• Comcast Pulls Out of Time Warner Deal
    Posted by on April 23rd, 2015 at 3:48 pm

    In February 2014, Comcast (CMCSK) and Time Warner Cable (TWC) announced plans for a mega-merger. Folks across the industry got nervous. Two months later, DirecTV (DTV) and AT&T (T) announced their deal.

    I always tell investors that any merger has the chance of falling through. Today, Comcast said they’re backing out of the Time Warner Cable deal. Both stocks have trailed the S&P 500 since the deal was announced 14 months ago.

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    Apparently, the regulatory concessions were just too much. Charter Communications (CHTR) is standing on the sidelines ready to move:

    The planned $68 billion deal including debt, 431 days in the making, is facing resistance from regulators. Comcast could ultimately walk away if concessions needed to win approval are too strict, people familiar with the matter said.

    Given that Time Warner Cable’s revenue and earnings are on the upswing, analysts see any shareholder losses in the absence of a deal as minimal and probably temporary. The stock could fall about 7 percent at most, according to the lowest estimate compiled by Bloomberg. That compares with a potential gain of 11 percent if the deal still happens.

    Backstopping Time Warner Cable’s share price is the expectation that Charter Communications Inc. would buy the company if Comcast doesn’t. Charter, backed by billionaire dealmaker John Malone, was the original suitor for Time Warner Cable back in 2013 before Comcast unexpectedly trumped its offer.

  • Snap-on Earns $1.87 per Share
    Posted by on April 23rd, 2015 at 9:55 am

    This morning, Snap-on (SNA) reported Q1 earnings of $1.87 per share. That was five cents better than estimates. Revenues increased 5.1% to $827.8 million which was below consensus of $834.42 million.

    “We’re pleased to begin 2015 with encouraging first quarter results that included broad-based organic sales growth of 9.9% and a 15.4% increase in diluted earnings per share,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “We believe these results confirm Snap-on’s unique capabilities in providing valued productivity solutions to a growing range of professional customers performing critical tasks in workplaces of consequence. Additionally, we achieved a 120 basis point improvement in operating margin before financial services, further demonstrating our ability to realize ongoing benefits from our Snap-on Value Creation Processes. Finally, this continued progress along our defined runways for both coherent growth and operating improvement would not be possible without the capability and commitment so evident across Snap-on, and I thank our franchisees and associates worldwide for their significant contributions and extraordinary effort.”

    The shares have been as high as $152 this morning.

  • Morning News: April 23, 2015
    Posted by on April 23rd, 2015 at 7:17 am

    Petrobas Says $2.5 Billion of Corruption Losses Are ‘Recoverable’

    Day Trader in Leather Jacket Far Cry From Wall Street Flash Boy

    FCC Staff Recommends Hearing on Comcast-Time Warner Cable Merger

    Procter & Gamble Hit by Strong Dollar in Third Quarter

    AT&T Tops Profit Estimates as Tablet Sales Boosted User Base

    PepsiCo Tops Estimates After Cutting Costs, Boosting Snack Sales

    Facebook Sees Strong Q1 Revenue, But Spending And Currency Impact Hurt Profit

    You’re Still Not Eating At McDonald’s, And The New CEO Wants To Change That

    Hyundai Motor’s Profit Falls Again

    Altria Earnings Boosted By Higher Shipments

    Dunkin’ Brands Boosts 2015 Outlook

    China Hits Mercedes With $56 Million Antitrust Fine

    GM Profit Rises Less Than Estimated With Russia, Brazil Problems

    Jeff Carter: Bridges to Brooklyn, and Swamp Land in Florida

    Cullen Roche: Secular Stagnation or Golden Era of Low and Stable Growth?

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  • eBay Earns 77 Cents per Share
    Posted by on April 22nd, 2015 at 4:31 pm

    Another earnings beat for us, but this time with better guidance. eBay (EBAY) reported Q1 earnings of 77 cents per share. That topped estimates of 70 cents per share. Quarterly revenue was $4.45 billion, just a hair above Wall Street’s estimate of $4.42 billion.

    The details are pretty solid.

    eBay Inc.’s commerce and payments ecosystems continued to increase the role they play in global commerce, but the strengthening dollar significantly impacted first quarter results and reduced the 9% organic growth rate to 4%. Revenue growth was negatively impacted by foreign currency translation at eBay and PayPal by 7 pts and 3 pts respectively, with benefits from foreign currency hedging partially offsetting the impact at PayPal. Additionally, weaker local currencies in some markets led to reduced demand for goods in export-oriented markets like North America, impacting the growth of cross border trade.

