Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
With 2013 drawing to a close, the stock market appears to have taken on its traditional bullish tone as the holidays approach. The stock market posted modest but solid advances today, with the Dow up 42 points while the S&P 500 gained about half a percent, both setting new all-time record highs. Yet for BlackBerry (NASDAQ: BBRY ) , Textron (NYSE: TXT ) , and Red Hat (NYSE: RHT ) , today's gains were much more significant, with each company having news that made investors more optimistic about their prospects.
BlackBerry soared 16% as the company released its quarterly report this morning. The mobile-device pioneer didn't make investors terribly happy with its financials, as the company posted 56% lower revenue and a net loss of $4.4 billion. But a long-term five-year agreement with Foxconn will have BlackBerry produce lower-cost devices that should appeal to the company's customer base in emerging markets. Moreover, interim CEO John Chen's emphasis toward the company's service offerings and its software products could bring about a useful change in direction that could help BlackBerry compete more effectively in the tech space. Given how far the stock has dropped, today's move is relatively insignificant in the long run, but it could signal an important inflection point if BlackBerry can continue to make progress.
Textron climbed 14% as reports swirled that the maker of Cessna aircraft could be close to sealing a deal to buy rival Beechcraft for $1.4 billion. With Beechcraft making planes ranging from its King Air turboprop planes to Hawker private jets, a combination would greatly expand Textron's Cessna division and its ability to offer business and personal customers tailored solutions to their transportation needs. The move also makes sense given Beechcraft's bankruptcy filing last year and its inability to follow through on a proposed sale to Chinese buyer Superior Aviation Beijing for $1.79 billion.
Red Hat also gained 14% after a positive earnings report last night, with several analysts raising their views on the stock following the report. Red Hat's sales grew 15% in dollar terms, with subscription revenue rising 17% and making up more than 85% of its overall sales. CEO Jim Whitehurst pointed to the success of its core products, including Enterprise Linux and JBoss Middleware, as driving growth for the company. Net income jumped by nearly half, and a big reversal in restoring growth in software billings helped put to rest fears of slowing business activity. Going forward, Red Hat's OpenStack program appears poised to generate even more sales from enterprise customers looking for flexible IT solutions.
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