Market briefing --- Matt (slow)
Hewlett-packard --- Carmen (fast)
NYSE --- Bob (fast)
welcome to “world financial report,” i am matt nesto. big story today, after hours, we talked about it all day and hewlett-packard has delivered. its second-quarter profit up 77% as sales hit a record. carmen roberts has been tracking the numbers that were released after the closing bell today and contained surprises.
>> yes. definitely surprised when it comes to the sales report. hewlett-packard says its sales rose 12% to a record $21 billion as revenue increased across the board, nearly a billion more than wall street expected. with that, h.p. is boosting its forecast for the second-half revenue. profits at the world’s second largest computer maker was more than $1 billion or 34 cents a share, in line with wall street’s estimate. net profit rose to 29 cents a share as chief executive carly fiorina is spending billions to protect the company’s most profitable unit, its printer ink cartridge unit. merrill lynch analyst says 3/4 of hewlett-packard’s profit came from that unit and the analyst with bb&t asset management says the cartridge business is a driving force for h.p.’s profit, its cash flow and long-term value. but rising competition and broader weakness in the markets pushed shares down 24% before the earnings were released this afternoon. since their high, 3 1/2-year high in january. stock trading at 14 times estimated earnings compared to rival dell’s 28 and s&p 500’s 17.
>> after the call tonight, we’re currently reassessing our valuation of the company and very interested in adding to our core position in hewlett-packard after tonight’s call assuming there are no immediate surprises.
>> the converse call is just getting underway. if there are surprises, we’ll let you know. for the moment, we can tell you that h.p. is confirming the second-half forecast of profit minus some items of 74 cents a share and as matt mentioned, shares are rising in after-hours trading.
>> about 3%, absolutely. thank you very much. looking at the shares of hewlett-packard, i put together a chart and i’d like to start with the big picture, a 20-year logarithmic chart. you can see, obviously, the runup but the red bracket there, i’ll zoom this in for you―the red bracket is the 80% decline and subsequently tighter you can see the rebound that we saw in the stock over the past, well, 14 months or so. really, the stock running up to the january 27 peak. it was about at an 80% move at october 2002, so the stock going from $11 a share up to the high recently of $27 a share, just shy of that. the six-month moving average you can see now, in the near term, the stock has been weakened. this is where the hewlett-packard story gets more interesting. i apologize for the―there you go. this is where the stock gets more interesting and this is the recent decline from january 27, which happens to be my birthday and mozart’s, but you can see the decline here back down to $20 per share. that works out to about 25%. it’s going to be softened a bit because of the extended hours’ gains of 3% but nonetheless, even with the gains in extended hours, you’re still looking at a down trend and you’ll still be below the six hoff month moving average and last but not least, i want to show you another way to look at this in terms of relative strength. a lot of focus on the oversold line and overbought line. this being overbought back in january for a full three weeks before it hit that recent high. and then the weakness, you can see breaking beneath both the 20- and 50-day moving averages and down here notice that the stock again on the bottom, this is the oversold line in terms of relative strength, the stock, again, for a full few weeks, has been below that relative strength line and you can see it popping up there again. that’s hewlett-packard for you in bloomberg fashion, as we were, with all the power of the terminal. 3.4% higher in the extended hours and that would bring the stock up to 20.5. applied materials turned in a profit in its fiscal second quarter after losing money a year ago. shares are higher in after-hours’ trader―no, they aren’t. now we’re down almost 1%. applied materials is the world’s biggest maker of semiconductor production equipment and boosted sales to chipmakers who were increasing production. applied materials earned 22 cents a share, three cents better than analysts expected and net income was up 47% at network appliances. the company makes devices for storing and distributing data on computer networks. sales rose more than expected as the company broadened its product line and earnings increased to 10 cents a share from seven cents a share a year earlier. separately, the company announced it will buy back as much as $200 million of its stock as shares are lower in after-hours’ trading. and you thought earnings season was over? here is an acquisition story for you. nearly $2 billion of acquisitions in the insurance industry announced after the close of trading. marsh & mclennan is paying all cash for kroll. they will pay $37 a share, a 32% premium to the closing price of $28.10. today, kroll shares are not trading in the extended session but shares of marsh and mclennan are falling. down 64 cents. marsh expects the deal to close in the third quarter of this year. i believe it’s time to check the markets . stocks were higher today, snapping a three-day slump, bouncing off of the year-to-date lows. you can see .6% for the dow and s&p. the nasdaq, 1.1% higher. volume on the big board -- nasdaq alone averaging close to two billion shares a day year to date and there only 1.4. so many investors on the sidelines. bob bowden, whose day has been going for quite a while, is at the big board with a wrap of the big movers.
>> if you only knew when they day started going. we begin with retail, that, one of the biggest upward moving stock groups on the day. staples, the biggest office supplies retailer, up $1.97. that’s to $26.39, up 8%. first-quarter profit increased five-fold. it had been five cents a share a year ago and in the most recent quarter, 25 cents a share. more business spending helped sales at staples. j.c. penney not on that list but the number two u.s. department store chain had first-quarter sales jump 8% helped by demand for worthington spring dresses and stafford’s clothing. shares of j.c. penney with the biggest gain in more than eight months. toys ‘r’ us missed sales expectations for last quarter and posted a bigger loss than last quarter but analyst with harris nesbitt upgraded those shares so they rose 6.5%. in general for retailers, profits overall climbed an average of 28% in the quarter for the 473 companies in the standard & poor’s 500 index reporting earnings through today. they expected to post a 13% increase overall for retailers so when you see 28% compared to 13%, that is better than expected. material stocks also higher on the day and we had a number of those stocks, including steel stocks, which rallied. and finally, t.x.u. corporation, the largest percentage gainer in the s&p 500, will form a billing venture with cap gemini s.a.
>> which part of wrap don’t you understand?% that’s it.
