Brian Nelson

Broadcom’s Outlook Falls Short

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Telecom equipment maker Broadcom (click ticker for report: ) announced relatively decent second quarter results Tuesday afternoon, but its outlook left much to be desired. Revenue increased 6% year-over-year to $2.09 billion, slightly below consensus estimates. Earnings, excluding a sizeable impairment attributable to its NetLogic acquisition, grew 8% year-over-year to $0.70 per share, modestly exceeding consensus expectations. Free cash flow was decent at $267 million, or 13% of revenue. Broadcom acquired NetLogic for $3.7 billion in 2012, and as is often the case with acquisitions, it turns out Broadcom paid too much. NetLogic products help improve network performance for 3G and 4G devices, and at the time of the acquisition, Broadcom paid a 57% premium to acquire the firm. After … Read more

Boeing’s and United Technologies’ Second Quarters Reinforce Strength in Aerospace

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On Wednesday, Boeing (click ticker for report: ) reported better-than-consensus top and bottom line results for its second quarter. Revenue advanced 9% thanks to higher deliveries of the 787 Dreamliner and the workhorse 737 platform, while backlog grew to a record $410 billion (nearly 5 times expected 2013 revenue), including $40 billion of net orders during the quarter. Core earnings per share jumped 13%, as operating cash flow (before pension contributions) more than doubled, to $3.5 billion. Free cash flow generation in the period was just over $3 billion, or nearly 14% of revenue. Management raised its 2013 revenue outlook to the range of $83-$86 billion thanks to improved performance in its ‘Defense, Space, & Security’ segment and upped its … Read more

AT&T Fends Off Intensified Competition in the Second Quarter

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Tuesday afternoon, telecom giant AT&T (click ticker for report: ) reported solid second quarter results, fending off intensified competition from T-Mobile (TMUS). Revenue grew 1.6% year-over-year to $32.1 billion, slightly ahead of consensus estimates. Earnings per share excluding one-time items rose 2% year-over-year to $0.67, falling a penny shy of consensus estimates. Free cash flow was relatively strong at $4 billion, equal to 12% of revenue. Image Source: T 2Q2013 Investor Presentation Mobile data growth remained robust during the second quarter, surging 20% year-over-year to $5.4 billion. AT&T activated 6.8 million smartphones posting a record quarter for Android (click ticker for report: ) devices and LTE (35% of all smartphones). While we didn’t get specific commentary on Apple iPhone (click … Read more

Apple Proves It Isn’t Dead

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On Tuesday, Best Ideas Newsletter portfolio holding Apple (click ticker for report: ) posted strong third quarter results and solidified our view that the iPhone is far from dead. Revenue increased 1% year-over-year to $35.3 billion, exceeding consensus estimates. Earnings per share were also better than the consensus had anticipated, falling 20% year-over-year to $7.47 per share. Year-to-date, free cash flow remains terrific at $37.5 billion or roughly 28% of total revenue. Image Source: AAPL 3Q FY13 Earnings Report Apple’s most important product, the iPhone, did phenomenally well as the firm sold 31.2 million units compared to the consensus estimate of 26.2 million. Remember how media pundits have claimed repeatedly that people only want Samsung Galaxies? We’ve made the argument … Read more

DuPont’s Second Quarter Results Secondary to Performance Chemicals Announcement

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Chemical and agricultural conglomerate DuPont (click ticker for report: ) announced uneventful second quarter results Tuesday morning which were overshadowed by the firm announcing it will explore “strategic alternatives” for its performance chemicals business. The firm believes spinning of its highly-cyclical titanium dioxide business will allow it to focus on higher-growth segments and reduce performance volatility. We’ll address this issue later. During the second quarter, DuPont’s revenue declined 1% year-over-year to $9.8 billion—slightly below consensus estimates. Earnings per share declined 15% year-over-year to $1.28 per share, a touch better than consensus expectations. Image Source: DD 2Q 2013 Investor Presentation The bigger story is that the firm is exploring strategic alternatives for its ‘Performance Chemicals’ business. DuPont believes spinning off its … Read more

