Wednesday, 10/23, Market WrapUp (Big Blue May Be Singing The Pension Blues)

Financial Sense Online ^ | 10/23/2002 | James J. Puplava

[rohry]

"IBM reported that profits fell 18% in the third quarter. The company helped to ignite a rally in the stock market by beating estimates. However, buried in IBM’s footnotes was about 10% of its pretax profits came from investment income earned by its employee pension fund. IBM has been losing money in its employee pension fund even though it has been reporting profits from pensions in its operating income. IBM has been using 10% returns in its pension assumptions. That assumption will no longer fly, given the actual losses in the plan."

[rohry]

Market WrapUp is delivered...

[steveegg]

Sure looks like a ceiling to me.

[rohry]

"Ceiling" seems to be your word for the day...(inside joke, folks)...

[steveegg]

Everyone else is talking about a floor. There seems to be a point above which this market can't go (or at least stay), and we're past that point.

[STONEWALLS]

....I mentioned on another thread that I suspect that pension troubles have been brewing since the hostile take-over era of the 80s....Kohlberg, Kravis and Roberts looted my company's pension fund for $734 million...I also look for pension problems upcoming in the public sector....the huge expansion of government at all levels in the 70s means those folks are retiring now and their retirements are COLA indexed.....we'll all be paying more taxes to fund that tidal wave of retirees...

As always, thanks Rohry and good luck to everybody!!

Stonewalls

[Steven W.]

no - what's happened is extremely unhealthy for the market IMO. this rise has had no corrections along the way and is poised for a near exact repeat of the November crash which ended the bear market in 1974. basically what to watch for at this point is for the current cadre of anxious buyers who came in after the market hit new lows in October (DOW 7200), without waiting for the market to test those lows. once this period of buying has exhausted itself the market is now well prepared for a terrif big plunge through November before a final correction in December, near exactly the same setup as happened throughout the year in 1974.

[rohry]

This from The James Joyce Table (non-gold people can disregard this):

Mahathir steps up plan to use gold dinar to trade with Islamic countries

---

KUALA LUMPUR (AFX-ASIA) - Prime Minister Mahathir Mohamed is stepping up plans to use the gold dinar to trade with participating Islamic countries by proposing establishing a team to study the scheme.

Malaysia plans to use the gold dinar mechanism to facilitate financial settlements between participating Islamic nations in gold, while at the same time increasing trade among Islamic nations.

"I will propose to the Cabinet and if they agree, I will ask Bank Negara to establish a secretariat for the gold dinar (facility). Iran seems to be interested so we will contact them," Mahathir said at a press conference.

He added that Malaysia is still in the process of explaining the concept of using the gold dinar to other Islamic countries.

He said participating countries may have to revise their laws to comply with international financial regulations.

Mahathir said Malaysia is looking for Islamic countries with a strong financial and economic background as participants.

He added that the gold dinar will be valued according to the market price.

[steveegg]

Exactly what happens when something bounces off the ceiling. I have no idea where the floor is on this market, (I hope you're not too optimistic), but it's going to be a long while before we get above the 8500 range.

[EVO X]

"IBM reported that profits fell 18% in the third quarter. The company helped to ignite a rally in the stock market by beating estimates

I started off this morning reading good new about DaimlerChrysler, but my afternoon paper reported it as bad news. Until this crap stops, not a dime of money I control is going into stocks.

[rohry]

"what's happened is extremely unhealthy for the market IMO. this rise has had no corrections along the way and is poised for a near exact repeat of the November crash which ended the bear market in 1974."

Interesting, very interesting. I was not in the market then and don't remember exactly what happened, but I do know the market took a big hit...

[arete]

what's happened is extremely unhealthy for the market IMO.

Have read some other comments saying that this rally is a setup for a significant move down, if not a full blown bone jarring crash as in '87. Too much unfounded and baseless buying in the face of bad economic news. Doesn't smell right.

Richard W.

[rohry]

"I started off this morning reading good new about DaimlerChrysler, but my afternoon paper reported it as bad news."

Whoa, I read that this was bad news after it was analyzed. Is that what you meant?

[EVO X]

Whoa, I read that this was bad news after it was analyzed. Is that what you meant?

Yes

[rwfromkansas]

Considering the luck of the Republicans, the crash will occur.......and it will be HUGE......right before the election and the GOP will be voted out of the House and the Dems will gain wider advantages in teh Senate.

The luck of the GOP is truly horrible and we are setting up to have that bad luck happen yet again.

[rohry]

"Considering the luck of the Republicans, the crash will occur.......and it will be HUGE..."

The crash will not occur before the election...

But, it will occur...

[LS]

Course, Xerox posted nice gains today. Guess Pupulva missed that one. Also, a small, but important, ruling on internet music as I mentioned.

So, that makes what? Five out of seven days up? 1300 points?

[rohry]

"Course, Xerox posted nice gains today."

