The Best of Benzinga

The Week Ahead: Tiffany, Avago Technologies and The Fresh Market Report Earnings; Key Economic Data on Tap

Scott Rubin — Sat, 25 May 2013 00:38:33 +0000

The final week of May will be critical for the markets as volatility hit a number of regional stock indices this week, although the United States was largely spared.

For the week, the S&P 500 lost a little better than 1 percent, but this paled in comparison to losses in Japan, where the Nikkei fell more than 7 percent on Thursday. Traders will be watching earnings announcements from the likes of Tiffany (NYSE: TIF), Michael Kors (NASDAQ: KORS), Dollar General (NYSE: DG), The Fresh Market (NASDAQ: TFM), Avago Technologies (NASDAQ: AVGO), Costco (NASDAQ: COST), and Guess? (NYSE: GES), among others.

On the economic front, consumer confidence numbers for the month of May will be out on Tuesday. Other domestic reports that will be of interest to the market include jobless claims and the second GDP estimate, both of which are due out on Thursday. Pending home sales data will also be due out on Thursday. On Friday, key economic reports include Chicago PMI and the final reading of the University of Michigan Consumer Sentiment index.

Earnings

On Tuesday, May 28, luxury retailer Tiffany is expected to release its quarterly earnings results prior to the opening bell. Heading into the report, Wall Street analysts have consensus EPS estimates of $0.52, representing a year over year decline of almost 19 percent compared to the $0.64 the company reported in last year's corresponding period. Sales are expected to be up 4.40 percent to $855.14 million.

Shares closed Friday's trading session essentially flat at $76.21. Year-to-date, Tiffany has risen nearly 33 percent on the back of a strong market.

In a client note from Thursday, analysts at Deutsche Bank noted that the company previously guided for net earnings from operations to fall around 15 to 20 percent due to gross margin ...

Fed Tapering Could Hurt This ETF...And It's Not One You'd Expect

ETF Professor — Fri, 24 May 2013 20:24:19 +0000

One of this week's most prominent themes has been speculation that the Federal Reserve is either going to wind down or soon end its $85 billion per month asset-buying activities. Not surprisingly, that has not been particularly good news for U.S. stocks and other riskier assets.

Beyond the usual ETF suspects such as mortgage-backed securities, mortgage REIT funds and high beta sector plays that could be harmed by the end of quantitative easing, a surprising candidate for end-of-QE vulnerability has entered the conversation. That ETF is the iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR), one of 2013's emerging markets ETF stars.

Barclays published a list of investments that could be hit if QE ends and Turkish stocks made that dubious cut.

"Investors who are concerned about the reversal of Fed easing should consider short positions in assets with high elasticities to the Fed and expensive valuations versus history. Turkish equities and US defensives appear vulnerable," according to part ...

Aeropostale and Abercrombie Both Fall After Earnings

Scott Rubin — Fri, 24 May 2013 19:21:06 +0000

Earnings from both Aeropostale (NYSE: ARO) and Abercrombie & Fitch (NYSE: ANF) suggest that current conditions in the teen and young-adult retail space are challenging from an operational perspective. Aeropostale released its fiscal first-quarter earnings results after the closing bell on Thursday, while Abercrombie released its Q1 results prior to the open on Friday.

Both stocks were down sharply during Friday's trading session, with ARO down more than 10 percent and ANF off by almost 7 percent. While both stocks are up year-to-date, they have been underperforming the broader market. Aeropostale has added a little less than 14 percent so far in 2013 while ANF is up 5 percent.

For the first-quarter, Aeropostale topped Wall Street earnings and revenue estimates, but the company's second-quarter guidance was substantially below current estimates.

For Q1, Aeropostale reported a net loss of $12 million or $0.16 per share, compared to net income of $10.6 million or $0.13 per share, in last year's corresponding period. This came in slightly ahead of street consensus EPS estimates calling for a loss ...

P&G Replacing CEO With Predecessor – Is This J.C. Penney Déjà vu All Over Again?

Jim Probasco — Fri, 24 May 2013 18:26:08 +0000

Procter & Gamble Co.(NYSE: PG) CEO, Bob McDonald is out. His predecessor, A.G. Lafley, is back, according to Bloomberg. And, over at J.C. Penney (NYSE: JCP), heads are nodding to the beat of a familiar tune.

