Alcoa Inc. (NYSE: AA)On July 7 after the markets closed, the largest U.S. aluminum producer Aloca reported a surge in second quarter earnings on higher prices for aluminum and its raw material alumina. Adjusted EPS = $0.32; Street view = $0.32 Sales = $6.59 billion; Street view = $6.32 billion Looking forward, Alcoa projects continued growth in all major end markets on a global basis. Alcoa also reaffirmed its 2011 global aluminum demand forecast of a 12 percent growth. "Although the economic recovery is uneven, the overall outlook for Alcoa - and for aluminum - remains positive," Alcoa Chairman and CEO Klaus Kleinfeld said. "Demand for aluminum continues to rise and so does growth in our major markets. These factors support our projection that aluminum demand will grow 12 percent this year and will double by 2020." Alcoa expects aluminum sales to the sector to grow by 4 percent to 8 percent globally this year and by 8 percent to 11 percent in North America.
Google Inc. (NASDAQ: GOOG)On July 14, Internet search engine Google reported a surge in second quarter earnings as it continued to draw more revenue from advertising. Both earnings and revenue excluding Traffic Acquisition Cost (TAC) came in well ahead of the Street expectations. The company's search advertising business, combined with new efforts like display and mobile advertising, boosted its revenue by 36 percent in its first three months under the helm of new Chief Executive Larry Page. Adjusted EPS = $8.74; Street view = $7.86 Revenue excluding TAC = $6.92 billion; Street view $6.55 billion Google added about 2,450 new employees in the second quarter, bringing its total headcount to 28,768 employees as of the end of June 30. Over 135 million Android smartphones or tablets -- made by the likes of Motorola and Samsung Electronics -- had been activated in total, Google executives told Reuters. And its Chrome browser is now employed by more than 160 million users.
JPMorgan Chase & Co. (NYSE: JPM)On July 14, financial services giant JPMorgan reported a higher-than-expected second quarter earnings as it wrote off fewer bad mortgages and credit card loans. The company made new loans faster than customers paid off existing ones during the quarter, a reversal from the first quarter and a good sign for a business long plagued by weak loan demand, according to Reuters. EPS = $1.27; Street estimates = $1.21 Revenue = $27 billion; Street estimates = $25.13 billion JPMorgan has been hiring people to work out its problems with mortgages, still the biggest drag on its business. The bank told Reuters that it hired 10,000 people in the second quarter. It has 250,095 people as of the end of June. Looking ahead, Jamie Dimon, Chairman and Chief Executive of JPMorgan, said, "We continue to see substantial opportunities for the company. We are building our international presence, with more bankers, branches and products. In the U.S., we are also investing in new branches and adding bankers and salespeople, expanding the reach of our consumer and wholesale businesses."
Citigroup Inc. (NYSE: C)On July 15, financial services giant Citigroup reported a 24 percent growth in its second quarter earnings on an improvement in credit costs that offset a decline in revenue. Earnings and revenue for the quarter topped analysts' expectations. The results came a day after JPMorgan Chase posted solid earnings, raising investor hopes for strength across the banking sector. EPS = $1.09; Street view = $0.97 Revenue = $20.62 billion; Street view = $19.94 billion "Looking forward, while we are comfortable with the broader macro economic trends that underpin our strategy, we are concerned with the impact the near-term economic environment will have on the industry for the second half of the year. But that said, we are consistently profitable and remain focused on growing responsibly," Citigroup Chief Executive Vikram Pandit said during the conference call. Citigroup's Chief Financial Officer John Gerspach told Reuters that the bank's overall loan balances should start growing on a year-over-year basis by the end of 2011 or "very early" in 2012. "The impact of the weakening U.S. dollar, as well as higher legal and related costs will likely continue to affect our expenses in the second half of this year and will remain difficult to predict. Therefore, we expect operating expenses to remain elevated for the remainder of the year. As a result, our full year operating expenses will likely exceed the $48 billion to $50 billion guidance that we had communicated previously," said Gerspach.
