By MIRIAM GOTTFRIED
The No. 1 rule for CEOs: Don't overpromise and underdeliver.
In April, Netflix NFLX +0.50% Chief Executive Reed Hastings reassured rattled investors by saying the company would add seven million net subscribers in 2012. But Tuesday, Netflix's new guidance was for net additions of 4.73 million to 5.43 million, hammering the shares.
Netflix has said that incremental domestic streaming subscribers are almost pure profit because its content costs are fixed. But even taking the high end of Netflix's new subscriber-guidance range, there will now be a shortfall of 1.57 million. So multiplying that number by the roughly $96 those customers would have paid in a year ($7.99 a month) means gains to operating profit would be shaved by around $150 million.
Of course, some analysts had already lowered their views for the company's potential subscriber gains. And Netflix added a total of nearly two million subscribers globally, bolstered by strong international subscriber growth. It also lost fewer DVD customers than in the previous quarter.
But the international business is still losing roughly the same amount as domestic streaming earns. So that is a wash. And any loss in DVD subscribers affects Netflix's bottom line: Those subscribers are four times more valuable than streaming subscribers in terms of their contribution to overall profit. Netflix remains a grim picture for investors.
http://online.wsj.com/article/SB10001424052970203400604578075172468600026.html
Dow Chemical to Eliminate 2,400 Jobs and Close Factories
Dow Chemical Co. (DOW), the largest U.S. chemical maker by sales, will cut about 2,400 jobs and shut 20 manufacturing plants to reduce annual costs by $500 million in the face of slow global economic growth.
The facilities to be closed are in the U.S., Belgium, the Netherlands, Spain, the U.K. and Japan, the Midland, Michigan- based company said in a statement released after it inadvertently e-mailed a draft copy to Bloomberg News earlier yesterday. An additional $500 million will be saved by cutting capital spending and curtailing some investments, Dow said.
The job cuts, which amount to 5 percent of Dow’s global workforce, follow DuPont Co.’s announcement yesterday that it’s eliminating 1,500 jobs in part because of declining demand for paint pigment and solar cells. Dow Chairman and Chief Executive Officer Andrew Liveris said in July the company is operating in the worst conditions since 2009.
“Chemicals are a very economically sensitive industry,” Jake Dollarhide, CEO of Tulsa, Oklahoma-based Longbow Asset Management, said in a phone interview. “Economic growth in 2012 has slowed to a trickle, and that has spooked a lot of people.”
http://www.businessweek.com/news/2012-10-23/dow-chemical-considering-cutting-2-400-jobs-5-percent-of-workforce
What to watch: 'Quantitative easing' overrated?
7:54PM EDT October 23. 2012 - NEW YORK -- When the Federal Reserve breaks up its two-day meeting Wednesday, talk on Wall Street is likely to focus on the fact that QE3 has yet to provide a boost to the stock market.After Tuesday's stock swoon amid ongoing weakness in third-quarter profit reports, both the Dow Jones industrial average and Standard & Poor's 500 are below levels they closed at following a big rally on Sept. 13 after Fed Chairman Ben Bernanke announced the central bank's third round of QE. "Quantitative easing" is an unconventional bond-buying policy designed to inject liquidity into the financial system and keep borrowing rates low in an effort to boost the economy and hiring.Both the Dow and S&P 500 are more than 3% below where they were when QE3 was announced more than five weeks ago. In contrast, the broad stock market rallied 43% after QE1 was officially announced in late 2008 and 30% after Bernanke hinted at QE2 in the summer of 2010 in a speech at Jackson Hole, Wyo.http://www.usatoday.com/story/money/markets/2012/10/23/stocks-wednesday-10-24/1652821/
As you can see from the above chart gold appears to me to have downward momentum. The good thing is it is very oversold, but this could keep going down to the 200 DMA and lower. The Silver chart looks much the same. Maybe if GAW has the time he can also make a comment on the direction of PMs.
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