Wednesday, December 29, 2010

Recap of Healthcare Holdings

Endo Pharmaceuticals

As expected, the specialty pharmaceutical firm wrapped up its acquisition of Qualitest Pharmaceuticals, cementing Endo as the 6th largest generics company in the United States. Reflecting the closing date, the acquisition should be fully accretive to earnings in 4Q 2011. To help cover a portion of the financing for the acquisition, Endo issued a $400 million privately placed note offering this past November. The notes were priced at 7% and will be due in 2020. With the closing of the deal finalized, management revised its earnings estimate for FY 2010, increasing full year revenue projections to $1.7 billion from a range of $1.63 billion to $1.68 billion. The Qualitest acquisition was a major catalyst in my valuation for Endo.

Just today, Endo received FDA approval for Fortesta, which is a topical gel for testosterone replacement therapy. Fortesta was a minor catalyst for my valuation of Endo, but with currently just 9% of the 14 million men suffering from low levels of the key hormone being treated, this drug has huge potential. What differentiates Fortesta from competitor drugs like AndroGel is Fortesta contains 2% testosterone and is applied to the thigh, which should further help prevent the transfer from one person to another. The product is expected to be launched in early 2011 and while Endo did not give revenue projections for the drug, Abbott Laboratories is expecting FY 2010 revenue of $633 million for AndroGel. Endo’s stock was up over 3 percent in after-hours trading earlier today.

Even more important is the hearing for the approval of the tamper-resistant form of Opana ER on January 7, 2011. I am confident that Endo will receive approval for the drug due to the positives for both physicians prescribing and patients who use tamper-resistant forms of painkillers. Approval of Opana TR would also help Endo fight off generic competition for Opana ER.

- David, Co-President, Healthcare Sector Head

Novartis AG

Novartis has recently finished its acquisition of Alcon by purchasing the remaining 23 percent of the company. Novartis offered 2.8 of its own shares per share of Alcon, which equates to $168 per share. The remainder of Alcon was valued at $12.9 billion, wrapping up a $28.1 billion deal earlier this year, and a $10.4 billion deal in 2008. The complete merger had been stalled for a year, until the offer became more lucrative due to the appreciating Swiss franc and a rise in the Novartis share price. Novartis purchased Alcon in order to strengthen its eye-care division, and believes the acquisition will bolster sales, and allow Novartis to expand into a market that was previously untapped by the Swiss drug maker. Joseph Jimenez, the CEO of Novartis, says the improved eye-care division would have had created $8.7 billion in new sales last year. In addition to an increase in sales, Jimenez believes the companies will complement each other well, and that they can create $300 million in cost savings through synergies.

In addition to merger news, Novartis has seen some new drug activity lately. Tasigna, a blood cancer drug, has been approved in the European Union for treating leukemia. Studies showed that Tasigna produced better results than Gleevac, a widely prescribed drug for patients with leukemia. Gleevac is also owned by Novartis, and the company hopes Tasigna will replace the former drug before patent expiration. Novartis drugs have also seen some setbacks though, with Zometa failing to help with breast cancer. Zometa was seen as a promising new way to treat the disease, but has failed to produce significant results in clinical studies. Previous studies showed great promise for the drug, as the osteoporosis medicine seemed to reduce cancer reoccurrence by 33 percent. The successes could not be replicated, however, and the drug did not reduce reoccurrences of breast cancer in the latest study.

In addition to bad news from clinical testing, the Swiss drug maker has recently paid-out $350,000 to settle a fraud case. The company settled a case with the state of Idaho, after allegations that the company was engaging in bribery. The state of Idaho alleges that Novartis was bribing doctors to prescribe a drug used to treat epilepsy. The company had been coercing the prescription of its drug through providing entertainment and travel gifts to medical professionals. The case with Idaho is settled, but the company may see further lawsuits from other states.

-Ryan Kennedy, Junior Analyst

Allscripts-Healthcare Solutions

Allscripts-Healthcare Solutions announced on 12/28 that two of their current offerings, sunrise Acute Care Version 5.5, are Sunrise Emergency Care Version 5.5 are 2011/2012 CCHIT compliant and were certified as Complete EHRs on December 21, 2010 by the Certification Commission for Health Information Technology (CCHIT). This is only a few weeks after 5 other offerings were CCHIT certified as well. "Certification of our Sunrise Acute Care, Emergency Department and Ambulatory Electronic Health Records is an important milestone for the company as it marks the completion of ARRA (American Recovery Reinvestment Act) certification for our full portfolio of ambulatory and acute EHRs, a commitment we made to our clients," said Glen Tullman, Chief Executive Officer of Allscripts. "The Federal incentives for EHR adoption represent an unparalleled opportunity for healthcare organizations to implement tools which can help improve healthcare quality and efficiency. We believe our ARRA-certified products, coupled with our experience delivering meaningful value for tens of thousands of physician practices and hospitals across the country, make Allscripts an ideal organization to partner with as we create a connected community of health."

-Devon Gould, Junior Analyst

Life Technologies

At the beginning of the month, Life Technologies launched its newest revolutionary technology in DNA sequencing, which has significant cost lowering implications for the now expensive process of sequencing DNA. Life’s Personal Genome Machine is a printer-sized device that is currently being marketed to research laboratories for about $50,000, which is about a tenth of the cost of similar machines. More importantly, the new device has streamlined the sequencing process so that it only takes a few hours, as opposed to several days of laboring with large machines that must be operated by specially trained technicians. Life’s COO, Mark Stevenson, aspires to sell the machine to hospitals to diagnose diseases.

Also during December, Life raised $800 million in a two part sale of bonds. The $400 million notes, which carry a coupon rate of 3.5%, will mature on Jan. 15, 2016, while the securities costing $400 million, which carry a coupon rate of 5%, will be due on Jan. 15, 2021. The company will use the proceeds from the offering, which is expected to close on Dec. 14, 2010, for repayment of existing indebtedness and for general corporate purposes.

Finally, the company announced that it was taken as a member of the Dow Jones Sustainability World Index for the third year in a row. The company also declared its debut on the NASDAQ Global Sustainability List and second year on the Maplecroft Climate Innovation Index, and its commitment to transparency and carbon footprint reduction through participation in the Carbon Disclosure Project, demonstrating the company’s continued global leadership in business, environmental and social issues.

- Jesus Rincon, Junior Analyst

Tuesday, December 21, 2010

NKE FY2011 Q2 Earnings

Nike, Inc. reported financial results for their fiscal 2011 second quarter ending November 30, 2010 today after the close. Diluted earnings per share were reported at $0.94, representing a 24% increase year-over-year and beating analyst expectations of $0.87. Revenue for the quarter was $4.84 billion, up 10% over last year and also surpassing Street estimates of $4.81 billion. Shares of NKE finished up 2.25% today at $92.30, but are down nearly 5% in after-market trading.

President and CEO Mark Parker attributes growth in nearly every brand, category, and geographic location to their "innovative product, compelling brands, and strong marketplace management." In the future, Parker believes that the company will have "far more opportunities than challenges."

Futures orders for branded products from December 2010 through April 2011 totaled $7.7 billion, which is 11% greater than orders reported for the same time frame last year. The Street, however, was expecting an 11.6% gain in futures orders, which may explain why the stock is down in extended trading hours. Inventories were up 8% from FY2010, ending the quarter at $2.3 billion. Net Income increased 22% to $457 million.

The company repurchased 3.5 million shares for approximately $280 million during the second quarter. This is part of the company's 4-year, $5 billion share repurchase program. To date, 17.4 million shares have been bought back for about $1.3 billion under this program.


