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Friday, July 18, 2008

Sorry. Life in the way.

I'm moving.

Entries have been and will remain sparse until I get settled late next week I would think.

Good luck.

Wednesday, July 16, 2008

Financials hitting their downtrend from underneath



I'm shorting some. Tight stop obviously.

12:31pm: out.

Earnings Estimate Cheat Sheet -- July 16 – July 17, 2008

Estimated Reporting Date

Symbol

Revenue Estimate Current Q

Operating Profit Estimate Current Q

EPS Estimate Current Q

EBITDA Estimate Current Q

Revenue Estimate Next Q

Sequential Revenue Growth Estimate, Percent

Operating Profit Estimate Next Q

EPS Estimate Next Q

EBITDA Estimate Next Q

Revenue Estimate Full Year

Operating Profit Estimate Full Year

EPS Estimate Full Year

EBITDA Estimate Full Year

Revenue Estimate Next Year

Operating Profit Estimate Next Year

EPS Estimate Next Year

EBITDA Estimate Next Year

7/16/2008

EBAY

2,167.9

679.4

0.41

807.2

2,178.1

0.47%

673.2

0.41

808.2

9,008.7

2,892.3

1.74

3,357.1

10,214.5

3,259.8

1.96

3,726.4

7/30/2008

ORCT

3.4

(9.1)

(0.50)

--

5.2

53.73%

(8.4)

(0.46)

--

21.1

(32.4)

(1.72)

--

64.4

(9.9)

(0.39)

--

7/16/2008

PLCM

265.5

42.0

0.36

48.0

272.6

2.68%

45.8

0.39

50.0

1,083.6

179.7

1.56

168.0

1,218.8

221.0

1.83

224.1

7/16/2008

XLNX

481.9

122.2

0.35

144.6

483.0

0.22%

124.3

0.36

140.1

1,965.9

513.5

1.50

582.7

2,135.3

581.2

1.71

673.7

7/23/2008

ACTS

23.8

4.5

0.10

--

26.7

11.95%

5.3

0.12

--

111.1

30.2

0.48

44.9

112.5

33.7

0.34

29.1

7/17/2008

AMD

1,452.9

(228.1)

(0.52)

140.9

1,603.8

10.38%

(101.0)

(0.30)

283.6

6,319.5

(596.7)

(1.46)

643.2

6,912.5

(48.1)

(0.65)

1,190.5

7/17/2008

APH

815.5

160.7

0.58

183.7

826.8

1.38%

163.2

0.59

186.8

3,257.8

642.2

2.33

732.2

3,498.6

702.1

2.60

796.0

7/17/2008

AVCT

155.0

26.4

0.43

--

168.8

8.92%

31.5

0.52

--

640.2

110.0

1.78

--

688.6

133.3

2.13

--

7/17/2008

CY

540.0

61.0

0.21

--

561.8

4.04%

79.5

0.26

--

2,155.8

278.7

0.91

412.3

2,779.8

471.5

1.46

475.2

7/17/2008

ESLR

22.1

(15.4)

(0.10)

(12.2)

26.5

19.72%

(12.1)

(0.08)

(6.4)

116.9

(41.5)

(0.24)

(19.6)

399.1

44.1

0.47

76.9

7/17/2008

GOOG

3,871.2

1,844.7

4.74

2,228.3

4,086.6

5.57%

1,958.4

4.99

2,354.5

16,183.1

7,831.1

20.14

9,351.9

20,581.6

9,974.7

24.77

11,847.7

7/17/2008

INFA

109.9

18.4

0.16

--

112.5

2.34%

21.0

0.17

--

458.3

88.9

0.73

95.0

524.5

116.2

0.90

126.0

7/17/2008

JPM

16,551.8

6,366.0

0.44

--

17,297.1

4.50%

8,158.0

0.63

--

72,638.0

31,973.0

2.49

12,480.8

80,656.7

35,975.0

3.41

16,495.4

7/17/2008

MER

3,266.1

4,346.0

(1.91)

--

6,967.4

113.32%

5,242.0

0.61

--

21,915.6

18,961.0

(2.35)

(3,211.7)

33,390.9

24,482.0

4.24

7,350.5

7/17/2008

MSFT

15,651.2

6,050.7

0.47

6,776.1

15,080.9

-3.64%

6,126.3

0.49

6,871.0

60,245.3

24,267.9

1.88

26,371.0

67,289.7

26,863.3

2.16

29,508.9

7/17/2008

PMCS

137.3

31.7

0.12

--

137.9

0.45%

30.9

0.12

--

543.2

121.8

0.46

--

608.5

147.7

0.51

--

7/17/2008

SWKS

210.6

28.5

0.17

36.5

222.1

5.46%

32.5

0.19

40.9

846.2

115.4

0.69

145.7

947.8

147.5

0.87

181.0

7/17/2008

SPWR

343.1

52.6

0.51

63.4

346.9

1.10%

62.3

0.57

75.7

1,355.5

230.6

2.17

268.6

1,936.1

383.9

3.40

429.3

The SEC gets into the market manipulation game

An alarming amount of short-seller backlash has emerged in the last several days in response to the decline in the financial stocks. In response, the SEC has issued an "emergency rule" declaring that all short sales in major financial stocks must be preceded by a stock loan borrow.

