stockOzone

MGM Mirage (NYSE: MGM): Q4 Earnings Preview 2009

2010-02-17T03:55:00.000-08:00

By Stock Wizard

MGM Mirage (NYSE: MGM), the world's second-largest gambling company by revenue, is scheduled to release its fiscal fourth-quarter 2009 financial results before the opening bell on Thursday, February 18, 2010. Analysts, on average, expect the company to report a loss of 13 cents a share on revenue of $1.46 billion. In the year ago period, the company posted a loss of 11 cents per share on revenue of $1.62 billion.

MGM Mirage, through its subsidiaries, owns and operates casino resorts in the United States. The company's resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club.

In the preceding third quarter, the Las Vegas, Nevada-based company posted a net loss of $750.39 million or $1.70 per share, compared to a net profit of $61.28 million or $0.22 per share in the year-ago quarter. Revenue slipped 9% to $1.53 billion from $1.78 billion last year. Analysts, on average, expected the company to report a loss of $0.08 per share on revenue of $1.47 billion.

Like many gaming companies, the firm's casino operations has been hit hard by the recession, due to lower traffic, shorter stay and decreased spending by the visitors.However, the financial outlook for Las Vegas Sands Corp. has improved amid a rebound in consumer spending and global economic revovery. Recently, Nevada’s Gaming Control Board said that the Las Vegas Strip gambling revenue rose 5.9 percent in December, the second straight monthly gain. Strip proceeds climbed to $502.2 million in December from a year earlier.

Yet another bright spot is Macau's outlook. The company is poised to benefit from more friendly gaming policies from the local government, limited supply of new gaming tables in the near term, and expectation of no further stringent enforcement by the Chinese government over tourist visitations to the enclave support stable growth for the sector's revenues. The casino operator is also expected to get a boost from Chinese New Year celebration. According to Portuguese news agency Lusa, casino revenue in Macau jumped almost 65 percent to a monthly record of 14 billion patacas ($1.75 billion) in January from a year ago, beating the 12.6 billion patacas recorded for October 2009. A new daily record of more than 800 million patacas was also reached in January, Lusa said, citing data from the casino operators.

MGM Mirage's CityCenter resort complex opened its door to the public just before Christmas to critical acclaim. CityCenter, an unprecedented urban metropolis on the Las Vegas Strip, is a joint venture between MGM Mirage and Infinity World Development Corp, a subsidiary of Dubai World.

The firm has taken several steps to improve its financial position. It is seeking amendments to credit agreements that would extend the maturity for a substantial portion of $5.55 billion of senior debt. Recently, MGM Mirage said it was looking to extend the maturities to Feb. 21, 2014, from Oct. 3, 2011, and has asked lenders to approve the change by later this month. In a statement, the company cited "strong initial support" from leading lenders for the proposed accord and said it was working with the rest of its lender syndicate. The company is also planning a Hong Kong IPO that could raise a billion dollars. Meanwhile, according to media reports, MGM Mirage is planning to sell its 50% stake in the Borgata casino resort in Atlantic City, New Jersey. MGM, which partners with Boyd Gaming to manage the Borgata property, is reportedly asking for between $700 million and $850 million for its half.

Shares of the casino operators have spiked ahead of earnings reports. In terms of stock performance, MGM Mirage shares have rallied 130 percent over the past year.

Full Disclosure: None.

Dell Inc. (NASDAQ: DELL): Q4 Earnings Preview 2009

2010-02-16T01:56:00.000-08:00

By Stock Wizard

Dell Inc. (NASDAQ: DELL), the world's third-largest computer manufacturer, is scheduled to release its fiscal fourth-quarter 2009 financial results after the closing bell on Thursday, February 18, 2010. Analysts, on average, expect the company to report earnings of 27 cents a share on revenue of $13.85 billion. In the year ago period, the company posted earnings of 29 cents per share on revenue of $13.43 billion.

Dell Inc., together with its subsidiaries, engages in the design, development, manufacture, marketing, sale, and support of computer systems and services worldwide.

In the preceding third quarter, the Round Rock, Texas-based company reported that its third quarter profit plunged 54% from last year, as revenue dropped and margins shrank amid global market share loss and weak corporate demand. Net income totaled $337 million or $0.17 per share, compared to $727 million or $0.37 per share, for the year-ago quarter. Revenue for the third quarter fell 15% to $12.90 billion from $15.16 billion in the same quarter last year. Analysts, on average, expected the company to earn $0.28 per share on revenue of $13.18 billion. Gross margin for the quarter fell to 17.3% from 18.8% a year ago, while operating margin declined to 4.5% from 6.7% last year.

The company expects fourth quarter revenue to improve over the third quarter. Dell expects seasonal demand improvement in its consumer business, while demand in public is typically lower during the quarter. Dell responded to lackluster PC sales growth by expanding offerings of non-PC electronics and increasing their presence in developing countries such as India and China.

Dell is likely to benefit from an uptick in technology spending. PC sales particularly got a boost from stronger consumer demand, especially during the holiday season and following the rollout of Windows 7, Microsoft Corp.'s new operating system.According to technology research firm Gartner, worldwide PC shipments surpassed 90 million units in the fourth quarter of 2009, a 22.1% increase from last year. It was the strongest quarter over quarter growth rate the worldwide PC market has experienced in the last seven years. Dell's worldwide PC shipments increased by 5.7% to 10.39 million units from 9.83 million units a year-ago.

Early this month, Dell agreed to acquire KACE, a systems management appliance company with solutions tailored to the requirements of midsized businesses and public institutions. The acquistion is expected to help it compete in the small and medium-sized business hardware market.

The company's stock currently trades at a forward P/E (fye 30-Jan-11) of 11.07 and PEG Ratio (5 yr expected) of 1.24. In terms of stock performance, Dell shares have gained 53 percent over the past year.

Full Disclosure: None.

Indian Central Bank RBI Scolds Banks On Home Loans

2010-02-11T23:50:00.000-08:00

By stockOzone team

The central bank has stepped in to help home loan customers who opted for floating interest rates but have not get any benefit in almost two years.

The RBI has sought clarity from the Indian Banks Association (IBA), asking why new home loan buyers were lured by lower interest rates but the lower rates did not apply for existing borrowers.

In the letter written to the IBA, the RBI wants to know how existing borrowers are getting the benefit of reduced home loan rates.

Most of the schemes announced with reduced rates are applicable only to new customers and this has been a point of contention among existing borrowers.

Latha Venkatesh, CNBC Banking Editor, reports the RBI’s letter almost accuses banks of being discriminatory. The “problem” is for customers who have floating home rates,” says Venkatesh.

Customers expect that interest rates will fall but the experience in one-and-half years has been that banks have not passed on the rate cuts to customers though the RBI has slashed interest rates.

Banks have offered lower rates for new customers but not to their existing ones. RBI has flayed this policy in its “very, very hard-hitting” letter to the Indian Banks Association.

The letter is written in a series of questions and in it the RBI is almost accusing the banks of being discriminatory.

The IBA, on its part, has told the central bank home loan rates cannot be made uniform for all but added it would take up the matter with banks’ chief executives.

The IBA, however, admitted the downward adjustment for lending rates was slower than it should have been, sources said.

Disclosure: Author does not own any of the stocks discussed here.

Hartford Spent $520,000 Lobbying Government in 4Q

2010-02-09T11:12:00.000-08:00

By stockOzone team

Insurer Hartford Financial Services Group Inc. spent $520,000 in the fourth quarter to lobby the federal government on insurance regulation reform, consumer protection rights and other issues, according to a recent disclosure report.

