Posts tagged AMZN
Tim-fucking-berrrrrrrrrrrrrrrrrrrrrrrrrrr. Holy shit is it on like Qadaffi’s dong as protesters in Libya whip themselves up in to a frenzy over the lack of Joanna Krupa’s latest Maxim spread being available to them (or over their oppressive treatment at the hands of Qadaffi, their lack of say in the government, their non-existent job opportunities, and their years of being treated worse than a patron at the Platinum Premier Club). The protests caused oil prices to surge to 2.5 year highs as Libya produces ~1.6MM barrels of oil a day and has the largest reserves in Africa at 44B barrels which is a fuckton of heat for the winter, airplane flights for Al Gore to promote global warming (or rather the solution to global warming or something), and Monster Truck rallies.
The unrest in the Middle East coupled with Qaddafi’s threat to crush it like Michael Gilliland’s career (and Money McBags loves the irony of the former CEO of Wild Oats getting arrested for figuratively sewing his wild oats) and the jump in oil prices spooked investors and the market today even as Saudi Arabia stepped the fuck up and said they will not allow any oil supply disruptions as OPEC has enough spare capacity to avoid a global shortage (though if they have so much oil they are not using, then why the fuck is the price so high? Oh right, cartel pricing. Money McBags knew something in his economic books would come in useful one day, just kidding, he never thought anything would).
And it’s not just oil as Italy shut down a pipeline from Libya that supplies them with ~10% of their natural gas which means demand for Will the Farter abroad is now skyrocketing. But fear not because some guy named Michael Hewson at some place called CMC Markets likened the Middle East protests to an Australian bushfire (as opposed to an Australian fire bush) by saying “..once it takes hold, its very difficult to put out” and “until the situation in the Middle East settles down, you are going to have very wild price swings.” No shit Captain Obvious, what’s next, telling us that Alan Greenspan may have left rates a bit too low for a bit too long or telling us that JWOWW may be covered in awesomeness (and perhaps herpes).
The big question is why the fuck someone wants to not just make a Great Gatsby movie, but make it in 3D, while the bigger question is whether investors will buy this dip and not just ignore high unemployment, falling home prices, and spiking commodities, but also ignore a little something called instability in the most unstable place in the world other than Pam Anderson’s liver or Andy Dick’s rectum.
In macro news today, consumer confidence hit a three year high just as the market sells the fucking rip (though the only thing this consumer is confident in is that Breanne Ashley is hot). The index of consumer attitudes rose to 70.4 from a revised 64.8 which was the highest level since February 2008, back when there were even more Dicks on Wall Street and Steven Tyler was still a man. Also, the expectations index rose to 95.1 from 87.3 as apparently consumers are expecting fundamentals to continue to matter less than Clarence Thomas during oral arguments (though hopefully no one was orally arguing too hard).
Home prices fell again in December in news more backward looking than Alexis Texas‘ boyfriend, because um, it’s almost fucking March. That said, the Case-Shiller index fell by 1%, or .4% when adjusted seasonally (and as always Money McBags’ favorite seasonal adjustments are paprika, cayenne pepper, and Brooklyn Decker‘s saliva). It was the fifth month in a row that the Case-Shiller index fell as 11 cities reached all-time lows and only Washington DC didn’t see prices fall (because you can’t really get lower than a price of $0). For the year 2010, prices fell 2.4%, slightly more than the 2.3% decline analysts had guessed and a fuckload more than needed for a healthy ponzeconomy™.
In the market, HD had better profit and earnings than guessed and raised its fiscal-year outlook as shoppers took up long-delayed maintenance and repair projects for their homes like buying extra masking tape to reinforce their cardboard boxes and shovels to dig proper latrines. Sales at Home Depot stores open at least a year rose 3.9% globally, with U.S. same store sales rising 4.8% thanks to a shift to cheaper products like faucets, paints, and Borders franchises.
In other earnings news, WMT had its 7th consecutive quarterly sales drop at existing US stores so perhaps they shouldn’t have pared entire SKUs like the dairy aisle. WMT has also lost customers to dollar stores though as inflation rises, dollar stores will become more a thing of the past than 8-tracks, beehive hairdos, and civility. The company did beat analyst eps guesses of $1.31 by $.03 on sales growth of 2.5% which was below analyst guesses but apparently even world domination takes a few quarters off.
