Harris Earns $1.42 Per Share
Posted by Eddy Elfenbein on July 31st, 2012 at 11:02 am

More Buy List earnings. This morning, Harris Corp. ($HRS) reported quarterly earnings of $1.42 per share which was a penny more than estimates. This was Harris’ fiscal fourth quarter and they earned $5.20 per share for the entire year.

“Harris fourth quarter results represented a solid finish to fiscal 2012,” said William M. Brown, president and chief executive officer.

“Both income and earnings per share from continuing operations increased compared with the prior year, driven by operating improvement in all three segments and from a lower share count. Cash flow was particularly strong in the fourth quarter, contributing to excellent full year results.

“Although revenue declined as expected, orders in the quarter were higher than revenue and increased in all three segments with the strongest increase in Integrated Network Solutions. Our recent wins are encouraging as we enter a new fiscal year facing uncertainty in the government spending environment.”

The most important news today is that Harris reiterated its guidance for the current fiscal year for earnings between $5.10 and $5.30 per share. The stock is currently going for eight times earnings.

Buy List Earnings Calendar
Posted by Eddy Elfenbein on July 31st, 2012 at 10:53 am

Why Is Fiserv Down Today?
Posted by Eddy Elfenbein on July 31st, 2012 at 10:51 am

Just a quick note on Fiserv ($FISV). The company had a good earnings report yesterday. The stock was trading at $75 in yesterday’s after hours market, but it’s down to $68.48 this morning. I have no idea why — perhaps it was downgraded by someone.

The earnings call was very good. I wanted to reiterate that despite today’s pullback, there’s nothing wrong with Fiserv’s business.

On the plus, Hudson City is up strongly today thanks to an analyst upgrade. HCBK has been as high as $6.38 this morning although I’ve grown somewhat cool on the stock recently.

Facebook = $22.28
Posted by Eddy Elfenbein on July 31st, 2012 at 10:30 am

As I look at Facebook ($FB), the stock is now down to $22.28. That’s more than half off the high price from the day of the IPO. I knew the stock was overpriced and I said so at the time. But I didn’t think the balloon would deflate so quickly.

I’d say FB has a fair price of about $14 per share, but I wouldn’t be interested unless it’s going for a steep discount. I might be a buyer at $10. Remember that with investing, you should never take risks you don’t need to.

Repealing Glass Steagall Didn’t Cause the Crisis
Posted by Eddy Elfenbein on July 31st, 2012 at 10:15 am

Barry Ritholtz makes a very good point about the claims that repealing Glass-Steagall Act did not cause the financial crisis. Glass-Steagall was the Depression-era law that separated investment banking from commercial banking. (We can see the effects today as to comply with the law, Morgan Stanley was the investment bank spun-off from JP Morgan.)

The claim that the repeal did not cause the crisis is formally correct; however, it misses the point. When the crisis came, the absence of Glass-Steagall made the crisis much, much worse.

This is somewhat like people saying that the Titanic didn’t sink due to too few lifeboats. That’s true, but it obscures the issue. The Titanic did sink and the lack of lifeboats caused the deaths of hundreds, and it was entirely avoidable.

I don’t claim to know a good way of avoiding future credit crises. The nearest thing I have to a coherent opinion is to realize that these events happen and regulation is often a step behind. Therefore, we ought to avoid the temptation of trying to make a system that’s impossible to break, but instead make one that’s easy to fix. That’s why I lean towards favoring “big dumb rules” like breaking up large banks, instead of smart, smaller rules like the Volcker Rule.

Think of a speed limit on a highway. It’s a good example of a big, dumb rule that governs a complex system (traffic). The speed limit applies to everyone and is easily understood. The problem on the highways isn’t specifically the speed of drivers, but how careful they are. The reason why speed limits work is that by limiting speed, drivers are more careful. It’s not perfect, but it works well enough.

Morning News: July 31, 2012
Posted by Eddy Elfenbein on July 31st, 2012 at 6:31 am

Singh’s $400 Billion Power Plan Gains Urgency as Grid Collapses

India Holds Key Rate, Skirting Global Easing on Inflation

Taiwan GDP Shrinks As Slowdown Seen From Japan To Korea

China to Step Up Policy Fine-Tuning in Second Half: Wen

China’s Energy Grab Is About Know-How, Not Resources

Bond Gains Prop Up Japan Banks Amid Weak Loan Growth

Fed Seen Forgoing Next Round of Asset Purchases Until September

Manchester United Seeks Up to $333 Million in IPO

UBS Hit by Loss on Facebook IPO

BP Reports Loss on U.S. Asset Writedowns, Production Slump

Panasonic Reaps Profit Gain, Set To Streamline Further

Alibaba Is Said to Be Close to Raising $8 Billion

Social Media Are Giving a Voice to Taste Buds

Roger Nusbaum: Trust Your Gear

Credit Writedowns: Did Draghi Act On His Own?