Thursday, December 16, 2010

Visa Inc

Visa Inc’s shares dropped 12.67% today on news that the Federal Reserve proposed a 12 cent cap on the fees banks would be allowed to charge merchants for debit card transactions. This would be a drastic change considering the average 2009 fee was 44 cents. The cap is only proposed for debit card and has no affect on credit cards. This is not good for Visa because their business is growing much faster in the debit card segment versus the credit card segment. Also in the proposed regulation merchants would be allowed to choose which network processed their transactions, no matter what brand the card is. This means a visa card transaction can be processed by master card or another competitor. This will create more competition and could lead to a price war between companies, cutting deeper into profits. I will do more research into the affects this will have on Visa and make a recommendation to the group shortly.

-Joe Doran

Wednesday, November 17, 2010

WMT Posts 3Q; Raises Outlook

Wal-Mart Stores Inc. (WMT) 3Q earnings posted on Tuesday, November 16th, showed a 9.3% increase in profits mainly due to successful international operations and cost controls. However, the company's biggest unit, U.S. same-store sales fell for a sixth straight quarter as the world's biggest retailer contended with still-struggling low-income customers and management changes. WMT posted Net sales for the third quarter were $101.2 billion, an increase of 2.6 percent. Wal-mart income from continuing operations attributable to the quarter was $3.4 billion, up from $3.2 billion in the third quarter last year. Wal-Mart did raise its current-year earnings forecast from $4.08 to $4.12 a share from $3.95 to $4.05 as it projected earnings of $1.29 to $1.33 a share for the fourth quarter. WMT believes they will continue to see driving growth through international operations along with a tax benefit, and predicted that same-store sales growth will turn positive during the period. Wal-Mart shares rose 0.8% premarket, to $54.40.

Wednesday, November 10, 2010

Polo Ralph Lauren Reports 2Q Earnings

Ralph Lauren today reported net income of $205 million, or $2.09 per diluted shared, from $178 million, or $1.75 per diluted share a year earlier. RL beat expectations of $1.71 with the $2.09. Revenue rose 11% to 1.5 billion compared to last year, this beat expectations of the estimated 1.48 billion. The increase in revenue is driven by higher global wholesale sales and growth in retail sales. Higher shipment volumes in the United States and Europe offset the lower wholesale revenue in Japan and the unfavorable effect of currency translation. Retail sales rose 17% to $659 million from $563 million the previous year. Rise in retail sales reflects the newly transitioned Asian operations. Operating expense reported at $1.1 million is up 9% from the prior year. A source of the growth is the costs associated with the new Asian operations. Looking ahead the company expects that as a result of higher than expected second quarter revenues the remainder of fiscal year 2011 will have an increase in revenue in the low double-digit percentage, this includes the foreign currency translation effect. Previously the company had expected mid to high single digit percentage rate. As a response to the higher then expected 2Q Earnings the stock rose 7.29% to $107.95

Tuesday, November 2, 2010

Corning Inc. Reports 3Q Earnings

Corning's net income rose to $785 million, or 50 cents a share up from $643 million, or 41 cents a share a year earlier. Excluding one time items adjusted earnings came in at 51 cents a share, just a penny short of Wall Street expectations.

Revenue rose 8% to $1.6 billion from $1.48 billion. Corning expects that glass prices will fall in the single digits during 4Q year-over-year while sales stay flat.
LCD's continue to be a healthy market although demand has not been up to expectations this year.

Thursday, October 28, 2010

International Paper Co. (IP) F3Q10 Earnings 10/27/10-(Jeremy Pellizzari)

International Paper reported third-quarter earnings on 10/27/2009. They reported record earnings of $397 million or $0.91 per share, which beat the market expectations of $0.79 per share. This is an increase from second-quarter EPS of $0.41, and an increase from 3Q 2009 EPS of $0.37. The increase in earnings for this quarter was led by strong business, realization of price increases and restructuring, improved operations, and a favorable business mix.

The Industrial Packaging segment saw a record increase in earnings due to realization of price increases and improved input costs. Its profits grew 17% year over year and 7% sequentially amounting to $2.6 billion. The Printing Papers segment saw a 5% revenue growth year over year and 7% revenue growth sequentially. This can be attributed to favorable pulp and paper pricing, reduced fixed costs, fewer mill outages, bad debt recovery, and increased volumes to the U.S. and Europe. Consumer Packaging posted revenues of $870 million, up 10% year over year and 3% sequentially. Higher volumes, realization of price increases, and fewer maintenance outages drove the improvement. The Forest Products segment sold off a majority of their land portfolio and recorded revenues of $205 million, which was an improvement from the $5 million both sequentially and year over year. Their last segment, xpedx, which is their distribution segment, shows a year over year increase of 5% to revenues and an 8% sequential increase in revenues. Although revenue increased, they showed a drop in operating profit of 15%, due to increased overhead and lower margins.

The company reported an increase in free cash flow of more than $750 million dollars and ended the quarter with more than $1.4 billion dollars in cash on hand. They also reduced their long-term debt by $200 million and put $1.4 billion dollars into their pension plan. Some investors were concerned with the debt of the company and the status of their pension plan and I believe they are showing steps towards taking care of these issues. John Faraci, CEO, stated in their fourth-quarter outlook that they expect to continue to see strong earnings and free cash flow, but at seasonally lower levels than the third quarter. I believe the company has a strong outlook for the long-term, but don’t see much higher return in the near future.


Eco-Lab Releases 3Q Results

Ecolab reported their earnings on 10/26/10, and reported a rise in 3Q rise of 20 percent due to higher domestic and international sales. The Company claims are Net Income grew $174.2 million or 74 cents per share, compared to be 60 cents per share in the same quarter a year ago. Revenue was $1.56 billion, which is an increase of about 1 percent from just under $1.55 billion. Analyst had expected profit to be 65 cents per share and 1.59 billion in revenue (Thomson Reuters Poll). The cleaning and sanitizing revenue grew 4% to $719 million. However, other U.S service revenue was only $118 million.

International revenue climbed 3 % to $775 million, particularly in Kay, Asia Pacific and Latin America. The introduction of the Scrub-N-Go, the floor cleaner for QSR restaurants, was a huge factor for earnings in Kay. The Company wishes to continue this growth in Kay and to continue to be aggressive gaining accounts and achieve better sales. For fourth quarter predictions, analysts believe the company will show earnings of $ .59-$ .61 per share.

Wednesday, October 27, 2010

Ensco Plc (ESV) Q3 2010

Ensco Plc (ESV) reported Q3 earnings on 10/20/2010, posting EPS of $0.92- beating analyst estimate of $0.89. Q3 revenue was $428,000,000, up 5% from Q3 of 2009. Ensco 8503 was completed on time in Singapore, bringing the total ultra deepwater semi’s to 5 (four 8500 series, and one 7500). Deepwater drilling revenue was up 77% compared to Q3 of 2009, driven mainly by Ensco 8501. Deepwater drilling expense was up 38% due to the addition of Ensco 8501, and Ensco 8502. Ensco 7500 was placed in the ship yard, offsetting $10,000,000 of the deepwater drilling revenue. Ensco 109, an ultra high speed jack up suited for deep gas drilling, was acquired at $186,000,000 as well. Ensco 69 disputes have been settled, resulting in Ensco 69’s reclassification in continuing operations. This added $0.04 to EPS. There is a pending agreement to sell Ensco 60, moving the rig to discontinued operations as a result. The company is expecting $26,000,000 for the sale of Ensco 60, but has not recognized that transaction yet. This negatively impacted EPS by $0.01, as opposed to adding $0.04 as it did in Q3 of 2009.

