With the S&P up more than 7% since the beginning of August, last week's music may have seemed a bit out of tune. Nevertheless, harmonious or dissonant, Wall Street plays on -- let's take a peek at a week in music.
"Slow Down" by Ozzy Osbourne, with special guest Wal-Mart
Wal-Mart (NYSE:WMT) reported last week that same-store sales inched ahead at a disappointing 0.5% rate in October, the slowest rate in nearly six years. This number was particularly disheartening to investors, since Wal-Mart had cut previous same-store sales projections from 2%-4% to 1% just a week earlier. In response, market participants tied some weights to the stock, bringing it down slightly more than 6%.
Following a steep fall in energy prices earlier in the year, Wal-Mart was looking forward to shoppers taking to their SUVs and loading up on new purchases. CEO Lee Scott said that lower gas prices had not translated to the pickup in shopping that the company had expected. Wal-Mart also blamed a lukewarm reception of new, trendier apparel and ongoing store remodeling for the abysmal numbers.
Though the overall retail picture isn't as strong as retail bulls might hope, it does seem that this might be a Wal-Mart-specific problem. Competitors on both the general retail side, such as Target (NYSE:TGT), and on the department-store side, such as J.C. Penney (NYSE:JCP), saw respectable growth in same-store sales in October. Of course, moves like Wal-Mart's Friday's announcement of price cuts on top electronics items could make the retail behemoth's headache a pain for other retailers as well.
"Dream On" by Aerosmith, with Yahoo! and Time Warner
Last week, reports that Yahoo! (NASDAQ:YHOO) and Time Warner (NYSE:TWX) had resumed talks over the potential Yahoo! purchase of the AOL property were met by both companies humming this classic Aerosmith tune. The two were talking last year, before Google (NASDAQ:GOOG) swooped in and inked a $1 billion deal to provide search on the AOL sites and purchase 5% of the property.
Yahoo! has been under a lot of heat lately, always seemingly a few steps behind Google. Google's monster purchase of the YouTube video site turned up the temperature a little higher as investors, analysts, and anybody else who knows that there's a "!" at the end of Yahoo! started clamoring for the Web search giant to make a countermove. For Yahoo!'s sake, I hope they're denying these AOL talks with conviction. As far as most Web users are concerned, you might as well tack an extra letter onto AOL and call it a four-letter word. Other options open to Yahoo!, including the much-ballyhooed potential deal with Facebook, are likely a more promising alternative.
Meanwhile, Facebook may be humming a tune of its own. Didn't Frank Sinatra record a version of "High Hopes?"
"Why Can't We Be Friends?" by War, featuring Microsoft and Novell
In a surprise move, Microsoft (NASDAQ:MSFT) and Novell (NASDAQ:NOVL) announced Thursday that they would settle their patent dispute and put in place a broad set of collaborative agreements in an effort to make Windows and Linux more interoperable. The move is likely a response to the number of Windows customers who work on dual-boot systems, or in a mixed environment of Windows and Linux machines. The press release outlines three main areas of collaboration: enabling virtualization (the ability to view or use many machines as a single unit), Web-based server management in mixed environments, and document compatibility between MS Office and OpenOffice.
While the announcement is definitely positive news for the Linux operating system, it is particularly nice for Novell, whose SUSE Linux software Microsoft will recommend to its customers. Novell's shares saw nearly a 25% jump on the announcement before coming back a bit on Friday. So does this mean that it's all rainbows and candy canes ahead for Linux software companies like Novell and Red Hat? Probably not, though this nudges Linux forward a bit further, larger competitors have been moving into the space. A recent announcement from Oracle, announcing the company's full support for Red Hat Linux, sent that stock plunging. And who knows what crafty Microsoft's real intentions are for Linux?
"Bad, Bad Leroy Brown" by Jim Croce, with guest vocals by Sanjay Kumar
I always thought of Leroy as bad in that good way, though, but former CA head Sanjay Kumar is definitely not. He's bad in a bad way, and he's getting jail time for it. Kumar was responsible for the $2.2 billion accounting fraud at CA and for obstruction of justice during the investigation into the fraud.
With a fine of $8 million and 12-year jail sentence, Kumar joins a rapidly growing group of former business high fliers behind bars. Recently, Jeff Skilling, of Enron infamy, was handed a 24-year sentence, while Bernie Ebbers of WorldCom and Dennis Kozlowski of Tyco both are serving 25-year sentences. It'd be nice if they were put up in the same place -- at this point, they could get a pretty respectable card game going.
"You Can't Always Get What You Want" by The Rolling Stones, featuring The Besotted Bulls
It's was a hurtin' time for bulls on Wall Street last week, as all the major indices lost ground. Mixed and often disappointing economic data left investors trying to figure out whether the economy is too weak and is headed for a hard landing, or whether prices are still tipping up a little too fast for the Federal Reserve. Heading up the economic confusion was a weaker-than-expected third-quarter GDP report of 1.6%, lower-than-expected consumer confidence, higher-than-expected jobless claims, and combined low unemployment and solidly growing wages.
It's up for grabs whether the bulls will be back out to play this week. Economic news pares back next week, but earnings season is in full swing, so some strong reports there could get the market engine revving back up again. XM Satellite Radio's report today could cause a lot of excitement, but some of the big boys, such as Toyota and J.C. Penney, reporting later in the week could provide some real fuel for market.
Now hear this:
Yahoo! and Time Warner are Motley Fool Stock Advisor selections, XM is a Rule Breakers pick, and Microsoft and Wal-Mart made the cut at Inside Value . Try any of our Foolish newsletters free for 30 days.
Fool contributor Matt Koppenheffer prefers more cow bell to hearing the bell toll. He does not own shares of any of the companies mentioned, though he'd definitely buy shares of Ozzy if only he'd IPO. The Fool's disclosure policy always sounds good.