That’s down from the $690,000 the Hartford, Conn.-based life insurer spent in the year-ago period during the height of the financial crisis, and the $540,000 it spent in the 2009 third quarter.

Last year, the government gave six life insurers, including Hartford Financial, approval to tap its $700 billion bailout program. The company received $3.4 billion in funds in late June.

Hartford Financial also lobbied on issues including the National Insurance Consumer Protection Act, flood insurance, workers’ compensation, drywall safety, health care reform, retirement securities, taxes and financial regulatory reform.

In the October-December period, the company lobbied Congress, the Securities and Exchange Commission, and the Labor Department, according to the report filed Jan. 20 with the House clerk’s office.

The Obama administration has proposed a series of measures to tighten the reins on financial institutions in hopes of preventing a recurrence of the crisis that struck both Wall Street and Washington in the fall of 2008.

Disclosure: Author does not own any of the stocks discussed here.

Coke Gets Lots of Pop from China and India

2010-02-09T11:02:00.000-08:00

By Pallavi Gogoi *

As Americans struggled amid the worst recession in decades, beverage giant Coca-Cola (KO) relied on its large global operations to pick up the slack. It turned its laser focus on the two big international markets where the growth is: India and China. The strategy has paid off as consumers in the two giant Asian nations responded by buying its beverages with gusto. In its fourth-quarter earnings report, Coke says sales skyrocketed 29% in China, and 20% in India.

The stellar performance in those two countries and in parts of Latin America helped offset a slowdown in North America. Overall, Coca-Cola reported 55% growth in fourth-quarter net profit from the same period last year to $1.54 billion, or 66 cents a share, in line with analysts' expectations. Revenue for the quarter increased to $7.51 billion from $7.13 billion. Coca-Cola's shares were trading up 3.3% in midmorning to $54.40.

"Over 80% of our total business is international, we truly have a global footprint and we are seeing the benefits of that," says Coke CEO Muhtar Kent in an interview.

"No matter what happens in the short-term macroeconomic storm," he says, "there will be 1 billion new people entering the urban middle class in the next 10 years, which will create a huge demand for the nonalcoholic ready-to-drink beverages that we are known for."

Global Tastes Call for Changes
As American consumers slashed spending, Coca-Cola volume fell in the last three quarters – declining 1% in the fourth quarter, 4% in the third quarter, and 1% in the second quarter. Worldwide, though, the company saw a 5% increase in sales of its "unit case" volume, a measure of all Coca-Cola drinks. Each unit case contains 24 drinks, each with 8 ounces.

Today, given the importance of international markets on Coca-Cola's businesses, changing drink preferences globally are also propelling growth trends in its product portfolio. While fizzy drinks continue to see some growth, the noncarbonated beverages are growing faster.

Coca-Cola's international sales of noncarbonated still beverages soared 14% in the quarter, while sparkling beverages increased 5%. Kent says part of the reason is that still beverages are a smaller part, only 20%, of its total portfolio and have more room to grow.

Getting Juiced From Juice
Nevertheless, in China, Coke's Minute Maid Pulpy is a hugely popular drink, while in India, its mango drink Maaza is the country's best-selling juice drink. Both are noncarbonated.

Kent emphasized in a conference call with analysts that the company made juice a major priority two years ago and that it was instrumental in tripling its internal sales volume and led to a doubling of its share of the global juice business. Expect more of the same. Said Kent: "Juice is a major opportunity in the coming years."

Disclosure: None

* Pallavi Gogoi is a prize-winning journalist who has written for USA TODAY, BusinessWeek, The Wall Street Journal and Dow Jones.

The Coca-Cola Company (NYSE: KO): Q4 Earnings Preview 2009

2010-02-08T11:12:00.000-08:00

By Stock Wizard

The Coca-Cola Company (NYSE: KO), the world's largest beverage company, is scheduled to release its fiscal fourth-quarter 2009 financial results before the market open on Tuesday, February 9, 2009. Analysts, on average, expect the company to report earnings of 67 cents a share on revenue of $7.21 billion. In the year ago period, the company posted earnings of 64 per share on revenue of $7.13 billion.

The Coca-Cola Company manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages.

In the preceding third quarter, the Atlanta, Georgia-based company reported net income that was flat with the prior-year quarter at $1.90 billion or $0.81 per share. Excluding these charges and gains, non-GAAP net income for the quarter edged down to $1.92 billion or $0.82 per share from $1.93 billion or $0.83 per share in the year-ago quarter. Net operating revenues for the quarter declined 4% to $8.04 billion from $8.39 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $0.82 per share on revenue of $8.11 billion. Gross profit for the quarter decreased 5% to $5.11 billion from the year-earlier quarter, and selling, general and administrative expenses were $2.91 billion, 7% lower than the third quarter of 2008.

Worldwide unit case volumes increased 2% in the third quarter, driven by a 4% increase in international unit case volumes. Unit case volume growth increased strongly in key emerging markets with 37% growth in India, 15% growth in China and 3% growth in Brazil.

In November, the beverages company said its productivity initiatives remain well on track to achieve $500 million target in annualized savings by year-end 2011, and expects to deliver more than half of the savings by the end of 2009.

Coca-Cola is expanding agressively in international market, especially emerging markets, to improve revenue growth. The soft drinks maker is planning to more than double its number of bottling plants in China over the coming decade as part of the group's aim to triple the size of its sales to the country's rapidly emerging middle class. Coca-Cola executives say they expect 60 per cent of the new growth to come from China, India and other emerging markets, with only 15 per cent from developed markets. China, already Coca-Cola's third-largest national market by revenues, has an average per capita consumption of 28 Coca-Cola products per year -- on a par with poor African countries and well below the 199 per capita of Coca-Cola products drunk last year in Brazil.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 15.57 and PEG Ratio (5 yr expected) of 1.93. In terms of stock performance, Coca-Cola shares have gained 25 percent over the past year.

Full Disclosure: None.

Disclosure: Author does not own any of the stocks discussed here.

Hasbro Optimistic About 2010; Shares Soar

2010-02-08T11:08:00.000-08:00

By stockOzone team

Hasbro Inc (HAS.N) posted a much stronger-than-expected quarterly profit and said the momentum in its games and its toys for boys would help 2010 profit and revenue rise, sending its shares up nearly 14 percent.

The upbeat forecast in an "entertainment-light" year for Hasbro -- with toys tied to the releases of only two movies "Iron Man 2" and "Toy Story 3" -- cheered investors, boosting its stock to the highest level since September 2008.

Demand for toys tied to the "Transformers" movie, meanwhile, helped boost the fourth quarter.

The No. 2 toymaker behind Mattel Inc (MAT.O) also hopes to benefit from its joint venture with Discovery Communications Inc (DISCA.O) to form a new children's television network -- The Hub -- and the creation of Hasbro Studios.

It also sees its presence in emerging markets and key long-term licenses aiding future growth.

On a conference call, Hasbro said it expects the sales momentum in the holiday quarter at its games business to continue into 2010 and added that its boys business should be "very robust" in the period.

"2010 guidance is pleasantly surprising," Timothy Conder, an analyst with Wells Fargo, said in an e-mail.

Conder said the announcement for the autumn 2010 line-up for The Hub could be an additional catalyst for shares as "investors will then be able to benchmark a base for growth of this venture going forward."

Some investors are already bullish about the joint venture and expect it to give Hasbro a big boost in 2011.

The strong results came a week after rival Mattel forecast a strong 2010 from new toy lines and renewed demand for its Barbie dolls, but failed to excite investors worried that higher costs could limit its gross margin growth.