Except, not exactly. According to The Wall Street Journal, while the practice of replacing a struggling CEO with a predecessor is often seen as a sign of crisis, it isn’t always the smartest move. Mark Cohen, former chief executive of Sears Canada said, “It only makes sense if the person coming back has a successful track record.”

Former P&G head, Lafley, has that. Returning, J.C. Penney CEO, Myron Ullman, not so much. At least not to Bill Ackman, who was instrumental in forcing Ullman out in the first place.

Speaking of Mr. Ackman, who has a large ownership position at P&G, he called for the removal of Bob McDonald earlier this month if performance didn’t show improvement.

As for Lafley, he retired from P&G in 2010 following a very successful reign as head of the company.

Charles Elson, head ...

It's Time to Think About Obscure Middle East ETFs

ETF Professor — Fri, 24 May 2013 18:16:23 +0000

Geopolitical concerns and perceived liquidity risk are among the issues that have kept investors from embracing Middle East stocks and ETFs in recent years. A prime example of a market hampered by those issues is Egypt.

The Market Vectors Egypt ETF (NYSE: EGPT), the lone ETF devoted exclusively to North Africa's largest economy, has had its share of struggles at the hands of negative news flow. However, that does not mean the entire Middle East investment thesis is damaged. Actually, the opposite is true.

"The Middle East markets may be associated with higher levels of risk as a result of the seemingly constant conflict-oriented headlines coming out of the region (i.e., from Israel, Syria, Iran, Iraq, Egypt, to name just a few of the dicey spots)," said WisdomTree Research Director in a new research note. "Yet at least the market moves this year illustrate that not all news is bad. Many of the Middle East economies are growing as they develop significant infrastructure spending with their oil wealth in an effort to diversify their economies."

Indeed, some Middle East markets, many of which are classified by index providers as frontier markets, are found among the world's high fliers in 2013. ...

Consider Fundamentals Before Bailing on Japan ETFs

ETF Professor — Fri, 24 May 2013 17:06:35 +0000

Perhaps Japanese stocks and the corresponding ETFs had things too good and too easy to start 2013. The abridged version of the story goes like this: Prime Minister Shinzo Abe garnered more confidence among average Japanese citizens than his recent predecessors, the yen tumbled against the U.S. dollar to levels not seen in several years and Japanese stocks responded by becoming Asia's best performers this year.

Then came Thursday, a day that saw Japanese stocks suffer their worst one day performance in more than two years. Friday's Asian session was no day at the beach, either. The Nikkei 225 started the day in fine fashion only to careen down to 14,000, before rebounding by more than 600 points. Days like Thursday and Friday are enough to make participants question the veracity of Japan's rally and some analysts have done just that.

This may be a "blood on the streets" scenario where cooler heads eventually prevail, particularly if USD/JPY continues to rise.

"With the equity market rising in conjunction with earnings expectations, I believe the case for Japan's equity markets is intact," said WisdomTree Research Director Jeremy Schwartz in a note. "A ...

Mid-Day Market Update: Infoblox Jumps On Upbeat Results, Sears Declines

Jake L'Ecuyer — Fri, 24 May 2013 16:56:34 +0000

Midway through trading Friday, the Dow traded down 0.20 percent to 15,264.01, while the NASDAQ fell 0.29 percent to 3,449.33. The S&P was also down, declining 0.31 percent to 1,645.38.

Top Headline
Yesterday, Pandora Media (NYSE: P) reported upbeat revenue for the first quarter. Pandora posted a quarterly net loss of $28.6 million, or $0.16 per share, versus a year-ago loss of $20.2 million, or $0.12 per share. Excluding one-time items, Pandora lost $0.10 per share. Its revenue surged 55% to $126 million. However, analysts were expecting a loss of $0.10 per share on revenue of $124 million.

Equities Trading UP
Infoblox (NYSE: BLOX) shot up, gaining 12.34 percent to $24.72, after the company reported upbeat Q3 results. Dean Foods Company (NYSE:

Consumer Reports Crowns New Airline Highest in Customer Satisfaction

Tim Parker — Fri, 24 May 2013 15:19:23 +0000

First, Consumer Reports gives Tesla (NASDAQ: TSLA) its highest ranking ever and now it is placing a new name at the top of its best airlines list. Is Consumer Reports getting soft in its older age? Here’s what it said:

“If you’re tired of airline flights that leave you too frazzled to enjoy your trip, we have a new recommendation for you. Virgin America, a newcomer to our ratings, got a clear thumbs-up from readers in our latest survey, with some of the highest scores we’ve seen in years.”

