Despite a measurable drop in the number of new and continuing unemployment claims for last week, stocks just couldn’t get past the big loss European stocks booked on Thursday. All told, the S&P 500 fell 0.86% today, closing at 2,095.84, below some very important support levels.
For Opko Health Inc. (NYSE:OPK), J M Smucker Co. (NYSE:SJM) and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) though, things were much, much worse on Thursday. Here’s why.
J M Smucker (SJM)
Don’t let the headlines mislead you too much — JM Smucker didn’t actually lose money on an operational basis last quarter. The loss of 82 cents per share of SJM mostly stemmed from a one-time accounting charge.
On the other hand, the adjusted profit of 98 cents per share fell short of the expected 99 cents, and still came up well short of the $1.16 per share the organization earned in the same quarter a year earlier.
The primary culprit for the disappointing performance was higher coffee costs, which JM Smucker didn’t pass along to consumers this time around. The bulk of the reason SJM shares were in the red to the tune of almost 4% on Thursday, however, has less to do with its fiscal Q4 results, and more to do with disappointing guidance for the current year. Now the company expects to turn a profit of between $5.65 and $5.80 per share of SJM this year, versus prior analyst estimates of $5.84.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor investors had something of an epiphany this week — the recent of wave of mergers and acquisitions within the industry could end up being a big problem for the company. TSM shares are off more than 4% for the week now that the premise has soaked in, with today’s 2.9% dip being the biggest daily loss in the past four days.
As Barron’s journalist Shuli Ren notes, recent unions like the one between Intel Corporation (NASDAQ:INTC) and Altera Corporation (NASDAQ:ALTR) will make each more self-reliant, and therefore less reliant on third-party service and equipment providers like Taiwan Semiconductor.
“Intel is likely to integrate Altera’s FPBA designs into Intel’s platform to better service corporate customers on data centre and cloud applications. Given both have announced to work on 14nm node foundry (Mar 2013) and advanced packaging (Feb 2014), the integration will likely to occur sooner….Altera’s switch to Intel’s 14nm node in 2015 and volume productions in 2016 will adversely impact TSMC [TSM].”
Opko Health (OPK)
The decision from Opko Health to acquire Bio-Reference Laboratories Inc. (NASDAQ:BRLI) was given plenty of lip-service by each company’s insiders. For example, the press release announcing the decision noted Bio-Reference has a solid distribution channel for Opko Health’s services. Judging from the stock’s 15% drop today, though, OPK investors aren’t impressed.
The reason for the selloff is most likely the terms of the deal. It’s an all-stock deal, meaning current owners of BRLI will eventually have them swapped out for OPK shares, which dilutes current Opko Health shares.
Or, it may just be the frothy price of $1.47 billion Opko is paying for Bio-Reference Laboratories. Although it’s actually a pretty fair price for the target company, everybody wants to feel like they’re getting a bargain, and OPK owners just aren’t feeling it.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