International Business Machines Corp. (NYSE: IBM)On July 18, IBM reported a 8 percent increase in its second quarter earnings on strong revenue growth in hardware, software and services. Quarterly earnings and revenue exceeded Street expectations. At the same time, the company raised its full year earnings forecast. Adjusted EPS = $3.09; Street estimates = $3.03 Revenue = $26.67 billion; Street estimates = $25.35 billion Investors had feared that technology sales would slow in the second half, hurt by the economic uncertainty in Europe and Japan, as well as a drop in government spending. But IBM offset those challenges with strong growth in developing markets from Brazil to China, and robust sales of a new line of mainframe computers, according to Reuters. Looking ahead, the company raised its fiscal 2011 earnings and operating earnings guidance. New EPS forecast = $12.87; Previous forecast = $12.73 New operating EPS forecast = $13.25; Prevous forecast = $13.15 Street view = $13.22 In its 2015 roadmap, the company aims to take emerging growth countries to about 30 percent and software to 50 percent. IBM also has plans to make $20 billion worth of acquisitions between now and 2015.
Halliburton Co. (NYSE: HAL)On July 18, the world's second-largest oilfield services company Halliburton reported a higher-than-expected second quarter earnings as improved pricing and equipment utilization generated higher revenues, mainly in the United States. The second-quarter results clearly demonstrate how Halliburton has benefited from its North American leadership in the pressure pumping technology that enables oil and gas producers to tap in to shale rock, according to Reuters. Adjusted EPS = $0.81; Street estimates = $0.73 Revenue = $5.94 billion; Street estimates = $5.69 billion Looking ahead, chief executive officer of Halliburton, Dave Lesar said, "Robust growth in global energy demand supports the continuing need to develop new hydrocarbon resources and provides us with strong growth opportunities. We anticipate that the execution of our strategy and our focus on the high growth segments of deepwater, unconventional resources, and mature fields will result in margin expansion in both our North America and international business." For North America, the company expects that strong crude prices, operators' improved cash flows combined with their ability to access capital, and the increasingly liquids-rich nature of the United States land market, would be the strength going ahead through 2012. The company is also confident for Europe's business prospects longer term with increasing interest in shale development. Halliburton said international pricing is stabilizing and that volume increases will result in pricing improvements toward the end of the year.
Apple Inc. (NASDAQ: AAPL)On July 19, Apple reported a surge in its third quarter earnings on strong sales of its iPhones and iPad multimedia devices. Quarterly earnings exceeded Wall Street's expectations helped by blockbuster sales of the iPhone and strong Asian business. EPS = $7.79; Street estimates = $5.80 Revenue = $28.57 billion; Street estimates = $24.92 billion The company's iPhone sales soared 142 percent to 20.34 million units, while iPad sales jumped 183 percent to 9.25 million units. Apple's Macintosh computers sales grew 14 percent to 3.95 million units, while iPod sales fell 20 percent to 7.54 million units. Looking ahead, the company issued fourth quarter guidance. EPS forecast = $5.50; Street view = $6.42 Revenue forecast = $25 billion; Street view = $27.7 billion Apple Chief Executive Tim Cook told Reuters that they were particularly optimistic about Greater China, which includes mainland China, Hong Kong and Taiwan, where Apple's year-over-year revenue was up sixfold at $3.8 billion. Overall, Asia Pacific revenue more than tripled to $6.3 billion in the quarter. "I firmly believe that we are just scratching the surface right now," Cook said of China. "I think there is an incredible opportunity for Apple there." Cooks also remarked on Apple TV, one of the few Apple products that has not really connected with consumers, saying it still had a "hobby status" within the company.
Bank of America Corp. (NYSE: BAC)On July 19, Bank of America reported a record second quarter loss of $8.8 billion as continuing mortgage problems and low interest rates pressured revenue of the bank. The loss was expected after the bank said in June it would pay $8.5 billion to settle lawsuits from mortgage bond investors and take more than $14 billion of other home loan-related charges. Excluding the charges, the bank earned $3.7 billion or 33 cents per share in the second quarter. Loss per share = $0.90; Street view loss = $0.90 Revenue = $13.24 billion; Street estimated = $12.34 billion "Obviously, the solid performance in our underlying businesses continues to be clouded by the costs we are absorbing from our legacy mortgage issues. But it is clear that - from deposits to wealth management to investment banking - our customers and clients are choosing to do more with us every day," CEO Brian Moynihan said in a statement. Interest income fell during the quarter, and Moynihan told Reuters that demand for loans is sluggish and the economy is not improving quickly. On a conference call, Chief Financial Officer Bruce Thompson said the bank was "pretty close" to the trough for net interest income, if it was not there already.
