Wednesday, December 21, 2011

Late day buying brings Dow into the black

Dow eked out a gain of 4, advancers over decliners better than 3-2 but NAZ pulled back 25 on weak tech earnings.  The Financial Index rose 1 to the 172s.

The MLP index rose 2+ to 280, just 10 below its record high reached 8 months ago, & the REIT index was flattish in the 228s.  Junk bond funds did little & Treasuries pulled back, taking their yields higher.  Oil held onto AM gains whie gold has been hanging in above $1600 in the last 2 days.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG12.NYM...Crude Oil Feb 12...98.77 ...Up 1.53  (1.6%)

Live 24 hours gold chart [Kitco Inc.]

Walgreen's, a Dividend Aristocrat, profits fell more than 4% due in part to a slow flu season & its split with the Express Scripts pharmacy network.  A 3-year contract between the companies ends next week.  WAG has received $5.3B in revenue from Express Scripts, but said it would rather give that up than continue filling unprofitable prescriptions.  Unless the companies strike a last-minute deal, most people whose prescription drug benefits are handled by Express Scripts won't be able to fill their prescriptions at WAG stores, starting next month.  WAG is the biggest drugstore chain in the US with 7800 locations.  EPS inched up to 63¢ from 62¢  last year when it had more shares outstanding.  Revenue grew 4.7% to $18.2B.  Analysts expected EPS of 67¢ on $18.24B in revenue.  Earlier this month, WAG said sales at stores open at least a year grew 2.5% during the qtr.  However the Express Scripts fight reduced those sales by 1.1%.  The stock lost 13¢.

Walgreen 1Q profit drops on Express Scripts fight AP

WAG    Walgreen Co.

  • <p>               In this Dec. 18, 2011 photo, a sold lot sits next to a structure being constructed in a KB Home community, in Balch Springs, Texas. KB Home’s fiscal fourth-quarter net income fell 20 percent on rising expenses, but its performance beat analysts’ expectations and revenue climbed on an increase in home deliveries and a higher average selling price.  (AP Photo/Tony Gutierrez)
Photo:    Yahoo

KB Home Q4 net income fell 20% on rising expenses, but revenue climbed on more home deliveries & a higher average selling price.  EPS was 18¢ in fiscal Q4 which compares with 23¢ last year & beat estimates of 4¢.  This was the company's first net profit in 2011.  Quarterly selling, general & administrative expenses climbed 36% to $75.6M.  Revenue rose 6% to $479.9M from $451M, topping estimates of $467.9M.  Home deliveries increased 4% & average selling price rose 3% to $238K (compared with $232K last year).  "We anticipate that our companywide average selling price will continue to grow in 2012 as we heighten our concentration in our most desirable markets, particularly in our West Coast region which typically generates higher profits,"  CEO Jeffrey Mezger said.  Q4 net orders rose 38% to 1494 from 1085.  Backlog also increased, to the highest year-end level since 2008, with a total of 2156 homes as of Nov 30 (far above a backlog of 1336 last year).  Cancellation rate as a percentage of gross orders was 34%, down from 37% last year.  For the full year, KBH had EPS of $2.32, compared with a loss of 90¢ in the previous year.  Annual revenue slipped 17% to $1.3B from $1.6B as the number of homes delivered fell 21%.  The stock dropped 52¢.  

KB Home Falls After Homebuilder Reports Smaller Profit, Weaker Margins

KBH   KB Home

  • A person uses the new Blackberry Bold 9900 at a release party to promote the BlackBerry OS 7 devices in Toronto August 3, 2011. REUTERS/Mark Blinch
Photo:   Yahoo

Research In Motion sales in the US fell for a 5th straight qtr in Q3 even as the BlackBerry maker's overall revenue jumped $1B from a year earlier.  Sales of RIM's BlackBerry smartphones & the PlayBook tablet in the US has struggled to keep up with Apple's (AAPL) iPhone & iPad as well as Android-based devices.  RIMM said it had US revenue of $1.03B in Q3, a 7% drop from the previous qtr.  It had US sales of $1.88B in the prior year.  The Canadian company, however, expanded elsewhere, with sales outside the US, Canada & Britain increasing 31% to $3.17B & made up 61% of total sales, up 5.4 percentage points from the year-before period.  Today the shares shot up more than 10% on buyout hopes, but those losses were pared after analysts said a buyout is unlikely as company executives focus on guiding their own turnaround.  The stock finished up $1.26 to $13.78 (10%).

RIMM   Research in Motion Ltd.

Tech stocks did not take disappointing earnings well, but the rest of the market held up OK.  News from Europe has quieted down, many are away on holiday.  The US congress is  in limbo with the fate of tax & unemployment extensions hanging on for dear life.  Dow held on, near the 12.2K interim high.  Maybe tomorrow it will decide what to do but I don't think so.

Dow Jones Industrial Average

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