Wednesday, July 15, 2009

7/15/09 am Intel Sees Improving Demand for PCs

Post #1 Happy 28th Birthday to my son, Lee. The following is brought to you by Intellivest Securities Research, Inc. The following is not intended as advertising by a broker-dealer and is not a research report. This Post is the first Post of this Dow Monitor Blog. The purpose of this Blog is to study and comment on the Dow Jones Industrial Average and its 30 component companies. Why waste time trying to predict the stock market? It is more intelligent and efficient to study major public companies. For the first time in history, the average investor has at his or her fingertips vast amounts of information provided through the government at, the Internet and the print media. Yet, there are thousands of public companies which are too many to know. The solution is to pick, somewhat admittedly arbitrarily, the 30 most well known companies, the blue chip companies that comprise the Dow Jones Industrial Average. Remember when you were in school and you had approximately 30 classmates? By the end of the year, you were fairly knowledgeable about your 30 classmates. At that point, if you were to predict who would be successful, who might end up in jail, who might succeed at sports or in business you could do so. In other words, to know 30 companies is not that difficult if you persist. The result is that by understanding the fundamentals of these 30 companies and how they intereact with each other, you will have a bellweather not only for the stock market but also for society at large in terms of politics, economic, technological and cultural trends. Join with me in becoming a student of the Dow Jones Industrial Average. To belong to the Dow Monitor Club you must be able to identify all 30 companies unassisted. This is easier than you think - they are all household names. Once you can name all 30 companies, to be a Premium Member you need to do the following:

1. Learn all 30 trading symbols and the exchange on which they trade (CSCO, INTC, MSFT are traded on NASDAQ, the other 27 are NYSE).

2. Learn the range of the daily closing price within a range of five dollars.

3. Learn the names of the CEOs - they are listed at the end of this Blog.

Once you are a Premium Member the following is recommended to increase your knowledge:

4. Track the SEC filings of the Dow 30 each weekend (I will try to do this and give the results at the end of this Blog.)

5. Each morning read the print editions of Wall Street Journal, New York Times, Atlanta Journal Constitution, Financial Times, Investor's Business Daily and USA Today for stories and information about Dow Jones 30 component companies. (I willI try to do this and give the results on this Blog.)

6. Each afternoon give the closing price and volume of each of the Dow Jones 30 component companies. (I will try to do this and give the results on this Blog.)

7. Each weekend read the print edition of Barron's, Forbes, Business Week, CEO, CFO, Time, NewsWeek and various other print periodicals for stories and information about Dow Jones 30 component companies. (I willI try to do this and give the results on this Blog.) Recently, the Dow Jones Company has started a economic sentiment indicator that monitors 15 major print newspapers for mentions of certain "key" words, such as recession. Using this information, they feel they can spot trends. If you follow the print media as we will do, we will not only learn information but we will learn which companies are being discussed which is valuable in and of itself. During the few months of the beta stage of this Dow Monitor Blog I have learned that CAT Caterpillar is hardly ever mentioned. Other companies that don't get in the print media much are KRAFT, Travelers, and MMM. On the other hand, by far, the most mentioned companies are BAC Bank of America and MSFT.

8. Learn the intricacies of the Dow Jones Industrial Average itself. It is really a very simple process. You add the closing prices of all 30 companies and then multiply by a divisor which is found daily at page C4 of the Wall Street Journal(pB4 on Saturdays). The divisor is currently 0.132319125 and changes for stock splits, stock dividends and other recapitalizations. I learned if you dispense with the divisor and just add the 30 prices to get a numerator, you get a different, and arguably better, feel for what the Dow is doing. (You can also track the average daily close and median closing price this way, which is helpful.) The divisor really just multiplies by approximately 7 the increase or decrease in the market. In other words, if at the end of the day all Dow Jones IA stocks closed at their opening price except IBM moved up 5 points from 100 to 105, that would not be such a big deal but the DJIA would move up 37.79 (5 divided by .132319125) and that would seem like a good day on the Dow and people would get all excited. A dollar increase in a price has the same effect on the Dow whether it is low priced Alcoa going from 9.50 to 10.50 (a significant movement) or high priced IBM going from 100 to 101 (no big deal). I will try to tell you the daily divisor on this Dow Monitor Blog. A student of the Dow Jones should memorize it - this will come naturally form looking at it daily and using it as I do to find your own metrics.