The Coca Cola Co. (NYSE: KO)On July 19, Coca-Cola reported better-than-expected earnings for its second quarter on strength of volume growth across geographies and the purchase of the North American operations of Coca-Cola Enterprises, although increased commodity costs continue to hurt. Revenue grew 47 percent on increase in concentrate sales, currency benefit, positive price/mix and the acquisition of Coca-Cola Enterprises' North American operations. EPS = $1.17; Street estimated = $1.16 Revenue = $12.74 billion; Street estimated = $12.40 billion "Even as consumers around the world continue to feel the impact of a slow economic recovery, they increasingly choose our brands to refresh themselves at a rate of over 1.7 billion servings each and every day," said Muhtar Kent, the chairman and CEO of the beverage giant. Looking ahead, Coca-Cola said company-wide productivity initiatives are well on track to slightly exceed the upper end of its original targeted range of $400 million to $500 million in annualized savings by year-end 2011, the final year of the four-year program.
The Goldman Sachs Group Inc. (NYSE: GS)On July 19, Goldman Sachs reported second quarter earnings and revenue far below Street expectations. EPS = $1.85; Street estimated = $2.27 Revenue = $7.28 billion; Street estimated = $8.14 billion "During the second quarter, the operating environment was more difficult given global macro-economic concerns. In addition, certain of our businesses had disappointing results as we reduced our market risk in response to attempting to manage fluctuations in prices and market liquidity," said Lloyd Blankfein, chairman and chief executive officer of the company. Goldman Sachs declared a dividend of $0.35 per common share to be paid on September 29 to common shareholders of record on September 1.
Johnson & Johnson (NYSE: JNJ)On July 19, drug giant Johnson & Johnson reported a better-than-expected second quarter earnings on strong international sales and positive currency impact. Adjusted EPS = $1.28; Street estimated = $1.23 Revenue = $16.6 billion; Street estimated = $16.22 billion "Our recently launched pharmaceutical products continued to achieve strong growth and contributed to our solid second quarter results. We received several new product approvals across our businesses which will benefit patients around the world and drive future growth," said William Weldon, Chief Executive of Johnson & Johnson. Looking ahead into the full year 2011, the company still expects earnings of $4.90 to $5.00 per share, excluding the impact of special items, while Street predicts $4.95 per share.
Yahoo! Inc. (NASDAQ: YHOO)On July 19, Internet search company Yahoo reported a 11 percent growth in second quarter earnings, but revenue fell 23 percent due to the change in revenue presentation related to the search agreement with Microsoft Corp. (NASDAQ: MSFT). Adjusted EPS = $0.19; Street estimated = $0.18 Revenue excluding Traffic Acquisition Cost = $1.08 billion; Street estimated = $1.11 billion "We experienced softness in display revenue in the second half of the quarter due to comprehensive changes we have made in our sales organization to position ourselves for more rapid display growth in the future," said Carol Bartz, CEO of Yahoo. Looking ahead, the company provided its revenue outlook for the third quarter, which was lower than the current Street expectations. Revenue excluding TAC = $1.05 billion to $1.10 billion; Street view = $1.12 billion Yahoo Chief Financial Officer Tim Morse told Reuters in an interview the changes that Yahoo was making to its North American sales force meant that Yahoo was underequipped to meet demand. "In the second half for the quarter we didn't close out the good, branded advertising revenue like we could have and we should have and we plan," he said. By contrast Morse said that Yahoo was making progress in rectifying some of the problems in its search partnership with Microsoft, which had crimped Yahoo's revenue per search.
