Tech Head Fakes and Holiday Droughts
Unhappy Holidays... #5 US Investment Bank, Bear Stearns reported the first loss in the company's history, and the bank decided top executives would not receive bonuses.
BS took a larger than expected $1.9 billion write down reflecting the reduced value of mortgage related securities...
and reported a net loss of $854 million vs year ago profit of $563 million, as of Nov 30th.
CFO Sam Molinaro said it was impossible to be certain that the worst of the market troubles were over. Little known fact Sammy, its just getting started.
Its Bowl Season, Dustbowl that is... The lack of rain, which also caused water shortages in Florida, Georgia and Alabama has hit North Carolina.
With autumn and winter rainfall down 25% and temperatures close to 80 degrees Fahrenheit in December...
Governor Michael Easley called on residents to cut water use by half, saying the drought is the worst on record. Two-thirds of North Carolina is in an exceptional drought.
Lake Mead, on the Colorado River, just 30 miles from Vegas, is the largest man made lake and reservoir in the United States.
90% of Southern Nevada's water comes from the lake, whose level has been falling since 1998.
On Dec 14th, seven western states reached an agreement on water rights for the Colorado River, now in its eighth year of drought.
The drought has left Lake Powell and Lake Mead, the river's two mammoth reservoirs, half-empty. Have a look at The Drought Monitor.
Ellison & Tech's Disconnect... RIMM net earnings doubled and so did sales...
as shoppers spent a record $3.2 billion on mobile phones, or $83 each, up from $2.2 billion a year earlier.
The phone producer gave upward forward guidance anticipating more consumers purchasing Blackberry's, shares jumped 11%.
#1 database software provider, Oracle beat the number and projected Q4 revenue will rise as much as 23%. CEO Larry Ellison:
"The company's software handles essential business tasks, making it harder for customers to curb spending when the economy slows." Say what?
Blame it on demand... #2 package delivery company, FedEx...
said Q2 profit fell 6.3% as a slowing economy cut demand for freight shipments and fuel spending rose.
FedEx gave lowered forward guidance for Q3 and cut its fiscal 2008 capital spending forecast.
Blame it on less flu... #3 pharmacy RiteAid's stock plunged 32%, the most in eight years...
upon reporting an $84 million Q3 loss on a sales increase of 51%. RiteAid gave lowered forward guidance and forecast a wider loss for Q4.
CEO Sammons: "The cough, cold and flu season continues to be weaker than last year and we are seeing slower holiday sales than expected so far."
Unsalubrious Greetings... #2 greeting card company, American Greetings profit...
fell 42% in Q3 on a 7% sales decline, stock down 12% on the lean and mean greetings.
Salubrious Overexposure... The world's largest bond insurer or guarantor MBIA's net worth as of September 30 was $6.5 billion.
Today, MBIA announced exposure to $8.1 billion of CDO collateralized debt obligations based on toxic MBS.
MBIA said it has exposure to $30.6 billion in complex mortgage securities that it insures, five times the amount of its net worth
A Morgan Stanley report said: "This new disclosure completely changes our view of MBIA being a 'more conservative underwriter' relative to Ambac."
You mean no one had any idea of the magnitude or gravity here?
Credit protection costs on MBIA surged 100 basis points. The cost of protecting MBIA's debt rose to $600,000 a year for five years to protect $10 million of debt.
More cash they don't have. MBIA'S stock plunged by 27%, bringing its total decline for the year to more than 70%.
Fitch Ratings said it would reassess its AAA insurance rating for a possible downgrade and gave the company four to six weeks to raise at least $1 billion.
Fitch cited deterioration on some of the $22 billion of securities MBIA insures that are backed by 2nd lien mortgages.
The More, The Merrilly Lynched... reports indicate that #3 US securities firm Merrill Lynch may have...
$8.6 billion in new write downs, in addition to Merrill's previous $7.9 billion write down. Shares down 41% YTD.
Moody's said that it's maintaining a negative outlook on Merrill's senior unsecured debt, which is rated A1. Moody's:
"The negative outlook is driven primarily by Moody's expectation of further writedowns on the firm's subprime mortgage CDO portfolio and the resulting impact on Merrill's capital adequacy."
The Nattering One muses... Capital adequacy ya say? Total US GDP Annual $15 Trillion; Total Derivatives based on MBS, are ya sitting down?
$48 Trillion. Are ya getting a grasp of the inadequacy yet? Apparently Larry Ellison, RIMM and misled tech investors haven't.
So cell phone and database sales are immune from economic malaise? Guess again, greeting cards, transports, retail and pharma say otherwise.
This tech head fake is just that, as NOTHING and NO ONE is immune to the economic flu that is coming. Except the water utilities and mortuaries.
