Top Stories of the Week
Did ANYONE Make Any Money Last Quarter?!
You may have noticed in the table to the right that it was a pretty rough week for stocks. Actually, odds are good you noticed that during the week, as you stared at your computer screen, weeping and gnashing your teeth. As Q2 earnings rolled in, one blue chip after another disappointed Wall Street expectations, contributing to a pretty rough week for major indices.
First it was IBM ($IBM), a company that seems really intent on becoming the first really bad call Warren Buffett ever made, reporting a 13.5% decline in revenue. That marks lucky 13 for consecutive quarters of declining revenues. IBM’s whiff, along with the news that United Technology was cutting its outlook and saw sales take a 5% hit, made up the majority of the 180+ point decline for the Dow on Tuesday.
Of course, after the bell, the news got worse when Apple ($AAPL) announced that it had, once again, made an ungodly sum of money in the previous three months. However, with a valuation north of $700 billion, the company’s playing by different rules these days, so that ungodly sum of money still wasn’t enough, prompting a hit to the stock that carved some $50 billion or so out of its valuation. This would be the point where I’m obligated to mention that the Equities.com research team pretty much nailed it when they made the case for Apple being overvalued in the report they issued earlier this month.
McDonalds ($MCD) joined the parade with another report featuring declining sales due to, well, the really awful food they serve. The whole week was rough right up until Amazon ($AMZN), of all companies, showed a surprise profit after the bell on Thursday. It wasn’t enough, though, as markets finished down on Friday as well.
That’s right, folks: Amazon is profitable and IBM is looking like a weak stock. Cue frogs raining from the sky and the earth opening up to consume the New York Stock Exchange.
Just One, Big, Happy, Health Insurance Company
So, maybe President Obama ultimately get the single-payer system he always wanted. In the end, though, it will be through every different portion of the healthcare industry merging together, piece by piece, into one massive Health Corp. (LIVE).
The nation’s second-largest health insurance company, Anthem ($ANTM), decided to purchase the nation’s fourth-largest health insurance company, Cigna ($CI), for a whopping $48.4 billion. The deal appears to continue the ongoing trend in most of the healthcare sector towards consolidation. It’s of particular importance for insurers, who now have strict limitations on the amount of profit they can take. The deal here should involve reducing costs through synergies, but the bigger advantage appears to be in getting more leverage in negotiations with providers.
While the two companies have struck a deal, we have yet to see whether federal authorities nix the deal or not. However, the early analysis is that it has a pretty solid shot of getting approval, despite reducing total competition. One argument in favor is actually that the combined might of these companies could allow the new Anthem to enter into markets that are currently dominated by a single player, thus improving competition in many parts of the country.
What Do You Mean My Television Program Has Been “Dropped?”
In the event that you’re trying to keep a comprehensive and ever-growing list of “people who just don’t like Comcast ($CMCSA) and Time Warner ($TWC),” add the FCC to all of their customers.
And speaking of big mergers, the FCC officially okayed the acquisition of satellite TV provider DIRECTV ($DTV). This isn’t exactly news, the deal’s been on everyone’s radar for months, but FCC approving the deal means it’s not going the way of the merger. However, it’s hard not to view this as at least a little bit of a rebuke if you’re Comcast. Seeing as the FCC, fresh off shooting down your plan to take over Time Warner, has opted to approve a deal that has created your, now, largest competitor, I’m guessing it’s going to be really awkward if they run into each other in the elevator.
Comcast is, in fact, a related name today, as the potential hiccup involved concern about the competitiveness involving pay television subscriptions and broadband Internet, areas where AT&T, Inc. (T$) will now be in very direct competition with Comcast for. In fact, the FCC revealed that part of its approval of this deal could be connected to AT&T’s promise to improve high-speed internet access to rural communities.
With the purchase of DIRECTV, AT&T will now represent 26 million subscribers, making it the largest pay TV company in the United States.
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