Zacks.com submits:

Incorrect forecasts by brokerage analysts are contributing to the current downturn in the equity markets.

Energy, finance and technology are the three biggest components of the large-cap index, and analysts have been constantly revising their estimates on oil and banking companies. Last week's miss by Research in Motion (RIMM) and cautious guidance by Oracle (ORCL) raised the possibility of technology earnings being a bit light in the second-half of the year.

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Don Dion submits:

Many of iShares S&P North American Technology ETF's (IGM) top holdings gained ground during the second quarter, even as the broad market slid toward bear market territory. Apple (AAPL), IGM's recent No. 3 holding, leapt nearly 19% for the three months ending June 27; No. 6 holding Google (GOOG) jumped more than 20% in the same period; No. 8 holding Oracle (ORCL) gained about 10% and No. 9 holding Qualcomm (QCOM) surged about 14%. Only three of the fund’s top ten holdings lost ground for the period, and none dropped by more than 3%. The fund itself gained about 5%.

IGM held more than half its assets in its top ten holdings during those three months—standard operating procedure for this fund—so strong performance by the largest U.S. tech stocks gave the fund's momentum a strong boost. IGM ranked 14th on the ETF Momentum Tracker Sector Table last week, up from 33rd on April 8. Whether IGM's momentum continues to build will depend largely on a few factors: how much tech spending slows in response to the turmoil in the U.S. economy, the success of the latest products released by major U.S. tech firms, and the ability of those firms to tap into overseas markets.

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Filed under: Forecasts, Consumer experience, Competitive strategy, Apple Inc (AAPL), Ford Motor (F), Motorola (MOT), Research in Motion (RIMM), Washington Mutual (WM), Economic data, JetBlue Airways (JBLU)

The weak market conditions have caused many stock prices to fall under $10. Not only smaller -- and perhaps lesser known -- stocks trade under $10 these days, but also some big and famous names such as Ford Motor Co. (NYSE: F), Motorola Inc. (NYSE: MOT), Sprint Nextel Corp. (NYSE: S), Washington Mutual Inc. (NYSE: WM) and Del Monte Foods (NYSE: DLM), as well as many airline companies like Northwest Airlines (NYSE: NWA) and JetBlue (NASDAQ: JBLU).

While those names could sound tempting for investors who may think they are cheap, BusinessWeek's Karyn McCormack reminds us that not everything that is cheap is a good bargain, and there are some risks that need to be taken into account.

One common problem for most of these stocks is that they trade under $10 for a reason. That reason is usually hardly any earnings growth, if any at all. And with a weak economy, these companies would have an even harder time to stimulate growth. Add to the mix the fact that institutional investors don't like to touch stocks under $10 and the potential for recovery is not good.

In addition, for companies like Ford and Motorola, the problems compound as they find it difficult to address changing customer demands and needs. After they each focused on one business model such as Ford's focus on sport-utility vehicles and trucks and Motorola's focus on the RAZR wireless handset, they both have lost considerable market share to competitors as they have both failed to respond to changing demands.

But there are still some hopes for these stocks. If we take a look in the past, even Apple Inc. (NASDAQ: AAPL) was under $10 in the summer of 2003 and is currently trading over $170, while Research in Motion Ltd. (NASDAQ: RIMM) dropped under $10 between 2001 to 2003, and now trades for $118.

As a last piece of advice, the article reminds us that there is always a reason for single-digit stocks to be priced at such a low level and it is not something that should pass unobserved for investors. With so much turmoil in the market, it may not be the wisest move to add smaller, riskier stocks.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

 

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Sramana Mitra submits:

The market was stunned last week as Research In Motion missed analyst estimates by a slight margin. Its stock has plummeted to $117 from a 52-week high of $148.13 on June 19, providing a great opportunity to buy. In this post, we will take a look at RIM’s and Palm’s recent earnings reports.

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FP Trading Desk submits:

Research in Motion (RIMM) is aggressively investing to become a more significant player in the handset market, says UBS analyst Jeffrey Fan, so he’s not too worried that the Waterloo,Ont.-based maker of the BlackBerry has increased its Purchase Obligations by 53%, to C$3 billion, compared to the previous quarter.

In a research note, Mr. Fan says RIM indicated that C$2.1-billion of the purchase obligations are related to purchase orders with contract manufacturers, which supports his view that the increase “appears to support our view of a large upcoming ramp in units.”  However, he noted that there isn’t a strong correlation between purchase obligations and units, so the figures offer “better directional rather than absolute” indications for what may lie ahead.

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