Tag Archives: earnings

Has ConocoPhillips Reached An Inflection Point? [Seeking Alpha]

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.

Mixed Results

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.

Falling Production

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.

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Akamai: Hitting A Home Run With Expanding Margins [Seeking Alpha]

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.

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Zynga: Dumping Or Buying? A $1.7 Billion Dollar Question [Seeking Alpha]

Zynga (ZNGA) is a leading provider of social game services with 253M average monthly active users over 175 countries. With declining revenue and a disappointing forecast, it may still be too early to dump ZNGA.

The Good and Bad

For Q1, Zynga reported net income of $4.1M (break-even on a per share basis) compared with a net loss of $85.4M (loss of 12 cents per share) for the same period last year. Adjusted net income was $9.1M (1 cent per share) for Q1. However, revenues declined nearly 18% to $263.6M while bookings fell to $229.8M. Analysts were expecting revenue of $264.5M with a loss of 3 cents per share.

ZNGA generated $230M in bookings, exceeding the management’s expectations. FarmVille 2 outperformed with audience engagement and bookings hitting near peak levels in the quarter seven months after launch. The FarmVille 2 team was able to drive multiple days with growth bookings exceeding $1 million per day, including the amount retained by Facebook (FB). Web bookings were down 37% year-over-year and 15% quarter-over-quarter driven primarily by lower web user pay. On the other hand, mobile bookings were up 21% year-over-year, but down 8% quarter-over-quarter driven by a light slate of new game launches over the past two quarters that would normally offset aging live games.

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Halliburton: Fundamental Improvements With Short-Term Catalysts [Seeking Alpha]

Halliburton Company (HAL), with a market cap of $36.87B, is an oilfield services company, providing services and products to the energy industry. Despite a Q1 loss, HAL is expanding significantly in the international market while improving the margins in North America.

Better Than Expected Results Despite Q1 Loss

Due to $1 billion pretax charge to help settle a lawsuit related to the Deepwater Horizon oil spill, the company lost $18M (or 2 cents per share) in Q1. Excluding the money set aside, Q1 earnings declined 25% to 67 cents per share, which still beat analyst expectations by 10 cents.

Revenue and Margin

Total company revenue of $7B was a record for a Halliburton first quarter, and operating income was $902M. Revenues and operating income for international operations expanded significantly (revenues grew by 21%) compared with the prior year as HAL outgrew its primary competitors. Sequentially, North America margins improved substantially with nearly a 400 basis point sequential improvement. The activity levels also rebounded from the dramatic drop-off seen at the end of the Q4, 2012. Management continues to expect North America margins to expand over the balance of 2013, subject to the usual year-end seasonality.

Natural Gas

Despite the recent uptick in natural gas prices, management’s outlook for gas activity this year remains the same. Sustained pricing improvement needs to be seen before gas activities will increase meaningfully.

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United Technologies: Bottom Line Improvement Continues [Seeking Alpha]

United Technologies Corporation (UTX) is a diversified conglomerate, providing high technology products and services to the building systems and aerospace industries worldwide. Despite the mixed earnings results, UTX continues to hold strong cash position while focusing on integration to boost profitability.

Mixed Results

For Q1, 2013, revenue increased to $14.4B, which is below analysts’ estimate of $14.9B. However, net income of $1.39 per share is well above the estimate of $1.29 per share. The management also reaffirmed a forecast for full-year profit of $5.86-$6.15 per share on $64B-$65B of sales.

Declining Organic Sales due to Tough Market Conditions

The acquisition of Goodrich and IAE had provided $0.21 of earnings for Q1; however, organic sales declined 2%. However, North America and emerging markets continue to recover while Europe continues to be a headwind. On the positive side, UTX’s portfolio is well positioned for a resumption of top-line growth as the year progresses on.

Integration, Growth, and CapEx

Climate, Controls and Securities continued to realize savings from the integration (profit increased 8% while organic sales declined 3%). Otis, on the other hand, is gaining momentum with two consecutive quarters of sales growth. The CapEx for the quarter was $295M, which was up 60% comparing to the same quarter last year, as the company prepares for the ramp in commercial aerospace.

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Abbott: Where Is Growth Coming From?

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of healthcare products worldwide, operating in four business segments: Established Pharmaceuticals Division (EPD), Medical Devices, Diagnostics and Nutritionals. Despite mixed global economy, ABT continues its growth from emerging market, led by the nutritional segment.

Strong Q1 Profit
For Q1, 2013, sales increased 1.8% to $5.38B, which was slightly below analysts’ expectation of $5.42B. However, without the research-based pharmaceuticals business, which spun out as AbbVie (ABBV) at the beginning of the year, ABT reported earnings of 42 cents a share, beating analysts’ consensus by a penny. Management also confirmed the full-year 2013 ongoing EPS outlook, which is for double-digit growth at the mid-point of the range. Despite a mixed global economy, ABT managed to deliver its current growth expectations and management expects to see some improvement in the second half of 2013.

