VMWare is 86% owned by EMC. Its shares traded as high as $125 per share, which nearly brought its market cap to parity with EMC.
When VMWare was trading in the 100's, EMC continually stated that they would not seek to completely spin off the company or sell anymore of their stake.
Today, with VMWare opening at $32 per share after delivering a disappointing outlook, EMC has "hinted" that they are open to spinning off VMW.
Wednesday, July 23, 2008
Wachovia Runs Out of Steam
After posting an obnoxiously huge loss, Wachovia rallied 27% yesterday. This was after recovering from a 10% loss in early trading.
Early this morning, Wachovia was up again by as much as $2 per share. It has since given back some of its gains.
In just seven days, the fourth largest bank in the United States went from a low of $7.80 per share to a high of $19.53 per share.
I think now is a good time to take some money out of financials and look for the next green pasture.
A couple of ideas: this morning EMC is up after posting a nice quarter. The move is even more impressive when you consider that VMW is down nearly 10%. EMC is one of the first technology companies that has posted a seemingly impressive quarter.
GE, a bargain hunters paradise. The stock is coming back from a multi-multi-year low. It's a name everyone loves to love. People late to the party might start a new party in this stock.
Early this morning, Wachovia was up again by as much as $2 per share. It has since given back some of its gains.
In just seven days, the fourth largest bank in the United States went from a low of $7.80 per share to a high of $19.53 per share.
I think now is a good time to take some money out of financials and look for the next green pasture.
A couple of ideas: this morning EMC is up after posting a nice quarter. The move is even more impressive when you consider that VMW is down nearly 10%. EMC is one of the first technology companies that has posted a seemingly impressive quarter.
GE, a bargain hunters paradise. The stock is coming back from a multi-multi-year low. It's a name everyone loves to love. People late to the party might start a new party in this stock.
Tuesday, July 22, 2008
Wachovia: First Look
Wachovia (WB) reported a headline grabbing $8.9 billion loss for the quarter leading to some creative personification hyperbole:
"Wachovia Blows Itself Up"
"Wachovia... just puked up its last quarter"
Beyond the headline number, the loss excluding the $6.1 billion charge for goodwill was inline with the projection the company provided on July 9 when they named their new CEO.
Notably, the company did not mention a dilutive equity offering. They plan to preserve capital by reducing their quarterly dividend from 37.5 cents to 5 cents and cutting 6,350 jobs. They will also exit the wholesale mortgage business.
The stock was down over 10% in the early pre-market session, but is now down only 5%. If the stock somehow manages to find its way into the green today we may have another "market tell" on the state of the financials. In addition to its own $9.8 billion loss, it's also fighting against disappointing earnings from Amex and Apple.
"Wachovia Blows Itself Up"
"Wachovia... just puked up its last quarter"
Beyond the headline number, the loss excluding the $6.1 billion charge for goodwill was inline with the projection the company provided on July 9 when they named their new CEO.
Notably, the company did not mention a dilutive equity offering. They plan to preserve capital by reducing their quarterly dividend from 37.5 cents to 5 cents and cutting 6,350 jobs. They will also exit the wholesale mortgage business.
The stock was down over 10% in the early pre-market session, but is now down only 5%. If the stock somehow manages to find its way into the green today we may have another "market tell" on the state of the financials. In addition to its own $9.8 billion loss, it's also fighting against disappointing earnings from Amex and Apple.
Monday, July 21, 2008
Interesting Gold
Oddly, the ongoing rally in beaten down financial stocks has not tarnished gold. Likewise, the recent pull back in oil has not resulted in a corresponding pullback in gold.
When gold was on the way up these were two commonly cited reasons used to explain the rise in price. What is this telling us?
1.) The rally in financials is probably not the permanent bottom. In fact, tomorrow things are bound to get interesting when two of the relatively weaker financial stocks Wachovia (WB) and Washington Mutual (WM) announce their (lack of) earnings.
2.) The longer term bullish trend in gold is far from done. Adjusted for inflation, gold is still way below its all time high.
When gold was on the way up these were two commonly cited reasons used to explain the rise in price. What is this telling us?
1.) The rally in financials is probably not the permanent bottom. In fact, tomorrow things are bound to get interesting when two of the relatively weaker financial stocks Wachovia (WB) and Washington Mutual (WM) announce their (lack of) earnings.
2.) The longer term bullish trend in gold is far from done. Adjusted for inflation, gold is still way below its all time high.
Thursday, July 17, 2008
How Will Big G's Miss Impact the Rally in Financials?
