Dow was up 10, advancers over decliners 5-2 & NAZ gained 39. The MLP index shot up 5 to the 454s, flirting with its record high, & the REIT rose 4+ to the 298s. Junk bond funds were mixed as were Treasuries. Oil & gold inched higher in what are vastly oversold markets.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
IBM, a Dow stock, fell the most in almost 3 years after missing profit estimates, hurt by a hardware slump & the failure to sign customers to contracts. The company posted Q1 profit of $3 a share, missing the $3.05 predicted, the first earnings shortfall since 2005. In a bid to rebound, the company announced plans to spend $1B cutting jobs in Q2 & will divest some businesses this year. As part of the effort to slim down, IBM is selling its low-end server division to Lenovo (which acquired IBM’s PC business in 2005). For now, CEO Ginni Rometty is struggling to revive growth amid weak demand for hardware & consulting work, especially in Europe. It has been trying to push into more lucrative markets like data analysis & mobile-phone security. “We did not achieve all of our goals in the period,” Rometty said. The poor performance of some businesses, such as certain storage products, is prompting the company to take “substantial actions,” CFO Mark Loughridge said. The moves will include job cuts, or “workforce rebalancing,” in Q2, he said. Q1 EPS was $2.70 a share, compared with $2.61 a year earlier. Sales slid 2.3% to $104.5%, the first decline in 3 years. Last year’s revenue was just 0.8% more than 2008 sales, the worst 4-year growth rate since 2002. The sales force has had difficulty closing deals, Loughridge said. “By and large, this is an execution problem,” he said. The stock plunged $17 to $190.
IBM Profit Misses Estimates for First Time Since 2005
Photo: Bloomberg
Microsoft, another Dow stock, Q1 profit exceeded estimates, buoyed by cost controls & sales of business & server software amid weak demand for PCs running the new Windows 8 operating system. EPS was 72¢ & that beat the 68¢ estimate. Revenue rose 18% to $20.5B, matching estimates. CEO Steve Ballmer kept expenses in check, while sales of Office collaboration & teleconferencing programs climbed. That blunted the impact of a drop in quarterly PC sales, the steepest decline on record, according to market-research firm IDC, which cited lackluster demand for the new operating system for the slump. Operating expenses for its next fiscal year, which starts Jul 1, will be $31.6-$32.2B, the company forecast. For the current year, expenses will be $30.2-$30.5B, lower than the previous target of $30.3B-$30.9B. Unearned revenue, which comes from sales of multiyear deals that will be recognized in the future, was $17.9B, compared with the $17.8B projection. Global PC unit shipments slid 14% in Q1, IDC said last week. MSFT released Windows 8 & the Surface tablet, its first hardware product, on Oct 26 to stem the loss of PC sales as smartphones & tablets attract users with many of the same features. The Windows division sales rose 23% to $5.7B, less than the $5.9B predicted. Excluding the impact of revenue from previous qtrs, Windows sales were unchanged from a year earlier, the company said. As for the Surface tablet, a little more than 1M of the lower-end RT version were sold along with 400K Surface Pros. The stock rose $1.
Microsoft Profit Beats Analysts’ Estimates on Cost Controls
Cypriot President Nicos Anastasiades announced a range of tax breaks & subsidies to boost investment & save jobs after the country’s banking sector was torn apart by a financial rescue that imposed losses on depositors. The gov will offer tax breaks of as much as 25% for companies hiring new employees for at least one year & create a fund to manage state assets. The package also includes plans to create casinos & the lifting of some building regulations to draw investment in resorts & golf courses. “There is no doubt that trials and tribulations await us,” Anastasiades said. “For us to succeed in kick-starting the economy and to emerge from this crisis as soon as possible, we must strictly adhere to all the commitments we have undertaken in this loan accord.” He agreed on Mar 25 to a €10B ($13B) loan from the euro area & the IMF in return for measures including a tax on bank deposits of more than €100K at the country’s 2 biggest banks as well as wage & pension cuts along with the sale of assets & gold. The country’s rescue program includes a forecast for GDP to decline 8.7% this year, compared with a European Commission projection for a 3.5% contraction before the Cypriot bailout was agreed. A gov spokesman said 2 weeks ago that GDP could fall by as much as 13% this year, the biggest slump among euro area countries.
