Holy(land) shit did the market sell off on Friday as civil (or more exactly, uncivil) unrest overran the streets of Egypt like Ben Bernanke overran the Fed’s printing presses or hepatitis C overran Pam Anderson’s liver.  Protesters were apparently frustrated by government corruption, economic stagnation, a lack of political freedom, and Ehsan Hatem El-Kirdany‘s refusal to pose for Playboy.  Shit Money McBags hasn’t seen rioting like that since OJ Simpson was set free (the first time), Ohio State beat Michigan, or Alf was canceled.

The Egytian government tried to counter the protesters by ignoring them and hoping they would go away before deciding to just beat the piss out of them and then disconnecting the fucking internet.  No really, there was no Facebook, no Angry Birds, and no Spankwire in Egypt so it is no wonder everyone was so fucking pissed off (And a quick digression here in case President Obama or any future Presidents of the United States are reading this.  First of all, why the fuck are you reading this?  No really?  There is nothing better for you to be doing than skimming dick jokes about the market and pictures of Isabeli Fontana?  But second, and most importantly, if you ever turn off Money McBags’ internet and thus his access to the market, news, and NSFW muff guessing, he will personally take to the streets and scream anarchy with such force that it will certainly mark the beginning of the devolution.  In short, choose your punishments wisely).

That said, the Egyptian protests were the catalyst to the market selling off on Friday (with the 9%+ unemployment rate, the housing price double dip, and the spiraling debt in the ponzeconomy™ being the promoters in the shitacular chain reaction).  Obviously with the Middle East now potentially in more disarray than Josef Fritzl’s dating life, there are a shit ton of concerns over oil reserves and unknown policy changes, and all of that spooked the already inflated market enough to cause it to drop almost 2%.  This could be a blip, this could be the start of the correction, or this could just be an opportunity to buy the fucking dip (as opposed to selling the fucking rip), but the market needs a breather (more so than Johnny Carson did) so make sure you are properly hedged.

As for macro news, Q4 GDP was released and as usual it GDpeed on analyst guesses by rising 3.2% which was below guesses of 3.5%.   Inventory build (or unbuild) caused a -3.7% hit to GDP as companies have finally restocked from the downturn and now are all properly stocked (or potentially overstocked) as Money McBags has been pointing out for the last couple of Qs (he has also been pointing this out for the last couple of Qs, so you’re welcome).  Surprisingly, the biggest driver of GDP growth was consumer spend which jumped 4.4% due to a strong holiday shopping season and a suspension of reality.  Despite this growth, wages and benefits were up only 0.4% in Q4 as Americans get back to their second favorite hobby of spending money they don’t have on shit they don’t need (their first favorite hobby of course being dick flashing).

The only other piece of macro news was that consumer sentiment fell from 74.5 to 74.2 but it was above analyst guesses of 73.2 and also completely meaningless to Money McBags since as always, the absolute differences between any of those numbers is less clear to him than a urinal is to Tihomir Petrov.  The positive was that consumers are expecting more cash due to federal tax cut extensions and a temporary reduction of payroll taxes, the negative is that the extra cash won’t do much as inflation will make the extra dollars more worthless than investing advice from Larry Wilcox or a tampon for Chaz Bono.  Some consumers are starting to realize this as one-year inflation expectations edged up to 3.4% from 3.0% in December which was the highest since October 2008, but luckily, according to Ben Bernanke and his magic inflation reader (which works best when he is riding his unicorn to his crystal palace in the land of make believe), inflation is nothing about which to worry.

In the market, AMZN was down ~7% after their Q4 disappointed and they gave guidance weaker than Troy Aikman’s marriage.  While the company had strong topline growth of 36% (the kind of topline growth usually found only in Heidi Montag), it was slightly below guesses and their $.85 eps was below the $.88 eps guessed at by analysts.  Of course Money McBags’ favorite part was that management blamed the weather for some of the revenue miss, which is as nonsensical as Fred Hoyle’s Steady State Theory of the Universe of Sofia Vergara ever blaming her boobs for not getting an acting job, because people being stuck at home is exactly the fucking point of AMZN.  Anyway, the real reason for the sell off (other than AMZN not really having a competitive advantage and trading at ~50x earnings, which are just minor details, like don’t get too close to a giant fucking stingray, or Amy Winehouse) was that next Q’s operating income guidance is for between $260MM and $385MM which is a fuckload below analyst guesses of $469MM as the company will see declining margins as they invest in new fulfillment centers to aid in growth.

