9:00am (EST)
We knew going into yesterday’s open the market was going to have a rough session after the bulls after some disappointing economic news. The market started off in the red but the losses were contained as the bulls came in and started buying at the lows shortly after the bell. The rest of the day was a struggle and the bears eventually won out with the market finishing near the bottom end of Wednesday’s range.
The Dow dropped 50 points, or 0.5%, and settled at 10,856. The index managed a quick trip into positive territory at one point and touched a high of 10,907 after dropping to 10,832 shortly after the open.
The S&P 500 slipped 4 points, or 0.3%, to settle at 1,169 after touching a low of 1,165. As long as the index holds 1,150, that’s how long we stay bullish. Meanwhile, the Nasdaq gave up a 12-pack, or 0.5%, and closed just below our 2,400 level at 2,397.
Yesterday was the end of the quarter and we will go over the March and quarterly gains in the Weekly Wrap. We will also give you a scorecard on how well we did as we will be updating the portfolio to reflect our recently closed trades.
The big news after the bell last night was Research In Motion’s (RIMM, $73.97, down $0.95) quarterly report. On Monday, we thought there was a chance the company might wow Wall Street but as the week wore on, and with the Apple (AAPL, $235.00, down $0.85) news yesterday, we kind of felt RIMM was a sitting duck.
RIMM missed estimates and in after-hours last night shares quickly fell to $68 but later recovered to close above $70. The company earned $710 million, or $1.27 a share versus a profit of $518 million, or $0.90 a share, in the year ago period. Wall Street was expecting $1.28.
Revenue came in at $4.08 billion, but fell short of the company’s forecast of $4.2-$4.4 billion and Wall Street’s forecast of $4.3 billion in revenue.
The 5% drop in after-hours has carried over into this morning as shares are trading at $70.25 in early action.
RIMM still grew its subscriber base by 4.9 million, better than the company’s forecast of between 4.4 million and 4.7 million, but we feel they could lose a lot of customers once Apple launches a CDMA phone. Analysts will argue RIMM is still growing globally but even if it is Apple will be too.
RIMM has an overall subscriber base of nearly 41 million users but a recent survey points towards many of them might jumping ship once Apple does come out with a new iPhone. Perhaps the best way for RIMM to attack this problem would be to scoop up Palm (PALM, $3.76, flat) on the cheap.
Palm has a nice operating system and some slick features but even a move like this might not improve RIMM’s chances of holding off Apple. In fact, Palm would likely want a higher price than $7-$8 which would represent a 100% premium and maybe fair value but they would want more considering shares were recently in the teens before the plunge.
This smartphone wars are only beginning and now, with prices coming down, it will only intensify.
Despite RIMM’s miss, futures are pointing towards a strong open for Tech as the Nasdaq 100 futures are higher by 10 points this morning. Dow futures are up 70 while the S&P 500 futures are higher by 7.
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