Nokia (NYSE: NOK - option chain) shares are falling today after the company warned that the global mobile phone market will weaken in 2009. NOK forecast global handset sales of 1.24 billion phones in 2009, down from a previous estimate of 1.26 billion. The entire industry is taking a hit today from this announcement including competitors like Research in Motion (NASDAQ: RIMM) and Motorola (NYSE: MOT) as well as suppliers such as Qualcomm (NASDAQ: QCOM). If you think this Nokia won't be rising too far in the coming months of economic headwinds, then it could be a good time to look at a bearish hedged play on NOK.
This morning, NOK opened at $12.43. So far today the stock has hit a low of $12.22 and a high of $12.97. As of 12:40, NOK is trading at $12.57, down $1.58 (11.2%). The chart for NOK looks neutral and S&P gives NOK a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $15 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 an 11.1% return in five weeks as long as NOK is below $15 at December expiration. Nokia would have to rise by more than 19% before we would start to lose money. Learn more about this type of trade here.
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 NOK, RIMM, MOT, or QCOM.
It is hard to believe that Motorola (NYSE: MOT) is still No.1 at anything. But, until recently, it was the market share leader in the cellular handset business in the U.S. The company may be losing money. It may be laying people off. It may have had to delay spinning off its phone business.
Now, MOT has lost its last crown. According toThe Wall Street Journal, Samsung took the top spot in the third quarter. The paper reports "The South Korean company reached the milestone -- with 22.4% of the market compared with Motorola's 21.1% -- by offering carriers a full portfolio of devices, from high-end products such as the touch-screen Instinct to lower-end phones given free to customers who sign up with a particular carrier."
It sounds like old news, but that is the troubling part of it. Motorola lost most of its share overseas several quarters ago. It says something about the company that it could not come up with one or two models that would be popular in its home market. For crying out loud, the firm's headquarters is in Illinois.
What it comes down to is more depressing than market share. Motorola's product development operation is too devoid of good ideas that it has not produced a single model that consumers are anxious to own, something they would put on a table or desk so that other people could see that they own it.
It is as if the company made plans to fail.
Douglas A. McIntyre is an editor at 247wallst.com.
U.S. stock futures were lower Wednesday morning, a day after a historic election saw Barack Obama elected president. But if Tuesday markets rallied, today it seems we're witnessing a "sell on the news". President-elect Obama will inherit a troubled economy and that what Wall Street is back to focusing on this morning. Some data could contribute to current sentiment as the October ADP employment numbers will be released before the opening bell and October ISM services after. weekly energy inventory data are also out for release. Oil prices declined ahead of the data to around $68.30 a barell.
Time Warner (NYSE: TWX) reported an 18% growth in profits from continuing operations, and profit of 31 cents per share (excluding items), beating analyst estimates. Time Warner also lowered its outlook for full-year earning primarily because of layoffs at Time Inc. Advertising revenue at AOL as did revenue at its Warner Bros. movie division, but TWX saw growth in its cable-access and cable-network businesses.
Cisco Systems Inc. (NASDAQ: CSCO) and News Corp. (NYSE: NWS) will both report after the close. Cisco is expected to report fiscal first-quarter earnings of 39 cents a share, News Corp., 22 cents a share in the fiscal first quarter according to Thomson Reuters.
U.S. stock futures were somewhat higher Monday morning as investors put October -- one of the worst months ever -- behind them and braced for the impact of the presidential election. A slew of economic data will be released this week, including September construction spending and the October release of the ISM index due today after the market opens. Global stocks were generally higher even as oil slipped again.
PepsiCo Inc. (NYSE: PEP) said Monday it will invest $1 billion in China over the next four years. The beverage company wants to expand local manufacturing capability, research and development and sales force.
General Motors Corp. (NYSE: GM) -- the company has been in the process of trying to find a way to merge with Chrysler. While we didn't hear much about the merger so far from the United Auto Workers union, it seems it intends to play a key part in it and has has retained an adviser to help with workers' concerns should the merger occur, the WSJ reported.
Boeing Co. (NYSE: BA) saw its 27,000 machinists resuming work Sunday after a 57-day strike that shut down production. Because of logistics, it will take several weeks before Boeing is running normally. The company missed at least 70 deliveries as a result of the strike. Seems it may miss more until production is properly under way. Boeing was downgraded to Conviction Sell from Neutral by Goldman Sachs, saying investors should sell into the strength from the resolution of the machinists union strike.
Motorola Inc. (NYSE: MOT) is like the guy who was cool in high school and still tries to impress girls at the football game when he's 30.
