Brian Nelson

Yahoo Beats Estimates; We Like Mayer’s Strategy

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Web content firm Yahoo (click ticker for report: ) reported better than expected third quarter results Monday afternoon. Revenue grew 2% year-over-year to $1.09 billion, a touch better than consensus estimates. Operating income per share, which excludes the gain on sale of Alibaba, grew 66% year-over-year to $0.35, which was much better than the consensus expectation. Most of Yahoo’s profitability gains came from shrinking the workforce, which fell by 1,700 employees on a year-over-year basis, to 12,000. Sales and marketing expenses were cut 7% year-over-year to $269 million, while product development costs fell 5%. This focus on cost cutting allowed the company to generate adjusted operating cash flow of $496 million, up 39% compared to the third quarter of 2011. … Read more

Hasbro Reports a Strong Third Quarter

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Toymaker and dividend-growth gem Hasbro (click ticker for report: ) reported better than expected earnings and revenue that was in-line with consensus estimates Monday morning. The firm saw revenue remain roughly flat at $1.35 billion but grow 1%, if adjusted for negative currency impacts. Earnings per share fell 2% to $1.24. We thought results might be a little stronger than reported after Mattel’s (click ticker for report: ) strong earnings, but we still think the quarter was solid. Revenue in the US grew only 1% to $774.5 million, but operating profits surged 20% year-over-year to $154.2 million. The firm’s focus has clearly yielded positive results. Net of currency impacts, international toy revenues were up 1% as well, though down 7% … Read more

McDonald’s Sales Growth Looks Anemic in the Third Quarter

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Fast-food chain McDonald’s (click ticker for report: ) reported mediocre third quarter results Friday morning. Revenue growth was weak, coming in flat year-over-year, though up 4% on a currency-neutral basis, in-line with expectations. Earnings fell 1% year-over-year to $1.43 per share, a few cents lower than consensus estimates. Weakness was broad-based, with aggregate same-store sales growing only 1.9%. The weakest geographic region was surprisingly the US, where same-store sales grew only 1.2% year-over-year. The firm has tried to move away from its value offerings to grab margin dollars as input costs soar, but the change hasn’t been effective. Still, management expects the McRib and the introduction of the Cheddar Bacon Onion to drive incremental growth in the US during the … Read more

Chipotle’s Growth Moderates

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Burrito chain Chipotle (click ticker for report: ) reported solid, but slowing, third quarter results Thursday afternoon. Revenue increased 18.5% year-over-year to $700.5 million, while earnings grew 19.5% year-over-year to $2.27, both slightly below consensus expectations. Though both growth rates are still impressive, the sequential slowdown in same-store sales indicates that the excitement surrounding new food offerings (Doritos tacos, its Cantina Bell menu) at Taco Bell (click ticker for report: ) are stealing the moment. Same-store sales grew 4.8% during the quarter, compared to 8% during the second quarter, and 12% during the first quarter. The firm doesn’t see things getting much better, forecasting mid-single-digit same-store sales growth during the fourth quarter, and flat-to-low single digits expansion during 2013. Management … Read more

A Follow Up on Google’s Third Quarter Results

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Please click here to read our initial thoughts on Google’s premature quarterly release. In spite of a hoarse voice, CEO Larry Page sounded excited about several initiatives going forward, including expanding mobile ad spend by advertisers. The firm continues to make incremental improvements to search, which may save market share, but the changes haven’t been able to slow the shift to mobile search. Google continues to spend hundreds of millions of dollars on research & development on projects like Google Fiber and self-driving cars which may drive growth in the future, but has weighed on near-term profitability. CEO Larry Page hit on some other positive notes, like YouTube’s increase in ad effectiveness relative to traditional TV, as well as the … Read more

Google Accidentally Reports Weaker Than Anticipated Third Quarter Earnings

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Tech giant Google (click ticker for report: GOOG) accidentally reported weaker than expected third quarter earnings today. Printing firm RR Donnelly (click ticker for report: RRD) mistakenly filed Google’s third quarter earnings just after noon eastern time, leading to some erratic trading in shares of the search giant. Regardless, the report revealed that revenue surged 45% year-over-year to $14.1 billion, boosted by the firm’s acquisition of Motorola Mobility (a bit lighter than anticipated). Earnings per share fell 7% year-over-year to $9.03, much worse than consensus expectations. Paid clicks surged 33% year-over-year and 6% sequentially, driven by increasing mobile ad share, in our view. However, cost-per-click fell significantly, down 15% year-over-year, while traffic acquisition costs grew to 26% of revenue from … Read more

PepsiCo Reports Mixed Results But International Business Remains Strong

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Food and beverage giant PepsiCo (click ticker for report: ) reported mixed third-quarter results Wednesday morning. Revenue fell 5% year-over-year to $16.7 billion, which was a bit worse than consensus expectations. However, earnings on an adjusted basis fell only 4% to $1.20, which was a few cents better than consensus estimates. After excluding some divestitures and refranchising agreements, organic revenue increased 5% year-over-year, driven by 1% volume growth and 4% pricing growth. The company’s ability to generate cash continues to impress, as operating cash flow year-to-date registered $5.1 billion. We were also excited to see broad-based strength across its portfolio, especially internationally. For one, Latin American Foods revenues surged 13% on the back of strong pricing and volume gains. Though operating profit … Read more

eBay Reports Solid Third-Quarter Results; Active Marketplaces User Growth Reaches Best Pace Since 2007

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On Wednesday, global commerce and payments company eBay (click ticker for report: ) reported solid third quarter performance that showed accelerated growth in both Marketplaces and PayPal. We continue to like the company and hold shares in the portfolio of our Best Ideas Newsletter. Revenue for the third quarter increased 15%, while GAAP and non-GAAP net income jumped 22% and 14%, respectively. The firm’s consolidated operating margin advanced 150 basis points from the same period last year (100 basis points on a non-GAAP basis), as segment margin in each of its three business segments expanded on a year-over-year basis. Cash flow was robust, with eBay pulling in $1.2 billion in operating cash flow and $792 million in free cash flow … Read more