cmcsa

Julia Boorstin covered an interesting topic over at CNBC.com the other day. The Supreme Court, by electing not to review a case involving Cablevision (NYSE: CVC), essentially said that cable companies such as Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) can pursue digital video recorder (DVR) storage on cable-system servers. By doing this, a perceived barrier to entry for subscribing to DVR has been eliminated: you don't have to deal with a clunky box. Cable should theoretically see an increase in customers who adopt DVR technology if remote storage is exploited.

Well, as Boorstin rightly points out, CBS (NYSE: CBS), Disney's (NYSE: DIS) ABC, General Electric's (NYSE: GE) NBC, and News Corp.'s (NASDAQ: NWS) Fox do need to worry. These DVR technologies basically translate to a drop in the economic value of advertising. Let's face it: who watches commercials when they don't have to?

"Midyear is as good a time as any to pause and reflect," says Richard Moroney in Dow Theory Forecasts -- a newsletter with the distinction of having been published for more than 50 years.

Here, he reviews the state of the market and offers a look at trio of favorite stocks which he considers "fundamentally superior" companies: Biogen Idec (NASDAQ: BIIB), Comcast (NASDAQ: CMCSA), and Oceaneering International (NYSE: OII).

You know you're probably looking at a tough business situation when the first thing you see on an earnings release is a pair of bullet points related to financing strategies that are clearly meant to show the reader that a company is getting its house in order.

Such was the case with Blockbuster (NYSE: BBI) and its Q1 report, which came out Thursday after the bell. Remember, this is the company that, not long ago, received a notice about its woes.

Liquidity is the name of the game these days for Blockbuster. Too bad it isn't the company's business model. As far as that goes, the video-rental chain is still having its difficulties. Revenues dipped 19% to $1.1 billion. On an adjusted basis, net income came out to 19 cents per share versus 21 cents per share in the year-ago period.

Netflix (NASDAQ: NFLX) did a spectacular job in Q1. The famous DVD-rental-by-mail entity issued its quarterly numbers on Thursday after the bell. On an adjusted basis, Netflix delivered 40 cents per diluted share. That represented bottom-line growth of over 70%. I guess movies truly are resistant to recessions, huh? Revenues advanced over 20%.

According to earnings.com, that 40-cent figure means that management destroyed expectations since Wall Street was looking for somewhere around 31 cents per share. I should point out, however, that I've noticed that some other sources listed the expectations as being a little higher than 31 cents. No matter, Netflix beat the bottom line.

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets. And with the aforementioned in mind, Comcast Corporation (NASDAQ: CMCSA) is worth a review.

In general, analysts see Comcast's revenue increasing 7-9% in FY 2009, including accounting for basic subscriber attrition/loses. Local advertising trends are bearish, but look for Comcast to continue to score gains in video services, commercial data, and phone customers.

Right now, over at Hulu.com -- a joint project of News Corp. (NYSE: NWS) and General Electric Company's (NYSE: GE) NBC Universal, viewers can check out recent editions of, for example, The Daily Show or Man Caves, among many other programs normally viewed on cable networks such as Comedy Central or the DIY Network. Viewers need a computer and a high-speed Internet connection to catch these programs, but they don't need a cable subscription (or even a television!).

Video chain Blockbuster (NYSE: BBI) reported earnings earlier this week for the fourth quarter. While there were some positive aspects to the story, I can tell you that the stock is not a buy at all, at least not from where I sit.

Okay, let me throw some of the good stats out at you. According to the press release, Blockbuster's same-store sales, or comps, are doing well. In Q4, domestic comps rose well over 4%. Free cash flow was positive. And earnings on an adjusted basis calculated out to $0.40 per share. That was a huge beat, since analysts were looking for $0.25 per share.

AT&T (NYSE: T) closed at $24.35. T April option implied volatility of 39 is below its 26-week average of 45, according to Track Data, suggesting decreasing price movement.

Verizon (NYSE: VZ) closed at $28.14. VZ April option implied volatility of 38 is below its 26-week average of 46, according to Track Data, suggesting decreasing price movement.

Comcast (NASDAQ: CMCSA) closed at $12.92. April option implied volatility is at 64; July is at 62; near its 26-week average according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Apollo Group Inc. (NASDAQ: APOL) reported that Q4 revenue soared despite the recession.
• Baidu Inc. (NASDAQ: BIDU) posted strong annual revenue, but at a slowing growth rate.
• Career Education Corp. (NASDAQ: CECO) easily topped Q4 earnings expectations, lifting shares up.
• Comcast Corp. (NASDAQ: CMCSA) Q4 earnings beat expectations and it increased its dividend.
• CVS Caremark Corp. (NYSE: CVS) shares jumped after it reported higher earnings in Q4.
• Digital River Inc. (NASDAQ: DRIV) shares soared on better-than-expected Q4 earnings and revenue.
• Expedia Inc. (NASDAQ: EXPE) reported dismal results due to a huge good will write down.
• Goodyear Tire & Rubber Co. (NYSE: GT) posted a greater-than-expected Q4 net loss and announced job cuts.
• Hormel Foods Corp. (NYSE: HRL) exceeded Q1 earnings expectations due to the popularity of SPAM.

