All you need to know
If you're like me, you probably have a lot of friends and family members who don't know squat about the stock market. They couldn't care less about business news. They couldn't tell a bid from an ask, a short from a long, or a Maria Bartiromo from an Erin Burnett.
It's shocking, I know.
Well, in an effort to help you share a little of your market enthusiasm, I've decided to take a look at some of the top stories of the past week and explain them in layman's terms that will get any couch potato excited.
Let's start with the Time Warner Cable (NASDAQ:TWCA) story. Rather than go the conventional IPO route, Adelphia's bankruptcy forced Time Warner (NYSE:TWX) to distribute the spun-off shares to Adelphia stakeholders prematurely. In lay Fool's terms: It's like having a baby on the way to the hospital. It's messy. It's hectic. It makes for a better story.
How about Hershey (NYSE:HSY) announcing that it will fire 1,500 employees and move some of its production to Mexico? In lay Fool's terms: It's not sexual harassment if you take your severance in Kisses. Or, for the musically inclined:
Oompa, loompa, doopity-do
I've got another pink slip for you
Oompa, loompa, do pity dough
I hear we're hiring in Acapulco
Then you have news stories that really need no translation. 1-800-Flowers (NASDAQ:FLWS) was got a downgrade from Goldman Sachs on Valentine's Day. Really! What's next? Will Bank of Ireland (NYSE:IRE) be downgraded next month on St. Patrick's Day?
Lifestyles of the niche and famous
One of my favorite stocks is a company by the name of Baidu.com (NASDAQ:BIDU). I don't own it, but I have recommended it to Rule Breakers subscribers in the past. The stock got hammered on Thursday after reporting stellar results the night before. Yes, you read that right. It was a great fourth quarter for China's top search engine.
Wall Street was looking for 136% in revenue growth and 255% in profit growth. Baidu nailed the top line and actually saw earnings per share soar 400% higher. Still, the stock took a hit, though it did begin to claw its way back throughout the trading day.
What spooked investors into what was initially more than a 10% dip? Well, analysts were concerned that the company's revenue guidance for the first quarter wasn't up to snuff. Let's dig right back into that quarterly report. Did you see how profits outpaced revenue? That is margin expansion. The same analysts who can't realize that Baidu is squeezing $0.43 in profit out of every dollar in revenue suddenly think the company is vulnerable under a slower growth scenario. I've seen folks underestimate the paid-search leader in the slower-growing stateside market before, and Google (NASDAQ:GOOG) has done just fine. Good luck scaling that Great Wall of Worry again, Baidu.
Until next week, I remain,
Rick Munarriz
Time Warner is a Stock Advisor selection. Baidu is a Rule Breakers newsletter pick. You can check out either service with a free 30-day trial.
Longtime Fool contributor Rick Munarriz recommends windshield wiper fluid when trying to look back. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.