Hasbro, on the other hand, gave investors another reason to cheer by saying it did not expect rising input costs to have a material impact on margins in 2010.

Hasbro's fourth-quarter net profit rose to $165.6 million, or $1.09 a share, from $93.6 million, or 62 cents a share, a year earlier.

Analysts on average were expecting earnings of 81 cents a share, according to Thomson Reuters I/B/E/S.

Net revenue rose 12 percent to $1.38 billion, beating analysts' average forecast of $1.34 billion. Revenue from the boys' segment rose 16 percent in the quarter.

"Overall, the fourth quarter was very good and was much better than we envisioned even factoring in what were clearly market share gains in action figures and games/puzzles," Conder said.

Standard & Poor's analyst Erik Kolb backed his "buy" rating and raised his target on the stock to $38 from $34, saying he expected the boys segment to likely remain the strongest in 2010.

Looking ahead, Hasbro has a huge entertainment lineup, with "Stretch Armstrong," "Battleship," "The First Avenger: Captain America" and "Spider-Man 4" movies all slated for release in 2012.

Last December, Hasbro also signed a 10-year deal to make and sell toys and games based on characters in the American children's television series "Sesame Street."

Disclosure: Author does not own any of the stocks discussed here.

Former Merrill Lynch Boss Appointed CIT Chief

2010-02-08T11:05:00.000-08:00

By stockOzone team

The former chief executive of Merrill Lynch, John Thain, has been appointed as the new boss of US lender CIT Group, which recently emerged from bankruptcy.

CIT will pay Mr Thain $6m (£3.8m) a year - $500,000 in cash, $2.5m in stock to be held for one year, and $3m in stock to be held for three years.

Mr Thain resigned from Merrill just after it merged with Bank of America at the start of last year.

He was criticised for allowing big bonuses despite Merrill's hefty losses.

These were paid out just days before the takeover by Bank of America.

"John is a well-respected financial services executive and proven leader who is uniquely qualified to lead CIT at this critical stage," said board member, John Ryan.

The new boss said the firm was well-placed, despite its recent troubles.

"The company's numerous market-leading positions are evidence of the resiliency of the franchise and its unwavering commitment to customers," Mr Thain said.

CIT suffered in the recession as its many bad loans were exposed. It filed for bankruptcy protection on 1 November last year after failing to restructure its debt.

The company emerged from protection just a few weeks later.

Disclosure: Author does not own any of the stocks discussed here.

Activision Blizzard Inc. (NASDAQ: ATVI): Q4 Earnings Preview 2009

2010-02-04T11:46:00.000-08:00

By Stock Wizard

Activision Blizzard Inc. (NASDAQ: ATVI) is scheduled to release fiscal fourth-quarter 2009 earnings after the closing bell on Wednesday, February 10, 2010. Analysts, on average, expect the company to report earnings of 44 cents a share on revenue of $2.23 billion. In the year ago quarter, the company reported earnings of 31 cents per share on revenue of $2.34 billion.

Activision Blizzard, Inc., through its subsidiaries, publishes online, personal computer, console, and hand-held games worldwide. The company develops and publishes video games, as well as maintains its proprietary online-game related service, Battle.net. It also publishes interactive software products and peripherals internationally. The company?s products cover various game categories, including action/adventure, action sports, racing, role-playing, simulation, first-person action, music, and strategy. Its products include Guitar Hero, Call of Duty, Tony Hawk, Spider-Man, X-Men, James Bond, and Transformers, as well as Diablo, StarCraft, Warcraft, and World of Warcraft.

In the preceding third quarter, the Santa Monica, California-based company posted net income of $15 million or $0.01 per share compared to a loss of $108 million or $0.08 per share, in the year-ago quarter. On an adjusted basis, the company earned 4 cents a share. Revenue for the quarter totaled $703 million. Analysts, on average, expected the company to report earnings of $0.04 per share on revenue of $724.04 million.

For the third quarter, Activision Blizzard increased its U.S. and European share 1.2 points over last year, across all platforms to 12.3% and had two of the top-10 best-selling titles in the U.S., Guitar Hero 5 and Guitar Hero World Tour, according to the NPD Group (U.S. data) and Charttrack and Gfk (European data).

For the fourth quarter, Activision Blizzard anticipates a GAAP loss of $0.04 per share, and non-GAAP earnings of $0.43 per share. GAAP net revenues are estimated to be $1.33 billion, and non-GAAP net revenues are expected to be $2.22 billion. For calendar year 2009, the company continues to expect GAAP earnings of $0.26 per share, and non-GAAP earnings of $0.63 per share. GAAP net revenues are estimated to be $4.05 billion, and non-GAAP net revenues are expected to be $4.50 billion.

In the fourth quarter of calendar year 2009, Activision Publishing released five holiday titles namely "Call of Duty: Modern Warfare 2" and "Tony Hawk: Ride" this month, as well as the already released "DJ Hero" and "Band Hero." In November, Activision Publishing released Infinity Ward's highly anticipated first-person action game Call of Duty: Modern Warfare 2 globally. According to its own internal estimates, Modern Warfare 2 racked up $550 million in its first five days on the market. In January, Video game publisher Activision Blizzard Inc. said that the game "Call of Duty: Modern Warfare 2" has brought in more than US$1 billion in revenue since it went on sale. "Call of Duty" has an edge over other games because of its online multi-player mode. New updates to the online version can give titles a longer shelf life. The company is poised to benefit from strong holiday sales.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 13.80 and PEG Ratio (5 yr expected) of 1.08. In terms of stock performance, Activision shares have gained 12 percent over the last year.

Full Disclosure: None.

Sony Corporation (NYSE: SNE): Q3 Earnings Preview 2009

2010-02-04T10:27:00.000-08:00

By Stock Wizard

Sony Corporation (NYSE: SNE) is scheduled to release fiscal third-quarter 2009 earnings on Thursday, February 4, 2010. Analysts, on average, expect the company to report earnings of 7 cents a share on revenue of $25.51 billion. In the year ago quarter, the company reported earnings of 11 cents per share on revenue of $23.68 billion.

Sony Corporation, together with its subsidiaries, engages in the development, design, manufacture, and sale of electronic equipment, instruments, and devices for consumer and industrial markets in Japan, the United States, Europe, and internationally.

Late in October, the Tokyo-Japan based company posted fiscal second quarter net loss of 26.31 billion yen or US$292 million, compared to a net income of 20.82 billion yen in the previous year. Loss per share was 26.22 yen or US$0.29, in comparison with earnings of 19.83 yen per share in the prior year. For the second quarter, sales and operating revenue dropped 19.8% to 1.66 trillion yen from 2.07 trillion yen in the same period last year, due to factors including slowdown of global economy and the appreciation of the yen. In dollar terms, revenue for the quarter was US$18.46 billion. On a local currency basis, sales decreased 9% year-on-year. Analysts, on average, expected the company to report a loss of $0.37 per share on revenue of $19.17 billion.

For fiscal 2010, the company expects net loss attributable to stockholders of 95 billion yen, compared to 120 billion yen projected in July. Sony still anticipates sales and operating revenue to be 7.3 trillion yen for the fiscal.

The Japanese electronics maker is poised to benefit from agressive cost-cuts, consolidation of its operations and a strong holiday sales. In the second quarter, costs and expenses declined 18.5% to 1.68 trillion yen from 2.06 trillion yen in the comparable quarter last year. Cost of sales dropped 25.1% to 1.13 trillion yen from 1.51 trillion yen in the preceding year. Selling, general and administrative expenses decreased 11.8% to 370.27 billion yen from 419.89 billion yen in the earlier year.

