Earnings Chutes and Ladders

 | Apr 23, 2014 | 8:07 PM EDT  | Comments
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Stock quotes in this article:

aapl

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FB

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qcom

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ge

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ibm

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lmt

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goog

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gild

Chutes and ladders all over the place. I don't know how else to describe the activity. We expect a shrug-the-shoulders Apple (AAPL) chute and we get a welcoming seven-for-one better-than-expected iPhone-sales ladder with a dividend and buyback boost to extend the climb. But we get a chute from Qualcomm (QCOM), which has a history of laying down one of these profit projection horror shows when you least expect it.

But then we get a gigantic ladder from Facebook (FB), which, unlike so many other Internet wunderkinds, is an actual earnings-per-share story. And we discover that it is just plain old cheap, although we wish it didn't toss its gold around on acquisitions and we certainly didn't want the CFO to leave and be replaced by the former CFO of Zynga (ZNGA). Zynga?

Then we land on what could be a chute -- an acquisition by General Electric (GE) of a French company, a developed country that is perhaps the least friendly toward business on Earth. But it will make the company look even more industrial, so maybe it is a small chute.

We have chutes turning into ladders, like the excellent interview by Becky Quick with Warren Buffett, where he said that he expected IBM's (IBM) weaker quarter. Or the defense companies like Lockheed Martin (LMT), which sold off hard on lower revenues and then rallied even harder on better earnings and orders.

And we have ladders turning into chutes, like the amazing about-face in Yum! Brands (YUM), where we finally got good Chinese numbers sending the stock to $80 after hours last night only to see it plunge to $75 today off of commodity costs and, get this, Taco Bell weakness. I don't even know if we would have even cared about Taco Bell if it weren't for those outrageous ads!

Now inconsistency within a backdrop of low interest rates works, provided that there are just enough big ones, like Apple and Facebook, to offset Google (GOOG) and IBM. As long as we have the Boeings we can tolerate the Johnson Controls' –excuse me but these are front and center actionalertsplus.com names.

This earnings season, like all of them, is filled with volatility but, I have to admit, it's been pleasant enough, even as it seems brutal on a day-to-day flood of information perspective. We are still getting way too many snap judgments going on -- witness Facebook's horrendous decline on the initial report and Gilead's (GILD) outrageous ramp on the headlines.

But maybe that's par for the course. Nonetheless, the ladders are far outweighing the chutes -- at least for now.

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