For Immediate Release
Chicago, IL – February 16, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Amazon (AMZN), Best Buy (BBY), Ethan Allen (ETH), Home Depot (HD) and Motorola Inc. (MOT).
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Here are highlights from Friday’s Analyst Blog:
Retail Sales Advance
Overall, though, for the month the gains in retail sales appear to be pretty broad-based. The biggest monthly increase was from non-store retailers, up 1.6% on the month and 12.4% year over year. This is mostly Internet firms like Amazon (AMZN). That 1.6% rise comes on top of a 2.2% surge in December. They are also doing extremely well on a year-over-year basis with a 12.4% increase, and unlike the gas stations that represents actual volume growth rather than simply a price surge.
However, if you recall, there was a major snow storm the weekend before Christmas, and many people turned to the net to do their shopping since they could not get out to the malls. General merchandise firms also had a nice 1.5% rise in January, but that was a rebound from a 1.1% decline in December. Electronics and appliance stores also showed a rebound, rising 1.2% after a 3.5% plunge in December.
On a year-over-year basis, Electronics is the weakest category, still showing a 7.0% decline. That does not mean that things are horrible at Best Buy (BBY), though, because a year ago Circuit City was still around.
A simple drive around your local shopping strips will confirm that there are many fewer open retail outlets (and many more empty stores and strip malls) than a year ago, so in general same-store sales should be doing better than total retail sales. That means that costs are coming down along with the revenues.
Another area where the report was particularly weak was in furniture stores, where sales were down 1.4% on the month and off 4.4% from a year ago. That is not good news for the likes of Ethan Allen (ETH).
Furniture sales are generally greatly influenced by existing home sales. In December, existing home sales were just plain awful (down 16.7% on the month) due to people thinking that the tax credit was going to expire (it got extended at the last minute). However on a year-over-year basis, existing home sales were still up 15.0%. Given that, the 4.4% year-over-year decline has to be considered very disappointing.
Furniture is an extremely discretionary category, and this shows that people are keeping a pretty tight grip on their wallets still. In the long run that is a good thing, but in the short run it slows the economy. Building-products stores like Home Depot (HD) are also very much tied to the housing market and they are also very weak, falling 1.2% for the month and down 6.3% year over year.
All in all, though, this was a moderately positive report, and shows that the economic recovery is still moving forward, although at a slow pace.
Motorola to Split
Motorola Inc. (MOT) has finally come up with a detailed plan to split itself into two entities — independent and publicly traded. Over the last couple of years, industry circles have been ripe with rumors about Motorola’s likely spin-off.
Yesterday, management announced that the company will reorganize its entire business structure and then split into two. The proposed separation is likely to take place in the first quarter of 2011.
As a result of the business restructuring, the existing three divisions of Motorola will be converted into two divisions. These are (1) Mobile Devices and Home Businesses and (2) Enterprise Mobility Solutions and Networks Businesses.
The Mobile Devices and Home businesses will provide a comprehensive portfolio of mobile converged devices, digital entertainment devices (set-top boxes) in the home, and end-to-end video, voice and data solutions.
Enterprise Mobility Solutions and Networks businesses will provide end-to-end portfolio of products and solutions, including rugged two-way radios, mobile computers, secure public safety systems, scanning, RFID, and wireless network infrastructure.
The proposed split-up will create two independent companies each of which will inherit around half of the total $22 billion revenue of Motorola in full fiscal 2009. The split will take place through a tax-free stock distribution to shareholders.
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