    “We had a strong first quarter, with eBay and PayPal off to a good start for the full year,” said eBay Inc. President and CEO John Donahoe. “I feel very good about the performance of our teams at eBay and PayPal. Each business is executing well with greater focus and operating discipline as we prepare to separate eBay and PayPal into independent publicly traded companies. We are moving forward with clarity and speed, with a smooth separation expected in the third quarter. We are deeply committed to setting up eBay and PayPal to succeed and to deliver sustainable value to our shareholders.”

    Now for guidance. eBay estimates earnings of 71 to 73 cents per share for Q1, and revenue between $4.4 and $4.5 billion. The consensus on Wall Street had been for earnings of 71 cents per share on revenue of $4.57 billion.

    For all of 2015, eBay sees earnings of $3.05 to $3.15 per share on revenue of $18.35 to $18.85 billion. Wall Street had been expecting $3.10 per share on revenue of $18.96 billion.

    The shares are currently up 4.4% in the after-hours market.

  • Qualcomm Earned $1.40 per Share
    Posted by on April 22nd, 2015 at 4:12 pm

    Mixed results for Qualcomm (QCOM). The company earned $1.40 per share for their fiscal Q2 which was seven cents better than expectations. Quarterly revenue came in at $6.89 billion which was better than the Street’s expectations of $6.83 billion.

    The problem was guidance. Wall Street had been expecting earnings of $1.14 per share on revenue of $6.5 billion. Qualcomm said fiscal Q3 earnings should range between 85 cents and $1 per share while revenue should range between $5.4 billion and $6.2 billion.

    That’s a big miss. This is what Qualcomm had to say:

    We are reducing our outlook for our semiconductor business, QCT, for the second half of fiscal 2015 primarily due to:

    The increased impact of customer share shifts within the premium tier, which will reduce our sales of our integrated Snapdragon™ processors and skew our product mix towards modem chipsets in this tier; and

    A decline in our share at a large customer.

    In the second quarter of fiscal 2015, we reached a resolution with the NDRC regarding its investigation and agreed to implement a rectification plan that modifies certain of our business practices in China. However, we continue to believe that certain licensees in China are not fully complying with their contractual obligations to report their sales of licensed products to us (which includes 3G/4G units that we believe are not being reported by certain licensees). Additionally, we expect it will take some time for licensees to decide whether to accept the new China terms or retain the terms of their existing agreements and for unlicensed companies that had delayed execution of new licenses pending resolution of the investigation to execute new licenses. We believe that the conclusion of the NDRC investigation will accelerate the resolution of these issues, although the outcome and timing of any resolutions are uncertain. Please refer to our Quarterly Report on Form 10-Q for the second quarter ended March 29, 2015 filed with the SEC for our most recent disclosures regarding the NDRC resolution. Our current outlook for our licensing business, QTL, also reflects the following:

    We estimate global 3G/4G device shipments were approximately 1.37 billion for calendar year 2014. However, due to the issues described above, we do not believe that all of the global 3G/4G device shipments for calendar year 2014 were reported to us within the time periods required by our license agreements. Accordingly, we currently estimate approximately 1.174 billion to 1.190 billion calendar year 2014 3G/4G device shipments were actually reported to us through the first calendar quarter of 2015.

    We expect global 3G/4G device shipments to be approximately 1.52 billion to 1.6 billion for calendar year 2015. At this time, we are not providing a forecast for calendar year 2015 reported 3G/4G device shipments.

    The stock is off by 2.3% in after-hours trading.

  • The Nikkei Breaks 20,000
    Posted by on April 22nd, 2015 at 11:50 am

    For the first time since 2000, the Japanese Nikkei closed over 20,000.

  • The Voltari Surge
    Posted by on April 22nd, 2015 at 11:43 am

    An obscure mobile-advertising company named Voltari (VLTC) has soared dramatically in the last few days. It was as low as 72 cents per share on March 26, Today it’s been as high as $21.75.

    What’s causing the rally? Carl Icahn.

    Icahn and his funds purchased 4.06 million shares, or about 95 percent of the stock that the New York-based company sold. The holding cost $5.5 million, according to a regulatory filing, and was valued at $65.7 million as of yesterday. The purchase brought his stake to 4.74 million shares.

