Nasdaq---Anthony
Fourth quarter earnings
Interview: Armada Funds--- Thomas, Crit--- Portfolio Manager
>> welcome back. the nasdaq fell for the sixth time in the past sevening sessions today. for the latest on the nasdaq, let’s go to anthony massucci at the market site.
>> over the last seven trading days at the nasdaq, the nasdaq has dropped 3%, or 66 points. in fact, today’s drop was led by intel and microsoft. those stocks both fell throughout the day. cisco and qualcomm rounding out the nasdaq 100, those top four names were dragging the nasdaq 100. in fact, numbers five through eight, interactive corporation, ebay, amazon, and yahoo!, those eight names the leading losers on the nasdaq 100. of the 1 hrks stocks , 80 fell on the day. ebay offered to buy internet auction, the biggest online company in south korea, paying $382 million in cash for the remaining part of the company it doesn’t already own. other news from oracle, the european commission chiming in today and saying they’ll review the hostile offer from peoplesoft. the issue―will the combination be too much for the industry and dominate markets? overdominating is the concern. they’re saying it’s a complex deal at the commission and they need time to break it down. a merger would help oracle take back its number-two spot behind s.a.p. in germany. sun micro, a story from “the wall street journal” today that the company plans to make server systems that include a new computer chip made by advanced micro devices. so, sun would drop intel’s chip and pick up a.m.d.’s chip, which is cheaper. sun micro down a couple pennies on the day. tech stocks are pricing long-term earnings growth of 20%, one analyst says, higher than his long-term forecast. right now the nasdaq for the day down 1%. we’ll see how it trades in the morning. back to you in the studio.
>> all right, anthony. thanks very much. well, this is the trillion-dollar question, folks -- what’s it going to take to drive the stocks higher? our next guest says if we get a healthy preannouncement season in december that stocks will move higher before the year-end, and here to share his view is crit thomas, director of growth equities at national city investment management and also portfolio manager of the armada large-cap growth fund. he joins us now from his office in cleveland, ohio.
>> good evening.
>> crit, you spoke with our screeners here. you had said that this preannouncement season people are actually wrongly concerned about fourth-quarter earnings. why are people wrongly concerned?
>> well, i’m not sure that it’s a concern. i think, you know, what’s out there is there’s this perception that built into estimates is year-over-year about 20% earnings growth in the fourth quarter, and i think people are looking at that wrongly. really, it’s a sequential rate that is more important as we move from third to fourth quarter. and if you look at the estimates on a sequential basis, actually on a historical basis, the averages are much higher than what is predicted in this fourth quarter. so, i think that numbers could be much higher and actually that would be more normal for the market itself.
>> so, then what happens?
>> the proof will be in the pudding moving into december. a hell―healthy preannouncement season will run the numbers up.
>> is the probability of getting it greater than not getting it in your estimation?
>> oh, i think it’s much greater.
>> so, then, you position your portfolio to take advantage of the stocks that will benefit if, indeed, the earnings momentum is going? is that correct?
>> yes. across the armada growth portfolios we have been positioning for a cyclical recovery in earnings. and we’ve been overweight in the technology sector, we’ve been adding to industrials, also have been pretty well focused on the consumer cyclicals. so, definitely we believe that it’s earnings that will drive this market, and we want the earnings that will be the most cyclical within our growth universe at the armada funds.
>> sure. now, you had said we have been overweight, you know, some of the technology stocks , have been. still are?
>> still are. if we get much more of a run in semiconductors, i think we’ll probably pull that back a bit and redeploy it into either software, which hasn’t performed that well year to date or industrials, at least undis covered industrials. recently, we purchased roman hoss in our large-cap growth fund. again, leverage to economic recovery.
>> are you trading semiconductors for software shares now?
>> at this point, we haven’t started that. we think that you still have some legs in the semi side, a whole lot of leverage in these models. so, it’s really valuation that’s going to push us out, and that is one of the key component pars we look at in the armada funds for stom selection.
>> ok. we are just about out of time. we have about 20 seconds here, so i should probably say thanks and goodbye politely rather than cutting you off impolitely. that’s crit thomas, director of growth equities, not to be coon fused with value equities, and he’s also a portfolio manager at the armada funds. thank you very much, crit. appreciate you joining us.
>> thank you.
>> a lower profit is expected tuesday from japan telecom, that country’s third-largest phone company losing in just about every area it operates in. you want to hear the full story? that’s up after the break.