That’s pretty big praise that Sir Richard Branson, founder and chairman of Virgin Group, will surely use in a fresh round of marketing.

The Consumer Reports survey compiled responses from more than 16,000 readers that critiqued 31,732 flights. The praise for Virgin America included high marks for the leather seat cushions in coach class. One reader said, “The leather seat cushions are so nice in coach, there’s ...

Mid-Morning Market Update: Markets Fall, Pandora Posts Higher Revenue

Jake L'Ecuyer — Fri, 24 May 2013 14:36:12 +0000

Following the market opening Friday, the Dow traded down 0.26 percent to 15,255.34, while the NASDAQ fell 0.55 percent to 3,444.19. The S&P was also down, declining 0.47 percent to 1,642.82.

Equities Trading UP
Infoblox (NYSE: BLOX) shot up, gaining 15.55 percent to $25.42, after the company reported upbeat Q3 results. Pandora Media was also up ...

MillerCoors CEO Tom Long On The Evolving Beer Industry

Jason Cunningham — Fri, 24 May 2013 14:17:55 +0000

Tom Long, Chief Executive Officer of MillerCoors, appeared on CNBC's Squawk Box to talk about the longtime summer tradition of drinking beer. The conversation ranged from the happenings of MillerCoors to legislation around the taxation of the industry.

"Summertime is beer time, and every single week of the summer is as big as Super Bowl week for beer, so we're focused," said Long.

He said that there's an enormous amount of innovation in the beer business, saying that customers, especially the younger demographic*, are drinking a little bit of everything.

"Craft brewers are doing great [but] premium lights are flat, and the economy part of the business is down a ...

Abercrombie & Fitch Shrinks on Dry Earnings, Unstylish Guidance

Clay Wyatt — Fri, 24 May 2013 13:47:22 +0000

Abercrombie & Fitch Co. (NYSE: ANF) has taken a nosedive on Friday after posting woeful first-quarter results and very weak 2013 guidance.

The New Albany, Ohio-based firm's net loss per share declined from $0.25 in Q1 2012 to $0.09, but missed the Wall Street consensus of $0.05.

Revenue dropped nine percent year-over-year to $838.77 million, falling drastically short of the $941.66 million analysts expected.

A&F, Hollister Unfashionable

The Abercrombie & Fitch and Hollister brands tanked during the quarter, with sales falling 13 and 18 percent, respectively. Abercrombie kids fell, as well, albeit by a more modest five percent.

Overall, comparable store sales plunged 17 percent while direct-to-consumer sales dipped six percent.

The lower sales are in line with the relatively cold winter and cool start to spring the US experienced in 2013, which drove down sales for numerous other clothing retailers. American Eagle (NYSE:

Durable Goods Orders Rebound, Up Two of Past Three Months

Gene Balas — Fri, 24 May 2013 13:40:43 +0000

New orders for manufactured durable goods in April increased $7.2 billion or 3.3 percent to $222.6 billion, the U.S. Census Bureau announced Friday. This increase, up two of the last three months, followed a 5.9 percent March decrease. Orders generally increased across the board with only a couple exceptions. Note that durable goods orders can be volatile, and the gains in April generally did not make up for decreases in March. Still, February orders advanced 6.4 percent.

In one positive development, companies invested more in their equipment and other capital goods. Orders for non-defense capital goods excluding aircraft, a key component of the report, advanced 1.2 percent in April after edging up 0.9 percent in March. This doesn't quite reverse the 4.8 percent drop in February, however. Still, it does show that companies might be a bit more optimistic about the future as this shows they are investing more in their businesses. Other details of the report, however, show more of a mixed picture.

Among those categories where a rebound in April only partially offset March dips include primary metals, which inched up 0.5 percent after a drop of 5.8 percent (though this followed a February increase of 10.6 percent). Fabricated metals increased 1.2 percent after ...

Unilever's Kees Kruythoff Talks Magnum Prospects In The Ice Cream World

Jason Cunningham — Fri, 24 May 2013 13:15:41 +0000

Kees Kruythoff, President of Unilever's (NYSE: UN) North American division, appeared on CNBC's Squawk Box to talk ice cream. Of the company's over 400 brands, ice cream is one of its biggest businesses. Unilever holds various forms of the sweet frozen treat including the popular and fast growing, Magnum brand--the number one ice cream in the world.

