The new trading week got started on a bullish foot despite the bearish end to last week … despite a lowered ISM reading for April. The S&P 500 's close of 2081.43 was 0.78% better than Friday's last value, and carried the index back above a key technical line in the sand.
Here's the deal.
Baidu Inc (ADR) (BIDU)
In a strange, but not entirely unexpected turn of events, Chinese search engine giant BIDU is on the proverbial hot seat after a cancer patient used the site to find more information about treating his cancer, and then died anyway. Though from any legal perspective the complaint holds little water, the fact that Chinese officials are starting a formal investigation of the complaint lends just enough credence to the situation that it has managed to send BIDU shares lower to the tune of 8%.
The cancer patient in question, Wei Zexi, was connected to a treatment option at a government hospital performing treatments for a rare form of cancer cell synovial sarcoma. The treatment wasn't nearly as effective as the hospital's ads - displayed on the Baidu website's search results pages - suggested it would be.
While Baidu itself - like Google - doesn't directly control the content and messages of the ads it displays, in a court of public opinion, it must assume some sort of basic responsibility for its user experience.
Brocade Communications Systems, Inc. (BRCD)
Networking hardware company Brocade Communications Systems reeled in its second quarter guidance when it announced its first quarter results Monday morning, and BRCD shareholders were less than thrilled with the outlook.
As of right now, Brocade anticipates reporting a profit of between 21 and 23 cents per share of BRCD on sales of somewhere between $518 million and $528 million for the current quarter. Those numbers strained analysts' outlooks for earnings of 23 cents per share and a top line of $551.8 million. The company earned 22 cents per share on $546.6 million in revenue for the same quarter a year earlier.
BRCD ended the day down a more than 11%.
Valeant Pharmaceuticals Intl Inc (VRX)
Last but not least, following through on Friday's weakness, Valeant Pharmaceuticals lost another 2.3% on Monday as word of Charlie Munger's assessment of VRX began to spread . The comment (given at this year's annual meeting of Berkshire Hathaway shareholder)? "Valeant, of course was a sewer," referencing the implosion of VRX since August of last year, spurred by a business model that - in retrospect - was never built to remain sustainable .
Warren Buffett underscored Munger's message on Monday morning, commenting , "I don't think you'd want your son to grow up and run a company in the manner that Valeant was run."
Since it's difficult to argue with two veteran investors who have proven their assessments are usually right, traders took it as another reason to dump more VRX stock.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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