This Week's 5 Smartest Stock Moves
If you're feeling good about the market, you're not alone. Take my hand as we go over some of this week's more uplifting headlines.
1. Sony learns to play the game
Sony (NYS: SNE) doesn't often make it to the "smartest stock moves" side of things these days, but it seems to be doing something right this time.
The Wall Street Journal is reporting that the Japanese consumer electronics giant will retain the optical disk drive in its next gaming console.
We don't know a lot about the successor to the PS3. It probably won't be out until next year. However, whispers earlier this year indicated that some platform-killing moves including a lack of backward compatibility and a lack of a Blu-ray drive were being considered.
Launching without a drive would've been the end for the PlayStation. Relying entirely on downloads and Sony's routinely hacked cloud would've turned off gamers who are used to trading away games after they're done or revisiting earlier titles.
Sony's chances of catching up in an industry that's been in decline for three years aren't very good, but at least it still has a shot now.
2. Blizzard of loss
Activision Blizzard (NAS: ATVI) hasn't been doing well lately. The stock's been stuck in the pre-teens for a long time. The Error 37 and Error 73 roadblocks in its two-week-old Diablo III game -- preventing gamers from going online to play -- reared their ugly heads again this week.
However, Activision Blizzard did announce last night that it has reached a settlement with Call of Duty: Modern Warfare 2 developer Infinity Ward.
It's always good to clear any cloud of uncertainty, but here's the language in the press release that's truly encouraging: "The company does not believe that the incremental one-time charges related to the settlement will result in a material impact on its GAAP or non-GAAP earnings per share outlook for the current quarter or the calendar year, due to stronger-than-expected operating performance in the current quarter."
You got that? The amount that it's going to shell out is immaterial because it will be offset by better-than-expected bottom-line performance this quarter.
Finally! Good news for Activision Blizzard.
The high-end grocery store chain saw its revenue climb 23% to $324.8 million in its fiscal first quarter, powered by the addition of new stores and a juicy 8.2% spike in same-store sales. Adjusted earnings climbed 32% to $0.40 a share, as The Fresh Market scored net profit margins of 5.9% during the period.
That's not the kind of margin performance that may impress you, but it's far greater than the industry average, where high turnover on meager mark-ups is in the norm.
Either way, analysts only figured that The Fresh Market would earn $0.36 a share on $310.9 million in revenue. The upscale grocer's guidance for the entire fiscal year is also comfortably ahead of where the pros were perched.
4. Not-so-burnt Ciena
Ciena (NAS: CIEN) is bucking the trend.
The optical networking equipment maker came through with a better-than-expected quarterly report yesterday. Revenue climbed 14% to $477.6 million, well ahead of the $447 million that analysts were projecting. However, the meatier surprise was waiting on the bottom line. Wall Street was braced for a small loss, but Ciena came through with an adjusted profit of $0.04 a share.
This is a pretty sweet report, especially given ho-hum reports by larger networking and fiber-optics specialists earlier this earnings season.
5. Mobile chips in
Spreadtrum Communications (NAS: SPRD) got a well-needed boost after JPMorgan upgraded the mobile chip maker.
The firm's new price target of $22 is backed by recent smartphone design wins for the company in China and other turnaround catalysts. JPMorgan sees monthly smartphone chip shipments exceeding a million units in Spreadtrum's fiscal third quarter.
Even the $22 target may be too conservative, representing an earnings multiple in the single digits -- just below 10 -- based on next year's bottom-line target.
At the time this article was published The Fool owns sharesof JPMorgan Chase and Activision Blizzard,and has written calls on Activision Blizzard.Motley Fool newsletter serviceshave recommended buying shares of Activision Blizzard and The Fresh Market.Motley Fool newsletter serviceshave also recommended creating a synthetic long position in Activision Blizzard. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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