After Hours Action: Netflix, Qulacomm, Motorola Mobility
AFTER HOURS ACTION: NETFLIX
After gains of more than 260% last year, if you thought this latest earnings report would drag down Netflix - you thought wrong.
The high flying stock flew even higher in extended trade; shares climbed about 7% after the company reported a quarterly profit that blew past expectations and gave a positive forecast for the current quarter.
The company's subscriber rolls surpassed the 20 million mark in the most recent period, rising to 20.01 million. It expects to have from 21.9 million to 22.8 million subscribers at the end of the first quarter.
What’s the trade?
The short interest in this stock is something like 25%, says Karen Finerman. I think we're looking at a classic short squeeze. If you’re not in this name, I wouldn’t touch it.
For me, $209.24 is the bogie, says Guy Adami. If it can break above that level then I’d go long.
I have a sell rating on the stock, says Michael Pachter of Wedbush Securities. I don't see evidence that their earnings are going to grow fast enough or dramatically enough to justify a $200 share price.
AFTER HOURS ACTION: QUALCOMM
Shares of Qualcomm spiked in extended trade, after the company raised its forecast for 2011 revenue and predicted robust second-quarter revenue as sales of its wireless device chips accelerated.
By the numbers Qualcomm said revenue rose to $3.35 billion in the December quarter, up 25 percent from the year-ago quarter. That was a bit above analysts' average estimate of $3.2 billion, according to Thomson Reuters.
The company said current-quarter revenue would climb to between $3.45 billion and $3.75 billion. Analysts on average had expected $3.1 billion.
Qualcomm estimated fiscal 2011 revenue between $13.6 billion and $14.2 billion. Analysts had expected $12.8 billion.
What’s the trade?
I think the stock is heading to $56.50, says Guy Adami. At 17 times forward earnings other may say it’s rich but for their product cycle I think the valuation is reasonable.
I think these results could juice chip stocks broadly on Thursday, speculates Pete Najarian. In the space it looks like things are clicking.
AFTER HOURS: MOTOROLA MOBILITY
Shares of Motorola Mobility slipped in extended trade; after the company released earnings that disappointed the Street.
Although the company posted a profit, it warned it would revert to a loss again in the current quarter, as it faces new competition from the Apple iPhone.
In its first quarterly report as a separate company, Motorola said on Wednesday it had a profit of $80 million, or 27 cents per share compared with a loss of $204 million, or 69 cents per share in the year-ago quarter before it became a stand-alone company.
Revenue rose to $3.4 billion from $2.8 billion in the year ago quarter.
Motorola said it shipped 11.3 million phones in the quarter, including 4.9 million smartphones. The average estimate was for sales of 5.2 million smartphones and total shipments of 10.7 million, according to six analysts contacted by Reuters.
Its shares fell to $33.50 in late trade after closing at $34.83.
TOPPING THE TAPE: STEEL
Steel stocks topped the tape on Wednesday with both AK Steel and US Steel trading higher following their quarterly reports. Meanwhile JPMorgan issued a strong outlook for the sector on further price increases.
What’s the trade?
Everything America seemed to work in this space on Wednesday, says Guy Adami, especially after the State of the Union. In this space, I’ve got Walter Industries on the radar, he says. If it doesn’t break above it’s all time highs I think he stock has topped out.
I'm seeing big buyers of the March 35 calls in the XLI , says Pete Najarian. With great earnigns coming out of United Technologies, GE and others I'd keep an eye on the whole space.
In this space I'm watching Titanium Metals, says Brian Kelly.
ALL ABOUT INVENTORY
Trader Brian Kelly has been watching inventory numbers this earnings season, which he says is the real 'market tell.'
I'm looking at stocks with increasing inventories that also have high margins, he says. Those include MEMC, GreenMountain, Microsoft , Timberland and Macy's .
I'm especially cautious of GreenMountain and MEMC, he says. These stocks have a high P/E; the market is rewarding them for a high profit margin but will it continue? If inventories continue to grow, I'm not sure the margins are sustainable.
I think inventory gains are a sign that CEOs feel more optimistic about the future, counters Karen Finerman. So they're willing to bulk up a little more.
STREET FIGHT: DOES OBAMA REALLY MEAN BUSINESS?
Investors were glued to the TV last night hanging on every word during President Obama’s State Of The Union address.
Among the most promising comments for investors was his pledge to cut the corporate tax rate while at the same lower the country's deficit. But is that even possible?
Hear from CNBC contributor Andy Busch of BMO Capital.
Watch the video now!
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Trader disclosure: On Jan. 26, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Guy Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE) and (BTU). Karen Finerman owns (AAPL), (BAC), (BP), (C), (GLW), (GOOG), (HPQ) and (MSFT). Karen Finerman owns (BAC) leaps. Karen Finerman owns (JPM) and (JPM) leaps. Pete Najarian owns (BAC) call spreads. Pete Najarian owns (C). Pete Najarian owns (F) calls and bonds. Pete Najarian owns (GE). Pete Najarian owns (JPM) call spreads. Pete Najarian owns (MS). Pete Najarian owns (TCK). Pete Najarian owns (YHOO) and (YHOO) calls. Josh Brown owns (BAC), (GE), (JPM), (QCOM), (NVDA) and (GLD).
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