Author Archive

• Cognizant Down 6% Despite Earnings Beat
  Eddy Elfenbein, May 7th, 2014 at 10:49 am

  Shares of Cognizant Technology Solutions ($CTSH) are down about 6% this morning after the IT provider’s earnings report. For Q1, CTSH earned 62 cents per share which was seven cents better than estimates. That’s up from 51 cents per share a year ago. Quarterly revenue rose 19.9% to $2.42 billion.

  For Q2, the company sees revenues between $2.50 billion and $2.53 billion, and EPS of 62 cents. The Street had been expecting 63 cents per share. For all of 2014, they project revenues of at least $10.3 billion and earnings of $2.54 per share. Three months ago, CTSH had disappointed investors when they projected 2014 earnings of at last $2.51 per share (that’s post-split), while the Street had expected $2.54 per share.

  “Cognizant continues to be well positioned to help clients as they face the secular shifts impacting their businesses,” said Francisco D’Souza, Chief Executive Officer. “Our broad set of capabilities and our compelling value proposition enable Cognizant to help clients simultaneously ‘run better’ and ‘run different,’ by not only driving efficiency in their current operations, but also helping them to re-imagine and re-design their business models.”

  “We remain confident in the overall demand environment and in our ability to deliver our previously stated revenue guidance of at least $10.3 billion for 2014, up at least 16.5% over 2013,” said Gordon Coburn, President. “Our strategy of re-investing in our business to build strength across all of our growth horizons is clearly paying off. As the impact of digital technologies increasingly becomes a CEO level agenda item, Cognizant is well positioned to capitalize on this trend.”

  These numbers look pretty good, and there’s not much surprising here. I don’t see what can justify today’s sell-off, but I’ve never understood short-term moves.

• Morning News: May 7, 2014
  Eddy Elfenbein, May 7th, 2014 at 6:36 am

  Repsol’s $1.26 Billion YPF Stake Sale Ends Argentine Entanglement

  SocGen Posts Surprise Profit Decline on Russia Writedown

  Treasuries Gain Amid Speculation Yellen Will Say Growth Gradual

  Yahoo’s Alibaba Windfall Means Firepower to Chase Google

  Japan’s SoftBank Says Won’t Sell Alibaba Shares in Listing

  Twitter Shares Plummet With Sell-Off

  Fiat Chrysler Reveals Plans to Grow Sales by 2018

  Park Your Tesla Shares Ahead of Earnings

  Jim Cramer: Here’s Why Apple Broke $600 A Share

  Walt Disney Co. Earnings Surge 27% on Strength of Film Studio

  HSBC Posts Fall in First-Quarter Profit

  Freeport-McMoRan Announces Agreement to Sell Eagle Ford Interests for $3.1 Billion

  Commerzbank Profit Misses Forecast as Battles to Turn Round

  Edward Harrison: Charts of the Day: Jobless Claims as a Real-Time Economic Indicator

  Jeff Carter: Innovation Does Create Jobs-Software Doesn’t Eat The World

  Be sure to follow me on Twitter.

• Big Earnings Beat for DTV
  Eddy Elfenbein, May 6th, 2014 at 7:55 am

  DirecTV ($DTV) just reported Q1 earnings of $1.63 per share. That’s 15 cents per share better than expectations. Quarterly revenue rose 4% to $7.86 billion.

  “Our first quarter results continue to demonstrate the strong execution of our operations,” said Mike White, president and CEO of DIRECTV. “In the U.S., operating profit before depreciation and amortization margin expanded year-over-year for the third consecutive quarter, highlighting our commitment to profitably grow our businesses through significantly improving the customer service experience, disciplined expense management and productivity initiatives. In Latin America, despite challenging macroeconomic headwinds, we continue to profitably expand our share of the growing pay TV market while delivering adjusted OPBDA margin of 30%. In addition, by leveraging the achievements of both DIRECTV U.S. and DIRECTV Latin America with the strength and stability of our cash flow, we continue to return cash to shareholders through stock repurchases at an industry leading clip.”

• Morning News: May 6, 2014
  Eddy Elfenbein, May 6th, 2014 at 6:34 am

  French Services Activity Grows at Weaker Pace in April

  OECD Warns Government Against Harsh Budget

  GE Offer for Alstom Is Not Acceptable, Hollande Says

  UK’s Financial Research Group Markit Reveals Plans For US Float

  Feds Wrestle With ‘Too Big to Jail’

  UBS Profit Beats Forecasts as Unveils Restructuring

  Bayer to Pay $14.2 Billion for Merck’s Consumer Care Division

  Target’s Decision to Remove CEO Rattles Investors

  Tyson Profit Surges, But Hog Virus Mutes Guidance

  Google and Amazon Launch Same-Day Delivery in L.A. Area

  AIG Profit Falls 27%

  Coke Just Stopped Using A Chemical That’s Also A Flame Retardant — But That’s Not The Worst Thing That’s In Its Drinks

  Three Bankers Bolster Blankfein as Goldman Trading Sinks

  Howard Lindzon: The Pressure of This Boom….Revisited

  John Hempton: Just How Weak Are Bill Ackman’s Examples?

