Filed under: Analyst reports, Deals, Industry, Consumer experience, Google (GOOG), Apple Inc (AAPL), AT and T (T)

Google (NASDAQ: GOOG) is getting a lot of traffic to its mobile search applications from the Apple (NASDAQ: AAPL)’s iPhone. That does not quite add up since the iPhone “accounts for just 2 percent of smartphones worldwide, according to IDC, a market research firm,” writes The New York Times.

The data would seem to show that iPhone users will access internet search features 10 to 20 times more than customers with other smartphones. Based on the industry’s perception of how good the handset’s interface is for going online, that is possible.

The news raises two important issues. The first is that the iPhone is only available on the AT&T (NYSE: T) 2.5G network now. Later this year, it is likely to work on the faster 3G network, which could increase access to online services even more.

Beyond that, fees from using an interent browser and downloading data can be fairly significant. In other words, Apple and AT&T could be bringing in more revenue than most analysts think.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Before the bell, Earnings reports, Analyst upgrades and downgrades, Google (GOOG), Yahoo! (YHOO), Apple Inc (AAPL), General Electric (GE), Pfizer (PFE), Ford Motor (F), General Motors (GM), Home Depot (HD), International Business Machines (IBM), Bed Bath and Beyond (BBBY), General Mills (GIS), Lowe’s Cos (LOW), Teva Pharm Indus ADR (TEVA)

Before the bell: Rate cut hopes could fuel rebound

IBM (NYSE: IBM) are shooting up over 9.5% in premarket trading after the company reported strong preliminary results, taking a few other tech stocks higher with it. Big Blue said fourth-quarter earnings from continuing operations rose 24% from a year ago to $2.80 per share on revenue of $28.9 billion, beating Wall Street expectations of $2.60 per share on sales of $27.82 billion by a wide margin. The weaker dollar, IBM reported, helped to push revenue up 10%.

With the start on Macworld tomorrow, January 15, it seems there is no shortage of Apple Inc. (NASDAQ: AAPL) news:

• Apple and China Mobile have called off talks to launch the iPhone in China. The talks have so far fueled speculation the device will hit the country’s store shelves soon.
• As for the iPhone being used as a web browser, reports have indeed showed increased traffic to search engines from the iPhone, surpassing others, despite it holding only a 2% share of smartphones. On Christmas, traffic to Google Inc. (NASDAQ: GOOG) from iPhones surged, surpassing incoming traffic from any other type of mobile device (it later fell below Nokia-backed Symbian operating system phones). Yahoo! Inc. (NASDAQ: YHOO) also said “iPhones accounted for a disproportionate amount of its mobile traffic.”
• And, for all your Macworld coverage, be sure to check Engadget.

The Detroit Auto Show, America’s biggest car show, kicked off over the weekend, with automakers like Ford (NYSE: F) and General Motors (NYSE: GM) unveiling some of their newest vehicle models like Ford’s Lincoln suv.
Meanwhile, GM is close to an agreement with the United Auto Workers on another round of buyout and early retirement offers.

As oil prices reach record high and demand increases for alternative power, General Electric Co. (NYSE: GE)’s energy investment business was to announce Monday it will increase its investment in renewable energy by 50%, to $6 billion by 2010.

A study found that patients treated with Pfizer Inc. (NYSE: PFE)’s cholesterol drug Lipitor — the world’s top=selling drug — were significantly less likely to have a heart attack than those treated with generic Zocor. The study was funded by Pfizer.

Notable analyst calls this morning:

• Credit Suisse upgraded Bed Bath & Beyond (NASDAQ: BBBY), Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW) from Neutral to Outperform.
• HSBC Securities downgraded Teva Pharmaceutical (NASDAQ: TEVA) from Overweight to Neutral.
• JP Morgan upgraded General Mills (NYSE: GIS) from Underweight to Neutral.

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Filed under: Citigroup Inc. (C)

When Citigroup Inc. (NYSE: C) reports tomorrow, one big question on investors’ minds will be how big a charge against its earnings it will take for its Collateralized Debt Obligations (CDOs) and other Level 3 assets. The amount of the charge could range from $9 billion to $24 billion.

