Coordinated efforts by Europe's central bankers should Greece's elections go awry and the prospects for a new round of quantitative easing by the Federal Reserve led the Dow Jones Industrial Average 155 points higher yesterday. Yet some stocks did much worse, going in the other direction and falling by double-digit percentages. So first let's see whether they had good reason to drop, as panic-fueled declines can sometimes make for excellent buying opportunities.
As broad-based as the Dow's surge was, not every stock that makes up the index followed suit. Concerns about whether Boeing (NYS: BA) can get its 787 Dreamliner to live up to the promise it offers remains very much in doubt. Moreover, its once hugely popular 747 doesn't command the prices it once did. In a period of high fuel costs, airlines are looking for more fuel-efficient models. Analysts say there's not as much demand for the older 747 as there once was, as many airlines have turned to Boeing's rival Airbus for its A380.
And it was jobs that caused one-time top cell-phone maker Nokia (NYS: NOK) to tumble 16% yesterday after it announced it was cutting 10,000 more jobs by next year in an effort to save $2 billion in costs. It's closing down both R&D plants as well as manufacturing facilities. It's been losing ground in the smartphone wars and recorded a huge $1.2 billion loss in the first quarter as Samsung and Apple (NAS: AAPL) caused a 40% drop in device sales. It now says its slipping even further behind than it previously thought, and as the Fool's Evan Niu points out, in just over a year Nokia has hacked away 24,500 jobs.
But even teaming up with Microsoft and introducing several Windows Phone 7 models has done nothing to stanch the bleeding. Microsoft had wanted to challenge the iPhone, and Nokia accounts for two-thirds of its mobile software shipments. But the dwindling impact it has suggests the partnership may not survive, which could end up being a death knell for Nokia.
CAPS member Speculatormaster lives up to the screen name by suggesting Microsoft may end up wanting to acquire Nokia, but in the meantime MajorBob04 says there's no bottom in sight and expects Nokia to keep falling. Still, the smartphone maker remains a well-respected company among investors, and 90% of the 4,100 CPAS members weighing in on its prospects think it will eventually gain traction again.
Tell me on the Nokia CAPS page or in the comments section below whether you agree the sell-off was overdone, and then add its stock to the Fool's free stock-tracking service to watch the twists and turns of this one-time leader's troubles.
A gouge, not a chip
While macroeconomic news didn't have an impact on Nokia, you could see its effect on Lattice Semiconductor (NAS: LSCC) , which reduced its guidance for the second quarter as weak international business, particularly that coming from Europe, weighs on its operations. Shares tumbled 14% on the news.
Considering Lattice competes with Altera (NAS: ALTR) , which recently reaffirmed its guidance of sequential revenue growth of between 14% and 18%, it might indicate Lattice is losing market share to its rivals. Xilinx, for example, recorded 27% sequential growth in Europe in April.
But the area Lattice is seeing the most weakness in, telecom and wireless, is also what's hurting Altera. While Lattice's competitor is looking for stronger second-quarter revenue growth, that comes on the heels of a disappointing first-quarter performance that saw a significant decrease in late-quarter demand in the same segment. So its growth is coming from a weaker base, meaning Lattice is not so far behind its rivals and it's more an industry phenomenon rather than being company-specific.
With 88% of the CAPS members rating Lattice to outperform the broad market indexes, it's apparent they're confident in the chipmaker's ability to gain control of the situation, as does the four-star rating (out of five) they've assigned to it.
Add Lattice's stock to your Watchlist to see whether it can dial up new growth, and then tell me in the comments box or on the Lattice Semiconductor CAPS page whether you think it's falling behind Altera and Xilinx.
Ready for a resurrection
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At the time this article was published Fool contributor Rich Duprey owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio . The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft and Apple and creating a bull call spread position in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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