Earnings Tonight - Oracle (ORCL), Research in Motion (RIMM), Nike (NKE)

Today we had 4 important earnings reports, in "bell weathers" that the market does follow closely. As we stated earlier this week, it is not so much the results, but the reaction to results that matters. So far, it's not been a good reaction to results. I won't get into Oracle (ORCL) too much because it's not really a name I follow too closely but it is down 3-4% in after hours on what appears to be solid results. Remember the "tech is immune to oil" trade is what is keeping the NASDAQ (relatively speaking) outperforming everything else (NASDAQ being top heavy in technology names).

• Oracle Corp (ORCL Quote, Profile, Research, Stock Buzz), the world's third-largest software maker, reported on Wednesday that quarterly profit rose 27 percent, beating Wall Street estimates, on strong new software license revenue. The company had a profit, of 47 cents a share, excluding items, which beat the average analyst target of 44 cents.
• "Nobody expected the May quarter to come in as strong as it did," said David Garrity, director of Research at Dinosaur Research.

So good news, but the stock sinks? Don't like to see that if we are bulls. But let's compare this to say Bed Bath and Beyond (BBBY) which is a retailer who reported a shoddy year over year quarter but it beat the all important lowered expectations and that stock is rocking up 9% in after hours. This is why it is generally safer to hold stocks with no serious expectations going into earnings versus ones everyone has high hopes for, as we saw this morning in Monsanto (MON).

Off we go to one of our fund holdings, Research in Motion (RIMM) - the earnings are spectacular but not good enough for hyper expectations. We sort of like that here, selfishly, since we only have a placeholder position at 0.1% of fund - awaiting some sort of pullback. The stock is down to low $130s after hours which coincides with its 50 day moving average. Might be a spot to begin scaling in, but frankly at 33-35x forward earnings it is hard to see huge upside in either this name or Apple (AAPL) - we'd like to see more pullbacks on prices. Again, as with Monsanto (MON) when everyone expects the world from you, many times any i that is not dotted or t not crossed leads to a sell off - expectations simply get out of hand on some of these names which is why I usually always cut back ahead of any earnings. In this case "earnings were light" - as with Apple, the most likely scenario is the typical underpromise then over deliver... but when the underpromise part happens (today) people forget that in 3 months the over deliver part will come, and instead try to scrutinize every line item trying to find the "weakness"... weakness in 100% year over year growth. :) We've sold some of this off in the $100s, $120s, and $130s - but by and large the stock has been stagnant for the past 6 weeks while we chased more fruitful opportunities so that is ok. Below is the typical hand wringing.

• Research in Motion (RIMM) shares got pummeled when the company's fourth quarter earnings came out, missing earnings per share estimates by a penny, reporting 84 cents instead of the 85 cent consensus. (the horror) Revenue also came up short, at $2.24 billion against the $2.3 billion expectation.
• New subscriptions and BlackBerry units shipped were essentially in line with expectations. But the problem for this company comes from its guidance into its fiscal first quarter. The Street was looking for 90 cents on $2.439 billion. Instead, RIM expects 84 cents to 89 cents on higher than expected revenue.
• That's leading to questions as to why RIM won't be able to translate those better than expected revenues into increased profits? What new expenses are we not aware of, or that Wall Street wasn't counting on? Further, for a company so used to knocking the cover off the ball, why such a lukewarm report (in comparison to the expectations among the experts?)
• A quick call of some analysts suggest to me that some are worried that RIM's historic hyper growth might be waning, if ever so slightly. That's a problem. Another analyst wonders whether the Apple iPhone is taking a bigger toll on RIM than people had anticipated, slowing the company's growth faster than expected. In other words, are RIM's problems its own?

When you take 5 steps back and really look at the numbers and ignore the "analysts expectations" the data is astounding for a company of this size - I'd call it Googlish in fact.

