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Investors gave a strong reception Thursday to three of the four newly public companies spun off from IAC/InterActiveCorp -- which media mogul Barry Diller had hoped to build into an Internet conglomerate for the 21st century.
HSN Inc., the original Home Shopping Network, saw the biggest jump, gaining $2.68, or 21.2%, to $15.29.
 The others: Vacation time-share firm Interval Leisure Group Inc. rose $1.76, or 12.5%, to $15.88; West Hollywood-based Ticketmaster rallied $1.45, or 6.7%, to $23.09; and online lending company Tree.com Inc. edged up 4 cents, or 0.5%, to $7.46.
The price changes are measured from the stocks’ Wednesday "when-issued" prices -- trading before the new securities actually were distributed.
Shares of New York-based IAC, which retained 35 Internet businesses, including Ask.com, Gifts.com, Match.com and gaming site IWon, rallied $1.27, or 8.3%, to $16.63.
Wall Street never gave his creation the stock price Diller had hoped for, so he opted for a breakup -- betting that the sum of the parts would be worth more than the whole over time.
Diller has conceded that the company he began to build in the early 1990s wound up with "just too much complexity" for investors to get their arms around.
Chief Financial Officer Tom McInerney told Bloomberg that the value of the five companies "should be much more than it is now. I hope it’s very obvious in a year."
But Bloomberg’s story points out that the stocks could be in for a rough ride in the near term as IAC’s original investors reshuffle their new holdings. Read the story here.
Photo: Barry Diller. Matthew Staver / Bloomberg News
From Times staff writer Edward Silver:
Remember Compression Labs Inc.? Of course not. In the early 1990s, CLI had Intel Corp. as an investor and was seen as a standard bearer for a technology sure to become a must-have for the modern corporation: videoconferencing.
That’s the setup that enables an executive in Los Angeles to view a product demo in London while clad in Armani on top and Juicy Couture below. The excitement around videoconferencing faded, however, as the early adopters recoiled from jerky visuals and outsize costs. Eventually, Compression Labs was absorbed by a rival, also floundering, for less than $5 a share.
After such a long time, it seems, videoconferencing’s time has come. Sales are vibrant at the industry’s top dogs, East Bay-based Polycom Inc. and Tandberg of Norway, and behemoths Cisco Systems Inc. and Hewlett-Packard Co. are moving into the field. Why? In this globalizing era, the technology opens a window on anywhere in the world you want to do business.
 The clean-and-green theme, however, has come to the fore of the purchase proposition. Why consume a reservoir of fuel and spew literally tons of carbon into the air -- while spending big -- when you can get face time with far-flung colleagues, suppliers and clients without leaving the office?
In an eye-opening sign of the industry’s arrival, Tandberg reported Wednesday that it was in buyout talks with an unnamed private equity firm rumored to be Silicon Valley-based Silver Lake. Tandberg's shares jumped more than 15% on the Oslo exchange. With that news, a bull’s-eye was hung on Polycom’s back, as speculation rose about a potential bid from Cisco or HP. According to brokerage Wedbush Morgan, Polycom and Tandberg split 80% to 90% of the global videoconferencing market last year.
Cisco marched into the market in late 2006, focusing on the high end. Some Cisco packages require dedicated rooms and cost hundreds of thousands but create an experience observers dub "immersive," "lifelike" and generally awesome. In the most recent quarter, sales of the product line sextupled from the small base of a year earlier, though Cisco won’t disclose figures....
Read on »
Brief bragging rights: Apple Inc.’s stock market value on Wednesday topped that of Google Inc. for the first time since Google came public in 2004, according to Bloomberg’s calculations.
Apple was worth $158.8 billion to Google’s $157.2 billion at the end of trading Wednesday. Today, however, Google has crept back on top, with its shares up $4.76 to $504.79 at about 12:15 p.m. PDT while Apple has slipped 46 cents to $178.84.
Both of the stocks tumbled in the first quarter of this year from their record highs reached late in 2007, as investors bailed on them amid the broad sell-off on Wall Street. But Apple’s shares have staged a much more impressive recovery since then compared with Google.
