answers. My inbox is open.
Wednesday, January 14, 2009
Why don't they read the papers?
The market is shocked, shocked I tell you(!) by today's retail sales release. Brace yourselves, dear readers, but retail sales for the month of December were down 2.7%. If you're asking yourself how this could possibly be, you haven't been reading this blog long enough. Catch up please, we can't hold up the entire class just for you.
Did we not have chain store sales for the month of December released last Thursday? And were they not abysmal? Yes, yes we did and yes they were. I know, I didn't blog about it. I was too depressed. Anyway, here we are yet again with a big market sell off because of a number that a kindergartner with a little training could have predicted a week ago.
I suppose there's a little ray of sunshine in the numbers - if you took gasoline sales out of the equation, retail sales for the month of December were only down 1.4%. That's what happens when gas prices fall 15.9%... even if you sell more gasoline, it's almost impossible to make up that much of a price decline. Then think about all the clothing discounts we've seen at the mall over the past couple of months - it shouldn't be a surprise that the clothing sales dropped 2.5%. In fact, it's a bit of a miracle it wasn't worse. Deflation is here folks, as previously stated. You read it here, maybe even first.
Did we not have chain store sales for the month of December released last Thursday? And were they not abysmal? Yes, yes we did and yes they were. I know, I didn't blog about it. I was too depressed. Anyway, here we are yet again with a big market sell off because of a number that a kindergartner with a little training could have predicted a week ago.
I suppose there's a little ray of sunshine in the numbers - if you took gasoline sales out of the equation, retail sales for the month of December were only down 1.4%. That's what happens when gas prices fall 15.9%... even if you sell more gasoline, it's almost impossible to make up that much of a price decline. Then think about all the clothing discounts we've seen at the mall over the past couple of months - it shouldn't be a surprise that the clothing sales dropped 2.5%. In fact, it's a bit of a miracle it wasn't worse. Deflation is here folks, as previously stated. You read it here, maybe even first.
Tuesday, January 13, 2009
More from the NRF conference
No, not the National Rifle Federation, although I'm sure there are some investors who wish they had a rifle if they still own retail stocks. I'm talking about the National Retail Federation conference. Women's Wear Daily, again, is saying the following this morning:
You're right that there's a new world order coming out of this. But the comment about the wages. All I can do is shake my head. Dude, consumers are digging out from years of over spending. Did you conveniently forget that?
Just because more money is coming in doesn't mean that they can spend it. Consumers spent this year's "means" 5 years ago trying to keep up with the Jones'. And now the credit card companies are starting to look a little like Guido the Enforcer (or is that Carlo the Collector?) They want their money NOW, thankyouverymuch. We're reliving my favorite line in one of my favorite movies, Trading Places: "Margin call, gentlemen."
The prospect of a new consumer order was echoed by Carl Steidtmann, chief economist at Deloitte, who addressed global trends and forecasting at a subsequent NRF session. “The recession will create a very different economy when we come out of it than the one we had when we went into it,” he said. “Real wages are up 6 percent since July. Consumers have the means to spend, they just don’t have the will.”
You're right that there's a new world order coming out of this. But the comment about the wages. All I can do is shake my head. Dude, consumers are digging out from years of over spending. Did you conveniently forget that?
Just because more money is coming in doesn't mean that they can spend it. Consumers spent this year's "means" 5 years ago trying to keep up with the Jones'. And now the credit card companies are starting to look a little like Guido the Enforcer (or is that Carlo the Collector?) They want their money NOW, thankyouverymuch. We're reliving my favorite line in one of my favorite movies, Trading Places: "Margin call, gentlemen."
Apparently Lee Scott reads my blog
Women's Wear Daily is reporting the following:
The fact that people still need to be told that this is the case is rather interesting to me. (If they'd only read my blog earlier...) This isn't something new, and it's going to get worse before it gets better.
The economy will turn around some day — but don’t expect conspicuous consumption to make a comeback.
