Has Viacom's (NYSE: VIA) Tropic Thunder succeeded where the Joker has failed? Has the film beaten Time Warner's (NYSE: TWX) The Dark Knight? According to early estimates at Boxofficemojo, it has. Can you believe it? Tropic Thunder, which stars Ben Stiller, right now has $26 million to its credit, enough to capture the top spot. That number will change most likely when final tallies are in, but it doesn't matter, since The Dark Knight is believed to have taken in a little under $17 million over the three-day weekend at domestic multiplexes, giving it a second-place finish. This is good news for shareholders of Viacom, who have so far been pretty happy with the studio's successful summer output. Box-office hits like Indiana Jones and the Kingdom of the Crystal Skull and Marvel's (NYSE: MVL) Iron Man have powered the media company.
Now, Time Warner's new animated flick, Star Wars: The Clone Wars, actually did worse than I expected. It came in third with $15 million. I admit, I totally misread this one. Believe it or not, I thought the film might do a huge number, like between $40 million and $50 million. I'm not sure the box-office dynamics at this time of year would have supported a statistic like that for this kind of film. And I guess I overestimated the number of geeks out there who were waiting to see it during the first weekend out. I really blew it on that one. News Corp.'s (NYSE: NWS) horror flick Mirrors came in fourth place, while Pineapple Express, distributed by Sony (NYSE: SNE), came in fifth. I saw Express last week. Cool movie.
You may see a recommendation to "overweight" a stock or sector. An analyst is bullish on a stock or group and feels buying more than usual will be rewarded. It may or may not come true. While it's a good idea to overweight at times, it should never be done in excess, to a point where you're putting too much of your portfolio in one stock or group of stocks. That's when overweight turns into speculate.
A rational approach to building a portfolio is to have at least five different sectors, ones that aren't correlated. There are different definitions of sectors but there are usually between 10 and 15, depending on what publication or expert you use. These sectors are categorized into broad groups, such as Healthcare, Technology, Manufacturing, etc. Within each sector are many industries. Value Line defines 98 different industries, ranging from Coal to Auto Parts to Water Utility to Beverages. Healthcare, as one example of a sector, has pharmaceutical companies, hospitals, medical devices, anything associated with health. Technology has a broad spectrum as well, encompassing everything from computers to wireless communication.
No, you're not surprised. Nintendo (OTC: NTDOY) moved the most video-game consoles in the U.S. in July. According to this Bloomberg article, which cites monthly data supplied by market-research firm NPD, gamers purchased over 550,000 Wii systems. Sony's (NYSE: SNE) PlayStation 3 was snapped up by almost 225,000 players, and Microsoft's (NASDAQ: MSFT) Xbox 360 sold about 205,000 units.
There's no question about it now -- the Wii should dominate the holiday season. Momentum is behind the company's strategy of creating products that appeal to casual gamers. I'd be shocked if the fad all of a sudden burned itself out, although Douglas McIntyre did write recently about the possibility of Nintendo running out of steam at some point. The Wii Fit exercise system was the second best-selling software title in July. That property is definitely helping drive Nintendo's fortunes.
In other software statistics, Electronic Arts (NASDAQ: ERTS) was number one with NCAA Football '09. Activision Blizzard (NASDAQ: ATVI) came in third with its version of Guitar Hero for the Nintendo DS handheld unit. EA should come out on top again next month since the new iteration of its Madden franchise came out earlier this week. There was a lot of excitement over that game, as there traditionally is every summer.
Time Warner's (NYSE: TWX) The Dark Knight will not rest. According to Boxofficemojo, the superhero flick finished in first place yet again over the weekend. It grossed an estimated $26 million at domestic theaters. Sony's (NYSE: SNE) Pineapple Express put forth a valiant effort to beat the Bat, but it came up a little short. That film came in second with roughly $22 million for the three-day weekend. It debuted on Wednesday, and its total gross to date is around $40 million. Sony was smart in opening it early so that it might gain some positive word of mouth for the weekend. Any movie going up against Dark Knight needs whatever assist it can get. Seth Rogen and Judd Apatow are becoming quite the Hollywood kings of R-rated youth-targeted comedies, and Pineapple Express will only serve to further cement their dominion in Tinsel Town.