 At $178.84, Apple is within 12% of its all-time closing high of $199.83 on Dec. 28.
Google would have to rise 47% to regain its all-time high of $741.79 reached on Nov. 6.
Apple’s earnings in the quarter ended in June surged 31% from a year earlier, to $1.07 billion. Google’s profit was up 35%, to $1.25 billion. Both of the companies missed analysts’ estimates (in Apple's case its current-quarter forecast fell short), but the market has been much more forgiving of Apple than Google since the reports -- suggesting that investors are less concerned about the outlook for sales of iPhones, iPods and Macs than they are about the outlook for Web advertising.
If anyone still cares about price-to-earnings ratios, Apple shares now sell for 34 times this year’s estimated earnings of $5.21 a share. Google’s P/E is about 26 based on expected earnings of $19.67 a share.
Both of the companies, by the way, still far trail Microsoft Corp.’s stock market value of $255 billion.
Photo: The new Apple iPhone 3G. Ed Ou / Associated Press
Google Inc.’s official code-of-conduct motto is "Don’t be evil." But some small investors may feel that it’s at least unjust, if not a bit evil, for the company to refuse to split its stock (now $500.03 a share) to make it more affordable for people of limited means.
Too bad for them, Google CEO Eric Schmidt made clear Wednesday in an interview with CNBC’s Jim Cramer.
The host said he was "stopped all the time by people who know I love Google and say, ‘Will you get the guy to split the stock? I can't afford 500 bucks. Why won't they split it?’ "
 Schmidt’s reply: "We're not going to split it. People think the value of the stock is really the dollars, so we keep it high."
Say what? I always thought "value" in a stock was evident in ways other than its absolute share price.
But no matter. Cramer agreed with Schmidt. "I think that's good," Cramer said of the no-split policy. "I like individuals to buy one share. Berkshire Hathaway did the same thing."
"It works well," Schmidt said.
Uh, for who?
Cramer also brought up the much-chewed-over debate about whether Google is dumbing down mankind -- particularly kids -- with instant, push-button information (i.e., no longer any reason to think for yourself).
Schmidt’s response: Kids use [Google] all the time because it's a new way of learning. When I was growing up, in Virginia, they made me memorize the names of all the capitals of every county in the state. Completely useless information. So kids today are going from knowing everything to being able to search very quickly. The kids need to learn how to search because they're going to have to search everywhere. They're going to have search everywhere on devices that they carry with them.
"So," Cramer said, "you're not worried about intellectual laziness because you guys have done what it took me four years of college to do -- how to do a thorough search for papers etc?"
Nope, Schmidt said. "I don't believe in the lazy people/dumb people," he said. "I think people are smarter because they have access to more information. Google just organizes it. The people are still asking the questions, they're still thinking it. They have so much more information available to them."
Including, of course, completely useless cute-kitten videos on Google’s YouTube. Useless, but way cuter than Virginia county capital names.
Photo: Google CEO Eric Schmidt. Matthew Staver / Bloomberg News
In their hunt for a winning growth-stock formula for 2008, some investors have been heading back to the laboratory -- the biotech lab.
Biotech shares already were off to a surprisingly strong start in the third quarter even as the rest of the market was sinking. Then came Roche Holding’s offer on Monday to buy the 44% of Genentech Inc. it didn’t already own, for $89 a share.
The bid sent shares of the South San Francisco-based biotech giant up 15% to $93.88 on Monday, as Wall Street bet on a higher offer. More important for the industry, the offer further boosted interest in biotech issues across the board.
One key attraction: the companies’ potential for sales and profit growth despite the deteriorating economy.
 Biotech "is pretty insulated from the economy," notes Karen Andersen, who tracks the industry for investment research firm Morningstar Inc. in Chicago..
Eric Schmidt, a biotech analyst at Cowen & Co. in New York, said that even before the Roche offer for the rest of Genentech, investors had recently begun to pay more notice to biotech shares.
"I think this is the first time in about three years that we’ve gotten calls from generalist investors" asking about the stocks, he said. "I think they’re looking for visible earnings growth."
