Yahoo 3Q profit soars despite 12 pct revenue drop

Yahoo 3Q profit soars despite 12 pct revenue drop

Yahoo Inc. may finally be pulling out of a three-year slump that cast aside two CEOs and spurred a cost-costing spree that laid off about 2,000 workers.

The purge is the main reason Yahoo's third-quarter profit more than tripled from last year to soar past analysts' relatively low expectations for the troubled Internet company.

But the results released Tuesday also showed Yahoo's revenue fell by at least 12 percent for the third consecutive quarter. The revenue rut means Yahoo still has a long way to go on its comeback trail.

Sony Ericsson's loss widens in Q3, announces new financing

Sony Ericsson's loss widens in Q3, announces new financing

Mobile phone maker Sony Ericsson said Friday its losses widened to euro164 million ($245 million) on sagging sales in the third quarter, and announced new financing from external investors.

The LM Ericsson and Sony Corp. joint venture said losses in the same period a year ago came to euro25 million.

Sales in the quarter fell more than 40 percent to euro1.6 billion, compared with euro2.8 billion in the same period in 2008. Units shipped in the July-September period amounted to 14.1 million, up 2 percent on the quarter, but down 45 percent on the year.

Sony Ericsson said it had strengthened its balance sheet by securing euro455 million ($676 million) in external financing facilities, primarily from parent companies Sony and Ericsson.

In April, Sony Ericsson announced it would slash 2,000 jobs, on top of 2,000 jobs cut last year, to lower costs. In total, it aims to cut operating costs by euro880 million, with full effect of the measures expected in the second half of next year.

Google’s Profit, Sales Top Estimates as Ads Recover

Google’s Profit, Sales Top Estimates as Ads Recover

Google Inc. reported a 27 percent increase in third-quarter profit, beating analysts’ estimates, after the recovering economy boosted demand for online ads and e-commerce. The shares gained in late trading.

Net income rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06, a year earlier, the company said today in a statement. Excluding revenue passed on to partner sites, sales were $4.38 billion, compared with an estimate of $4.25 billion in a Bloomberg survey of analysts.

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Google stock was up 3% in after hours trading today at 547$.

eBay Goes To Radio

eBay Inc. has decided to begin auctioning advertising airtime on 2,300 participating U.S. radio stations, expanding on an existing plan to sell cable television ads. This move will put eBay in direct competition with Google. eBay sees hundreds of thousands of sellers in its online auction markets as potential advertisers within the media marketplaces it is seeking to develop. The ad auction push has met with some resistance from broadcasters who fear the auctions could put stiff pressure on advertising rates.

Worker Productivity Below Estimates

Worker productivity in the Q1 was much lower than original estimates, according to a government report. Productivity increased by 1% in the quarter, down from the original estimate of a 1.7% gain, but matching the consensus of economists. The slower economic growth cut into productivity gain, which measures the output of U.S. workers. The slower productivity raised inflation, as the unit labor costs rose 1.8% in the quarter. It indicates growth was not so great in the first quarter and that went straight into productivity.

The lower productivity and higher labor costs could keep the Federal Reserve from moving to cut rates to spur the economy in the face of the slowing economy. Higher labor cost could lead to job cuts. U.S. employers announced plans in May to eliminate 71,115 jobs, up 32% from May 2006. It was the second consecutive month in which job cuts increased from the same period a year ago.

Still, year to date, the pace of job cutting remains below last year's level, but the gap is rapidly closing. Heavy downsizing in the computer industry dominated May job cuts. Heavy job cutting in the computer industry reflects a slowdown in business spending on new technology.

Stock Review: Baidu

Baidu.com, Inc. (Baidu) is a Chinese-language Internet search provider. Baidu offers a Chinese-language search platform to both users and customers. Its platform consists of the Websites and Baidu Union, which is its network of third-party Websites and software applications. The Company's services are designed to enable Internet search users to find relevant information online, including Chinese-language Web pages, news, images and multimedia files, through links provided on its Websites. In February 2005, the Company acquired the distribution business of Shanghai Qilang Science and Technology Co. Ltd.

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Stock Review: Rentrak

Rentrak Corporation manages business operations that facilitate the delivery of home entertainment content products and related rental and sales information for that content to home video specialty stores and other retailers, including grocery stores and convenience stores (Retailers) by the way of Pay Per Transaction System (PPT System). The Company leases product from various suppliers. Under its PPT System, Retailers that rent digital videodiscs (DVDs), videocassettes (VHSs) and video games (collectively, Units) to consumers generally sublease Units and other media from the Company, usually for a low initial fee and share a portion of each retail rental transaction with the Company. Effective April 1, 2005, the Company has two operating divisions: the Pay-Per-Transaction (PPT) and Advanced Media and Information (AMI) divisions, as well as an Other Division

Company Earnings: Centex Corp, Circuit City, MedImmune

Homebuilder Centex Swings to Q4 Loss
U.S. homebuilder Centex Corp (CTX) reported a Q4 loss as the housing downturn continues to hit revenue. The company posted a loss from continuing operations of $22.3 million versus its earlier forecast of break-even. Last year the company earned $369 million in Q4. The results do not reflect earnings from discontinued operations of $221.1 million related to the company's construction services business, sold off in March, and some home equity operations. Including those profits, the company posted net income of $198.9 million, down from $391.8 million a year earlier. Revenue dropped 11% in the quarter to $3.67 billion against analyst expectations of $3.34 billion. Shares dropped 2.7% yesterday and were down another 1% in AH trading to $44.77.