    The gain on Voltari would be even larger if Icahn’s holdings of other equity securities were included. He and his funds owned 1.15 million preferred shares and warrants to buy 969,603 common shares, according to the filing.

    Icahn’s involvement with Voltari began in February 2007, when he invested $50 million. The company was called Motricity Inc. back then and was closely held. It made an initial public offering in June 2010. The shares peaked less than five months later and then plunged as much as 99.8 percent, to 63 cents.

    Voltari was a unit of Motricity, and became the parent company in an April 2013 reorganization designed to preserve loss-related tax credits. The company had net losses totaling $367.5 million from 2007 through last year, according to data compiled by Bloomberg.

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  • Wabtec Beats and Raises Guidance
    Posted by on April 22nd, 2015 at 9:02 am

    More earnings. This morning, Wabtec (WAB) reported Q1 earnings of 99 cents per share which was four cents better than estimates. The company also raised its full-year guidance from $4.05 to $4.10 per share.

    Raymond T. Betler, Wabtec’s president and chief executive officer, said: “With a strong first quarter, we’re off to a good start for the year. We will continue to face challenges during the year, including global economic uncertainty and foreign currency exchange headwinds, but we expect to benefit from our strong backlog, and from ongoing investment in freight rail and passenger transit projects around the world. We’re also pleased with our long-term growth prospects, which are driven by our diversified business model, balanced strategies and rigorous application of the Wabtec Performance System.”

    Details from the quarter:

    First quarter sales were $819 million, 18 percent higher than the year-ago quarter, due to growth in the Freight Group.

    Income from operations was a record $148 million, or 18.1 percent of sales, compared to 17.5 percent in the year-ago quarter.

    Earnings per diluted share were a record 99 cents, which was 19 percent higher than the year-ago quarter.

    At March 31, 2015, the company had cash of $249 million and debt of $421 million.

  • Morning News: April 22, 2015
    Posted by on April 22nd, 2015 at 7:17 am

    Greek Cash Seen Lasting Into June, No EU Deal Imminent

    EU Opens Antitrust Case Against Gazprom

    Bank of England Policymakers Unanimous on Holding Rates

    Mystery Trader Armed With Algorithms Rewrites Flash Crash

    Is Cheap Gas Pulling the Plug on Electric Cars?

    Rolls-Royce Names East CEO as Rishton Goes Amid Investor Ire

    Comcast’s Track Record in Past Deals May Be Hitch for Merger With Time Warner Cable

    Amazon’s New Travel Service Enters Lucrative Online Travel Market

    Coca-Cola Profit Tops Estimates as Price Increases Boost Sales

    EMC Falls Short of Analysts’ Estimates on Weak Storage Demand

    AutoNation Profit Rises 17%

    Richemont Warns of Profit Drop on Derivative Losses

    British Regulator Fines Merrill Lynch $19.8 Million for Reporting Failures

    Frances Coppola: Rediscovering Old Economic Models

    Joshua Brown: Savita Subramanian: The Cycle Is Not Peaking

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  • Stryker Earns $1.11 per Share
    Posted by on April 21st, 2015 at 4:17 pm

    Stryker (SYK) reported Q1 earnings of $1.11 per share. That was three cents better than estimates. The company also raised the low end of their full-year forecast by five cents per share. The new range is $4.95 to $5.10 per share. Net sales rose by 3.2% to $2.4 billion, or 7.4% in constant currency.

    “We are pleased with our first quarter results, with another strong quarter of nearly 6% organic sales growth and disciplined expense management,” said Kevin A. Lobo, Chairman and Chief Executive Officer. “We expect this momentum, which is balanced across segments and regions, to continue and are raising the low end of full year sales and earnings guidance.”

    (…)

    We expect 2015 constant currency sales growth in the range of 6.0% to 7.0%, including organic sales growth in the range of 5.0% to 6.0%. Based on current foreign currency exchange rates we expect adjusted diluted net earnings per share to be in the range of $1.15-$1.20 and $4.95-$5.10 in the second quarter and the full year, respectively. If foreign currency exchange rates hold near current levels, we expect sales in the second quarter and full year of 2015 to be negatively impacted by approximately 3.5% to 4.5% and adjusted diluted net earnings per share to be negatively impacted by approximately $0.25 to $0.30 in the full year, approximately half of which will be in the first half of the year.