Google (GOOG) certainly likes keeping investors and short sellers on their toes. Last quarter was an upside surprise with a 20% pop. This quarter an earnings miss. After hours shares are down more than 7%.
So how will this impact the rally in financials? During the market's last mini-rally from March to May I remember the financials starting the rally and tech grudgingly following. Repeat?
As for the believe it or not rally, here's where the three mentioned prior stack up after today.
FRE: Friday Low 3.89, Today's Close 8.33. Gained 114%
WM: Monday Low 3.03, Today's Close 4.99. Gained 64.6%
WB: Tuesday Low 7.80, Today's Close 13.44 Gained 72.3%
So how will this impact the rally in financials? During the market's last mini-rally from March to May I remember the financials starting the rally and tech grudgingly following. Repeat?
As for the believe it or not rally, here's where the three mentioned prior stack up after today.
FRE: Friday Low 3.89, Today's Close 8.33. Gained 114%
WM: Monday Low 3.03, Today's Close 4.99. Gained 64.6%
WB: Tuesday Low 7.80, Today's Close 13.44 Gained 72.3%
You know you're in a bear market counter-rally when...
Wachovia headquarters is raided by securities regulators in an auction-rate probe.
After briefly dipping into negative territory, the stock is up over 10% on the day.
JP Morgan warns of potential losses in its prime loan portfolio.
The stock gapped up and is currently up over 10% on the day.
To see how long this rally can run, keep watching stock price reaction to the news. In the coming week or so, I think there will be many more revelations and negative stories met with stock gains.
Apparently the stock market just needed some bad news to allay investor's fears.
After briefly dipping into negative territory, the stock is up over 10% on the day.
JP Morgan warns of potential losses in its prime loan portfolio.
The stock gapped up and is currently up over 10% on the day.
To see how long this rally can run, keep watching stock price reaction to the news. In the coming week or so, I think there will be many more revelations and negative stories met with stock gains.
Apparently the stock market just needed some bad news to allay investor's fears.
Wednesday, July 16, 2008
Believe it or Not Stock Market Rally
It's the believe it or not stock market rally. Just as pundits and analysts begin to forecast hundreds of bank failures in the coming years and lament the abysmal state of our financial system, the market decides to frustrate the maximum number of participants with a bear crunching rally.
It might not seem like it, but its already been an impressive rally.
From its intraday low yesterday, the Dow is up 508 points or 4.7%, the Nasdaq is up 117 points or 5.4%, the S&P is up 45 points or 3.75%.
How about some individual stocks?
From Monday's intraday low, Washington Mutural (WM) is up 1.50 or 49.5%.
From yesterday's intraday low, Wachovia (WB) is up 2.74 or 35%.
From Friday's intraday low, Freddie Mac (FRE) is up 2.94 or 75.5%.
Where do we go from here?
Call me crazy, but I think the direction is higher. There were some intraday reversals on panicky selling in some of the stocks mentioned above. Earnings season has started with Wells Fargo (WFC) setting an upbeat tone. Other financial company announcements likely will not be as rosy, but I think the results will be met with relief rallies anyway.
It's going to be a nail biting few weeks as shorts and longs alike decide whether its really time to pull the trigger. Keep your ammo ready.
It might not seem like it, but its already been an impressive rally.
From its intraday low yesterday, the Dow is up 508 points or 4.7%, the Nasdaq is up 117 points or 5.4%, the S&P is up 45 points or 3.75%.
How about some individual stocks?
From Monday's intraday low, Washington Mutural (WM) is up 1.50 or 49.5%.
From yesterday's intraday low, Wachovia (WB) is up 2.74 or 35%.
From Friday's intraday low, Freddie Mac (FRE) is up 2.94 or 75.5%.
Where do we go from here?
Call me crazy, but I think the direction is higher. There were some intraday reversals on panicky selling in some of the stocks mentioned above. Earnings season has started with Wells Fargo (WFC) setting an upbeat tone. Other financial company announcements likely will not be as rosy, but I think the results will be met with relief rallies anyway.
It's going to be a nail biting few weeks as shorts and longs alike decide whether its really time to pull the trigger. Keep your ammo ready.
I'm Back
OK, I'm back. Sorry for the long absence from this blog.
I'm going to try to keep a more consistent posting schedule and keep everything "bite sized." I'll focus on specific stocks and events with pointed, timely observation and opinion.
We seem to be within interesting times once again.
I'm going to try to keep a more consistent posting schedule and keep everything "bite sized." I'll focus on specific stocks and events with pointed, timely observation and opinion.
We seem to be within interesting times once again.
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