Filed under: Housing, Recession

AP reports that home sales dropped to levels not seen since the George H. W. Bush housing recession in 1991. And home prices are plummeting faster than they have since 1970.

Here are the details: new homes dropped by 8.5% in March to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991. And the median price of a home sold in March dropped by 13.3% compared to March 2007, the biggest annual price decline since a 14.6% plunge in July 1970.

What the current Bush housing collapse and the earlier one share is the after math of too much capital flowing in to the housing market. Under Bush the elder, the capital flowed in due to the deregulation of the Savings & Loan industry — resulting in a $250 billion bailout. Under Bush II, the problem was the $1.3 trillion subprime mortgage market which made capital available to people who couldn’t afford to pay the mortgage — after all, 47% of those loans required no documentation of borrower’s income.

The cost of Bush II’s housing plunge has yet to be tallied but it looks like he’ll beat his father.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

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Filed under: Launches, Consumer experience, Wal-Mart (WMT), Housing, Recession

It is old news, very old, that the last time Wal-Mart (NYSE: WMT) tried to sell brand-name clothes, things did not go well. But if at first you don’t succeed try, try again.

The largest retailer has good reason to want to be in the fashion clothes business. According to The Wall Street Journal “Higher fashion apparel and bedding have higher profit margins than other merchandise — about 31%, a full 10 percentage points higher than almost each other category the discounter sells.” The company intends to sell brands that are not terribly costly from designers including Norma Kamali and Mark Eisen.

The Wal-Mart move is a bad one for two reasons. It has yet to prove that people who want discount merchandise like food and blue jeans want to come to Wal-Mart for nice clothing. These shoppers can go to clothing stores and get good deals and probably a larger selection.

Another, perhaps more important consideration, is that the country is in a recession. A typical Wal-Mart shopper is probably struggling to make mortgage payments, purchase gas, groceries and new shoes. That does not put fancy clothing very high on the list.

Wal-Mart should stick to its knitting.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Market matters, Schlumberger Limited (SLB), Citigroup Inc. (C), Boeing Co (BA), Merrill Lynch (MER), Federal Natl Mtge (FNM), Lockheed Martin (LMT), Honeywell Intl (HON), Lehman Br Holdings (LEH), Stocks to Buy, Housing, Cramer on BloggingStocks, MBIA Inc (MBI)

TheStreet.com’s Jim Cramer says we know how it’ll play out. Besides, there’s money to be made elsewhere.

Nobody’s dissing the credit crisis. We all see it. We know when it is back. We know that the write-offs for the banks and brokers and Fannie (NYSE: FNM) (Cramer’s Take) and Freddie (NYSE: FRE) (Cramer’s Take) will be gigantic if and when the Gang of Four (Ambac (NYSE: ABK) (Cramer’s Take), MGIC (NYSE: MTG) (Cramer’s Take), MBIA (NYSE: MBI) (Cramer’s Take), PMI (NYSE: PMI) (Cramer’s Take)) finally chokes to death. But we also know that Boeing (NYSE: BA) (Cramer’s Take) and Honeywell (NYSE: HON) (Cramer’s Take) and Schlumberger (NYSE: SLB) (Cramer’s Take) and Lockheed (NYSE: LMT) (Cramer’s Take) and all of the other stocks that are on the move, not to mention anything oil and gas, just aren’t that levered to the crisis. I know that is heresy for many of you. How could the crisis not bring everything to its knees?

Because these companies are basically foreign companies. They are just not that important to the credit crumble.

More important, we’ve all figured out the game. There are endless pools of really stupid/long-term capital that keeps coming in and bailing these clowns out. They either will never admit defeat — some of the mutual fund holders, like “legendary” Bill Miller — or they view everything as a bargain — Corsair — or they are easily talked into sovereign funds that think they have discovered Citigroup (NYSE: C) (Cramer’s Take) at $5, a la 1990. Who knows? Maybe they have. Merrill Lynch (NYSE: MER) (Cramer’s Take)? I’ll buy 10 million shares!! Lehman (NYSE: LEH) (Cramer’s Take)? $2 billion in preferred, please. And on and on.

What matters to me is that there seems to be no end to the amount of capital that will go to this sector. No end. Value!

Next thing you’ll hear there will be someone coming in, a Wilbur Ross, or some other grave dancer, and he will pants the current shareholders and “make out like a bandit” with the monolines. Blah blah blah.

It’s not that the crisis is irrelevant. It’s that there’s so much money around that it has gotten to the “who cares?” status unless you hold common stock of the targets.

RELATED LINKS:

• Ambac Swings to Worse-Than-Expected Loss
• Cramer: Higher Oil Is a Good Thing

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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CNet is running an update to the controversy over giving telecommunications giants such as AT&T immunity from lawsuits involving the assistance they gave the NSA for illegal wiretaps. Republican leaders are circulating a petition which would force a vote on the bill passed by the Senate but not by the House. Democrats are holding out for a version of the FISA bill which opens the telecoms to prosecution. President Bush still intends to veto any such document. “At a wide-ranging House hearing on Wednesday, FBI Director Robert Mueller again urged passage of a bill that includes immunity for phone companies, arguing that ‘uncertainty’ among the carriers ‘affects our capability to get info as fast and as swiftly as we would want.’ He admitted, however, that he wasn’t aware of any wiretap requests being denied because of Congress’ inaction.”