Be sure to follow me on Twitter.

Fiserv Earns $1.28 Per Share
Posted by Eddy Elfenbein on July 30th, 2012 at 4:11 pm

Fiserv‘s ($FISV) Q2 earnings are out and the company made $1.28 per share for the second three months of the year. This was two cents more than Wall Street’s forecast. All across the board, these were solid results:

GAAP revenue in the second quarter was $1.10 billion compared with $1.07 billion in the second quarter of 2011. Adjusted revenue was $1.03 billion in the second quarter compared with $1.00 billion in 2011, an increase of 3 percent. For the first six months of 2012, GAAP revenue was $2.21 billion compared with $2.11 billion in 2011, and adjusted revenue was $2.06 billion compared with $1.99 billion in 2011, an increase of 4 percent.

GAAP earnings per share from continuing operations for the second quarter was $1.18 compared with $0.67 in 2011, which included a loss from early debt extinguishment of $0.26 per share. GAAP earnings per share from continuing operations for the first six months of 2012 was $2.13 compared with $1.45 in 2011, which included a loss from early debt extinguishment of $0.26 per share.

Adjusted earnings per share from continuing operations in the second quarter increased 13 percent to $1.28 compared with $1.13 in 2011. Adjusted earnings per share from continuing operations for the first six months of 2012 was up 15 percent to $2.48 compared with $2.15 in 2011.

“We achieved strong earnings and sales performance in the quarter consistent with our full year expectations,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “The continuing strength in the sales of our leading channel, payment and account processing solutions is providing strong forward momentum.”

As I suspected this morning, Fiserv raised the lower-end of its full-year forecast by four cents per share. The new range is $5.08 to $5.20 per share. At $72, this is a good deal.

Moog Earns 85 Cents Per Share
Posted by Eddy Elfenbein on July 30th, 2012 at 1:09 pm

I neglected to mention Moog’s ($MOG-A) earnings report from Friday. Moog isn’t a well-known company but it ought to be; they make flight control systems for commercial and military aircraft. Even though defense budgets have come under the knife in the U.S. and Europe, Moog is still doing well.

The company earned 85 cents per share for its fiscal third quarter which was a penny ahead of estimates. Moog had earned 73 cents per share in the same quarter one year ago. On the bad side, the company cut its 2012 revenue estimate just slightly from $2.47 billion to $2.45 billion. For 2013, they see full-year earnings ranging between $3.50 and $3.70.

If they hit $3.70 per share, that would be a very strong number. That means the stock is going for just under 10 times forward earnings. The stock is up about 2.5% today.

Looking Ahead to the Fed’s Meeting
Posted by Eddy Elfenbein on July 30th, 2012 at 11:09 am

There’s a lot going on this week. For one, Europe seems to have Mario Draghi’s back in his attempt to save the euro. This won’t be easy and honestly, they don’t have much time left. Draghi is meeting with Tim Geithner today in Germany. I’m not sure how much that will help him.

Wall Street is also waiting the big jobs report, which comes this Friday. This will be a biggie and I don’t expect much good news. Wall Street expects a gain of 85,000 for NFP. There could, however, be a surge due to pent up demand from earlier this year.

Before the jobs report, the Fed holds a two-day meeting on Tuesday and Wednesday of this week. Any new policy will be announced on Wednesday afternoon. The latest talk is that the Fed may cut the interest rate it pays banks on their reserves. Since they only pay 0.25%, I’m not sure how much of an impact this would have. Interestingly, Draghi did this same move in Europe a few weeks ago. The idea is that by stopping rewarding them to park their money at the Fed, banks will have to lend their money out to consumers and businesses who, in turn, will get the economy up off its back.

Another idea being kicked around is that the Fed will extend its forecast for low interest rates. Previously, the central bank said its rates would be staying low through 2014. They could slap another year on that and make it through 2015.

Up 4% in Three Days
Posted by Eddy Elfenbein on July 30th, 2012 at 10:25 am

The stock market is slightly higher this morning. This is a continuation of the strong rally from Friday which led the S&P 500 to its highest close since May 3rd. The S&P 500 is up 4% over the last three trading sessions. From our Buy List, Fiserv ($FISV) is scheduled to report its earnings after the close. Shares of FISV are down a bit today but they’re very close to their 52-week high. Wall Street expects Q2 earnings of $1.26 per share.

Previously, Fiserv had told us to expect full-year earnings to range between $5.04 and $5.20 per share. That’s a high bar but I think the company has a very good chance of hitting that. In fact, I wouldn’t be surprised to see FISV raise the lower end of its guidance.

Even though the stock is near a 52-week high, it’s only going for about 14 times this year’s earnings estimate. That’s still a good deal.