9. Learn the dividend habits of the Dow Jones 30.

10. Learn the price earnings ratios of the Dow Jones 30.

11. Read the annual reports on 10K, quarterly reports on 10Q, special reports on 8K on the Dow Jones 30, all available at by putting in the ticker symbol. Also check Wikipedia on the company and its CEO. The CEO's of the Dow Jones Industrial Average should be "celebritized" (my word) because they are under the radar but are, in my opinion, the most powerful group in America and possibly the world.

12. Approach the Dow Jones Industrial Average as you would sports or other hobbies you may have. Just as you know the batting average of your favorite baseball habit, pick a favorite Dow Jones 30 stock and learn about it. (Currently, may favorite Dow company, not necessarily because of its metrics, is Boeing BA.) I guarantee you that not only will you become an expert on the stock market, but your brain will get a good work out and you will find benefits in other aspects of your life. You'll see.

Now let's get to work.

On this Day in Dow Jones History in 1916 BA Boeing was incorporated in Seattle, Washington as Pacific Aero Products Company. Speaking of Boeing, here is an interesting story. If you google "Intellivest Securities Boeing Research" you will find a press release announcing Intellivest Securities Research, Inc. released on June 25, 2009 announcing that early June 25, 2009 I released a research report saying Boeing was a buy because on June 24th the stock fell $2.55 or 5.81% to close at 41.32 on news that Boeing postponed the first flight of its long awaited 787 Dreamliner. I don't know about you but having been in the aviation industry, I am delighted when a problem is found on the ground rather than in flight. In any event, I was the only one applauding Boeing for doing the right thing and placing safety over all other considerations. I felt, and still do, that eventually the market will reward Boeing for this intelligent behavior. People need to realize that Boeing is the world's expert on metalurgy as it relates to aircraft dating back to 1923 when it developed the DH-4M Observation Plane with welded steel tube fuselages. In any event, in my beta testing of this Dow Monitor Blog on June 29th I noticed a letter from Randall Tognazzini from Arroyo Grande, Calif. to USA today entitled, "Boeing 787 will be worth the wait" wherein Randall said "Boeing's stock shoudl have gone up, not down, for its good judgment." Since that was the essence of my report, I tried to contact Mr. Tognazzini through the Internet. I was able to do so and yesterday he called me and we had a great conversation. I hope to meet him in person when he comes to Atlanta on business. He had many intersting things to say as a result of his fame resulting from a letter to USA Today. Great things happen when you study the Dow!

A read of Wednesday's 7/15/09 print editions of: Wall Street Journal, New York Times, Atlanta Journal Constitution, Financial Times, Investor's Business Daily and USA Today yielded the following stories about Dow Jones 30 component companies:

WSJ pB1, "Intel Gives Rosy Outlook as Sales Recover - Chip Giant Posts Quarterly Loss After EU Fine but Sees Improving Demand for PCs." INTC second quarter results were better than expected although they were tainted by a loss due to a $1.45 billion antirtust fine. For the quarter that ended June 27, INTC earned $1 billion or .18 per share. Sales fell 15% to $8.02 billion and analysts' consensus had predicted $7.28 billion. This story is in all the print editions including AJC pA8, NYT pB1. WSJ pC1 says INTL helped the Nasdaq Composite Index gain 0.4% The NYT story pB1 also notes that for the first time ever, MSFT experienced a drop in sales of its Windows software and carried out large scale layoffs. Inv Bus Daily pA4 "Intel Shatters Views As Atom Chip Sales Jum 65% from Q1" is a bit more excited than the other prints. USA p1B story title is "Intel's earnings raise hopes for tech - Strong notebook sales lead the way toward gains."

WSJ pB1 "Restaurants Burned by Deep Discounts" says MCD McDonalds has avoided deep price cuts but are boosting promotions to boost sales.

WSJ pB4 (also at WSJ pC5, IBD pA2 and NYT pB9) "J&J Net Falls as Drug Business Feels Pinch - Currency Rates, Generic Cometition and Tighter Spending Combine for Challenging Quarter" as JNJ second quarter profit fell 3.6% on income of $3.21 billlion or $1.15 a share, compared with $3.33 billlionk or $1.17 a share a year earlier. Sales fell 7.4% to $15.24 billion from $16.45 billion. JNJ and INTC each filed 8ks yesterdays with the SEC reporting their earnings.

WSJ pB4, "In Strategy Shift, Exxon Plans $600 Million Biofuels Venture." This was reported on in my Dow Monitor Blog yesterday about XOM trying to turn algae iinto a biofuel that would also help fight global warming. Also reported at Fin Times p14.