Finally, Macy’s reported a higher profit as same store sales rose ~4.5% thanks to a strong holiday season and appealing to local tastes such as offering Boston beltbuckles, Seattle pantyhose, and the rare Baltimore nose rings. BKS declined more than 5 percent after announcing it would suspend its dividend, not providing a final quarter outlook because of the bankruptcy filing of Borders, and being in a business that is becoming more obsolete than TV antenna repairman or financial planners for the middle class. And AMZN joined NFLX and Sears (yep, Sears) in the video streaming business by offering unlimited streaming to it’s premium customers for ~$70 a year only a couple of weeks too late for Whitney Tilson’s short to work but Money McBags is sure Mr. Tilson will cover that in between sips of RC Cola and Warren Buffett’s tears at the next Value Investor’s Conference.
As for small caps, well, everything went down because the small illiquid names that Money McBags covers just trade with more volatility than the market so this can open up cockriffic buying opportunities (except for in DTLK because as Money McBags pointed out this weekend, their guidance was craptacular enough to sell out of your position, unless your position was reverse cowgirl and DTLK was Kate Bosworth). That said, one of Money McBags’ favorite little stocks, KITD, is getting back to the point where it is just way too fucking cheap (trading at ~6x potential 2011 EBITDA) so as it drops in to the $12s, it is time to start adding to positions.
Tomorrow Money McBags hopes to break down CTGX’s Q, perhaps take a look at GA, and continue to point out investing opportunities such as short WGO and long Chrishell Stause. Yeah, Money McBags has been short WGO all the way up but it is trading at a cockposterous 30x a lucky to get their earnings guess, sells expensive discretionary products that rely on oil more than Paris Hilton relies on Valtrex, and finally saw dealers restock so it will start having flat growth at best (after one more Q). If the market is going to sell off, you might as well be short a high beta name that also doubles as a shitty company (ok, maybe that’s not fair, WGO isn’t a shitty company, but they are in a business shittier than a coprophilia party host). So be smart about trades, make sure you are properly hedged, and get ready to buy should some of these quality names gap down with the market.
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.
The market was mixed today as fears of currency wars formed the yin to earnings beats’ yang (or the teeth to earnings beats’ hummer if you will) and with macro data more non-existent than Mel Gibson’s career, there wasn’t much for the Street to manipulate. That said, a number of US officials were in the spotlight today sharing their views on the economy.
First of all, Tim Geithner wrote a letter to fellow finance ministers at the G20 meetings (though unclear if it was SWAK) where he urged countries to keep their current account balances below 4% of GDP and stay the fuck off of his front lawn. The idea was Geithner’s way of trying to find a backdoor solution (other than more lube or an extra pillow to bite) to try to avoid the wave of global currency manipulation, especially with the dollars’ upcoming plunge with QE2 on the way. Unfortunately, his suggestion was met with a more tepid response than Jaleel White‘s comeback as countries with large trade surpluses like Germany and Japan don’t want to be held to any kind of hard targets.
Elsewhere, the president of the Fed Bank of Dallas, the honorable Dick Fisher (which sounds like the name of an Atlantis cruise ship) told Bloomberg that the Fed needs to be mindful of the impact that their decisions have on the dollar while also maintaining that no decisions have been formally made about more quantitative easing. He then informed the interviewer that he had to go as his unicorn was impatiently waiting outside to take him back to the land of “you’re so fucking gullible.”
In addition to Dick Fisher getting a bit flaccid on QE2, noted Fed turd in the punch bowl Thomas “T. Ho” Hoenig got his gangsta on and told an audience in Albequerque, New Mexico that the Fed needs to be wary of excess liquidity because it can fuck a market worse than he fucks his bottom bitch. T Ho opined “My experience tells me that if you wait until you’re absolutely certain that everything is fine, you waited too long” and followed with “My experience also tells me that “no” don’t always mean “no,” and most Fed Bankers ain’t shit but hoes and tricks. You hear that Benny?”
And kind readers, on Wednesday (also known as hump day or as we call it in the offices of the award winning When Genius Prevailed, Spankwire.com day) you should recall that Money McBags commented on the fantastic returns the government made on their bank and insurance TARP spend. Well today, data was out about the toxic mortgages the Treasury has been buying and the data is even fucking better. The Treasury so far has had a 36% return on their purchases of toxic mortgages in their Public-Private Investment Program (PPIP) which gives Money McBags’ newly established party, Bail Outs Get Us Savings (BOGUS for short), even more fucking street cred. Money McBags’ new party boasts the greatest idea for the government to get out of debt since hyperinflation and selling pet rocks.
