Archive for October, 2013

• Morning News: October 25, 2013
  Eddy Elfenbein, October 25th, 2013 at 6:04 am

  Bank of England to Offer Banks More Help at Lower Cost, Says Mark Carney

  German Business Confidence Unexpectedly Falls

  U.K. Economy Accelerates to Fastest Growth Since 2010

  New Claims by Jobless Fall Less Than Hoped

  Mortgage Declines Spread the Pain

  Twitter Sets I.P.O. Price at $17 to $20 Per Share

  Southwest CEO Opens Door to Baggage Fees

  Microsoft Relying on Gamers to Cloud Users as PC Sales Slump

  Semiconductors Bolster Record Samsung Profit

  Amazon Posts Another Loss As Revenue Soars

  Icahn Amps Up Pressure on Apple, but His Stake Limits His Leverage

  Volvo Posts Surprise Quarterly Profit Drop on Krona Gain

  The Bullish Case for Stocks in One Sentence

  Roger Nusbaum: Back When Taleb Was Useful

  Howard Lindzon: Twitter…The Anti-Froth IPO!

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• Excellent Earnings from Microsoft
  Eddy Elfenbein, October 24th, 2013 at 4:39 pm

  Microsoft ($MSFT) reported a 17% earnings increase last quarter. For July, August and September, Microsoft earned 62 cents per share which easily beat the consensus estimate of 54 cents per share.

  The world’s largest software maker is undergoing unprecedented changes, conducting its first-ever CEO search and starting a major organizational overhaul aimed at bolstering sales by focusing on devices and services. Demand for Microsoft’s Office productivity software has helped compensate for declining consumer purchases of PCs running Windows, and the company has been cutting costs to shore up profit.

  “Business has been driving the train,” said Colin Gillis, an analyst at BGC Partners LP in New York, who recommends holding the shares. “Most people are really looking through the quarter to the new CEO.”

  MSFT is also up about 5% after hours.

• CA Technologies Earns 86 Cents Per Share
  Eddy Elfenbein, October 24th, 2013 at 4:19 pm

  Great earnings report from CA Technologies ($CA). For Q3, the company earned 86 cents per share which was 13 cents more than Wall Street’s estimate.

  CA also raised its full-year growth forecast by a small bit. Previously, they saw non-GAAP diluted earnings rising by 16% to 20%. Now that range is 17% to 20%. That works out to an earnings-per-share range of $2.96 to $3.03. Wall Street had been expecting $2.97 per share.

  “I am pleased with our overall second quarter results,” said Mike Gregoire, CA Technologies chief executive officer. “We over performed on both the top line and the bottom line, enabling us to increase our full year guidance for revenue and GAAP and non-GAAP earnings per share. This is clearly a beginning, but we still have work to do to get the aggregate portfolio growing.

  “To drive growth at CA we are investing in our business. In the second half of the fiscal year we will increase our research and development spend and accelerate our investment in marketing, all within the expense guidance we outlined at the outset of the fiscal year,” Gregoire said. “This will enable us to continue to deliver disruptive new products like our recently announced Nimsoft Monitor Snap – a SaaS monitoring solution that provides an entirely new customer experience – and the next generation of mainframe products. Accelerating innovation, delivering differentiated products and focusing our marketing is the path to getting CA on a growth trajectory.”

  The stock is up about 5% after hours.

• More Strong Earnings for Ford
  Eddy Elfenbein, October 24th, 2013 at 11:57 am

  Ford Motor ($F) reported another solid quarter this morning. This was Ford’s 17th profitable quarter in a row. Excluding another round of charges, Ford earned 45 cents for the third quarter which topped Wall Street’s consensus of 38 cents per share.

  From the NYT:

  “It was a really, really great quarter,” Robert L. Shanks, Ford’s chief financial officer, told reporters at the automaker’s Dearborn headquarters. The company’s performance was “encouraging from a number of perspectives,” with growth in wholesale volume, revenue and market share in North America, South America, Europe and Asia-Pacific.

  The automaker posted a combined profit for regions outside of North America for the first time since the second quarter in 2011. A $159 million pretax operating profit in South America beat Wall Street’s expectations, while a $126 million profit in Asia-Pacific, though a third-quarter record for the company, came in below an analyst consensus.

  Ford’s market share in South America, where Mr. Shanks said inflation in Venezuela and Argentina could pose a problem, grew more than a full percentage point to 9.5 percent.

  Ford now expects to record a total company pretax profit and automotive-related operating margin higher than last year. Previously, the company had said it expected its performance to be on a par with 2012.

  “The progress and the direction is what’s really exciting,” Mr. Shanks said.

  Ford also raised its outlook for this year. Before they said that this year’s pre-tax profit will match last year’s. Now they say it will beat it. I was also impressed to hear that their losses in Europe will be less than what they had last year.

  Alan Mulally also said that he’ll be on the job, at least through the end of next year. The stock cracked $18 per share this morning. Shares of Ford were last over $18 in early 2011.

• Stryker Pays $13.2 Million to Settle Charge
  Eddy Elfenbein, October 24th, 2013 at 11:50 am

  Stryker ($SYK) has agreed to pay $13.2 million to settle charges of overseas bribery.