Not a bad idea, given the recent disappointment from the other tech -- the computer realm. Google Inc.’s second-quarter earnings made no one happy on Wall Street. Apple Inc. sounded less upbeat about near-term growth. Texas Instruments Inc. bombed with its results.
Genentech, by contrast, on July 14 raised its full-year earnings estimate to a range of $3.40-$3.50 a share, from a previous range of $3.35-$3.45. The company earned $2.59 a share in 2007.
Many biotech shares made only modest progress in 2006-2007. The 20-stock BTK index gained 15.5% over the two years, underperforming the 20.3% rise in the Nasdaq composite index.
Meanwhile, sales and earnings have continued to grow rapidly at profitable players such as Biogen Idec Inc., Celgene Corp., Genzyme Corp., and Gilead Sciences Inc.
Many other biotech firms still are in the red, of course. But the hope for blockbuster drugs to emerge from the industry’s labs is ever present. And that’s more exciting than what’s going on at the major drug companies, which continue to suffer from generic competition and depleted new-product pipelines.
Investors even have turned back to one-time biotech industry star Amgen Inc., which has had its own growth worries of late. Shares of the Thousand Oaks-based company have rebounded 24% since June 13, to $54.60 on Tuesday.
Despite Amgen’s challenges, "They’re not going to earn less than $4 a share" this year, Schmidt said. And there's always the possibility of a takeover bid from a bigger, growth-needy drug firm, such as Eli Lilly & Co.
Two of Schmidt’s favorite companies: Cephalon Inc., a developer of drugs to treat cancer and central nervous system discorders; and Imclone Systems Inc., which has the anti-cancer drug Erbitux.
Andersen also likes Imclone as well as Amgen. Among early-stage companies, she likes Alnylam Pharmaceuticals Inc., which is working on drugs that could interfere with disease-causing genes.
Photo: Genentech's California headquarters. Justin Sullivan/Getty Images
Wall Street had its mojo working for a second straight session today.
Then came three buzz killers named Google, Microsoft and Merrill Lynch.
Another plunge in oil prices and some better-than-expected bank earnings reports fueled a powerful rally in the regular trading session, lifting the Dow Jones industrial average 207.38 points, or 1.8%, to 11,446.66.
That put the Dow’s two-day gain at 484 points, or 4.4%, after it hit a two-year low on Tuesday.
But after the closing bell, Google, Microsoft and Merrill each reported second-quarter earnings that failed to meet analysts’ estimates. Their stocks are being hammered in after-hours activity, with Google off $40 to $493, Microsoft down $1.60 to $25.92 and Merrill sliding $1.97 to $28.76.
 Everything had been going so well for Wall Street’s bulls. Crude oil in New York slumped $5.31 to $129.29 a barrel, the lowest price since June 5 and the third consecutive decline.
Banking giant JPMorgan Chase this morning reported quarterly results that were down but still came in above expectations. The stock zoomed $4.86, or 13.5%, to $40.80, leading a second day of frenzied buying of battered financial issues. Smaller banking firms PNC Financial Services and Huntington Bancshares also beat estimates.
The sudden turnaround in bank, brokerage and other financial stocks has squeezed so-called short sellers, traders who have been betting that the stocks would continue to slide. In a short sale a trader sells borrowed stock, expecting to replace it later with new shares bought for less.
So if a stock they’re targeting rises instead of falls, that’s a problem for short sellers: It triggers many of them to rush in to close out their bets. Their buying just drives prices higher. Check out East West Bancorp and Downey Financial today, both of which have been heavily shorted.
"The short-squeeze definitely added to the buying" today in financials, said Todd Leone, a trader at Cowen & Co. in New York. Even so, he said, "I think there’s real buying, too. These stocks have been absolutely devastated."
Anthony Conroy, head trader at BNY Convergex in New York, says many investors are reassessing financial stocks in the wake of the massive and indiscriminate selling in the sector since late May.
"There are some very solid companies that were getting hit for no reason," he said. "People are asking, 'How many babies got thrown out with the bathwater?' "
But Merrill Lynch’s quarterly results -- a net loss of $4.7 billion -- may revive fears that the financial system is a long way from recovery. And results from Google and Microsoft won’t help the mood at the next opening bell.
