Apple (AAPL, $162.93, down $2.22) reports earnings after the closing bell. Wall Street is expecting $1.08 a share. Mac sales are strong and this will likely be the key to where Apple trades on Tuesday. iPods will be steady and the new iPhone won’t add be adding anything to the bottom line in the quarterly numbers so what Apple says about the Mac could determine the direction of the stock.
Bank of America (BAC, $29.70, up $2.21) is helping keep the Financial sector rally alive for another day. The company reported earnings of $0.72 a share which blew the doors off Wall Street’s estimates of $0.53 a share.
Merck (MRK, $36.00, down $1.68) is expecting to report earnings of $0.83 a share after the bell today. There’s chatter at the water cooler that Merck could surprise Wall Street with a number of $0.86 a share. However, there’s a camp that believes Merck could come in at $0.79 a share. Either way, Merck is trading lower after delaying its numbers until after the bell. The company was going to report earning before the bell but delayed results so European researchers can present some data from a study of the company’s cholesterol drug Vytorin. The news is due out at 1PM EST.
Option traders were scooping up the August 37.50 calls (MRKHU, $1.00, down $0.50) and the August 40 calls (MRKHH, $0.35, down $0.15) on Friday as the July contracts were expiring but they are trading lower today. The August 35 puts (MRKTG, $0.85, up $0.35) are the most active in the August put chain.
Merck has been known to disappoint in the past and just last week the company settled a $4.85 billion agreement that will end 50,000 lawsuits from the Vioxx fiasco. Those who are bullish are taking on added risk with other storm clouds hanging over Merck but stranger things have happened. Too rich for my blood.
Rick Rouse
Rick@OptionsMentoring.com












Google (GOOG) Rocks, Stock Drops
Friday, April 16th, 2010
9:05am (EST)
The bulls extended the major indexes winning streak to six following Thursday’s gains. However, judging by this morning’s futures, the bulls will have to dig out of a hole to make it seven in-a-row.
The Dow managed to squeeze a 22 point win and closed at 11,144 after touching a low of 11,096 on Thursday. The index peaked at 11,154 and touched another new 52-week high in the process.
The S&P 500 added a point to finish at 1,211 while the Nasdaq added 11 and settled at 2,515.
The big news after the close last night was Google’s (GOOG, $595.30, up $6.30) numbers. Although impressive, shares got hammered, losing 29 points, and were last seen at $566 in pre-market trading.
The company earned nearly $2 billion, or $6.06 per share, in the quarter, versus $1.4 billion, or $4.49 per share, in the year-ago period. Goog’s would have earned $6.76 a share but took a hit for expenses covering employee stock compensation. Wall Street was expecting $6.60 a share on average.
Revenue surged over 20% to $6.8 billion which marked Google’s greatest revenue growth since 3Q08. After subtracting commissions paid to advertising partners, Google’s revenue really came in at a little over $5 billion but was still about $90 million above estimates.
We said yesterday that Google was the wild card and we also said we could get a “curveball”. Well, we did. The real deal with Google’s big drop was the fact the company’s CEO, Eric Schmidt, was NOT on the conference call. To compare it to the sports world, it would be like a NFL owner not going to the Super Bowl when the team he owns is in it.
To put things in perspective, the 30 point drop in the stock is only a 5% fall and the rumors on why their CEO did not do the yapping on the earnings call are running rampant. Look, the rumors are overblown. Yes, Google didn’t do a very good job of giving Wall Street a heads-up but this morning’s sell-off will be met with buying.
Bank of America (BAC, $19.48, up $0.08) and General Electric (GE, $19.50, up $0.15) reported this morning before the opening bell and that has helped futures come up off of their lows after they beat estimates.
Both stocks are flat as we head towards the open with BAC up a few pennies while GE is down a penny.
As we head to press, Dow futures are lower by 23, Nasdaq 100 futures are off by 6 while the S&P 500 futures are down 4.
Tags: bac, Bank of America earnings, GE, GOOG, Google's earnings, option picks, option signals, options alerts, stock options trading
Posted in Earnings, Google, Market Commentary | Comments Off