On Tuesday, CheckFree Holdings (CKFR - 63-3/8) reported a second-quarter loss of eight cents per share, topping Street expectations of an 11-cents-per-share loss. This figure, though, does not compare favorably to net income of 22 cents per share in the year-ago quarter. In response to this news, the electronic-commerce services company gapped 5-7/8 points lower at today's opening bell. The stock is currently in the red by more than 20 percent in a move that has taken the shares to their lowest intraday level since November 23. Since hitting an all-time intraday high on December 30, the equity has lost 41 percent of its value. CKFR is poised to close this week below its 20-week moving average for the first time since early September. Despite this technical weakness, the latest information from Bloomberg shows that CKFR remains overloved on Wall Street. Out of 15 analysts covering the stock, 13 rate it as a "buy" or better.<
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In a Market Observation that appeared this morning, we mentioned that Ford Motor (F - 48-1/2) announced fourth-quarter profits of $1.47 per share, which narrowly edged out the Street consensus of $1.45 per share. Although the earnings beat the Street, the shares are moving substantially lower in response. At noon, the shares were trading at down over three percent. Currently, the stock is threatening to break below that level that was a source of support last September and December.<
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More bad news for tobacco and food stalwart Philip Morris (MO - 21-1/4). This morning, the company reported operating income of 77 cents per share for the fourth quarter. This came in a penny per share shy of the Street consensus estimate. The shares are trading fractionally lower in response. MO shares have been bedraggled for quite some time, losing 57 percent in 1999; however, the option activity remains pretty mixed. With the shares trading at 21-1/4, the similar distance out-of-the-money February 22-1/2 call and February 20 put had a total of 6,134 contracts and 2,863 contracts of open interest, respectively, at the close of yesterday's trading. It should be noted, though, that the February 22-1/2 put is itself the site of over 6,800 contracts of open interest. Nevertheless, until the speculative sentiment as a whole becomes more pessimistic on MO, the likelihood for a sustained rally is small.
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This morning, pharmaceutical giant Merck (MRK - 72) reported fourth-quarter earnings of 66 cents per share. The results met the Street expectation. MRK shares are up over a dollar in today's trading. This post-earnings reaction is in contrast to the negative reaction other drug names have received after reporting recently. The price action in MRK will be important to watch in the near-term as a barometer for the health of the drug sector.
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As we noted last night, Qualcomm (QCOM - 125) reported earnings after yesterday’s close that beat estimates, but the company cautioned of slowing growth in the next quarter due to seasonal factors. As we noted, this may not be embraced by the Street, which has now come to fruition. The stock is lower by 16 percent, or about 23-1/2 points, in early trading.<
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