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

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.

Rory

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.

Chad

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

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.

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.