Coming in third was The Mummy: Tomb of the Dragon Emperor, distributed by General Electric's (NYSE: GE) Universal. The fantasy flick took in $16 million and its total tally stands at $70 million. An okay performance, but nothing special. The Sisterhood of the Traveling Pants 2 from Time Warner was in fourth place with a $10.7 million take. That wasn't too good for a film that I thought had a lot of buzz, but the budget on the project isn't too steep at under $30 million, so maybe this one will do all right. Sony's Step Brothers took hold of fifth position. Disney (NYSE: DIS) continues to do horribly with its bomb Swing Vote. It dropped to ninth place.
So Time Warner's studio division will have the success of The Dark Knight to look forward to in future quarters as the movie, which now has over $440 million to its credit, progresses through home video and other ancillary channels. Disney will not have anything to look forward to from Swing Vote. And here's something else for Time Warner: Star Wars: The Clone Wars opens August 15. Time Warner will bring the cartoon to the silver screen ahead of the animated TV series that is set to debut later on. I think Clone Wars will surprise everyone by doing better than expected. The merchandise from Hasbro (NYSE: HAS) is out in the marketplace now pushing George Lucas' new chapter in his famous franchise. May the Force be with the multiplex.
Disclosure: I own Disney and GE; positions can change at any time.
Lions Gate Entertainment's (NYSE: LGF) stock rose nearly 5% in after-hours trading on Friday after the movie studio issued its Q1 report. In fact, the stock hit $11 per share. What drove this reaction? Well, Wall Street was figuring on a loss for the company, somewhere around $0.05 per share, according to the AP. However, management fooled everyone by delivering a $0.06 per-share profit. Last year's Q1 saw a net loss of $0.45 per share. The top line was also awesome, rising 50% to $298.5 million. This also went beyond expectations.
These numbers are impressive to a certain extent. Management reported a nice backlog of revenues derived from movie projects that should be recognized in later quarters. There was a lower amount of expensed-costs related to distribution, an element that helped things out a great deal.
Cash flow, however, was an entirely different matter altogether. Lions Gate reported a much wider use of the green stuff this quarter. In fact, the metric more than doubled to nearly $150 million. Changes in working capital affected the cash flow, including increased investments in content productions and a larger booking of participations and residuals. Negative free cash flow also expanded, coming in at roughly $110 million this quarter versus $82 million one year ago.
LSI Corporation (NYSE: LSI) designs, develops and markets semiconductors used by original equipment manufacturers in the data networking and consumer electronics markets. It also provides a wide variety of storage systems, sub-assemblies, and storage management software applications. Top clients include Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM) and Sony (NYSE: SNE).
The firm surprised the Street late last month, when it reported Q2 EPS of 13 cents and revenues of $692 million. Analysts had been looking for nine cents and $665.5 million. Management also guided Q3 EPS to 11-15 cents (11 cent consensus) and Q3 revenues to $695-$725 million ($693.41M consensus). The CEO noted that the company had recently secured silicon design wins with top-tier hard drive and server makers.
Nintendo already has the upper hand in the video game console market. Its Wii outsells the Microsoft (NASDAQ: MSFT) Xbox 360 and Sony (NYSE: SNE) PS3. But with its market penetration so high, the hyper-growth has to start slowing.
According toThe Wall Street Journal, "After overseeing several years of rapid growth at Nintendo Co., President Satoru Iwata faces new challenges: how to keep players of the company's videogames interested, and how to cultivate a new wave of customers."
Nintendo's problems may be beyond its ability to solve. It can bring out new consoles and games for its current products, but the industry as a whole may be facing a slow period.
The newest game platforms are now a couple of years old. That means most of the ready buyers probably own one. Going after the market of people only modestly interest in the products will be harder, especially when compounded by a weak economy.
It may be easy to focus on Nintendo because it has such a large market share, but the entire industry may have problems until the next generation of consoles brings a large number of buyers into the market again.
Douglas A. McIntyre is an editor at 247wallst.com.