"The market leader in the world in ice cream came to the biggest ice cream market in the world two years ago, and so Magnum is now here in the U.S.," Kruythoff said in regards to the ...

This AT&T Announcement Should Attract iPhone Prepaid Customers in Droves

Tim Parker — Fri, 24 May 2013 12:49:23 +0000

Must be nice having people fight over you. Apple (NASDAQ: AAPL) is used to that, though, but another battle is about to get underway and this time it’s in the prepaid phone market.

With the price of contract plans feeling a lot like the typical cable bill, consumers continue to look for options that are cheaper, a la carte, and don’t lock them into a contract. (You know, the same thing consumers demand from their cable provider but don't get.)

Prepaid phones are the carriers’ answer to that demand but up until recently, they’ve been a little archaic. 10 cents for each text message?

On Thursday, MacRumors reported that AT&T’s (NYSE: T) GoPhone prepaid wireless plan will expand. First, it will include support for AT&T’s LTE and HSPA+ networks. This upgrade allows for the second big piece of news: full support for the ...

Google and Facebook Going to War Over Mapping App

Jim Probasco — Fri, 24 May 2013 12:43:18 +0000

A bidding war between Google (NASDAQ: GOOG) and Facebook (NASDAQ: FB) may be about to erupt, according to Bloomberg. The object of the conflict is Waze, a smartphone-mapping app with unique social features.

Waze provides driving directions with a twist. Users submit information about traffic tie-ups, speed traps, and road closings. Waze alerts and even reroutes users around problem areas.

Waze is a free service and generates revenue via location-based advertising. That capability, plus more than 40 million users (and growing) makes the product attractive. Whether Waze is as attractive as it thinks it is remains to be seen.

One Bloomberg source said Waze is open to acquisition discussions, if the price is right. The price? $1 billion or more. The company is also reportedly considering remaining independent and raising venture capital if a suitable deal can’t be reached.

Mapping capability on smartphones and other devices is increasingly important. Mapping with cool features is a ...

ETFs to Watch May 24, 2013 (EWJ, VDC, XLU)

ETF Professor — Fri, 24 May 2013 10:12:38 +0000

Here is the ETF Professor's ETF Watch List for Friday May 24, 2013.

The Global X Silver Miners ETF (NYSE: SIL) is worth a look.

Obvious plays of the day: iShares MSCI Japan Index Fund (NYSE: EWJ) and the Utilities Select Sector SPDR (NYSE: XLU).

Keep an eye on the Vanguard Consumer Staples ETF (NYSE: VDC).

Emerging ...

Aeropostale Falls on Weak Q2 Guidance; Q1 Results Top Estimates

Scott Rubin — Fri, 24 May 2013 10:10:27 +0000

Clothing retailer Aeropostale (NYSE: ARO) released its fiscal first-quarter earnings results after the closing bell on Thursday. In late trading the stock was last down around 4 percent to $15.85. The company topped Wall Street earnings and revenue estimates, but issued second-quarter guidance which was substantially below current consensus.

Benzinga Market Primer: Friday May 24

Tim Parker — Fri, 24 May 2013 10:03:57 +0000

The buy on the dip mentality seems to be alive and well in this market as the Dow erased a loss of more than 120 points to end close to flat on the day. Let’s not forget that this is a market that found a way to attract buyers on a day when the Nikkei was down more than 7 percent and took most of the global markets with it.

This morning, markets around the world are quiet with most major averages near the flat line.

Morning News

S&P 500 futures are down nearly 3 points to 1647.25

The EUR/USD was up at 0.38 percent to 1.2984

German 10-year government bond yields are unchanged at 1.466 percent.

Italian 10-year government bond yields rose nearly 1 basis point to 4.014 percent.

Gold was down 0.47 percent to $1,386.60 per ounce.

St. Louis Fed President James Bullard told CNBC that inflation needs to move closer to target before QE is tapered.

The Nekkei saw extreme volatility once again. Up more than 2 percent close to its open, it closed up just shy of 1 percent.

ECB head, Mario Draghi said that the euro zone was more stable than one year ago and that the region needed more integration with the U.K. as a part of that, according to

Brent Lower on Ample Supply and Waning Demand

Laura Brodbeck — Fri, 24 May 2013 09:57:04 +0000

Further indications of a slow global economic recovery coupled with ample supply set crude futures up for their largest weekly drop since mid April on Friday. Brent prices slipped toward $102 and traded at $102.45 at 9:17 GMT on Friday morning.

