Ford Motor reported its best full-year profit in more than a decade, but weaker-than-expected fourth-quarter earnings. Net profit for 2010 totaled $6.6 billion, or $1.66 per share, an increase of $3.8 billion above 2009. However, Ford’s fourth -quarter earnings fell 79% to $190 million. These results include a previously disclosed one time charge of $960 million as part of its balance sheet restructuring. Ford fell short of analyst earnings estimates of $0.48 by 37%, reporting earnings of only $0.30. Ford had beaten expectations for each of the past seven quarters.
4Q earnings also showed Ford Europe’s operating loss of $51 million, compared with a $253 million profit a year earlier. Chief financial officer, Lewis Booth described the surprising results in Europe as “a little bit of a disappointment”. He also said: “We were very clear, though, that we were not going to chase market share.” The European operation is expected to return to profitability this year.
In 2010, Ford paid over $14.5 billion in debt, ending the year with $19.1 billion in debt. Cash revenues totaled $20.5 billion shifting Ford from $8.7 billion in net debt a year ago to net cash of $1.4 billion. Ford plans to continue to reduce the amount of debt they have on their balance sheet through 2011.
Ford shares were hit by the weak earnings, falling by $2.39 or 12.72% to 16.40. Other then the stock plunge the earnings report for Ford was great. Ford showed its ability to grow profits in 2010 and is expecting to continue in 2011. A key concern looking to the future will be whether or not Ford can maintain healthy profit margins.
- Michael Biagi, Junior Analyst
Friday, January 28, 2011
Verizon Communications (VZ)- Earnings Release
Verizon Communications released fourth quarter earnings of $0.54 per share missing analyst expectations of $0.55 per share.
Verizon Wireless has experienced a 7.7% increase in service revenue and a 25.5% increase in its data revenue from 4th Quarter 2009.
Verizon’s Wireline segment added 197,000 Fios internet users and 182,000 Fios TV subscribers in the 4th Quarter of FY 2010.
On January 11th 2010 Verizon Wireless announced that it would begin carrying the iPhone 4 which will be available to Verizon Wireless subscribers in February of 2011. Verizon’s ability to begin distributing the iPhone 4 as one of its premier mobile devices is expected to provide substantial wireless service and data growth. Despite the iPhone’s ability to increase customer and data growth, many analysts are concerned of Verizon’s ability to support the influx of data usage. Verizon Wireless has been a market leader in service quality over the last years. Deterioration of Verizon’s wireless network could potentially cause material problems for the company’s growth and ability to maintain favorable churn. Management has stated that it is fully confident in its network, however this is an issue that UASBIG analysts will continue to monitor closely.
~Chad
Verizon Wireless has experienced a 7.7% increase in service revenue and a 25.5% increase in its data revenue from 4th Quarter 2009.
Verizon’s Wireline segment added 197,000 Fios internet users and 182,000 Fios TV subscribers in the 4th Quarter of FY 2010.
On January 11th 2010 Verizon Wireless announced that it would begin carrying the iPhone 4 which will be available to Verizon Wireless subscribers in February of 2011. Verizon’s ability to begin distributing the iPhone 4 as one of its premier mobile devices is expected to provide substantial wireless service and data growth. Despite the iPhone’s ability to increase customer and data growth, many analysts are concerned of Verizon’s ability to support the influx of data usage. Verizon Wireless has been a market leader in service quality over the last years. Deterioration of Verizon’s wireless network could potentially cause material problems for the company’s growth and ability to maintain favorable churn. Management has stated that it is fully confident in its network, however this is an issue that UASBIG analysts will continue to monitor closely.
~Chad
Thursday, January 27, 2011
CAT 4Q10 Earnings 01/27/11 - Jeremy Pellizzari
Caterpillar Inc. reported 4Q revenues of $12.8 billion, which was a 69% increase from the year before. For the fiscal year, CAT reported earnings of $42.6 billion, an increase of 31% from the prior year. The 4Q earnings showed profit nearly quadrupled year over year to $968 million, which equates to an increase of EPS from $.36 to $1.47. Caterpillar managed to beat analysts’ expectations by nearly 14% and has managed to beat earnings for eight straight quarters. Much of this can be attributed to machinery sales being up 88% and engine sales up 36%. Throughout the year, CAT raised production levels each quarter, to the point that there 4Q shipments of machinery were double that of the prior year.
