Google’s Cash Pile Grows
July 20, 2013
Search superpower Google (click ticker for report: ) reported decent second quarter results Thursday after the closing bell. Revenue increased 19% year-over-year during the quarter to $14.1 billion, falling slightly below consensus expectations. Non-GAAP earnings per share fell 6% year-over-year to $9.56, over $1 per share below consensus estimates. Google’s earnings per share can move around considerably during different quarters, but free cash flow remained robust at $3.1 billion, approximately 22% of revenues. This figure is down slightly from the same period a year ago, but it is still a very healthy number, in our view. Image Source: GOOG Q2 FY2013 Earnings Presentation Advertising remains the core of Google’s business, but key metrics were decidedly mixed during the second quarter.
Microsoft: The Surface Bust and Windows Slump
July 19, 2013
Leading technology company Microsoft (click ticker for report: ) reported much weaker than anticipated fourth quarter results Thursday afternoon. Revenue performance was disappointing, expanding only 3% year-over-year on a non-GAAP basis to $19.1 billion, falling short of consensus estimates by several hundred million dollars. Earnings per share fell 10% year-over-year to $0.66, which excludes the impact of an inventory charge for the Surface RT tablet. Not surprisingly, this number was below consensus expectations. Though down substantially from the prior year’s quarter, free cash flow during the fourth quarter was $4.1 billion—equal to approximately 22% of revenue. For the full-year, free cash flow came in at $24.6 billion, which equates to 31% of revenue (an excellent showing). One of the material
General Electric and Honeywell Post Strong Second Quarter Results
July 19, 2013
On Friday, industrial conglomerates General Electric (click ticker for report: ) and Honeywell (click ticker for report: ) reported strong respective second-quarter results (GE’s press release; Honeywell’s press release). Though we liked that Honeywell raised the low end of its 2013 earnings per share guidance range, the most important takeaway from their respective second-quarter performances, in our view, was the significant growth in GE’s backlog of equipment and services, which advanced to $223 billion at the end of the quarter. We think such expansion bodes well for many firms across the industrial/energy space, from oil/gas to commercial aviation. Image Source: GE GE’s second-quarter revenue missed consensus expectations, but the firm’s bottom line came in slightly better than what the Street
Firms Raising Their Dividend In the Week Ending July 19 Included Kinder Morgan and Omega Healthcare
July 19, 2013
Below we provide a list of firms that increased/decreased their dividends for the week ending July 19. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here. Increases Amphenol (APH): now $0.20 per share quarterly dividend, was $0.105. Bassett Furniture (BSET): now $0.06 per share quarterly dividend, was $0.05. CARBO Ceramics (CRR): now $0.30 per share quarterly dividend, was $0.27. Education Realty (EDR): now $0.11 per share quarterly dividend, was $0.10. El Paso Pipeline Partners (EPB): now 0.63 per share quarterly distribution, was $0.62. First Community Corporation (FCCO): now $0.06 per share quarterly dividend, was $0.05. Home Loan Servicing Solutions (HLSS) declares quarterly dividend of $0.15 per
eBay’s “Weak” Guidance Doesn’t Change the Phenomenal Story
July 19, 2013
E-commerce giant and Best Ideas Newsletter portfolio holding eBay (click ticker for report: ) announced solid second quarter results after the closing bell Wednesday. Revenue jumped 14% year-over-year to $3.9 billion, roughly in-line with consensus expectations. Earnings were also in-line with consensus estimates, growing 13% year-over-year to $0.63 per share on a non-GAAP basis. Free cash flow for the quarter was wonderful at $658 million, approximately 17% of revenue. Enabled commerce volume, a metric specific to eBay, registered $51 billion, a 21% increase over the same period a year ago. Image Source: EBAY Q2 FY2013 Earnings Presentation PayPal continued to be a stellar performer for eBay, with payments revenue surging 21% year-over-year to $1.475 billion, driven largely by international growth,
Intel’s Second Quarter: Soft But Not Panic-Worthy