WSJ pB5 says that DIS Walt Disney and GE's NBC Universal are not participating in Comcast Corp.s nationwide test of an online video subscription offeing although their jointly owned A&E Television Networks is participating.

WSJ pB5 "Cloud Computing Prices Announced by MSFT". MSFT will charge .12 an hour for computing, .15 per gigabyte for storage and .10 per 10,000 storage transactions. If you know what that means please email me.

Fin Times p14, "Azure to boost MSFT's online Prescence" that says Ray Ozzie, MSFT's chief software architect, has unveiled its new cloud computing prices.

JPM is in two stories at WSJ C1, "Loan Paid, JP Morgan Swagger Returns" that notes JPM repaid $25 billion in bail out money and the other story "US Tightens Its Derivatives Vise" says the US Dept. of Just is investigating Markit Group Holdings Ltd.'s role in the credit default swaps - among Markit's shareholders is BAC BofAm but JPM is mentioned as being criticized for dominating the market. NYT pB2 and Fin Times p13 reports similar information.

T AT&T's chart is at WSJ pC5 under the heading "And the Bad News" over concerns that its plan to acquire Centennial Communications will not be approved.

IBD pA4 mentions HPQ and MSFT in a story about Dell saying the pc market has reached the bottom and will pick up.

The Dow closed Tuesday at 8359.49 up 27.81 or 0.33% from Monday's close of 8331.68. 19 of the Dow 30 gained with the biggest gainer being HD Home Depot $23.68 +0.57 2.47% 15,578,582 NYSE and the biggest loser being TRV Travelers $39.54 -0.86 2.13% 4,307,024 NYSE.

The current divisor for the Dow found at today's page C4 of The Wall St. Jrnl is
.132319125 unchanged.

Tuesday's Dow numerator was 1106.12 up 3.68 from Monday's closing numerator of 1102.44. This is the sum of all 30 closing prices. A short cut to the Dow numerator is to multiply the closing Dow by the Divisor.

Now, if you divide the Dow increase of 24.5 in the Dow numerator by the divisor you get 27.81, the increase in Monday's Dow.

The average closing price of Tuesday's Dow Jones was 36.87 up .12 from Monday's Dow Jones average closing price of 36.75 The median closing price of Tuesday's Dow Jones was 30.44 up .01 from Monday's median closing price of 30.43.

The highest closing price Tues was IBM $103.25 -0.37 0.36% 5,412,359 NYSE and the lowest closing price Tuesday again was AA Alcoa $9.59 -0.07 0.72% 27,606,427 NYSE.

The lowest volume Tuesday was MMM $60.63 +0.14 0.23% 3,538,154 NYSE and the highest volume was BAC Bank of Am $12.91 -0.08 0.62% 270,120,552 NYSE.

If Tuesday morning before the market opened you had purchased $100 of each of the Dow 30 shares (assuming you could buy fractional shares and assuming no transaction costs) and sold at the close you would have made $368.01 (110,612.01 - $110,244).

Tuesday's Closing Dow closing numbers:

Symb/Last/Change/% Change/Vol./Market

T $23.45 -0.32 1.35% 27,093,358 NYSE
AA $9.59 -0.07 0.72% 27,606,427 NYSE
AXP $24.46 -0.06 0.24% 10,533,994 NYSE
BAC $12.91 -0.08 0.62% 270,120,552 NYSE
BA $40.41 -0.03 0.07% 5,748,486 NYSE
CAT $31.93 +0.13 0.41% 10,116,235 NYSE
CVX $63 +0.56 0.9% 12,879,322 NYSE
CSCO $18.73 +0.16 0.86% 46,881,250 NASDAQ-GS
KO $49.29 +0.24 0.49% 7,679,477 NYSE
DIS $23.11 +0.41 1.81% 10,327,049 NYSE
DD $25.55 +0.29 1.15% 4,992,915 NYSE
XOM $66.22 +0.52 0.79% 22,878,509 NYSE
GE $11.64 +0.18 1.57% 71,468,182 NYSE
HPQ $37.14 -0.16 0.43% 13,845,915 NYSE
HD $23.68 +0.57 2.47% 15,578,582 NYSE
INTC $16.83 +0.34 2.06% 93,509,184 NASDAQ-GS
IBM $103.25 -0.37 0.36% 5,412,359 NYSE
JPM $34.7 -0.01 0.03% 52,786,246 NYSE
JNJ $58.23 +0.51 0.88% 20,395,170 NYSE
KFT $27 +0.12 0.45% 7,945,934 NYSE
MCD $57.46 +0.19 0.33% 6,670,040 NYSE
MSFT $23.11 -0.12 0.52% 45,343,984 NASDAQ-GS
MRK $27.16 +0.34 1.27% 13,903,226 NYSE
PFE $14.9 +0.14 0.95% 37,322,045 NYSE
PG $53.54 +0.56 1.06% 12,811,996 NYSE
MMM $60.63 +0.14 0.23% 3,538,154 NYSE
TRV $39.54 -0.86 2.13% 4,307,024 NYSE
UTX $51.58 +0.16 0.31% 3,613,591 NYSE
VZ $28.95 -0.10 0.34% 12,799,815 NYSE
WMT $48.13 +0.30 0.63% 13,466,325 NYSE

