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Contributors: Douglas McIntyre Jon C. Ogg

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Thursday, August 03, 2006

Market Wrap (August 3, 2006)

Stock Tickers: SBUX, MDT, STJ, BSX, MROI, RMBS, PHG, GPS, WMT, TGT, COST, PIR, MMC, CBS, WMG, LGBT, S, COGT, EBAY, NT

DJIA 11,242.59; Up 42.66 (0.38%)
NASDAQ 2,092.34; Up 13.53 (0.65%)
S&P500 1,280.27; Up 1.72 (0.13%)
10YR-Bond 4.951%

Today the markets had to endure an expected rate hike in Europe from the European Central Bank, but a surprise hike from the Exchequer in the Bank of England was not expected and was not well received. "Chris" actually helped oil as it did not progress to a hurricane, and Iran saying the destruction of Israel was the solution.

Starbucks (SBUX) actually beat earnings by a wider margin, but their initial 2007 same store sales guidance was low for historics. SBUX was punished for their food and other initiatives not driving more; SBUX closed down almost 8% at $30.64, but had been as low as $29.50.

The other large cap story of the day was Medtronic (MDT), which disappointed us with earnings guidance of $0.53 to $0.55 EPS vs $0.57 estimates; MDT closed down 13% to $44.25. It also pulled down St. Jude (STJ) 10.8% to $33.71 and pulled down Boston Scientific (BSX) 7.7% to $16.26.

MRO Software (MROI) took a $25.50 Buyout from IBM; MROI closed up 17% at $25.44.

Rambus (RMBS) fell another 10% to $11.34 the day after the FTC ruled against it by voting that it had illegally obtained a monopoly.

ADR's of tech and commecial products behemoth Philips Electronics (PHG) rose 1.1% to $33.83 after word that private equity firms KKR and Silver Lake were close to a deal to acquire its chip unit for north of $10 Billion.

Same-Store-Sales were relatively weak out of the retailers. Here is how certain key retailers that reported went:
Gap (GPS) fell 3% to $16.59;
Wal-Mart (WMT) rose 0.8% to $44.72;
Target (TGT) rose 1.3% to $46.41;
Costco (COST) fell 2.8% to $50.98;
Pier-One (PIR) fell 0.7% to $6.47.

Marsh & Mclennan (MMC) closed down 2.9% at $26.09 after posting mixed earning results, in what actually looks like a 2-year low.

CBS (CBS) fell over 2% to close at $26,36 after earnings were a hair under estimates.

Despite beating earnings expectations and despite the street supposedly already expecting bad numbers, Warner Music (WMG) fell 1% to $23.08 after posting higher evenues and lower losses than expected.

An alternative lifestyles site Planetout (LGBT) closed down 24% at $5.20 after posting another quarterly loss and taking a downgrade from JMP Securities.

Cogent (COGT), a finger printing operation, missed earnings expectations and fell a sharp 19% to $11.10.

Sprint NexTel (S) had a dismal day after missing estimates. It closed down 11.8% at $17.75.

A bright spot was online auction house eBay (EBAY) which rose 4.8% to $24.10 on bottom fishing and on some valuation writing from Doug.

NorTel (NT) was up pre-market, but after the street figured out this included over a $500 million in benefits from recapture the shares traded down 2.9% to $1.98 (ouch).

Jon C. Ogg
August 3, 2006
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