What Money McBags proposes to do is to first cut off all unemployment insurance thus killing mortgage payments, strangling consumer spend, and crippling companies. Then he will tax the shit out of exports in order to make US businesses even less competitive. While this all sounds as dumb as giving a shit about finding a more humane way to kill chickens or an episode of “Are You Smarter than a Christine O’Donnell Supporter” (where the questions will range from “name a current Senator,” to “the First Amendment calls for the separation of Church and State per the Supreme Court’s ruling: True or definitely true?,” to “name a color that rhymes with nurple?”), but stick with Money McBags here for a second. Using the current fiscal system that relies on borrowing from China, increasing the spiraling debt, and “printing money” to continually add juice to the market, the country is destined to continue to flounder as that has proven to be more of a losing strategy than challenging George Michael to a game of gay chicken.
So what Money McBags is proposing is for the government to do what it does best: Step one: Ruin the economy. And we’re not going beat around the bush about it this time, we’re going all out. No financial regulation, no safety nets, and the fewer documents the better. Step 2. Bail companies the fuck out. Step 3. Profit. It’s much more sensible than stealing underpants and as we’ve seen from the TARP and PPIP returns, it works a fuckload better as well.
Sure it might not do much for main street in the short term (or the long term), and sure there is a little something called moral hazard, and yeah the FNM and FRE bail outs may cost taxpayers $300B which outweigh the gains from the other bailouts, but those are just shortsighted details. Come on, we’re talking about a 35% fucking return on troubled assets and an 8% return on bailed out banks. So suck on that Warren Buffett. Those type of earnings can put plenty of pork on the table so next time you go to vote, don’t vote for the status quo, vote “none of the above” and write in Money McBags from the BOGUS party as he promises to restore prosperity one bailed out company at a time. That said, Money McBags could use some help on his campaign slogans, he is deciding between: “Bail outs we can believe in,” “To let interest accrue and transfer it too,” or “Ma Ma, where’s the law? Gone to bail outs ha ha ha.”
In stock news, AMZN was up after the company beat guesses yesterday and analysts upgraded the stock from “really fucking overvalued” to “really fucking overvalued but you should buy even more of it.” The company grew top line 39% as sales of the Kindle continue to rise as Americans grow tired of having to lug both People magazine and US Weekly around on their staycations.
Elsewhere BIDU jumped ~5% after another strong quarter as Chinese people increasingly search the fuck out of shit. AXP charged off by ~2% as even though they beat analyst guesses thanks to a huge reserve release (where they followed the rest of the financial sector’s lead in manipulating earnings on weak revenues and now won’t be ready for the next round of defaults). That said, the stock traded down as investors worry about the anti-trust suit filed by the federal government against the company for what Money McBags is told is technically being called: “running your network like a bunch of douchnozzles.” Finally, Schlumberger served up some turdburgers to anyone who was short the company by rising ~5% on the strength of a solid Q (and yeah, that joked sucked, but you got anything better for Schlumberger?).
In small cap news, EPAY put up a nice Q and Money McBags pointed out this interesting little company when he broke down their last Q a few months ago and they are up ~20% since then. In their fiscal Q1 release today, revenue was up 15% to ~$42MM driven by a 39% rise in subscription and transaction revenue to ~$11MM (and to get that kind of growth, they must have been selling subscriptions to walking walking tours of NY or India Reynolds’ vagina). Core net income was up 26% yielding $.27 eps which was up $.03 sequentially on basically flat sequential growth so they are getting some operating leverage. Cash was up by ~$14MM to $135MM and they continue to have no debt with $24MM of FCF in the last 12 months. So all pretty fucking nice.
That said, their guidance was a bit underwhelming with revenue for $172MM to $175MM for the fiscal year (which was up a bit from last Q) and eps ~$1.02 which is down from the $1.20 Money McBags triangulated from their 20% net income growth guidance last Q (though to be fair, he even questioned that calc last Q before saying ~$1.11 sounded more reasonable). They also claimed eps will be down sequentially next Q because they will be paying a higher tax rate (so Money McBags recommends they do what GOOG did by shifting revenue overseas to avoid paying taxes in strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” which are probably more lucrative than either “Irish goggles” or a “Dutch milkshake” but only half the fun). So the company should earn ~$1.00 to $1.10 on the high end but is basically forecasting the next 4Qs to look exactly like the previous 2Qs, which is fine, but less interesting than youth league soccer or watching ants hump (unless one of the ants has a huge coxa).