No revenue was recognized for Ensco 8502, as a result of a pending contract. This rig was placed in service on August 13th, and has been recognized as an operating expense. Resolving this dispute is a key objective for ESV in Q4. Another factor is going to be Ensco’s ultimate contracting for the 7500 rig. Management claims that they have had an increase in requests regarding the rig, but still have not made their final decision. Q4 revenues are expected to be between $345- $400 million, with the wide range resulting from the uncertainties in the deepwater segment. Ensco is poised well in comparison to its competitors in regards to new regulations expected within the industry. The government of Singapore honored Ensco with a Safety Award for their construction of Ensco 8503.


Ford Releases Strong 3Q Earnings

Yesterday, October 26th, Ford Motor Company posted unexpectedly strong 3Q earnings, proving the company is making a turnaround. This is the 6th continuous quarter of profit posted for the company, as F is gaining market share and sustaining growth. F reported a better than expected earnings of $1.7 billion, or $0.43 a share, up $690 million, or $0.14 a share, from a year earlier. F market share increased to 15.9% this quarter, up from 14.6% a year ago.

Ford being the only car maker to avoid a US government bailout, is has been diligently working to improve it's balance sheet by paying off debts and eliminating liabilities. Ford's total debt will be paid down to $22.8 billion, compared to $33.6 billion a year ago. The reduction of company debt will save F an estimated $800 million in annual interest payments. Company officials predict debt net of cash, currently standing at $2.6 billion, will be eliminated by the end of the year, which is one year earlier than the company predicted 3 months ago. The good press surrounding the company has been reflected in it's stock price which hit $14 on Monday.

Tuesday, October 26, 2010

LIFE 3Q Earnings

Life Technologies announced today their quarterly earnings for the third quarter FY2010 ending September 30th. They reported third quarter GAAP revenue of $867million. Their EPS was $0.56, and FCF was $187million. On a Non-GAAP basis revenue was $869 million which was an increase of 8% from $805 reported in Q3 of 2009. Non-GAAP gross margins were 66.8% 20 bp lower than prior years due to impact from mix of sales. Non-GAAP operating margin however was 29% which was an increase of 170 bp from last year’s 3rd quarter. This improvement resulted from acquisition related synergies and cost controls implemented this year.

Cash flow from operating activities for the third quarter was $215 million. Third quarter capital expenditures were $28 million and resulting free cash flow was $187 million. The company ended the quarter with $537 million in cash and short-term investments, including $19 million held as restricted cash. Regional organic growth rates for the quarter compared to the same quarter of the prior year were as follows: the Americas increased 8 percent, Europe 5 percent, and Asia Pacific 7 percent. Japan declined 1 percent. Revenue from orders transacted through Life Technologies’ eCommerce channels grew 26% percent during the quarter. Over 50% of all transactions are processed using eCommerce platforms.

LIFE beat expected EPS by 9 cents $0.87 over $0.78 Non-GAAP forecasted. Management has risen their guidance for FY 2010 to $3.48-$3.52 from $3.35-$3.50. With LIFE beating estimates again this quarter, it extends their record of beating estimates I believe now for as far back as Q1 2009. Afterhours the stock has been up 2%. Historically LIFE has seen significant slowdown in business during 3Q yet these were not far off of Q2. With management increasing their outlook I believe we should be seeing upside in the stock as the market prices management’s new guidance in. Furthermore, LIFE has been producing mid-high single digit organic growth since 2007 and this quarter’s organic growth was 6% providing evidence that management is capable of continuing this growth which will result in an increase of equity value. I will update the model with this quarter’s results and post my new price target.

-Michael Arias

Monday, October 25, 2010

Travelers Companies (TRV) 3Q Earnings

On Thursday October 21, The Travelers Companies Inc. (TRV) beat the consensus estimate of $1.51 when they reported third-quarter earnings per share of $2.11, up from $1.65 in the same period last year. TRVs quarterly Revenue of 6.48 Billion, net written premiums of 5.46 Billion, and net income of 1.005 Billion, all topped their respective 2009 figures of 6.33 billion, 5.34 billion, and 935 million. The combined ratio rose slightly to 90.6% but remained on the profitable side of the 100% benchmark. TRV also increased their full year EPS target range to $5.75 - $5.95, surpassing the $5.69 per share analysts had forecasted. This was the solid quarter TRV needed to restore investor confidence after missing estimates in their last two attempts.

The EPS increase outpaced the growth of the core business because net income included a one time, after tax, gain of $133 million, catastrophe claims were much lower than normal, and the number of outstanding shares decreased by 92 million.

Travelers CEO and Chairman Jay Fishman characterized the situation this way, "While current profitability across our diversified commercial insurance businesses is solid, the general economic environment continues to present challenges. Reinvestment yields are low by historical standards and exposure and pricing remain flat."

UASBIG will continue to hold TRV, but we are currently investigating the capital allocation strategies of TRV and their competitors. TRV returns a high percentage of excess capital to shareholders through dividends and stock repurchases, but they might be compromising their long term health by not expanding their core business. 94% of their operations take place in the ultracompetitive, and economically challenged domestic market, while the remaining 6% is spread over the equally demanding markets in Canada, the United Kingdom, and the Republic of Ireland. The opposite approach is being taken by some competing Property and Casualty companies. They are using excess capital to expand into the developing Asian and South American markets. At this point it is unclear which strategy is more prudent, but UASBIG will continue to monitor the situation.


Verizon Communications 3Q Earnings

Verizon reported 3rd quarter 2010 earnings of $0.58 per share beating analysts’ expectations of $0.56 per share by 4.32%.

VZ reported cash flows from operations of $25.2 billion and free cash flow of $13.4 billion up 25.3%. The company added an additional 997,000 customers this quarter amounting to totals of 93.2 million customers and 101.1 million connections. VZ also saw 226,000 additional FIOS internet subscribers and 204,000 FIOS TV subscribers demonstrated growth in the company’s wireline segment.

Verizon will be releasing the Apple iPad WiFi starting October 28th and will be launching the Droid X and Droid 2 in the future. Verizon has demonstrated that product and contract development is of priority and has exemplified hard evidence of the company’s ability to compete with other wireless device and service providers. With strong capital gains in the third quarter, expected additional upside in the 4th, and a dividend yield a little over 6%, UASBIG Tech/Telecomm analysts are confident in Verizon’s position in the portfolio.


Caterpillar 3Q Earnings

Caterpillar: The third quarter went extremely well for Cat. Improved numbers reflect what management said was improved demand for construction equipment in both developed and emerging markets. Consensus analyst estimates according to Reuters were eps of 1.09. Cat topped these estimates reporting an eps of $1.22 compared with an eps of .64 in q3 of last year. Sales and revenue were 11.13 billion up 53% from last year. Machinery and engines sales were $10.45 billion, a 59% rise from $6.58 billion a year ago. While machinery sales grew 84% to $7.20 billion, engines sales increased 21% to $3.25 billion.


Sunday, October 24, 2010


ITW reported third quarter earnings of $419.3 million which translates to 83 cents per share. This was a significant increase from q3 of last year which had earnings of 60 cents per share. the stock beat consensus street estimates by a penny. Despite narrowly beating expectations the stock took a major hit last week when it was downgraded by Deutsche Bank from a buy to a hold. Deutsche lowered their 12 month price target from $59 to $54.

Novartis AG Beats Estimates

Q3 earnings for Novartis have increased, beating both analyst expectations and management’s forecast. Novartis reported $2.3 billion in net income this quarter, or 99 cents per share. Income rose to $2.3 billion from 2.1 billion in Q3 2009, representing an increase of 10 percent. Core earnings per share rose by 16 percent to $1.36 per share, beating analyst expectations of $1.29 per share.