I appeared this morning on CNBC to discuss bank earnings with Charlie Gasparino and Andrew Ross Sorkin of the New York Times. I got into a bit of a disagreement with Gasparino, who reported earlier on the wide range of that charge. He thought that there was a strict amount for the charge. However, as I pointed out, Citigroup’s Vikram Pandit wants to take a big bath write-down, but can only do so if he can raise enough capital to offset it. (Moreover, as I did not mention on the air, the very fact that Gasparino was discussing such a wide range of write-downs indicates how much management discretion is involved.)

I argued that since there is no active market for the Level 3 assets that Citigroup is writing down, there is significant management discretion in the amount of the charge. Management could base the write-down on the decline in the ABX, an index of subprime creditworthiness, or on the values that other institutions — such as hedge fund Citadel — have used, which range from 27 cents on the dollar to 45 cents.

Continue reading Will Citigroup write-down $9 billion or $24 billion?

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Filed under: China, Citigroup Inc. (C), Merrill Lynch (MER), BHP Billiton Ltd ADR (BHP), Rio Tinto plc ADS (RTP)

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Citigroup (NYSE: C) plans to sell a stake of around $2 billion to China Development Bank, in an effort to raise capital may be in jeopardy due to opposition from the Chinese government.
• Merrill Lynch (NYSE: MER), which is seeking close to $4 billion in capital, may receive an investment from the Kuwait Investment Authority, according to people familiar with the matter. A deal could be announced as soon as mid-week, according to the Financial Times (subscription required).

OTHER PAPERS:

• There is speculation that BHP Billiton (NYSE: BHP) may raise its offer for Rio Tinto (NYSE: RTP) to 3.6 shares for one from three for one and add a cash sweetener “sooner rather than later,” the Australian reported.
• According to CNBC, Citigroup could write down as much as $24 billion from subprime and credit-related losses and there could be twenty-thousand layoffs as part of a plan to cut costs and raise capital.

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Filed under: Earnings reports, Good news, Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Hewlett-Packard (HPQ), Intel (INTC), International Business Machines (IBM)

International Business Machines Corp. (NYSE: IBM) outperformed earnings expectations in the fourth quarter, allaying analysts’ concerns of a potential tech slowdown at least for now.

Before the market open, Big Blue said it would earn $2.80 per share, 20 cents better than analysts’ expectations. IBM shares, down about 10% since the start of the year, rose $7.85 to $105.52 in early trading. Other tech stocks including Google (NASDAQ: GOOG), Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) traded higher on the news.

Is the hoopla premature? Fears of a recession are quite real. Moreover, IBM Isn’t like most tech companies. For one thing, the vast majority of its profits come from corporations and not individual consumers, and it also gets a huge amount of its revenue from outside the U.S. During the third quarter, revenue in the Americas rose 4% (3% adjusting for currency) to $10.2 billion while Europe/Middle East/Africa sales jumped 11% (4% when currencies are excluded) to $8.1 billion, and Asia-Pacific increased 9% (6% at constant currencies) to $4.9 billion.

The fourth quarter was more of the same. IBM’s strength came from Asia, Europe and emerging markets, according to Chief Executive Sam Palmisano. The weak dollar may be giving IBM a huge boost as companies outside the U.S. may more inclined than domestic firms to buy IBM’s hardware, software and services because they are pretty reasonably priced. Perhaps other tech companies such as Intel Corp. (NASDAQ: INTC) and Hewlett Packard Co. (NASDAQ: HPQ) will see similar benefits.

Tech stocks have been a basket case in the early days of 2008. In the next few days, investors will see whether IBM was a fluke or a hint of things to come.

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Filed under: Products and services, Consumer experience, Competitive strategy, Starbucks (SBUX), McDonald’s (MCD)

“The place reeks of fries and beef.” That’s the charmingly candid assessment of McDonald’s (NYSE: MCD) from Chris Dannen at Fast Company’s blog. As you can probably guess, he’s none too impressed with Mickey D’s plan to open 14,000 new coffee bars in its U.S. stores.

