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Netflix (NASDAQ:NFLX) Losing To Amazon (NASDAQ:AMZN)?

09/04/12 by  
Filed under Bourbon & Bayonets

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Stocks sank today after U.S. manufacturing data dropped.  The Dow Jones Industrial was down 97 points and below the 13,000 level, the Nasdaq was down 18 points and the S&P 500 was 8 points.

The Institute of Supply Management reported that the U.S. Purchase Managers Index sank to its lowest level since July of 2009. The reading for the PMI in August was 49.6, falling from 49.8 in July. Economists were expecting the number to increase to 50. Regular readers will remember that an economic index reading below 50 indicates a shrinking in manufacturing activity, while a number above 50 indicated an expansion.

Meanwhile, the Commerce Department announced that construction spending was also down, a 0.9% decrease for the month of August.  Economists were predicting an increase of 0.5%. Michael Lynch, president of Strategic Energy & Economic Research, said “We are seeing downward prices because of the poor economy. The ISM number compounds the earlier manufacturing number from Europe, and overall, the economic data is weak.”

The popular video rental and live streaming company Netflix (NASDAQ:NFLX), sank as much as 11% following news that Amazon.com has struck a deal with Viacom for the company’s content. Viacom had previously had an exclusive deal with Netflix, but that deal expired on September 1. Amazon (NASDAQ:AMZN) announced previously that it had signed a deal to stream movies live from premium movie channel Epix on Amazon’s “Prime Instant Video” service. Epix is owned by Viacom, and the movie channel owns digital rights to many MGM, Paramount, and Lionsgate films. Edward Williams, an analyst at BMO Capital Markets said “The goal for Amazon with tablets is to keep people in their ecosystem, and that’s what they’ve done by adding more content. It removes some of the uniqueness of the Netflix content and makes the Amazon offering more competitive.”

Domestic automobile news was very strong today.  The three major American car companies Ford, GM and Chrysler all beat analysts sales expectations for the month of August. Chrysler’s sales were up 14%, Ford’s sales were up 13% and General Motors’ sales were up 10%. These numbers beat out analysts expectations of 9.9% for Chrysler, 8.5% for Ford and 3% for GM. Toyota also announced that their deliveries sky rocketed 46%, which also beat analysts expectations of 40%. Alan Baum, principal of auto-industry forecaster Baum & Associates, said “This is an affirmation that the automotive market is strong. This would normally be a time in the year when model year-end incentives kick in, and there were some targeted incentives in place that were effective.”

Valeant Pharmaceuticals (NYSE:VRX) was up 15.14% to $59.02 per share. The company, which is Canada’s largest publicly traded drug maker, will purchase Medicis Pharmaceutical for $2.6 billion in cash. Medicis sells an injection that is similar to Botox, called Dysport.

Campbell Soup (NYSE:CPB) was up 0.53% to $35.32 per share. The company posted higher than expected earnings. Net income was $127 million, or 40 cents per share, up from $100 million, or 31 cents per share a year earlier. Earnings for the last quarter were 40 cents per share. This beat analysts estimate of 38 cents per share.

That’s all for today!

 

All the best,

Jack Aubrey

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