The market is down again today thanks to Qualcomm giving a subdued forecast and something again about people not having jobs. Luckily, according to the Fed, the recession may be over which has left many of the 10% of unemployed people loudly cheering from their urine stained cardboard boxes. The Fed upgraded its economic outlook, reaffirmed it will end liquidity backstops and a $1.25T program to buy mortgage-backed securities, and then shook their magic wand over the grave of Benjamin Strong while singing an incantantion from the Atharva Veda. While they pledged to keep the benchmark rate low for an "extended period" (and remember by low they mean zero, and by zero they mean free money for banks), they did question how long inflation will remain "subdued" citing the fact that they just printed enough money to deplete the rain forest or for PacMan Jones to make it rain for six consecutive hours at his local Rick's cabaret.
Despite the Fed's modestly upbeat statement, weekly claims for unemployment came out today and while they were slightly better than last week (in the same way that Paris Hilton is only slightly dumber than a centipede), they were still worse than expectations as there were 470k new filers and expectations were for 450k. Additionally, durable goods orders were well below expectations growing .3% in December vs. expectations of 1.7% growth. This was driven by a 38% decline in orders for civilian aircraft, a 5% decline in orders for computers, and a 10% decline in things that "cost money." However, if transportation is excluded, durable goods orders grew .9% which was above the .5% median estimate. So as always, you show me some data and I'll make it look good or bad, depending on what you want to hear (she was fat, she had a good personality. Potato, puhtaato). Those analysts who have used Excel have a word for it, it's called "solver."
In international news, George Soros is now looking for a seat on the "China is a bubble" bandwagon joining Jim Chanos and everyone else looking at the market on a daily basis. I'm not saying China is moving too fast, but it shunned foreplay and offers of lube and then demanded to receive immediate insertion in to it's Shanghai. Also Greece continues to worry economists but at least they are being honest about their problems as their finance minister, George Papanotgonnaworkhereanymore, has denied reaching out to other governments for help. Despite needing to raise an estimated 54B in euros, the finance minister said they can solve their budget crisis themselves and currently "have no plan B," which puts him with Joseph Hazelwood, Tischman Speyer Properties, and John McCain.
As for earnings today, Ford posted a $2.7B profit for 2009 which was their first profit since 2005 and they now expect to also be profitable in 2010. When asked how he did it, Ford CEO Alan Mulally said "two words: vibrating seats." NetFlix also put up a huge quarter earning $.59 per share vs. analyst estimates of $.49 per share. The company citied that 48% of users had watched streaming videos up from 41% in Q3 and 28% in Q4 2008 which should help deflate some business model concerns that people will stop using DVDs and shift to the on demand delivery model because NetFlix is showing it can also sucessfully provide movies on demand (unless you demand adult movies because NetFlix is prude).
In small cap news today CRUS is trading down heavily after they had their quarterly release which was exactly inline with their pre-announcement and included guidance above the street. Guidance was for next Q to have $55MM-$59MM in revenue, 54% to 56% gross margins, and $24MM-$26MM in operating costs with $1.5MM being non-gaap. Remember, this company is barely paying taxes right now so you can get to about $.11 of non-gaap earnings for next Q which is above the $.09 of the street. Now the stock could be trading down with AAPL being down since they provide an IC for audio in the iPhone and there could be concerns that the iPad will cannibalize iPhone sales and thus hurt CRUS's revenue, but I have no idea if they are providing any ICs for the iPad so that is just conjecture for why they may be down today. Money McBags laid out his case for CRUS after their pre-announcement on 1/12/10 and said this: "Money McBags would hold off on buying today, but there is still probably $2-$4 of upside (15x FY 2011 $.60 estimates + $2ish in cash per share) and that is if the energy market does not have a big comeback. It is worth tuning into their 1/28/10 call to see what they have to say, so put this on your watch list and be ready to buy the dip." So he is now going to listen to their call and may buy this dip (though he hasn't yet so as always, do your own research).
In other small cap news, EBIX pre-annonuced that they had $10.3MM cash from operations in the Q, $19.3MM cash on the balance sheet, will be resuming buybacks, and are in fact a real business. The CEO, Robin Raina, also gave this statement: “In recent times, I have been asked about the decline in stock price and the rather high shorting numbers on our stock. As the CEO of Ebix and one of the largest stakeholders, I continue to believe in Ebix and the opportunity to make Ebix the largest insurance player globally. The Company continues to do well on all fronts and we expect Q4 results to be in line with our expectations. We have always believed in letting our numbers speak for themselves and towards that extent we will continue our efforts to create new benchmarks in terms of revenues, cash growth, earnings, and net margins for Ebix.” Money McBags has mentioned it here before, EBIX has a ridiculously good business from a numbers perspective, but there are concerns as to how real those numbers are given their predilection for firing auditors, complexity of business model and tax domiciles, and a CEO who thinks he is god's greatest gift to the planet (when we all know that Hanna Hilton is god's greatest gift, with duck confit and spankwire.com being a close second and third). The point is, this is either a ridiculously great buying opportunity for EBIX or you are just going to be giving your money away. As Money McBags can't say which with any certainty, he is happy to sit on the sidelines as a spectator, though he'd be happier to be sitting on the sidelines as a spectator for the upcoming Brooklyn Decker photo shoot or the live reunion of the cast from the Facts of Life.