9:10am (EST)
The market bounced back in strong fashion yesterday as the bulls snapped a three-day slide and took the Dow to new highs yesterday. The Dow gained 132 points to finish at 10,450 after reaching a high of 10,524. The S&P 500 added 15 points to close at 1,106 while the Nasdaq was higher by 30 points and settled at 2,176.
Hewlett-Packard (HPQ, $51.02, up $0.98) reported earnings Monday after the market closed of $2.4 billion, or $0.99 a share, versus $2.1 billion, or $0.84 a share, in the year-ago period. Excluding one-time items, net income was $1.14 a share which matched Wall Street’s expectations.
Revenue fell 8% to $30.8 billion but was $400,000 ahead of expectations. This was a good sign as we have been saying that we would have to start seeing some revenue growth. The other bit of good news was the HP raised its 2010’s earnings.
The company now expects to earn between $4.25 and $4.35 a share for the year, compared to earlier forecasts between $4.20 and $4.30 a share. Revenue is expected come in at $118-$119 billion, compared to its previous forecast of $117-$118 billion. Wall Street is expecting full-year 2010 earnings of $4.32 a share on revenue of $118.9 billion.
In economic news, third quarter GDP (Gross Domestic Product) increased 2.8%, which in-line with what was widely expected, but down from the 3.5% increase that was posted as part of the advance GDP estimate. Personal consumption was revised downward to reflect a 2.9% increase, which was not as strong as the 3.2% increase that was widely expected.
The futures have been pointing towards a lower open but they have improved since last night. World stock markets fell last night following big gains on Monday, with China’s stock market posting its biggest drop in three months after the country’s central bank warned commercial banks to control their lending.
As we head to press, Dow futures are up a point, S&P 500 futures are up by two while the Nasdaq futures are down a half-point. We may get a lower open this morning but sentiment is improving…
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Hewlett Packard in Turmoil
Monday, August 9th, 2010
9:00am (EST)
Shares of Hewlett Packard (HPQ, $46.30, down $0.05) fell 10% in extended trading on Friday as Wall Street and traders dumped the stock after hearing the company’s CEO, Mark Hurd, was stepping down.
The resignation caught everyone off-guard, but what was shocking is that Mr. Hurd resigned in the wake of a sexual harassment probe. The claims against him were already settled on Thursday, the day before the news came out, but it was certainly a blow to the company’s image.
It didn’t end there. The investigation by HP’s head brass found that their boy also fluffed his expense reports and had people on payroll for work they didn’t do.
The company immediately named Chief Financial Officer, Cathie Lesjak, as its temporary CEO and HP said it would look for a permanent replacement. Here’s the kicker though. Despite his “mistakes” and breach of conduct, Mr. Hurd, manage to negotiate a “severance” package that could be worth more than $35 million, including a cash payment of $12 million. Wow.
HP shares are at $43+ in pre-market action.
Earnings for the week:
MONDAY – American Dairy (ADY, $12.88, down $0.23), Assisted Living Concepts (ALC, $31.52, down $1.23), Baltic Trading Limited (BALT, $11.46, up $0.21), Blackboard (BBBB, $37.26, down $0.38), China Automotive Systems (CAAS, $20.66, up $0.86), Clear Channel Outdoor Holdings (CCO, $11.65, up $0.01), Clean Energy Fuels (CLNE, $16.84, down $0.03), Ctrip.com International (CTRP, $42.45, up $0.45), EchoStar (SATS, $20.32, up $0.16) and Tyson Foods (TSN, $17.13, up $0.35).
TUESDAY – Bob Evans Farms (BOBE, $25.72, down $0.19), Fossil (FOSL, $41.6, up $0.15), Learning Tree International (LTRE, $10.82, down $0.13), Neenah Paper, (NP, $18.00, down $0.09), Piedmont Office Realty Trust (PDM, $17.89, down $0.31), STR Holdings (STRI, $24.73, up $0.23) and Sysco (SYY, $30.61, down $0.27).
WEDNESDAY – Advance Auto Parts (AAP, $52.75, down $1.12), Computer Sciences Corporation (CSC, $46.05, down $0.32), Cisco Systems (CSCO, $24.08, down $0.09), Macy’s (M, $19.44, down $0.34) and Pan American Silver (PAAS, $23.79, up $0.04).
THURSDAY – Briggs & Stratton (BGG, $18.08, down $0.68), DeVry (DV, $47.83, down $3.13), Brinker International (EAT, $15.71, down $0.22), Estee Lauder Companies (EL, $63.46, up $0.15), Nordstrom (JWN, $33.96, down $0.16), Kohl’s (KSS, $48.63, down $0.37), Royal Gold (RGLD, $46.76, up $0.92), Red Robin Gourmet Burgers (RRGB, $20.95, down $0.18) and Sara Lee (SLE, $14.84, down $0.17).
FRIDAY - Dillard’s (DDS, $22.13, down $0.57) and J. C. Penney (JCP, $21.81, down $0.31).
Futures are pointing towards a slightly higher open despite the HP news this morning. Dow futures are up 43 points to 10,656 while the S&P 500 futures are higher by 5 points to 1,125. The Nasdaq 100 futures are showing an 8 point advance and are at 1,910.
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