Cyprus President Outlines Plan to Rebuild Economy After Bailout
Stocks closed a tough week on an up note. Dow reached a record 14,756 on Tues but finished the week 210 lower because of drab earnings. IBM dominated today. That's a huge company & when it has problems it signals problems with the overall global economy. More earnings from some of the biggest companies are coming next week followed by the GDP report on Fri. Dow should have had a good day today, but was weighed down by IBM (IBM), General Electric (GE), Hewlett-Packard (HPQ) & McDonald's (MCD). Excluding IBM, the other 3 were down a total of almost 4. The bears are taking control of the markets.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.048% | |
U.S. 2-year |
0.232% | |
U.S. 10-year |
1.706% |
| CLK13.NYM | ...Crude Oil May 13 | ....88.22 |  ...0.49 | (0.6%) |
Photo: Bloomberg
IBM, a Dow stock, fell the most in almost 3 years after missing profit estimates, hurt by a hardware slump & the failure to sign customers to contracts. The company posted Q1 profit of $3 a share, missing the $3.05 predicted, the first earnings shortfall since 2005. In a bid to rebound, the company announced plans to spend $1B cutting jobs in Q2 & will divest some businesses this year. As part of the effort to slim down, IBM is selling its low-end server division to Lenovo (which acquired IBM’s PC business in 2005). For now, CEO Ginni Rometty is struggling to revive growth amid weak demand for hardware & consulting work, especially in Europe. It has been trying to push into more lucrative markets like data analysis & mobile-phone security. “We did not achieve all of our goals in the period,” Rometty said. The poor performance of some businesses, such as certain storage products, is prompting the company to take “substantial actions,” CFO Mark Loughridge said. The moves will include job cuts, or “workforce rebalancing,” in Q2, he said. Q1 EPS was $2.70 a share, compared with $2.61 a year earlier. Sales slid 2.3% to $104.5%, the first decline in 3 years. Last year’s revenue was just 0.8% more than 2008 sales, the worst 4-year growth rate since 2002. The sales force has had difficulty closing deals, Loughridge said. “By and large, this is an execution problem,” he said. The stock plunged $17 to $190.
IBM Profit Misses Estimates for First Time Since 2005
International Business Machines (IBM)
Photo: Bloomberg
Microsoft, another Dow stock, Q1 profit exceeded estimates, buoyed by cost controls & sales of business & server software amid weak demand for PCs running the new Windows 8 operating system. EPS was 72¢ & that beat the 68¢ estimate. Revenue rose 18% to $20.5B, matching estimates. CEO Steve Ballmer kept expenses in check, while sales of Office collaboration & teleconferencing programs climbed. That blunted the impact of a drop in quarterly PC sales, the steepest decline on record, according to market-research firm IDC, which cited lackluster demand for the new operating system for the slump. Operating expenses for its next fiscal year, which starts Jul 1, will be $31.6-$32.2B, the company forecast. For the current year, expenses will be $30.2-$30.5B, lower than the previous target of $30.3B-$30.9B. Unearned revenue, which comes from sales of multiyear deals that will be recognized in the future, was $17.9B, compared with the $17.8B projection. Global PC unit shipments slid 14% in Q1, IDC said last week. MSFT released Windows 8 & the Surface tablet, its first hardware product, on Oct 26 to stem the loss of PC sales as smartphones & tablets attract users with many of the same features. The Windows division sales rose 23% to $5.7B, less than the $5.9B predicted. Excluding the impact of revenue from previous qtrs, Windows sales were unchanged from a year earlier, the company said. As for the Surface tablet, a little more than 1M of the lower-end RT version were sold along with 400K Surface Pros. The stock rose $1.
Microsoft Profit Beats Analysts’ Estimates on Cost Controls
Microsoft (MSFT)
Cypriot President Nicos Anastasiades announced a range of tax breaks & subsidies to boost investment & save jobs after the country’s banking sector was torn apart by a financial rescue that imposed losses on depositors. The gov will offer tax breaks of as much as 25% for companies hiring new employees for at least one year & create a fund to manage state assets. The package also includes plans to create casinos & the lifting of some building regulations to draw investment in resorts & golf courses. “There is no doubt that trials and tribulations await us,” Anastasiades said. “For us to succeed in kick-starting the economy and to emerge from this crisis as soon as possible, we must strictly adhere to all the commitments we have undertaken in this loan accord.” He agreed on Mar 25 to a €10B ($13B) loan from the euro area & the IMF in return for measures including a tax on bank deposits of more than €100K at the country’s 2 biggest banks as well as wage & pension cuts along with the sale of assets & gold. The country’s rescue program includes a forecast for GDP to decline 8.7% this year, compared with a European Commission projection for a 3.5% contraction before the Cypriot bailout was agreed. A gov spokesman said 2 weeks ago that GDP could fall by as much as 13% this year, the biggest slump among euro area countries.
Cyprus President Outlines Plan to Rebuild Economy After Bailout
Stocks closed a tough week on an up note. Dow reached a record 14,756 on Tues but finished the week 210 lower because of drab earnings. IBM dominated today. That's a huge company & when it has problems it signals problems with the overall global economy. More earnings from some of the biggest companies are coming next week followed by the GDP report on Fri. Dow should have had a good day today, but was weighed down by IBM (IBM), General Electric (GE), Hewlett-Packard (HPQ) & McDonald's (MCD). Excluding IBM, the other 3 were down a total of almost 4. The bears are taking control of the markets.
Dow Jones Industrials
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