Hattip to Reuter's, MSN and Bloomberg.
BS took a larger than expected $1.9 billion write down reflecting the reduced value of mortgage related securities...
and reported a net loss of $854 million vs year ago profit of $563 million, as of Nov 30th.
CFO Sam Molinaro said it was impossible to be certain that the worst of the market troubles were over. Little known fact Sammy, its just getting started.
Its Bowl Season, Dustbowl that is... The lack of rain, which also caused water shortages in Florida, Georgia and Alabama has hit North Carolina.
With autumn and winter rainfall down 25% and temperatures close to 80 degrees Fahrenheit in December...
Governor Michael Easley called on residents to cut water use by half, saying the drought is the worst on record. Two-thirds of North Carolina is in an exceptional drought.
Lake Mead, on the Colorado River, just 30 miles from Vegas, is the largest man made lake and reservoir in the United States.
90% of Southern Nevada's water comes from the lake, whose level has been falling since 1998.
On Dec 14th, seven western states reached an agreement on water rights for the Colorado River, now in its eighth year of drought.
The drought has left Lake Powell and Lake Mead, the river's two mammoth reservoirs, half-empty. Have a look at The Drought Monitor.
Ellison & Tech's Disconnect... RIMM net earnings doubled and so did sales...
as shoppers spent a record $3.2 billion on mobile phones, or $83 each, up from $2.2 billion a year earlier.
The phone producer gave upward forward guidance anticipating more consumers purchasing Blackberry's, shares jumped 11%.
#1 database software provider, Oracle beat the number and projected Q4 revenue will rise as much as 23%. CEO Larry Ellison:
"The company's software handles essential business tasks, making it harder for customers to curb spending when the economy slows." Say what?
Blame it on demand... #2 package delivery company, FedEx...
said Q2 profit fell 6.3% as a slowing economy cut demand for freight shipments and fuel spending rose.
FedEx gave lowered forward guidance for Q3 and cut its fiscal 2008 capital spending forecast.
Blame it on less flu... #3 pharmacy RiteAid's stock plunged 32%, the most in eight years...
upon reporting an $84 million Q3 loss on a sales increase of 51%. RiteAid gave lowered forward guidance and forecast a wider loss for Q4.
CEO Sammons: "The cough, cold and flu season continues to be weaker than last year and we are seeing slower holiday sales than expected so far."
Unsalubrious Greetings... #2 greeting card company, American Greetings profit...
fell 42% in Q3 on a 7% sales decline, stock down 12% on the lean and mean greetings.
Salubrious Overexposure... The world's largest bond insurer or guarantor MBIA's net worth as of September 30 was $6.5 billion.
Today, MBIA announced exposure to $8.1 billion of CDO collateralized debt obligations based on toxic MBS.
MBIA said it has exposure to $30.6 billion in complex mortgage securities that it insures, five times the amount of its net worth
A Morgan Stanley report said: "This new disclosure completely changes our view of MBIA being a 'more conservative underwriter' relative to Ambac."
You mean no one had any idea of the magnitude or gravity here?
Credit protection costs on MBIA surged 100 basis points. The cost of protecting MBIA's debt rose to $600,000 a year for five years to protect $10 million of debt.
More cash they don't have. MBIA'S stock plunged by 27%, bringing its total decline for the year to more than 70%.
Fitch Ratings said it would reassess its AAA insurance rating for a possible downgrade and gave the company four to six weeks to raise at least $1 billion.
Fitch cited deterioration on some of the $22 billion of securities MBIA insures that are backed by 2nd lien mortgages.
The More, The Merrilly Lynched... reports indicate that #3 US securities firm Merrill Lynch may have...
$8.6 billion in new write downs, in addition to Merrill's previous $7.9 billion write down. Shares down 41% YTD.
Moody's said that it's maintaining a negative outlook on Merrill's senior unsecured debt, which is rated A1. Moody's:
"The negative outlook is driven primarily by Moody's expectation of further writedowns on the firm's subprime mortgage CDO portfolio and the resulting impact on Merrill's capital adequacy."
The Nattering One muses... Capital adequacy ya say? Total US GDP Annual $15 Trillion; Total Derivatives based on MBS, are ya sitting down?
$48 Trillion. Are ya getting a grasp of the inadequacy yet? Apparently Larry Ellison, RIMM and misled tech investors haven't.
So cell phone and database sales are immune from economic malaise? Guess again, greeting cards, transports, retail and pharma say otherwise.
This tech head fake is just that, as NOTHING and NO ONE is immune to the economic flu that is coming. Except the water utilities and mortuaries.
Hattip to Reuter's, MSN and Bloomberg.
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