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General Electric: Disappointed? Focus On Its Cash Position And Backlog [Seeking Alpha]

General Electric Company (GE), with a market cap of $226.16B, is a diversified technology and financial services company and a leader in all markets in which it competes. On April 19, 2013, GE reported in-line operating profit of $3.6B or 35 cents per share. However, GE’s share price dropped more than 4% due to declining revenue from the industrial end.

The Good and Bad for Q1, 2013

For Q1, GE reported the continuing operations revenues of $35B. Industrial sales were down 6% to $22.3B. Power and water dragged the overall results, whereas Europe services remained tough. The industrial segment profits were about $200M below the management’s expectations due to the worsening condition in Europe and some short cycle push outs from March into Q2. The gap was offset by cost control and better than expected GE Capital performance. Further, shipments should improve significantly in the second half.

GE Capital continued to improve and delivered a solid quarter. The ending ENI balance was reduced by $17B, and the earnings had increased to $1.93B as compared to $1.8B in Q4, 2012. The GECC Tier 1 common ratio had increased to 11.1%, as seen from the table below.

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American Express: It’s Still About Bottom Line Improvement [Seeking Alpha]

American Express Company (AXP), with the market cap of $71.41B, is the most profitable closed-loop credit card network in the U.S., providing credit and travel services to affluent customers. Although AXP missed the revenue estimates for Q1, AXP continues to improve its bottom line.

Q1, 2013 Earnings

For Q1, 2013, revenue increased nearly 4 percent to $7.88B from $7.61B a year ago, which missed the estimates of $8.03B. However, net income increased 2 percent to $1.28B or $1.15 per share, beating analysts’ estimates of $1.12 per share. EPS grew faster than net income due to share buybacks, which had reduced the outstanding shares by 5% year-over-year.

Performance

Despite one less day compared with Q1, 2012 (Leap Year), billed business came in at $224B, which grew 6% on a reported basis and 7% on an FX adjusted basis. Cards in force grew at 5% while proprietary cards grew at 2%. All segments performed consistently with Q4, 2012, except for Global Corporate Services, which had slower growth due to a slower T&E spending growth.

Increasing Provision for Losses

The total provision for losses increased 21%, whereas charge card provision increased 10%, primarily driven by higher receivables, which are 5% higher than a year ago. Card member loan provision increased 30% or $63M, reflecting a 4% increase in card member loans compared to last year. The net write-off rate remains stable and remains historically low.

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Loving Coca-Cola, But What About Valuation? [Seeking Alpha]

The Coca-Cola Company (KO), with a market cap of $189.26B, is the world’s largest non-alcoholic beverage company. The Coca-Cola Company has one of the widest moats in the consumer beverage industry with its diversified brands and extensive distribution network. KO had reached a new 52 week high of $42.70 in the last trading day after reporting a better than expected Q1, 2013 profit on April 16, 2013.

Q1, 2013 Earnings

KO reported net income of $1.75B, or 39 cents per share, down from $2.05B, or 45 cents per share, a year earlier. Excluding one-time items, earnings were 46 cents per share, beating analysts’ average estimate of 45 cents.

Volume Growth

Worldwide sales volume grew 4 percent, but revenue slipped 1 percent to $11.04B, which was negatively impacted by currency exchange rate and the sales lost through the refranchising of some other bottler assets. KO’s global sparkling portfolio grew 3%, led by brand Coca-Cola (3% growth), Fanta (6% growth), and Sprite (5% growth). Two-thirds of global volume growth was contributed by sparkling brands. As for the still beverage, the global volume increased by 6% for the quarter with growth across most still beverage categories.

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Rite Aid Is Looking Solid In Battle With Stronger Rivals [Seeking Alpha]

Rite Aid Corporation (RAD) had an amazing performance year to date by gaining 52.52%, strongly outperforming the market where the S&P index increased 13.60% as of April 11, 2013. Rite Aid, with a market cap of $1.92B, operates drugstores in 31 states across the U.S. and in the District of Columbia. On April 11, 2013, RAD surged 18.44% after the company reported its second-straight quarterly profit and first annual profit in six years.

Management Call

Rite Aid’s Q4 results were driven by solid front-end same-store sales growth of 0.3%, increased profitability from new generics and a strong 3% increase in same-store prescription count. The results were impressive as Walgreen (WAG) was back in the ESI network for the entire quarter. The company also achieved a new all-time company record for a full-year adjusted EBITDA.

Operation Improvement and Customer Satisfaction

The company had converted nearly 800 stores to wellness format, with nearly 1,300 Wellness Ambassadors working in these stores and providing a higher level of customer service. The management also indicated that new ESI patients were retained due to excellent services. RAD also earned the top position among major drugstore chains for the American Customer Satisfaction Index and its score had increased by 3%.

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