After the bell --- Lori (slow)
Archer-Daniels-Midland --- Bob (fast)
Steel stocks --- Suzanne (slow)
“after the bell.” i’m lori rothman. recapping the day on wall street, stocks rose for a third straight day, the s&p 500 closing in at a five-year high after the services industry report this morning came in higher than expected, renewing optimism the economy’s expansion has not been undermined by higher interest rates. the dow up 35 -- archer-daniels-midland is trading at a record today. for more insight on this stock and the industry, we go to bob bowden.
>> good afternoon. investors must have woken up this morning with ethanol on their minds. the energy bill signed in august requires oil companies to put 7.5 billion gallons of ethanol into gasoline annually by 2012, up from four billion gallons in 2005, so almost doubling in that seven-year period. it appears the free market wasn’t a sufficient motivator for ethanol and they needed the government stimulus. the archer-daniels-midland six-year chart shows you how the shares have exploded. this is a logarithmic chart. i can draw a linear regression with plus or minus two standard deviations to show you the flat period between 2001 and 2002, which draws as such. this is the automatically linearized by the bloomberg terminal. if i draw a second one here, it shows you what has happened since. this is 2003, 2004, 2005. that stock more than tripling in that period. wanted to show you other ethanol stocks and how they’re moving today. archer-daniels-midland up 3.4%, hitting an all-time high. pacific ethanol, 5 ½ year high, up 18% today and 138% year to date. we’re only in early april so far of this year. and mgp ingredients and xethanol corp., both up over 18% in this one session. right now, back to you.
>> thanks so much for that. steel stocks hit another yearly high today. the big question, of course, will the gains continue and to help us answer that question, we are joined by bloomberg’s suzanne o’halloran. what are you hearing?
>> a lot of positive news about steel stocks, but investors aren’t necessarily buying it. we’ll look at the standouts today, carpenter, allegheny and cleveland cliffs all gaining today. analysts say takeover speculation and the broad rally in commodity prices has pushed the s&p steel index up more than 58% this year. within the group, allegheny up 83%, nucor 66% and u.s. steel, 30%. earlier today, the c.e.o. of nucor, dan domicco, told bloomberg times are good for the steel business.
>> the global situation is very positive for us, as prices rise for us internationally, they allow us to make sure we can have good prices here in the united states.
>> steel prices rose .9% to $540 a ton in march, the first gain this year and u.b.s. boosted its second-quarter forecast for u.s. sheet steel to $570 a ton. takeover bids may also continue to fuel the rally. the world’s largest steelmaker, mittal is, attempting a hostile $24 billion takeover of arcelor, the number two producer.
>> industry consolidation is here to stay and a long-term trend that will continue. we see numerous steel producers globally and yet constrains in the supply and a limited number of raw materials suppliers.
>> even with the improved optimism, not everyone is buying the stocks. andrew seibert of s&t wealth management said the downside risk is too great. another cautionary sign, the stock prices are at or above the prices set by wall street analysts. the average price for u.s. steel is just a few cents shy of that level. the shares of nucor set to $110 a share and the average price there is around $98. and allegheny, at $66, compared to at average price at $53. and the quarterly profit estimates show a decline of 17% and 6.2%. investors say takeover talk is rampant in the industry. we heard from mr. dimicco of nucor. he said his company will grow through acquisitions.
>> thank you very much for that. we heard that some analysts may be questioning the rally in steel. we’re also hearing that there is bullishness on melts such as copper and zinc―metals. we’re talking about a three-year rally on these metals and credit suisse says it’s not over yet. certainly not over today. copper and zinc both rising to records after reports showed a decline in stockpiles and a strike in mexico now in its second week. for the rest of this year, credit suisse says look for copper, zinc and nickel to continue to lead the rally. you have the labor issues such as the mexican strike, the supply is tight and those situations make it worse. analysts say there’s plenty of demand, especially from speculative investors, to drive the prices higher. let’s look at how some of the metals have been trading. copper hit a record today. the london metal exchange tracks copper inventory and it was down for a third straight day today. zinc also trading at a record today. since there are no sot many people out there with the exception of the pros trading these metals, let’s also look at stocks that might be boosted by this. credit suisse raised its price target on, among other, copper producer phelps dodge, those shares up 3.5% today. it also boosted the gold miner newmont mining and those shares also higher today, up nearly 3%. coming up, we’re going to take a closer look at apple computer’s new strategy. the company is making a play for win os users. we’ll ask nitin gupta, analyst with yankee group.