Abbott Laboratories (NYSE: ABT)On July 20, Abbott Laboratories reported a 50 percent surge in second quarter earnings helped by strong sales growth in emerging markets and demand for its Humira arthritis drug. Ongoing earnings for the quarter grew 11 percent and topped analysts' expectations by a penny. EPS = $1.23, Ongoing EPS = $1.12; Street estimated = $1.11 Sales = $9.62 billion; Street estimated = $9.56 billion Humira, as usual, was the standout product. Its global sales rose 25 percent to $2 billiondespite stiff competition from Johnson & Johnson's (JNJ) Remicade and Pfizer Inc's (PFE) Enbrel. The drugs treat rheumatoid arthritis by blocking a protein called tumor necrosis factor, according to Reuters. The company also raised its ongoing earnings forecast for the full-year 2011, citing the strong performance to date. New ongoing EPS forecast = $4.58 to $4.68; Street estimated = $4.60 Previous ongoing EPS forecast = $4.54 to $4.64 "Abbott is well-positioned for a strong second half of the year as we remain on track for double-digit EPS growth in 2011. We're also pleased with our growth in emerging markets, as well as the progress of our broad-based pipeline, including several new product approvals, regulatory submissions and clinical trial initiations," Chairman and CEO Miles White said in a statement.
American Express Co. (NYSE: AXP)On July 20, American Express posted a 31 percent growth in its second quarter earnings as cardmember spending improved 18 percent and its processing revenue jumped 16 percent. Average spending on American Express cards for the quarter rose 15 percent to $3,767 from last year, and the number of outstanding cards rose 6 percent to 94 million. EPS = $1.10; Street estimated = $0.98 Revenue = $7.62 billion; Street estimated = $7.35 billion “Higher revenue growth reflects an attractive return on the investments we’ve been making to strengthen merchant relationships and enhance cardmember services.Cardmember spending was at an all-time high, growing 18 percent and we saw broad-based strength across the consumer, small business and corporate sectors globally. While net interest income was down from last year because of a lower yield on our portfolio, cardmember borrowing rose 2 percent, reversing the pattern of the past couple of years," said Kenneth Chenault, chief executive officer of American Express.
eBay Inc. (NASDAQ: EBAY)On July 20, online auctioneer eBay reported a better-than-expected second quarter earnings helped by solid top-line growth and productivity. Adjusted EPS = $0.48; Street estimated = $0.46 Revenue = $2.8 billion; Street estimated = $2.61 billion Net revenues from the Payments business unit, which includes online payment service PayPal, and short-term credit service Bill Me Later, grew 31 percent to $1.07 billion from the year-ago quarter. PayPal ended the quarter with 100.3 million active registered accounts, a 15 percent increase over last year. PayPal's net total payment volume (TPV) grew 34 percent to $28.7 billion in the second quarter of 2011. Looking ahead, the company's third quarter outlook is indicated to fall short of current analysts' consensus. Nevertheless, the company has raised its forecast for fiscal year 2011. Q3 Adjusted EPS = $0.46 to $0.47; Street view = $0.48 Q3 Revenue = $2.85 billion to $2.95 billion; Street view = $2.68 billion Full year 2011 new adjusted EPS = $1.97 to $2.00; Street view = $1.96 Full year 2011 new revenue = $11.3 billion to $11.6 billion; Street view = $10.87 billion Previous 2011 EPS forecast = $1.93 to $1.97; Previous 2011 revenue forecast = $10.6 billion to $10.9 billion
Intel Corp. (NASDAQ: INTC)On July 20, Intel posted a modest 2 percent increase in second quarter profit as higher costs and expenses offset a 21 percent growth in revenue and a lower tax rate. However, the company's quarterly earnings came in above analysts' expectations as did its revenue. Intel's results follow those of two technology giants - International Business Machines Corp. (IBM) and Apple Inc. (AAPL) - that reported strong results earlier this week. Adjusted EPS = $0.59; Street estimated = $0.51 Revenue = $13.03 billion, Adjusted revenue = $13.11 billion; Street estimated = $12.82 billion "Strong corporate demand for our most advanced technology, the surge of mobile devices and Internet traffic fueling data center growth, and the rapid rise of computing in emerging markets drove record results," said Paul Otellini, Intel president and CEO. Looking forward, the company guided third quarter revenue and increased its 2011 capital spending outlook. Q3 revenue forecast = $14 billion, plus or minus $500 million Q3 adjusted revenue forecast = $14.1 billion, plus or minus $500 million; Street view = $13.48 billion. New 2011 capital spending outlook = $10.5 billion, plus or minus $400 million. Previous 2011 capital spending outlook = $10.2 billion, plus or minus $400 million. "Intel's 23 percent revenue growth in the first half and our increasing confidence in the second half of 2011 position us to grow annual revenue in the mid-20 percent range," said Otellini.