Anyway, the company was very cheap and now it is about fairly priced for its growth (or lack of) by trading at ~17x guidance though they do have ~$4.25 of cash per share on the balance sheet so ex. that they are trading ~13x fiscal year guidance. It’s not a horrible name to own because they still have three areas of growth including: 1. General market dynamics as the payment industry continues to move away from paper and to electronic payments. 2. The Paymode network they acquired from BAC is just starting to gain steam which would be very nice upside if they can sign some more big banks (and on the call they said “We are also in active discussions with several new bank partners who could potentially adapt and resell the Paymode-X platform,” so that is pretty positive). and 3. they are going to make an acquisition with their excess cash.
That said, the fact that this company may make a large acquisition worries Money McBags a bit and makes it almost impossible to value their business because it’s not clear what their balance sheet or earnings will look like after a deal (though hopefully it won’t look like this). So Money McBags is fine-ish if you want to own this company, because there is potential upside, that said, he’s not sure when that upside hits, and there are some risks (especially as banks are their biggest customers and bank spend could be fucked any day now). So do with EPAY what you will but their longer term outlook should be reasonable (unless they fuck up an acquisition).
The market was quiet in the morning despite a slew of solid earnings announcements as it waited for the release of the Europe bank stress tests which were more highly anticipated than Lindsay Lohan’s jail stint, Avatar’s opening weekend, or Mel Gibson’s next career limiting phone call. Well the results came out midday and were exactly as worthless as one could have hoped. Only 7 out of 91 banks failed the stress test including Munich based Hypo Real Estate, Greek based ATE Bank (which apparently “ate” a fuckload of bad loans), some Spanish banks, and Italy’s Bank of Madoffia. Of course these stress tests were weaker than the efficient market hypothesis in the era of high frequency traders or Haiti’s infrastructure, so it’s hard to get too excited about the results.
The stress tests failed to analyze whether banks could withstand a debt default by any European country and neglected to look at the entirety of banks’ balance sheets (which is a bit like asking a female out on date but forgetting to check for an Adam’s Apple) including completely leaving out any government bonds being held to maturity which is only the fucking majority of the sovereign debt held, so that makes as much sense as trying to diagnose rectal cancer with a broken thermometer and a loving touch.
From day one it was obvious that the stress tests were more bogus than Iraq having weapons of mass destruction, MBA programs teaching anything useful, or Ricky Martin being interested in any female who bangs. There was no way the EU was going to have the test results come out and show that a fucklaod of banks had failed and yet they also wanted to try to have some credibility and not have every bank pass because that would have been less believable than the US bank stress tests or GS’ non-admission of guilt in the Abacus CDO manipulations. So the Committee of European Banking Supervisors managed to find some BS Goldilocks scenario where 7 banks would fail in a number deemed to be just right in not causing more fear but also just right in showing that there are some problems. So jolly good show, hope no one in the CEBS tore their black jeans in their rigorous assessment of the data.
The point is, the banks may be healthy or they may not be healthy, but don’t piss on Money McBags and tell him that it’s raining (unless you are Kelly Brook and just downed a case 1787 Chateau Lafite, and in that case, piss away) by claiming the tests that were run give any kind of conclusive evidence about the health of the EU’s banking system. So excuse Money McBags while he yawns this one out while the market rallies on the news.
In other european news, Britain had a 1.1% increase in GDP which was double what economists had guessed but is still nowhere near pre-recession levels. The country hopes their newly introduced dental sector can help spur GDP higher. In Germany, business confidence rose the most since reunification and to its highest level in three years as the whole country celebrates schadenfreude at the downfall of their fellow EU members. Finally, Hungary’s credit rating may be falling to junk after their talks with the IMF went worse than Sarah Palin‘s talks with Bristol about abstinence. A lower credit rating could leave investors in Hungary starving and will cause it to be more difficult for the country to raise money which it won’t likely to be able to pay back anyway. That said, the threat of credit ratings downgrades are coming from S&P and Moody’s who, as always, suck at their jobs worse than a closterphobic magician’s assistant, so take it for what it is worth.
