Thursday, April 1, 2010

4/1/10 Midafternoon Report: A disappointing RIMM job

Before we get to the markets, Money McBags found a picture of the hottest female in the history of history and wanted to share it with his readers as a sign of his gratitude.  This is the hottest female ever*, so you're welcome.  Anyway, stocks are up today as macro data was more encouraging than a Stephen Hawking pinky raise or Anne Sullivan Macy.  The ISM reported that manufacturing expanded at its fastest pace in 5 years to a whopping 59.6 (and if it had been 59.9 the market may have shot more loads than a Japanese bukakke film).  Prices paid (cough, inflation, cough) drove the index higher while the unemployment gauge slipped once again.  More importantly, first time jobless claims fell to 439k, while even more importantly, Audrina Patridge is hot.  The Street is hoping that the 6k drop in first time unemployment claims will bode well for the Labor Department's unemployment report to be released tommorow on paper made from the tears of the homeless.  However, providing the proverbial turd in the punchbowl, or the penis in the MFF scene, was a report released today by some firm called Challenger, Gray, and Christmas who bah humbugged on the labor market by reporting that job cuts accelerated in March.  The outplacment firm announced that the pace of job cuts had increased 61% sequentially from February but optimists will point out that the job cuts were down 55% from March of last year.  So hoo-fucking-ray.  The economy is either better or worse depending on your comparison.  It's like the old saying, in the land of the blind, the one-eyed man is king (though in the land of the blind, the one-eyed man better not develop macular degeneration because there sure as fuck won't be any ophthalmologists).

International markets are all a buzz today as Asia and Europe saw strong manufacturing reports which signal the recovery is coming.  China's manufacturing expanded for a 13th consecutive month, Europe's manufacturing industry expanded at its fastest pace in three years, and somethng in Japan called the Tankan index of sentiment jumped from minus 25 to minus 14.  April fucking fools!!!!!!!  Oh wait, that data is actually real.  Wow.  The international markets may have found their Viagra or Peter Gowland's private photo collection.

In stock news, RIMM missed their earnings estimates by $.01 eps and their revenue estimates by 6%.  So despite earning $1.27, showing better margins, and growing 18%, the stock is down 5%+.  Money McBags is actually surprised it isn't down more because when a growth stock in a competitive market needs to make their numbers and whiffs, nothing good can happen.  Goldman Sachs cut their rating on RIMM to sell and basically called them a has been in the handset market.  Their products are less differentiated than a Dahm triplet and a whole lot less delicious.  Money McBags puked out his RIMM shares because fool me once, shame on me, fool me twice and you can go fuck yourself.

In small cap news everything is up except for Chinese power generation company APWR who handed out fortune cookies with their earnings release yesterday that all read "suckers."  Their guidance was 30% below analyst guesses who apparently were just chasing windmills when covering the stock (and that is funny because APWR produces windmills, but you all knew that anyway, right?).  Also, there was a comment in yesterday's blog comment section asking about MLNK and Money McBags will address it here.  The reader wanted to know what was going on with MLNK and if it is still a hold.  Money McBags broke down their fuck awful quarter a few weeks ago and nothing has changed since then of which he is aware.  They earned $13MM of EBITDA and said this upcoming Q was going to be worse while they would see some sequential improvement after that.  Of course they also said that last quarter would be flat and it was down worse than a than a clinically depressed person who just lost their dog and had a virus wipe out their computer's porn collection, so who the fuck knows if management can be trusted.  Their excuse for missing the quarter is still a little squirrely as they blamed their clients for delaying decision making but Money McBags doesn't quite get that.  HP's revenues were up ~10% and HP is like 25% of MLNK's business, so why the fuck didn't that help drive revenues more?  And if MLNK is earlier in the cycle, why did they not see revenues jump by more in the previous Qs or why is their revenue being impacted by clients delaying their decision making now (since decisions should have already been made for this upcoming cycle).  The simple fact is the company is underperforming, but even so, they still earned $13MM of EBITDA in the Q.  They have a $163MM in cash and a $375MM market cap so an enterprise value of $210MM.  If you think their business bounces back after likely sucking this Q coming up (Money Mcbags' words, their guidance), then a $52MM EBITDA run rate is possible and thus they are trading at 4x that.  The stock is cheap on that basis, but on an EPS basis, they'll probably be lucky to earn $.45 this year so are trading at almost 20x that for no growth.  The EV/EBITDA and cash give us some downside protection so Money McBags sees no reason to sell, but he also thinks this is dead fucking money for a while.  Their business should ramp with electronics sales (though it didn't despite HP being up 10% as Money McBags said earlier, so if someone can explain that, Money McBags is all ears), so if the economy can really come back, they should be able to grow the business.  Look, it ain't fucking AAPL, but it is sort of cheap with a cash cushion that has some nice operating leverage.  So in short, the downside seems a bit limited but the upside may be further away than Paris Hilton's Academy Award (One Night in Paris excluded).

*April fucking fools'.

1 comment:

Anonymous said...

Sexy Girl Seducing...SGS. UMM, it is doing what MLNK isn't.

Stream Global Services...Yeah,,,its one of the best stocks nobody has ever heard of...if the hurd hears about it, its gonna be a cattle call kinda stampede.

They also work with HPQ, Dell, and T. Worldwide prescence,ramping up and r2r (ready2roll)