Netflix’s Second Quarter Was Fine; The Stock Is Just Expensive

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Content streaming service Netflix (click ticker for report: ) posted solid second quarter results Monday afternoon. Revenue increased 20% year-over-year to $1.02 billion, roughly in-line with consensus expectations. Earnings per share quadrupled year-over-year to $0.49, well above consensus estimates. The firm also generated positive free cash flow of $12.9 million, or about 2% of revenue. The format for the earnings call stole the show from the actual results. Eschewing the traditional call with analysts, Netflix instead had CEO Reed Hastings, CFO David Wells, and Chief Content Officer Ted Sarandos sit down with CNBC’s Julia Boorstin and Rich Greenfield of BTIG to discuss the results. While some may be upset with the exclusive choices, we do not have any problem with … Read more

Kimberly-Clark Posts Solid Second Quarter Results

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Wisconsin-based consumer products company Kimberly-Clark (click ticker for report: ) posted solid second quarter results Monday morning. Revenue was flat year-over-year at $5.7 billion, just a touch below consensus estimates. Adjusted earnings per share increased 8% year-over-year to $1.41, slightly above consensus expectations. Even though headline numbers were strong, free cash flow totaled $356 million, equal to just under 7% of revenue (not as strong as we would have liked, but still good). Kimberly-Clark’s ‘Personal Care’ segment, the firm’s largest division, underperformed the rest of the company, with revenue declining 1% year-over-year to $2.4 billion. European operations are being pared back, and it now no longer sells its legendary Huggies brand in any European market except for Italy. North American … Read more

Soft Sales Growth at McDonald’s Is No Surprise

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Fast food heavyweight McDonald’s (click ticker for report: ) reported an uneventful second quarter Monday morning. Revenue increased 2% year-over-year to $7.1 billion, in-line with consensus estimates. Earnings per share fell a few cents short of consensus estimates, growing 5% year-over-year to $1.38 per share. CEO Don Thompson tends to cite the macroeconomic environment as the main driver of persistent weakness at McDonald’s. This argument certainly holds weight in Europe, in our view, but we do not believe the soft 1% same-store sales growth rate in the US was macro-related. Rather, we think the company’s premium product offerings aren’t packing the same punch as new products did in previous years. McDonald’s performed relatively well during the Great Recession thanks to … Read more

Disney Contract Extension Outshines Weak Revenue Growth at Hasbro

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Monday morning, Dividend Growth Newsletter portfolio holding Hasbro (click ticker for report: ) reported slightly weaker than anticipated second quarter results. Revenue declined 6% year-over-year to $766 million, well below consensus estimates. Earnings per share, adjusted for a one-time charge, also came in below consensus expectations, falling 12% year-over-year to $0.29. Year-to-date, free cash flow is up to 66% to $245 million, which equates to 17% of revenues (an excellent number). Though headline numbers weren’t quite as strong as anticipated, the market is focused on the contract extension Hasbro inked with Disney (click ticker for report: ) to keep Marvel and Star Wars products exclusive to Hasbro. We’re not surprised by the deal extension, but some market participants may have … Read more

Intuitive Surgical Reduces Its Outlook Amid Regulatory Concern

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Thursday afternoon, medical device maker Intuitive Surgical (click ticker for report: ) reported weak second quarter results and reduced its full-year outlook. Revenue jumped 8% year-over-year to $579 million, falling short of consensus expectations. Earnings per share increased 4% year-over-year to $3.90, below consensus estimates. Of course, these headlines are no surprise after the company pre-announced weak results earlier this month. We’ve of the firm but are sticking with our small position in the portfolio of our Best Ideas Newsletter. The big news in the press release was the extremely bearish revenue guidance given by management. After announcing first-quarter results, the firm provided a revenue growth outlook of 16%-19% for fiscal year 2013. With the market for da Vinci systems … Read more