Rob Black's "Winners & Losers" May 22 Home Sales Up, Best Buy Struggles & Facebook 800lb Gorilla

By: Rob Black - Tue, 22 May 2012 17:05:07 -0800

Loser: Stocks Reverse Gain in Last Hour

U.S. stocks erased earlier gains as concern that Greece would exit the euro and a tumble in Facebook. shares overshadowed economic optimism.

Former Greek Prime Minister Lucas Papademos said the nation is considering preparations to leave the shared currency. European Union leaders are planning to gather in Brussels tomorrow to discuss how to revive growth.

Commodity and technology shares in the Standard & Poor’s 500 Index fell, while financial companies gained.

Facebook slumped 8.9 percent, dropping 19 percent in two days.

 Dell tumbled 11 percent after forecasting revenue that missed analysts’ projections.

“Stocks did a 180.  On a relative basis, the U.S. is still the cleanest dirty shirt. Yet Europe is still a dominant story for the market.”  Walter “Bucky” Hellwig, BB&T Wealth Management

Winner:  Sales of Existing Homes Rise

Sales of existing U.S. homes rose in April, driven by broad-based gains in demand that signal the market is stabilizing.

Purchases, tabulated when a contract closes, increased 3.4 percent to a 4.62 million annual rate. This was the 2nd highest month in two years.

Demand peaked at 7.1 million in 2005 during the housing boom.

In 2008, sales totaled 4.11 million, the least since 1995.

At the current sales pace, it would take 6.6 months to sell those houses compared with 6.2 months in March.

The median price of an existing home climbed 10 percent to $177,400 from $161,100 in April 2011.

Employment gains, depressed prices and record-low mortgage rates may bring more dwellings within reach of Americans, eliminating a source of weakness for the world’s largest economy.

We are making incremental progress. People are becoming more confident about job prospects and about taking on mortgages. This is all positive for the economy.

Loser: Best Buy Profit Drops

Turn aroudns seldom turn.  Best Buy  said profit dropped 26 percent on restructuring charges as the struggling electronics retailer began implementing a turnaround plan.

Its adjusted earnings and revenue both topped Wall Street's expectations.

That's sorely needed good news as they are trying to change their  outmoded "big-box" store model.
At the same time, the company is seeking a new CEO after the former top executive left amid scandal.

Best Buy said U.S. sales growth in tablets, mobile phones, e-readers and appliances helped offset declines notebooks, gaming, digital imaging and TVs during the quarter.

 But revenue in stores open at least 14 months  fell 5.3 percent during the quarter.

Best Buy has been shrinking store size and focusing on its more-profitable products such as mobile phones. It's also trying to combat the so-called "showrooming" of its stores — when people browse at Best Buy but purchase electronics goods elsewhere.

Interim CEO Mike Mikan said, "Today's marketplace is different.  From my perspective it is a marketplace we weren't prepared for. Best Buy's customer experience is no longer unique as it once was.  We know we have to better adapt to the new realities of the marketplace, and we are creating a long-term plan designed to make Best Buy more relevant with customers, and position the company for sustained, profitable returns in the years ahead.

Loser:  Facebook Pulls Down All Web 2.0 Stocks

Facebook is a bellweather stock similar to what Intel or Microsoft used to be. 
Kings of the ecology or 800 lb gorilla.

In the past as Intel or Windows would do  all the tech companies that sold into that ecology would follow.

Story FB represents greatness to  all web 2.0 companies

Pre IPO that helped all the companies. 

Now you have to pick the winners  as there is a lack of enthusiasm right now for facebook. 

Social Networking: LinkedIn (LNKD), RenRen (RENN), Sina (SINA), Quepasa (QPSA).

Online Reviews & Local Deals: Groupon (GRPN), Yelp (YELP), Angie's List (ANGI).

Online Gaming/Music: Zynga (ZNGA), Netease (NTES), Pandora (P).

Internet Search: Google (GOOG), Youku (YOKU), AOL (AOL), Yandex (YNDX).

I like Linked In and Google off of this list.


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