Time Warner's (NYSE: TWX) The Dark Knight is in the fight of its life. According to Boxofficemojo, it has a slim lead over General Electric's (NYSE: GE) The Mummy: Tomb of the Dragon Emperor at the domestic box office. The Batman flick is estimated to have taken in roughly $43.8 million, while the Mummy movie has about $42.5 million to its credit right. That's just too close to call. There is one thing for certain, however. Knight will approach $500 million in total box-office grosses since its cume currently stands at a little under $400 million. Awesome, indeed, although I think the movie will start to exhaust itself before it can gets to $500 million. We'll see if I'm correct on that count.
Moving on, we see that Sony's (NYSE: SNE) Step Brothers, GE's Mamma Mia!, and Time Warner's Journey to the Center of the Earth came in third, fourth, and fifth, respectively, over the weekend. Disney (NYSE: DIS), unfortunately, suffered an utter embarrassment with its new film project Swing Vote, starring Kevin Costner. The movie came in sixth place and only managed about $6 million. I've got to say that I don't blame Disney on this one. Concept and timing seemed solid to me, and it had a decent enough advertising campaign. However, I didn't like the performance of Disney's studio operations in the latest quarter, so it is too bad that this film couldn't have swung one out of the park.
Time Warner is really doing great with Knight, but I'm sure it's frustrating for shareholders to know that one hit film won't necessarily rally the stock for this big media conglomerate. It should drive studio and licensing profits down the line, however, so investors will at least notice that. I must admit that I thought the Mummy sequel was going to bomb over the weekend. Didn't seem as exciting as the first two. But GE's Universal division scored and seems to be having a decent summer at the multiplex, releasing hits such as Wanted, Hellboy II: The Golden Army, and the aforementioned Mamma Mia! Will Mummy will see a big drop next weekend? I fear it might. For now, it remains Batman's nemesis.
Disclosure: I own Disney and GE; positions can change at any time.
Famous maker of photographic equipment and supplies Eastman Kodak (NYSE: EK) reported earnings for the second quarter earlier this week, and they have not changed my opinion whatsoever on the stock. The shares are to be avoided at all cost.
Yeah, I've got to admit, I've been bearish on Eastman Kodak for a long time. It isn't difficult to hold such an opinion, of course. The company reported net income on a GAAP basis of $0.66 per share from continuing operations as opposed to a loss of $0.53 per share from continuing operations in the year-ago period. However, the results for the quarter include a gain of $0.88 per share from an IRS refund, offset by $0.09 per share in other items of net expense (this yields a net benefit of $0.79 per share). Considering that last year's Q2 was affected by a net of $0.92 per share due to restructuring charges (which were offset by gains on asset sales), it can be seen that the adjusted scenario isn't impressive in the least.
I just can't get past the utterly horrible story behind this company and its long-term performance. Simply put, Eastman Kodak just didn't adjust properly to the transition from film photography to digital photography as it was happening. It's trying to make amends, but it hasn't been easy. In fact, colleague Elizabeth Harrow recently wrote an informative article on the awful history of the company and how its stock has been one of the worst performers of the last decade. She discusses the impact of competition from businesses such as Sony (NYSE: SNE) and Canon (NYSE: CAJ), as well as the demand of one big stakeholder for management to expand its current buyback program.
File this one under "Get over yourself you washed up former running back."
Jim Brown, a former star running back for the Cleveland Browns, is suingSony (NYSE: SNE) and Electronic Arts (NASDAQ: ERTS) because a football player on the All-Browns team in a video game wears his number and looks like him. He's seeking an injunction and unspecified damages to punish the company for "taking a free ride on the trade value" of his name.
Oh please. Mr. Brown, no one is going to buy or not buy a video games because it contains or doesn't contain your likeness. The "trade value" of your name is precisely zero. Somewhere between starring in The Dirty Dozen, serving as an announcer for Ultimate Fighting, and numerous arrests related to assault and spousal abuse, people just kind of lost interest.
This isn't a material event for Sony or Electronic Arts, but it's an interesting tale of the long half-life of a former star's ego. It's also a great waste of the legal system's resources.
Baird upgraded Buffalo Wild Wings (NASDAQ: BWLD) to Outperform from Neutral following strong Q2 results as they expect comps momentum, operating leverage, and potentially favorable chicken wing costs to support healthy trends in 2H08.