Early in January, Sony Corporation announced that US holiday season sales beat expectations. Sony Corporation said flat-screen televisions, electronic readers and Blue Ray video players helped its US holiday season sales top expectations. The electronics giant said that the sales of Playstation 3 video game console soared 76% to 3.8 million units during the holiday season.

Sony Corp. is implementing additional transformation measures centering on four initiatives to permit further growth and continue to enhance profitability. The company targets these measures to lead to a 5% operating income margin annually and a 10% return on equity by the end of the fiscal year ending on March 31, 2013.

In November, The company said that under the leadership of its new management team established in April 2009, it has reformed its organizational structure to bolster profitability and transform its operations in order to accelerate innovation and growth and optimize business processes, particularly within its electronics and networked service businesses. The reformation helped it to achieve approximately 80% of its targeted 330 billion yen of group-wide cost reductions for the fiscal year ending on March 31, 2010 in the first half of the year. Further, the company said in November that it is now positioned to launch a succession of competitive products from the end of this calendar year and into 2010.

The four turnaround initiatives include consistent profitability in core hardware businesses such as TV, game and digital imaging; provide new user experiences integrating innovative hardware, software and services; reach out to new customers and develop new geographic markets; and lift focus on environmentally conscious products and processes.

Sony is targeting to regain the leading market position in LCD TV business. The company targets the LCD TV business to return to profitability in fiscal 2011 and achieve a 20% worldwide market share on a unit basis in fiscal 2013. The company also plans to create a new revenue model beyond conventional TV business models. Further, Sony expects to introduce "Evolving" TV that delivers new applications over the network and develop new generation displays using proprietary Sony devices.

Sony expects its game business is targeted to return to profitability in fiscal 2011 on revenue increases by expanding hardware/software sales and enriching PlayStation Network services. The company also plans cost reduction and other measures to improve profitability in the business. Additionally, Sony intends to strengthen its digital imaging business through outstanding product differentiation and cost competitiveness based on key devices such as image sensors and imaging engines.

The company intends to expand networked service business by utilizing PlayStation Network services and by integrating attractive hardware, including new mobile products and other consumer electronics, with networked services. The company projects annual revenues of 300 billion yen for the networked service business by the end of fiscal 2013.

As per the company, it plans to strengthen and expand networked mobile business, strengthen collaboration with Sony Ericsson Mobile Communications, a joint venture between Sony and Swedish telecom equipment maker LM Ericsson Telephone Co., accelerate the rollout of e-book business and expand the lineup of network-connected products. Installed user base is projected to be 350 million units by the end of full-year 2013.

Further, Sony targets to launch 3D-related products for the home, including TV, Blu-ray Disc players/recorders and 3D gaming on PlayStation 3 in fiscal 2011. The company will also provide solutions for 3D content production, distribution and theatrical projection to lead the field in broadcast and professional businesses. 3D-related products are expected to generated revenues of more than 1 trillion yen excluding content in fiscal 2013.

The company's growth strategies for lithium-ion battery business include securing high profitability in existing businesses and analyzing possible entry into new business domains such as storage/e-Vehicle battery.

The company's stock currently trades at a forward P/E (fye 31-Mar-11) of 25.09. In terms of stock performance, Sony shares have gained 76 percent over the past year.

Full Disclosure: None.

Illumina Inc. (NASDAQ: ILMN): Q4 Earnings Preview 2009

2010-02-02T22:33:00.000-08:00

By Stock Wizard

Illumina Inc. (NASDAQ: ILMN) is scheduled to release fourth quarter 2009 earnings after the market close on Thursday, February 4, 2010. Analysts, on average, expect the company to report earnings of 19 cents a share on revenue of $172.98 million. In the year ago quarter, the company reported earnings of 25 cents per share on revenue of $160.93 million.

Illumina, Inc. engages in the development, manufacture, and marketing of integrated systems for the analysis of genetic variation and biological function. Genomics is emerging as a growing market within the life sciences sector, offering attractive growth opportunities and products that will potentially change the field of research.

In the preceding third quarter, the San Diego, California-based company posted net income of $17.1 million or $0.12 per share for the third quarter, compared to a net loss of $10.1 million or $0.08 per share a year ago. Excluding items, Illumina's adjusted net income was $32.3 million or $0.24 per share, up from $28.64 million or $0.22 per share for the third quarter of 2008. Revenue increased 5% to $158.36 million from $150.26 million reported in the third quarter of 2008. Analysts, on average, expected the company to earn $0.20 per share on revenue of $167.32 million.

Recently, Illumina said that based on management's preliminary review of quarterly financial results the company's revenue for the fourth quarter of 2009 is approximately $176 million. This compares to fourth quarter revenue guidance of a minimum of $165 million and implies fiscal year 2009 revenue of approximately $662 million or annual growth of 15%. However, the company added that this revenue estimate is preliminary and remains subject to audit by its independent registered accounting firm.

The company said that for the full year 2010 it expects non-GAAP earnings per share to be in the range of $0.90 to $1.00 and the revenue to grow by approximately 20% from the anticipated 2009 revenue of $662 million. Also, it expects gross margins in the mid to high 60s.

In the fourth quarter, the company unveiled a revolutionary new DNA sequencer, the HiSeq 2000, which has the potential to provide four times the amount of genetic information per experiment with improved performance in comparison to other products currently on the market. The machine will decode a person's DNA in one week using $10,000 worth of materials--five times cheaper than any other competing gadget on the market. Illumina has already received a record order for 128 of the new HiSeq 2000 systems from the Beijing Genomics Institute, a Chinese government research institute. Illumina is planning to ship limited quantities of its latest system in February and begin broad shipments in March.

In November, Illumina announced that its Board of Directors has approved a new stock repurchase program, authorizing the company to repurchase in the aggregate up to $100 million of its outstanding common stock.

The company's stock currently trades at a forward P/E (fye 28-Dec-10) of 37.46 and PEG Ratio (5 yr expected) of 1.99. In terms of stock performance, Illumina shares have gained 34 percent over the past year.

Full Disclosure: None.

NTPC Public Issue Priced At Rs.201 Per Share

2010-02-02T04:12:00.000-08:00

By stockOzone team

State-run power utility NTPC will sell each equity share at Rs.201 as part of the public offer to divest five percent of the government's stake, while its employees will be able to subscribe at a discount of Rs.10, the company Tuesday said in a statement.

'The Empowered Group of Ministers (EGoM) in its meeting held on Feb 1 decided the floor price for Further Public Offer of NTPC Ltd. at Rs.201 per equity share,' the company said in a statement.

The follow-on public issue Wednesday will see the country's largest power generation firm offer 412,273,220 equity shares of Rs.10 each. It will close Feb 5. A total of 42,73,220 equity shares are reserved for NTPC employees.

'EGoM has also decided to offer a discount of Rs.10 per share to eligible employees submitting bids under the Employee Reservation Portion,' the statement added.

The government currently owns about 89.5 percent of NTPC's equity.

ICICI Securities, Citigroup Global Markets, JP Morgan and Kotak Mahindra Capital are the book running lead managers to the offer.

At the Bombay Stock Exchange, the NTPC scrip closed at Rs.206.05, down 2.46 percent from its previous close.

Disclosure: Author does not own any of the stocks discussed here.

The iPAD - The Supposed Losers are Actually Winners

2010-02-01T04:14:00.000-08:00

By Michael Shulman

The discussion and debate about winners and losers created by the iPad is amusing - the Street has already identified the suppliers and is focusing on Amazon as a potential loser. Sorry, wrong victim. In fact, Amazon is a big winner in the announcement of the iPad.