New drugs Afinitor and Gilenya, along with the acquisition of Alcon, helped boost sales 13 percent. Novartis acquired part of Alcon, an eye-care product company, in 2008, and strong Q3 results may help them in their plan to buy out the rest of the company. Novartis is currently offering 2.8 shares per share of Alcon, and any boost in share price will make the offer more attractive.

~Ryan Kennedy

Thursday, October 21, 2010

MCD 3Q earnings

McDonald's Corp. posted 3Q earnings today, beating analyst estimates. For the three months ending Sept. 30, McDonald's earned $1.39 billion, or $1.29 per share, up from $1.26 billion or $1.15 per share last year. The company had heavy sales with it's frappes, fruit smoothies, and items on the dollar menu. The posted earnings pushed the stock price past it's 52-week high, hiting $79.48. This marks another continuous quarter of MCD outperforming competitors, Burger King and Wedny's. Unlike its competitors, MCD has launched popular items like the Angus Snack Wrap, frappees and smoothies, and is expected to sell oatmeal to go, available all day long. Sales at stores globally that have been open longer than 13 months had average increase of 6%.


Gilead Earnings Beats Estimates

Driven by an increase in sales of its HIV drug portfolio, Gilead Sciences beat estimates, reporting 3Q net income of $704 million, or 83 cents a share. This represents a 4.6% increase over the company's 3Q results of last year. When adjusted, the company posted earnings of 90 cents a share, beating the street consensus of 87 cents a share.

Total sales of Gilead's antiviral drugs, which includes HIV and other viral diseases, rose 12% this past quarter to $1.65 billion. Meanwhile, Atripla and Truvada both beat expectations as well. The headlining drugs recorded 3Q sales of $748 million and $669 million, respectively


Western Digital (WDC) FY2011 Q1 Earnings

Western Digital Corp (WDC) posted first quarter earnings for fiscal year 2011 on October 19th 2010. Earnings were $0.81 beating analysts’ expectations by 3.70%.

WDC announced quarter one FY2011 revenue of $2.4 Billion, hard-drive shipments of 50.7 million and net income of $197 Million compared to quarter one FY2010 revenue of $2.2 Billion, 44.1 million shipping hard-drives, and net income of $288 Million.

President and CEO John Coyne stated that even with competitive pricing in the industry, WDC was capable of remaining profitable, grew revenues and shipments, and generated $390 Million in cash from operations.

UASBIG Tech/Telecomm analysts are interested in WDC ability to continue competing with its main competitor Seagate. With recent news regarding Seagate’s possible privatization, WDC is left in a unique place within the industry. WDC also faces significant competition from other memory product producers, producing non magnetic memory products that offer high sustainability and performance.


Apple 4Q Earnings

Apple posted earnings of $4.64 per share compared to
expectations of $4.08. This quarter is yet another record
for AAPL and we expect that with holiday season
approaching this will only go up next quarter. Net income
was up 70% year over year with revenue growing 67%.

Apple sold 14.1 million iPhones from July through september beating
analyst estimates of 12 million. CFO Peter Oppenheimer stated "had the
company been able to make more iPhones, that number would have been even
higher". With strong catalysts looking forward such as the new line of
iPods, the iPad and possible Iphone contracts with other service providers.


Bank of America Q3

On Tuesday Bank of America reported a net loss of $7.65 billion, or -77 cents per share. This net loss included a non-cash goodwill impairment of $10.4 billion. When excluding this non-reoccurring charge, the company reported a net income of 3.1 billion or 27 cents per share. The impairment charge resulted from the Dobb-Frank Consumer Protection Act that limits the fees a bank can charge for debit and credit card use. The normalized earnings of 27 cents per share beat the street consensus of 16 cents per share.

For the quarter Bank of America strengthened its tier one capital ratios, increased asset management fees from the Merrill Lynch acquisition, and the investment bank remains number two in global investment banking fees. On the other hand, due to financial reform, Bank of America expects to see declines in the Global Card Services segment and in fees collected for overdrafts.

Bank of America’s share price was hit hard even after the positive earnings surprise because of developing news that the company may have to repurchase bad loans that were not serviced properly by Countrywide. The Federal Reserve Bank of New York and Pimco are two the major players who are putting pressure on Bank of America to repurchase the loans. The amounts to be repurchased in unknown right now, but investors fear it could be billions.

Joe Doran

Friday, October 15, 2010

Western Digital Rally

Western Digital Corporation rallied 8.14% today on news that its main rival Seagate Technology has received an offer to go private. Reports claim that this would be the largest LBO of the year if the deal were to go through. There have been no official releases from Western Digital on who made the offer, however Western Digital has confirmed that they have hired Morgan Stanley and Perella Weinberg Partners for financial and legal advice.

This news break has comes at an interesting time for UASBIG, as our Tech/Telecomm analysts have demonstrated hesitation on WDC’s ability to compete with Seagate. This coming weekend will leave time for UASBIG to further evaluate the situation before market open on Monday.


Monday, October 11, 2010

Alcoa Reports 3Q Earnings

Alcoa reported 3rd Quarter earnings on Thursday beating analyst estimates for adjusted earnings per share. Income from continuing operations came in at $61 Million or $.06 per share, and revenue increased 15% versus 3Q'09. Adjusted EBITDA was $602 Million with an 11% EBITDA margin. This rise in revenue can be attributed to higher volumes in the aerospace and construction industries. LME aluminum prices still continue to hurt Alcoa's bottom line but cost cutting strategies have helped offset these price effects.

Alcoa still remains extremely healthy in terms of cash flow. FCF remained high at $176 Million, and debt to cap was 270 bp lower at 35.7%. Alcoa also reduced their debt by $491 Million and extended their debt maturity profile.

Looking forward UASBIG expects LME Aluminum prices to rise in accordance with global economic growth. Alcoa is positioned very well to take advantage as the market for Aluminum continues to recover, but can also survive if these prices continue to lag, as evidenced by the past 3 quarters. Our main and only concerns are fears of deflation and stagnant economic growth. Aside from these concerns we still believe that Aloca remains a great position in our portfolio.

-Thomas Boeje

Sunday, September 26, 2010

Apple beat earning estimates of $3.11, posting $3.51 per share. Revenues came in at an all time high of $15.7 beating even holiday Quarters and much higher than analyst expectations of $14.74. Revenue and earnings were the highest Apple has seen in the 34 year history of the company. Profit was reported at $3.25 billion, a 78% increase over last year.

Apple has continued to beat estimates and this quarter had a boost from iPhone and iPad sales. The big story looking forward is Apple's recent revenue guidance for the next quarter. Analysts were expecting apple to guide around $17 billion in revenue for Q4. However Apple has raised guidance to $18 billion indicating that revenue will likely come in at the higher end of $19 or $20 billion.

Apple's international expansion is also paying off very nicely. Revenue in Europe was up 66% compared to last year while sales in Asia Pacific are up 160% year over year.

I believe Apple still has a very promising future and give it a hold rating. With the holiday season approaching and a view that they will have other service contracts for the iPhone sometime in the next year the upside is promising. Apple still seems to give consumer's an unparalleled experience with mobile phones and now the iPad. More people fall in love with Apple products daily and I do not think they are at full potential yet.


Sunday, August 15, 2010

Verizon Communication (VZ) Q2

Verizon Communications posted second quarter earnings of $0.58 a share beating analyst expectations by 4.32%. Second quarter highlights for the communications company included 9.8 billion dollars in cashflow from operations up nearly 30%, and 5.5 billion dollars in free cash flow up nearly 77% from 2Q FY2009.

