The Market Corner: Blockbusters and busts
Published: Friday, April 20, 2012
Updated: Thursday, April 19, 2012 19:04
“The Hunger Games” movie had an astonishing open weekend, grossing $150 million in its first three days. Lions Gate Entertainment (LGF), the company behind the four movie series, is relying on this to propel it into the big leagues of the film industry.
They have also recently acquired Summit Entertainment LLC which will allow them to turn out more movies than expected. LGF’s stock price has more than doubled over the last six months.
Many questions still remain as to how much longer this stock rally will continue.
Most year end forecasts for the indexes are already outdated or imply a decline in the markets until that point. Now most forecasts are at levels which the markets have already surpassed.
The consumer confidence index in March rose to the highest levels in over a year reading 76.2, up from 75.3 a month ago. The index measures how much households are willing to spend or save, a higher index meaning consumers are more willing to spend more on non-necessities.
This brings hope for some retailers who have struggled in the holiday season, as well as the markets in general.
Consumer purchases in Feb. also rose 0.8 percent, beating analyst predictions by 0.2 percent.
This is also indicative that the labor market has been improving and fostering more spending. The increase in real GDP for Q4 2011 is expected to be 3 percent as was reaffirmed by the US Dept. of Commerce last Thursday.
Last week Canadian based Research in Motion (RIMM), declared earnings that missed the already bleak outlook for the company. Shares dropped but were later trading up 8 percent higher on Friday morning.
RIMM’s new CEO, Thorsten Heins declared that they would no longer provide quarterly guidance because they believe in focusing on a longer term picture. Or, in my opinion, “I will no longer admit ahead of time, how grim our company’s future continues to become.”
Their phone spec’s on their website preach things like “Integrated email” and “HD Video recording,” all which sound fancy, but are commonplace in the smartphone industry now.
Development of programs and apps for the platform are discouraged given their diminishing market share.
Moreover, they have delayed new product launches and their desire of focusing more on their “enterprise” customers is flawed given that they have lost that niche market as well.
Finally, RIMM is pouring money into research and development that won’t be recovered.
They recently released an add-on to their failed playbook tablets; a 200 dollar external keyboard that has already been marked down. This is my stock of the week, with obviously a short interest in it, although I would not recommend touching it with a 10 foot pole.