Intel CEO Paul Otellini Will Step Down
November 19, 2012
This morning, Intel (click ticker for report: ) announced its current CEO, Paul Otellini, will retire in May. The company will focus on finding a new CEO during that time period, with Otellini and board chairman Andy Bryant leading the search. Given the recent weakness in the firm’s share price, many seem to suspect that Otellini’s hand was forced by the company’s inability to become the dominant mobile technology player. Though we view this criticism as valid, we doubt Otellini’s exit was anything more than a planned retirement. During his tenure, he oversaw several billions of dollars in earnings growth, helped grow the company’s data center business, made a savvy acquisition in McAfee, and returned billions of dollars to shareholders.
Sears Slide Continues
November 19, 2012
Department store Sears (click ticker for report: ) continued its long decline during its third quarter, as evident from results Thursday afternoon. The company exceeded consensus revenue estimates, though revenue still fell 6% year-over-year to $8.9 billion. Earnings, adjusted for certain items, actually increased to a loss of $1.99, which was significantly better than consensus expectations. Though results were better than expected, the company’s deterioration continued during the quarter. Same-store sales growth was weak across the board, though we saw some signs of life from the Sears Domestic business. Same-store sales fell 1.6%, and management noted that net of consumer electronics, same-store sales would have increased. Appliances remain an area of strength due to the housing recovery, and management noted that apparel
Footlocker Surges on Fantastic Sales
November 17, 2012
Friday morning, athletic footwear retailer Footlocker (click ticker for report: ) reported fantastic third quarter results. Total sales soared 9.3% year-over-year to $1.5 billion, easily exceeding consensus estimates. Earnings growth was spectacular, surging 60% year-over-year to $0.69 (up 47% net of a tax allowance), which was much better than consensus expectations. We’ve been bullish on North American athletic footwear for some time now, noting that Footlocker is a North American derivative play on Nike (click ticker for report: ). Another strong quarter was headlined by several LeBron and Jordan Brand launches at higher average selling prices, as well as a new adidas Derrick Rose shoe selling at a 45% price increase over last year’s model. A huge boost in performance
PetSmart Remains Overvalued
November 17, 2012
Wednesday afternoon, pet supplies retailer PetSmart (click ticker for report: ) reported better than expected third quarter results. Revenue grew 9% year-over-year to $1.6 billion, roughly in-line with consensus expectations. Earnings per share jumped 50% year-over-year to $0.75 per share, cruising past consensus estimates. Cash flow was also strong, as the company generated $93 million in free cash flow, returning $18 million via dividends and $60 million worth of share repurchases. Pet spending continues to remain resilient, as same-store sales surged 6.5% compared to the same period last year on 2.3% more transactions. Merchandise sales were strong, growing 9% year-over-year to $1.4 billion, and gross margins increased 30 basis points to 30.2%. Services revenue, which includes veterinary and training services,
Dell Stumbles Again During Its Third Quarter
November 16, 2012
Changing a huge company like Dell is proving to be a difficult process. Shares are inexpensive, but the company’s secular decline and market share losses could be too overwhelming.
Amazon Can’t Stop Dick’s Sporting Goods
November 16, 2012
Online sales surged at Dick’s Sporting Goods, and the company reported strong margins and same-store sales growth.
Valuentum’s November Edition of Its Best Ideas Newsletter! Portfolio Outperformance Hits Record High!
November 15, 2012
The November edition of our Best Ideas Newsletter is now available.
Wal-Mart’s and Target’s Results Slightly Diverge
November 15, 2012
Wal-Mart and Target both reported relatively strong results, but Target appears to be making some gains.
Alert: Valuentum’s Best Ideas Portfolio Hits Record High Outperformance
November 15, 2012
The portfolio of our Best Ideas Newsletter is now outperforming its benchmark by 29.6% since inception (May 2011)! Subscribers of our Best Ideas Newsletter should expect the November edition this evening.
Strength in the US Lifts Cisco
November 14, 2012
Tuesday afternoon, telecommunications and network equipment maker Cisco (click ticker for report: ) reported surprisingly strong results for its fiscal year 2013 first quarter. Net sales jumped 6% year-over-year to $11.9 billion, exceeding consensus expectations. Earnings were also better than the consensus forecast, growing 12% year-over-year to $0.48 per share on a non-GAAP basis. High-margin service revenue was a major growth driver, surging 12% year-over-year to $2.6 billion, while product revenue increased 4% year-over-year to $9.3 billion. Since margins on service revenue are greater than those of product revenue, we welcome the shift in product mix towards services. SG&A also declined 150 basis points to 32%, and R&D remained flat at 15.4% of sales. Geographically, the Americas were relatively strong,
