Market briefing --- Lori (slow)
Nasdaq --- Brett (slow)
i’m lori rothman. stocks took a pause today for the first time this week. you had oil hitting a two-month high. gold was up there today. jobs report coming out tomorrow. at the closing bell, the dow jones industrial average lost 23 points. merck, verizon, altria group among the leading laggards on the industrials today. the s&p 500 lost 2.5 points. you saw weakness in utilities, telecom, pharmaceuticals. the nasdaq at the close held on to gains, up just about 1.5%, closing at 2361. apple, a big gainer there for a second consecutive day. 3m also had its best day in more than a year. the stock was up a significant percent. 5% was the gain. top performer on the dow and s&p 500 today. let’s look at the reasons behind the move. 3m raised its first-quarter forecast citing strength in a number of business units from industrials to safety products to consumer goods and electronics. the company projects earnings in a range of $1.15 to $1.16 a share. analysts had a median forecast of $1.12. 3m raised its sales forecast saying revenue could rise about 8%, which is up from a prior estimate of 3% to 4% growth. on to the energy markets where crude futures are flirting with $68 a barrel and gasoline futures are back at $2 a gallon. nymex crude oil ended the session at $67.94, the highest price since last january. gasoline futures soared almost 3% to their highest price since october. the only exception to the rally, natural gas, futures fell after a smaller-than-forecast drop in the nation’s supplies. here’s su keenan at the nymex, joining us back in the studio to bring us what was driving the moves today.
>> the bulls in the crude oil pits are asking the question, can we break above $70, reached in late august. those traders have a saying, three times is the charm. twice in january, if you look at that chart, it’s the twin peaks you see, nymex crude broke above the $68 mark and failed to set a new record. today, there was plenty of talk of setting that record. barclays capital kevin norris predicts fresh highs in the mid $70 range. analysts say conflicts with iran and nigeria are factors but gasoline is fueling the latest rally, concern about gas shortages for this summer after a more than 6% drop in supplies over the last five weeks has pushed futures prices to a six-month high.
>> there’s uncertainty with the reformulated gasoline, the ethanol, rephased into the market . and we had that huge draw on gasoline yesterday. all those facts are pulling the whole market up and crude oil along with it.
>> jeffrey spotts, chief investment officer for a hedge fund with 1/3 of its assets in commodities stocks, said the biggest gains come in the tail end of a rally and it’s his view the hot stocks are about to get hotter.
>> i think that gold stock prices have more likely secularly than do energy stocks but i think that short term, yeah, if you want to trade the energy stocks, i think the breadth numbers speak to that being a good idea.
>> good idea, he says, not too late to buy energy stocks. a bloomberg survey shows oil analysts have raised their 2006 price forecast for oil an average of 20%. that’s in the last three months.
>> su, thank you. research in motion’s big story we’re following in the after-hours session, the stock taking a hit following the release of the fourth-quarter results. brett gehrig is at the nasdaq with the explanation.
>> that stock was down all day today, finishing more than a dollar lower at $84.38. take a look at the after hours’ trading, the stock is now down more than 6%, below $80 a share. the company came out with fourth-quarter earnings earlier, fourth-quarter earnings per share came in at 65 cents and analysts were expecting 67 cents a share. fourth-quarter revenue, same deal there, $561 million reported by the company and analysts were looking for $559 million―a little bit better but not good enough for investors. also, the company saying that its first-quarter earnings and revenue would be lower. first-quarter earnings per share will be in a range between 62 and 67 cents a share. analysts were looking for 76 cents a share. revenue coming in between a range of 580 million and 610 million dollars, analysts expecting $625 million. so there you see the disappointment in the after-hours. sales and subscriber growth this quarter may trail analysts’ estimates, marking the fourth straight period research in motion has disappointed investors on that front. you remember that co-chief executive officer jim balsillie cut his fourth-quarter subscriber forecast three times as customers held off signing orders until the agreement with n.t.l. to settle that lawsuit came within the last month or so. that being said, the nasdaq composite index managed to eke out a fresh five-year high today, gaining one point, up to 2361. it just managed to do that. there were a few things weighing on the market . the gain we’ve been larger had it not been for higher oil prices, higher bond yield and weakness in the biotech sector. celgene was down more than 7%. vertex, medimmune and gilead sciences following in suit. but there were pockets of strength today on the nasdaq. first of all, we have the satellite radio companies, both sirius satellite and x.m. satellite, both gaining more than 7%. as we look at the retail winners, this was the big story here on the nasdaq. bed bath and beyond leading the way, american eagle outfitters, gymboree and costco following suit.
>> brett, thanks so much for that. so research in motion, the story of the moment, could be a loser on the nasdaq tomorrow given the reaction in extended hours. we’ll bring it down with our next guest, stay tuned.
