Jan 19 2007
The nightmare started again with Apple Inc (Nasdaq: AAPL, stock) after the earning announcement on Wed, 17-Jan-2007 after the bell. It beats estimated earnings all right, just like what I predicted but as what I blogged earlier, my concern were related to the possible of not-so-nice figure that Apple might announce. True enough, the company posted blowout numbers for the most recent quarter but offered conservative guidance.
First the good news – For the final three months of 2006 profit surged 78 percent (sold a record 21 million iPod players and 1.6 million Macintosh computers) 
and earned $1 billion, or $1.14 per share, compared with $565 million, or 65 cents a share, a year earlier. Revenue for the quarter hit a record, reaching $7.1 billion, up 24 percent from $5.7 billion the previous year. The stock was actually trading as high as 4% above the Wednesday’s closing at the after-market trading.
and earned $1 billion, or $1.14 per share, compared with $565 million, or 65 cents a share, a year earlier. Revenue for the quarter hit a record, reaching $7.1 billion, up 24 percent from $5.7 billion the previous year. The stock was actually trading as high as 4% above the Wednesday’s closing at the after-market trading.Then the bad news – Apple announced second-quarter guidance that fell below the average forecast of Wall Street analysts. The company expects second-quarter earnings to be between 54 cents to 56 cents per share on revenue in a range of $4.8 billion to $4.9 billion. Analysts were expecting Apple to earn 60 cents per share on $5.22 billion in revenue. Apple stock lost $2.15 to close Wednesday at $94.95. And at the same time, the Murphy Law strike when Nasdaq Stock Market in general tumbled.
But Apple ALWAYS gives conservative guidance, just like what Piper Jaffray analyst Gene Munster said. Thursday was another bad-day of Nasdaq’s overall stocks. Shares of Apple slid $5.88, or 6.2%, to $89.07, despite numerous upgrades (by Prudential – target $100 from $90, UBS – target $124 from $118, Bear Sterns – target $130 from $125, Piper Jaffray boosted to $124 from $99, Goldman – upped $110 from $102).
Shares of chipmaker Marvell Technology (Nasdaq: MRVL, stock) fell 3.5%, or 69 cents, to $18.91. Intel Corporation (Nasdaq: INTC, stock) declined 2.2%, or 47 cents, to $20.57. Wireless chipmaker Broadcom Corporation (Nasdaq: BRCM, stock) declined 3.7%, or $1.21, to $30.08. Shares of Oracle Corporation (Nasdaq: ORCL, stock) declined 1.4%, or 25 cents to $17.27.
Fortunately I already Ring Register on Apple Option after 5 days trading though I’m still stuck with some Call Options (which I re-open) on the day before Apple earning announcement. Nevertheless if what I read and heard is correct, then the tech-stocks might have more sell-off on the coming session considering below factors:
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Cautionary words from Federal Reserve Chairman Ben Bernanke. In testimony to Congress Thursday, Bernanke said that the current structure of the government’s two major entitlement programs, Social Security and Medicare, may soon pose serious problems to the economy.
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abor Department’s consumer price index for December showed stronger-than-expected inflation. The CPI was up 0.5%, compared with expectations for an increase of 0.4%. Core inflation, is now up 2.6% over the past year. The core PPI (measures inflation at the wholesale level) was up 0.2%, also ahead of forecasts. These numbers, while not prompt Feds to increase rate, it will neither give the justification for Bernanke to cut rates. -
Some attribute the widespread and sudden decline of tech stocks to Jim Cramer, the host of CNBC’s show “Mad Money.” On Wednesday, he urged investors to avoid some of those companies, saying tech stocks are in a peak period.
# TIP: With the above factors, I would justify that you either HOLD or SHORT technology stocks because you simply cannot go against the overall market sentiment. You can either short the stocks or options or both. You might want to play Bear-Call Spread to make some fast but limited money.
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January 19th, 2007 by financetwitter
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