The Tycoon Report

Heavyweight Earnings Greeted With Hostility

Some real heavyweights reported earnings after the bell yesterday and all were battered in the aftermarket. I must say that I'm a little confused by the initial reactions, which underscore the hostile mood of investors.

Oracle (ORCL): the company achieved sales of $7.24 billion and earnings per share (ex items) of $0.47; the street was looking for $6.88 billion and $0.44 per share, respectively. The company is enjoying strong sales around the world, and the Americas region was up 18% which was really impressive. I guess investors had a problem with guidance. The company is looking for earnings per share of $0.26 to $0.27 on revenue of $5.42 to $5.51 billion (this is generally the weakest quarter of the year); Wall Street came into yesterday looking for earnings of $0.27 per share on $5.37 billion in revenue.

Research in Motion (RIMM): the company missed the consensus estimates on the top and bottom lines when it posted results last night. Earnings missed by $0.01, and revenue of $2.24 billion came in below the street estimate of $2.27 billion. What is more worrisome, and what drove the stock significantly lower, was the guidance. The company expects earnings of $0.84 per share versus the previous street consensus of $0.92 per share. There were a couple of positives, including subscriber growth of 2.3 million versus the estimate of 2.2 million, and IDC saying the company's advance phone share climbed to 44.5% from 35.1% (Palm's share leaped to 13.4% from 7.0% while Apple's tumbled to 19.2% from 26.7%).

Nike (NKE): the company beat on the top and bottom lines and saw growth around the world except at home. U.S. sales were unchanged, but EMEA climbed 10% and Asia/Pacific, led by China, exploded by 31%. I must say that there is something in the realm of karma that the Chinese can now afford real Nike products. I must say to the West pay attention as this is just like an Indian company buying Jaguar, once the crown jewel of British industry. I guess weak domestic sales were why investors were fleeing the stock after hours.

Bed Bath and Beyond (BBBY): the stock was up big in the aftermarket, go figure. Yes the company beat the consensus earnings estimate by $0.03, posting earnings of $0.30 per share. Revenue of $1.65 billion was also ahead of expectations of $1.62 billion. The company was able to eek out same-store sales gains, albeit it, only 0.8% higher. Still, management says that it's taking market share in this tough environment, and that is the stuff that once made this a Wall Street darling.

Today's Session

After finally getting good news on the crude oil front the market hit another speed bump, and considering the lack of air in the tires, even the smallest bump makes sore teeth rattle. Yesterday, I saw the tides shift so many times that I almost got seasick. Financials were up and then gave most of it back, energy stocks were down but exhibited resolve before the close. One stock that really caught my eye was LDK Solar (LDK). We have featured this stock numerous times and I still think it could be a grand slam once the company gains more credibility with accountants. The stock was nearing $40.00 a share and looked vulnerable, but then it turned on a dime to close at the high of the session. I think the stock rallies to $50.00 a share, although not in a straight line. The point is that this Chinese stock looks fantastic as do many Chinese ideas. If you can deal with the gyrations it would be smart to own a few. If you'd like to know our favorites, in addition to open positions in the model portfolio, send me an email including a phone number at charles.payne@wstreet.com.

Written by Charles Payne, CEO and Principal Analyst of Wall Street Strategies (www.wstreet.com) providing information to over 50,000 subscribers. Charles is a regular contributor to the Fox Business and Fox News Networks.