Then again, if the market can overcome that troika on Friday, the idea that stocks just scratched out their summer bottom may gain more currency.
Photo: Nothing wrong with this baby; back in the bath you go. Bob Carey / Los Angeles Times
Financial stocks have lost their seat on the throne of the Standard & Poor’s 500 index.
The new king of the index is the old king: technology.
 The financial sector accounted for 16.2% of the S&P index’s market value as of the close of trading today, according to analyst Howard Silverblatt at S&P in New York. For the first time since 2002, that dropped the sector to the second-largest weighting in the index. Moving to No. 1: technology, at 16.3% of the S&P.
The No. 3 group -- with a bullet -- is energy, at 14.9% of the index.
If you own a fund that tracks the S&P 500, the industry sector weightings basically tell you what you own under the surface of the otherwise faceless index.
At any given moment, the sector weightings depend on which stocks S&P has put in the index and how those stocks have performed relative to the rest of the market (because the index is capitalization-weighted).
As of March 2000, after S&P had loaded up the index with tech stocks in the late 1990s -- and as the prices of those shares rocketed amid the dot-com bubble -- tech reached a ridiculous peak weighting of 34.5% of the S&P 500. Financials were a distant second at that point, at 12.9%.
As tech stocks crashed from 2000 to 2002, the sector’s weighting in the S&P index shrank to a low of 12.8% by October 2002. Financials were No. 1 at that point, at 19.5% of the index, and they’ve stayed on top ever since -- until today.
What the shift shows is that investors continue to mark down the values of many financial stocks while favoring many tech issues. Over the last three months financial stocks in the S&P have fallen 5.6%, on average, while tech shares in the index are up 10.6% on average.
The good news is that no group is as dangerously dominant in the S&P index as tech was in 2000. That was an accident waiting to happen -- and it was the main reason the S&P lost almost half its value between 2000 and 2002, devastating the portfolios of many investors who figured indexing was a relatively safe strategy.
Have record oil prices finally gotten the stock market’s goat?
A heady early advance on Wall Street today evaporated late in the session as technology stocks suddenly fell off a cliff. And one catalyst -- or excuse -- for the tech sell-off was a plunge in shares of flash-memory card maker SanDisk Corp. after its chief executive, Eli Harari, told analysts that consumer electronics sales were "soft" in April and he raised concerns about the effect of high energy prices on consumers.
Record oil and gasoline prices amount to "a very substantial tax on most consumers and the discretionary-spending impact of that should not be underestimated," Harari said at a conference in New York.
That shouldn’t qualify as a revelation, but shares of Milpitas, Calif.-based SanDisk, whose memory cards are used in digital cameras and cell phones, quickly fell from $31.94 just before Harari’s comments to $29.50, and closed at $30.02, for a drop of 7.5% on the day.
The Nasdaq composite index, which had been up 0.9% before Harari spoke, ended with a loss of 12.76 points, or 0.5%, at 2,516.09. The rest of the market also went south in a hurry, although blue-chip indexes still closed modestly higher. The Dow Jones transportation stock index reached a record high intraday before pulling back. (More on the transports’ wild run here.)
It didn’t help the mood that near-term crude oil futures finished above $127 a barrel for the first time, adding 76 cents to a record $127.05.
Stocks have been showing amazing resilience in the face of the latest surge in oil, as I wrote in this column on Saturday. But everyone has wondered what oil price would finally prove too much.
"The stock market has been going up in spite of the oil rally, but apparently it needed someone to point out the harm this was doing to companies that you normally don't associate with oil problems," said Steve Todd, editor of the Todd Market Forecast, referring to SanDisk’s Harari.
Many Wall Street pros have been warning for weeks that the stock market needed a timeout. SanDisk seems an unlikely candidate to trigger a broad market pullback, but for investors who’ve been itching to take profits Harari may have provided as good an excuse as any.