• RIM said it earned $482.5 million, or 84 cents a share, in the three months ended May 31. That was up from a profit of $223.2 million, or 39 cents a share, a year earlier.
• The company said that revenue surged to $2.24 billion -- up 107 percent from a year earlier -- and that it added 2.3 million subscribers, about 100,000 more than it expected.

So the end is neigh! Well, not so much. This is no Garmin (GRMN). We'll look to buy in the coming days/weeks.

Now let's end with Nike (NKE) - see the one problem with RIMM is they are based in Canada. Therefore unlike the Nike's, or IBM's or just about any US multinational they are not benefiting from the United States of Subprime Peso (the artist formerly know as the dollar). Could of added some great juice to RIMM's quarter - instead they are stuck with the powerhouse Loonie. While CNBC clangs the pots and pans together rejoicing over the incredible growth last quarter in all these U.S. multinationals the dirty secret I revealed then, and will repeat in the near future (earnings season begins anew in a few weeks!) is if not for the dollar breaking to pieces, all these beautiful earnings would look quite pathetic for most of these companies. Let's take a quick and dirty look inside Nike - truly this one company says it all about the shift in global forces. (p.s. Nike down 6% in after hours as well - not a good day for the market darlings)

• For the fourth quarter, revenues increased 16 percent to $5.1 billion, compared to $4.4 billion for the same period last year. (sounds amazing!)
• Changes in currency exchange rates increased revenue growth by 7 percentage points for the fourth quarter. (oh, so you're telling me 44% of revenue growth is due to nothing but the U.S. peso? Not so amazing - but let's leave that fact out when we crow about the glorious growth of US multinationals)

Now let's look at it region by region, going from worst to best - it sort of sums up the global economy all in 1 company.

• Worst? United States of Subprime - no currency benefit here for Americans. During the fourth quarter, U.S. revenues increased 4 percent
• Next? Europe. Weakening but still benefit from their Euro crushing the US peso in its slimy grip. Fourth quarter revenues for the European region grew 19 percent (sounds amazing!) Changes in currency exchange rates increased revenue growth by 15 percentage points (oops! reality check, 2% growth - CNBC won't mention it though)
• Better? Latin America. Fourth quarter revenues in the Americas region increased 30 percent (sounds amazing!) Changes in currency exchange rates increased revenue growth by 11 percentage points. (ok, not so amazing but still kinda good @ 19% growth)
• Best? You guessed it - those rabid Asians who love to gobble up American goods. Yummy! Feed me. Fourth quarter revenues for the Asia Pacific region grew 39 percent (sounds amazing!) Changes in currency exchange rates increased revenue growth by 13 percentage points. (ok, still amazing but not quite so amazing - 26% growth is still solid)

Note - I actually like Nike - so I am not picking on them. But why am I wasting time spelling this out? Mostly for a reality check - lots of new readers to the blog since April's earnings season and I'm warning you ahead to ignore the hype spouting from the pundits come July - MUCH of the U.S.'s "incredible" export growth is nothing more than the currency being devalued to the basement by Uncle Ben. And this leads to problems for the future.... if dollar bulls get their wish and the dollar actually strengthens what does that lead to for corporate profits of multinationals? Not good things. So cross your fingers and pray together for a terrible dollar (which by the way means everything we import is slapped with serious inflation) But that's a problem for US consumers who actually need to buy imported things (which is almost everything nowadays in our manufacturing neutered economy) and we do not care about those peons (or we'll cut them another rebate check to keep them sated for a few more months - at least until the election; darn whiners). All we care about is corporate profits. Weaker dollar, come to papa - we need you. Corporate America needs you. CNBC needs you.

Advice to Research in Motion? Move to the United States - your 107% growth can move to 150-170% growth overnight.

Conclusion: Ignore the hype about the great multinational boom - and make sure to analyze every company and discern what profits are coming from true growth; and what are coming from nothing more than the pathetic US dollar. The ones with true growth outside the dollar are where you want to be.

Long Research in Motion in fund; no personal position