Stock Analysis

Microsoft Layoffs About Nokia and New CEO

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Microsoft recently announced a big round of layoffs. According to reports, this is Microsoft’s biggest round of layoffs ever, at nearly 18,000 employees, all within the next year. Often, layoffs are all about Wall Street, rather than the company itself. Cutting jobs shows you are serious about cutting costs, which investors seem to care about more than the admission that your company no longer produces the products or revenues to fully use your workforce. In this case, the motivation is different. New Microsoft CEO Stamps Microsoft has a new CEO after years under Bill Gates replacement Steve Ballmer. The company, which still generates plenty of revenue and profit, is frequently criticized for not growing more, for “losing” its dominant position, and for missing out on big technology shifts, primarily mobile technology. When Ballmer stepped down, nothing was more important than the next CEO making big, drastic moves to “right the ship.” New Microsoft CEO Satya Nadella is doing just that. First, there was a company-wide memo (gladly made public) about how Microsoft would make be making major shifts in its focus and in how it develops, markets, and sells products. Next up, Nadella is “proving” he is serious about changes by …

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Investing Scams Newsletters

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Scamming investors is a very old practice. Way before a centralized stock market institutionalized the dreams of investors looking to get rich, there were unsavory tricksters looking to pray on those dreams. Are Investing Newsletters Scams? Not all newsletters are scams. However, it is important to remember that even legitimate newsletters seldom have a solid, long-term, track record of beating the market. The statistics and returns are often carefully calculated in the just the right way as to show the newsletter in the best possible light. For example, a newsletter may only report it’s “best picks” returns. This allows a retroactive look at what the “best picks” were. For newsletters that are scams, there are some useful ways to spot them. Other FinanceGourmet articles on finance schemes: Credit Karma Is a Scam? Is Quizzle a Scam Is Credit Sesame Safe? FAFSA.com scam First, a legitimate newsletter won’t promise the sun and the moon, especially, after you have subscribed to it. Companies frequently boast a little big when they are advertising to new customers. However, once you buy that new car, the manufacturer doesn’t include a section in the owner’s manual about how to beat a fighter jet in a drag …

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Apple Earnings Dividends and Stock Split

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Apple is one of those companies that draws more than its fair share of attention. There are both the so-called fanboys, and plenty of haters out there to talk at high volume whenever the company does anything. However, the company is also a key component of the S&P 500 and most NASDAQ indexes. In other words, what Apple does as a publicly traded company matters to your personal finance. Apple 2014 Q2 Earnings You’ve probably seen the news by now. Apple had what many analysts are calling a blockbuster quarter. In particular, analysts were surprised by the increase in Apple’s revenue for the quarter. In a way, this is just further proof that analysts don’t really have any sort of crystal ball that regular investors don’t. Apple long ago stopped giving guidance to Wall Street. Without that guidance, Wall Street really doesn’t have a clue how things are going for Apple beyond what things like channel checks can tell them. If you want to read about Apple’s second quarter earnings, there are several reasources including Marketwatch, and Apple’s investor relations website. However, for long-term investors in Apple stock, the quarterly earnings are not the story. What is the story is …

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Goldman Sachs Report Card Accountability

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There is precious little accountability in the world of stock market analysis. I’ve written before about how Goldman Sachs’ chief market analyst (at the time) predicted an up year for stocks during every single year from before the internet bubble burst through to when she finally stopped making market predictions after again predicting  a higher stock market for 2008. If you’re recent market history is a bit fuzzy, 2008 was a disastrous year for stocks and the start of the so-called Great Recession. Even where there appears to be accountability, it is often easily gamed. Analysts get rankings from various financial groups, but those are often laughable. If an analyst has a “Buy” on a stock and that company reports after-hours that its main product slaughters babies by the thousands, when the analyst cuts his outlook before the market opens, he gets credit for shifting his prediction before the ensuing drop in the stock price. So, it was a little breath of fresh air, when MarketWatch decided to take a quick look at the report card for Goldman Sachs’ 2013 investment recommendations. Goldman Sachs 2013 Investment Calls Report Card Remember in elementary school when the teacher had you self-grade some papers. You …

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What Are Expected Earnings?