July 18, 2013
Best Ideas and Dividend Growth Newsletter portfolio holding Intel (click ticker for report: ) reported lackluster second quarter results Wednesday afternoon. Revenue declined 5% year-over-year to $12.8 billion, falling short of consensus estimates. Earnings-per-share also came in below consensus expectations, falling 28% year-over-year to $0.39. Even though earnings dropped, the firm still generated $2 billion in free cash flow, equal to about 16% of revenue. Intel’s personal computer (PC) revenue declined 7% year-over-year to $8.1 billion and remains the firm’s largest segment by a wide margin. We think the issue in PCs is secular rather than company specific, but there are signs that suggest the PC market may finally be bottoming. Though international PC shipments fell 11% year-over-year during the
IBM Reports Second Quarter; Raises Operating Outlook for 2013
July 18, 2013
On Wednesday, IBM (click ticker for report: ) reported second quarter results that were roughly in line with our expectations. Operating non-GAAP diluted earnings per share (excluding workforce rebalancing charges) advanced 8%, to $3.91, despite revenue declines of 3%, which were led by a 12% drop in ‘Systems and Technology’ sales and a 4% fall off in ‘Services’ revenue. Adjusting for currency, key branded middleware (WebSphere, Tivoli, Social Workforce Solutions—Lotus), z mainframe revenue, business analytics, ‘Smarter Planet’, and cloud revenue were up 10%, 11%, 11%, 25% (during the first half of the year), and 70% (during the first half of the year), respectively. The firm’s operating non-GAAP gross margin advanced 110 basis points in the period, to 48.7%. On a
Abbott’s Nutrition Business Leads the Charge in Its Second Quarter
July 18, 2013
On Wednesday, global healthcare company Abbott Labs (click ticker for report: ) issued decent second quarter results that revealed the strength of the firm’s international portfolio. Excluding changes in foreign exchange rates, worldwide sales advanced 4.2% thanks primarily to expansion in its international ‘Nutrition’ segment, which advanced over 18% on an operational basis (excluding currency) during the period. Growth in emerging markets, which now represent more than 40% of Abbott’s total sales, was impressive, jumping more than 13% from the same period a year ago. Second-quarter adjusted gross margins of 55% and adjusted diluted earnings per share of $0.46 both came in ahead of internal projections. Year-over-year comparisons were difficult given the spin-off of AbbVie (click ticker for report: )
Strong Second Quarter Results at Johnson & Johnson
July 17, 2013
Tuesday morning, pharmaceutical and personal care giant Johnson & Johnson (click ticker for report: ) reported fantastic second quarter results. Revenue surged 9% year-over-year to $17.9 billion, easily exceeding consensus expectations. Excluding the impact of one-time events, earnings per share also came in ahead of consensus estimates, growing 14% year-over-year to $1.48. Free cash flow year-to-date is roughly $6 billion, equal to approximately 17% of revenues. Johnson & Johnson grew at a solid clip in both the US and abroad, with revenue expansion in the US of 8% year-over-year and international currency-neutral revenue growth of 12%. Importantly, the firm is experiencing tremendous growth in BRIC (Brazil, Russia, India, China) nations, as shown below. Image Source: JNJ Q2 FY2013 Investor presentation
Weak Volume Growth Weighs on Coca-Cola
July 17, 2013
Leading soft drink maker Coca-Cola (click ticker for report: ) posted lackluster second quarter results Tuesday morning. Revenue declined 3% (+2% excluding currency) year-over-year to $12.8 billion, falling short of consensus estimates. Comparable earnings per share (a non-GAAP figure) increased 4% year-over-year to $0.63, in-line with consensus expectations. With lower capital expenditures than in the year prior, free cash flow is roughly flat year-to-date at $2.8 billion, approximately 12% of revenue. Image Source: Coca-Cola Eurasia and Africa outperformed the rest of the company as volumes surged 9% year-over-year, annualizing 10% expansion in the same period a year ago. Currency headwinds weighed on net revenue growth, which totaled 5% (11% excluding currency). The markets in Eurasia and Africa have consumption rates