The once-cutting edge technology company reported dismal third quarter results. The results were not as wretched as Wall Street had expected but they stunk nonetheless. Motorola's net loss was $397 million, or 18 cents a share, compared with $60 million, or 3 cents, a year earlier. Sales plunged 15% to $7.48 billion. Excluding costs to fire people, profit was 5 cents a share, beating the 2-cent average estimate of analysts polled by Bloomberg News. The revenue figure trailed the $7.82 billion Bloomberg estimate.
But neither the results nor the company's statement that it has exceeded its goal of cutting $1 billion in costs impressed investors who sent shares of the Schaumberg, Illinois-based company tumbling in early morning trading today. The company's plans to separate its headset business from the part that actually makes money is on hold. For how long, it's not clear.
U.S. stock futures were much higher this morning, indicating markets could open with strong gains a day after the Federal Reserve cut rates by half a point to 1% and indicated further measures will be taken as necessary. While Wall Street ended mixed, global markets took this, as well as other measures central banks around the world have been taking, as a good sign and stocks in Asia and Europe rallied. However, at 8:30 a.m. this morning, advanced GDP for the third quarter will be released, and will likely show the economy has contracted for the first time. Economists expect GDP fell 0.5-0.6% in the quarter. Weekly jobless claims is also due at the same time.
Exxon Mobil Corp. (NYSE: XOM) - sometime before the opening bell, Exxon is scheduled to report third-quarter earnings. Much like other oil producers that have already reported, posting huge profits for the quarter due to record high oil prices, so is Exxon expected to report sharply higher profit.
Delta Air Lines (NYSE: DAL) - after the merger was approved Wednesday, Delta completed its $2.8 billion acquisition of Northwest Airlines (NYSE: NWA) on Wednesday to become the world's biggest carrier. Shares of both carriers surged 6% in after-hours.
Motorola Inc. (NYSE: MOT) will report its third quarter earnings tomorrow morning, and we'll see what kind of results CEO Greg Brown has been able to muster. The wireless giant, which is about to split itself up soon, now may find its wireless division spinoff not quite the saving grace it was six months ago.
Indeed, Motorola has followed up a dismal 2007 with a subpar 2008 as well. The company still can't get itself out of the hole its distinctive RAZR phone left when it debuted in 2004. Since then, the company has not followed up with any blockbuster consumer products and has let global wireless handset vendors like South Korean giants LG Electronics and Samsung Electronics to literally eat its sales and profit lunch.
As such, expectations tomorrow morning are for Motorola to earn just a penny per share at revenue of $7.83 billion. Even this would be quite a drop from the year-ago period of $0.06 per share on revenue of $8.81 billion. Handset shipments for the quarter are expected to come in under 30 million units compared to the year-ago figure of over 37 million units. Motorola, for now, does not have the product portfolio or design moxie to outgun its rivals, and global market leader Nokia Corp. (NYSE: NOK) continues to steadily up its market share as well. Every handset vendor is nipping at Motorola's heels, and unless the company ramps up -- well, everything -- 2009 will be another year to forget.
Motorola's (NYSE: MOT) handset business had a global market share of 22% two years ago after it launched its successful RAZR, but that turned out to be a "one hit wonder". On a good day, MOT's share of worldwide handset sales is 12%.
Motorola is spinning its handset operation out to the public, but it has done so poorly; it is hard to see what the public will get. The head of the new company does what all CEOs do when they are in trouble. He fires people.
Sanjay Jha, the just-hired chief executive, will also begin to adopt Google's (NASDAQ: GOOG) Android phone operating system for many of the company's new models. According toThe Wall Street Journal, "Motorola is hoping that the open-source Google platform can attract developers of sophisticated applications."
Those plans are not likely to work. For starters, the Android software system is new and so far there is no evidence it will be widely adopted. While its use may spread, betting on something so novel has tremendous risks.
The other, more vexing problem is that Motorola has not had a handset design that has been a big hit with consumers in over two years. No matter what OS the company is shipping on its phones, unattractive and feature-poor products are not going to get MOT back in the game.
Product. Product. Product. Motorola does not have one. Everything else is academic.
Douglas A. McIntyre is an editor at 247wallst.com.