Looking to the future, CAT appears to maintain strong growth into 2011 riding out the growth in developing countries. CFO Edward Rapp is quoted as saying “We’re very optimistic about what’s going on in the developing parts of the world.” The outlook for 2011 does not include two pending acquisitions of Bucyrus International Inc. and Motoren-Werke Mannheim Holding, but still forecasts earnings near $6 per share, a 45% increase from the $4.15 per share in 2010. They are forecasting sales to top $50 billion which would be a 17% increase from 2010. Some of the risks they have identified going into 2011 are rising prices of raw materials, global divergence, and central banks in developed economies tightening economic policies. In regards to raw material prices, Caterpillar reports they believe that total costs of material are expected to be “relatively flat.” They justify this with the fact that steel accounts for only 20% of material costs and the suppliers through which they buy parts have cut costs of labor by becoming more efficient. Look for Caterpillar to have a strong year in 2011 and continue to be the world’s largest manufacturer of construction and mining equipment.
Jeremy Pellizzari - Junior Analyst
Looking to the future, CAT appears to maintain strong growth into 2011 riding out the growth in developing countries. CFO Edward Rapp is quoted as saying “We’re very optimistic about what’s going on in the developing parts of the world.” The outlook for 2011 does not include two pending acquisitions of Bucyrus International Inc. and Motoren-Werke Mannheim Holding, but still forecasts earnings near $6 per share, a 45% increase from the $4.15 per share in 2010. They are forecasting sales to top $50 billion which would be a 17% increase from 2010. Some of the risks they have identified going into 2011 are rising prices of raw materials, global divergence, and central banks in developed economies tightening economic policies. In regards to raw material prices, Caterpillar reports they believe that total costs of material are expected to be “relatively flat.” They justify this with the fact that steel accounts for only 20% of material costs and the suppliers through which they buy parts have cut costs of labor by becoming more efficient. Look for Caterpillar to have a strong year in 2011 and continue to be the world’s largest manufacturer of construction and mining equipment.
Jeremy Pellizzari - Junior Analyst
Western Digital Q2 Earnings
Western Digital reported Q2 earnings with total revenue of $2.475 billion and a net income of $225 million, or 96 cents per share, beating analysts’ estimates by 38 cents per share. Western Digital, which competes with larger rival Seagate Technology, said hard-drive unit shipments in the quarter rose 5 percent to 52.2 million. Chief Executive John Coyne said the company’s results reflected “solid execution and an improvement in hard drive industry conditions compared with the prior two quarters.” However, the company warned that tablets which use flash memory rather than hard-drive storage - would reduce growth in shipments of low-end laptops by 10-20 percent over the next few quarters. Western Digital expects revenue to range from $2.2 billion to $2.25 million in the third quarter.
Vladimir Pantilei,Junior Technology Analyst
Vladimir Pantilei,Junior Technology Analyst
LIFE upward trend looks to continue
In the past 52 weeks, shares of Life Technologies have traded between a low of $41.10 and a high of $57.25 and are now at $54.49, which is 33% above that low price. Life Technologies is currently above its 50-day moving average of $53.66 and above its 200-day moving average of $49.64. In the last five trading sessions, the 50-day MA has climbed 0.32% while the 200-day MA has remained constant.
-Jesus
-Jesus
Wednesday, January 26, 2011
Corning posts 4Q10 earnings.
Corning has reported earnings of $0.45, just one penny shy of analyst expectations. Revenue numbers came in at $1.77B which was far ahead of the expected $1.61B analysts were looking for. After earnings were released Corning finished the day up 7.9%, closing at $21.21. We have not seen a price this high since August 2008.
Full year sales were $6.6B, a 23% increase over a year ago, with each of the company's business segments growing year over year. Full year gross margin improved 700bps to 46% year over year. Corning ended the year with $4.59B in cash and continues to look attractive.
Gorilla Glass continues to be gaining traction. It is part of the specialty materials division of the company, which has grown revenue 70% year over year. This revenue made up 9% of Corning's total revenue in 2010.
Corning currently trades at a P/E of 10.3 and doesn't seem to price in growth at all. CFO Jim Flaws stated "it might be possible for Gorilla Glass to reach $1B in sales in 2011 depending how the TV market takes to the product." Seeing a 76% growth in EPS year over year and a strong outlook, I do not see why this stock is not trading at a higher P/E. If the P/E was to grow to 15, Corning would be trading over $30. It seems the market is overlooking the growth Corning is experiencing.
-Rory Blake
Full year sales were $6.6B, a 23% increase over a year ago, with each of the company's business segments growing year over year. Full year gross margin improved 700bps to 46% year over year. Corning ended the year with $4.59B in cash and continues to look attractive.
Gorilla Glass continues to be gaining traction. It is part of the specialty materials division of the company, which has grown revenue 70% year over year. This revenue made up 9% of Corning's total revenue in 2010.
