What’s the trade?
With Oracle trading at $32 I think the stock remains cheap relative to its software peers, says Joe Terranova.
The thing with Oracle that always worries me is that they grow through acquisition and they’re one bad acquisition away from a problem, says Tim Seymour. I’m cautious.
I’d let the stock gap up and if Oracle holds that level, I’d buy into the strength, says Brian Kelly.
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For additional information on Oracle’s earnings click here
AFTER HOURS ACTION: RIM
Shares of RIM waffled in the aftermarket Thursday in the wake of earnings and revenue that beat Wall Street estimates.
"The only blemish in the current quarter was really the subscriber adds were a little light, but in terms of the outlook, revenue and EPS guidance are both ahead so this is a better report than most thought," says Matthew Thornton, senior analyst at Avian Securities.
By the numbers, the Blackberry maker reported fiscal third-quarter earnings of $1.74 a share. RIM earned $1.10 a share during the same period last year.
Sales for the most recent quarter rose to $5.49 billion, up from $3.92 billion last year.
The company was seen earning $1.65 a share on revenue of $5.41 billion, according to a consensus estimate from Thomson Reuters.
In addition, RIM boosted revenue guidance for the current quarter to between $5.5 billion and $5.7 billion. Earlier consensus was $5.46 billion.
RIM also said it expects to generate a profit of between $1.74 and $1.80 a share in its current quarter, above the $1.61 a share that 50 analysts who follow the company had expected.
The gross margin, or percentage of sales left after costs, widened to 43.6 percent last quarter, compared with an average analyst estimate of 42 percent. RIM said its margin should be similar this quarter.
What’s the trade?
For a trade I can see going into RIM short-term as a bet it takes out $65 but I wouldn’t buy RIM as a long term investor, says Joe Terranova. I’m concerned about margin erosion as they attempt to gain position in the emerging world.
I agree that margins may be compressed going forward, says Brian Kelly, but we haven’t seen it yet.
RIM isn't about this quarter for me, says Karen Finerman, it’s about what happens to their business in 2011. And I’m afraid of erosion. (According to a Bloomberg report, RIM’s share of the global smartphone market slid to 15 percent in the third quarter from 20 percent a year earlier, according to researcher IDC. Apple’s was unchanged at 17 percent while Samsung Electronics Co., which uses Android, jumped to 8.9 percent from 3 percent. )
> For additional information on RIM earnings click here ---------
VISA MASTERCARD SELLING OFF
Investors slammed shares of Visa and Mastercard Thursday in the wake of a Federal Reserve proposal to force banks and card networks to slash the fees they charge retailers.
The Fed proposal would generally limit so-called debit "interchange" fees at 12 cents per transaction. The average interchange fee for all debit transactions was 44 cents per transaction in 2009, the banking regulator said.
What’s the trade?
No question there’s still a lot of uncertainty about how these developments will play out, says Tim Seymour. But considering the sharp sell-off, I can’t help but wonder how much is now priced in.
If you’re not holding Visa and Mastercard, now’s not the time to establish a position; I’d avoid both of these names, counters Joe Terranova. And if you are long I hope you’re holding puts.
If you’re holding Visa and Mastercard I’d get out now, adds Brian Kelly. There are much better places to put money to work.