And in China, worries are getting out that banks may not be able to collect on nearly a quarter of the loans they made to local governments for the building of airports, highways, and lunch delivery of the nation’s favorite soup, cream of Sum Yung Gai. Banking regulators haven’t addressed this potential shortfall but Money McBags is sure they will successfully manipulate their way out of it.
In market news, earnings are powering US companies like spinach powers Popeye or herpes powers Britney Spears (she does run on herpes, right? It’s the only logical conclusion with which Money McBags can come up for regarding the affair du Federline). Ford reported a profit again and said they expect next year to be even better thanks to their new vibrating seats functionality. The company was strongly cash flow positive with $2.6B of cash brought in and they say they will be in a net cash position by the end of next year (and net cash is Money McBags’ third favorite position, right behind lowering taxes and reverse cowboy). Ford’s sales were up 28% in the first half which is twice the industry average as consumers move down market and no longer care about status.
In other earnings news, MCD beat estimates yet traded down as it missed whatever the whisper number analysts made up but were to chickenshit to actually put on paper was. Money McBags will never understand the concept of a whisper number (unless it is Olivia Munn whispering Money McBags her number) because it is a bigger cop out than “it got lost in the mail,” “I was young at the time,” or running to Miami to play with Dwyane Wade. In theory, sell side analysts get paid to provide their unbiased opinions while in practice they get paid to pump up the stocks for whom their firms are trying to raise money, to write meaningless daily updates, and to anally rape sheep (ok, one of those may be made up) and the lameness of not having the nuts to put a whisper number in any of their daily drivel says all one needs to know about paid research. Anyway, MCD had a nice quarter with revenue up 5%, same store growth of 4.8%, $1.13 eps, and only 1k blocked coronary arteries in the Q. Strong international growth helped fuel the results as MCD’s cheap menu and and aspirational brand equity resonantes in countries with large poor populations such as India, China, and the United States.
Also, MSFT put up a big Q after running up yesterday in anticipation of good things happening like the resurgence of the corporate upgrade cycle, stronger sales of Windows, and Excel hardcoating goalseek to always find the lovely Sofia Vergara. EPS was up 48% to $.51 and revenue grew from $13B to $15B, both numbers handily beating analyst guesses though the numbers could contain a trojan horse virus so no one wants to get close enough to them to really dig in.
Finally, Verizon slapped their cocks on the table and yelled “can you hear me now?” as they beat guesses by $.02 per share by earning $.58 per share despite flatish revenue growth and no exposure to the iPhone thanks to better operation. And AXP beat estimates and tripled their profts as customer spend was up 16% and like all financial companies, they lowereed their provisioning, likely just in time to have to raise it again for the second dip in the upcoming recession.
Not all was lobster tails and blow jobs though as AMZN missed their earnings estimates despite growing the top and bottom lines by 40%+. Analysts had guessed the company would earn $.54 per share but instead they earned $.45 per share due to an increase in operating expenses as the company has to spend more on advertising to convince people that the Kindle wasn’t outdated two months ago with the release of the iPad or ~600 years ago with the release of the printing press. Amazon has always seemed like a nebulous investment to Money McBags given the competition, relatively low barriers to entry for specialty sites, and consistently high valuation so he is as happy to not be involved in this stock as Dan Quayle is happy not to be involved in a spelling bee (and yes, Money McBags just whipped out a 20 year old punch line because frankly, 1k-1.5k words of dick jokes a day is a blistering pace, even for a talent like Money McBags).
In small cap news, IBKR reported and managed to shit all over themselves, and Money McBags’ thesis, as if they didn’t just have Montezuma’s Revenge but had his ire, hatred, and angst as well. Their results made Money McBags sadder than he was this morning when read that the inventor of the black box had died until he realized it was this guy and not Roxy Reynolds or Vanessa Del Rio‘s mom.
Anyway, before we get to IBKR’s numbers, Money McBags wants to apologize for saying buying some options in this piece of shit company ahead of earnings would be a good strategy. He believes his logic was sound, but unfortunately he made the mistake of believing he had correctly called the bottom of one of the biggest value traps the market has seen since AIG in 2006 or Elizabeth Berkley‘s acting career pre-Showgirls, so he is sorry for that. Never again will he give a fuck about this shitty company whose market making business which is based on voaltility couldn’t profit when the market was, umm, how to put this lightly, fucking volatile.