Circuit City Shares Fall
Circuit City (CC) restated earnings for the past 2 quarters and revised its guidance for 2008. Restatement of earnings along with poor sales of large flat panel and projection TV, will result in a loss from continuing operations before taxes of $80 million - $90m for Q1'08. Circuit City said if business trends improve and restructuring efforts are effective, then it expects 2008 earnings at the low end of its prior forecast of 1.4% to 1.8%. Shares of Circuit City lost 2.7% to $17.45 in normal trading and dropped 8% to $16.05 in the after-hours on volume of almost 1.07 million.


MedImmune Inc Beat Quarter
MedImmune Inc. (MEDI) reported that its 1Q 07 profit more than tripled on increased sales of its respiratory drug. MedImmune posted a net profit of $160 million. Sales were up $574.8 million, from $498 million last year. Analysts were looking for revenue of $553.5 million. Worldwide sales of their drug grew 9% to $507 million, up from $463 million last year. MedImmune agreed last month to be bought by AstraZeneca (AZN) for more than $15 billion. Shares climbed $0.82 to $57.50 after hours.

(Source: Seeking Alpha, MarketWatch, Reuters)

Company Earnings: Qualcomm, Akamai, NutriSystem, Anheuser-Busch

Qualcomm Shares Rise
Qualcomm QCOM reported Q2 net income rose 22% to $726 million. EPS totaled $0.50, ahead of analysts estimates of $0.47. Revenues increased 21% to $2.22b, again beating analysts' expectations. Qualcomm also raised its full-year EPS guidance on sales of $8.4b - $8.7b (from $8.1b - $8.6b). Shares of Qualcomm gained 2.2% to $45.34 during normal trading and added 0.90% to $45.75 in after-hours activity on volume near 2.6m.

Akamai Shares Tumble
Akamai AKAM reported Q1 net income climbed 67% to $19.2 million. Revenues grew 53% to $139.3m, compared to analysts' estimates of $138.8 - $139m. Akamai forecast Q2 sales of $149m - $153, compared to analysts' consensus estimate of $150.3m. In a conference call, Akamai reiterated its full-year revenue growth guidance of $610m - $625m. However its shares fell 10.3% to $48.97 during normal trading and last traded down 0.35% to $48.80 in the after-hours, having dropped as low as $46.46 (-5.1%), on volume of more than 1.1m. Analysts had very high expectations, especially with Akamai beating in the several quarters prior.

NutriSystem Beats Street
NutriSystem's NTRI revenues soared 62% to $238m in Q1'07 vs. $146m in Q1'06. Net income rose 70% to $38m in Q1'07, vs. $22m in Q1'06, beating analyst's expectations. Operating income almost doubled from $35m in Q1'06 to $60m in Q1'07. Despite a 92% rise in marketing costs, revenue per customer grew and returning customers should bring in $93m in 2007 compared to $38m in 2006. NutriSystem grew its online market and its men's market grew faster than the traditional woman's market increasing cash flow. Strong Q1 comes from New Year's weight loss program. NutriSystem forecasts Q2 revenues of $190-$200m, a 43% increase. Full year revenues are expected between $790-$805m, as NutriSystem continues to focus on the men, women and senior markets, returning customers and new products. Shares rose $7.41 to $65.65 after hours Wednesday.

Anheuser-Busch Shares Down
Anheuser-Busch BUD shares fell 2.8% yesterday, their biggest drop in almost two years, after the company posted a Q1 profit miss on advertising expenses for Bud Light and imported beers. Net earnings were $517.5 million in the quarter, up 3.7% from $499.2 million a year ago. Net revenue rose 2.7% to $3.86 billion from $3.76 billion in the year-ago quarter. Analysts were expecting revenue of $3.94 billion. Marketing and administration expenses were up 8.1% to $665.7 million in a bid to keep consumers away from rival Miller Lite. Advertising costs were also increased. Sales were up 2.7% to $3.86 billion for Q1 from $3.76 billion a year earlier. The company's U.S. market share dropped to 50.2% from 50.9% a year ago. Shipments to U.S. wholesalers rose 0.5% from a year ago, but international shipments to wholesalers were up 8.7% to 5.2 million barrels, primarily on sales to China and Canada.

(Source: Seeking Alpha)

Recent Earnings: Ups & Downs

Sun Shares Drop 6.5%

Sun Microsystems swung to a profit in its fiscal Q3, but a small sales gain fell short of analyst forecasts; shares fell over 6.5% in after-hours trading. Net income was $67 million vs. a loss off $217 million last year. Sales rose 3% to $3.28 billion, less than the $3.42 billion analysts expected.