Analyst upgrades:

• Jefferies upgraded Whole Foods (NASDAQ: WFMI) to Buy from Hold as it believes the company is taking the right steps to turn its operations around. The firm raised its target price to $13 from $11.
  
• Pali upgraded Whole Foods to Buy from Sell following the Q1 report based on better than expected cost containment, labor costs, capex cuts, and plans to rationalize the store base.
  
• Thomas Weisel upgraded Hewlett-Packard (NYSE: HPQ) to Overweight from Market Weight. The firm believes HPQ's risk/reward has improved given overdue reduced FY09 guidance and attractive valuation.
  
• Bernstein upgraded Talisman (NYSE: TLM) to Outperform from Market Perform based on relative valuation.
• Navistar (NYSE: NAV) was added to Goldman's Conviction Buy List.
  
• Sovran Self Storage (NYSE: SSS) was upgraded to Perform from Underperform at Oppenheimer.
  
• Suncor (NYSE: SU) was upgraded at Barclays to Overweight from Equal Weight.

Comcast Corporation (NASDAQ: CMCSA), a cable/broadband entity that competes with Verizon Communications Inc. (NYSE: VZ) and DISH Network (NASDAQ: DISH), reported earnings for the fourth quarter on Wednesday. Adjusted revenues increased 7%, and earnings per share jumped 35% to $0.27. Not a bad performance, and in fact, earnings beat estimates by four pennies according to this source.

Perhaps the biggest piece of news in the release is the increase in free cash flow for the full fiscal year. That jumped 56% to $3.7 billion, driven in part by a decrease in capital spending. I liked reading that management intends on focusing on free cash flow. It better, because it's going to be a challenging environment for the cable business, and the company committed itself to raising its dividend by 8%. On the flip side, though, as has been noted in a couple news reports, Comcast stated in the release that it doesn't feel like buying back stock at the moment. That won't be comforting to shareholders who have seen their shares hovering closer to a 52-week low than a 52-week high.

U.S. stock futures crept higher Wednesday morning, but investors will likely continue to focus on President Obama's economic stimulus bill, housing plan and auto and financial sector bailouts: Before the bell: Stocks may start session higher; housing plan, economy, autos in focus

General Motors Corp. (NYSE: GM) and Chrysler LLC barely managed to submit their recovery plans by the deadline that was part of their deal to receive $13.4 billion in government loans. It wasn't clear how they could plan a recovery given the state of the economy in general and the auto industry in particular. GM said it is cutting a total of 47,000 jobs globally and closing five more U.S. factories. It said it may need up to $30 billion, but asked for $9.1 billion now. Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models. Chrysler requested $5 billion in new loans. GM shares rose 2.3% in premarket trade.

Analyst upgrades:

• RW Baird upgraded LHC Group (NASDAQ: LHCG) to Outperform from Neutral based on valuation and expectations for raised 2009 guidance. The firm has a $36 target on the stock.
  
• Deutsche Bank upgraded Swiss Reinsurance (OTC: SWCEY) to Buy from Hold following the CEO change as the firm views it as a positive move.
  
• Wachovia upgraded DuPont Fabros (NYSE: DFT) to Outperform from Market Perform because it thinks the company has taken major measures to mitigate its liquidity risk by obtaining additional debt. The firm also notes that the company signed several new leases.
• Goldman added Air Products (NYSE: APD) and Burger King (NYSE: BKC) to the Conviction Buy List.
  
• MSC Industrial (NYSE: MSM) was upgraded to Outperform from Market Perform at William Blair.
  
• Northrop Grumman (NYSE: NOC) was raised to Outperform from Market Perform at Bernstein.

DirecTV (NYSE: DTV) closed at $22.98. DTV is scheduled to report Q4 EPS on February 10. February option implied volatility is at 64; March is at 59; above its 26-week average of 53, according to Track Data, suggesting larger price movement.

Echostar (NASDAQ: DISH) closed at $12.84. DISH is expected to report Q3 EPS in late February. March option implied volatility is at 83, June is at 74; above its 26-week average of 63, according to Track Data, suggesting larger price movement.

Google (NASDAQ: GOOG) is setting up a new tool to allow people online to measure whether their broadband provider is cutting down the speed of their access to the internet.

According to Reuters, "Google is looking to encourage network neutrality and prevent Internet service providers from blocking bandwidth-heavy sites." That is probably good news for consumers, but it is bad news for broadband providers like Comcast (NASDAQ: CMCSA) who have limited capacity in their network infrastructures.