Brent tumbled to a three week low on Thursday following data from China that showed the industrial giant's factory activity contracted for the first time in more than half a year. Chinese Purchasing Managers Index data showed the nation's reading was 49.6, just shy of the 50 point mark with indicates expansion. The report also showed that new orders fell in May, which stoked fears ...

Eurozone Crisis Hinges on Structural Reforms, Says Draghi and Weidmann

Laura Brodbeck — Fri, 24 May 2013 09:53:37 +0000

The euro improved modestly on Friday morning following better than expected data that showed the eurozone's service sector and factory output improved in May. However, gains were narrow as both figures, although improved from last month's readings, still indicated a contraction.

Bloomberg reported that a composite index drawn from a survey of purchasing managers rose to 47.7 in May compared to 46.9 in April. Most economists were expecting 47.2, so the data came as a pleasant surprise for the region.

Many are taking this news as a sign that the eurozone could end its longest recession since 1999 in the third quarter of this year. The readings gave the euro a bit of a lift, but since a reading below ...

Marvell Jumps After Beating Q1 Estimates; Company Delivers Upbeat Outlook

Scott Rubin — Fri, 24 May 2013 01:07:36 +0000

Chip-maker Marvell Technology (NASDAQ: MRVL) released its fiscal first-quarter earnings results on Thursday after the closing bell.

The company reported earnings per share and revenue which was above Wall Street analysts' consensus estimates and also delivered an upbeat outlook. In late trade, MRVL was last up a little less than 8 percent to $12.16.

"Our results in the first quarter were at the high-end of our guidance mainly due to better than normal seasonal demand and share gains in our storage and networking end markets," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer.

For the first-quarter, the ...

Sears Holdings Plummets on Q1 Results

Scott Rubin — Fri, 24 May 2013 01:02:28 +0000

Retailer Sears Holdings (NASDAQ: SHLD) was trading down sharply in Thursday's after-hours session after the company released its fiscal first-quarter earnings results.

Sears reported a much wider than expected loss for the quarter, but revenue actually came in above consensus. In Thursday's after-hours session, SHLD was last trading down more than 11 percent to $51.54 in the wake of the company's large loss for the first-quarter.

The company reported a net loss of $279 million or $2.63 per share, ...

Salesforce.com Falls on Wider Q1 Loss

Scott Rubin — Fri, 24 May 2013 00:57:17 +0000

Cloud computing and customer relationship management company Salesforce.com (NYSE: CRM) released its fiscal first-quarter earnings results after the closing bell on Thursday.

The company reported adjusted earnings per share that were in-line with Wall Street estimates and sales that topped expectations. Salesforce also provided guidance for the second-quarter and the full-year. In late trading, the stock was last down a little more than 6 percent to $42.73.

For the first-quarter, Salesforce reported a net loss of $67.7 million or $0.12 per share compared to a loss of $19.5 million or $0.04 per share, in last year's corresponding period.

On an ...

Ross Stores Reports Higher Q1 Profit, Lifts Full-Year EPS Guidance

Scott Rubin — Fri, 24 May 2013 00:51:28 +0000

Discount retailer Ross Stores (NASDAQ: ROST) released its fiscal first-quarter earnings results after the closing bell on Thursday.

The company reported earnings per share that were in-line with Wall Street consensus and revenue that topped expectations. Ross also lifted its full-year EPS view, although the updated guidance is still below street consensus. In late trading, ROST was last trading up a little less than 1 percent to $65.65.

For the first-quarter, the Pleasanton, California-based company reported net earnings of $234.6 million or $1.07 ...

Pandora Jumps on Q1 Results, Increased Guidance

Scott Rubin — Fri, 24 May 2013 00:49:14 +0000

Internet radio company Pandora Media (NYSE: P) released its fiscal first-quarter earnings results on Thursday after the closing bell.

The company reported in-line earnings per share and revenue which was above Wall Street expectations.

Pandora also lifted its fiscal 2014 earnings and revenue outlook, sending the stock up around 8 percent in after-hours trading. Ahead of the report, during regular trading hours, Pandora shares rose better than 4 percent. The stock is now sitting at a new 52-week high of $18.54.

For the first-quarter, Pandora reported a net loss of $28.6 million or $0.16 per share, compared to a net loss of $20.2 million or $0.12 per share, in last year's corresponding period.

On an adjusted basis, which is comparable ...