On January 30th, 2013 Qualcomm released it's first quarter earning release stating record quarterly revenues. Qualcomm beat analysts predictions of $5.9 billion in revenue and earnings of $1.13 per share. Their revenues were $6.02 billion up 29% year over year and 24% from last quarter. Earnings were reported at $1.91 billion or $1.09 per share. Operation income was up 69% at $2.09 billion and net income was up $1.91 billion up 50%. Qualcomm posted a record 182 million chip shipments in the quarter, ahead of analysts forecast of about 175 million shipments. “We are off to an excellent start in 2013, and I’m pleased to report a record quarter driven by strong year-over-year growth in both our Qualcomm CDMA Technologies and Qualcomm Technology Licensing businesses.Long forward, we believe our long-term growth drivers remain intact. Smart phone adoption remains strong,” said Chief Executive Paul Jacobs in the conference call. Qualcomm also raised their yearly forecasts sales from $23.4 billion to $24.4 billion and their earning between $4.25 and $4.45. Qualcomm's has a technical lead over competitors in high-speed 4G technology that is gaining them more market share in smart phones and tablets that I feel will continue to grow as the year progresses.
Kristen Pfaffe - Technology Sector Junior Analyst
Saturday, January 26, 2013
Apple reported earnings after the bell on January 23rd. Apple reported $54.5B in revenue compared to $46.3B in the year ago quarter and record quarterly net profit of $13.1B. Gross margins fell to 38.6 percent compared to 44.7 percent a year ago. Apple sold a record 47.8M iPhones in the quarter compared to 37M in the year-ago quarter and 23 million ipads. iPad sales were constrained due to supply falling short of demand for their new hand size tablet--the ipad mini. EPS came in at $13.81 compared to estimates of $13.47 down from $13.87 a year ago.
While profits and earnings were flat from a year ago, one thing we feel the market isn’t taking into consideration is that last year Q4 had 7 more days then this year’s quarter. Taking that into account Apples revenues rose 25% while EPS rose 13.5% from the same quarter a year ago. Apple sold 4.1 macs compared to 5.2 Mac in the year ago quarter. Mac sales were down reflecting IDC’s prediction of a 6% contraction in the personal computer market during the December quarter.
A dividend of $2.65 was declared compared to no dividend a year ago. In addition, Apple is changing their approach of how they provide guidance to promote more transparency into their business. Previously guidance reflected a single point conservative estimate the company had reasonable confidence in achieving. Going forward they are providing a range of guidance that they believe they are likely to report within. The stock reacted negatively diving almost 13% to $450 from $514. For 2Q13’ revenue guidance is projected at 41- 43B and gross margin guidance estimated at 37.5% -38.5%. Apple has increased their product ecosystem and we remain excited for their product pipeline.
-Technology Analyst Ryan Stern
Halliburton (HAL) reported earnings on January 25, 2013. The company reported a profit of $0.63 per diluted share on record quarterly revenues of $7.3 billion, beating consensus of $0.61 per diluted share. This news resulted in a price increase of 5.05% on the day, ending at $39.72. This price represents a profit of 18% over our purchase price of $33.66.
In the 4th quarter, revenue and income from international operations made up for lower revenues and operating income in North America. In North America, revenues were hurt by a decline in land drilling activity, as drilling & exploration companies began to approach or exceed their yearly capital expenditure budgets, and from downward pressure on hydraulic fracturing services, from increased competition. North American margins also remained suppressed from lagging effects of an overpriced inventory of guar gum, a key ingredient for its operations. In Latin America and Middle East/Asia, revenues were driven up primarily by increased activity in a number of areas, as well as higher software sales. The Europe/Africa/CIS region was driven positively by increased demand around the North Sea, Russia, and Eastern Africa.
It was acknowledged that the company would lose revenue and suffer from depressed margins in North America, but this downward trend should be reduced as Halliburton’s supply of guar gum is used up and as it reaps the benefits of its "Frac of the Future" program and other strategic initiatives. As Halliburton continues to improve the quality of its services it will be able to command higher fees than its competitors, partially offsetting the effect of a more competitive atmosphere. The company should also continue to see growth in the Eastern Hemisphere, as more companies are looking into offshore opportunities in the North Sea, Africa, and Australia.
Going forward to the next fiscal year, the company looks to be in sound financial position. The company has enough cash and flexibility under its revolving credit facility to withstand any downturns in the economy, or in case of a large payout to BP for its role in the Macondo well incident in 2010. We are going to reevaluate our model on Halliburton to see if the original price target of $44.00 should be raised and to make a more educated decision about whether we would like to enter into a full position.