IBKR earned $.09 per share in the Q which was down from $.31 per share in last year’s Q and continued the unpredictable nature of this company whose quarters are more up and down than Oprah’s weight (see, Money McBags could write for Leno, no problem) or Faye Reagan on a sybian (he could also write for the AVN awards, he is bi-comedial). Their internet brokerage business fared well and continued to grow increasing accounts by 20% and customer equity by 43% but all of that was irrelevant because their market making business made a mockery of themselves and only had a 5% pre-tax profit margins leading to a profit of $3.9MM which was down 97% from last year.
The stock is such a peice of shit that their CEO who is an ~80% owner has given up trying to make it seem like anything someone would want to invest in and is instead now marketing the stock as some type of hedge for anyone who wants to keep their portfolio from growing too much.
The CEO said: “increasing fluctuations in foreign exchange markets have a corresponding impact on our reported results in U.S. dollars. This makes it ever more apparent that our shares would be more appropriately considered as an investment in a global enterprise based in a diversified basket of currencies rather than in U.S. dollars.”
So any of you out there who own a global enterpirse, buy away.
On the call, CEO Peterffy claimed that the appreciation of the dollar cost them $72MM in revenue or $.16 per share because it’s always one excuse or another. Anyway, Money McBags clearly fucked up and was speculating on market volatility causing earnings to appreciate, which apparently they would have had the dollar not strengthened, but whatever. As Money McBags was speculating, he said to buy options and not the stock so your losses would be minimized, but either way, fuck this company and if any of you ever read Money McBags trying to give an opinion on IBKR other than he has no idea and they hate turning out a profit, you have permission to punch Money McBags in the nuts while forcing him to listen to the melodic stylings of Celine Dion.
The market is up today as sales of new homes were up 27% blowing past analyst guesses and rising by the most in five decades which is so long ago that baby boomers were still in grade school, man had yet to reach the moon, and full muff was still in style (like the very very NSFW 1561). Sales were spurred by the government tax credit which runs out next week, milder weather, and improved construction techniques. Additionally, orders for US manufactured durable goods were strong excluding the drop in commercial aircraft (no pun intended). Taking out transportation (and if you are going to take out transportation, be sure to grease it up with plenty of oil at dinner if you want to make sure you get a proper ride later on), orders rose by the most since December 2007 when the sale of wrecking balls spiked during the “Make Detroit Beautiful” phase of the recession. Driving up orders for durable goods was business spend on computers and electronics as companies are either gearing up for the recovery or trying to get enough computing memory to store all of the videos they have been downloading from spankwire. And the SEC is back in the news today as Goldman is choosing to press their luck (no whammies, no whammies, and stop) rather than settle with them over fraud allegations and a report is out showing SEC regulators spent more time downloading porn than they did trying to actually, you know, regulate the fucking markets (though if they were doing it as a way to research whether Heather Vandeven was causing investors to drop their shorts and get longer, Money McBags totally understands).
Internationally, Greece is activating their bailout plan while Prime Minister George Papandreou called the economy a “sinking ship” and with the bailout he hopes to avoid the fate of the Dokos. The bailout will give Greece 30B euros from Eurozone countries, another 15B from the IMF, and free two for one coupons at their local Red Lobster. The Greek requested bailout is the biggest test for the Euro since it had to guess French Economic Minister Christine LaGarde‘s gender. With the premium on Greek 2 year bonds approaching the premiums on both Pakistani bonds and Lindsay Lohan‘s life insurance, Greece needed to finally cry “theios” and get the aid promised them. Of course getting the aid may be a lot harder than asking for it as German politicians are wavering on their desire to bailout Greece citing Greece’s manipulation of economic statistics, the language in the EU treaty which forbids bailouts, and the potential for any funds to help energize Nia Vardalos’s movie career (though we hear she is working on a new movie titled: My Big Fat Greek Debt Spreading).
