Filed under: Earnings reports, Forecasts, Bad news, General Motors (GM), Housing

Ryder System (NYSE: R) today announced it is dropping its forecast for third-quarter earnings per share from $1.20-$1.23 to $1.12-$1.14. The company also revealed that third-quarter results will be impacted by a $10 million sale of property, more than offset by a $12 million charge for restructuring, the benefits of which won’t be realized until 2008. Its end-of-year projections are now for EPS of $4.10-$4.15, down from previous expectations of $4.30-$4.35, but still above 2006 figures.

Ryder blames general softening of demand beyond the housing sector for declining revenue in its Fleet Management Solutions segment, which accounts for about 60% of its revenue. The company has a fleet of more than 140,000 vehicles and employs almost 30,000 people.

One area to keep an eye on with Ryder is its Supply Chain Solutions sector, which accounts for 32% of revenue. This sector is closely tied to the automobile industry — in fact, GM (NYSE: GM) accounted for 40% of Ryder’s SCS revenue in 2006. Slack times at GM could show up on Ryder’s bottom line.

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Filed under: Rumors, Consumer experience, Google (GOOG)

Google (NASDAQ: GOOG) is amassing a huge staple of power over information and advertising these days. The company’s acquisition of YouTube last year and the pending DoubleClick purchase are set to begin creating a massive information use overlord to much of the global internet audience. With that, you have to ask yourself one question: Do you feel lucky?

I’ll pass over the Google-esque and Dirty Harry pun jokes there and say that Google wants every customer to feel lucky using its services. Instead of trying to dominate the internet portal landscape, it’s settling for providing advertising for any online venue possible in order to take a small cut of all those billions of transactions. That’s a tad more profitable than trying to offer every possible feature under the sun (like Yahoo! in the last six years) while not knowing what will stick to the wall and what will fall down. Better to just offer ads everywhere possible and stick to that.

But, there’s more to the Google phenomenon-in-progress than advertising domination. Google’s YouTube was featured this year as a platform to let ordinary citizens interact with presidential hopefuls set for next year’s election (just over a year from now). Ordinary netizens could whip out that cellphone camera or digital videocam and send a question to a presidential candidate. Would that have been possible without YouTube? Perhaps, perhaps not. But, when Google’s services start to allow communication of that magnitude, there’s something rumbling going on in the world. The larger question is, can Google continue to “do no evil” while becoming omnipresent everywhere in our lives?

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Filed under: Economic data, Commodities

Gold, the Canadian dollar, the euro and the lowering of short-term interest rates does not bode well for the U.S. dollar. Or at least that is what conventional wisdom is saying. You will be hard pressed to find a financial TV show or publication saying anything positive about the greenback these days.

Arguments are a plenty: the dollar is weak because the Fed added to much liquidity to U.S. economy in 2001 and 2002, the dollar is weak because of our huge trade and budget deficits, the dollar is weak because we are a people who are undisciplined and cannot save. The arguments go on and on. Someone in Barron’s actually wrote that the dollar is weak because inflation is high. Outside of housing there does not seem to be a lot of price deflation, but taking the leap to suggest inflation is pervasive enough to cause the dollar to weaken is somewhat of a stretch.

As we have blogged a few times this past month, the U.S. dollar is weak because currency traders have a trend-is-your-friend mentality. They will lever up and follow that trend until they get spanked by central banks. Currency reversals are driven by Treasury secretaries working with central bankers to change the direction of a currency. Expect that to soon happen particularly with the U.S. dollar reversing against the euro. The seeds are already being sown to spank those currency traders good and to drive the U.S. dollar higher. The U.S. economy remains the place to be and the global leader in new business creation. Do not sell the dollar short, go long the greenback.

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Filed under: Earnings reports, Analyst upgrades and downgrades, Good news, Procter and Gamble (PG), Yum Brands (YUM), Technical Analysis, Stocks to Buy

There is a Shanghai firm that has established itself as an advertising powerhouse by recognizing that innovation generates profits. The company conveys clients’ messages by way of 200,000 flat panel TVs.