Wireless service has proven to continue to strengthen throughout the quarter. The increase in data subscribers continues to be a driving force behind Verizon's gross profit. Through personal observation, it appears as if Verizon Wireless is restructuring their business plan to make it nearly impossible to not have a data plan which will allow for increased profitability.

Verizon remains to be strong position in our portfolio. The market value of the position has been relatively flat, but we continue to benefit from Verizon's $0.47 dividend. Unless a dire need to free capital arises, I am confident that this position will remain profitable for UASBIG and should remain in the portfolio.


Gilead Misses 2Q Estimates

Gilead Sciences failed to meet the Street’s 2Q estimates, despite experiencing a 25% growth in profit for the quarter. The company also lowered their sales guidance for the year going forward due to continued distress in the Euro markets.

Net income for the quarter was $709.1 million, up from $569.1 million a year ago. Revenue increased 17% to $1.93 billion, missing the Street consensus of $1.96 billion. Gilead cut their 2010 net sales projection to a range between $7.3 and $7.4 billion, from a range of $7.4 billion to $7.5 billion. The company insists that business fundamentals are as strong as ever, but the current economic situation continues to be a constraint on revenue. Company management also restated their desire to pursue acquisitions or partnerships that can solidify their product pipeline with the wave of patent expirations to come in the near future.

-Dave Siegel

Thursday, July 29, 2010

LIFE Technologies posts solid earnings

LIFE released this morning, second quarter GAAP earnings per share of $0.58 and non-GAAP earnings of $0.91. Analysts interviewed by Reuters had an average expectation of $0.87(exculding special items). FCF for the second quarter was $203 million. Growth of revenue on a non-GAAP basis y/y was 8% rising from $839 mil to $906 mil. Managment has announced a share buy back program in which they are going to spend up to $350 mil. This will enhance existing shareholder value.

Revenue increase was caused by growth in genetic systems and cell systems divisions. Non-GAAP gross margin expanded to 67.7% a 100 bp improvement over the prior years period. This was a result of price realization, synergies, manufacturing productivity and royalty revenue partially offset by product mix. Non-GAAP operating margin was a record 30.1%, a 290 bp increase from last years period.

Growth by region over the prior years period was as follows, Americas grew 7%, Europe 4%, Asia Pacific 19% and Japan declined 4%. Revenue from LIFE's e-commerce website channel grew 14% during the quarter. Approximately 52% of all transactions are now processed using eCommerce platforms. This helps in lowering margins through automated online systems of ordering LIFEs products.

The company has updated its expectations for fiscal year 2010 to full year non-GAAP earnings of $3.35-$3.50. The stock was down today by 6% and closed at $42.40. Currently the stock seems to be oversold, and I think instiutional selling brought down the price today as portfolio managers may have been re-allocating their funds into other sectors. Another reason maybe the fact that historically the third quarter has usually been a slower quarter for LIFE. Regardless, I believe that my investment thesis remains intact and I will update my model with this quarters numbers.

Monday, July 26, 2010

ITW:Net income in the current quarter was $120 million, or $1.15 per fully diluted share, compared to $121 million, or $1.17 per fully diluted share, in the second quarter last year.
(NYSE: ITW) today reported 2010 second quarter diluted income per share from continuing operations of $0.83, a 131 percent improvement versus diluted income per share of $0.36 in the 2009 second quarter. The growth in earnings was achieved even though the Company experienced a higher than expected tax rate, which had a negative impact of $0.03 per share. The 2010 second quarter tax rate of 31.6 percent was 260 basis points higher than the rate the Company originally forecasted in April of 2010.
Caterpillar Inc. (NYSE: CAT) report a second-quarter profit of $1.09 per share, an increase of $0.49 per share from a profit of $0.60 per share in the second quarter of 2009. Thats a 91% increase in profit.

Thursday, July 22, 2010

The Travelers Companies Q2

Travelers reported quarter 2 profits of 670 million or $1.35 per share. The consensus for the quarter was $1.49 per share meaning travelers came up 14 cents short. The reason for the short coming was an unexpected rise in flooding and hail storms. On a positive note, Travelers had a 1% increase in net written premiums which beat analyst estimates. Year over year Travelers profits have fallen from 740 million to 670 million but EPS has risen from $1.27 to $1.35 due to Travelers repurchasing shares.

Travelers also decided to cut its full-year earnings forecast by 10 cents. The insurer said the rate of renewal from commercial customers is not meeting original expectations, which led to the drop in the forecast. Travelers now expects profit to range between $5.20 and $5.45 per share for the year. Analyst predict a profit of $5.71 per share for the year, but that estimate does not include investment gains and losses that are factored into net income.

Joe Doran

Saturday, July 17, 2010

Novartis AG Misses Earnings Expectations but Raises FY 2010 Guidance

Novartis AG barely missed meeting the street’s net income estimate of $2.43 billion, instead posting net income of $2.42 billion for the second quarter. However, Novartis has also raised its sales forecast for FY 2010 after second quarter net income increased by 19%. Management now expects sales to increase at mid-to-high single digit pace this year, compared with the more pessimistic mid-single digit range given earlier in the year. Fueling this sales increase has been the strong sales growth of newer products such as Lucentis and Exforge, which are needed to offset the loss in revenue that will be experienced in 2012 due to patent expiration of the drugs Divoan and Gleevec.

Sales of the hypertension drug Diovan gain a percent in generate $1.55 billion in revenue, beating street estimates of $1.5 billion. Gleevec, another flagship drug for Novartis AG, beat analyst estimates with revenue of $1.08 billion. Encouraging signs for the company has been the growth in its other underlying businesses aside from pharmaceuticals. New products accounted for nearly 21% of total sales for the quarter, with Exforge’s revenue growth of 35% and Lucentis’ revenue growth of 28%.

Novartis AG is still very much interested in diversifying its current medical inventory through the purchase of Alcon Inc., the world’s largest eye-care company. However, this process has not been without controversy as Alcon’s independent directors still believe the offer of 2.8 Novartis shares for every remaining public share of Alcon is still inadequate and are fighting to resist this offer. Novartis already has a 25% minority stake in the company and expects to complete the purchase of Nestle SA’s 52% stake in Alcon for $28.1 billion in the third or fourth quarter of this year.

Ultimately, I agree with Analyst’s predictions that Novartis is one of the more attractive pharmaceuticals out there currently. The company is already proving that their new products can offset the loss in revenue that will occur due to patent expiration and their attempt to diversify their business s leads me to believe that the company has set itself up for success.

-Dave Siegel

Friday, July 16, 2010

Alcoa Beats Earnings Estimates

Alcoa kicked off earnings season on Monday, beating analyst estimates. Income from continuing operations came in at $137mm, or $0.13 per share, compared to a year-over-year loss of $312mm or $0.32 per share and a $194mm loss or $0.19 per share sequentially. Analysts were expecting Alcoa to earn 12 cents for Q2. Revenues increased 6% quarter over quarter, mainly driven by higher volumes in key end markets. EBITDA margin was 14%. This increase in margins can me attributed to Alcoa's continuing cash sustainability initiatives, mainly in the area of decreased head-count. They also managed to generate positive free cash flow.

Although LME Aluminum prices have decreased dramatically during the quarter, stronger volumes coupled with lower energy costs and favorable exchange rates more than offset this decrease in prices. FCF came in at $87mm, and Alcoa has $1.34b in cash on hand. This increase in FCF is being driven by Procurement reductions, overhead reductions, and days in working capital reductions, all part of Alcoas continuing CSI.

