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If you want to be gloomy, just look at the continued weakness in financial stocks after investment bank Bear Stearns (BSC, news, msgs) reported its first loss in its 84-year history.
But it's the holidays, so let's have a little cheer, courtesy of Research in Motion (RIMM, news, msgs), which reported terrific third-quarter results this afternoon, and Oracle (ORCL, news, msgs), which issued a strong earnings report late Wednesday.
Research in Motion said its profit jumped 111% and revenue doubled in the quarter from a year ago. The stock rose 4.8% in regular trading and jumped an additional 8.6% to $116.15 in after-hours trading.
The tech strength pushed the Nasdaq Composite Index up nearly 40 points, or 1.5%, to 2,641. The Dow Jones industrials, which struggled most of the day, finally rallied to a gain of 38 points, or 0.3%, to 13,246. The Standard & Poor's 500 Index was up 7 points, or 0.5%, to 1,460.
Bear Stearns reported a much-bigger-than-expected loss, but it was forthright enough about the problem that the stock actually closed up 0.9% to $91.42 on the day.
But declines that hit the sector soon after the open today still couldn't be overcome. The group has been weakened by the wholesale collapse of securities backed by subprime mortgages.
Confidence in top bond insurer MBIA (MBI, news, msgs) plummeted today after the guarantor disclosed on its Web site that it had $8.1 billion in exposure to complex and risky securities backed by home loans -- a level much larger than expected. The stock fell 26% to $19.95.
The MBIA announcement was "especially disconcerting," Briefing.com noted, "considering the company withheld the information from the public until after its rating was upheld by Moody's and Standard & Poor's."
Citigroup (C, news, msgs) was down 1.1% to $29.89, its first close under $30 since Oct. 10, 2002.
Merrill Lynch (MER, news, msgs) was down 0.4% to $54.50 on speculation the third-largest broker might be seeking additional capital to shore up its financial position. Even Goldman Sachs (GS, news, msgs), easily the most powerful investment bank, was down 0.8% to $202.67.
But techs were the day's stars, behind Research in Motion's gain and Oracle's 6.5% rally to $22.10.
The two stocks, in fact, were two of three biggest contributors to a 39-point gain for the Nasdaq-100 Index. The index closed up 1.9% to 2,070.
Also helping the index were Apple (AAPL, news, msgs), up 2.2% to $187.21; Microsoft (MSFT, news, msgs), up 2.1% to $35.52; eBay Inc. (EBAY, news, msgs), up 5.4% to $33.37; and Google (GOOG, news, msgs), up 1.8% to $689.69. (Microsoft is the publisher of MSN Money.)
Eighty-four of the Nasdaq-100 stocks were higher on the day, compared with just 18 of the Dow stocks and 321 S&P 500 stocks.
Light, sweet crude oil closed down 18 cents a barrel to $91.06 today, but energy shares were generally higher.
Behind in Research in Motion's report
Apple's iPhone may be hot, but the BlackBerry remains king among mobile devices.Research in Motion said it sold 3.9 million BlackBerry devices during its third quarter. The gain from a year ago wasn't available, but the company sold just 4 million BlackBerry units in all of fiscal 2006.
Apple has sold more than 1.4 million iPhones since their launch in June.
Stock Charts (Year)
Research in Motion
Bear Stearns
For the fourth quarter, the company expects revenue of $1.8 billion to $1.87 billion, ahead of Wall Street estimates of $1.76 billion. It expects to add 1.82 million new subscribers, short of Wall Street estimates.
But investors didn't seem to care.
Bear Stearns' bigger-than-expected loss
Bear Stearns said it lost $854 million, or $6.90 per share, in its fiscal fourth quarter. The company had earned $563 million, or $4 per share, a year ago. Analysts had been looking for a loss of $1.67 per share.As at Morgan Stanley (MS, news, msgs), which also reported its first-ever quarterly loss Wednesday, Jimmy Cayne, Bear's CEO, said he would skip his bonus this year.
As of Wednesday's close, the stock had fallen 44% this year.
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Last year, Cayne got a base salary of $250,000; his 2006 bonus, on the other hand, added up to $33.6 million.
Bear wrote down $1.9 billion in subprime mortgages -- more than the $1.2 billion the company had forecast in November. The write-downs reduced earnings by $8.21 per share, Bear said.
Bear follows Goldman Sachs and Morgan Stanley (MS, news, msgs), both of which reported their quarterly results earlier this week.
Goldman managed a 2% rise in profit, but Morgan Stanley saw a loss of $3.56 billion. Morgan Stanley CEO John Mack also gave up a likely multimillion-dollar bonus because of the "disappointing" results.
Most financial-services companies have been suffering from investments in risky vehicles that were backed by subprime mortgages. After the subprime-mortgage market imploded this summer, the banks were forced to write down losses on their bad bets.
Bear is sued
In separate Bear Stearns news, the company is being sued by Barclays (BCS, news, msgs).British bank Barclays late Wednesday claimed that Bear Stearns knew that the assets in one of its hedge funds were worth far less than the company claimed. The suit, filed in federal court in New York, is aimed at recovering between $300 million and $400 million lost after the fund collapsed this summer.
The Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund was heavily invested in subprime-mortgage-backed securities. The fund, along with a sister fund, controlled about $20 billion in June; Bear Stearns liquidated the fund at the end of July.