7 Great Companies for $7 or Less These battered stocks are ripe for a rebound. They include Animal Health International, Build-a-Bear Workshop, Blockbuster, Global Cash Access Holdings, Great Wolf Resorts, Hackett Group and Spansion. http://www.kiplinger.com/magazine/archives/2008/11/7_cheap_stocks.html Biggest Losers: 15 Stocks That Have Plummeted This Year The following list is of selected familiar names and large stocks that have plunged significantly over these time periods. It does not include the obvious names such as AIG, Wachovia, GM and the likes, but decent stocks we all liked and knew over the years. Among them are Alcoa, American Express, Apple, Boeing, Citigroup, Dell, eBay, General Electric, Google, Merck, Motorola, Sprint Nextel, Research in Motion, Sirius XM and Whole Foods are all down significantly more than 25% which is what the Dow is off in 2008. http://www.bloggingstocks.com/2008/10/06/big-losers-15-large-stocks-that-have-plummeted/
After Monday, there are probably no more doubters left. We are in a bear market and we are in a recession and anyone arguing otherwise is living in a made-up world. The only thing left to argue over is how to get out of this dire situation, and how long it will last. Looking at stocks since the beginning of the year, and over the past month since the feds seized Fannie and Freddie, the picture isn't pretty. Many familiar names have vanished, many -- luckily -- have just seen their market value cut about in half. What once were some large stocks are now some of the smaller ones, including some DJIA components.
The following list is of selected familiar names and large stocks that have plunged significantly over these time periods. It does not include the obvious names such as AIG, Wachovia, GM and the likes, but decent stocks we all liked and knew over the years. By comparison, the Dow industrials is down 25% year-to-date, the S&P 500 down 28% during the same time and the Nasdaq Composite down nearly 30%. Over the past month (since the Fannie/Freddie rescue), the Dow declined over 11%, the S&P 500 declined nearly 15% and the Nasdaq declined over 17%.
Alcoa (NYSE: AA) -- aluminum giant Alcoa is feeling the pains of a global economic slowdown and higher costs even as aluminum prices remain high. Alcoa shares hit a 10-year low Monday. YTD, AA market value has been cut in half, and over the past month alone Alcoa lost 36% of its value.
American Express (NYSE: AXP) -- the credit card company had large exposure to bad loans that affected its results. With analysts expecting credit card debt to be the next shoe to drop, AXP may see its stock fall more than the 42.2% it already has YTD. It plunged 23.68% this past month.
Apple (NASDAQ: AAPL) -- even this consumer tech darling couldn't escape the claws of the bears as worries over demand for its products increased. AAPL, one of the stocks that actually had a positive day Monday and closed at $98.14, is down 50.45% YTD, 38.73% this past month.
Motorola Corp. (NYSE: MOT) is apparently planning on a rather large piece of its wireless business being wrapped around Google Inc.'s (NASDAQ: GOOG) Android operating system. The wireless company already has 50 employees working on Android development and will be boosting that number to 350 before long. Since Motorola is one of the larger members of the Open Handset Alliance (OHA), the open-source software movement meant to support all things Android, this comes as no surprise.
Perhaps Motorola wants some revenue from software development for the mobile space instead of selling profit-challenged hardware? The company has had a rough time of things recently, but after spinning off its handset division soon, Motorola wireless hardware and software may be on the path to re-inventing themselves.
But can Google's vaunted wireless platform challenge the entrenched iPhone, Windows Mobile and Symbian space? Together, those three platforms control a huge swath of the smartphone market. Nokia Corp. (NYSE: NOK), which now owns all of Symbian, has the lion's share of smartphone software sales globally. The newer iPhone 3G has launched in dozens of countries and continues to sell very well. Let's not count out Windows Mobile. Even Google may find it hard to take large pieces of market share away from these players. But at least Motorola is only placing a small bet here on Android's success. Three hundred fifty employees isn't too many, is it?
Stock futures dropped sharply Monday morning after the bailout plan was revealed Sunday and several banks in Europe were bailed out. U.S. investors are expected to react similar to stock markets around the word, which tumbled Monday following Washington's $700 billion bank bailout deal. The bailout may not be enough, and it will take a while to clean up the mess and restore confidence to financial markets. The economic reading due to be released today, August personal income and spending is not expected to affect markets much.
Three major banking bailouts were announced in Europe. 1) The Dutch-Belgian bank and insurance giant Fortis failed and was provided with a $16.4 billion lifeline by the governments of Belgium, the Netherlands and Luxembourg. 2) The British government nationalized mortgage lender Bradford & Bingley -- the second British bank to be taken under government control this year. 3) A consortium of German banks and regulators bailed out Hypo Real Estate Holding AG, in a deal worth billions of dollars.
