It's not that the bottom-line numbers were wholly bad. Net profit rose 16% to roughly $1.1 billion. Earnings per diluted share on an adjusted basis increased 17% to $0.63. According this news source, that figure beat estimates by three pennies. That's all well and good, but that news source also states that Qualcomm is guiding below consensus. Not surprising, certainly, given what the markets are going through. But it still puts a damper on the stock's near-term potential, in my opinion. Plus, free cash flow was down 13% during the quarter, and it was flat for the twelve-month period.
Except for certain companies like Microsoft Corporation (NASDAQ: MSFT), I'm not really interested in playing the tech sector. If you had purchased Qualcomm near its 52-week low of $30.87, I'd be a seller into today's strength. No, I certainly can't predict the movement of stock prices, but I can tell you that I think Qualcomm could easily pull back from today's rally. The recession is going to worsen, and I don't think we've reached the point where the market will begin to discount better days. In fact, we're probably far off from that point. The rally that is going on in the markets as I write this (and by the time this gets published, it could be gone for all I know) feels like a dead-cat bounce. That wouldn't be good for Qualcomm's stock, I'd imagine. So, kudos to management for beating Q4 expectations. But I won't be rewarding you by buying your stock. Sorry!
Disclosure: I don't own any company mentioned; positions can change at any time.
Apple Inc. (NASDAQ: AAPL), according to one analyst, may be cutting iPhone production for the fourth-quarter. Yes, you read right. Despite the looming shopping season, the analyst believes the economy would have more of an impact on shopper as we slide further into a recession, affecting iPhone sales.
Friedman Billings Ramsey analyst Craig Berger also covers Broadcom (NASDAQ: BRCM), Marvell Technology (NASDAQ: MRVL) and the likes -- companies that supply Apple with iPhone components. He regularly checks into Apple's supply chain and he consequently now thinks production of the 3G iPhone could fall by as much as 40% in the calendar fourth quarter sequentially. Last time he ran his checks, he suggested a 10% drop. The analyst further said that this is an indication on how the global slowdown is affecting even high-end consumers.
This comes not long after Apple has reported financial results, boasting a 26% rise in quarterly profit thanks to growth in iPhone sales -- Apple sold 6.89 million iPhones during the quarter, outpacing Research in Motion (NASDAQ: RIMM) and capturing 2.3% of the phone market. Apple also said iPhone builds remained healthy.
Still, there is no denying Apple is not immune to macroeconomic conditions. If the analyst is right, it looks like the slowdown has finally touched the tech darling and is going to hurt demand for its products evern more going further. While another analyst suggested the production "cut may not be as bad as it sounds if Apple had already ramped up delivery of the iPhone to countries outside the United States," it certainly doesn't paint a pretty picture either.
Investors have not reacted much to the news today as Apple shares closed down 0.59% at $106.96, but perhaps the 46% punishment year-to-date has been enough so far.
This was yet another tiring day in the markets, despite the ever-falling price of oil back to under $70.00 per barrel. The sad thing is that the selling started this morning and only grew worse throughout the day. There was no single catalyst. The fears are over the coming recession and weak earnings, but that is about as new as the sun rising in the East every morning. The death being witnessed in commodities and commodity-related stocks is only exacerbating the fears that the global recession is going to be much deeper than projections were indicating.
AT&T Inc. (NYSE: T) is trading down over 1% after the telephone giant posted lower earnings. Its earnings report came in at $0.67 EPS vs. the $0.71 estimate, despite adding 2 million wireless subscribers and despite activating 2.4 million 3G iPhone activations. Shares were down 8% at $23.61 in today's final minutes.
Today would have likely felt like Day 3 of the market siege, but thankfully the master of the universe came to a key firm's rescue. The bad news is that the stock markets were mixed all day and the key index levels didn't gain at the end of the day. The good news is that there was no systematic free fall. Bernanke changed his tone marginally to convey a better bailout message, and Paulson was more on target today in conveying the need and lack of outright costs to the system. Things are so bad that the Presidential campaigns are being put on hold temporarily.
Goldman Sachs Group Inc. (NYSE: GS) was the real stabilizer today despite what the overall index levels closed at. It raised $5 billion in a stock sale and received a $5 billion investment from Warren Buffett. Shares were up almost 6% at $132.20 right before the close.
Merrill upgraded shares of General Motors (NYSE: GM) and Ford (NYSE: F) to Neutral from Underperform on expectations for fundamentals to improve in 2009.
