Apple Earnings Miss Panic?

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Apple (AAPL) reported its third quarter earnings on Tuesday and was promptly hammered with downgrades and negative financial news articles. This morning, the stock is down nearly five percent. Is it time to sell Apple stock? See here for the Finance Gourmet’s analysis of Microsoft’s first quarterly loss. Apple’s Earnings Facts It seems that Apple has maybe gotten too good at living up to people’s expectations. Last year’s iPhone release of a modestly upgraded iPhone 4S, which basically was a small upgrade that added the voice assistant Siri. That, plus Apple’s track record of releasing a new iPhone roughly once per year, has left many iPhone buyers waiting for the still unannounced iPhone 5. All of those customers not buying iPhones this quarter dented Apple’s earnings. Concerned about whether Credit Karma is a scam? Here is where things get a little weird. Everyone already knew that the demand for iPhone 4 was lessening in the face of increasing belief that the next iPhone was just a few months away. Couple that with the 2-year contracts that the carriers slap on every new iPhone purchase and you get people who don’t want to get “stuck” with the “old” iPhone when the …

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Microsoft’s First Quarterly Loss Facts

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A lot of media have been leading with the headline that Microsoft reported its first ever quarterly loss. This is completely true, and yet, Microsoft didn’t actually lose any money during the quarter. So, what really happened. If the world of accounting had been better known to Mark Twain, he might have altered his famous quote to suggest that there are, “Lies, damn lies, and accounting.” Accounting is one of those things that seems like it should be straightforward enough. The popular notion is that companies and their lawyers and accountants deliberately obfuscate the truth about their company’s finances. That isn’t entirely untrue, but it is also true that accounting for a large corporation is not simple. Writing Down Goodwill One of the most subjective, and yet, completely legit, parts of corporate accounting is something known as goodwill. Essentially, the idea is that when you purchase a company, you are buying not just the tangible assets and liabilities of the company, but also the “good will” that exists toward that company. The acquiring company gets to count this so-called goodwill as an asset on its balance sheet. Although goodwill is a completely recognized, after all, a company is worth more …

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What Is Wrong With Greece Debt?

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There has been a lot of news over the last year about the situation in Greece and how Greece’s economy could possibly take down the Euro. The ripples from such an event could set off a global slow down. But, what is the problem with Greece’s economy, and why has this never been an issue before? Greece and the Euro To understand what is going on with the Euro and Greece, it is helpful to understand just where things stand today, and where they stood a couple of decades ago. Before the implementation of the Euro as a single currency for countries across Europe, each country had its own money. Greece had its own currency called the drachma, and other countries had their own currency such as the German mark, the French frank, and so on. Each country gave up its own currency to make one currency to be used through out Western Europe, with the notable exception of England, which refused to give up the English pound. Greek Deficits and Inflation Typically, when a country takes on too much debt there are various market forces that “fix” the problem. For one, the bond markets begin to demand a higher …

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2012 Economic Recovery?

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It’s July 1st, and that means that the second quarter just ended. Recent economic data suggest that the housing market might finally be improving a little bit. Recent jobs data suggests that the labor market is at least holding its own, even though it isn’t strong enough to be lowering unemployment yet. How companies report their second quarter earnings will go a long way toward showing whether or not the economy will finally move forward faster than a snail in 2012. Economy Improving? Here is what to look for. Companies should report earnings that are pretty much in line with how well they did in the first quarter since there were no real up or down catalysts in the second quarter. However, what you really want to be looking for is the guidance that companies are giving for the next quarter and the rest of the year. If companies feel good about the rest of the year, that means that they are more likely to spend, or at least not cut. That additional economic activity is what this economy really needs to kick it over this hump because consumers are tapped out. A solid third quarter with rising expectations heading …

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Economy Slowing? Banks Downgraded

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The Dow Jones Industrial Average fell over 250 points today, while the S&P 500 dropped over 30 points. That is the second worst day of the year for the stock market. So, what happened, lots of stuff… or nothing, depending on how you look at things. Weak Economic Data The U.S. economy has been growing very slowly for a while now. However, the markets seem to keep getting ahead of themselves and forgetting the “very slowly” part. Every time new economic data comes out that shows the economy is indeed only growing at a snail’s pace, the markets get hammered. First up, the Federal Reserve announced it was cutting its growth and inflation forecasts for the rest of the year. Part of this is bad news. After all, the Fed’s growth projections weren’t exactly rosy in the first place. The second part, however, is good news. It means that all of that stimulus out there in the form of low interest rates and bond market maneuvers by the Fed are not causing inflation. Banks and insurance companies are big losers are the news of a worse economy. People cancel insurance when they cut back on spending. In addition, a significant …