Amazon (AMZN) wants to be the intermediary between a customer - a reader - and the writer/publisher of a book or other material. They started by enabling writers to self-publish, on demand and even bought a company to help them with the process. Then the Kindle. Then Kindle for the iPhone. And after that, Kindle for Windows. Last piece of first generation Kindle is software for the Mac. The money to be made is the 65%-70% Amazon keeps from the sale of a Kindle book, magazine or blog. Not in designing, manufacturing and selling a piece of hardware. Those are the kind of margins that will increase Amazon's overall gross margin; more and more sales of Kindle hardware will reduce gross margin.

Amazon's move was brilliant - jumpstart the market, force others to compete. And now the most recognized consumer technology brand in the world - a company that does not waste space by putting its name on signs above its stores -- Apple (AAPL) - is piling in and on. Which is great news for Amazon. Why? Apple is not in the publishing business - other than some exclusives for iTunes - it is in the hardware business, using iTunes to generate customers for the iPod, the iPhone and the Mac. So Apple really wants Amazon to be a successful publisher while Amazon really wants the iPad to be successful, that will sell a lot of books.

So, loser Amazon is winner Amazon.

The second loser that is actually a winner is a whole segment - textbook publishers - one of the purest publicly held plays being McGraw Hill (MHP). Kindles are not textbook friendly - no color, no serious graphics. iPads are and will be. Won't this displace traditional? Yes - but not traditional textbook publishers. The biggest cost in textbook publishing is the cost of printing the books. That can go away. The biggest problems in publishing textbooks is the need to update them, especially in science, to keep abreast of change. This is a major hassle - and expensive. But not for an electronic text. Best thing about e-publishing textbooks? No used textbook market - if you update a book every year, and a book is trapped on a dedicated device, there is no used textbook market. Go Steve Jobs go --- that is what the folks in the textbook industry should be yelling, right now.

Another sets of losers are actually winners - the textbook guys.

Anybody else? Any loser really a loser?

Yes - Barnes & Noble (BKS), Books a Million (BAMM) and Borders BGP)- they are not financially or culturally built to compete against digital titans Amazon and Apple with their own readers. And Apple's entrance into the market will accelerate the shift away from hard copy books, and traditional book retailers has the most to lose. I expect Borders and Books a Million will disappear and Barnes and Noble will be the last large book retailer standing. The Nook will do little to help B&N - ChangeWave surveys show there is extreme interest in the iPad and a multi-use device that is also a very good book reader will crowd out most if not all alternatives.

Bottom line: the iPad is not bad for publishers, it is good for them. The iPad and electronic distribution of books - especially expensive to produce textbooks - because it is a cost dis-intermediator. The iPad is not bad for Amazon, rapid sales of hardware will increase demand for Kindle books sold via the existing iPhone app that will work on the iPad - I hope so, I am publishing two novels as Kindle and print on demand books in the coming months - and for Amazon, publishing and distributing is where the margin is, not in selling hardware. Yes, the iTunes store will put a dent in Amazon sales but Amazon can match Apple keystroke for keystroke as a simple interface to buy intellectual property and there is more than enough room for both.

Disclosure: None.

Visa Inc. (NYSE: V): Q1 Earnings Preview 2010

2010-02-01T00:11:00.000-08:00

By Stock Wizard

Visa Inc. (NYSE: V), the world’s largest electronic payments network, is scheduled to release its fiscal first quarter 2010 earnings after the closing bell on Wednesday, February 3, 2010. Analysts, on average, expect the company to report earnings of 91 cents a share on revenue of $1.92 billion. In the year ago quarter, the company reported earnings of 78 cents per share on revenue of $1.74 billion.

Visa Inc. operates retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services, primarily authorization, clearing, and settlement, as well as related value-added services.

Visa managed to escape relatively unscathed from the worst consequences of the global recession as credit-card networks are insulated from rising defaults because they process transactions and don’t make loans to cardholders. The continuing adoption of credit and debit cards worldwide has cushioned the effects of a U.S. slowdown. Total processed transactions, which represent transactions processed by VisaNet for the fiscal fourth quarter, increased 9% to 10.5 billion from the year-ago quarter.

In the preceding fiscal fourth quarter, the San Francisco, California-based company posted net income of $514 million or $0.69 per class A share for the fourth quarter, compared to a loss of $356 million or $0.45 per share in the prior year quarter. Excluding items, adjusted net income grew to $552 million or $0.74 per class A share from $448 million or $0.58 per class A share in the year-ago quarter. Fourth quarter net operating revenue increased 10% to $1.9 billion from $1.7 billion in the same quarter last year, driven primarily by strong contributions from data processing revenues as processed transactions grew 9%. Analysts, on average, expected the company to report earnings of $0.72 per share on revenue of $1.78 billion.

Total cards carrying the Visa brands rose 5% worldwide to over 1.7 billion from the fourth quarter of 2008.

For fiscal 2010, Visa expects earnings per class A share growth to be greater than 20%, and net revenue growth at the lower end of the 11% to 15% range. The company expects full year 2010 operating margin to be in the mid-50s, up slightly from the low-50s Visa achieved in its last fiscal year. Its projection for free cash flow for the year is north of $2.0 billion.

For fiscal 2011, the company anticipates earnings per class A share growth to be greater than 20%.

At September 30, 2009, the company had cash, cash equivalents, restricted cash, and investment securities of $6.6 billion.

Visa said that its board has authorized a $1 billion share repurchase plan. The authorization will be in place through September 30, 2010, and is subject to extension or expansion at the determination of Visa's board.

Among other developments, Standard & Poor's added Visa Inc. to the S&P 500 index in December.

The upcoming quarterly report is likely to reflect strong holiday season and improved transaction levels, volume and international travel.

The company's stock currently trades at a forward P/E (fye 30-Sep-11) of 18.77 and PEG ratio (5 yr expected) of 1.14. In terms of stock performance, Visa shares have gained 79 percent over the past year.

Full Disclosure: None.

Obama's Outsourcing-Speak Rattles Indian IT Stocks

2010-01-29T01:21:00.000-08:00

By stockOzone team

The BSE IT sector has shaved off nearly 3% as the outsourcing bogey came back to haunt the information technology space.

In his State of the Union address, Obama reiterated a campaign pledge to end tax breaks to American companies that outsource jobs overseas. “To encourage ... businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America,” Obama had said.

India is among the world’s top five outsourcing destinations, along with the Philippines, Ireland, China and Brazil, according to a Tholons report. India earned revenues of $40 billion from IT-BPO export services in 2008, with the US accounting for 50-60% of the Indian IT companies' revenues.

The country's largest IT exporter by sales Tata Consultancy Services has fallen 3.3% at Rs 715, Infosys has shed 2.7% at Rs 2425 and Wipro has weakened by 4.9% at Rs 640.

Disclosure: Author does not own any of the stocks discussed here.

Apple’s New iPad Disappoints

2010-01-28T21:28:00.000-08:00

By Corey Nachman

Companies often claim to have a product that can change the world. Most of the time, these types of statements don’t meet the expectations they set.

When the Segway was in the development stages, known only by the codename “Ginger,” it was heralded as something that would change the world of transportation, as we knew it. One famous quote about the Segway before it was released came from the mouth of Apple CEO Steve Jobs. Time Magazine quoted him as saying that the Segway would be “as big a deal as the PC.” Apart from making a few mall security cops who hated walking happy and the hilarious photos of President Bush falling off of something that was believed to be unfalloffable, the Segway hasn’t revolutionized a thing.

