Is It News Or Not? In the world of investments and markets, it’s sometimes hard to tell at first glance.
At around 8 am, a single headline flashed: Motorola (MOT) says investor Carl Icahn has a 1.4 percent stake and will seek a board seat. (That’s when all the heads in the control room turn around and look at me. Terrifying!).
The question was not so much whether the item was of interest - when Carl Icahn is involved, stocks go up, managements get shuffled, and all hell generally breaks loose. This has been especially true in the past few years, unlike the days when Icahn was largely referred to as a “raider”. Now, he tends to amass stakes in companies and try to implement change that he feels will enhance shareholder value.
The question: was this new - or incremental? Sometimes these announcements merely represent a minor shift in a stock position. But I did not remember ever hearing before this that Icahn had a stake in Motorola, and certainly not that he’d be seeking a board seat.
With that in mind, we immediately put up a “deko” and within seconds, we saw that the “bid/ask” on the stock had risen significantly. That plus subsequent research (plus the fact that "Squawk Box" anchor Joe Kernen has an encyclopedic mind) rewarded our faith: this was, indeed, new and turned out to be a significant story through much of today.
Hit Or Miss? That’s always the question when corporate earnings come out, and sometimes it’s not so straightforward. Interpreting earnings is one of the more difficult skills to develop but do yourself a favor: the next time your son or daughter asks why they have to take math, THIS is why: for when they work for CNBC and have to translate earnings on the fly!
I’m not saying it’s always difficult - often a number is “clean”, meaning that there is only one number to consider, and no one time factors to add or subtract, as companies often do when they, for instance, have a gain on an asset sale, or a reorganization expense.
Then you have a case like we had this morning with Dow component 3M (MMM). 3M, which makes a gazillion products including Post It Notes and Scotch Tape, reported earnings of $1.57 a share. But, there was a 47 cent a share one-time gain, so we factored that out - then compared the resulting $1.10 a share to the First Call estimate of $1.14. A miss, right? Maybe. Maybe not. Seems there was a four cent a share expense for stock options, which may or may not have been included in the estimate. Argh!!!
In any event, we put the news on the air, and explained what information we were missing. Ultimately, we determined that 3M had indeed missed: As I write this, the Dow is up 25 points, but 3M is down about $3.50, shaving more than 28 points off the Industrial Average.