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Listen Interview: Analyst with Yankee Group
>> after the bell earnings news from bed bath and beyond, stock up over 5% after beating estimates, reporting fourth-quarter e.p.s. 57 cents a share. thomson financial analysts were expecting 65 cents a share. sales also ahead of estimates. heavy volume in the extended session, 760,000 shares trading hands at bed bath and beyondr. so the home retailer coming in with better-than-expected fourth-quarter results, shares up about 5.5% right now in the extended session. shares of apple rose more than 8% in today’s session. the computer company unveiled new software called boot camp that will allow its newest p.c.’s to run software written for microsoft windows. here to talk about the plan is nitin gupta, analyst with yankee group. nitin joins us from boston. welcome.
>> hi. >> let me get your reaction on the news. was the news on boot camp expect sfd.
>> it was expected that we were going to see ways to run windows programs on the newer mac machines. i don’t think it was as expected that we would see the offer from apple this soon.
>> so i guess as we’ve had a day to digest the news, the bottom line, the big question is, for apple computer, how does it translate into, will they be able to sell more computers now?
>> we’ve seen a lot of interest in macs and apple computers generated by the ipod. they sold 14 million ipods last quarter and have seen sharp increases in ipod sales but not in mac sales. there is a halo effect which they were hoping the interest in ipods would translate to mac sales but it hasn’t. one of the barriers to that has been that a lot of windows users are tied to certain playications unavailable on the mac. this reduces that barrier.
>> how many more windows users could this perhaps lure?
>> it’s hard to say a definite number. but our research has shown that about 50% of people interested in apple for mp-3 players are also interested in apple for a computer. and last quarter they sold 14 million macs, so do the math, that’s a potential of seven million mac sales. but that’s unlikely for them to get that many mac sales but to get a higher portion of those interested in macs would be a huge benefit for the company.
>> apple shares today rose nearly 10% on this news about boot camp. is this exciting? is that that exciting for apple or did investors overreact?
>> it is substantial news, however, this isn’t new. there’s been ways to get windows programs to run on apple computers in the past. and especially on the neurocomputers―newer computers and there are also third-party solutions that will be seen doing virtualization to enable this, as well. so it’s not surprising, the news to be able to run windows programs on the machines. >> what about the p.c. competitors? you have dell and hewlett-packard. are they worried right now?
>> no, i don’t think dell or h.p. should be worried at all. apple is still very high-end computer. even if you look at it as just a windows machine. the mac book petros are around―pros are around $2,000. consumers are looking for lower-cost pique’s and that’s -- p.c.’s and that’s where dell and hewlett-packard have the advantage.
>> so apple p.c.’s are still higher priced. who would that put apple in competition with, the sony vaio?
>> i think it does put them in more direct competition with sony vaio. but the person looking to switch to a mac, i think, is a little bit of a unique user, someone who may have walked interest an apple store to purchase the ipod and they like the feel of the mac and may be fed up with windows viruses and now ware. we’re not going to see a mass transition of vaio users or any other brand to the mac platform.
>> what you do know about the windows vista program about to be released, we’re told that boot camp will only work on windows x.p. what does this mean for apple?
>> currently that’s correct. boot camp is only intended for windows x.p. it’s hard to say whether it will be vista compatible as the requirements of vista are released. i think it’s a possibility but it will be difficult to say at this point.
>> in our remaining 30 seconds. i know that piper jaffray says some of the risks for the new software apple is putting out -- excuse me, but basically, apple is dependent on spending trends. you would think this is a good time, no, because we’re coming up on the school shopping season and the holidays?
>> sure, yeah. i think especially for the back-to-school quarter, that’s important for mac sales, for computer sales in general. so it is good timing if you look at it from that respect.
>> thanks so much for bringing us your analysis.
>> you’re welcome.
>> nitin gupta is analyst with the yankee group. stay with us as “after the bell” continues.
