Market Round-Up (GOOG, ALKS)

Some painful cuts may be seen as California’s Governor Schwarzenegger is releasing a revised budget today. Austerity measures are likely to be adopted by the state that faces a deficit of more than $20 billion, a quarter of general-fund spending. Marshall Auerback reiterated that the US (along with Japan, the UK, and others) does not have a "Greece problem."

Analysts are raising their forward estimates quite a bit over the recent weeks, led by strong earnings growth in the first quarter, especially in the industrial sector. The positive revisions in the sector are exceptionally strong at 41.4% as companies have been consistently raising guidance. The S&P 500 has seen 50% year-over-year earnings growth in Q1, up from the expectations of about 30% at the start of earnings season. For the entire fourth quarter of 2009, net upside revisions were basically flat and then they declined for most of Q1 2010. However, over the last couple of months, the analysts have significantly raised their earnings estimates for stocks in the Industrial sector as these companies have reported strong results and hiked guidance.

In the recent move, Google (NASDAQ: GOOG) acknowledged that its online sales haven't exceeded expectations because of which it has decided to close the Web store for the Nexus One. These stores will now be converted into an online store window to showcase a variety of Android phones available across the globe. As the company is trying to expand the availability of Nexus One in more countries, it’ll adopt the strategy it uses in Europe, which involves offering Nexus One to consumers through the existing retail channels. GOOG was trading at $503.42, down 1.46% at 2:56 pm.

The Cambridge, Massachusetts based company Alkermes Inc (NASDAQ: ALKS) led the losses in drug stocks as its shares plunged on weaker-than-expected earnings and financial forecast. ALKS had yesterday announced a 12% decline in its fiscal Q4 revenue to $38.5 million, while its quarterly loss widened to $0.15 a share, from $0.14 a share. Moreover, ALKS’ earnings forecast for fiscal 2011 was for the loss of $0.47-$0.58 a share, on revenue of $170-$195 million, widely missing the analyst expectations. By 2:56 pm, the stock had slipped 8.05% to $11.60.

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