Archive for the ‘technical analysis’ Category
GM Should Shine Next Year
By Mitchell Clark, B.Comm. for Profit Confidential
The other evening on “60 Minutes,” Steve Croft hosted a fascinating report on General Motors, highlighting the company’s current struggles and its task ahead to return to greatness.
There’s been a lot of bad news about GM so far this year and it finally occurred to me that what GM is doing is purposefully making 2006 its official transition year. Put all the bad stuff into one fiscal year, then even a modest improvement in fiscal 2007 will look like a real accomplishment.
So far in 2006, GM has announced a number of plant closings, layoffs of both workers and management, and the majority sale of its highly profitable finance arm along with other non-core operations. The company is ending its corporate alliances with other automobile manufacturers and is going back to the drawing board to create new automobile designs.
In the “60 Minutes” story, Bob Lutz himself (GM’s Vice- Chairman) said that automobile companies usually design their best products when they are in crisis. I hope GM comes out with some great new vehicles and I hope they do it fast. Even if you don’t like the Chrysler 300 or Dodge Magnum, you have to give Chrysler credit for producing bold designs.
That’s it! Bold design. GM needs it so it can generate some excitement in its vehicles again.
My mechanic (at a private garage) doesn’t recommend any American cars to his customers because he says they just aren’t screwed together as well as foreign manufacturers. He used to like German cars, but now puts them down because of their poor reliability over the last few years, particularly … Read More
Warning For Slower Growth Ahead
By Mitchell Clark, B.Comm. for Profit Confidential
Where’s the beef? You might remember that great advertising slogan for Wendy’s. The same question can be applied to the stock market today. Just where is the leadership in this market?
The broad market indices are up around 5-year highs, but I’m worried about a few benchmark stocks. Don’t get me wrong, I still think the overall trend for stocks is positive, but I’m not super bullish because some great companies aren’t participating in this market.
General Electric; otherwise known as one of the economy’s benchmark companies isn’t doing great on the stock market. The Dow Jones Industrial Average is going up, but it is doing so without GE’s help. The stock hasn’t done anything for the last two years and has been trending lower since June of 2005.
IBM also isn’t participating in the renewed enthusiasm for technology stocks. Big blue’s been trending lower since early 2004 and the company continues to layoff staff.
Even good old Johnson & Johnson, the benchmark pharmaceutical, healthcare, consumer products company is having a tough time in this market. The stock has been going down significantly since May of 2005.
It isn’t a big deal, but the performance of these stocks bothers me because they are benchmark companies. Fortunately, the Dow Jones index hasn’t required their help.
I think the stock market performance of these three companies raises a red flag for stock market speculators. There are lots of good opportunities in the stock market right now, but I think a little caution is appropriate. Perhaps these well managed large-cap companies are telling us something that the market doesn’t want to hear. … Read More
US Auto Sector In A Shift
By George Leong, B.Comm. for Profit Confidential
The news is out on the U.S. auto industry and there should be no surprise, especially if you have followed my columns. In March, it was reported that the two top U.S. automakers, General Motors Corp. (NYSE/GM) and Ford Motor Co. (NYSE/F) both saw its monthly sales fall.
GM saw its March sales plummet 14.6% year-over-year, its largest decline since October 2005. Ford reported a 4.5% year-over-year decline, which was disappointing given that Ford offered the most consumer rebates in March according to Edmunds.com, an industry tracking firm. The lone bright U.S. automaker was DaimlerChrysler AG (NYSE/DCX), which reported a 2% year- over-year increase in March sales.
As has been the case in the recent months, U.S. automakers are losing sales to Japanese automakers. Toyota Motor Corp. reported a monthly record for U.S. sales, seeing a 7% year-over-year jump in March sales.
The reality is the U.S. auto sector is in a shift. Domestic automakers must correct this or the negative trend will continue going forward and could further devastate the U.S. automakers.
As far as market share, GM is still holding to the top spot, but saw its U.S. market share decline to 22.8% from 26.9% a year ago. Likewise, Ford saw its share fall to 18.4% from 19.4%. Concurrently, Toyota held on to the third spot at 13.8%, just ahead of the 13.7% belonging to Chrysler.
The use of incentive programs by U.S. automakers, while it helps, does not really address the root of the problem. Once incentive programs are finished, consumers may go back to buying foreign autos. The reality is incentive programs make the consumer wait … Read More
Transmeta Not Gaining Wide Market Acceptance
By George Leong, B.Comm. for Profit Confidential
Computer-chip maker Transmeta Corp. (NASDAQ/TMTA) is a stock that I have been following for some time. I remember all the hype back in November, 2000 when Transmeta launched its highly anticipated Initial Public Offering. At that time, there was a trend developing towards smaller computers, laptops, and PDAs. While the main computer-chip makers, Intel Corp. (NASDA/INTC) and Advanced Micro Devices, Inc. (NYSE/AMD), focused on the desktop PC segment, Transmeta was gaining some followers by focusing on developing chips that used lower energy consumption–ideal for the smaller computer market.
Some market watchers even went as far as saying Transmeta would be a force to be reckoned with in their niche. But, since trading at $45 in November, 2000, the stock has steadily seen its value erode in the market to the tune of 96.86%. From a market cap of $8.24 billion, Transmeta is currently trading at a market cap of $270 million.
Here is the problem. Transmeta was correct in predicting the trend for portable devices and laptops would rise, but the problem was Intel and AMD also figured this out. Once this happened, there was very little hope that Transmeta could fend off the industry giants. The only hope was a takeover of Transmeta, but it failed to materialize as the major computer-chip makers with their huge resources and technology expertise developed competing low power chips with more features.
Now Transmeta is struggling to stay afloat. Its chips, while used in some laptops, have yet to gain wide market acceptance. And, in business, this could be a killer.
On the operational front, there has been some encouraging news. … Read More
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