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Contributors: Douglas McIntyre Jon C. Ogg

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Friday, July 14, 2006

Weekly Wrap for Week of July 14, 2006

Main Stock Tickers: GE SAP LU EMC CREE MFLX SCUR BC YCC ELMG KRON AAPL COWN CBRL WMG NSTK DNA GENZ F DHI SGR INFY KLAC TLB CTB WBSN MSFT COCO SCMR APOL PETC FL XOM SLB HD DELL

Today's Closing Levels:
DJIA 10,739.35; Down 106.94 (-0.99%)
NASDAQ 2,037.35; Down 16.76 (-0.82%)
S&P500 1,236.18; Down 6.11 (-0.49%)
10YR-Bond 5.059%

Change for the Week:
DJIA -3.16%
NASDAQ -4.35%
S&P500 -2.3%


Last week, everyone on the street thought we were bracing for earnings season as the key catalyst for news and stocks. It turns out that global developments in the form of geopolitical uncertainty rules the roost. A series of simultaneous train bombings in Mumbai, India killed over 200 and woulded hundreds more, and that was the first negative catalyst. Two days later, Israel retailiated against Hizbollah by a seires of strikes into Lebanon that killed civilians and guerillas alike. It goes without saying that the markets aren't happy with developments in the world going backwards. The last three days of the week were the worst three days of trading we have supposed to have seen this year.

We had many key earnings for the week, and unfortunately the tone was more negative than positive.

General Electric (GE) met $0.47 EPS estimates but said declining sales in the NBC unit would put next quarter EPS at $0.48 to $0.50, versus a $0.50 estimate. GE was down 1% after earnings and closed the week close to the lower-end of a trading band at $32.09, down $1.12 on the week.

We also had a series of additional warnings from many key stocks ahead of the deluge of earnings for the next two to four weeks.

SAP (SAP) closed down 7% on news of an earnings warning because of license revenues; SAP closed down over $5.00 for the week at $46.89. Lucent (LU) fell almost 6% after saying week orders would make its earnings only half of expectations; LU closed at $2.06, down almost 5% on the week. EMC (EMC) issued an earnings warning just before the earnings were due. Shares of EMC closed down almost 7% on the news, and they closed out even lower on further guidance by closing at $9.82, down 1.36 for the week. Cree (CREE) fell as much as 21% on an earnings warning and finished the week down over $4.50 at $18.27. Multi-Fineline (MFLX) was another loser on a warning closing down 22% on its warning; it closed at $21.03, down $6.37 on the week. Boat-maker Brunswick (BC) issued a warning and fell over 7% on that news and closed down at $27.54 on the week, or down about 14% from last Friday. Yankee Candle (YCC) gave up 13% on their earnings warning but recobvered about 3% of the loss to close the week out at $22.02. EMS Tech (ELMG) fell 18% the day after it issued an earnings warning and closed out the week at $15.07, or down 21% from last Friday. Kronos (KRON) fell almost 15% on an earnings warning and closed the week out at $29.01, or 16% from last Friday's close.

Secure Computing (SCUR) fell as much as 38% after issuing a warning AND making an acquisition and it closed the week out at $4.96, compared to $8.16 close last Friday. They get the dunce play of the week for issuing a Warning AND a dilutive acquisition at the same time. Way to go guys!

Apple (AAPL) had another poor week on rumors of delays and even on talk of more competition from Microsoft; AAPL fell almost 7% to end the week at $50.67.

Cowen & Co (COWN) had a broken IPO out of the chute. It priced at $16.00, under the $19.00 to $21.00 range, and proceeded immediately lower. It closed out the week at $16.00 after it was all said and done.

CBRL Group (CBRL) filed to spin-off its Logan's unit, although if you looked at the stock you would have no idea they were trying to do anything. They also this week announced the "retirement" of its CEO. CBRL ended down about 1% at $32.71 for the week.

Warner Music (WMG) fell as much as 15% on word of the EU blocking music label mergers, and it closed the week at $25.89, up about 5% of the 15% it lost.

Shares of Nastek (NSTK) fell 15% after receiving a non-Approbvable letter from the FDA; it closed the week out even lower at $12.45.

Genentech (DNA) fell after beating earnings, mainly because of individual drug sales not meeting some projections. It closed the week under $80.00 at $79.46, down from last week's close of $84.61.

Genzyme (GENZ) beat earnings and it actually rose 8% on that news; GENZ closed out the week up over$3.00 at $62.41.

Shares of Ford (F) announced they would slash the dividend in half; shares of F closed down for the week by 5.2% at $6.38.

D.R.Horton (DHI) fell another 7% Friday after the homebuilder slashed its earnings forecast. When will the "homebuilder earnings warnings" be reflected in the price? Shouldn't everyone know and learn to anticipate that they have issues in the sector for the next year? DHI closed the week out at $21.20 from last Friday's close of $23.90.

Shaw Group (SGR) was a huge disappointment to the market as they missed earnings and announced a clerical error would cause a restatement; SGR fell over $4.00 to $21.55.

Infosys (INFY) was one of the few winners as the beat earnings expectations on strong outsourcing business to india; INFY closed the week $78.49, up about 3%.

KLA-Tencor (KLAC) actually said revenues were coming in above their range, and shares rose 6% on the news. Unfortunately the street realized the tone of the overall sector and it closed the week out only up $0.14 at $40.38.

Talbots (TLB) raised guidance and closed up 22% on the news. TLB shares closed the week out at $19.45 compared to last Friday's close of $17.38.

Cooper Tire & Battery (CTB) fell $0.87 this week to $9.94 on news that the S&P was removing it from the coveted S&P 500 Index because it had the lowest market cap in the group.

Microsoft (MSFT) had another bad week closing down $1.01 at $22.29. Bill Gates gave an 80% probability that they would meet the January 2007 target for Windows Vista, and they were hit with over $350 million in fines from the EU on anticompetitive causes.

Stock Options probes continued to hit many companies. Corinthian Colleges (COCO) fell 3.2% on this news; Sycamore Networks (SCMR) closed down 4.5% on this news; Apollo Group (APOL) fell as much as 4% on this news before recovering.

Retail mergers pushed some select names higher. Petco (PETC) rose 43% on word it accepted a $29.00 buyout from private equity firms. Foot Locker (FL) rose as much as 10% on word that private equity firms were interested, and it closed the week out at $26.53 or up about 7%.

With oil having its unadjusted dollar closing highs Friday on global turmoil, Exxon Mobil (XOM) and Schlumberger (SLB) responded with a 1.3% gain and 8% gain respectively. ChevronTexaco (CVX) closed up about 4% at a near-record highs at $66.38.

It wouldn't be fair to close the week without discussing the doggie doggie Home Depot (HD), which closed down at $33.84 compared to last Friday's close of $35.37.

Also shares of Dell (DELL) endured another dismal week even with a new pricing and operating plan. It shed another painful $1.97 to close at three year weekly lows of $21.90.

Jon C. ogg
July 14, 2006
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