  Be sure to follow me on Twitter.

• Sharp Turn Towards Energy Stocks
  Eddy Elfenbein, May 5th, 2014 at 5:20 pm

  For the first time in a long time, the energy sector has been popular. Since March 20, the Energy Sector ETF ($XLE) has been beating the S&P 500.

  

• Bonds Are Holding Up
  Eddy Elfenbein, May 5th, 2014 at 10:24 am

  The 10-year yield is down to a six-month low today. Here’s a look at the S&P 500 compared with the Long-Term Bond ETF ($TLT). After getting kicked around for a long time, bonds are in the lead this year. Interestingly, the yields for the 10-year and S&P 500 are pretty close.

  

• Stocks Are Down and TGT’s CEO Is Out
  Eddy Elfenbein, May 5th, 2014 at 10:08 am

  The stock market is down this morning. The S&P 500 is currently at 1,868 which is a pullback of about 0.7%.

  Interesting news out of Target ($TGT). CEO Gregg Steinhafel has resigned due to the data security breach issue. Even though the story broke five months ago, the fallout has continued.

  As a business, I like Target a lot and I think it could be a good buy. However, I’m not confident enough to say that it’s a flat-out buy. Earnings last year were terrible, especially for Q4. Just because a stock is down doesn’t mean it’s cheap; it’s only cheap relative to where it was.

  The current estimate for this year is $4.03 per share which would still be less than the profit from three years ago. Ideally, I’d like to see TGT trade a lot lower before I felt comfortable saying the price was favorable.

  Shares of Tyson Foods ($TSN) have been on fire this year, but the stock is down about 7% this morning after the country’s largest meat producer missed earnings by three cents per share. Earnings were actually very strong compared with one year ago (60 cents versus 36 cents). What’s interesting about TSN’s earnings report is that it topped sales estimates thanks to higher prices for beef and pork.

  From Bloomberg:

  The wholesale price of pork has jumped 35 percent this year after a piglet-killing virus curbed domestic supply. Beef is 14 higher percent as drought and high feed costs shrink the U.S. cattle herd.

  More than 5,000 cases of the virus have been reported with it spreading to at least 27 states, according to the National Animal Health Laboratory Network. U.S. production may drop the most in three decades this year, Rabobank International has estimated.

  Tyson said it sees full-year earnings of $2.78 per share, so the lower stock price is 14.3 times that.

• Morning News: May 5, 2014
  Eddy Elfenbein, May 5th, 2014 at 6:48 am

  EU Reduces Euro-Area Growth Forecast as Inflation Seen Slower

  Buoyed by Exports, Portugal Chooses Clean Exit From Bailout

  China Factory Activity Shrinks in April, New Export Orders Contract

  Cnooc Oil Rig Fuels Vietnam-China Tensions

  Indonesia’s Economy Stumbles in First Quarter

  U.S. Looks Into Wagers, Pro and Con, on Herbalife

  Ackman, Icahn Defend Activism as Munger Sees Harm to U.S.

  U.S. Firms With Irish Addresses Get Tax Breaks Derided as ‘Blarney’

  Nokia’s $100 Million Investment Suggests Its Next Focus May Be ‘Connecting Cars’

  Chevron’s Goal for Record Output Slips as Production Falters

  Dish or DirecTV Needs Deal Most in AT&T Love Triangle

  No Regrets for the Founder of Tumblr After Yahoo Sale

  Can’t Find Enough 30-Year Treasuries to Buy? Here’s Why

  Jeff Miller: Weighing the Week Ahead: Is the Ukraine Crisis a Market Crisis?

  The Epicurean Dealmaker: Ozymandias at the Art Gallery

  Be sure to follow me on Twitter.

• The 10-Year Is Still Range Bound
  Eddy Elfenbein, May 2nd, 2014 at 10:17 am

  Yesterday, the 10-year Treasury ever so slightly stepped below its locked-in trading range of 2.6% to 2.8%. The yield has stayed within this tight range for more than three months. But thanks to today’s strong jobs report, the yield has jumped and we’re still in our range.

  

• April NFP +288,000
  Eddy Elfenbein, May 2nd, 2014 at 8:36 am

  The Labor Department just reported very strong job numbers for April. Nonfarm payrolls rose by 288,000. That’s the biggest gain since January 2012, and it was far more than expectations of 215,000. The unemployment rate fell to 6.3%.

  Private payrolls rose by 273,000 and we finally topped the pre-recession peak. The labor force dropped by 800,000 last month. The participation rate fell to 62.8% which is the lowest in 36 years.

  For the first time in 66 months, there’s less than 10 million unemployed. Nonfarm payrolls are now 113,000 below the peak from January 2008. If you were to take the jobs-to-population ratio from April 2000, then add 22.4 million people none of whom are working, you would have the jobs-to-pop ratio for April 2014.

  Here’s a look at the growth in NFP for the last 32 months along with its trend line.