Corning currently trades at a P/E of 10.3 and doesn't seem to price in growth at all. CFO Jim Flaws stated "it might be possible for Gorilla Glass to reach $1B in sales in 2011 depending how the TV market takes to the product." Seeing a 76% growth in EPS year over year and a strong outlook, I do not see why this stock is not trading at a higher P/E. If the P/E was to grow to 15, Corning would be trading over $30. It seems the market is overlooking the growth Corning is experiencing.
-Rory Blake
TRV – Q4 earnings & FY 2011 wrap-up 1/25/2011
The Travelers Companies reported fourth quarter net income of $1.95 per share, a decline from a record $2.36 per share in the same period last year. Despite the decrease TRV easily outpaced the consensus estimate of $1.66 per share, illustrating the fact that Q4 2009 was not a reasonable target because it benefited from three rare items. For the year, Travelers reported net income per Diluted Share of $6.62 compared to $6.33 in 2009. Yearly revenue was up 2%, and net written premiums increased by 1%. Forward guidance was not provided, but management was optimistic about the 2011 pricing environment. TRV’s board has authorized an additional 5 billion in stock buybacks in anticipation of strong operating cash flow next year.
During the conference call, CEO Jay Fishman addressed numerous questions about the company’s municipal bond portfolio. Analysts were concerned that the continuing budget deficits across all levels of domestic government might lead to pockets of insolvency. Any weakness in government debt would impact TRV because they systematically invest more of their reserves in the municipal market than their competitors, a strategy which helped them avoid MBS losses like those of Allstate – who is currently suing Bank of America over 700 million in bad debt. Fishman allayed these concerns by saying, “If one takes the 10 states that our analysis suggests are the most challenged, whether that's through pension or medical liability, medical payments or debt obligations, we own an aggregate in all of those 10 states. And this is excluding pre-refunded bonds, we own an aggregate of $1 billion of state-issued general obligation bonds in those entire 10 states. That represents 3.1% of our municipal portfolio.”
TRV management also detailed their first venture into a developing market, “we will invest approximately $370 million or 43% of the common stock at J. Malucelli, the market leader in the [construction insurance] business in Brazil.” This is a welcome first step for a company that has almost no business outside of the United States, Canada, and the UK. Unfortunately, management later admitted that, “The Malucelli situation was really very opportunistic. And it really came about because of an outreach from the folks in Brazil… We don't have any ambition to be a global company.”
Looking ahead, the concerns I voiced about the company’s long term strategy in my Q3 review are still unresolved. They are mirrored succinctly by Morningstar’s Drew Woodbury, “In the absence of growth opportunities, the company has been buying back shares… The company repurchased more than 18% worth of its year-end 2010 equity. In 2011, management expects to buy back $1.5 billion more than its full-year operating earnings. We think previous repurchases have been a good use of capital, given alternative low-return opportunities, but we would hope that as the market improves Travelers will put more capital toward expanding its business.”
~Zach
During the conference call, CEO Jay Fishman addressed numerous questions about the company’s municipal bond portfolio. Analysts were concerned that the continuing budget deficits across all levels of domestic government might lead to pockets of insolvency. Any weakness in government debt would impact TRV because they systematically invest more of their reserves in the municipal market than their competitors, a strategy which helped them avoid MBS losses like those of Allstate – who is currently suing Bank of America over 700 million in bad debt. Fishman allayed these concerns by saying, “If one takes the 10 states that our analysis suggests are the most challenged, whether that's through pension or medical liability, medical payments or debt obligations, we own an aggregate in all of those 10 states. And this is excluding pre-refunded bonds, we own an aggregate of $1 billion of state-issued general obligation bonds in those entire 10 states. That represents 3.1% of our municipal portfolio.”
TRV management also detailed their first venture into a developing market, “we will invest approximately $370 million or 43% of the common stock at J. Malucelli, the market leader in the [construction insurance] business in Brazil.” This is a welcome first step for a company that has almost no business outside of the United States, Canada, and the UK. Unfortunately, management later admitted that, “The Malucelli situation was really very opportunistic. And it really came about because of an outreach from the folks in Brazil… We don't have any ambition to be a global company.”
Looking ahead, the concerns I voiced about the company’s long term strategy in my Q3 review are still unresolved. They are mirrored succinctly by Morningstar’s Drew Woodbury, “In the absence of growth opportunities, the company has been buying back shares… The company repurchased more than 18% worth of its year-end 2010 equity. In 2011, management expects to buy back $1.5 billion more than its full-year operating earnings. We think previous repurchases have been a good use of capital, given alternative low-return opportunities, but we would hope that as the market improves Travelers will put more capital toward expanding its business.”
~Zach
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