Intel Maintains Margins While PC Business Stalls
October 17, 2012
Chip-maker Intel (click ticker for report: ) reported better than expected, though still weak, third quarter results Tuesday afternoon. The tech giant saw revenue fall 5% year-over-year to $13.5 billion, which was better than consensus expectations. Earnings per share fell 11% year-over-year to $0.58 per share, which was meaningfully better than the consensus estimate of $0.49 per share. Gross margins remained flat quarter-over-quarter at 63.3%, enabling the company to beat estimates and maintain profitability. Revenue in every region except Europe was down slightly from the previous quarter. Not surprisingly, most of Intel’s weakness came in the PC Client Group, where sales tumbled 8% year-over-year to $8.6 billion, as average selling prices fell 4% and volumes fell 4%. Production remains muted
Johnson & Johnson Posts Strong Results
October 16, 2012
Dividend growth gem Johnson & Johnson (click ticker for report: ) posted strong results Tuesday morning. Revenue grew 6.5% (10.8% ex-currency) year-over-year to $17.1 billion, slightly better than consensus estimates. Earnings, net of a non-cash charge of $553 million, increased 0.8% year-over-year to $1.25 per share, a few cents better than consensus expectations. We like the company, and we hold shares in our Dividend Growth Newsletter portfolio. Domestic growth outpaced the rest of the world, with sales surging 13.4% year-over-year to $7.8 billion. The acquisition of Synthes materially boosted medical device sales, which grew 18.3% domestically and 14.4% internationally (excluding currency). Pharmaceutical sales growth was also strong, with the segment expanding 7% (11.3% excluding currency) year-over-year to $6.4 billion, driven
Coca-Cola Continues to Grow Steadily
October 16, 2012
Global beverage giant Coca-Cola (click ticker for report: ) reported solid third-quarter results Tuesday morning. The soda giant saw revenues increase 1% (6% currency neutral) year-over-year to $12.3 billion, roughly in-line with consensus expectations. Comparable earnings fell 2% year-over-year to $0.51 per share, also in-line with consensus estimates. Not surprisingly, North America remained relatively strong, with volumes growing 2% year-over-year during the quarter and revenues up 5% year-over-year. With obesity backlash en vogue, the segment leaders included Coke Zero (up 9%), Seagram (up 11%), juices (up 6%), and Powerade, which grew 9%. We expect these trends to continue, and we wouldn’t be too shocked to see Coke Zero eventually become one of Coca-Cola’s top North American products, in the realm
Vikram Pandit and John Havens Step Down at Citigroup after Third Quarter Results
October 16, 2012
Citigroup (click ticker for report: ) CEO Vikram Pandit and COO John Havens shockingly stepped down this morning after Citi reported decent third quarter results. Revenues and earnings were both strong, with earnings per share coming in several cents better than consensus estimates. The firm took a large write down on the sale of SmithBarney to Morgan Stanley (click ticker for report: ), but operations were relatively strong. Citi, the “too big to fail” bank with arguably the most promising international business, experienced surging revenues and earnings in Latin America, which grew 8% and 30% year-over-year, respectively. This growth was driven by spectacular performance in Latin American Securities and Banking, which saw profitability surge 75% year-over-year on the back of
Sprint Receives a Huge Investment from SoftBank
October 15, 2012
SoftBank will acquire a 70% stake in Sprint. Let’s take a look at the deal.
Xbox Music Is a Nice Addition to the Surface Product Suite
October 15, 2012
Early Monday, Microsoft (click ticker for report: ) announced that it will add Xbox Music as a preloaded device to its Surface tablets. Much like Spotify, the service will allow users to compile their own on-demand music and playlists, but it will also be able to be used for downloading individual songs onto a cloud storage system. Though the new software will also be available on iOS (click ticker for report: ) and Android (click ticker for report: ) within the year, the service is a clear attempt to boost the attractiveness of the Surface tablet. The service will have the same selection of songs as the recently discontinued Zune Pass, and it revives the firm’s presence in music. It’s
AMD Warns Again…The Knife is Still Falling
October 12, 2012
Chipmaker AMD (click ticker for report: ) announced Thursday afternoon that its third quarter results will be substantially worse than expected. Revenues will fall 10% sequentially, compared to prior guidance of -3% to -1% declines, with gross margins coming in substantially lower at approximately 31% compared to a previously-expected gross margin of 44%. With the PC business struggling mightily and no presence in the mobility market, AMD’s decline has no real end in sight. We’ve previously noted some excitement regarding the firm’s next generation video game technology, but we see no reason establish a position in the name in the portfolio of our Best Ideas Newsletter at this time. Shares of Intel (click ticker for report: ) have experienced tremendous
JP Morgan and Wells Fargo Report Third Quarter Results
October 12, 2012
Friday morning was big for banks, as both JP Morgan Chase (click ticker for report: ) and Wells Fargo (click ticker for report: ) reported third quarter results. Earnings for JP Morgan surged 37% year-over-year to $1.40 per share, which was much higher than the consensus expectation of $1.24 per share. Revenue grew 6% year-over-year to $25.9 billion, slightly better than consensus expectations. Earnings at Wells Fargo came in at $0.88 per share, a penny better than consensus estimates. Revenue fell $100 million sequentially to $21.2 billion, which was a little over $200 million short of consensus expectations. Though net interest margins slipped at both banks, the third quarter showed impressive results from the mortgage business. Mortgage originations at JP
Fastenal Posts a Strong Third Quarter
October 12, 2012
Industrial distributor Fastenal (click ticker for report: ) reported strong third quarter results Thursday morning. Revenue grew 10% year-over-year to $802.5 million, roughly in-line with consensus estimates. Earnings per share ticked up 12% to $0.37, also meeting the consensus expectation. Fastenal, which provides a very detailed quarterly press release, indicated that it saw growth slowing slightly during the summer, but recovering in September. Asia and Europe remained weak, but the firm still managed to open 73 new stores and gain market share in the US, while growing at a healthy clip in Mexico. In the past, the company has relied mostly on opening stores to gain market share in the highly fragmented industrial distributor space, but in recent months management has
Why We Continue to Like Apple and Microsoft
October 11, 2012
In yet another negative blow to the PC market, Gartner reports that PC shipments fell 13.8% year-over-year during the third quarter. The big losers, yet again, were the PC giants Dell (click ticker for report: ), HP (click ticker for report: ), and Toshiba. Of course, the shocking loser was Apple (click ticker for report: ), which saw shipments fall 6% (considerably lower than the 25%+ drops of competitors), though market share increased 110 basis points to 13.6%. With the entire industry slumping, who’s to blame? Not surprisingly, we’re labeling Apple as the major disrupter in the PC market. Since the inception of the iPhone and subsequent iPad releases, computing has shifted more and more toward mobile consumption, with the