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Stock Market Greece Recovery

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The stock market is attempting to stage a recovery now that worries about Greece defaulting and abandoning the Euro have taken a back seat. Recent elections gave the political parties that favor adhering to the conditions of Greece’s bailout the majority of seats and a solid chance at putting together a coalition government. However, Greece isn’t the only issue out there. Recent employment numbers have not been stellar and few companies are issuing what would be called “enthusiastic” guidance for the coming year. The result is an odd stutter-step market that today (June 18) gave us a mixed day with the Dow slightly down and the S&P 500 slightly up. In the long run, the last few months of market action have been good. Runs in the straight up direction seldom end well. This period of consolidation even had some new outlets using the term correction, which is enough to scare off the faintest of heart investors that are often the cause of so much volatility. For long-term investors the fundamentals today are no different than they were a few months ago. The economy is growing, but slowly. Europe is being held together, but barely.

Quarterly Estimated Tax Payments Due Soon

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Estimated tax payments are due to the IRS on June 15 for the second quarter. (If you use a fiscal year calendar, then your second quarter payments are due by the 15th day of the 6th month of your fiscal tax year.) Use the 2012 tax tables to estimate your income and determine an approximate payment. Small business owners are required to make estimated tax payments because U.S. income tax is a “pay as you go” system. You can’t just wait until next April and pay everything at once. Remember there is a sort of tax withholding safe harbor that states that if, over the course of the tax year, you pay 100 percent of the amount of taxes you owed the previous year, you will not be liable for an under-withholding penalty. However, you will still have to pay any amount you owe come April of next year.

Facebook IPO Securities Fraud?

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We talked recently about the Facebook IPO flop. Now, things are starting to maybe look a little bit worse. According to several news websites, including the Wall Street Journal, there may have been some forbidden communications between Facebook, its major bankers, and subsequently, between those banks and their clients. It seems that during the Facebook IPO roadshow, Facebook disclosed, in more detail than in their amended S-1 filed with the SEC, that their earnings were rapidly declining due to the fact that a large part of their user base was shifting to accessing the Facebook service via mobile devices instead of online. The difficulty is that there is no room on most smartphones to put up the ads that populate the right side of the screen on a full desktop computer or laptop computer. As such, Facebook generates almost no revenue from mobile users. If more users access Facebook without generating revenue that is a double whammy. More users equals more expense, but not more revenue. None of this necessarily adds up to trouble for Facebook, other than those disclosures made in private. All material information must be disclosed publicly both about a publicly traded stocks and those about to …

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Facebook Flop or Not?

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Facebook went public on Friday. After months of build up, there were some issues with trading, and finally, no big pop in stock price. This has led some media pundits to conclude that Facebook’s IPO was a flop. But was it really? Facebook IPO Trading Facebook’s IPO was not necessarily typical. However, there was little typical about it before it even began. There was the sheer size of the offering, making the Facebook IPO one of the largest of all time. Then, there was the intense media interest, which, believe it or not, is not typical of initial public offerings. The idea that Facebook’s IPO was a flop revolves around the concept that its stock price did not rise on its first day of trading. Indeed, there was ample evidence that Facebook’s underwriters were forced to step in and prop up the share price to keep it above the $38 offering price. Whether this is a flop or not depends on whose shoes you are in, and how much you care about what normally happens. Facebook IPO Pricing In the days leading up to the IPO, there was some concern that the price for Facebook stock was too high. After …

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Bank Mortgage Scams Continue

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Think that after a multimillion dollar lawsuit and settlement that the big banks would start playing by the rules and treating their customers right? If so, the bridge salesman convention would LOVE to have you drop by. Get ready for the next mortgage scam by the banks. Single Point of Contact Scam One of the things that the big mortgage banks were supposed to do to help their customers and stop mortgage foreclosure fraud was provide a single point of contact for borrowers to deal with on issues like mortgage modification, refinance or foreclosure avoidance. Before, borrowers were forced to call some 1-800 number where a faceless phone drone would do the standard dance. The borrower provided all of his or her information, and then the person on the phone would tell them what they needed to do. Unfortunately, customers found that they had to start over every time they called. One mortgage modification specialist would say that they needed certain documents, then another one would say that they needed additional, or different documents, until finally, one day, a foreclosure notice showed up in the mail because the borrower had “failed” to comply with the necessary procedures. By having a …

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