For the week ending February 8 2013, Jim Cramer covered more companies with a bearish tone. Of the 39 calls made, Cramer was bearish on nearly one-quarter, or 25%. This is a slight increase from the previous week, in which 20% of the companies mentioned were negative. The Nasdaq Index (QQQ) rose around 0.49% for the week, while the S&P 500 (SPX) continued its ascent, up 0.37%.
The continued rise in markets attracted investors, despite risk rising that stocks will correct to the downside. Any drop in stocks will likely be driven by company-specific bad news. For example, voice and language solutions maker Nuance (NUAN) plunged after reporting weak sales for its health care segment. Akamai (AKAM) dropped after giving light Q1 guidance.
A few notable calls made by Cramer last week are:
Analysis and Discussion
1. Akamai Technologies, Inc. (AKAM, Earnings, Analysts, Financials): Buy. Akamai could be facing heavy competition, which will hurt profits. Akamai, over the last few quarters, focused on higher-margin cloud apps, security, and e-commerce to differentiate itself from rivals. The dual focus on low-margin and high margin segments was discussed at the conference call. This did little to stop the company from recovering from the 15% drop for the week.
2. Facebook, Inc. (FB, Earnings, Analysts, Financials): Buy. Facebook shares failed to rise last week, despite quarterly results from Zynga (ZNGA) and LinkedIn (LNKD). Zynga reported a decline in R&D and operational costs, but still relies on Facebook as a source of revenue. LinkedIn reported strong sales growth in all segments of its business. Talent Solutions rose 90% year over year, while ad sales increased 68%. Users are slowing down in their use for Facebook. In a Pew survey, 61% said that they took a break of several weeks or more at least once. 28% said the site is less important to them compared to a year ago.
3. Google Inc. (GOOG, Earnings, Analysts, Financials): Buy. Google shares are at a 52-week high, closing recently at $785.37. Chairman Eric Schmidt made the headlines, as it was disclosed that he will sell 42% of his stake in the company. Despite his 1% ownership (and 3.2% voting power), this could limit further upside for Google. When Microsoft (MSFT) executives sold shares regularly in the past, upside in Microsoft shares was limited for several years.
Google shares were downgraded by two analysts. During the week, the company announced a display ad-deal with Yahoo (YHOO).
4. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Buy. Shares are close to a 52-week high, closing recently at around $181. Rival Coinstar (CSTR) is vying to compete more effectively against Netflix. Coinstar’s voice streaming service is still in beta. Netflix emailed former subscribers a 1-month free offer. This trial may be canceled anytime. Users who stay onboard may get Netflix service for $7.99 a month.
5. Skyworks Solutions Inc. (SWKS, Earnings, Analysts, Financials): Sell. Skyworks reported earnings on January 30, which beat estimates. Revenue grew, while earnings improved by 16% compared to the previous year. Strong demand for wireless-chips is expected to continue. Skyworks anticipates earnings $0.47 per share next quarter. Skyworks trades in the middle of its range, up 24.6% from a 52-week low and 23.9% below its 52-week high. Skyworks has a forward P/E of 9.6
(List compiled by CHRIS LAU)
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Akamai Technologies, Inc. (AKAM, Chart, Download SEC Filings)
- Facebook, Inc. (FB, Chart, Download SEC Filings)
- Google Inc. (GOOG, Chart, Download SEC Filings)
- Netflix, Inc. (NFLX, Chart, Download SEC Filings)
- Skyworks Solutions Inc. (SWKS, Chart, Download SEC Filings)
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