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Listen Interview: Portfolio manager at synovus investment advisors
>> we’re about 20 minutes away from bloomberg “money & politics.” michael mckee is here to tell us what’s on tap.
>> as ed sullivan used to say, a really big show today. we talk about the senate compromise on immigration reform with dick durbin of illinois and georgia republican senator, johnny isakson. and we’ll talk about efforts to craft legislation that will do something about global warming. energy committee chairman pete domenici is in our “charms corner” today. we’ll also have an interview with securities and exchange commission chairman christopher cox.
>> lexar media failed to gain shareholder carl icahn’s support for a proposed takeover by micron technology. icahn’s representatives are calling the $680 million sale price insufficient. the comment follows a meeting requested by lexar. the disclosure in a securities and exchange commission filing is another blow to micron’s effort to buy the maker of the computer memory cards. another shareholder, elliott associates, also opposes the deal, calling the price too low. icahn and elliott own a combined 13.5% of lexar. shares of lexar rose 1% to close at $9.18 today. shares of research in motion are tumbling after hours. here’s why. the company reported earnings of 65 cents a share in the fourth quarter, ex-items and analysts were expecting 67 cents a share. and research in motion had already lowered their fourth-quarter outlook in march. research in motion said earnings would fall short of expectations in the current quarter. here to react to the data is daniel morgan, portfolio manager at synovus investment advisors joining us from st. petersburg, florida. what’s your immediate reaction?
>> obviously, you just said it and that is that not only did the revenue number and earnings number on the most recent quarter fall below expectations but also the guidance they gave coming into the upcoming quarter in terms of 580 to 610 million was below expectations. i think the real big reason isn’t so much the revenue and earnings numbers. i think it’s the subscriber growth figures were below expectation. the street was looking for 7 to 750 and they didn’t get it and that’s one of the reasons the stock is down right now.
>> what do you think the main problem is with r.i.m.? why aren’t they able to gain traction, especially now that the n.t.p. litigation is behind them?
>> that was a big issue coming into the quarter, was there going to be a pent-up demand for blackberry devices relating to the fact that now that the litigation was behind them and people would feel more comfortable in terms of buying them and corgeses would feel more comfortable in terms of putting in orders and it looks like the litigation hurt them a little bit more than expected in terms of the number of new units that were sold and the guidance that they gave in terms of 675 million new units. so because of those factors, obviously, that is hurting the stock right now.
>> how does this affect your outlook on the stock? would you recommend buying, selling, holding r.i.m. right now?
>> you have a couple of issues. we know the guidance was below expectations. if you look at the revenue growth, it was in the 30% range. what we’ve noticed over the last four, five quarters, is that every quarter, revenues are growing by a less amount. the company is getting bigger and bigger and it’s hard to grow at the 100% rate it was before. that’s an issue you have to bear in mind. also, you have new competition coming up in terms of we know that palm had a great quarter with the trio, nokia and motorola in the mix so those are issues out there but i think they are still the leader, r.i.m. is still the leader going forward in that space.
>> let’s quantify this. you point out to us that the market for wireless email is expected to be upwards of $14.3 billion. currently r.i.m. has a $1.35 billion market share. what is your estimate of how much more of that $14 billion pie r.i.m. could achieve?
>> a couple of factors will happen. they’ll grow with the market . we know there’s a tremendous opportunity for all these companies to participate and we’re optimistic or hopeful that research in motion will continue to at least maintain their market share, even if they were to give up some share going forward to the other players i mentioned, you’re still looking at decent growth, it’s just that the growth will not be as great as it was in the past.
>> what do you think of the business strategy especially considering the fact that r.i.m. is expanding its wireless carrier relationships outside of north america. characterize the demand you see there?
>> that’s a big part of their strategy, they’ve introduced the 8700 model rolling out here in the u.s. as well as overseas. that’s a big part of their growth going forward is trying to duplicate the success they’ve had here in the u.s. in terms of everyone running around with their blackberries and taking that into other parts of the world. that’s definitely a growth catalyst going forward for r.i.m.
>> what does r.i.m. have to do to impress the street. >> obviously, we’re going to go into this quarter. we know that guidance was below expectations. maybe they’ll come through the quarter and up the guidance a little bit but we need to see stronger momentum in terms of subscribers of units going forward and i think that’s what the stock will trade on.
>> daniel morgan, thank you very much for joining us.
>> dan is portfolio manager at synovus investment advisors. the r.i.m. coverage doesn’t stop now. tomorrow, we’ll talk earnings, blackberry sales and the palm factor with the c.f.o. of the company. much more ahead on tonight’s edition of abercrombie &he bell.”