Amazon.com Shares Up
Amazon.com reported strong first quarter earnings Tuesday after the bell, beating Wall Street's expectations and sending shares higher by nearly 13% in after-hours trading. Amazon also raised its full-year sales guidance. Q1 net income more than doubled on improved electronics and clothing sales, as well as a lower tax rate, to $111 million, good for EPS of $0.26; sales jumped 32% to $3.02 billion. Amazon issued guidance for the next quarter, with revenue in the range of $2.7-$2.85 billion, annual sales of $13.4-$14 billion, and an operating income projection for the year of between $463 and $593 million.

McClatchy Posts Steep Profit Drop
Shares of newspaper publisher McClatchy Company fell to a 7-year low yesterday after the company posted a sharp drop in Q1 net income on slumping classified print ads. Q1 net profit came in at $9 million, a 67% drop from $27.7 million in the year-ago quarter. Ad revenue dropped 5.3% from last year to $477 million in Q1. Three main categories of classifieds: automotive, real estate and employment suffered double-digit percentage declines. Internet revenue grew over 5% in the quarter, but was insufficient to compensate for poor print ad performance. McClatchy's shares lost 3% after the report to close at $30.55.

Reuters Posts Revenue Beat but Sales Drop on Weak U.S. Dollar
Reuters Group posted a forecast-beating 6.5% rise in Q1 revenue, but said actual revenue fell 1.1% after accounting for currency fluctuations including a weak U.S. dollar. Actual revenue fell to €626 million from €633 million a year ago, during which the dollar fell 12% against the pound. Nonetheless analysts were impressed with the underlying growth

Western Union Posts 12% Drop in Q1 Earnings
Shares of payment transfer company Western Union fell 4.5% in AH trading to $21.90 yesterday after the company posted a drop in Q1 profit on overhead and interest expenses. Q1 net income fell to $193.2 million from $219.8 million a year earlier. The EPS result met analyst expectations. Revenue was up 8% from a year ago to $1.13 billion. International transactions rose 21%, with India showing solid growth. However the results reflect $15 million of expenses to add staff and replace services. The company has lowered its 2007 revenue growth forecast to 10-11% from 11-13%.

Gateway May Be Acer Target

Shares of the third largest computer manufacturer in the U.S., Gateway Inc. (GTW) shot up as much as 8.4% and closed up 6.7% on speculation it may be an acquisition target. Analyst believe Taiwanese computer manufacturer Acer Inc. was hoping to make an acquisition in the PC area within the next two years, and that would be Gateway. Analysts said Gateway is a likely candidate for a possible strategic buyout.

Such a transaction would put a company like Acer, with a faint presence in the U.S., in third place in the domestic PC race behind Hewlett Packard (HPQ). However till date both companies have declined to comment on this speculation. Lenovo, the Chinese computer manufacturer that bought IBM's PC business for $1.75 billion in 2005, was also thrown into the mix.

In September, Gateway rejected a $450 million offer for its retail business. Last month it said it would lay off more workers and cut $20-25 million in expenses. Gateway had already cut nearly 100 jobs, or about 5% of its work force, in the third quarter of last year.

Stocks: Gateway Inc. (GTW).

Competitors: Dell Inc. (DELL), Hewlett-Packard Co. (HPQ), Lenovo Group Ltd. (LNVGY), International Business Machines Corp. (IBM).

ETFs: SPDR Technology (XLK), iShares Goldman Sachs Technology Index Fund (IGM), iShares Dow Jones US Technology Index (IYW)

(Source: SeekingAlpha)

Palm: Is It a Likely Buyout

There were rumors that a Palm Inc. buyout was expected to be finished at a price of $20 or more per share when Palm released the results of its most recent financial quarter. Nokia Corp. is the leading vendor bidder, but Palm management is said to favor a private equity buyer, either Texas Pacific Group or Silver Lake Partners. Motorola Inc., has been reconsidering its position, and may try to block Nokia with its own bid in an effort to get out of its low-price war with Nokia and concentrate on Palm's higher-end Treo 680, and in order to placate activist shareholder Carl Icahn. Palm hired Morgan Stanley to explore its options to close the deal.

However in a twist of events, despite widespread rumors, no bids appear to be forthcoming for Palm. Meanwhile the PDA/smartphone maker, which has been the subject of persistent takeover rumors, reported results that beat Wall Street expectations. Palm executives were asked several times about the rumors, but they declined to comment. Just because there wasn't an official announcement of a company acquiring Palm today doesn't mean that it isn't going to happen.

The lack of an announcement today could simply be an indication that the bidding process is taking longer than some had hoped. At the same time, it could also mean that there is no truth to these rumors at all.

The price of Palm's stock, after steadily rising on speculation of a buy-out, dropped 8.8% percent recently, after Motorola's quarterly financial announcement was released yesterday without word of it acquiring Palm.

Stocks: Palm Inc. (PALM), Nokia Corp. (NOK), Motorola Inc. (MOT).

Competitors: Research In Motion Ltd. (RIMM), Apple Computer Inc. (AAPL).

ETFs: streetTRACKS Morgan Stanley Technology Index Fund (MTK), HOLDRS Wireless (WMH), HOLDRS Broadband (BDH)

(Source: SeekingAlpha)