Times Staff Writer Edward Silver, who keeps a close eye on green investing trends, filed this report on a key player in the alternative-energy food chain:
A big chunk of the revenue rushing into solar energy has found its way into the coffers of MEMC Electronic Materials, a company that does its business entirely indoors. MEMC fashions silicon wafers for computers and solar cells, which need the stuff to push electrons around.
Vibrant demand from solar firms has driven the price of silicon sky-high and made a Wall Street darling out of the St. Louis-based company. But the computer side is interfering with the story.
 Usually a good bet for an upside surprise, MEMC revealed first-quarter results late Thursday that barely made it into the ballpark of forecasts. Operating earnings climbed to 84 cents a share from 71 cents a year earlier. Revenue actually declined more than 6% from the fourth quarter to $501.4 million, which the company attributed to softness in high-tech and to the issue that absorbed analysts on the conference call: production bottlenecks that are preventing it from satisfying its clamoring solar clients.
Looking ahead, that raises questions about MEMC’s ability to keep up with demand, and it could test the patience of customers who may decide to find other sources.
So far, the solar side still is booming and wafer prices aren’t coming down. If alt-energy investors were worried about slackening growth, they can exhale.
More guests are crashing the solar silicon party, however, especially overseas. If rising supply tamps down prices, it helps cell purveyors like Suntech Power Holdings and JA Solar but could slice off some of the wafer makers’ share of the pie.
Those bullish on MEMC are bit warier today but still have reason to be optimistic. It takes time for new entrants to ramp up, and some sales that are on hold will show up in the second half of the year. But analysts will be watching to make sure the company fixes its manufacturing trouble.
Traders, not a wait-and-see bunch, took the stock down $4.85, or 6.4%, to $70.50 today. The shares are off 25% from their record high in December.
Posted April 25, 2008
Oh, the pain for Microsoft Corp. shareholders who are trying to keep the faith.
The company’s disappointing earnings report late Thursday has pushed the stock back below $30 this morning. It was off $2.05 to $29.75 at about 10:15 a.m. PDT.
 That puts it back where it was in September 2003. And where it was in November 2004. And where it was in December 2006.
There have been short-term rallies to play in Microsoft shares since the end of 2002, but for a buy-and-hold investor the stock has basically just flat-lined since then. And although you can say that about a lot of big tech stocks since the crash of 2000-02, Microsoft's total return since the end of '02 -- that is, stock appreciation plus dividends paid -- has been particularly dismal, at just 35%.
The total return numbers for some other tech giants in the same period: Cisco Systems Inc., 92%; Oracle Corp., 98%; Intel Corp., 53%; Qualcomm Inc., 147%; and the superstar of the bunch, Apple Inc., 2,256%.
The last two years had looked better for Microsoft investors. The stock was up 14% in 2006 and 19% in 2007. This year? Off 16%, so far.
Photo: Why is that man smiling? Microsoft Corp. founder Bill Gates. Kevin P. Casey/Associated Press
Posted April 25, 2008
Bill Miller, manager of the Legg Mason Value Trust mutual fund, has published his first-quarter shareholder letter, in which he explains and defends his abysmal performance.
 As many investors know, Miller had a legendary record with the fund, beating the S&P 500 index for 15 straight years through 2005. Things fell apart after that: In 2006 Miller trailed the S&P by about 10 percentage points. In 2007 he lost 6.7% while the S&P rose 5.5%. And in the first quarter of this year the bottom fell out: Miller's fund crumbled almost 20%, double the S&P's loss.
He is, once again, optimistic about the prospects for his portfolio, which includes many tech, financial and housing stocks. And once again he takes a swipe at the commodities markets, a sector he has long reviled.
He writes: "Although the economy is likely to struggle as it did in the early 1990s, the market can move higher, as it did back then. The wild card is commodities. If commodities break, or even just stop their relentless rise, equity markets should do well. If they continue to move steadily higher, they have the potential to destabilize the global economy."
Read the entire letter here.