RBC Capital upgraded Myriad Genetics (NASDAQ: MYGN) to Outperform from Sector Perform citing solid core molecular diagnostics growth and increased confidence that the spin-out will generate better shareholder value.
Analyst downgrades:
Citigroup downgraded shares of Wyeth (NYSE: WYE) to Sell from Hold following the disappointing bapineuzumab data and lowered their target to $39 from $49.
Molson Coors (NYSE: TAP) was downgraded to Neutral from Overweight at JP Morgan.
Sony (NYSE: SNE) was downgraded to Underweight from Neutral at HSBC.
Analyst initiations:
Citigroup initiated Intercontinental Exchange (NYSE: ICE) with a Hold rating and $112 target. The firm believes regulatory concerns and a potential deceleration in energy trading volumes could limit upside in the stock near-term.
Banc of America assumed Walgreen Co. (NYSE: WAG) with a Buy rating and $38 target and believes fewer new pharmacies openings removes an impediment to higher ROIC.
Today was really about watching the oil ticker and seeing crude break down under the $124.00 mark. OPEC's president said in the right circumstances that oil could go back under $80.00. Median home prices fell almost 16% in May. The US's failed trade talks with China at the W.T.O. hardly mattered. It even looked like people on Wall Street were in a good mood today as the dollar hit a monthly high. After a near $3.00 drop to under $122.00 you have to wonder.... Can gasoline hit $3 again this year?
Kraft Foods Inc. (NYSE: KFT) saw another gain of 2% to $31.45 in the final minutes after yesterday's earnings gains. But the key to today's move besides the market was massive stock options trading.
3 Blue Chip Stocks to Watch After nearly a decade, these growth stocks are finally showing some signs of life. They include Wal-Mart, ConocoPhillips and Burlington Northern. Blue chips: A growth spurt - CNNmoney
The One Stock to Buy Now We asked eight up-and-coming and top mutual fund managers what one stock they would buy now. Some of their recommendations are household names. Others might surprise you. They include Nike, Cisco, ExxonMobil, Noble Corp., Canon, Valeant Pharmaceuticals, Nalco Holding Co and Cognizant. The One Stock They Would Buy - Kiplinger
The financial news at Sony Corp. (NYSE: SNE) just won't stop raining red. The world's second-largest consumer electronics company reported a 47.4% drop in profit for its first quarter. The disappointing quarter was partially blamed on lower cellular handset sales from its part in the Sony Ericsson joint venture, but there's more here.
Sony's CEO, Sir Howard Stringer, continues to be someone who just doesn't get it. Sure, he's made smaller cultural changes at the electronics maker, but it's being eaten alive in the flat-panel television segment by competitors like Samsung and Vizio. Sony did say that flat-panel TV sales were down in China, although it did not comment about other regions that may have seen a dip.
With the economy in the U.S. in a precarious position, it would be interesting to see what flat-panel TV makers were selling more TVs than Sony beyond the above-mentioned brands that seem to have better marketing and lower prices than the Japanese icon. In terms of portable electronics, Sony's grasp on maintaining proprietary storage formats on its digital cameras and others make it a laughing stock in the tech consumer world.
And then Stringer tells the world that the Nintendo Ltd. (OTC: NTDOY) Wii is a "niche gaming device." Is Stringer completely out to lunch? The Sony Playstation 3 is a niche device that just happens to have a Blu-ray disc player in it (which is the unit's saving grace among non-gamers). The Wii continues pummeling the Playstation 3 in monthly sales, which could not be done by a "niche" device. Sony will continue to be marginalized in certain product segments if its head honcho and corporate culture continue seeing the competition in such menial terms.
Ted Allrich is the founder of 
No, you're not surprised. 
Lions Gate Entertainment
Here are some highlights from this past week's 
Famous maker of photographic equipment and supplies 
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The financial news at 
Closing Bell: Dow ends higher; HPQ, NOVL, PAY climb, EBAY, NVTL decline
Most likely, you'll determine the fuel for the car of the future
Chasing Value: Considering Berkshire Hathaway... again