Nearly a decade later, Jobs and his friends at Apple have a new product to claim as something that will forever alter our landscape. Steve has allegedly said to have told people close to him that his Apple Tablet (codename) would be the most important thing he’s ever done. Steve Jobs, the guy who created the iPod, Macbooks and Apple in general, said that this thing he’s working on is the most important thing he’s ever done?!

This gadget, nay, tool must be the thing that will lead us into a prosperous future filled with glorious riches, world peace, and crab rangoons. My iPod already lets me not deal with people I don’t like while I walk to class. What could possibly top that? All right Steve, what is it?

Oh, a giant iPhone. That’s neat I guess. Enter the iPad.

The reason for the iPad’s case of gigantism is its 9.7 inch touch screen. The screen is backlit with LED lighting, and since it’s so big, it may act like a tanning bed after prolonged use. That last part isn’t true, but maybe they will make an app for it. Yes, the iPad can access nearly every app available, even ones that I just made up.

The iPad has Wi-Fi and can use iTunes, which allows for the instant download of music, movies, TV shows, and the newest type of digital entertainment available, books.

Personally, I think it’s sad that the last things the world’s largest digital entertainment emporium added as downloadable digital products were books, but, you know, supply and demand.

I could go on and on about the features of the iPad, but you can look them up on anything that hooks up to the Internet. In fact, some of you may all ready own a portable Apple product that does that and doesn’t look like a high-definition cookie sheet.

For example, a Macbook, an iPod touch or an iPhone can connect to the Internet and Apple made all of these products before the iPad came out. What’s so innovative about a bigger version of what you had available before? Heck, the iPhone can do all of those things I mentioned, despite having a smaller screen. Plus, the iPhone has a camera, which no model of the iPad possesses, not even the $829 model.

If the iPad was what Steve Jobs wanted his legacy to be, then he could have retired in 2007 after the iPhone came out. He has done all of this before so the innovation is fairly lacking, but if someone designs a hoverboard application to take advantage of the iPad’s staggering size, I’ll buy 20.

Disclosure: None.

The Debt Limit is A Tax On The Majority

2010-01-28T21:17:00.000-08:00

By Donald Marron

Today the Senate voted 60-39 to increase the federal debt limit from $12.4 trillion to $14.3 trillion. No one is happy that we need to borrow another $1.9 trillion in the next year or two, but the alternative–default–is unthinkable. So let’s hope that the House follows suit when it votes next week.

As expected, today’s vote was entirely party line: 60 Democrats (including the two Independents who caucus with them) voted yea, while 39 Republicans voted nay; one R didn’t vote.

You might be tempted to look at these results and try to read into them some larger ideas about fiscal politics. Perhaps Democrats all voted to increase the debt limit because they are big spenders? Perhaps Republicans will recklessly risk default in their anti-government zeal?

I will leave to you, dear reader, to decide whether such claims have any merit. But please understand that the debt limit vote tells us absolutely nothing about them.

With rare exceptions, votes to increase the debt limit do not involve any real substance. Defaulting remains unthinkable, so the debt limit has to go up. The horse-trading before the final vote may have plenty of substance–this round included a welcome amendment bringing back statutory PAYGO rules as well as an almost-successful effort to create a budget commission–but the final vote is pure politics. The Senate has to deliver a debt limit increase. And that means that the Senate majority has to deliver the votes.

As a matter of politics, then, debt limit votes are a tax on the majority. The majority has to take the hit for increasing the limit, while the minority gets a free ride.

To test this view, I looked at Senate votes on the last five stand-alone increases in the debt limit (three other increases were part of the housing, TARP, and stimulus bills that passed in 2008 and 2009). The chart above shows the fraction of senators in each party who voted to increase the limit.

The results are striking: Back in 2004 and 2006, the Republicans (in red, but do I really need to say that?) controlled the Senate and thus bore the political tax of increasing the debt limit. In those two votes, the Rs accounted for 102 of 104 yeas. In 2009 and 2010, the situation was reversed, as the majority Democrats (yes, in blue) bore the political burden. In those two votes, the Ds (including the Is) accounted for 119 of 120 yeas.

And then there’s 2007, when the two parties shared the burden of boosting the debt ceiling. What explains that rare outburst of bipartisanship? Divided government. In 2007, President Bush had to work with a Democratic Congress to get the debt limit passed. With divided government, the pain had to be shared. In the other four years, however, the President was the same party as the Senate majority.

Bottom line: Sometimes it hurts to be in charge.

Disclosure: None.

Microsoft Corporation (NASDAQ: MSFT): Q2 Earnings Preview 2010

2010-01-28T02:23:00.000-08:00

By Stock Wizard

Microsoft Corporation (NASDAQ: MSFT), the world's largest software maker, is scheduled to release its financial results for second quarter of fiscal year 2010 after the closing bell on Thursday, January 28, 2010. Analysts, on average, expect the company to report earnings of 59 cents a share on revenue of $17.84 billion. In the year ago period, the company posted earnings of 47 cents per share on revenue of $16.63 billion.

Microsoft Corporation develops, manufactures and supportes a range of software products and services for different types of computing devices. It has five business segments: Client, Server and Tools, Online Services Business, Microsoft Business Division, and Entertainment and Devices Division.

In October, the Redmond, Washington-based company reported that its fiscal first quarter net income fell 11 percent to $3.574 billion or $0.40 per share, from $4.373 billion or $0.48 per share, in the year-ago quarter. Revenues fell $12.92 billion from $15.06 billion. Analysts, on average, expected the company to report earnings of $0.32 per share on revenue of $12.32 billion. In November, Microsoft cut its full year 2010 operating expense guidance to $26.2 billion to $26.5 billion, from the prior range of $26.6 billion to $26.9 billion.

Microsoft Corp. officially released the latest version of its operating system Windows 7 on October 21, aiming to win back customers disappointed by Vista and strengthen its hold on the PC market. In November, the software maker said its sales of Windows 7 hit record levels. The company is poised to benefit from a rebound in PC market. Worldwide personal computer shipments in the fourth quarter of 2009 increased 22.1% year-on-year to 90 million units, according to preliminary results by Gartner Inc. The technology research firm said that it was the strongest year-over-year growth rate that the worldwide PC market has experienced in the last seven years.

The company is trying hard to capture a bigger share of the online advertising market. In July, Microsoft announced a search collabaration with online search engine Yahoo Inc. Last month, Microsoft Corp. said that it has finalized and executed the online search and advertising deal with software giant Yahoo! Inc. The two companies expect to close the transaction in early 2010. Since it launched Bing in June, Microsoft has steadily if slowly been gaining ground. According to a report by comScore the company's share of searches in the U.S. reached 10.7 percent last month, up 0.4 percentage points from November.

Among other events during the final three months of last year, Microsoft made two acquisitions. In December, the software firm acquired systems management vendor Opalis Software for about $60 million. It also agreed to buy Sentillion Inc., a privately held company in Andover that specializes in software for the health care industry.

Last month, the software maker declared a quarterly dividend of $0.13 per share. The dividend is payable March 11, 2010 to shareholders of record on February 18, 2010.
The company's stock currently trades at a forward P/E (fye 30-Jun-11) of 14.02 and PEG ratio (5 yr expected) of 1.45. In terms of stock performance, Microsoft shares have gained 67 percent over the past year.

Full Disclosure: None.

Apple's iPad Slays Netbooks and Kindles With One Swing

2010-01-28T01:29:00.000-08:00

By Leslie Grandy

How many iPads will Apple sell? The question that preceded Apple’s announcements today will have to be revisited now, with new information about a killer consumer price point, and incredibly low priced unlimited data plans that some predict will drive sales way north of the 75 million iPods and iPhones already in consumers’ hands.