Photo: Bill Miller/Legg Mason
Posted April 24, 2008
Times Staff Writer Edward Silver, who keeps a close eye on green investing trends, filed this report from a conference on the green economy held this week at Pasadena’s Langham hotel:
Fortune magazine brought corporations, financiers, activists and scientists together to do some green brainstorming at a conference rich with information and inspiration. Panels and luminaries spoke before a sculptural backdrop of newspaper stacks, crushed soda cans and other symbols of ill-treated resources. Insights, confrontations and deal-making were abundant.
Three scenes from the conference:
Rountable: Is clean coal an oxymoron?
Coal is the least costly, most plentiful and dirtiest fossil fuel. David Hawkins of the Natural Resources Defense Council pointed out that in the last five years, China has built the equivalent of the entire U.S. fleet of coal-based power plants. Along with India, it's firing up at a breakneck pace.
 For foes of coal, it's painful to concede that these fresh investments in Asia may be with us for 50 to 60 years.
That's why Hawkins, though certainly a friend of the Earth, backs carbon capture and sequestration for coal plants, a little-tested approach that aims to bury emissions in the ground before they enter the atmosphere. The technique is full of drawbacks, and many enviros reject it as a marker of renewed commitment to a lethal substance. But its success, or at least its commercialization, could be a boon to the coal business as well as for General Electric and other engineering giants.
It's sure to raise costs, though. Groans went up as one participant delved into the logistics, subterranean infrastructure and monitoring that comes with large-scale sequestration. And if we expect China to follow suit, can we also expect tip-top adherence to the rules?
There are no good answers. But Hawkins recalled that China had adopted the West’s efforts to rein in tailpipe emissions, including catalytic converters and unleaded gasoline. As for proliferating coal, he said, "We have to show China and India that there's a technology to address this, or we will lose this war."
CEO interview: Hugh Grant of Monsanto
Monsanto has been vilified not just for rearranging the genetics of seeds but for its Superfund sites and alleged unsavory dealings with farmers. In 2008, however, the idea of sustainability has to include the reliable supply of food and water. As food prices climb and many go hungry, progressives might soon see Monsanto in a new light.
 Investors already love the company. When Grant took over five years ago the stock traded in single digits. Wednesday it closed at $125.58.
Monsanto is all about improving yields. The human family has more mouths to feed, and new middle classes want protein. Yet much of our stock of arable land is eroding or being turned to other uses, like building megalopolises and planting fuel grains. There's no way around it, Grant said: We will need bigger harvests on less dirt.
Even more crucial, he said, noting the recent "biblical" drought in Australia, is the supply of water to nurture crops. That led him to a fact you're sure to repeat: It takes 700 gallons of water to grow the cotton to make a pair of blue jeans.
Both cotton and water are big businesses for Monsanto, and a line of drought-resistant seeds is in development. Grant exited with a suggestion: "Think water, think food availability. . . . And those of you who wear blue jeans on the weekend, think about those 700 gallons."
Lunch in the garden
Pasadena entrepreneur Bill Gross, whose Idealab "incubator" hatched CitySearch and EToys, is heavy into solar energy now. And he was in a sunny mood on Earth Day. The day before, he announced that another fledgling he helped launch had raised $130 million from Google, venture firm Oak Investment Partners and other parties. The company, ESolar, specializes in "solar thermal" technology that uses mirrors to power generators.
 Through its charitable arm, Google has become a prominent clean-tech financier, spurring research under the slogan Renewable Energy Cheaper Than Coal. Many in the industry believe that crossing that price threshold is the key to widespread adoption of renewable technologies.
Gross told guests enjoying coq au vin and other delicacies that ESolar installations can get up and running faster and at lower cost than standard solar plants. They also require less space, allowing them to set up closer to cities. Another ESolar edge, he said, is that the mirrors are managed by computer, keeping them in the best position relative to the sun.
An exec at the table liked what he heard. The household name company he works for spends $750 million a year to power its services. Get us "off the grid" and cut our costs, he said, and we may have a deal.
For this potential client, who leads his firm’s corporate-responsibility group, looking into solar has something to do with saving the world from fossil fuels but is mainly about saving money.
If Gross can do that, more power to him and to us all.
