IBM Corp. has announced better than expected results for 2Q08. While Business and Technology Services continue to dominate IBM’s revenue streams, Software revenue has also shown impressive growth. read more…

Wells Fargo & Co’s (WFC) better-than-expected 2Q FY08 results show that WFC is better positioned than its peers to withstand the rigors of real-estate asset write downs. WFC soothed worried bank-stock investors by increasing dividend even as peers are cutting dividend.

We looked up some key real estate loans (REL) data of WFC and its peers on the Gridstone platform. Besides WFC, we picked up Washington Mutual (WM) and Wachovia Bank (WB) in the peer set. A quick analysis of past data and SEC filings of this group shows that WFC has been managing its loan portfolio more smartly than its peers. read more…

Microsoft Corp.(MSFT) reported 4Q08 Operating income growth of 42% Yoy. Excluding the $1.1 billion charge in 4Q07 related to the expansion of Xbox 360 warranty coverage, Operating income has increased only 12% Yoy. Xbox had some part in this poor earnings growth. read more…

Mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) are suddenly in the news for all the wrong reasons, from issuing large doses of fresh capital and the Fed backstopping short term debt issuance to talks about receivership/ nationalization. As the largest credit guarantors in the troubled mortgage markets, these companies are bearing the brunt of falling home prices, widening mortgage credit spreads, and rising defaults. read more…

Sandeep Mukherjee and Abdulqadir Navsariwala also contributed to this note.

Fuel Efficient Vehicles supply Constraint Plays Spoilsport

Jun08 monthly auto sales turned out to be much worse with most of US automakers sales declining in double digit. In addition to negative macroeconomic environment of record high crude oil price, weakened housing industry, and lower consumer sentiment, supply constraint of compact fuel efficient cars at many automakers further precipitated the the sales decline. Secondary aftereffects of higher gas prices is resulting in lower resale value of pre-owned pick-ups and trucks causing restricted trade-ins for more fuel efficient vehicles. Moreover, number of selling days was three days lower in Jun08 than in Jun07, which also contributed to lower sales volume across the industry. read more…

All discounters posted strong y/y comparable store sales growth in May08 supported by growth in traffic and average transaction size. Unlike discounters, department stores displayed a reverse trend as they posted negative y/y comp-store sales growth. Clothing and accessories retailers reported mixed results. read more…

Rahul Kenkre, Prashant Padelkar and Nisha Parmani contributed to this note

Verizon Wireless (VZ) has announced its plan to acquire Alltel Corp. (AT) which would make it the largest cellular carrier in the U.S. This acquisition should not only push Verizon past AT&T Inc. (T) in terms of number of subscribers, but also put additional pressure on T-Mobile USA Inc. and Sprint Nextel Corp. (S). read more…

Of the S&P500 stocks, Gridstone covers 370 companies. We offer full coverage overlap in the Consumer Services and Nondurables (CSND), Consumer Durables, Technology, Telecom, Energy and Utilities sectors and majority overlap in Financial Services and Industrials sectors. We are not yet covering any stocks in the Materials and Health Care sectors. This note looks at the sectoral quarterly earnings trend since Sept-06 and YoY growth in diluted EPS since Sept-07 of the S&P500 companies in the Gridstone universe. read more…