Earnings season gets into full swing this week, as movie streaming service Netflix Inc. and information technology giant International Business Machines Corp. report financial results Tuesday, followed by e-commerce company eBay Inc. on Wednesday. Coffee chain Starbucks Corporation and telecommunications juggernaut Verizon Communications Inc. post earnings on Thursday. On Friday, fast-food giant McDonald's Corporation and General Electric Company are scheduled to release results.
Earnings growth for S&P 500 companies in the fourth quarter is expected to be 5.6 percent, according to Estimize's research. With 36 S&P 500 companies reporting so far, 57 percent have beaten the Estimize consensus estimates of profit, while 32 percent have missed and 11 percent have met those expectations. On the revenue side, 53 percent of S&P 500 companies have beaten Estimize’s forecasts, while 47 percent have missed.
Here’s a deeper look at the tech, telecom, consumer discretionary and industrial companies reporting this week.
Netflix Inc. (NASDAQ:NFLX), the online movie and television streaming subscription business, is scheduled to report quarterly results after U.S. markets close Tuesday. Although Netflix posted third-quarter earnings in line with Wall Street estimates in October, shares tumbled more than 25 percent following news that subscriber growth came in lower than analyst expectations. The Los Gatos, California-based company added 3.02 million net additions for the third quarter, lower than projections for 3.69 million, bringing total members to 53.06 million.
The company attributed the slowdown to higher subscription costs after it hiked monthly subscriptions $1 to $8.99 a month. Meanwhile, Netflix added 980,000 U.S. customers, down from 1.29 million added in the same period a year earlier. The company, which has more than 44 million members in more than 40 countries, says it expects to add another 4 million members in the fourth quarter, which would bring the total to around 57.06 million for the year.
Wall Street expects Netflix to report fiscal fourth-quarter net income of $29.18 million, or earnings per share of 44 cents, on revenue of $1.49 billion, according to analysts polled by Thomson Reuters. That compares with a profit of $48.42 million, or earnings per share of 79 cents, on revenue of $1.18 billion during the same period a year earlier. In the last three months, shares of Netflix have lost 6 percent.
International Business Machines
After the closing bell Tuesday, technology giant IBM (NYSE:IBM) will report its latest quarterly results after the third quarter when the company missed Wall Street forecasts due to weaker-than-expected software revenues and lower productivity in its services business. The Armonk, New York-based company announced plans in October to offload its unprofitable chip manufacturing business to contract chipmaker Globalfoundries U.S. Inc. for $1.5 billion. The company said the deal was made to help IBM be “successful in the future,” adding the company is working to integrate its cloud, data and analytics operations. IBM, which has a market cap of $155.52 billion, has been reducing its presence in the hardware industry.
The company completed its $2.1 billion sale of the x86 server business to Lenovo Group in October. In 2005, Lenovo acquired IBM's consumer PC laptop business for $1.25 billion. IBM announced in an October earnings call it would back away from a plan to deliver $20 earnings per share by next year, abandoning the Roadmap 2015 pledge made by former CEO Sam Palmisano in 2010.
For the fourth quarter, Wall Street expects International Business Machines Corp. to report net income of $5.35 billion, or earnings per share of $5.10, on revenue of $24.77 billion, down from a profit of $6.65 billion, or earnings per share of $5.76, on revenue of $27.39 billion a year earlier. In the last three months, shares of IBM have dropped 7.07 percent.
Following the closing bell Wednesday, American e-commerce giant eBay Inc. (NASDAQ:EBAY) is slated to post fourth-quarter results after the San Jose, California-based company missed revenue expectations and handed in guidance that fell short of forecasts. The company reported earnings of 68 cents a share, excluding one-time items, edging past estimates by a penny a share. But the firm posted sales of $4.35 billion, missing expectations for $4.37 billion, according to a consensus estimate from Thomson Reuters. The company unveiled plans in September to separate itself from its PayPal unit and form two independent, publicly traded companies this year.
In the wake of the mega-IPO of Alibaba Holdings Ltd., and the introduction of competition in mobile payments from Apple and Google, both eBay and PayPal are facing big threats to their core businesses. The company expects the spinoff, which is subject to regulatory approvals, to be completed by the second half of 2015. As part of the spinoff, eBay CEO John Donahoe and Chief Financial Officer Bob Swan will step down from their roles but retain board seats. Devin Wenig, president of eBay Marketplaces, will become CEO of the new eBay company.
Wall Street expects eBay Inc.to report fourth-quarter net income of $1.11 billion, or earnings per share of 73 cents, on revenue of $4.93, compared with a profit of $1.07 billion, or earnings per share of 65 cents, on revenue of $4.53 billion in the same quarter of 2013. The company’s stock has gained 9.07 percent in the last 3 months.