Last week, Ralph Cioffi, who managed the fund, left Bear Stearns amid an investigation by federal prosecutors into whether he withdrew money from the funds before they collapsed.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $91.06 | $91.24 | -$0.18 | 2.65% | 49.16% |
| Heating oil (per gallon) | $2.5895 | $2.5979 | -$0.0084 | 2.37% | 62.06% |
| Natural gas (per million BTU) | $7.1370 | $7.1790 | -$0.0420 | -2.26% | 13.30% |
| Unleaded gasoline (per gallon) | $2.3276 | $2.3319 | -$0.0043 | 3.03% | 45.28% |
Oracle beats The Street
Database software maker Oracle shares jumped after reporting a 34% profit gain for the second quarter after Wednesday's close. The biggest maker of database software earned $1.3 billion, or 25 cents per share, up from $967 million, or 18 cents per share, a year ago. Revenue rose 28% to $5.31 billion in the quarter. Analysts had expected earnings of 27 cents per share on revenue of $5.04 billion.Chief Executive Larry Ellison has been on an acquisition spree, and it is working, one analyst said. "This acquisition strategy has not only worked but it's driving more revenue," Brendan Barnicle, analyst at Pacific Crest Securities, told Bloomberg News. "They are taking some (market) share."
Ellison has spent $25 billion over the past three years buying companies like PeopleSoft and Hyperion Solutions.
FedEx outlook fails to deliver
Shares of shipping giant FedEx (FDX, news, msgs) were down 1.1% to $93.63 after reporting that its second-quarter earnings fell 6% from a year ago.FedEx last month had lowered its guidance for the current quarter, blaming higher fuel costs and a slowing economy.
The company maintained its outlook for the full 2008 fiscal year that ends in late May, implying an improved fourth quarter. Whether that improvement materializes will depend on fuel costs stabilizing rather than racing ahead of surcharges, The Wall Street Journal said, and the U.S. economy's ability to avoid further weakening.
"We don't think that the United States is going to see an economic meltdown," CEO Fred Smith said during the company's earnings call. "But we don't think there is going to be strong growth in the U.S. economy, and that's what our forecast is built around."
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FedEx said it expects to earn between $1.15 and $1.30 per share in the next quarter -- lower than the consensus estimate of $1.37 per share.
Nike earnings score
Nike (NKE, news, msgs) shares were up 3.5% to $66.01 on a strong earnings report after Wednesday's close.The athletic equipment-and-apparel maker reported fiscal-second-quarter earnings of $359.4 million, or 71 cents per share, up 10% from $325.6 million, or 64 cents per share, last year. Wall Street was looking for earnings of 66 cents per share.
Sales rose 14% to $4.34 billion, above the consensus estimate of $4.22 billion. Revenue in the U.S. rose 7% to $1.5 billion, while sales in Europe jumped 18% to $1.2 billion. Sales also rose in Asia, up 17% to $674.6 million.
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Worldwide future orders for Nike's gear -- from footwear to apparel -- rose 13% this December through April 2008 from the same period a year ago.
Google gets green light for DoubleClick
Search giant Google shares moved higher after the company got the go-ahead from the Federal Trade Commission today for its $3.1 billion acquisition of Internet advertising company DoubleClick.In a 4-to-1 vote, the FTC said the deal "is unlikely to substantially lessen competition."
The deal still requires antitrust approval from regulators in Europe; the European Commission has an April 2 deadline to finish reviewing the proposed merger.
A number of companies, including Microsoft and AT&T (T, news, msgs), had been opposed to the deal, saying that it would hurt competition in the online advertising market.
The deal has also faced criticism from privacy advocates, who worry that the Google-DoubleClick combination would have an extraordinary amount of personal data on people who surf the Web.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 2.805% | 2.835% | -0.030 | -8.63% | -42.58% |
| 5-year Treasury note yield | 3.425% | 3.473% | -0.048 | 0.20% | -27.14% |
| 10-year Treasury note yield | 4.026% | 4.070% | -0.044 | 1.36% | -14.52% |
| 30-year Treasury bond yield | 4.448% | 4.494% | -0.046 | 1.02% | -7.68% |
| Currencies | |||||
| U.S. Dollar Index | 77.840 | 77.615 | 0.225 | 2.17% | -6.97% |
| British pound in U.S. dollars | $1.9841 | $1.9972 | -0.0131 | -3.55% | 1.25% |
| U.S. dollar in British pounds | £0.5040 | £0.5007 | 0.0033 | 3.68% | -1.23% |
| Euro in U.S. dollars | 1.4331 | 1.4386 | -0.0056 | -2.22% | 8.57% |
| U.S. dollar in euros | € 0.6978 | € 0.6951 | 0.0027 | 2.27% | -7.89% |
| U.S. dollar in yen | 113.14 | 113.30 | -0.16 | 1.96% | -4.94% |
| U.S. dollar in Canadian dollars | $1.000 | $1.002 | -0.002 | 0.08% | -14.15% |
| Canadian dollar in U.S. dollars | $1.001 | $0.998 | 0.002 | -0.08% | 16.61% |
| Commodities | |||||
| Gold | $803.20 | $805.40 | -$2.20 | 1.79% | 25.89% |
| Copper | $2.9655 | $2.9580 | $0.007 | -6.88% | 3.29% |
| Silver | $14.3400 | $14.3400 | $0.12 | 1.24% | 9.95% |
| Crude oil (NYMEX) (per barrel) | $91.06 | $91.24 | -$0.18 | 2.65% | 49.16% |
By Charley Blaine and Elizabeth Strott
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