In stock news AMZN beat forecasts but like other tech companies, guidance was a bit lacking. Revenue guidance for next Q was $6.1B to $6.7B and analysts guesses were more in the middle than lucky Pierre at $6.4B so the Street is worried they could miss. That said, AMZN earned $.66 per share which beat analyst guesses by $.05 thanks to a 46% increase in revenue as people still hate going outside to buy shit. It will be interesting to see how long it takes for the iPad to make the Kindle obsolete and thus put further strain on AMZN stock. Also, MSFT put up a nice Q as sales rose 6% and net income was up 35% thanks to Windows 7 and businesses starting to spend again. That said, the Street was hoping for better growth, especially after INTC’s numbers, and as a result MSFT is trading down off of a pretty stellar quarter for them. Money McBags hates everything about Microsoft from their clunky operating system which allows in more Trojan Horses than Troy and more viruses than Paris Hilton‘s vagina to that stupid fucking paper clip that pops up in word everytime one mis-hits one of those F keys, but the cycle should be good for them and they are relatively cheap at around 12x 2011 estimates. So Money McBags bought a little in this dip and is going to try to get a quick 10% before puking it out like a KFC Double Down.
In small cap news, RICK had a big day yesterday on no news. Two weeks ago they announced that March sales were up 11% with 3.5% same club sales growth and revenue for the Q up 21%. Of course it’s not RICK’s top line that we’re worried about as they have proven to be literally and figuratively extremely top heavy, it is their bottom line that needs work.
The market is bouncing around today even though GDP grew 5.7%, the fastest pace in 6 years and beat estimates of 4.7% growth. The upside was led by a restocking of inventories from their depressed levels (and inventories were more depressed than Kathy Griffin’s bikini waxer the time she ran out of rubber gloves). The change in inventories accounted for 3.4% of the growth with purchases of equipment and software up 13%, negating the 15% drop in commercial construction because building cardboard boxes is so much cheaper than actual homes. So the question becomes is this a one quarter inventory rebuilding and stimulus induced anomaly or are we really on the way to a recovery? In the delightful Elisabeth Kubler-Ross’s model on the stages of grief (and for those who missed Ms. Kubler-Ross’s induction into the National Women’s Hall of Fame in 2007, the finger sandwiches were to die for), the economy has passed steps one and two by moving past denial (we are definitely fucked) and anger (openly calling for Dick Fuld to have his dick folded) and is now in the bargaining stage (please hire me, please, please). Unfortunatley the next stage is depression, which hopefully isn’t caused by another market crash when inventories fail to turn and/or by China’s bubble bursting like Christina Hendricks’ bustier. Of course the last stage is acceptance and with any luck we will be accepting growth and recovery and not the realization that we are Japan circa 1989 or Taylor Rain‘s lovely backside in her brilliant performance in 2004′s much overlooked film, Apprentass.
What is most concerning to Money McBags is that the market has been selling good news and is trading down now that the expected results are coming in much better. Of the 195 companies in the S&P 500 that have reported earnings since Jan. 11, 154 have beaten analysts’ estimates, according to Bloomberg data. That is an amazing stat and yet the market rally seems to have fizzled out like Lindsay Lohan‘s singing career (and acting career, and pretty much anything other than her whoring career, which actually makes us all winners).
The other big news of the day is that Ben Bernanke was confirmed by the Senate for another 4 year term by a 70 to 30 vote. The thirty who voted against him also voted for Mountain Dew in the Pepsi challenge, Curly Joe as their favorite of the 3 Stooges, and Anna Karenina as their favorite Tolstoy novel. Money McBags is a Bernanke supporter and thinks he has done a perfectly reasonable job as Fed Chairman, so kudos and huzzah for the Senate who took a wide stance and voted bi-partisanly on this one.
In stock news, MSFT earnings were up 60% thanks to Windows 7 and a little something they refer to as a “monopoly.” They beat estimates by $.15 by earning $.74 per share and promised that with earnings like this Bill Gates may finally be able to move out of his mother’s basement. Amazon also put up a huge quarter with sales rising 43% and earnings coming in at a robust $.85 per share, well ahead of the $.72 estimates. They also announced a $2B share buyback which boggles the mind considering that they are trading at 50x next year’s earnings and with the iPad coming in to the market and potentially taking share away from the Kindle. Why a commodity business with low barriers to entry should trade at 50x is beyond me, but then again, so is M-theory and all of it’s absurdly thought out 11 dimensions.
In small cap news MED and ZAGG continue to trade down while EBIX gives back some of their gains from yesterday. CRUS is also down despite their better than street guidance yesterday and run of analyst upgrades today. Money McBags did dip his toe into the CRUS waters yesterday (and it was delightfully stripper piss warm) and buy a small position so go buy some iPhones. Next week promises to be a wild week in the small cap space with more earnings announcements than Jack Nicholson has chins, so enjoy your weekend and be prepared.