Oh no – ORCL missed revenuse by $40M out of $5,420M expected!
This is the same nonsense that has been driving the markets for two days. Q3 earnings are up 30% and in-line with estimates. Listening to the conference call, the company is expecting total revenue to be up about 16% for their Q4 (May) with $6.7Bn in revenues and they see new software revenues up 10-20% and CFO Catz said "there could be upside guidance but the company wants to be cautious in the current market environment." The guidance also does not included the acquisition of BEAS.
Catz said customers got more cautious in the third quarter. “Deals took longer than anticipated at the end of the quarter," she said. Catz said it “wasn’t just banks…not just financial services or any one industry. We saw a few things just get delayed a little bit…in some cases it did not make our cut-off.” People, people – this is NOT a reason to take a company down 10% after hours!
That’s pretty much how the day went, led by a fresh round of panic in the financial sector, an attack that is being led by Oppenheimer’s Meredith Whitney who has slashed her estimates on C, BAC, JPM and WB this morning and is now after MER and UBS as well. Whitney is another type of oracle, who forsees financial doom with write-downs of $13.2Bn at Citibank alone and $50Bn of write-downs for the sector. "Many expected the fourth quarter to be the ‘kitchen sink’ for the industry," Whitney wrote in her report (which is from last week but is being made into "news" today. "First-quarter results (will) be a rude awakening." Whitney is the same analyst who went after Citigroup in October and I agreed with her then as I had been calling the financials a house of cards since August but now she has gone too far.
First of all $50Bn in writedowns is NOTHING in the grand scheme of things. We already knew there was more to come as we are nowhere near my mid-range prediction of $400Bn in total write-downs and if it’s $50Bn in Q1 and $35Bn in Q2 and $20Bn in Q3 and $10Bn in Q4 then we are right on the button and well on our way to recovery. Really folks, how does Ms. Whitney think we get to $400Bn in write-downs? SOMEBODY has to write SOMETHING down at some point don’t they?
Google is also being taken down on the same ComScore story that took them down last month. We’ll see how low they can go this time as they quickly dropped $20 after hours. Paid clicks are, in fact UP 3% over last February (but there was an extra day this February) and hyenas are screaming about clicks being down 3% from January which, last I heard, has 31 days. Clicks are not widgets, Google is not shipping them out the factory doors, clicks are a function of how many times people view web pages and act on an ad so with steady daily viewership, the number of days in a month becomes a pretty big factor.
You can make numbers prove anything you want them to, there’s a great Penn and Teller show on numbers that I can’t find a full video for but I highly recommend if you can find it. UBS analyst Ben Schachter has this spin on Google: "Feb paid clicks data doesn’t suggest a deterioration since Jan, but tepid 3% y/y growth is unlikely to improve sentiment, queries were also disappointing, up 30% y/y, down from 39% in Jan and flat QTD sequentially.” Up 30% is disappointing for a company that already has a better than 50% market share? Well there is simply no pleasing some people…
Here’s another great example of how you are manipulated by "experts" – here’s Republican pollster Frank Lutz and Fox news caught faking results and then here’s Frank Lutz on Penn and Teller proudly showing you how he can manipulate polls to say whatever he wants.
I still think the market is being manipulated but as long as we keep letting ourselves get herded in and out of our positions like sheep, we should not be surprised when we get slaughtered like them. Bill Cara wrote an article complaining the MSM wasn’t bearish enough for his taste but it was his quote by Walter Cronkite that summed it up for me:
"I’m afraid there is [a ruling class in America]. I don’t think it serves democracy well… The ruling class is the rich who really command our industry, our commerce, our finance. And those people are able to so manipulate our democracy that they really control our democracy, I feel."
