Day Trading Thoughts For Thurs. Feb. 12

Discussion in 'Trading' started by erikrkolodny, Feb 12, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    A few weeks ago, I wrote a piece noting that Research In Motion (RIMM) put out a press release at 10:30PM in which they warned on their future earnings. Well, yesterday, they gave me fodder for another blog entry. This is the text of the RIMM release via PR Newswire:

    "WATERLOO, ONTARIO -- (MARKET WIRE) -- 02/11/09 -- Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX: RIM) today provided an update on forecasted net subscriber account additions for the fiscal fourth quarter ending February 28, 2009.

    RIM now expects net subscriber account additions for Q4 to be over 20% higher than the 2.9 million net subscriber account additions forecasted by RIM on December 18, 2008. RIM had record levels of net subscriber account additions throughout the month of December and continued to see strong levels following the holiday buying season. The new BlackBerry® products that were launched in the fiscal third quarter continue to be well received in the market and post-holiday subscriber performance in both North America and international markets has exceeded RIM's earlier expectations. RIM expects net subscriber account additions in Q1 to reflect a more normalized average weekly run-rate as the first quarter will not include the type of holiday surge experienced in Q4.


    "RIM achieved a very strong start to the holiday buying season and the momentum carried on stronger than expected during the past seven weeks despite a seasonally slower timeframe and the challenging economic environment," said Jim Balsillie, Co-CEO at
    RIM. "We are pleased with our leadership and momentum in the market after shipping our 50 millionth BlackBerry smartphone in January and introducing a range of new products that are achieving exceptional early results and helping attract record levels of new customers to the BlackBerry platform." In addition, RIM is reaffirming its financial guidance for the fourth quarter and expects revenue for the quarter to be at or near the mid-point of the previously guided range. Gross margin and earnings per share for the quarter are expected to be at the low end of the previously guided ranges. A variety of factors, including product mix, lowered channel inventory levels and an increased ratio of new subscriber sales to upgrade and replacement sales, are contributing to the degree of outperformance in subscriber growth relative to revenue and earnings performance within the quarter.



    RIM expects to report actual Q4 net subscriber account additions and actual Q4 financial results, as well as provide guidance for the first quarter of fiscal 2010, on April 2, 2009.
    The number of net subscriber account additions is a non-financial metric and is intended to highlight the change in RIM's subscriber base. The number of net subscriber account additions should not be relied upon as an indicator of RIM's financial performance. The number of net subscriber account additions does not have any standardized meaning prescribed by U.S. GAAP and may not be comparable to similar metrics presented by other companies."

    The headline here notes the additional subscriber growth. In the 2nd paragraph, there as a good quote from the CEO and the concept of added momentum was duly noted. Then there were these two sentences in the 3rd paragraph: “Gross margin and earnings per share for the quarter are expected to be at the low end of the previously guided ranges. A variety of factors, including product mix, lowered channel inventory levels and an increased ratio of new subscriber sales to upgrade and replacement sales, are contributing to the degree of outperformance in subscriber growth relative to revenue and earnings performance within the quarter.” After all of the optimism was a very subtle but notable warning that earnings were going to come in lower than expected…followed by a note about subscriber growth outpacing earnings! Amazing. Now, I could easily turn this into a schpiel as to why RIMM’s PR entity makes them seem very squishy. However, I have but one point for day traders: whenever any company puts out a press release discussing parameters of growth or shrinkage of any kind (in this subscriber growth), read through the whole thing. Companies want to focus upon the positive obvious, but one must be diligent about reading the entire text of press releases that companies put out to get the whole (e.g. true) story.


    Markets slumped throughout the world overnight. Tokyo finished down 3% with Hong Kong and Taiwan down 2% or so. European bourses have followed suit with the indeces down 1% to 2% following reports in various major newspapers there that the banking crisis there is deeper than initially thought. State-side, futures are down as well. Look for a day similar to yesterday- rumor and politically driven…and very choppy at that. The bias off-hand seems to be to the downside, but as has been so often the case recently, watch the major banks and you’ll have an idea of the direction of the broader market.





    Reiterating-
    Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
    If the whole story is not there -
    If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


    Good- The following stocks have good news and/or a strong technical pattern

    XL- closed near a high after posting great earnings Tuesday afternoon

    DVA- closed near a high

    NFP- closed near a high

    CMG- solid earnings

    BWLD- handily thrashed earnings estimates

    AIPC- another restaurant company with good earnings

    WINN- beat earnings

    WFC, PNC- among bank stocks closing near their highs

    AU, NEM, AEM gold stocks notably strong yesterday; all of these closed near their highs

    SIGA- closed near a high

    MJN, FCX, STJ, VFC- all on “Mad Money” last night

    ALXN- good earnings

    KO- good earnings

    Bad-The following stocks have bad news and/or a weak technical pattern

    FBP- closed near a low

    ID- closed near a low; a break of Wed 6.06 low could be a notable short

    NTAP- poor earnings

    MAS- bad earnings and restructuring

    STR- terrible earnings

    ATVI- warned on next quarter

    LVS- poor earnings

    SQNM- missed earnings estimates

    GIL- suspending earnings guidance due to uncertainty about its business

    JASO- warned again

    TEX- terrible earnings

    LYV, TKTM- both closed near their lows as concerns over their planned merger grow

    HIG- president of company resigned; may be viewed as positive as rumors may circulate that the company becomes a takeover target now

    MAR- warned on outlook

    EDU- poor earnings

    LJPC- halting its phase III trial of its lead drug






    Earnings:

    THURS FEB 12 BEFORE

    AET ALXN BWA

    CLI ECL FCL

    IRC JAH KO

    LH LIFE LUFK

    MAR MFC MLM

    NRG NXY PCH

    PDS PGN PTEN

    RTP SCG TDC

    VIA/B VTR WMI

    THURS FEB 12 AFTER

    CAKE CEPH COG

    DCT ECA ENH

    EQ GDI MFE

    PNRA SHO THRX

    VCLK VR






    Good luck today.

    Erik R. Kolodny