Couldn't the stocks be headed lower because the Secretary of the Treasury declared Fannie and Freddie worthless equities and not because of pesky short sellers? Could the fact that every central bank in the world seemed to have woken up a couple of days ago and realized they owned a ton of risky mortgage paper have led to the decline in the stocks?

The Treasury has made clear their option to buy equity in stocks when they see fit. Will they start buying? Is the government trying to engineer a short squeeze?

I myself do not believe in short conspiracies. My experience is market dynamics prevent that from occurring -- when a stock finds a level that draws out buyers the sellers wind up making bad sales. The problem here is that these stocks haven't been able to find a level. Their credit quality is deteriorating exponentially due to the oversupply of credit derivatives in the market. The FDIC takes over the #3 mortgage issuer in the nation (Indymac) and immediately halts foreclosures -- so people that can't afford their mortgages, that agreed to speculative terms they couldn't in fact maintain, get a break. None of that paper goes away. It just lingers out there.

If anyone is trying to manipulate the market, its the federal government and their minions... not the short sellers. I see your invisible hand, fellas.

Seagate (STX) 4Q:2008 results

Seagate's quarter was in-line but the guidance was worse than expected. Costs are too high on high capacity drives and pricing there looks worse than expected and as a result, gross margin guidance was meaningfully reduced for the next several quarters. Though inventories came down and notebook drives were strong, it wasn't enough to offset the significantly higher volume mix of 250+gb price degradation.

Let's call this what it is. A bad, bad call. I have to confess, I got stopped out of the position at 18.5ish after buying too much a bit under 21 and I didn't report it. For the record, I have no position in WDC at this point either, the other side of the pair.

In an unusual comment, Seagate claims their pricing problems are their own and not those of the industry. Perhaps a good sign for WDC. Despite that comment, WDC will probably also get hit this morning.

Intel (INTC) 2Q:2008 results

Despite a pretty major product rollout glitch with the delay of Montevina, Intel managed to beat top line estimates by a bit. Gross margins came in roughly 1% light at 55%. Emerging market strength held the quarter together. Guidance of 10.0 - 10.6 bil for next quarter is roughly in-line with normal seasonality but above street consensus and gross margin guidance of ~58% is better than expectations.

Assuming there is no further slippage in Montevina, Intel should make their forecast. The notebook market has held in surprisingly well in the face of the domestic economic malaise -- even domestically sales have remained pretty strong. I maintain that this is related to the growing importance of the internet as an information and social tool. PCs are quickly becoming as indispensable as the television and telephone.

Intel's probably okay here.

Tuesday, July 15, 2008

Activision (ATVID) trounces their lowball estimates

They guided to 650mm with the street at 523mm. EPS will be 21-23 cents non-gaap with street at 14 cents. The quarter was bolstered by the release of Kung Fu Panda early in the quarter and Guitar Hero: On Tour (for DS) and Guitar Hero: Aerosmith. These results do not include World of Warcraft as the merger had not been consummated at quarter's end.

Vivendi is tendering for 4 bil of stock at $27.50. I'm guessing they aren't buying a lot of stock there as it hasnt traded below 30 for the last several months. Expect them to change this to a buyback, which should pop the stock again.

Activision remains the best story in game software. Guitar Hero is creating tough comps for them -- it will be very difficult to replicate the ASP of the initial controller sales as the franchise matures. I like the stock but you can have mine at $40.

Novellus (NVLS) in-line, orders still dropping

They reported slightly better than the street.

Orders came in down 20% for the quarter, towards the lower end of their range, but they give a wide range. They forecast orders will be +5/-15% for next quarter -- memory markets remain weak. The CEO said there was no way he could see that 09 would be below 08... but he's also looking for NAND to stay strong. I don't think NAND will stay strong as pricing there is terrible.

The semicap group in general has backed off quite a bit and I've been covering my shorts there due to technical reasons. Orders should continue to decline throughout year end. I'm less sure the stocks will at this point.

I remain short VSEA but I've covered LRCX and KLAC.

Monday, July 14, 2008

Take a report, you bought 5 trillion dollars of mortgages.

The Fed and Treasury have made a statement that they will allow the GSEs access to the discount window. The Treasury has even gone as far as to say they may buy equity in the companies. This comes on the heels of Friday's denial of the GSE discount window report and Paulson's statement that equity shareholders should not be bailed out.

After a cavalcade of "informed" politicians and authorities assuring the public that the GSEs were "adequately capitalized", the Fed and Treasury felt it necessary to intervene over the weekend. It's quite an expression of confidence in a system that seems to be fatally flawed at it's core.

This is likely the Fed's last bullet... nuke really, as this is one hell of a shot across the bow. I expect Lehman will come under pressure later today as people come to realize this means the Fed will not be bailing them out. I hope it means they're not going to bail Lehman out too.

I don't think this is good news at all. I think it's a scary admission that the system is broken. It is likely going to kill bonds as it sets in that our currency will be hopelessly devalued through its potential ties to the securities and mortgage markets. Every time they tie the dollar to the value of falling housing prices, they dilute the value of it. Once we had a gold standard -- this is more like a lead standard.

The chart in FNM barely held on Friday. The chart in FRE broke terribly on Friday. I'm much more inclined to play FNM long given a choice between the two... and I'm there. Disillusioned and a bit bitter, but I'm there.

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