Behind the Market Headline News

BlackBerry device maker, RIM, report its the 3rd quarter results after the bell, as expected, the company's earnings were significantly impeded by the global economy slow down, GAAP net income increased about 7.0% from $370mm to $396mm ($0.70 vs $0.66 per share) with revenue coming in at $2.8 billions. Most interesting to me in the earning release, though, was that RIMM sold 6.7 million BlackBerry devices and booked $2.3 billion revenue. For comparison, in AAPL last quarter (ended 9/27/08), AAPL sold 6.9 million iPhone, but only $806 millions revenue was recognized. So even about 200,000 more iPhone were sold with assumed higher ASP than Blackberries in three month period, AAPL booked 2/3 less revenue than RIMM. The culprit is that AAPL book its iPhone sales using so-called "subscription accounting", namely recognized revenue over 24 month period, but not as sales occur. When AAPL only sold average about 1 mm iPhone in each previous few quarters, iPhone sales have limited...

Following the significant equity market consolidation or profit taking in Asian markets overnight, the stocks in the states were under enormous pressures from the opening bell in the morning. The declines were broad based and no safe place to hide (only two stocks of S & P 500 index ended in positive territory). However, the sell-off was due to happen considering the historical magnitude of rallies we have witnessed in the last week (>17% in 5 sessions) and potential huge amount tax related portfolio balancing at the year end. Any opportunities to book meaningful gain or any any sign of momentum shift would trigger consolidations. Today's movement is no exception, the broad based indexes steadily went to downward throughout morning session (we can see the ARMS gradually reach the usual upper limit of 2.0, then the index suddenly spiked right over 6.0 around 2:45. After this momentum shift the market went to unstoppable downward spiral. Because of the way that ARMS constru...