Read more of this story at Slashdot.

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Sean Hollister writes “GameCyte contacted Daniel Laughlin, Project Manager of NASA Learning Technologies, to find out where that $3 million budget for their educational MMO actually went. As it turns out, NASA still has the money — they are just planning to use it differently than we thought. Meanwhile, the ‘non-reimbursable Space Act Agreement’ actually allows the game developer to profit where they might not have, otherwise. ‘If it were a government contract, it would be illegal to be paid twice, once by the government and a second time by consumers.’”

Read more of this story at Slashdot.

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Filed under: Forecasts, Other issues, Bad news, Products and services, Consumer experience, Internet

Would you like a couple of failed World wide web page loads? I have a bucketful of them for you. Would you like your e-mail tied in knots? I have the ability to help you out there also. It’s all compliments of my new HughesNet DSL connection. If it was a new car, I’d take it back to the dealer. If it was a dish rag, I’d have thrown it out by now.

And it appears that I’m not alone in my assessment of this consumer internet service from Hughes Communications Inc. (NASDAQ: HUGH). I blogged about it previously on one of our sister blogs. I’ve received feedback there from other Hughes customers who are as unhappy as I’m with the Hughes service. Yet not one comment came to their defense. No, not one good thing have I heard.

Overall, the company’s stock is doing well, and analysts are calling it a strong purchase. Oscillating in a range between $48 an $55, it’s holding the middle ground between its 52 week high and low. The company has made some major upgrades for its commercial customers as of late, but honestly, what’s it doing for me, the tiny guy?

If this is the way that Hughes serves its consumer clientele, it’s a good thing that it has a commercial division. Because from the way I see it, the company isn’t long in the private sector. Someone needs to remind Hughes that word of mouth travels quite fast on the World wide web. We’re not happy out here with Hughes, and someone might find that out. In the mean time though, its stock is holding its ground.

Gary Sattler is a freelance blogger. He does not knowingly have interest in Hughes Communications, (except for the two year contract they’re going to have to ride out with him.)

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Filed under: Earnings reports, Products and services, Amazon.com (AMZN), Recession

Amazon.com Inc. (NASDAQ: AMZN) stated first quarter profit rose 30% driven by strong sales across the board. .

Amazon shares slumped in after-hours trading after the company lowered its operating income forecast for the year.

Net income at Amazon rose to $143 million in the first quarter, or 34 cents per share, from $111 million, 26 cents, a year earlier. Sales increased 37% to $4.13 billion. The results beat the views of Wall Street analysts who had expected a profit of 32 cents on revenue of $4.08 billion.

Amazon anticipates second quarter sales to be between $3.875 billion and $4.075 billion on operating income of $120 million and $160 million. For the year, the Seattle-based e-tailer is forecasting net sales of $19.1 billion to $20 billion on operating income of between $740 million and $940 million. Earlier this year, the company had forecasted operating income of $985 million, according to Bloomberg News. The operating income guidance was wide enough to drive an 18-wheeler through.

Once again, Amazon has left investors up the creek — or river — without a paddle.

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Filed under: Earnings reports, Forecasts, From the boards, Products and services, Management, Competitive strategy, Apple Inc (AAPL), iPhone

Tech giant Apple Inc. (NASDAQ: AAPL) reported its fiscal second quarter numbers this afternoon, easily beating out Wall Street estimates for the quarter.

Analysts had been anticipating the company to report earnings of $1.07 a share, and the company actually reported earnings of $1.16 for its most recent quarter. Sales came in way above estimates as well, with a reported $7.51 billion, exceeding the $6.964 billion analysts had been looking for.

Today’s report should help wipe any concerns that the current economic slowdown in America is negatively affecting the company’s business.

As I noted in our earnings preview, there were three main factors that I wanted to pay attention to today; the Mac, iPod and iPhone. Mac was strong as expected, with shipments up 51% from the same period last year. We knew that the iPod would be a sore subject for the company, and that turned out to be true, as the company saw iPod growth of only 1% on a unit basis, and 8% on a revenue basis. The iPhone had a decent quarter, although not as good as some had hoped, with 1.7 million units sold in the quarter.

Despite the strong earnings for the quarter, shares of the stock are trading down about 1.6% in after hours trading. The reason is, as we saw last quarter, a weaker-than-expected EPS forecast for the current quarter. The company, which I have to state always offers conservative estimates, said that it sees Q3 earnings coming in between $1.00 and $1.10. Wall Street had previously been anticipating to see the company bring in $1.10 for its third quarter.

So once again it is like we’re reading the same story that we were three months ago. A great quarter, but the stock gets a tiny beaten up due to the conservative guidance. Will we see a repeat of the last three months where the stock tumbled 40 points after its Q1 report, only to rebound and make up all that lost ground in the next three months? I doubt we will see such a huge pullback this time around, but definitely expect some selling tomorrow morning.

If you want to follow the company’s conference call this day, CNET is offering a live blog that’ll give you up-to-the-minute coverage on the call.

Disclosure: Mr. Fowlkes holds a long position in AAPL

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the web investment advisory service Investor’s Observer.

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