Qualcomm Inc. (NASDAQ: QCOM)On July 20, Qualcomm posted a 35 percent surge in third quarter earnings on robust demand for its chips that are used in smart phones and data-centric devices. The company's quarterly earnings topped Street estimates, as did revenue. Adjusted EPS = $0.73; Street estimated = $0.71 Revenue = $3.62 billion; Street estimated = $3.59 billion The company has reiterated a cash dividend of $0.215 per share payable September 23, to stockholders as of August 26. Looking ahead to the fourth quarter, Qualcomm expects adjusted earnings of $0.75 to $0.80 per share and revenue of $3.86 billion to $4.16 billion, while Street predicts profit of $0.76 per share on revenue of $3.93 billion. The company expects fourth-quarter wireless chip (Mobile Station Modem) shipments of 120 million to 125 million units. For the full year, Qualcomm raised its adjusted earnings guidance to range of $3.15 to $3.20 per share from previous forecast of $3.05 to $3.13 per share. The company also increased its revenue outlook to range of $14.7 billion to $15.0 billion from previous range of $14.1 billion to $14.7 billion. Street analysts predict profit of $3.15 per share on revenues of $14.73 billion for the full year.
BlackRock Inc. (NYSE: BLK)On July 20, BlackRock posted a 43 percent surge in second quarter earnings helped by its investment performance and asset mix. Assets under management grew 16 percent to $3.66 trillion. On an adjusted basis, earnings exceeded market expectations. Adjusted EPS = $3; Street estimated = $2.90 Revenue = $2.35 billion; Street estimated = $2.34 billion "Our second quarter results all attest to the strength of BlackRock's business model and our unique franchise. Growth was driven largely by investment performance and asset mix, and is evidence that we are leveraging the full breadth of our alpha, beta and risk management capabilities to serve our clients," said Laurence Fink, chairman and CEO of the company.
Advanced Micro Devices Inc. (NYSE: AMD)On July 21, chip maker AMD posted a decline in second quarter adjusted earnings but came in above Street expectations by a penny. The company also guided third quarter revenue growth and projects to ship the new Bulldozer core for servers in the third quarter. Adjusted EPS = $0.09; Street estimated = $0.08 Revenue = $1.57 billion; Street estimated = $1.58 billion For the third quarter of 2011, AMD anticipates revenue to increase 10 percent, plus or minus 2 percent, sequentially. The company also said it expects to ship the new Bulldozer core for servers in the third quarter, which it believes would strengthen its competitive position in servers. The company also told investors that finding a CEO is a top priority and that it had interviewed several high-quality candidates, but would not be rushed. AMD has been under the temporary stewardship of Tom Seifert since its board ousted Dirk Meyer more than half a year ago, after they disagreed over the chipmaker's strategy to establish a footprint in a booming market for mobile devices, according to Reuters.
Nokia Corp. (NYSE: NOK)On July 21, Finnish mobile company Nokia fell to a second quarter loss as it faces tough competition from Apple and Google's Android-powered smartphones, and recorded a restructuring charge. Nokia, which was once the mobile phone giant, has struggled to gain ground in the market over the last few years, largely due to intense competitive pressure from Apple (AAPL), Research in Motion (RIMM), Motorola Mobility (MMI) and Samsung in the smartphone segment. Adjusted EPS = $0.06; Street estimated = $0.03 Revenue = $13.16 billion; Street estimated = $13.04 billion The company shipped 88.5 million phones, down 20 percent from 111 million shipped last year. Smartphone volumes slipped 34 percent to 16.77 million units. On the other hand, Apple sold 20.3 million iPhones in the quarter. The company posted lower sales in all geographies barring Middle-East and Africa, and Latin America. Sales in North America slipped 5 percent to 467 million euros, Europe fell 15 percent to 2.87 billion euros, China decreased 24 percent to 1.32 billion euros and Asia-Pacific fell 4 percent to 2.06 billion euros. On the positive side, sales from Nokia Siemens network rose 20 percent to 3.64 billion euros. Looking ahead, Nokia expects to exceed its previous cost-cutting target of 1 billion euros for the full year 2013. It also expects its net cash and other liquid assets at the end of 2011 to be above the second quarter balance of 3.9 billion euros. Meanwhile, Nokia Siemens Networks net sales are expected to be between 3.2 billion euros and 3.5 billion euros in the third quarter 2011. The division's net sales have been projected to grow faster than the market in 2011.