For Dannen, it’s a pretty simple question. Will people buy more fancy coffee drinks in a fast food restaurant that smells of fry grease? He doesn’t think so. As a result, McDonald’s coffee bars — which the company hopes will bring in an extra $1 billion in revenue — will be defeated by the “sweet stink of the flagship fare,” namely, Big Macs and those never-decomposing French fries. That’s good news if you’re a Starbucks (NASDAQ: SBUX) shareholder.

Continue reading Is McDonald’s too smelly to compete with Starbucks?

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Filed under: China, Citigroup Inc. (C), Merrill Lynch (MER), BHP Billiton Ltd ADR (BHP), Rio Tinto plc ADS (RTP)

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Citigroup (NYSE: C) plans to sell a stake of around $2 billion to China Development Bank, in an effort to raise capital may be in jeopardy due to opposition from the Chinese government.
• Merrill Lynch (NYSE: MER), which is seeking close to $4 billion in capital, may receive an investment from the Kuwait Investment Authority, according to people familiar with the matter. A deal could be announced as soon as mid-week, according to the Financial Times (subscription required).

OTHER PAPERS:

• There is speculation that BHP Billiton (NYSE: BHP) may raise its offer for Rio Tinto (NYSE: RTP) to 3.6 shares for one from three for one and add a cash sweetener “sooner rather than later,” the Australian reported.
• According to CNBC, Citigroup could write down as much as $24 billion from subprime and credit-related losses and there could be twenty-thousand layoffs as part of a plan to cut costs and raise capital.

Permalink | Email this | Comments

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Filed under: Analyst reports, Deals, Industry, Consumer experience, Google (GOOG), Apple Inc (AAPL), AT and T (T)

Google (NASDAQ: GOOG) is getting a lot of traffic to its mobile search applications from the Apple (NASDAQ: AAPL)’s iPhone. That does not quite add up since the iPhone “accounts for just 2 percent of smartphones worldwide, according to IDC, a market research firm,” writes The New York Times.

The data would seem to show that iPhone users will access internet search features 10 to 20 times more than customers with other smartphones. Based on the industry’s perception of how good the handset’s interface is for going online, that is possible.

The news raises two important issues. The first is that the iPhone is only available on the AT&T (NYSE: T) 2.5G network now. Later this year, it is likely to work on the faster 3G network, which could increase access to online services even more.

Beyond that, fees from using an interent browser and downloading data can be fairly significant. In other words, Apple and AT&T could be bringing in more revenue than most analysts think.

Douglas A. McIntyre is an editor at 247wallst.com.

Read | Permalink | Email this | Comments

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Filed under: Products and services, Consumer experience, Competitive strategy, Starbucks (SBUX), McDonald’s (MCD)

“The place reeks of fries and beef.” That’s the charmingly candid assessment of McDonald’s (NYSE: MCD) from Chris Dannen at Fast Company’s blog. As you can probably guess, he’s none too impressed with Mickey D’s plan to open 14,000 new coffee bars in its U.S. stores.

For Dannen, it’s a pretty simple question. Will people buy more fancy coffee drinks in a fast food restaurant that smells of fry grease? He doesn’t think so. As a result, McDonald’s coffee bars — which the company hopes will bring in an extra $1 billion in revenue — will be defeated by the “sweet stink of the flagship fare,” namely, Big Macs and those never-decomposing French fries. That’s good news if you’re a Starbucks (NASDAQ: SBUX) shareholder.

Continue reading Is McDonald’s too smelly to compete with Starbucks?

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Filed under: International markets, Other issues, Federal Reserve

The dollar fell across-the-board Monday against the world’s other major currencies, including falling to a seven-week low against the euro, on talk the U.S. interest rates will continue to move lower due to monetary policy easing amid sluggish economic growth, Bloomberg News reported.

The euro rose about 1.2 cents against the dollar to $1.4892, the British pound gained 0.20 cents to $1.9576 and the yen improved 1.13 yen to 107.72 yen in Monday morning trading.

Bernanke’s speech

Andrew Resnick, independent currency trader, told BloggingStocks Monday U.S. Federal Reserve Chairman Ben Bernanke’s speech last week indicating that the Fed is ready to lower rates more to counteract economic headwinds has convinced many in the foreign exchange market that “at least two more rate cuts are ahead.”

Continue reading Dollar falls to seven-week low on likely lower interest rates from Fed

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