The Good:
- Apple posted much better than expected earnings results on surging iphone sales. Fourth-quarter profit rose to $1.14 billion or $1.26 a share on $7.9 billion in revenues. Apple sold 6.9 million iphones in the quarter (up from 1.1 million a year ago) and shipped 2.6 million computers. The stock continues to trade higher in pre-market trading, but has given back some of its gains.
- In related news, AT&T posted $3.2 billion in profit for the third-quarter on $31.3 billion in revenue, meeting average analyst estimates. Wireless revenue surged 15% on strong iphone sales. While every other corner of the US economy suffers from sluggish demand, the iphone is behaving like a store of value, sort of like bars of gold.
- Yahoo announced disappointing earnings results and a sharp reduction in the company's work force. Yahoo's third-quarter profit plunged 64% to $54.3 million from $151.3 million in the same period last year. Revenue rose to $1.33 billion. The company plans to eliminate around 1,500 jobs. How's that $33 a share takeover bid from Microsoft looking now, Mr. Yang?
- Boeing's quarterly profit fell 37%, due to the machinists strike at its commercial aircraft facilities. Boeing posted a $695 million profit (down from $1.11 billion a year ago), on $15.29 billion in revenue. With the recent plunge in the price of oil, prospects for the airline industry are looking significantly better. Perhaps not all of the airlines will go out of business and someone might order a plane at some point in the future which should benefit Boeing.
- Merck said its third-quarter profit fell 28% and that it expects to cut 12% of its workforce on top of earlier job cuts. The drug company earned $1.09 billion down from $1.53 billion a year ago.
- Wachovia posted a $23.9 billion third-quarter loss on what I call "finally figuring out that your assets are virtually worthless." It's interesting that the bank had to be on the verge of seizure by the FDIC before noticing that its goodwill was overvalued by around $18.7 billion. My thoughts on Wachovia's toxic portfolio have been expressed for many months here, so I can finally stop warning investors about the risks. I wish Wells Fargo much luck with its acquisition and sincerely hope that a $72 billion write-down is enough to make it a worthwhile purchase.
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