On the web since 1997
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On the web since 1997 |
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The Earnings ParadeLuke Hodgens / Powerhouse Profits -- Thus far, the earnings season has been largely mixed. While GE surprised the market with great growth, Yahoo was less than desirable. Although most reports have come in inline with expectations, the market needs a Barry Bonds-like injection of steroids to be pleased. So, the parade marches on.On Tuesday, after the closing bell, Intel Corp. announced that Q2 earnings were inline with expectations at 27 cents per share. Although earnings came in as expected, Q2 sales fell short. The announcement of a 15% increase in inventories pushed the stock price 5% lower in after hours trading. While the company is making a nice profit, growing inventories and cheaper products are eating into margins. The company is not performing as well as shareholders expected. But, that is the story of technology. A basic computer cost $2,000 10 years ago - now you can get a faster machine with more memory for $400. Hamburger prices haven't changed though! McDonalds Corp. announced on Wednesday that second quarter sales growth will be the best in 17 years. Earnings in the quarter were about 47 cents per share, based on preliminary results, beating analysts' expectations of 44 cents. Shares of MCD were trading up 4% in early trading. And the earnings parade marches on. Wednesday's earnings schedule includes Advanced Micro Devices, Apple Computer Inc., Bank of America Corp., and Harley-Davidson to name a few. --- Selling More Overseas Despite the highest relative oil prices in decades, the US trade deficit unexpectedly narrowed in May. The American led global recovery, combined with the cheap dollar, has now afforded foreign nations the ability to buy more US goods. The gap was $2.3 billion narrower than analysts had expected cutting the deficit for the first time in six months. The trimming of the deficit should prompt analysts to raise second quarter growth estimates by nearly 0.5%. Had oil prices remained in the $28 to $32 range, the deficit would have been further narrowed by an estimated $1-1.5 billion. High fuel prices have resulted in a slow down in retail sales. According to the Commerce Department, retail sales slipped 1.1% in June due mainly to higher gas prices. Record pump prices are attacking our disposable incomes like Rosie O'Donnell at a Chinese buffet. Again, can anyone say ANWR? --- Whine and Win You have to admit it - the French, although they're probably the world's foremost experts in complaining and stonewalling, know how to get their way. They create rules just so they can ignore them. In December of 1996 the Franco-German backed EU stability pact was enacted to keep national budget deficits below 3% of GDP. France and Germany, afraid that the newly formed European Union would be strained by smaller EU economies, pushed hard for the fiscal responsibility rule. Well it turns out that France and Germany are the ones who are straining the EU economy with deficit spending. 2004 will mark the 3 rd consecutive year that the two countries will break the pact's rules and 2005 is gearing up to be year 4. EU finance ministers threatened sanctions against the two nations last year, but a great deal of complaining by France led to a suspension of the fines. On Tuesday, the EU's highest court ruled that the suspension of fines was illegal. Uh Oh! Well not really. They also ruled that the finance ministers never had to enforce the rule. France has once again shown that if you cry loud enough you'll get your way. Luke Hodgens is the editor of |
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