AT&T Inc. (NYSE: T)On July 21, telecommunications giant AT&T posted a 10.3 percent decline in second quarter earnings, despite record sales of smartphones and strong wireless revenue growth. EPS = $0.60; Street estimated = $0.60 Revenue = $31.5 billion; Street estimated = $31.33 billion "We delivered another strong quarter capping a solid first half of the year. Mobile broadband growth continues to be robust, and we are seeing encouraging signs in wireline revenues. This adds to our confidence as we look ahead," Chairman and CEO Randall Stephenson said in a statement. AT&T posted a net gain in total wireless subscribers of 1.1 million in the quarter, to reach 98.6 million subscribers in service, with gains in every customer category including 331,000 postpaid net additions. The company added 545,000 of branded computing subscribers to reach 4.0 million, twice as many as a year ago. Most of those new subscribers were tablets with 377,000 added in the quarter. The company sold more than 5.6 million smartphones in the quarter, with 3.6 million iPhone activations. The company added that nearly 70 percent of total postpaid sales were smartphones. Smartphone sales also increased more than 43 percent year-over-year. Meanwhile, sales of Android and other smartphones doubled year-over-year. Looking ahead into the fiscal 2011, AT&T now expects capital expenditures in the $20 billion range, led by increased wireless demand. This is higher than the previously projected capital expenditures in the low-to-mid $19 billion range.
Eli Lilly & Co. (NYSE: LLY)On July 21, Eli Lilly posted a 4 percent decline in second quarter adjusted earnings due to significant restructuring charges, loss of U.S. patent exclusivity for chemotherapy drug Gemzar as well as U.S. healthcare reform. Adjusted EPS = $1.18; Street estimated = $1.17 Revenue = $6.25 billion; Street estimated = $5.99 billion "Our financial results reflect the solid performance of many of our marketed products, as well as important investments we are making to expand our commercial opportunities and deliver the next wave of potential new medicines to patients," Lilly's Chairman, President and Chief Executive Officer John Lechleiter said in a statement. Looking ahead to fiscal 2011, the company raised its adjusted earnings guidance to range of $4.25 to $4.35 per share from previous forecast of $4.15 to $4.30 per share, while Street predicts $4.28 per share. Also, Lilly now expects 2011 total revenue to grow in the mid-single digits, an increase from the prior guidance of low-single digit growth. The company still anticipates that the impact of U.S. health care reform will lower 2011 revenue by $400 million to $500 million. The forecast assumes rapid and severe erosion of Zyprexa sales after patent expiration in major markets, and the continued severe erosion of U.S. Gemzar sales.
Microsoft Corp. (NASDAQ: MSFT)On July 21, Microsoft posted a 30 percent surge in fourth quarter earnings helped by strong sales of its servers, Office 2010 and Xbox 360 video game consoles. The company's quarterly earnings per share also came in above analysts' expectations as did its quarterly revenue. However, revenue for the company's windows and windows live division fell for the third straight quarter, reflecting weak PC trend. EPS = $0.69; Street estimated = $0.58 Revenue = $17.37 billion; Street estimated = $17.25 billion "Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion," said Peter Klein, chief financial officer at Microsoft. "Our platform and cloud investments position us for long-term growth." Microsoft reaffirmed its fiscal 2012 operating expense guidance of 3 percent to 5 percent growth from 2011, or $28.0 billion to $28.6 billion. The company stopped making specific profit or revenue forecasts from January 2009, citing market volatility. "We continue to see strong business demand across all of our products, from small businesses all the way up to the largest global enterprises," said Kevin Turner, chief operating officer at Microsoft. "Our move to cloud services continues with the release and momentum of Office 365 and growth in Windows Azure. We’re providing our customers seamless and powerful ways to move to the cloud, and we are well positioned for the coming year."