Management projects that aluminum demand will increase 10%-12% in 2010, and are maintaing their long term outlook of 6% CAGR growth through 2020. Demand will increase in lightweight, versatile materials for building, as well as other key markets as a result of increasing global population, and the need for recyclable and lightweight materials in the automotive industry.

Looking forward I believe that global economic recovery will help drive Alcoa's earnings. Management has done a great job steering the company through rough operating environments, and these initiates will increase Alcoas ability to generate cash going forward. As worldwide demand increases for aluminum, Alcoa will benefit from higher realized LME pricing, increasing margins and Income. Some risks going forward include tightening in China, as China is the largest producer and consumer of Aluminum in the world, and pricing is directly correlated to their usage. I recommend a HOLD rating on Alcoa, but will have to update my model for a new target price.

-Thomas Boeje

Monday, May 17, 2010

Visa and Bank of Americs

Visa dropped over 10% on Friday due to an amendment added on to the financial reform bill about capping fees that Visa can charge. This can have adverse effects on Visa's business and will need to be looked into further.
As for Bank of America, them like the rest of the financial sector has fallen on hard times due to financial regulation and the European Debt Crisis.


Friday, May 7, 2010

Eldorado Q1 2010 Earnings -- Nick Iuliucci

Eldorado reported Q1 2010 earnings Thursday, May 6th. Eldorado reported net income of $52.8 million or $0.10 per share for the period, compared with $13.1 million or $0.04 per share in the first quarter of 2009, and they generated $80.8 million in cash from operating activities before changes in non-cash working capital. The increase in profit for the period resulted from significantly higher sales volumes from the Kisaladag mine in Turkey, as well as the new contributions of the mines in China previously operated by Sino Gold (the White Mountain and Jinfeng mines). Just like 4th quarter 2009, 1st quarter 2010 was a record quarter.

"We had record quarterly production of 164,928 ounces of gold at a cash operating cost of $371 per ounce with strong performances from all mines, whilst setting consecutive quarterly production records at Kisladag. Our revenues increased by 248% over the comparable period in 2009. Net quarterly income increased by 304% to $52.8 million. Cash generated from operating activities increased by 290% to $80.8 million. With the strong performance of the quarter we are increasing our 2010 production guidance to 575,000 to 625,000 ounces of gold and slightly reducing cost guidance to cash operating costs of $375 - $395 per ounce." said Paul Wright, President and CEO of Eldorado Gold. "We are also extremely pleased that the development of our Company with its strong performance in 2009 and the positive outlook for 2010 and beyond has enabled at this time the adoption of a dividend policy."

Q1 2010 Highlights:

Produced 164,928 ounces of gold at an average cash operating cost of $371 per ounce (total cash cost $398 per ounce)

Sold 163,446 ounces of gold at a realized average price of $1,110 per ounce

Reported earnings of $0.10 per share

Generated $80.8 million ($0.15 per share) from operating activities before changes in non-cash working capital

Announced the adoption of a dividend policy

They sold 163,446 ounces of gold at an average price of $1,110 per ounce, a 184% increase over the first quarter of 2009, when they sold 57,459 ounces at an average price of $909 per ounce. Production from Jinfeng and White Mountain added 57,265 ounces as compared to the prior year, and increased production at both Kisladag and Tanjianshan added to our record production levels.

Going forward, as I’ve said previously in a quarterly update on Eldorado Gold, things are lining up nicely for the company. Things are going so well they adopted their first ever dividend policy just last week. They hit $16 Friday, May 7th. I’ve updated the model with the new numbers and upped my price target from $16 to $16.50 due to higher realized gold prices and higher production levels. Regardless of valuation, I feel that UASBIG will continue to benefit from having EGO in the portfolio. With the volatility of the market and the economic concern regarding Greece, Eldorado provides a good hedge against our other holdings.

Thursday, May 6, 2010

CHK Q1 2010 Earnings - Dan Goldfarb

Chesapeake Energy Corporation reported net income of $590 million or $.92 per share on revenue of $2.798 billion and production of 223 billion cubic feet of natural gas equivalent.

The major drivers of their positive earnings were a 9% year over year increase in average daily production, a 19% year over year increase in production adjusted to asset sales, and a 35% year over year increase in oil and natural gas liquids production. The company’s earnings increase also reflects an increase in the price of natural gas and realized hedging gains.

Chesapeake anticipates full-year production growth of 8-10% for 2010 and 16-18% in 2011. The company is also working on expanding its oil and gas liquids production to 15-20% of total production through organic growth by 2012.

Overall, we maintain a hold rating on the company, expecting revenue growth to be driven by increasing commodity prices, their increased exposure to the US shale play, and their organic growth.

Friday, April 30, 2010


Transocean has been down over 5% the past two days and has surpassed are stop loss limit. The reason for the drop in price is due to the explosion of a rig off the Gulf Coast. Going forward I have redone the model and factored in the loss of the rig for this year- its contract was scheduled to start in the 4th quarter- and next year. These losses will have an eps impact projected of $.10 this year and $.40. From what I have read and what information there is about the companies contracts and insurance it seems insurance will cover must of the cost of replacing the Rig. Further more it seems that Transocean will not be responsible for the oil spill but rather BP as stated by President Obama, however I am unsure. Personally I think Transocean is currently trading at a severe discount do to market over reaction.

Any question email me at

Thursday, April 29, 2010


Analysts were expecting Visa, Inc. (V) earnings to come in at $0.91 per share for last quarter, but V beat expectations with actual earnings of $0.96---5 cents above the consensus estimate.
Today's announcement shows that V has made some year-over-year improvements. The company reported gains of $808.55 million last quarter compared with net gains of $614.84 million during the same quarter a year ago.
During the next five years, analysts expect the earnings-per-share (EPS) growth rate in the industry to be 16.79 percent. If you compare V's projected EPS growth rate of 20 percent to that of the industry, you can see that analysts expect V to outperform the industry in the future by 3.21 percent.

Visa has beaten expectations every earnings season since we have purchased this stock in April of 2009. The company has projected EPS growth of 20% over the next few years and Visa is currently on on track to do this. They have already reported $2.00 per share for half of this year and will beat the $3.10 Visa earned for FY 2009.

-Richie Civello

Low Refining Margins Hurt Valero (VLO)

Valero reported first quarter earnings on Tuesday. Results were less than impressive at a loss of $101M $0.18 per share. This result beat the $0.27 consensus loss of the 16 analysts covering. Valero's operating loss was $32 million, versus first quarter 2009 operating income of $593 million. This decline in operating income can be attributed to lower margins on their refined products across all regions. Operating results were also negatively impacted by downtime in some of their key refineries, which management estimates resulted in $200M of lost income. Despite the rough operating environment, Valero managed increase their liquidity position by $4B. Management also purchased an additional 3 plants this quarter, which brings their total to 10, increasing their capacity to 1.1 Billion barrels a year.

For the second quarter and the rest of 2010, management expects to be profitable. They believe that their cost savings initiatives and strategic actions will help them achieve profitability, even if they continue to operate in a low margin environment.

I am planning on locating the original model and updating it and making a decision going forward.

- Thomas Boeje

Wednesday, April 28, 2010

Caterpillar First Quarter Earnings 2010

Caterpillar reported 1st quarter earnings of $.36 per share or $233 million compared to a loss of $.19 per share or $112 million 1st quarter 2009. Caterpillar's estimated earnings were $.39 per share and would have beaten the forecast although they were charged a one time health care of $90 million. Excluding this one time charge Caterpillar would have posted earning of $.50 a share beating the estimate of $.39 per share. Sales fell 11% to 8.2 billion but in Asia sales rose 20%. Manufacturing costs were $566 million lower which helps profits as sales declined.