Citigroup upgraded Chubb (NYSE: CB) and Travelers Group (NYSE: TRV) to Buy from Hold as they expect the company to benefit from the AIG (NYSE: AIG) fallout. The firm raised Chubb's target to $57 from $56 and Travelers Group's target to $51.50 from $49.50.
Credit Suisse upgraded shares of SAP AG (NYSE: SAP) to Outperform from Neutral as they believe margin expansion can drive higher profitability.
JetBlue (NASDAQ: JBLU) was upgraded to Buy from Hold at Argus.
NetLogic (NASDAQ: NETL) was upgraded to Buy from Neutral at Piper.
Analyst downgrades:
JP Morgan downgraded Eli Lilly (NYSE: LLY) to Underweight from Neutral citing the company's early stage pipeline and generic competition.
Merrill downgraded Unilever (NYSE: UL) to Neutral from Buy as they believe the incoming CEO is unlikely to bring a major restructuring or split up the company.
This post is part of a report entitled "Six-pack of technology favorites." You can read about the other top tech stock picks here.
"It's time to watch for buying opportunities -- and one of the companies on my personal list is Broadcom Corp. (NASDAQ: BRCM), whose shares are in buying range right now," says analyst Glenn Rogers.
The contributing editor to Gordon Pape's Internet Wealth Builder explains, "This semiconductor maker is a good choice for investors who would like to add to their information technology position with shares of a first-class company."
"Broadcom, located in Irvine, California, designs semiconductors for the wired and wireless communications industry. It is a major supplier to Apple's iPhone, which has taken the world by storm this past year.
"Specifically, it powers the brilliant display screen that has captivated users since the launch of the iPhone last year. (Full disclosure: I've just picked up my new 3G iPhone.)
"It also provides the chip that delivers the GPS navigation in the new iPhone. The company holds over 2,000 U.S. and foreign patents and has more than 7,400 pending patent applications.
"But Broadcom is not just an iPhone supplier. It also powers the Motorola TV set top boxes, Netgear wireless routers, Bluetooth and Blu-ray applications, digital television, VOIP, etc. There are lots of chipmakers out there but Broadcom operates in the areas that offer the highest growth potential and the least commoditization in this sector.
With concerns over recession, turmoil in the financial sector, fear of rising rates, high market volatility and a rising aversion to risk, many investors have been avoiding technology stocks.
Investors have feared that these economic headwinds will dampen both consumer spending for technology products and reduced capital expenditures for technology in the corporate sector.
Despite these concerns, some of the newsletter industry's leading advisors are looking beyond the current malaise and seeing longer-term value in some of the tech sector's leading players. They believe that much of the "bad news" is already reflected in the price of the shares, with little recognition being given to their longer-term potential.
For those willing to go against the crowd and buy, as they say, "while blood is running in the street," we offer a six-pack of technology stocks that the some top advisors considers to be among their favorite ideas.
U.S. stock futures were mixed on Tuesday. Following Monday's broad sell-off and volatile session, which was also marked by low volume, today might not be different -- volatile and low volume. Several reports are in focus today, specifically some housing data that could shine more light on the sector, and consumer confidence, which could also move stocks. Meantime, oil prices declined and the dollar strengthened against major currencies.
Rio Tinto (NYSE: RTP) shares are down over 3% in premarket trading after the mining giant reported fiscal first-half profit more than doubled. RTP's acquisition of Alcan and soaring commodity prices helped Rio achieve the results. RTP shares have been declining due to worldwide slower growth.
Meanwhile, Anadarko Petroleum (NYSE: APC) shares were 2.4% higher in after-hours after it announced a plan to buy back up to $5 billion of stock.
Staying with share buybacks, Coach (NYSE: COH) are also 1.7% higher in premarket trading after announcing a buyback program of up to $1 billion, which follows the completion of a similar repurchase.
And of course, Lehman Brothers (NYSE: LEH). Shares of the embattled banker are rising this morning following speculation that Kohlberg Kravis Roberts may be interested in buying Neuberger Berman, according to CNBC, while Blackstone Group backed away.
Stock futures were mixed Monday morning, indicating stock would start on a down note a week full of economic data. This morning, investors are focusing on rising oil prices and existing home sales data to be released at 10:00 a.m. EDT. Also, over the weekend, Federal Reserve Chairman Bernanke commented from the Fed's yearly retreat, saying that problems in credit markets not yet over and are a threat to economy. Meanwhile, economists are saying inflation is catching up to the credit crisis as the major concern for the economy.
American International Group's (NYSE: AIG) credit ratings may be downgraded by Fitch due to uncertainties over AIG's exposure to mortgage backed securities. AIG was down 1.5% in after-hours Friday.