Focus Media Holding (NASDAQ: FMCN) operates an advertising network of public television displays in China. The devices are placed in high-traffic areas, such as office buildings, hotels, airports, retail chain stores and the public areas of residential complexes. In all, the company runs nearly 200,000 display units. It also operates an advertising network for the Chinese mobile telecommunications market and recently acquired China’s largest Internet advertising agency. Clients include Coca-Cola (NYSE: KO), Yum! Brands (NYSE: YUM) and Procter & Gamble (NYSE: PG).

FMCN investors were pleased late last month, when the company said that an internal investigation did not find evidence of alleged undisclosed rebate payments to a third-party advertising agency through a related party. Focus Media filed its annual report and audited financial statements for 2006, which had been delayed as a result of the investigation. Susquehanna Financial initiated coverage of the shares with a “positive” rating. Then, management reported fiscal Q2 EPS of 38 cents and revenues of $113.3 million. Analysts had been expecting 34 cents and $102.2 million. Officials also guided Q3 EPS to 41-43 cents (43 cent consensus), Q3 revenues to $132-$135 million ($115.51M consensus) and full-year 2007 revenues to $440-$450 million ($409.65M consensus). CIBC World Market and WR Hambrecht reiterated “buy” recommendations and boosted their price targets to $70. The stock popped into a bullish “flag” consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Continue reading Focus Media Holding (FMCN): Innovation in Chinese advertising

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Filed under: Bad news, Wal-Mart (WMT), Target Corp. (TGT), Housing

According to The Associated Press, the home decor industry is the “latest casualty of the ongoing housing and mortgage lending bust”.

The purchase of new home furnishings is an easy expenditure for consumers to put off — if people are anxious about their mortgage, or disheartened that their home isn’t appreciating in value like it was a few years ago, that old couch starts to look a lot better.

All of this makes Pier 1 Imports (NYSE: PIR) look like a tough bet. The stock rallied last week on an analyst upgrade, but continues to face sales and margin pressures, in part because of lower-price competitors like Wal-Mart (NYSE: WMT). The company is in the midst of an attempted turnaround but the combination of competitive pressures and an industry-wide slowdown that recently claimed Bombay could be too much for the company to handle.

In the most recent quarter, Pier 1 saw its sales decline 7%, and it’s going to be hard to turn that around if the industry as a whole continues to sputter.

In June, I suggested that it might be time for Wal-Mart and Pier 1 to team up. if Pier 1 continues to struggle with sales and profitability, and Wal-Mart continues to struggle to reach the more upscale demographic Target (NYSE: TGT) has nailed, it’s something that both parties might want to consider.

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Filed under: Rumors, Apple Inc (AAPL)

It’s time for the apple to split, and we’re not talking fruit here. Apple, Inc. (NASDAQ: AAPL) sits at an all-time high, closing above $161 last Friday, and it may be that another stock split is in order. After all, 2-for-1 splits have happened before, with the most recent in 2005.

This time, it’s different. Before — in 1987, 2000 and 2005 — Apple’s shares were worth roughly $100 each. They’re quite a bit above that now, right? It another 2-for-1 split already overdue? Has Apple’s meteoric share price been even a surprise to the company itself, explaining the delay?

A split now would signal to the world that Apple believes it has even more room to grow. But does it? From the unrelenting excitement about its products, it most likely does, despite the fact that the company appears to be more arrogant than ever. Shh — don’t tell the market makers, though.

If a split does happen, might it be a 3-for-1? That would bring the share price into the $50 range instead of the $80 range, which is a more likely a scenario in my view. One thing is for sure — Apple will most likely think harder and harder about splitting in some fashion as shares get within shouting distance of $200. It’s headed there soon, according to my colleague Georges Yared.

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Filed under: Ford Motor (F), General Motors (GM), Employees

Though the United Autoworkers Union’s threat to strike Chrysler LLC tomorrow got the headlines today, the union’s biggest challenge ahead lies with Ford Motor Co. (NYSE:F).

As Daniel Howes of the Detroit News points out, Ford is hoping to get a better deal than the agreement the UAW recently reached with General Motors Co. (NYSE: GM) because of the automaker’s “more dire financial circumstances.” UAW head Ron Gettelfinger has spent most of his career representing Ford workers and is close with Ford Executive Chairman Bill Ford Jr., with whom he’s been speaking with almost daily for the past month, according to Howes.

