3 Stocks
What is Amazon (AMZN)?
A member of a nation of woman warriors that lived in ScythiaArguably the largest river in the worldAn Internet success story that keeps getting better with ageIn the fourth quarter the company's revenue increased 18% in part to strong sales of the Kindle which Jeff Bezo said enjoyed "unusually string demand". Net income was $225.0 million or $0.52 on revenue of $6.7 billion. The Street was looking for $0.39 on $6.4 billion in revenue. First quarter revenue guidance is $4.53 to $4.93 billion against the current consensus of $4.51 billion.
Altria (MO) saw revenue increase 3% even as cigarette smokers both 2.1% fewer Marlboros and Parliaments and other brands. The company has pricing power and it needs it as there will be a federal tax hike in cigarettes on April 1 of this year. The company will still have to raise prices on top of the extra buck the fed tax will add to a pack. Earnings were in line for the quarter.
Sun Power (SPWRA) enjoyed a great quarter and added credence to solar-power hype. For the quarter the company earned $29.6 million or $0.35 a share up from $0.06 a year earlier. For the year the company added 350 more dealership to sell panels to residential and small businesses. Management says the long term fundamentals remain "very positive".
Outrageous!
President Obama was rightfully outraged yesterday when he discovered the amount of bonuses lavished on Wall Street in 2008. According to the office of the New York Comptroller, total bonuses for Wall Street firms came to $18.4 billion a decline of 44% but still a hell of a lot of money for an industry that lost $34 billion. The payout comes to $112,000 per person from $180,420 in the year ago period (in 2007, the average bonus at Goldman was $661,400).
While it is true that Wall Street workers have low salaries and rely on bonuses, rewarding cataclysmic failure like this has to be what led to the fall of the Roman Empire and even the U.S. automobile industry among many other nations and industries. The point is, there is still a sense of entitlement, greed and a series discount from the real world.
I will say, the number is misleading, as there are a lot of regular folks working on Wall Street that aren’t fat cats by any stretch of the imagination.
Last year employment on Wall Street declined to 168,600 from 187,800 in 2007. It really is outrageous, and will be another arrow in the quiver of those looking to push capitalism aside.
However, since we are on the topic of outrageous bonuses and uses of money, let's talk about the stimulus plan. A significant portion of the funds will go to create government jobs. Government job unemployment rate is current an enviable 2.3% but as much as $646,214 will be spent to create each of these new positions.
Maybe it's not just executives on Wall Street out of touch.
Be that as it may, President Obama was visibly angry but did say there will be times for making money, an assurance there will be no nationalization and suffocating regulations or salary caps, perhaps?
Ironically, almost a year ago to the day I was bitterly upset about the Wall Street bonus payouts for 2007. I could have used the update from January 18, 2008 for today’s comments -- it is a shame that nothing has changed.
In 1985, Wall Street bonuses totaled $1.9 billion, or $13,970 per person. By 2006, the amount was $34.1 billion. If a loaf of bread was $1.90 in 1985 it would cost $3.62 in 2006 and $3.71 in 2008. That means Wall Street bonuses, even after decreasing 44% last year, still almost ran five times the rate of inflation.
The last time bonuses were down two years in a row, the next year they surged 61%. Of course, there will be incredible opposition to any Wall Street bonuses for a long time but it would be nice for the backdrop to improve that dramatically.
The bottom line: If Wall Street didn’t have to go to Washington hat in hand their bonuses wouldn’t be anyone’s business but employees and shareholders. I would say there is the notion of unadulterated greed that is an internal struggle and challenge and ultimately judged as shameful or not by a higher power than the U.S. government.
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