Friday, January 25, 2013
OZRK announced Q4 Earnings of $20.7 million, including $1.1 in gains from their acquisition of Genala bank, which closed 12/31/12. Aside from the day-1 gain on the acquisition, none of Genala’s results are included in OZRK’s Q4. Including these gains, this is a 17.6% increase from Q4 2012. FY 2012 amounted to$77.0 million, compared to FY 2011’s $101.3 million- although that included gains from 3 FDIC-assisted acquisitions. Total loans and leases increased 2.3% to $2.12 billion over 2011 while covered loans and leases declined (which is to be expected). On the other side of the balance sheet, deposits grew 5.3% from $2.94 billion in 2011 to $3.10 billion at the end of 2012.
Breakdown: Net Interest Income $43.8 million in Q4 2012 down $45.8 million in Q4 11, but was $174.3 million in all of ’12, up 3.3% in ’11. Quarterly NIM was down 12 bps, annual up 7bps. I’m not going to discuss Non-Interest Income as a whole since it includes acquisition gains in Q4 ’12 and FY ’11. Service charges down 2.8% on the quarter, up 7.2% on the year. Mortgage lending soared to 1.48 million, up 29.3% for Q4 2012 and annually was 5.58 million, up 70.4$ from 2011. Non-Interest expense increased marginally and both Q4 ’11 and ’12 included pre-tax acquisition and conversion costs. On an annual basis, non-interest expense was 114.5 million for ’12, down 6.6% from 122.5 million in ’11 (includes 6.3 million in acquisition costs). Efficiency Ratio was 41.6% in 2011, up to 46.6% in 2012.
As always, I look forward to the full 10-k, but this looks like a solid quarter with solid earnings and (finally) an accretive acquisition. OZRK had 3 acquisitions in 2011, so it is important to remember that for a lot of these numbers, comparing year to year or quarter to quarter is not exactly apples to apples.
Speaking of acquisitions, OZRK announced yesterday after close of market their acquisition of First National Bank of Shelby in Shelby, North Carolina. First national has 14 North Carolina banking offices with (as of 12/31/12) $857 million assets including $474 million loans. First nation also hold $652 million in deposits and has been operating for almost 140 years. The transaction is valued at approximately $67.8 million; at least 51% of this consideration will consist of OZRK stock. More as I find it.
Tuesday, January 22, 2013
Verizon Wireless released fourth quarter results Tuesday, with earnings falling to 45 cents per share excluding one-time losses due to hurricane Sandy, pension related costs and restructuring costs. Analysts were expecting adjusted EPS of approximately 50 cents per share, which represents a 10% miss. Despite lower net income, Verizon was able to add a record high 2.1 million net postpaid subscribers this quarter, as well as an 8.5% increase in service revenue and retail service revenue. They also increased wireline revenues by 4.1% and a 9.5% gain in average revenue per user. Verizon continues to add customers to its wireline segment as they increase their FiOS availability to more markets. They also continue to increase the markets offering the newest 4G LTE cell phone service, which is now offered in an industry high 476 markets. Verizon suffered from slightly lower operating margins this quarter, most likely due to increased sales of Apple’s iPhone, as well as other smartphones. Immediately following the earnings release Verizon’s stock dropped approximately 2%, however by market open it was up 2%. This is most likely due to the poor earnings per share numbers, which led investors to a quick sell off, however diving deeper into the results of Verizon, they were able to add a record number of customers to their postpaid wireless segment, as well as increase their customer base for their wireline services. This quarter may not have been the most profitable for Verizon, but it has set them up for future success by growing their customer base. Looking forward, Verizon remains the leading wireless carrier in the United States, which puts them in position to continue to benefit from the smartphone and tablet craze. Coupling this with the fact that they continue to have a dividend over 4%, Verizon is a stock that represents great value.
Thursday, January 17, 2013
BlackRock reported Q4 2012 and full year results on January 17th, 2013. Q4 EPS of $3.96 beat analyst estimates of $3.70 by $0.26. The strong quarter and the beat was driven by assets under management (AUM) expansion in fixed income products and ETFs. ETF consumers positively reacted to BlackRock’s first ever TV marketing campaign during the quarter. AUM inflows were strong from both institutional and retail investors.
Many of BlackRock’s goals came together during the quarter including an operating margin of 42.6% a notable improvement over Q3’s 40.7% operating margin and a year prior’s 40.0% operating margin. BlackRock’s ability to increase assets and keep the operating margin high during the quarter is a true sign that their business model works. This sent BlackRock’s shares up 4.39% on the day.
The announced acquisition of Credit Suisse’s Swiss Re will improve BlackRock’s already dominate ETF market share in Europe, in particular the Swiss marketplace. BlackRock outbid rival State Street for the Credit Suisse’s ETF arm helping BlackRock maintain their territorial advantage in the region. This will be a key catalyst for ETF AUM in the quarters ahead.
Improved revenue and AUM inflows from every unit helped justify an increased price target for BlackRock. The previous price target of $232.00 was broken today with the earnings jump, however after readjusting the model a $253.25 price target will be assigned due to improved valuation. This represents an additional 9.1% upside from the current price.