The Australian government approved Chinalco 14.99% stake in Rio Tinto's (NYSE: RTP) but warned the Chinese firm against buying more shares without prior approval. Alcoa (NYSE: AA) backed the purchase. RTP shares were up over 1% in Australian trading.
Broadcom Corp. (NASDAQ: BRCM) will pay around $192.8 million in cash to acquire chipmaker Advanced Micro Devices Inc.'s (NYSE: AMD) digital TV business, the companies announced Monday.
BRCM opened this morning at $28.23. So far today the stock has hit a low of $27.76 and a high of $28.39. As of 12:20, BRCM is trading at $27.86, up 40 cents(1.5%). The chart for BRCM looks bullish and S&P gives BRCM a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just three months as long as BRCM is above $20 at November expiration. Broadcom would have to fall by more than 27% before we would start to lose money. Learn more about this type of trade here.
BRCM hasn't been below $20 since April and has shown support around $23 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BRCM.
Minyanville Professor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
Broadcom (NASDAQ: BRCM) crushes and I still think it's the best chip name on the planet. But as stated yesterday, I was worried about muted guidance and BRCM talked margins down, while guiding rev's higher.
This morning the stock surged off its after-hours low last night and I'm not sure how it pushed down into the $24's. Frankly I wish I had been in front of my trading station at that time, even though it has drifted lower as the day has progressed.
Bottom line, post earnings I'm back to being a buyer on weakness and feel anything in the $25's is an excellent entry, long term and/or even shorter term.
MOST NOTEWORTHY: European banks, the Paper and Forest Products sector, Kindred Healthcare and Convergys were today's noteworthy upgrades:
Keefe Bruyette upgraded the European Banks sector to Neutral from Underweight on valuation as they see limited downside from current levels. Included in the firm's top picks are HSBC Holdings Plc (NYSE: HBC) and Banco Santander SA (NYSE: STD).
Credit Suisse upgraded the Paper and Forest Products sector to Overweight from Underweight citing valuations and expectations that fundamentals will bottom this fall. The firm raised shares of Temple-Inland Inc (NYSE: TIN) and Smurfit-Stone Container Corporation (NASDAQ: SSCC) to Outperform from Neutral.
Friedman Billings upgraded shares of Kindred Healthcare Inc (NYSE: KND) to Outperform from Market Perform on valuation following the recent pullback and believes the company is well-positioned to beat modest expectations over the remainder of the year. The firm raised their target to $36 from $29.
Oppenheimer raised Convergys Corporation (NYSE: CVG) to Outperform from Perform on valuation, as they believe investors should look at the company's business lines separately. Their sum of parts valuation yields an $18 target.
OTHER UPGRADES:
Suncor Energy Inc (NYSE: SU) was upgraded to Overweight from Neutral at JP Morgan and to Outperform from Market Perform at Friedman Billings.
UBS upgraded BT Group Plc (NYSE: BT) to Neutral from Sell.
Lehman Brothers reiterated its "overweight" rating on Apple (NASDAQ:AAPL) ahead of the 3G iPhone going on sale, according to the AP.
UBS downgraded Merck (NYSE:MRK) from "buy" to "neutral", according toBriefing.com. The news service also reports that Piper Jaffray upgraded Broadcom (NASDAQ:BRCM) to "buy" from "neutral."
Douglas A. McIntyre is an editor at 247wallst.com.
This was yet another tiring day in the markets, despite the ever-falling price of oil back to under $70.00 per barrel. The sad thing is that the selling started this morning and only grew worse throughout the day. There was no single catalyst. The fears are over the coming recession and weak earnings, but that is about as new as the sun rising in the East every morning. The death being witnessed in commodities and commodity-related stocks is only exacerbating the fears that the global recession is going to be much deeper than projections were indicating. 
Today would have likely felt like Day 3 of the market siege, but thankfully the master of the universe came to a key firm's rescue. The bad news is that the stock markets were mixed all day and the key index levels didn't gain at the end of the day. The good news is that there was no systematic free fall. Bernanke .gif){kind=logo}
With concerns over recession, turmoil in the financial sector, fear of rising rates, high market volatility and a rising aversion to risk, many investors have been avoiding technology stocks. 
Minyanville Professor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit .gif){kind=logo}
Cramer on BloggingStocks: Lower oil will be a boon -- next year 
Before the bell: Market poised to extend losses as recession fears deepen
Collectible Investments: 100-year old $20 gold piece up 65% in past five years