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It’s earnings season again, and interest in running high in many companies including technology giants like Amazon, Apple, Facebook, and so on. With each earnings report, there is typically commentary noting how the company’s actual reported earnings ended up comparing to the expected earnings. This phrasing comes up so often, that most investors are used to the terminology long before they actually make any investments, but it is useful to understand just what expected earnings are, and who it is that generates those estimates. How Companies Report Earnings Publicly traded companies are required to issue financial reports about their company on a regular basis. These earnings reports are generated and published each quarter. In addition, companies generate an annual financial report, which typically accompanies the fourth quarter earnings report. There are very specific rules that govern when and how a company can disclose “material information.” A company’s financial information is most definately material. The basic rule is that companies may not make any disclosure of material information without doing so publicly. Just what counts as public has evolved slowly over the last few years, but the basic point is that all investors must get the same information at the same …

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Is Microsoft a Good Investment Now?

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Like many others in both technology and finance, I haven’t really looked at Microsoft as more than a staid company in a long time. However, recent events have necessitated a re-examination of the company. Is Microsoft a Buy or Hold? In the fantasy world of investment recommendations and analysts, buy, hold and sell, don’t really mean anything. Wall Street firms are reluctant to rate a stock as a sell lest it hamper their chances of getting investment banking business or other lucrative fees from the covered companies. Thus, most investors know that a “hold” rating is pretty much a sell rating. That doesn’t leave much room, so analysts added ambiguous ratings like Market Perform, and Overweight, among others. Whether or not it’s smart to invest in Microsoft depends, as always on your goals and risk tolerance. That being said, certain recent moves have made Microsoft an attractive play for an investor looking for a technology sector investment. First off, Microsoft is a company in flux. Two seismic level events this summer make any investment in the corporation a bit of a leap of faith. The CEO, Steve Ballmer is retiring. Truthfully, there aren’t many who are losing any sleep over …

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What Is Going On with Apple Stock?

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There has been a lot of news about Apple stock lately. From the company’s swoon from an Apple stock price in the 700s down to the 400s in just months, to the company’s recent earnings report, to the new Apple plan to issue debt to pay shareholders dividends and buyback stocks. Is this good news for Apple? Is Apple stock a good investment now, or is this all a prelude to a big Apple stock price crash? What’s Wrong with Apple Stock? Years ago when I was a financial planner in Denver, I advised a lot of people who worked at Qwest. For those of you who don’t remember how the internet bubble worked, it went a little something like this. First, people decided that the internet was an amazing new technology. They weren’t wrong. Then, they decided that every company that had ANYTHING to do with the internet was therefore a great investment. This was very wrong. Qwest provided a certain kind of telecommunications link that was very important to the internet. It used its stock to buy a “real” company with real earnings, namely US West before the whole internet bubble blew up. During the good ride, it …

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Investing in GE Dead Money?

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The world of investing can seem black and white, even though nothing could be further from the truth. Particular investments made for one purpose by one investor are made for a completely different reason by another investor. Furthermore  what is a “good investment” for one investor is flat out dumb, for another. This is what makes the various Buy, Sell, Hold recommendations from stock analysts kind of difficult to take seriously. JP Morgan Cuts GE Rating The reality is that investors of all kinds who want to use investment analysis from financial firms need to carefully read the entire text, not the headlines that get carved out by various news organizations. The reasons for cutting or raising a rating on a stock may have nothing to do with your investment goals, making those one-word ratings meaningless to you. Today, Marketwatch, and others report that JP Morgan cut its rating on GE stock from overweight to neutral. Most intriguing is the line in which the company calls GE stock, “dead money.” Dead money, in case you are unfamiliar with the term, means that the money is not growing or earning anything, while it could be earning money elsewhere. In particular, dead money …

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Amazon Stock vs Apple Stock

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The stock market does not always make a lot of sense, especially over the short-term. Stock price changes occur for silly reasons a lot of times, whether a news event around the world, or the comments of a TV personality. I think perhaps the most instructive lesson comes from the fictional movie Wall Street where you can hear the financial news on a TV in the background explaining what happened with Blue Star Airlines stock, which, of course, is not at all what happened. However, over the long-term, the stock market tends to shake off the manufactured volatility from trading programs and over/under reaction to news and eventually move stocks in the general vicinity of where they should actually be priced. This can take a very long time; witness the completely irrational internet bubble of the late 90s, which lasted years. What makes trading stocks so tricky is that it doesn’t matter if you are right. All that matters is what everyone else thinks is right. Amazon vs Apple Earnings and Stock Prices One of the latest head scratchers that has everyone talking is what happened with Amazon’s stock price and Apple’s stock price following their earnings announcements and press …

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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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