Friday’s Market Recap: Markets End Mixed, Palm Reports $105 Million Loss, KB Homes Reports $78.4 Million Loss

The markets had mixed results as the NASDAQ was the only major index up, up 0.47% to close at 1838.22.  The Dow Jones was down 0.40% to close at 8438.39, while the S&P was down 0.15 to finish at 918.90.  In commodities, both oil and gold were down, as Gold settled at $941.00, and oil fell to settle at $69.16 as the demand for oil came into question.  The 10-year Treasury saw prices rise as the yield fell to 3.529%.

KB Homes (KBH) was down over 9% today as it reported a loss $78.4 million, or $1.03 per share, better then a loss of $255.9 million, or $3.30 a share, from the same period a year ago.  Revenue came in at $384.5 million beating the average analyst estimate of $339.1 million, but failed to beat the average analyst estimate of earnings per share which was a loss of $0.64.  The company’s impairment charges fell from $176.5 million to $49.5 million with new orders also falling 31% to 2,910.  Investors reacted positively to a decline from 28% to 20% in cancellation as some believe that the housing market is starting to show signs of a possible bottoming.  The fifth largest home builder by annual closings is trying to redesign their product in an effort to position itself to profit in the future.  The real test for KB is going to be how they perform after the tax credit for those buying new homes ends.  The Los Angeles home builder has a tough road ahead of itself and it will be interesting to see how they deal with the housing mess that currently exists, especially in California.

In tech news, Palm (PALM) announced earnings after the bell yesterday, reporting a loss of $105.0 million, or $0.78 per share with revenue of $86.77 million beating the estimates of a loss of $0.62 per share on revenue of $80.64 million.  Palm’s revenues were up after it released its first smart phone the Pre, which many analysts believe will either make or break the company.  Palm did not release the number of Pre units sold, but estimates are around 70,000.  The Pre is the reason behind the price appreciation of Palm’s stock reaching a new 52-week high today of $16.59.  Palm announced that they could have positive cash flow in the second half of the year and become profitable sooner than earlier anticipated.  Currently the Pre is only available on Sprint (S), but is believed to be soon available on other carriers.

The Commerce Department released May consumer spending numbers, which showed consumer spending increasing 0.3%.  Some of the results are a result of Obama’s administrations stimulus plan, leading to a jump in American’s incomes.  This government activity is leading to a better flow of credit and higher incomes leading people to spend even though unemployment is on the rise.  The report also stated that earnings climbed 1.4% higher driving the savings rate to a 15 year high.   This increase in consumer spending is a positive sign for the economy, but a continuing increase in this number is needed to prove that this is not just a temporary result of government spending, but a long lasting trend.

Check back next week for another market recap from Bullish Bankers, enjoy the weekend.

Disclosure: None

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