Here are the latest SEC filings as of 7/15/09 other than ownership filings and, except for certain cases, I do not include third party shareholder proposals:

Symbol & Co. Name/Date of Filing/Form Filed/ Comments

T AT&T 6/30/09 11K Annual Report of Employee Stock Purchase Plan
AA Alcoa 7/13/09 8K 2nd Quarter Earnings Results
AXP 6/30/08 8K Settlement w/FDIC re: convenience checks
BAC Bank of Am 7/1/09 8A Regis. of Securities
BA Boeing 7/7/09 8K Acquisition of Vought Aircraft
CAT Caterpiller 6/23/09 11K Annual Report of Employee Stock Purchase Plan
CSCO Cisco 6/2/08 S8 Regis. of securities to employees
KO Coke 6/25/09 11K Annual Report of Employee Stock Purchase Plan
DIS Disney 6/26/09 11K Annual Report of Employee Stock Purchase Plan
DD DuPont 6/29/09 11K Annual Report of Employee Stock Purchase Plan
XOM Exxon 6/24/09 11K Annual Report of Employee Stock Purchase Plan
GE 6/25/09 11K Annual Report of Employee Stock Purchase Plan
HPQ Hewlett-Pack 6/30/09 11K Annual Report of Employee Stock Purchase Plan
HD Home Depot 6/29/09 11K Annual Report of Employee Stock Purchase Plan
INTC Intel 7/14/09 8K Financial results 3rd quarter
IBM 6/29/09 11K Annual Report of Employee Stock Purchase Plan
JPM JPMorgan 7/14/09 Freewriting Prospectus
JNJ Johnson 6/28/09 8K Press release re: financial results
KFT Kraft 6/22/09 8K re: personnel changes
MCD McDonalds 6/22/09 Prospectus
MRK Merck 7/1/09 8K Closing of sale of notes
MSFT Microsoft 6.29.09 11K Annual Report of Employee Stock Purchase Plan
PFE Pfizer 6/29/09 11K Annual Report of Employee Stock Purchase Plan
PG Procter Gam 7/13/09 8K re: 0.44 dividend
MMM 3M 7/7/09 8K settlement of shareholder derivative suit
TRV Travelers 6/24/09 11K Annual Report of Employee Stock Purchase Plan.
UTX United Tech 6/26/09 11K Annual Report of Employee Stock Purchase Plan
VZ Verizon 6/29 11K Annual Report of Employee Stock Purchase Plan
WMT Wal-Mart 6/5/09 10Q

Here are the CEOs of the Dow 30 Companies:

T Randall L. Stephenson
AA Klaus Kleinfeld
AXP Kenneth I. Chenault
BAC Kenneth D. Lewis
BA W. James McNerney, Jr.
CAT James W. Owens
CVX David O'Reilly
CSCO John Chambers
KO Muhtar Kent
DIS Rogert Iger
DD Ellen Kullman
XOM Rex W. Tillerson
GE Jeffrey R. Immelt
HPQ Mark Hurd
HD Frank Blake
INTC Paul S. Otellini
IBM Samuel J. Palmisano
JPM Jamie Dimon
JNJ William C. Weldon
KFT Irene Rosenfeld
MCD Jim Skinner
MRK Robert Clark
MSFT Steve Ballmer
PFE Jeffrey Kindler
PG Bob McDonald
MMM George W. Buckley
TRV Jay S. Fishman
UTX George David
VZ Ivan Seidenberg
WMT Mike Duke