  The Securities and Exchange Commission said that the company tried to mask its $2.2 million bribes in Argentina, Greece, Mexico, Poland and Romania by booking them as legitimate expenses for charitable donations, travel costs and commissions.

  The fine is hardly a backbreaker, but I find these allegations troubling.

• Morning News: October 24, 2013
  Eddy Elfenbein, October 24th, 2013 at 6:06 am

  China’s Manufacturing Strengthens in Boost to Recovery

  Euro Hedging Jumps as Europe Exporters Bemoan Gains

  SEC Crowdfunding Plan Wins Fans

  Jury Finds Bank of America Liable in Mortgage Case

  Caterpillar Races to Cut Back

  McKesson Agrees to Buy Celesio for $5.4 Billion

  Pinterest Raises $225 Million, as Valuation Jumps to $3.8 Billion

  Daimler Profit Beats Estimates as CLA Boosts Car Sales

  Unilever Pinched by Slowdown in Emerging Markets

  AT&T 3rd-Quarter Net Rises 4.9% as Subscriber Count Grows

  LG Electronics’ Third Quarter Hurt By Handset Competition

  Hyundai Motor Posts First Profit Gain This Year On China, Brazil Sales

  Starbucks Opens Its First Tea Bar As CEO Schultz Bets On $90 Billion Market

  Jeff Miller: What Happened to the Part-time Employment Story?

  Joshua Brown: Beta Managers, This is Your New Benchmark

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• The 10-Years Falls Below 2.5%
  Eddy Elfenbein, October 23rd, 2013 at 12:12 pm

  The bond market was rocked earlier this year as the yield on the 10-year Treasury jumped from 1.6% in early May to nearly 3% by September. How things have changed. The yield has gradually drifted lower over the past few weeks, and the yield finally dipped below 2.5% today.

  

  If the yield falls to 2.46%, that will match a four-month low.

• CR Bard’s Q4 Guidance
  Eddy Elfenbein, October 23rd, 2013 at 11:14 am

  Shares of CR Bard ($BCR) are rallying in the wake of yesterday’s good earnings report. BCR has been as high as $137 today which is a 7.9% gain from yesterday’s close.

  Here’s a look at what Bard had to say about guidance on their conference call (courtesy of Seeking Alpha):

  Now moving to financial guidance. For Q4, we are expecting constant currency sales growth between 1% and 3%. This includes the impact of the Q4 acquisitions and the divestiture of EP, which essentially offset each other in the quarter.

  Although our Q3 organic revenue growth was a bit stronger than that, we remain cautious about the sales environment, particularly in the U.S. We have seen the same survey data that you have that suggests no reliable improvement in physician office visits or hospital admissions, and we have some tough comps in Q4, specifically in biopsy and soft tissue repair. Of course, recognizing the Gore royalty as revenue now looks like a 2014 event.

  From an EPS standpoint, excluding items affecting comparability, our 2013 guidance after our acquisition call on September 4, including the $0.10 of dilution from EP and the acquisitions and excluding Gore, was between $5.55 and $5.60. On the back of the Q3 beat, we are raising the full year 2013 adjusted EPS guidance to between $5.70 and $5.75 a share, which puts Q4 between $1.34 and $1.39 per share.

  Q4 is obviously a little muddy with EP moving out of the P&L and the adjustments we are making around that, while at the same time integrating the new businesses and the start-up costs associated with those transactions. We’re very pleased that with all of these moving parts, excluding the Gore royalty, we’re on track to bring the year in where we said we would from both the sales and profitability perspectives.

• The Sensational Success of Small-Cap Stocks
  Eddy Elfenbein, October 23rd, 2013 at 11:12 am

  Roben Farzad writes on the amazing success of small-cap stocks:

  Zero in, for example, on the Russell 2000. It’s up 30 percent this year and has delivered a total return of 242 percent since the market hit its crisis low in March 2009, smartly ahead of the 183 percent total gain provided by the S&P 500. From 1926 through 2012, small-cap stocks averaged an annual return of 11.9 percent, compared with 9.8 percent for large caps, according to Morningstar (MORN) Ibbotson data—turning an original $10,000 investment into $158 million, compared with $31 million in large companies.

• Morning News: October 23, 2013
  Eddy Elfenbein, October 23rd, 2013 at 6:14 am

  ECB Sets Tougher Bank Health Tests

  Spain Exits Recession, Inches Back to Growth in Third Quarter: Bank of Spain

  U.K. Gilts Rise a Second Day as BOE Says Lower Rates Aid Growth

  Oil Prices Fall On Weak US Jobs and Likely High Stockpiles

  Jobs Report Tells Us the U.S. Economy Still in Desperate Need of Electroshock

  Weak Job Gains May Cause Delay in Action by Fed

  U.S. Stocks Rise as S&P 500 Annual Gain Nears Biggest Since 2003

  Twitter Secures $1 Billion Credit Line Ahead of IPO

  JPMorgan Nears $6 Billion Settlement With Investors

  Heineken Cuts Profit Outlook as Central European Sales Slide

  Broadcom Third-Quarter Profit Rises 44%; Shares Off on Outlook

  Carl Icahn Cuts Netflix Stake, Pockets $800 Million Profit

  Amazon Raises Free Shipping Minimum to $35

  Jeff Carter: Anecdotes for The Bears

  Cullen Roche: Warren Buffett on the Role of Luck

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