Morgan Stanley (NYSE: MS)On July 21, Morgan Stanley posted a $558 million loss for the second quarter, after taking a hefty $1.7 billion charge in connection with the conversion of preferred stock held by Japanese bank Mitsubishi UFJ (MTU) to common stock. Revenues for the quarter rose from last year and surpassed consensus estimate. Loss per share = $0.38; Street estimated loss = $0.62 Revenue = $9.28 billion; Street estimated = $8.04 billion Morgan Stanley's assets under management at June 30 of $296 billion increased from $244 billion a year ago, reflecting market appreciation and net customer inflows. Mitsubishi UFJ provided Morgan Stanley a lifeline back in the 2008 financial crisis and took a sizable stake in preferred shares. In June, Mitsubishi exchanged all the convertible preferred stock for 385 million shares of Morgan Stanley common stock, which gave the Japanese company a considerable stake in the bank. "While global markets remained challenging this quarter, the Firm delivered higher year-over-year revenues across our three major business segments. The stock conversion with Mitsubishi UFJ removes a significant yearly dividend payment and boosting the Firm's Tier 1 common ratio to an industry-leading level," said James Gorman, president and chief executive officer of Morgan Stanley.
Pepsico Inc. (NYSE: PEP)On July 21, soft drinks and snacks maker PepsiCo posted a 10 percent growth in its second quarter earnings that met Street expectations. Earnings were driven by top-line gains across its worldwide snacks and beverage businesses and from the recent acquisition of Wimm-Bill-Dann, a Russian drinks company. Core EPS = $1.21; Street estimated = $1.21 Revenue = $16.83 billion; Street estimated = $16.41 billion "While we are satisfied with the performance of our portfolio overall, the consumer in developed markets continues to be stressed, and the competitive environment in North America beverages has been particularly challenging. We are therefore implementing previously announced incremental pricing actions in the third quarter to more fully cover input costs while continuing to support our brand-building initiatives. We remain confident in our ability to continue to profitably grow our overall business, even in this uncertain economic environment," PepsiCo Chairman and CEO Indra Nooyi said in a statement. Looking ahead into the fiscal 2011, PepsiCo now targets high-single-digit core earnings per share growth, including an estimated foreign exchange translation gain of about 2 percentage points, from its fiscal 2010 core earnings per share of $4.13. The previous guidance called for 7 to 8 percent core constant currency earnings per share growth and an estimated 1 to 2 percentage point benefit from foreign exchange. "The revised guidance reflects higher uncertainty on macroeconomic and consumer trends for 2011 and anticipates high global commodity cost inflation and ongoing support of strategic initiatives in emerging markets and of its brand-building activities," the company said. The company expects to benefit from synergies from the bottler acquisitions and the acquisition of WBD. In addition, the company expects higher net interest expense when compared to last year and a core tax rate of about 27 percent. The company anticipates share repurchases of about $2.5 billion in 2011.
Caterpillar Inc. (NYSE: CAT)On July 22, construction and mining equipment manufacturer Caterpillar posted lower-than-expected second quarter earnings as sales were hurt by the events in Japan. Adjusted EPS = $1.72; Street estimated = $1.79 Revenue = $14.23 billion; Street estimated = $13.52 billion "Customer demand around the world continues to improve, and our sales and revenues reached an all-time record in the second quarter," Caterpillar Chairman and Chief Executive Officer Doug Oberhelman said in a statement. The company added more than 27,000 people to its global workforce since the beginning of 2010 and expects to continue hiring in 2011. Looking ahead into fiscal 2011, Caterpillar raised its earnings to a range of $6.75 to $7.25 per share from previous forecast of $6.25 to $6.75 per share. The company also lifted its sales outlook to range of $54 billion to $56 billion from previous range of $52 billion to $54 billion. The guidance exclude the impact of the acquisition of Bucyrus. Street analysts predict profit of $6.96 per share on revenue of $55.72 billion. The company said earnings, including Bucyrus, is expected to be $6.25 to $6.75 per share range and revenue, including Bucyrus, is projected in the range of $56 billion to $58 billion. The company said continued moderate economic expansion in the U.S. and stronger growth in the developing world is driving higher sales.