Ahead of the market open Thursday, telecommunication giant Verizon Communications Inc. (NYSE:VZ) is scheduled to report financial results after the company’s profit missed estimates in the previous quarter. Although Verizon turned in quarterly earnings that missed Wall Street expectations for the third quarter, revenue rose as it added customers to its wireless business.
The company reported third-quarter net income of $3.79 billion, or earnings per share of 89 cents, as revenue rose 4.3 percent to $31.59 billion. Analysts had expected the company to report a profit of 90 cents per share on revenue of $31.58 billion, according Reuters data. Verizon operates in two primary segments: Verizon Wireless and Wireline. The Manhattan-based company said revenues for Verizon’s wireless business grew 7 percent to $21.8 billion in the third quarter of 2014. Meanwhile, the company’s wireline segment saw revenues fall 0.8 percent to $9.6 billion in the third quarter, but total FiOS revenues grew 13.4 percent to $3.2 billion compared with the third quarter of 2013.
Wall Street expects Verizon Communications to report fourth-quarter profit of $3.17 billion, or earnings per share of 78 cents, on revenue of $32.67 billion, compared with profit of $1.91 billion, or earnings per share of $1.76, on revenue of $31.07 billion a year ago. In the last three months, shares of Verizon have lost 1.01 percent.
After U.S. markets close Thursday, retail coffee chain Starbucks Corporation (NASDAQ:SBUX) is scheduled to report quarterly results. Starbucks, which has a market cap $60.32 billion, announced plans in October to roll out mobile ordering and payment nationwide in 2015 as the latest stage of its mobile program. At 6 million average weekly transactions, mobile payments now account for more than 15 percent of all transactions at its U.S. company-operated stores, the company said in July.
The Seattle, Washington-based company reported quarterly earnings in October that met analysts' expectations, but its revenue and outlook fell short of forecasts. Revenue increased 10 percent in the fiscal fourth quarter to $4.18 billion from $3.80 billion a year ago. Wall Street had forecast revenue to rise to $4.23 billion, according to Reuters data. The company, which operates in 62 countries, had forecast full-year 2015 earnings per share in the range of $3.42 to $3.54.
For the company’s fiscal first quarter, Wall Street expects the company to report net income of $610.91 million, or earns per share of 91 cents, on revenue of $4.80 billion, compared with a profit of $540.70 million, or earnings per share of 71 cents, on revenue of $4.24 billion a year ago. Shares of Starbucks Corp. have gained 7.91 percent in the last three months.
Ahead of the opening bell Friday, fast-food giant McDonald's Corporation (NYSE:MCD) will turn in quarterly results after reporting fewer customers and lower revenue in its previous report. The Oak Brook, Illinois-based company issued its worst monthly comparable sales decreases in the U.S. since 2003 in its previous third-quarter earnings report in October. The world's largest restaurant chain said global comparable sales tumbled 3.3 percent in the third quarter. Meanwhile, the company’s third-quarter comparable sales in the U.S. also dropped 3.3 percent, driven by negative guest traffic amid sustained competitive activity.
The company added that global comparable sales for October are expected to be negative. “The internal factors and external headwinds have proven more formidable than expected and will continue into the fourth quarter, with global comparable sales for October expected to be negative,” Don Thompson, president and chief executive officer of McDonald's, warned in the company’s third-quarter earnings report in October. The Dow component, which has a market cap $89.04 billion, is forecast to report fiscal fourth-quarter earnings of $1.21 billion, or earnings per share of $1.24, on revenue of $6.70 billion, compared with a profit of $1.40 billion, or earnings per shares of $1.40, on revenue of $7.09 billion a year ago. In the last three months, McDonald's shares have edged down 0.11 percent.
General Electric Company
Diversified technology conglomerate General Electric Company (NYSE:GE), which has a market cap $236.9 billion, will report quarterly results ahead of the opening bell Friday on the heels of topping earnings estimates in the previous quarter, helped by sales from its aviation and oil and gas segments. General Electric Co., whose segments include energy infrastructure, aviation, health care, transportation, home and business solutions, and GE Capital, saw its third-quarter net income increase to $3.54 billion, or 35 cents per share, on revenue of $36.2 billion, from $3.19 billion, or 31 cents per share, on revenue of $35.73 billion a year earlier.
The company saw a 22 percent leap in orders for jet engines, locomotives and other industrial equipment and services during the third quarter. GE’s backlog of equipment and services at the end of the quarter was a record $250 billion, up $21 billion over the year-ago period. The Fairfield, Connecticut-based company is forecast to report fiscal fourth-quarter net income of $5.48 billion, or earnings per share of 52 cents, on revenue of $42.12 billion, compared with a profit of $5.42 billion, or earnings per share of 42 cents, on revenue of $40.38 billion a year earlier. In the last three months, shares of GE have lost 5.75 percent.