Ford Chief Executive Alan Mulally is well-regarded on Wall Street but he certainly has his work cut out for him. Earlier this year, the Dearborn, Mich. automaker unveiled a major restructuring which included the elimination of 25,000 to 30,000 jobs. Pundits including Howes say more job cuts and plant closings are possible. Last year, Ford posted a record deficit of $12.6 billion.

Whether the close ties between Gettelfinger and Bill Ford will help avoid labor trouble remains to be seen. For now, the UAW is focusing its attention on Chrysler.

A Chrysler spokeswoman told the AP that the automaker remained optimistic about a settlement. The timing of the UAW’s ultimatum was interesting considering that five U.S. Chrysler plants were going to be shut down anyway for about two weeks starting today because of lower demand for Chrysler products.

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Filed under: Products and services, Google (GOOG), Berkshire Hathaway (BRK.A), S and P 500, DJIA

Google Inc. (NASDAQ: GOOG) hit $600, the latest of a long series of hurdles that skeptics including yours truly didn’t think was possible. It’s only a matter of time before they move even higher.

The company continues to chug along even in volatile markets. The stock is up about 30% year to date, eclipsing rival Yahoo! Inc. (NASDAQ: YHOO), which gained 9% during the same period, and Microsoft Corp. (NASDAQ: MSFT), which is little changed.

Interestingly, the stock didn’t stay at $600 for too long, hitting a psychological barrier. Last I checked, the shares traded at $596.65. I think investors will soon get over their unease and push the stock even higher.

The question is how high? What’s the next hurdle for Google? Is it $700? $800? $1000? Henry Blodget recently upset the Internet establishment by arguing that Google could reach $2,000 over the next few decades. Why stop there?

Will Google’s stock ever top Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A) which now trades at the princely sum of $120,800? I am not sure if this will ever happen but the possibility is certainly intriguing. The company reports earnings October 18.

No doubt the faithful are waiting on pins and needles until then.

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Filed under: China, Options, Technical Analysis, Commodities, Aluminum Corp of China ADS (ACH)

Aluminum Corp. of China Ltd. (NYSE: ACH) stock is slumping today as aluminum futures are off by more than 2% as are other industrial metals like copper. Investors may also be locking in their gains after Friday’s big positive move. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ACH

The stock has been climbing steadily all year, hitting a one-year high of $76.99 on Friday. This morning, ACH opened at $74.00. So far today the stock has hit a low of $72.78 and a high of $75.33. As of 11:00, ACH is trading at $74.92, down $1.93 (-2.5%). The chart for ACH looks bullish but slightly deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $85 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 leverages nice returns. For this particular trade, we will make a 6.4% return in 2 weeks as long as ACH is below $85 at October expiration. Chalco would have to rise by more than 33% before we would start to lose money. The stock has never been above $77 and would have to jump by over 14% in less than two weeks to cause a problem.

Brent Archer is an options analyst and writer at Investors Observer. 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 ACH.

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Filed under: Consumer experience, Yahoo! (YHOO), eBay (EBAY)

Yahoo, Inc. (NASDAQ: YHOO) and eBay, Inc. (NASDAQ: EBAY) are partnering up this holiday season to try and keep all those nasty but legit-looking email messages out of your Yahoo! Mail inbox. Yahoo! is by far the world’s most popular web-based email service and I can only imagine the effort it takes to sniff out fraudulent and phishing email messages from tens of millions of inboxes every day.

In many cases, Yahoo! Mail users will receive official-looking messages that appears to come from eBay or its online payment division, PayPal. Those who are fooled into divulging personal information like passwords and account sign-in information usually have a large headache cleaning up the identity theft mess later. But, what if those unofficial email messages never arrived in your inbox to begin with?

Last last week, the three companies (PayPal is a wholly-owned eBay subsidiary) announced that the DomainKeys e-mail authentication system would be used to block malicious email messages from the inboxes of Yahoo! Mail users. Yahoo! stated that the upgrade would occur over its global email network for the next few weeks, allowing it to verify the domain from which email messages arrive. In other words, those Russia-based fraud emails that look like real eBay communications may soon be blocked for good.

This is a great initiative between the largest email provider and one of the largest commerce sites on the entire internet, and it’s perfectly timed for the holiday e-commerce season that’s already underway. Now, Yahoo! needs to market this new partnership in every way possible to let customers know what it is and how it can help them. Something like this does no deserve to be just working behind the scenes.

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