Top photo: A man cycles past cooling towers of the coal-powered Fuxin Electricity Plant in Fuxin, in northeast China. Greg Baker/Associated Press
Middle photo: Hugh Grant.
Bottom photo: Bill Gross. Bloomberg News
Posted April 24, 2008
Shares of Thousand Oaks-based Teledyne Technologies Inc. made it to a record high today the easy way: In one 19% jump, up $9.25 to $57.08, after the company reported better-than-expected first-quarter earnings.
 Teledyne is one of those low-profile stocks that has quietly made bundles for its buy-and-hold investors in recent years. The company’s shares are up 264% since the end of 2002, compared with a 57% price gain for the Standard & Poor’s 500 index.
Teledyne, which is expected to post sales of about $1.8 billion this year, owns a host of businesses that make electronic components, instruments and systems for the defense, aviation, satellite, energy and environmental industries. It also produces engines for military aircraft, though that’s a small part of the sales mix.
The company said first-quarter profit was $27.9 million, or 77 cents a share, up 36% from $20.5 million, or 57 cents a year earlier. Analysts had expected profit of 66 cents a share. Sales rose 17% to $452 million.
Teledyne has been masterful at building a portfolio of complementary companies, said John Harmon, an analyst at investment research firm Needham & Co. "They acquire companies, integrate them and improve their performance," he said. Also, the firm’s business with the Pentagon is spread out, not dependent on any one program, he said.
Despite the weak economy, Teledyne today boosted its profit outlook for the full year, projecting earnings of $2.98 to $3.06 a share compared with a previous range of $2.86 to $2.94. Harmon noted that Teledyne management historically has been conservative in its profit estimates -- which increases the likelihood of pleasant surprises.
If the company’s name sounds familiar it’s because of Teledyne’s storied family history. The original Teledyne was a conglomerate built up by legendary L.A. industrialist Henry Singleton in the 1960s and '70s. Singleton, Harmon noted, "acquired everything under the sun." But by the early-'90s the business model of disparate companies was waning. To escape a hostile takeover Teledyne merged with Allegheny-Ludlum in 1996 to form Allegheny Teledyne. Teledyne Technologies then was spun off from the parent in 1999.
Posted April 23, 2008
While the feds were slapping chip maker Broadcom Corp. today for a huge stock-options backdating scheme orchestrated by top executives from 1998 to 2003, the market was getting ready for the Irvine company’s first-quarter earnings report.
The results, released after the closing bell, were double what analysts had expected. That fueled strong demand for the stock after hours, driving the price up 9%, to $25.68 from $23.55 in the regular session. Broadcom’s shares now are up 56% from their 4 1/2-year low of $16.45 in March.
Which just serves as a reminder of how Wall Street sees the world. The market’s view is, "What have you done for me -- or to me -- lately?" The options-backdating scandal is ancient news, however much some investors might like to see the company, and its executives, punished further.
Broadcom’s first-quarter profit rose to $74.3 million, or 14 cents a share, from $61 million, or 10 cents, a year earlier. Sales were up 15% to $1.03 billion.
The company, which makes chips for the telecom, cable TV and video-game industries, conceded it was surprised by the high level of orders in the quarter. Based on the trend in orders, CEO Scott McGregor said he expected "solid revenue growth" in the current quarter as well.
Broadcom also could benefit this year from easy profit comparisons with last year, when earnings dived in part because of heavy research-and-development spending to fund the company’s push into chips for mobile phones. So far, though, R&D spending remains high, at $356 million in the first quarter compared with $301 million a year earlier.
Posted April 22, 2008
It’s easier to hurdle the bar after they’ve taken it down a few notches.
That’s part of the story with Google Inc. today, which is Wall Street’s after-hours hero stock following the company’s first-quarter profit report. The shares are trading at $526, up 17% from their regular-session close of $449.54.
The company reported operating earnings (profit before accounting for stock-option-related costs) of $4.84 a share, well above analysts’ consensus forecast of $4.52.
But the consensus has come down from about $4.90 a share at the start of the year. Wall Street reduced its expectations after Google on Jan. 31 reported fourth-quarter operating profit of $4.43 a share, missing the consensus by 2 cents.