Elsewhere, F was down ~12% after missing analyst guesses of $.48 eps by $.18 which is a bigger miss than Waterworld.  Ford blamed the miss on the costs of launching new vehicles, european operations, and rising commodity costs (but again, inflation is nothing about which to be worried according to the Fed, you know, the guys who missed the entire economic collapse even though it was their only fucking job, so nothing to see here).

Finally, Monster Worldwide was fired by investors as the stock dropped 25% after the company missed analyst guesses for revenue, earnings, bookings, and anything the fuck else at which analysts guessed.  Revenue growth of 20% was not enough as the company missed $.07 eps guesses by $.01 even though this is pretty much the best market this company will ever have.  Seriously, barely being able to turn a profit when your business is listing jobs in the midst of a global depression is like barely being able to turn a profit selling crack to Charlie Sheen so if they can’t make it work now, that doesn’t bode well for the future.  And the magnitude of the 25% stock price drop shows that this a short favorite which was further highlighted by noted mouth piece and butt buddy of the shorts (but not this short), Herb Greenberg, who regurgitated the thesis his hedge fund cronies likely screamed at him mid-fellatio which is that social networking sites like linkedin, twitter, and tagged may soon make Monster more obsolete than Alan Greenspan’s speaking engagement invitations.

In small cap news, as mentioned briefly on Thursday, longtime Money McBags favorite TMRK was taken out for $1.4B by Verizon and doing a back of the envelope calculation (Money McBags would do a full on calculation but he is too busy washing the stripper juice off of him from celebrating so much to give a fuck about the numbers), it looks like Verizon is paying ~15x EV/EBITDA which is hella fucking pricey, so a great deal for TMRK.  Cloud computing is here to stay so it makes sense that a company like Verizon would overpay for this solid little company with a nice niche market since it is way too expensive to build something like this from the bottom up (though not as expensive as getting this bottom up).  So kudos and huzzah if you owned this bitch, and who knows, maybe someone will come in and outbid Verizon, but Money McBags doubts it, that said, it still has  $.04 to go to hit the $19 price, so worth hanging on to a piece just in case (though this piece would be better on which to hang).

Otherwise, pretty much every small cap stock was down including a 6% sell off in KITD, perhaps because of their international exposure and Money McBags will buy more if it drops into the $12s, and a 10%+ drop in NEI.  Money McBags bought NEI last week and said it was a really speculative buy with ~20% downside and 100% upside, he just didn’t think the 20% downside would be in two fucking days, but he gets it.  Their guidance was underwhelming and there was a ton of profit taking as the market turned.  Money McBags will break down their Q sometime next week, likely as soon as his ass stops bleeding from what this company has done to him.

The only thing that was really up on Friday was EPAY, which Money McBags has written about many times on the award winning When Genius Prevailed and has always thought was an interesting, though slightly confusing name.  The reason for the confusion is that they have a shitload of cash (~$144MM) and say they are going to use it for an acquisition so it is just hard as fuck to build any kind of reasonable forecast. 

This Q revenue was up 10% (with services and transaction revenue growing 24%) and they earned $.25 per share of core income after taking out amortization, stock comp, one-time charges, and anything else in GAAP that would irritate the fuck out of the ballwashers at the CFA institute.  The Q was pretty much inline with Money McBags’ $1.00 to $1.10 annual eps guess for the company and they are now trading ~22x that but with nearly $5 of cash on the balance sheet.  Most encouragingly though was that their book to bill ratio was ~1.5 which bodes well for their continued growth (though not as well as if Doutzen Kroes were offering free blumpkins with every new deal signed, but whatever).

Nothing about Money McBags’ opinion has changed for EPAY since last Q.  They have a nice company, they continue to have reasonable growth, and they have potential upside with their Paymode network, but they are going to buy another company and as it will likely be a large acquisition, one never knows how that will go.  If you have a diversified portfolio and are looking for some more long-term beta, this isn’t a bad little name to own because the business is working and the long-term trends of getting rid of paper are in their favor, but it’s not that cheap and Money McBags wouldn’t own it as part of a concentrated portfolio because who the fuck knows on what they are going to spend their cash (perhaps this).  Money McBags needs to go through their transcript and if he finds anything interesting, he’ll let you know.

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