Wednesday, May 6, 2009

Orbitz Down Earnings Got Me Thinking....

From the WSJ:

Orbitz Worldwide Inc.'s first-quarter loss widened sharply on a write-down related to declines in the company's stock price.

The online travel agent has looked to aggressively cut costs as demand falls. Businesses and consumers have been scaling back travel amid the weak economy, and those cutbacks hurt companies like Orbitz, which allows customers to book hotels and flights at discount rates through its site.

The company posted a loss of $336 million, or $4.02 a share, compared with a year-earlier loss of $15 million, or 18 cents a share. The latest results included a $332 million write-down because of the decline of the company's stock price during the quarter. Total operating costs more than doubled, although cost of revenue declined on lower volume.

I'm a big fan of Dow Theory, which basically says averages have to confirm each other. If one average goes up, other averages should also increase. This is especially true with the Transportation averages. If things are better, we should be shipping more stuff and traveling more. The reverse is also true. So if things are getting better according to Ben, why is Orbitz reporting a poor quarter?

So, here are some charts from that show sub-sections of the transportation industry.

Click on all images for a larger image

This chart really caught my eye. If things are getting better shouldn't we be shipping more stuff? Prices are still moving lower and volume is still high indicating traders are dumping shares.

And the railroads trucking and shipping areas are still moving lower. On the positive side, at least the volume has subsided on the shipping and trucking charts.

And we sure aren't traveling individually or in a business capacity yet.

Bottom line - the transportation subsets don't tell a story of recovery.