Brian Nelson

AMD Warns Again…The Knife is Still Falling

by

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 … Read more

JP Morgan and Wells Fargo Report Third Quarter Results

by

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 … Read more

Fastenal Posts a Strong Third Quarter

by

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 … Read more

Why We Continue to Like Apple and Microsoft

by

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 … Read more

Safeway’s Earnings Beat But the Grocer Remains Weak

by

Grocery store chain Safeway (click ticker for report: ) reported soft third-quarter results Thursday morning. Revenue slipped 0.2% year-over-year to $10 billion, slightly worse than consensus expectations. Earnings from operations grew 18% year-over-year to $0.45 per share, a few cents better than consensus estimates. As we’ve noted several times, and specifically with respect to Supervalu (click ticker for report: ), the grocery segment remains under intense pressure from warehouses and discounters. Same-store sales in the quarter ticked-up 0.1%, compared to the 6% same-store sales growth we saw from Costco (click ticker for report: ) yesterday. However, the firm noted that same-store sales in the fourth quarter are currently running at 1%, driven by the popularity of the “just for U” … Read more

Costco Reports Fantastic Results

by

Warehouse retailer Costco (click ticker for report: ) reported a strong fourth quarter Wednesday morning. Revenue surged 14% year-over-year to $32.2 billion, just a touch short of consensus estimates. Earnings increased 29% thanks to a 10% increase in membership fees, as well as continued membership growth, resulting in a higher than anticipated $1.39 per share. Excluding the impact of foreign exchange rates and gasoline disinflation, same-store sales grew 6% in the US and 7% internationally. Consumers continue to flock toward the warehouse retailer as income growth remains stagnant, and Costco follows Wal-Mart (click ticker for report: ) in price leadership. As a result, gross margins were roughly flat year-over-year at 10.5%. Nevertheless, profitability gains were driven by membership fee revenue, … Read more

Alcoa Beats Estimates; Waiting for Global Growth

by

Integrated aluminum company Alcoa (click ticker for report: ) kicked off earnings season Tuesday afternoon, reporting a surprise profit for the third quarter. Revenues fell 9% year-over-year to $5.8 billion, which was stronger than consensus estimates. Earnings increased to $0.03—adjusted for one-time items—down from $0.15 per share during the same period last year, but a few cents better than the consensus expected. Perhaps the most unusual fact about the firm’s revenue growth was that volumes remained relatively strong despite fears of a global slowdown. Weakness came from pricing, as realized alumina prices fell 17% and realized metal prices dropped 20%. CEO Klaus Kleinfeld noted that the supply/demand situation for aluminum remained fairly balanced, with inventories declining. On its conference call, … Read more