Do you even read these company reports?:

 

Financials - Xerox Corporation (NYSE:XRX)

As of 11-Oct-2002

Enter symbol: symbol lookup

More Info: Quote | Chart | News | Profile | Reports | Research | SEC | Msgs | Insider | Financials

Xerox Corporation Quarterly Balance Sheet	Display Annual Data
More filings for Xerox Corporation available from EDGAR Online.  Get a Free Trial to EDGAR Online Premium

Income Statement		Balance Sheet		Cash Flow Statement

Period Ending	Jun 30, 2002	Mar 31, 2002	Dec 31, 2001	Sep 30, 2001
Current Assets
Cash And Cash Equivalents	$1,891,000,000	$4,747,000,000	$3,990,000,000	$2,427,000,000
Short Term Investments	N/A	N/A	N/A	N/A
Net Receivables	$7,016,000,000	$7,047,000,000	$7,246,000,000	$6,822,000,000
Inventory	$1,245,000,000	$1,283,000,000	$1,364,000,000	$2,114,000,000
Other Current Assets	N/A	N/A	N/A	$1,409,000,000
Total Current Assets	$10,152,000,000	$13,077,000,000	$12,600,000,000	$12,772,000,000
Long Term Assets
Long Term Investments	$5,600,000,000	$6,177,000,000	$6,388,000,000	$7,157,000,000
Property Plant And Equipment	$2,503,000,000	$2,591,000,000	$2,803,000,000	$2,099,000,000
Goodwill	$1,559,000,000	$1,482,000,000	$1,445,000,000	$1,525,000,000
Intangible Assets	N/A	$4,428,000,000	$4,453,000,000	$3,478,000,000
Accumulated Amortization	N/A	N/A	N/A	N/A
Other Assets	$5,203,000,000	N/A	N/A	N/A
Deferred Long Term Asset Charges	N/A	N/A	N/A	N/A
Total Assets	$25,017,000,000	$27,755,000,000	$27,689,000,000	$27,031,000,000
Current Liabilities
Accounts Payable	N/A	$1,475,000,000	$1,428,000,000	$1,430,000,000
Short Term And Current Long Term Debt	$3,904,000,000	$6,704,000,000	$6,637,000,000	$2,696,000,000
Other Current Liabilities	$3,256,000,000	$1,630,000,000	$2,195,000,000	$2,251,000,000
Total Current Liabilities	$7,160,000,000	$9,809,000,000	$10,260,000,000	$6,377,000,000
Long Term Debt	$10,354,000,000	$10,712,000,000	$10,128,000,000	$13,380,000,000
Other Liabilities	$3,285,000,000	$1,243,000,000	$1,233,000,000	$1,224,000,000
Deferred Long Term Liability Charges	($135,000,000)	$1,919,000,000	$1,883,000,000	$1,601,000,000
Minority Interest	$78,000,000	$75,000,000	$73,000,000	$76,000,000
Negative Goodwill	N/A	N/A	N/A	N/A
Total Liabilities	$20,742,000,000	$23,758,000,000	$23,577,000,000	$22,658,000,000
Stock Holders Equity
Misc Stocks Options Warrants	N/A	N/A	N/A	N/A
Redeemable Preferred Stock	$1,694,000,000	$1,691,000,000	$1,687,000,000	$686,000,000
Preferred Stock	$573,000,000	$593,000,000	$605,000,000	$613,000,000
Common Stock	$729,000,000	$2,634,000,000	$2,622,000,000	$719,000,000
Retained Earnings	$1,078,000,000	$985,000,000	$1,031,000,000	$3,105,000,000
Treasury Stock	N/A	N/A	N/A	N/A
Capital Surplus	$1,930,000,000	N/A	N/A	$1,861,000,000
Other Stockholder Equity	($1,729,000,000)	($1,906,000,000)	($1,833,000,000)	($2,611,000,000)
Total Stockholder Equity	$2,581,000,000	$2,306,000,000	$2,425,000,000	$3,687,000,000
Net Tangible Assets	$1,022,000,000	$824,000,000	$980,000,000	$2,162,000,000

More filings for Xerox Corporation available from EDGAR Online.  Get a Free Trial to EDGAR Online Premium
EDGAR Online: Research People in this company | Full text Search

[arete]

Looks like they are going to keep raising cash to support the paper assets of the market by selling gold. Same thing happened during the July-August rally to nowhere.

Fairly steady selling since noon.

Richard W.

[rohry]

"Xerox skips past Q3 earns expectations (7:37 AM ET) Xerox's(XRX: news, chart, profile)third quarter earnings skipped past Wall Street expectations as margins increased and costs declined. Net income for the quarter ending September was $105 million, or a nickel a share, versus a loss of a nickel a share in the year-earlier a period. Excluding restructuring charges, earnings were 11 cents a share. Total revenue declined 6 percent to $3.79 billion. The results compare with the average analyst forecasts compiled by Thomson First Call of earnings of 2 cents a share and revenue of $3.82 billion. Looking ahead, the copier maker believes economic uncertainty to continue, but expects revenue to remain on a positive trend due to "significant" equipment sales improvement resulting from new product launches. The stock closed Tuesday down 28 cents at $6.70."

Yep, looks like a good investment to me (sarcasm off)...

Here's more (hope I'm not overloading your reading capability:

"The company's net earnings were $105 million, or 6 cents a share, reversing a net loss of $32 million, or 5 cents, in the year-ago quarter.

Revenue fell 6 percent, to $3.8 billion from the prior year's $4.05 billion, as Xerox targeted businesses likely to generate earnings, and de-emphasized those that showed little promise of profit.

The company took restructuring charges of $63 million on a pre-tax basis and 6 cents after taxes in the latest quarter.

Adjusted for one-time items in both reporting periods, Xerox's per-share earnings improved to 11 cents from 1 cent in the year-ago third quarter.

Analysts surveyed by Thomson Financial/First Call had been expecting the Stamford, Conn.-based company to earn 2 cents in the latest quarter.

Gross margin underscored Xerox's better quarterly performance, standing at 42 percent in the latest quarter compared with the prior year's 37.6 percent and 42.5 percent in this year's second quarter.

Mulcahy didn't hold much back on her hopes for the fourth quarter and for 2003.

She said management is comfortable with Wall Street's consensus forecast for the quarter -- analysts are looking for a profit of 9 cents, on average. She predicted that Xerox's revenue would "continue to trend positively," yielding "strong full-year profitability."

Mulcahy also said she sees Xerox "in a lot stronger position going into 2003" as contributions from new products kick in.