The new Apple iPad will retail for as low as $499 for a wi-fi only version without a data plan, to as high as $829 for a 3G version that can consume as much wireless data as you want for only $29.99 per month. A sign the iPad is not ready for sale was the fact the Apple Online Store did not close during the Apple event, as it has in the past for iPhone and iPod launches. Pre-ordering is not possible at this time.

With more than a little speculation from both the financial markets and gadget enthusiasts, Apple’s legendary leader Steve Jobs took to the stage at the Yerba Buena Center for the Arts in San Francisco to disrupt the tech industry once again. After proclaiming Apple to be the largest mobile devices company in the world, Jobs unveiled the new Apple iPad. Directly dismissing Netbooks because of their poor quality screens, sluggish processors and uninspiring PC software, Jobs said the iPad is better than a laptop or smartphone, “or else we wouldn’t have made it.” Claiming it is a “dream to type on”, the device has a multi-touch 9.7” IPS display and runs a 1Ghz Apple A4 chip.

The device is a only a half-inch thick and weighs 1.5 lbs, compared to the Macbook Air which weighs 3 pounds and is nearly half again as thick due to its physical keyboard. It also will be available with up to 64GB of embedded flash memory.

In advance of today’s announcements, there was rampant speculation that the iPad would be a Kindle-killer. The iBook app and iBook Store present a challenge for Amazon, as does the multi-touch color screen of the iPad. Jobs gave kudos to Kindle and said Apple planned to "stand on Amazon's shoulders and go a little further." Initially, Apple has made deals with the five largest publishers in the world to make books available on the iPad. Extending the iTunes and App Store models, the iBook Store allows consumers to purchase books directly from the iPad and enjoy them immediately. Jobs indicated there are already over 125 million credit card accounts enabled for the Apple download stores, and thanks to their experience serving over 12 billion downloads from these stores, Apple claims to be ready to handle the scale they expect from the iPad.

What continues to differentiate Apple is the application software and its App Store. Jobs announced that the App Store has seen 3 billion downloads to date, and the new iPad will be fully capable of running all existing iPhone and iPod Touch apps. Although the size of the iPad is larger than an iPhone 3GS, the apps will run in their iPhone optimized size, which does not fill the screen, unless the user expands the app to fit full screen. The full screen versions of iPhone apps will work in an expanded mode by a process known as pixel doubling, which fills in additional pixels to increase resolution.

New apps and games specifically designed for the iPad form factor will launch when the device is available in 60 days, including ones previewed at today’s announcement by ESPN and the New York Times. Additional software demonstrations included a re-work of Apple’s iWork software for the iPad, advanced used of meta data for geo-locating photos and an updated email application.

The big surprises for the rapt audience were left to the end of the event, in classic Apple style. Although the entire presentation showed the device and referenced only wi-fi connectivity, the iPad will be available with embedded 3G capabilities. In the US, where a data plan typically runs $60 per month, the announcement today by Apple that the iPad will be available with a two-tiered, no contract data plan - $14.99 for only 250MB of data or $29.99 for unlimited data, is likely to drive more consumers to adopt the 3G capable version, including ones who may not own a smartphone today.

Disclosure: None.

Accelerator Problem Decelerate Toyota – Recalled 2.3 Million Faulty Vehicles

2010-01-22T05:16:00.000-08:00

By stockOzone team

One of the largest auto makers in the world Toyota, on Thursday issued a recall covering 2.3 million its line of late model cars, SUVs and pickup trucks, due to a potential accelerator pedal problem.

The automaker previously recalled about 4.2 million Toyota and Lexus vehicles to reduce the risk of pedal "entrapment" caused by floor mats, according to a news release issued by Toyota Motor Sales U.S.A. About 1.7 million Toyota vehicles are subject to both recalls, the company said.

"In 'rare instances' the accelerator pedal may stick in a partially depressed position or return slowly to the idle position, Toyota Group Vice President Irv Miller said."

In November, Bob Carter, Toyota's U.S. brand chief, said there was "no evidence" to support claims that the reported safety problems could be caused by anything other than loose floor mats interfering with the accelerator pedal.

The National Highway Traffic Safety Administration had received reports of 100 incidents at the time of Toyota's first recall. Those reports included 17 crashes and five fatalities possibly linked to floor mats and accelerator pedals in Toyota cars and trucks.

One of those crashes involved a Lexus that accelerated to more than 120 mph before crashing in San Diego, killing four people.

The safety stumbles have dinged Toyota's reputation in the U.S. as a builder of dependable, high-quality cars. Last year's recall was the sixth-largest ever in the United States.

Toyota Affected Models are:

• 2009-2010 RAV4
• 2009-2010 Corolla
• 2009-2010 Matrix
• 2005-2010 Avalon
• 2007-2010 Camry
• 2010 Highlander
• 2007-2010 Tundra
• 2008-2010 Sequoia

Disclosure: Author does not own any of the stocks discussed here.

Earnings Preview: Google

2010-01-21T05:09:00.000-08:00

Source: Seeking Alpha

Google (GOOG) is expected to report Q4 earnings after the market close on Thursday, January 21, with a conference call scheduled for 4:30 pm ET.

Guidance
The consensus estimate is $6.45 for EPS and $4.9B for revenue, according to First Call. Street estimates for Google's Q4 have been ratcheted up into the earnings report, as the company appeared to have weathered the recession better than most companies, and now appears ready to reap the benefits of a recovery.

Analyst Views
Stifel Nicolaus estimates Q4 revenue ex-traffic acquisition costs, or TAC, of $4.8B, adjusted EBITDA of $2.9B, cash EPS of $6.14, and GAAP EPS of $5.21. The firm has modeled Q4 paid clicks growth of +14%, flat with Q3. Stifel believes its estimates may prove conservative given the recent economic strength.

Key items for the conference call: 1) A Google China update and its revenue and EBITDA contribution, Stifel estimates revenues of $200M-$225M; 2) Paid click growth impact from new product ads and new click-to-call functionality; 3) Initial Nexus One sales figures; 4) Additional Android product releases and mobile advertising platforms including the newly released "Search Near Me Now" functionality; 5) Thoughts on Google's local strategy including the widely reported potential acquisitions of Yelp, Trulia, and Zillow; 6) An update on YouTube's monetization; 7) The status of Google Caffeine; 8) Updates to the Chrome OS timeline; 9) Updates and financial impact of Google's recent implementation of real-time search; and 10) Management's thoughts on Google Energy.

Disclosure: stockOzone does not own any of the stocks discussed here.

Shorting The Massachusetts Results

2010-01-21T04:59:00.000-08:00

By Michael Shulman*

Everyone is projecting changes in the economy, the market, the administration, life on Mars and the New York Yankees roster based on the election results in Massachusetts. The reality is less complicated - the election will make health care reform either very modest or nonexistent, restrain (a bit) the next stimulus package, make financial reform a bit more balanced but still a reality in 2010, and increase the odds the Republicans re-capture the House in the November elections. What are the consequences for investors of this happening?

• If health care reform legislation dies, the hospitals lose - more bad debts, less demand for services and a renewed focus on cost controls, via administrative actions, that restrain prices. The short: hospitals.

• If there is a modest health care package, the focus will be on voluntary cost control measures and federal regulation of insurers prohibiting the denial or exorbitant pricing of coverage based on pre-existing conditions. It may even include insurance exchanges. Bad news for insurance companies - and the first step in insurers becoming regulated utilities (not a bad thing). The short: insurers.