That miss hacked $48.40, or 8.6%, off the stock on Feb. 1, to $515.90. So investors who were in the shares on Jan. 31 still are under water, even at $526. Not to mention the folks who bought at the peak of about $741 in November.
Google’s fourth-quarter earnings miss was only the second time the company had come up short since it went public in 2004. The first miss was in results for the second quarter of last year.
Analysts’ current full-year earnings estimate for 2008 is $19.43 a share. At $526 the stock is priced at 27 times the consensus estimate. By contrast, at the November peak in the stock investors were paying about 48 times last year’s operating earnings.
So the price is cheaper. But is it cheap?
The numbers keep getting better for tech investors.
IBM Corp. just reported first-quarter operating earnings of $2.32 billion, or $1.65 a share, up 26% from $1.84 billion, or $1.21 a share, a year earlier. Revenue jumped 11% to $24.5 billion.
Analysts surveyed by Reuters Estimates had expected profit of $1.45 a share for the computer-services giant.
Chip leader Intel Corp. had boosted hopes for the tech sector's first-quarter results with its profit report after markets closed Tuesday. That helped power a strong rally on Wall Street today that lifted the tech-dominated Nasdaq composite index 2.8% to 2,350.11.
IBM, like Intel, sounded upbeat about the global economy -- exactly what nervous investors wanted to hear, especially in the wake of General Electric's earnings bomb Friday.
"We feel good about the rest of the year," said IBM CEO Samuel J. Palmisano. Check out the company's report here.
Intel Corp.’s first-quarter profit report could give investors a good reason to take another look at the beaten-down technology sector.
After markets closed Tuesday, the chip giant said it earned $1.44 billion, or 25 cents a share, in the quarter, matching analysts’ expectations. Net profit was down 12% from a year ago because of one-time charges, but operating profit was up 23%.
More important was that the company was upbeat about its sales and profit-margin outlook in what it called "a solid global market environment." That helped to damp concerns that world demand for tech equipment could wane this year.
Intel’s stock surged to $22.61 in after-hours trading Tuesday from its regular-session close of $20.91, setting the scene for a jump as trading begins today.
 At the end of last year, tech stocks had been touted by their fans as a smart place to be in 2008. The idea was that robust foreign demand for tech equipment would make up for any U.S. weakness. But when credit-crunch fears slammed the stock market in the first quarter, tech issues went with the flow. It didn’t help that Intel in January reported fourth-quarter sales that fell slightly short of expectations.
Now, Wall Street analysts are betting that tech companies in the Standard & Poor’s 500 index will report overall operating earnings growth of 7% in the first quarter compared with a year earlier, according to data tracker Thomson Financial. If that estimate is on target, the tech sector would have the second-best growth of the 10 major S&P industry sectors, after energy.
Brian Barish, who manages the Cambiar Opportunity stock mutual fund in Denver, owns Intel for what he expects to be a continuing overseas-growth story. About three-quarters of the company’s chip revenue comes from outside the U.S.
"I see it as an excellent story over the next five years," Barish said.
Another of his picks: Santa Ana-based computer wholesaler Ingram Micro. "I think it’s very cheap," he said of the stock.
Craig Hodges, co-manager of the Hodges Fund in Dallas, thinks investors are missing a long-term opportunity in computer networker Cisco Systems Inc. The stock’s plunge from $34 in November to about $23 now has left it selling for about 15 times this fiscal year’s estimated earnings per share. "That’s amazing to me," Hodges said.
But then a lot of tech stocks are priced at levels, relative to earnings, that seem cheap compared with a few years ago -- let alone compared with the absurd price-to-earnings ratios at the dot-com bubble’s peak in 2000.
With tech, "People have been so unwilling to pay up for too long," says Jason Trennert, investment strategist at Strategas Research Partners in New York.
That’s what happens after a bubble bursts, of course: Nobody wants to get fooled again, at least not in the same stocks.
Trennert thinks the caution is overdone. Given its growth potential, he says, "Tech is the sector I like the most now."
Let's see what IBM Corp. has to say today when it reports first-quarter results.
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