Chairman and CEO of the company stated that industry activity and orders are higher compared to last year and record level in some areas. Caterpillar is increasing it's production as a result of the increase in demand. This jump in demand is mostly in developing areas like Asia and Latin America and mining equipment worldwide.Higher commodity prices will drive the demand for mining equipment to increase. Caterpillar officials said that some models of 2010 mining equipment are sold out and they are already taking orders for 2011 equipment. The company has hired about 2,000 people after releasing 19,000 full-time employess. CAT's 2nd quarter earnings are estimated to be $.74 per share. The company raised their outlook for 2010 raising sales and revenues range from $38 to $42 billion and profit expectations for 2010 to be between $2.50 to $3.25 per share. The outlook for CAT is looking up and I think it will continue to perform well.

-Jared Duckstein

Tuesday, April 27, 2010

Life Technologies beats forecast

* Q1 ex-items $0.87/shr vs. forecast of $0.80/shr

* Q1 revenue $887 mln vs. forecast of $864 mln

* Shares rise 1 pct after-hours

NEW YORK, April 27 (Reuters) - Life Technologies Corp (LIFE.O) on Tuesday reported better-than-expected first-quarter earnings, on strong demand for its tools and equipment used in genetic testing and stem cell research.

The company earned $91.5 million, or 48 cents per share, compared with $15.6 million, or 9 cents per share, in the year-earlier period.

Excluding special items, Life Technologies said it earned 87 cents per share. Analysts on average expected 80 cents per share, according to Thomson Reuters I/B/E/S.

The company reported revenue of $887 million, well above Wall Street expectations of $864 million.

Life Technologies, created by the merger of Invitrogen and Applied Biosystems, said it expects full-year revenue to grow in the mid-to high-single digit percentage range. It predicted 2010 earnings, excluding special items, of $3.30 to $3.50 per share, in line with Wall Street expectations of $3.41 per share.

Shares of the company rose 1 percent in after-hours trading to $51.69 from their closing share price on Tuesday of $51.15 on the Nasdaq. (Reporting by Ransdell Pierson; Editing by Bernard Orr)

This is just a copy and paste job. I will review the numbers in detail tonight and repost an analysis of results and explain affects on my price target.

----- Michael Arias

Ecolab Delivers Strong First Quarter Earnings

Ecolab reported 1Q 2010 earnings this morning. EPS was $0.40, up 67% quarter over quarter. This exceeded the top of Ecolab’s forecasted range. Net income attributable to shareholders increased 66% to $96 million. Adjusted EPS forecast for the year was raised to $2.21-2.26. Previous forecast was $2.17-2.25. My model has them earning $2.22 in 2010.

Sales were up 6% to $1.4 billion. They saw strong sales growth from Kay, Asia Pacific, Canada, and Latin America, along with cost savings actions and favorable delivered product costs.

Segments US Cleaning and Sanitizing and US Other Services operating income both rose 11% while International Operations operating income rose 81%.

Ecolab reacquired 3.3 million shares of its common stock during the first quarter under its share repurchase program.

Commenting on the quarter, Douglas M. Baker, Jr., Ecolab's Chairman, President and Chief Executive Officer said, "We are off to a good start in 2010. We once again outperformed our end markets, and through our aggressive sales efforts, cost savings and efficiency actions, we turned in a strong earnings gain that exceeded the top end of our forecasted range.

"We are confident in our prospects for 2010. Our markets are generally showing expected improvement from 2009's difficult environment, and we are stepping up our investments to drive growth within them. These investments include expanding our sales and service force, developing new innovative products and programs that provide better results and lower operating costs for customers, building infrastructure in key geographies to enable faster and more efficient growth and profitability, and looking at new ways to better serve our strong customer base. We are seeing returns from these investments today and expect much more as they progress, providing not only strong results in 2010 but positioning us for even better results in the years ahead. We believe we are in solid shape for the year, we continue to make progress on our long term growth initiatives, and we expect to continue delivering superior results for shareholders in 2010 and beyond."

Going forward, Ecolab expects 2nd quarter 2010 EPS of $0.54-0.57 with a gross margin of 50% and tax rate of 30-31%. My model remains unchanged at a price target of $52. The company is doing well, but based on the current price of $47.13 (down 1% in reaction to a market correction), there is only 10% upside. If opportunities arise for a company with more upside, I would be supportive of selling in order to free up cash.

Travelers Take Hit on CAT losses

Net income dropped 2.6% to $647 million for Travelers due to higher catastrophe losses from the winter storms on the U.S. East Coast and the earthquake in Chile. Catastrophe losses of $312 million were five times what the company projected and the largest since the company merged in 2004. Operating profit of $1.22 was below the street estimate of $1.36. Investment income rose 39% from the previous year when the company had to take large write downs. Net earnings per share were $1.25 from $1.11 a year ago due to fewer shares outstanding. Travelers is expected to continue their share buyback program with $3.5-4 billion scheduled for this year alone. Dividends also increased 9% for the sixth straight quarter. Travelers is a solid company but we haven't seen much movement in the price since we bought it last December and has dropped a dollar from our buy-in price. If opportunities arise for a company with more upside I would be supportive of selling.

Thursday, April 22, 2010

Verizon -VZ - Quarter 1 2010 Earnings

Verizon posted Quarter 1, 2010 earnings today, Thursday April 22nd. Earnings were $0.56 a share meeting analyst expectations.

Verizon reported $7.1 billion in cash from operations up 7.5% from Quarter 1 2009 and $3.7 billion in free cash flow up %25.6. Verizon’s wireless segment increased total customers by 1.5 million and a 4.4% increase in total revenues compared to Quarter 1 2009.Verizon Fios growth remains strong with an increase of 185,000 internet subscribers and an increase of 168,000 TV subscribers.

Throughout the quarter Verizon has been capable of maintaining its high margins mainly through wireless data plan subscribers. In accordance with Verizon’s business plan, data plans have slowly become the status quo. Few phones are now offered through Verizon Wireless that can be purchased and used without data subscription. Management stated plans to introduce its 4G network to approximately 25-30 areas by the end of the year. Advancement in Verizon’s 4G network and breaking ground on its new Technology Innovation Center will lead to innovative products will continue to help Verizon gain market share, solidifying the investment thesis this company was purchased on.
- Chad Schneider

ENSCO 1Q earnings

Ensco plc (NYSE: ESV) reported diluted earnings per share from continuing operations of $1.11 for first quarter 2010, compared to $1.59 per share in first quarter 2009. Earnings from discontinued operations were $0.22 per share in the first quarter, compared to a loss of $0.03 per share a year ago. Discontinued operations in first quarter 2010 included a $34 million pre-tax gain from the sale of two jackup rigs and $7 million of pre-tax income related to jackup rig ENSCO 69, which was reclassified as discontinued operations in second quarter 2009. Diluted earnings per share were $1.33 in first quarter 2010, compared to $1.56 per share in first quarter 2009.

Deepwater segment revenues grew to a record $130 million in the first quarter, or nearly 30% of total revenues, highlighting the success of their deepwater fleet expansion strategy initiated in 2005 and reinforcing their hybrid drilling strategy. Only one-third, or $1 billion, of the ENSCO 8500 Series(R) newbuild capital commitments are remaining.

*startup of ENSCO 8500 Series(R) semisubmersibles and the remaining rigs under construction are on schedule for their delivery dates. In the first quarter, achieved 99% utilization in their deepwater segment. ENSCO 8502, is their latest ultra-deepwater semisubmersible drilling rig, was delivered during the first quarter and is now mobilizing to the U.S. Gulf of Mexico to commence operations under a multi-year contract.

