Monthly Archives: April 2013
Despite mixed Q1 results, ConocoPhillips (COP) could be approaching a very significant inflection point for its operation while it continues to improve its bottom line.
ConocoPhillips, with a market cap of $71.93B, is the largest independent U.S. oil and natural gas producer. COP operates as an integrated energy company, exploring for, producing, transporting and marketing crude oil, natural gas, natural gas liquids and liquefied natural gas, globally. COP is organized into Exploration and Production, Midstream, Refining and Marketing, LUKOIL Investment, Chemicals, and Emerging Businesses segments.
For Q1, 2012, COP’s net income fell to $2.14B ($1.73 per share) from $2.94B ($2.27 per share). Excluding discontinued operations, COP earned $1.42 per share. After spinning off Phillips 66 (PSX), COP’s downstream business, in Q2, 2012, COP’s income was negatively impacted by $700M. Excluding PSX’s impact, the earnings were about the same a year ago. Total revenues fell 10% to $14.65B, from $16.08B the previous year. According to FactSet, analysts, on average, expected adjusted net income of $1.42 per share on revenue of $12.79B.
Earlier in January, the management indicated that oil and gas production may reach a low point this year as the company completes a multi-year restructuring and asset sale program. Oil and gas output from continuing operations declined to 1.56 million barrels oil equivalent ((boe)) per day from 1.58 million boe per day a year earlier.
Alcatel-Lucent (ALU), a France-based company with a market cap of $3.13B, is a provider of telecommunications technology and services, which also engages in mobile, fixed, Internet Protocol and optics technologies, applications and services. With disappointing Q1 numbers, it may be still too early to give up ALU.
For Q1, 2013, ALU reported a net loss from continuing operation of $0.20 per ADS, which is lower than the Zacks Consensus Estimate of -$0.10 per ADS. Sales were nearly flat at $4.21B (€3.23B Euros) with a loss of $461.72M €353M Euros) as compared to a gain of $337.49M (€259M Euros) a year earlier. FactSet had forecast a Q1 loss of $345.31M (€265M Euros) on sales of $4.17B (€3.2B Euros).
As the company continues to be on a $1.63B (€1.25B Euros) restructuring program, cutting 5,000 jobs, new CEO Michel Combes still has a tough road ahead for his plan of “one month of listening, two months of defining a project, and three years of transformation.” Combes just became CEO earlier this month.
Geographic and Segment Breakdowns
Geographically, North America was up 15.1% while Asia Pacific region had a low single-digit decline (5.8%) year-over year. Europe continued to suffer with a decline of 10.1% in revenue. Lastly, revenue from the Rest of World decreased 13.3% due to poor performance in Central and Latin America, the Middle East and Africa.
Corning Incorporated (GLW) is a global, technology-based corporation, operating in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. With better-than-expected earnings and strong buyback, Corning is marching up, lifted by Gorilla Glass.
On April 25, 2013, Corning’s chairman and CEO Wendell P. Weeks told shareholders in the annual meeting that Corning’s performance over past two quarters is a strong indication that the Corning has successfully formed the bottom and is ready to march up. Despite a tough 2012, Corning is ready for growth in 2013. The growth opportunities mainly come from 1) the proliferation of mobile devices, which increases the demand for thin, tough cover glass; 2) increasing demand for bandwidth, creating needs for fiber optic networks; 3) evolution to higher-resolution display devices, requiring more specialty glass to meet rigorous technical requirements; 4) increasing demand for emissions-control products due to tighter environmental regulations; 5) increasing need for more effective drug therapies due to gaining global population. The company is progressing well and is introducing new glass compositions for high-performance displays and launching new products such as ultra-thin Corning Willow Glass.
Akamai Technologies, Inc. (AKAM) provides content delivery and cloud infrastructure services for the delivery of content and applications over the Internet. Many companies spend money on web acceleration and content delivery technologies, such as the services provided by market leader Akamai, to avoid lost sales and customers due to slow web pages. Despite the controversial guidance earlier from the management, Akamai delivers with solid numbers.
Surprising Home Run
Akamai reported Q1 revenue of $368M, 15% increase from the year-earlier quarter, beating analysts’ estimate of $357.7M. The management forecasts revenue of $368M to $378M in Q2 compared with a $363M analyst estimate. Q1 profit, including an 8-cent tax benefit, rose to 51 cents a share from 36 cents a year earlier, topping the average estimate of 46 cents, according to data compiled by Bloomberg. AKAM also forecasts Q2 profit excluding some items of 44 cents to 46 cents, compared with a 44 cents estimate.
Broadcom Corporation (BRCM), with a market cap of $19.96B, is a global semiconductor solution for wired and wireless communications, providing system-on-a-chip, and software solutions. Broadcom continues to benefit from strong smartphone/mobile device sales, whereas BRCM’s chips provide short-range wireless connectivity in Apple (AAPL)’s iPhone and iPad, as well as Samsung’s Galaxy line of mobile devices. Apple and Samsung contribute for more than 30 percent of BRCM’s sales, which was helped by stronger iPhone sales.
Strong Revenue and Profit
BRCM posted Q1 revenue of $2.01B, up 9.7 percent from the year-earlier period and beating analysts’ expectation of $1.91B. BRCM reported net income of $191M (33 cents per share), up from $88M (15 cents per share) in Q1, 2012. Excluding one-time costs, BRCM earned 65 cents per share, beating analysts’ estimate of 56 cents per share. Solid results were due to strong demand for wireless base band and connectivity chips. The management also sees sequential growth ahead in broadband business. BRCM expects Q2 revenue of $2.02B-$2.18B, beating analysts’ average projection of $2.05B.