Wachovia Corp. (NYSE: WB) - after WaMu's failure, the focus has shifted to Wachovia and at least two major banks, Citigroup Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC), were reportedly in talks Sunday to buy it. Wachovia shares are trading down 60% to $4 in pre-market action. C and WFC shares are down over 6.5% and 3.5% respectively in pre-market trade.
Minyanville contributor 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.
As Brian White noted earlier, Research in Motion (ASDAQ: RIMM) plans to enter the retail market this fall with a clamshell flip version of its BlackBerry Pearl smartphone.
The BlackBerry Pearl Flip 8220 offers multimedia features such as a video and music player and a 2-megapixel camera. Like the original Pearl, the new flip model includes a Web browser and a SureType Qwerty keyboard. The new device weighs 3.6 ounces and measures about 3.9 inches by 1.9 inches by 0.7 inches. BlackBerry says the Pearl Flip offers voice activated dialing, conference calling, speed dialing, call forwarding and background noise cancellation.
"The popularity of BlackBerry smartphones has grown tremendously around the world and the introduction of this new flip phone will help extend the reach of the BlackBerry platform even further," Mike Lazaridis, president and co-CEO of Research In Motion, said in a prepared statement. "The BlackBerry Pearl Flip is a full-featured smartphone."
BlackBerry's effort to expand beyond its business base to retail consumers puts the company in direct competition with Apple's (Nasdaq: AAPL) iPhone and industry stalwarts Motorola (NYSE: MOT), a pioneer of the flip phone, Samsung, which isn't publicly traded in the US, and Nokia (NYSE: NOK).
T-Mobile will be the exclusive stateside launch carrier of the new flip BlackBerry. Pricing details weren't released and will be available later.
It looks like the recession is hurting mobile phones sales. According toThe Wall Street Journal, "For the full year, Gartner said it expects handset sales to grow 11% to 1.28 billion phones, slowing from last year's 16% growth."
A trend of that magnitude is bound to hit every company in the industry, but some have the financial strength and market share to weather the storm, That is especially true of Nokia (NYSE: NOK), which has a global market share of 40% of handset sales. Samsung, which has 15% of the market and is one of the largest companies in Asia, should also be fine.
Motorola (NYSE: MOT) is another matter. Its global share has dropped from nearly 15% to just above 10% in a year. More financial pressure could poison its chances of spinning off its handset operation in 2009. It is already questionable whether the division has any value at all.
The Motorola 10-Q shows that revenue at the company's mobile device operation fell 22% last quarter to $3.33 billion. The operating loss for the unit was $346 million. If the handset market as a whole is reaching a challenging period, what is to become of the weakest player in the industry?
The answer is that Motorola may not be able to get rid of its handset operation. It may be faced with the much harder task of fixing it.
Douglas A. McIntyre is an editor at 247wallst.com.
Nokia (NYSE: NOK - option chain) shares are falling today after the company warned that the global mobile phone market will weaken in 2009. NOK forecast global handset sales of 1.24 billion phones in 2009, down from a previous estimate of 1.26 billion. The entire industry is taking a hit today from this announcement including competitors like Research in Motion (NASDAQ: RIMM) and Motorola (NYSE: MOT) as well as suppliers such as Qualcomm (NASDAQ: QCOM). If you think this Nokia won't be rising too far in the coming months of economic headwinds, then it could be a good time to look at a bearish hedged play on NOK.
U.S. stock futures were lower Wednesday morning, a day after a historic election saw Barack Obama elected president. But if Tuesday markets rallied, today it seems we're witnessing a "sell on the news". President-elect Obama will inherit a troubled economy and that what Wall Street is back to focusing on this morning. Some data could contribute to current sentiment as the October ADP employment numbers will be released before the opening bell and October ISM services after. weekly energy inventory data are also out for release. Oil prices declined ahead of the data to around $68.30 a barell.
U.S. stock futures were somewhat higher Monday morning as investors put October -- one of the worst months ever -- behind them and braced for the impact of the presidential election. A slew of economic data will be released this week, including September construction spending and the October release of the ISM index due today after the market opens. Global stocks were generally higher even as 
After Monday, there are probably no more doubters left. We are in a bear market and we are in a recession and anyone arguing otherwise is living in a made-up world. The only thing left to argue over is how to get out of this dire situation, and how long it will last. Looking at stocks since the beginning of the year, and over the past month since the feds seized Fannie and Freddie, the picture isn't pretty. Many familiar names have vanished, many -- luckily -- have just seen their market value cut about in half. What once were some large stocks are now some of the smaller ones, including some DJIA components.
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