Segment Highlights


Deepwater segment revenues grew to $130 million in first quarter 2010, from zero dollars a year ago. ENSCO 7500, which operated during first quarter 2010, was mobilizing to Australia during first quarter 2009 when it was the only rig in the deepwater segment. Revenues related to the mobilization were deferred until drilling commenced in April 2009. Additionally, two new ENSCO 8500 Series(R) rigs commenced operations in 2009: ENSCO 8500 in June and ENSCO 8501 in October.

In first quarter 2010, the average day rate was $411,000 and utilization was 99%. Comparable figures for the prior year period are not applicable due to revenues being deferred while ENSCO 7500 was mobilizing.

Contract drilling expense was $45 million in first quarter 2010, up from $5 million in first quarter 2009. The increase was primarily due to the deferral of certain costs associated with the ENSCO 7500 mobilization to Australia during first quarter 2009 and the commencement of ENSCO 8500 and ENSCO 8501 operations in mid- and late-2009, respectively.

Total Jackup Segments

Revenues from the jackup fleet totaled $319 million in first quarter 2010, down from $500 million a year ago. The decline primarily was due to a six percentage point decrease in utilization to 76% and a $55,000 decline in average day rates to $113,000. Contract drilling expense was reduced by nine percent year to year as personnel and other costs were lowered to address declining utilization.

Total operating expenses in first quarter 2010 increased to $259 million from $215 million last year. Contract drilling and depreciation expense rose by 17% and 20%, respectively, driven by growth in the deepwater segment. General and administrative expense increased to $21 million, from $12 million in first quarter 2009, as a result of increases in share-based compensation expense, professional fees incurred in connection with the redomestication and costs related to opening the new London headquarters.

Strong Financial Position - 31 March 2010

Ensco continues to maintain a strong financial position:

  • $1.2 billion of cash and cash equivalents
  • $350 million fully available revolving credit facility
  • Long-term debt of only $257 million
  • Long-term debt-to-capital ratio of 4%
  • Contract backlog totaling $2.8 billion
Additionally they announced a dividend increase of $.10 to $.35

Based on Ensco recent earnings, the current rig market, and my outlook on the future of the rig market compared to Ensco PLC's growth strategy. I still maintain the buy valuation.

Please fill free to send me an email with any questioning concerning you about ensco or the rig market in general.


James Menicucci

Wednesday, April 21, 2010

AAPL F2Q10 Earnings 04/20/09-(Daren Pon)

Revenue was $13.5 billion, a 49% increase year over year. Net income rose 90% year-over-year to $3.1 billion. Margins were slightly higher than expected at 41.7% versus guidance at 39%. Cash and short-term securities increased from $39.8 billion to $41.7 billion quarter-over-quarter. This was the best non-holiday quarter in Apple history.After yesterday's earnings release after the bell, Apple shares closed today at $259.22, for a gain of 5.98% for the day.

Strength was attributed to iPhone sales doubling and strong momentum across the boards, allowing Apple to avoid the great magnitude of their normal seasonal sales declines after December. New Intel processors and NVIDIA graphics chips were added to the Apple's computer and laptop lines providing better performance, crisper graphics, and improved battery life. Mac revenue increased 33% and iPod revenue grew 12% year-over year. iTunes delivered over $1.1 billion in sales, a quarter best. 8.75 iPhones were sold, a year-over-year increase of 131%, crushing the IDC estimate of 41% due to expansion in Asia, Australia, Japan, and Europe. As mentioned in an earlier post, the iPhone OS4 is due this summer and will have multitasking, folders, improved enterprise support, and iAds. Retails sales increased by 22% year-over-year.

I still feel that Apple will outperform the broad market going forward this year due to their premium product lineup, an unparalleled user experience, and an application market that is light years ahead in development of quality software (I own a Motorola Droid, the Google Marketplace is a joke). Every single community service related event on campus with a raffle/prize is using either an iPad or Apple gift certificates to draw in students and the Apple store is STILL always crowded at Crossgates Mall. I am raising my one year price target to $315, looking forward for a potential Verizon iPhone contract this summer and continued increases in market share in the Mac product segment as iPhone users spill off into new Mac owners.

McDonald's Q1 Earnings

McDonald's released first quarter earnings today showing an increase in global comparable sales by 4.2%. Specifically, U.S. comparable sales improved 1.5%, Europe up 5.2%, and Asia/Pacific Middle EAst and Africa up 5.7% Combined operating margin jumped 220 basis points to 29.8%. Diluted earnings for the quarter increased 15% (9% constant currencies) to $1.00. Sharepurchases and dividends put 1 billion dollars back into investors hands. Improved profits were attributed to McCafe beverages, the Breakfast Dollar Menu, and Chicken McNuggets. Stock price hit a new 52 week high of $71.19 today after the announcement. The company is doing a good job promoting new menu items as well as supporting sales with classic and bargain priced foods. Prices already pushed past my valuation of $69. This earnings release shows solid positive performance going into 2010 and keeps me optimistic that the stock should hit my yearly price target of $75 at the end of 2010. After hour trading places prices at $70.10.

Press Release

-Roopa Bhopale

Gilead Falls 10% due to Lower Forecasts

Gilead Sciences shares are trading around 10% lower hovering around $41 after the company issued weaker-than-expected 2010 guidance.The company lowered its 2010 sales forecast by about $200 million to a range of $7.4 billion to $7.5 billion due to the impact of the recently passed health care reform.

Tuesday, April 20, 2010

Illinois Tools Works Q1 2010

Illinois Tools Works posted 2010 first quarter earnings today, April 20th. Analysts expectations for first quarter were 52 cents a share to 60 cents a share. ITW was aligned with analysts expectations and achieved EPS of 58 cents share, excluding a tax adjustment of 4 cents per share related to new health care legislation and Medicare prescription drug subsidies. Excluding special items, adjusted earnings were 63 cents per share. ITW performed extremely well first quarter, especially when compared to Q1 2009 EPS of 2 cents a share.

ITW reported revenue for Q1 of 3.606 billion, 14.6% higher than 2009 Q1. The main increase in revenues was due to their automotive OEM, polymers and fluids, industrial packaging, and PC board fabrication segments.

Operating income rose 393 million to 483.9 million from Q1 2009. Income from continuing operations totaled 294.3 million compared to a loss of 8.0 million in 2009 and first quarter operating margins were 13.4 percent, which is 1050 basis points higher than the year ago period.

ITW has increased their outlook for 2010. For 2Q, the company is expecting earnings of .74 cents to .86 cents, which is assuming a 15-19% increase in revenue. For the full year, EPS is expected to be in the range of 2.72-3.08$, an increase from 2.39-2.89$

After ITW released earnings, their stock price hit a new 52 week high of 51.28$. In the after hours, ITW continued to rise and is currently trading at 50.71$.

Andrew Helfont

Novartis Q1 Earnings 2010

Hello all,

Novartis released their earnings hours ago with an EPS of $1.29 and a street estimate of $1.11. Previous year's EPS was $.87 so a dramatic increase in revenues helped bolster earnings. The majority of the increase in earnings can be attributed to the sale of H1N1 vaccinations purchased by the U.S and Chinese governments. Recently appointed CEO Joe Jiminez is expecting consistent growth in the pharmaceutical department with the help of 2 recent acquisitions in the cancer drug division. Novartis is still planning on completing the full acquisition of Alcon (The world's leader in eye-care products). Currently, Novartis has 77% stake in the company and is planning on closing the deal soon. The 18% growth in revenue from last year is a strong sign of consistent growth for the future in addition to the corporate strategy of acquiring more firms to broaden their market penetration.