So believes H. Lee Scott, chief executive officer of Wal-Mart Stores Inc., noting the dismal economy has caused a permanent and fundamental change in consumer behavior.
The fact that people still need to be told that this is the case is rather interesting to me. (If they'd only read my blog earlier...) This isn't something new, and it's going to get worse before it gets better.
Wednesday, January 7, 2009
Take your medicine like a good boy
Something occurs to me. Those who feel good about the economy's prognosis for the next year are constantly saying that "everyone" is bearish, making it the bottom for the market and a buying opportunity. Those who believe the sky is falling (yours truly included) hear nothing but talking heads opining about how this is the buying opportunity of their career. (If you want to know what I think about that comment, read this.)
There are folks who are certain that Bernanke has studied the Great Depression enough to know how to avoid it again. But knowing how to avoid the problems of the 1930's doesn't necessarily mean he knows how to avoid all the problems we're facing now. The consumer is on strike, and not by choice. And while I could be wrong, so far I haven't seen or heard anything that my buddy Ben can do to help the consumers feel flush and start buying again. Frankly, I don't think that would be the right answer anyway. We're lancing a boil on the butt of consumerism, folks. It's a painful procedure, but it's the only way for the economy to heal. The recuperation period needs to include recovery from the excessive spending of the recent past as well as resetting what the economy expects from the consumer. We're nowhere near done with that process yet.
Just call me Nurse Ratched.
There are folks who are certain that Bernanke has studied the Great Depression enough to know how to avoid it again. But knowing how to avoid the problems of the 1930's doesn't necessarily mean he knows how to avoid all the problems we're facing now. The consumer is on strike, and not by choice. And while I could be wrong, so far I haven't seen or heard anything that my buddy Ben can do to help the consumers feel flush and start buying again. Frankly, I don't think that would be the right answer anyway. We're lancing a boil on the butt of consumerism, folks. It's a painful procedure, but it's the only way for the economy to heal. The recuperation period needs to include recovery from the excessive spending of the recent past as well as resetting what the economy expects from the consumer. We're nowhere near done with that process yet.
Just call me Nurse Ratched.
What's a few hundred thousand between friends?
ADP revised their methodology for their much-watched employment report. It would be nice to say that the breathtakingly abysmal numbers were due to the new calculations, but it ain't so. Everywhere I look, companies are talking about cutting employees. In just the last 24 hours, we've heard about 13,500 job cuts at Alcoa, 2,400 job cuts at EMC, 1,230 from Marks & Spencer (gotta love the precision of those Brits), and I'm sure I'm missing some.
Bottom line, jobs are getting worse which is another nail in the coffin of consumer spending.
Bottom line, jobs are getting worse which is another nail in the coffin of consumer spending.
Tuesday, January 6, 2009
That explains that
Another blinding glimpse of the obvious was revealed yesterday, although I have to admit that it wasn't even on my radar screen as a possibility. I was both thrilled and a bit shocked that Costco was able to get a significant amount of Waterford crystal for the holidays. Costco has benefitted from the desperately bleak retail landscape for over a year now, as suppliers that hadn't considered them worthy of carrying their goods before suddenly saw them as a fabulous distribution mechanism. This has happened in previous recessions, so it wasn't too much of a shock.
But this time around, Costco's ability to get goods might have a bit more of a predictive value. The first sign of a crack at Crocs? Thousands of pairs of the popular yet distinctly unfashionable shoes showing up at Costco warehouses. Now, we hear about the bankruptcy of Waterford.
Geez, add to this a couple of financially-based suicides, and people might actually get the idea that the world-wide economy is a bit under the weather or something.
But this time around, Costco's ability to get goods might have a bit more of a predictive value. The first sign of a crack at Crocs? Thousands of pairs of the popular yet distinctly unfashionable shoes showing up at Costco warehouses. Now, we hear about the bankruptcy of Waterford.
Geez, add to this a couple of financially-based suicides, and people might actually get the idea that the world-wide economy is a bit under the weather or something.
Subscribe to:
Posts (Atom)
Posts