• There will be another stimulus once unemployment starts to climb again, March/April at the latest, and the double dip becomes obvious - maybe May/June. It is, after all, an election year. But it will be much more modest than the one passed last year and may even focus on the unemployed rather than unionized and state workers. This will restrain the deficit - good for bonds, good for the dollar, bad for gold - but will also hit corporate profits, as there will be less stimulus money sloshing around, hitting the overall market. The short: gold, the S&P 500.

• Financial reform will probably happen in 2010; even the Republicans favor some sort of regulation and populist resentment at the banks is going to be used by the Dems to put the Republicans in a box if they side too much on the side of the financially wicked. Obama may get his fee; Barney Frank is going to get much of what he wants; the banks are going to take the hit Main Street has wanted to see for a more than a year. The short: the big banks.

• A Republican re-capture of the House will lead to unspeakably divided government, true gridlock, often favored by Wall Street but a disaster given the current economic situation. I like divided government but the current House leadership is economically rigid, politically rigid, out of touch with the needs of the jobless and others on Main Street and bereft of any leadership that is able to work with Dems. In 2010, the prospect of the House turning red may boost the market temporarily and will certainly help the dollar and bonds and hurt gold. The short: gold.

Keep it simple when developing these theses and stick to what is real, not hype or hope. The economy is not recovering if you look at data, not words; the Republicans are not in steep ascent. If Victoria Kennedy had agreed to run she would have won in a landslide; Obama still has a 75% "personal" approval rating and his job and personal ratings are about the same as Reagan's after one year. Simply put, do not overreact.

*Michael Shulman is the Editor of ChangeWave Biotech Investor, a newsletter advisory service that follows life sciences and biotech stocks.

Micheal is the author of Sell Short: A Simpler, Safer Way to Profit When Stocks Go Down.

Disclosure: None.

General Electric Co. (NYSE: GE): Q4 Earnings Preview 2009

2010-01-21T04:53:00.000-08:00

By Stock Wizard

General Electric Co. (NYSE: GE), the world's biggest maker of jet engines and electric turbines, is scheduled to release its fourth quarter earnings for 2009 before the opening bell on Friday, January 22, 2010. Analysts, on average, expect the company to report earnings of 26 cents per share on revenue of $40.02 billion. In the year ago period, the company reported earnings of 36 cents per share on revenue of $46.21 billion.

General Electric Company operates as a technology, media, and financial services company worldwide, with products & services ranging from aircraft engines, power generation, water processing & security technology to medical imaging, business & consumer financing, media content & industrial products.

In October, the Fairfield, Connecticut-based company reported that its third quarter net income declined to $2.41 billion or $0.23 per share, compared to $4.31 billion or $0.43 in the prior-year quarter. Revenue dropped to $37.80 billion from $47.23 billion in the prior year quarter. Analyst, on average, expected the company to report earnings of $0.20 per share on revenue of $39.50 billion.

The company was hit hard hard by the severe recession as its Capital Finance segment saw its Commercial Lending and Leasing, Consumer and Real estate activities being hit by the economic woes. Third quarter revenue from GECS slumped to $12.746 billion from $18.431 billion in the prior year. However, it appears that worst may be behind the the largest US conglomerate. The company is now shrinking its Capital Finance business and has restructured the unit's funding profile. In December, General Electric said that earnings from its finance unit would be flat next year, with an expected peak in credit losses paving the way for an improvement in 2011. The real estate division of GE Capital has about $7 billion in unrealized losses and values were forecast to decline 13 percent in 2010, the company said in December. "We have positioned the company for solid earnings and cash-flow growth in the future," GE Chairman and CEO Jeffrey Immelt said last month. According to the company, the coming quarters, including the fourth one, are expect to reflect gains from stimulus programs, especially in technology infrastructure and health care segment.

On the other hand, GE's industrial segment has been doing pretty well. Profit at industrial segment was up 4% while backlog grew by $5 billion in the third quarter.

Among other developments, the diversified US firm agreed to sell its security business to United Technologies Corp. (NYSE: UTX) for $1.8 billion in November. Early in December, GE finalized a deal to sell a majority stake in NBC Universal for $13.75 billion, which it controlled NBC since 1986 to Comcast Corp. (NASDAQ: CMCSA), for a total of $13.75 billion. The deal will create a joint venture, with G.E. owning 49 percent and Comcast owning the rest.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 17.70 and PEG ratio (5 yr expected) of 1.67. In terms of stock performance, GE shares have gained nearly 28% over the past year.

Full Disclosure: None.

Buffett Doubts Kraft-Cadbury Deal; Kraft Shares Slide

2010-01-20T22:05:00.000-08:00

By stockOzone team

Billionaire Warren Buffett on Wednesday voiced his unhappiness over Kraft Foods' (NSYE: KFT) proposed 19.5 billion dollar acquisition of Cadbury (CBRY.L), giving a fresh twist to the buyout saga.

Buffett-led conglomerate Berkshire Hathaway is a top shareholder in US-based Kraft, holding 9.4 per cent stake.

In an interview to television channel CNBC (see the text, video) , Buffett said that he has a lot of doubts about Kraft's proposed buyout of Cadbury.

The billionaire investor also noted that he "feels poor" in the wake of the deal.

In early trading, shares of Kraft fell more than two per cent to USD 28.75 on the New York Stock Exchange.

Yesterday, Kraft said it would takeover the British confectioner in a cash-and-stock deal valued at 11.9 billion pounds, ending months of bitter battle between the two companies.

Earlier, Berkshire Hathaway had opposed Kraft's move to issue up to 370 million new shares to facilitate the acquisition of Cadbury.

The conglomerate had said that Kraft stock is a very expensive currency to be used in an acquisition.

Disclosure: Author does not own any of the stocks discussed here.

China Will Be Number One Economy By 2020: PriceWaterhouseCoopers

2010-01-20T21:40:00.000-08:00

By stockOzone team

China could overtake the United States to become the world's largest economy as early as 2020, a report of PriceWaterhouseCoopers (PWC) said on Thursday, underlining the impending change in global economic power.

The top business consultancy also said in its report that by 2030 the top 10 world economies could be China, followed by the United States, India, Japan, Brazil, Russia, Germany, Mexico, France and Britain.

The current 10 largest economies, according to 2008 data from the International Monetary Fund, are the United States, Japan, China, Germany, France, Britain, Italy, Russia, Spain and Brazil.

"These projects suggest that China could be the largest economy in the world as early as 2020 and is likely to be some way ahead of the US by 2030," John Hawksworth, head of macroeconomics at PWC, said in the report.

"India could grow even faster than China after 2020, however, and will also move rapidly up the global GDP (gross domestic product) rankings" because of its younger and faster growing population as opposed to China, he added.

The report also pointed to an increasing share of global GDP taken up by China and India, compared to the United States and the European Union.

The proportion in 2010 will be 20 percent for the US, 21 percent for the EU, 13 percent for China and five percent for India, the report said.

But by 2030 that will have changed to 16 percent for the US, 15 percent for the EU, 19 percent for China and nine percent for India, it added.

Jim O'Neill, chief global economist for US investment bank Goldman Sachs, forecast last November that China will overtake the United States by 2027; 14 years earlier than a previous Goldman Sachs forecast of 2041 made in 2003.

O'Neill coined the term "BRICs" to refer to the four emerging market powerhouses Brazil, Russia, India and China, which have since formed an informal grouping to discuss global issues and economic policies.

The Group of 20 (G20) developed and emerging economies last year took over from the traditional Group of Seven (G7) - Britain, Canada, France, Germany, Italy, Japan and the United States; as the main forum for economic talks.

Disclosure: None.