General Electric Co. (NYSE: GE)On July 22, GE posted a 22 percent surge in second quarter earnings helped by strong results from GE Capital, even though revenue were impacted by sharp decline in NBCU revenues following stake sale. The company said it is optimistic about growth prospects in the second half and beyond. Adjusted EPS = $0.34; Street estimated = $0.32 Revenue = $35.63 billion; Street estimated = $34.72 billion "With our fifth-consecutive quarter of double-digit earnings growth, we continue to execute in a volatile environment. We posted solid overall operating earnings growth of 18 percent, with strong contributions from GE Capital, Healthcare, Transportation, Aviation, and Oil & Gas," GE Chairman and CEO Jeff Immelt said. Looking ahead, Immelt said, "We are very encouraged by second-quarter orders and earnings momentum across the company." The company said industrial earnings should improve in the second half of 2011 and the cycle is expected to accelerate in 2012.
Honeywell International Inc. (NYSE: HON)On July 22, Honeywell posted a 43 percent surge in second quarter earnings helped by strong sales growth in all its segments. Revenue increased 15 percent helped by its extensive innovation pipeline and increasing presence in high growth regions. EPS = $1.02; Street estimated = $0.98 Revenue = $9.09 billion; Street estimated = $9.27 billion "Honeywell's strong second quarter performance reflects terrific execution and continued momentum in our key end markets, contributing to our upside performance in the first half of 2011," Honeywell's Chairman and CEO Dave Cote said in a statement. Looking ahead into the fiscal 2011, Honeywell increased its earnings guidance to range of $3.85 to $4.00 per share from previous forecast of $3.80 to $3.95 per share. The company now expects 2011 sales of $36.1 billion to $36.7 billion, an increase of 12 percent to 14 percent over 2010, excluding CPG sales. Street predicts profit of $3.97 per share on revenue of $36.83 billion. Honeywell also said it has received all necessary regulatory approvals for the previously announced sale of CPG, which is expected to close in the third quarter. "Favorable global macro trends like safety, security, energy, and globalization combined with our continued investments in new technologies, high growth regions, and our process initiatives will enable the company to continue to grow and outperform now and over the long-term," Cote said.
Verizon Communications Inc. (NYSE: VZ)On July 22, Verizon posted a second quarter profit helped by increased smartphone penetration and subscriber additions. The company also named President and Chief Operating Officer Lowell McAdam as its new chief executive officer, succeeding Ivan Seidenberg, with effect from August 1. EPS = $0.57; Street estimated = $0.55 Revenue = $27.54 billion; Street estimated = $27.43 billion Verizon wireless recorded 2.21 million net additions in the quarter, 36 percent higher than last year, resulting in total connections of 106.29 million. The company won 1.26 million wireless retail postpaid customers in the quarter, almost double from last year's 661,000 customers. The segment's revenue growth was driven by increased smartphone penetration and increased retail postpaid average monthly service revenue per user or ARPU. Verizon started selling Apple's iPhone 4 in February, ending years long exclusivity of rival AT&T Inc. (T). The company also continued to roll out its 4G LTE mobile broadband network during the quarter. At the end of the second quarter, smartphones were 36 percent of Verizon Wireless' retail postpaid customer phone base, up from 21 percent at the end of the year-ago period. In Verizon's wireline business, net FiOS Internet additions grew 22.4 percent and net FiOS TV additions rose 24.7 percent, resulting in a 34.3 percent increase in net FiOS Digital connections. Looking ahead, Verizon continues to expect 2011 capital spending to be similar to its 2010 investment of $16.5 billion.
The earnings season is when a large number of publicly traded companies release their quarterly earnings reports. The earnings season is so far topping Street views at a pace above typical quarters.
The unofficial kickoff to the earnings season is the release of results by Alcoa (NYSE: AA), which is a major aluminum producer and Dow Jones Industrial Average component, as it is one of the first major companies to release earnings after the end of each quarter.
There is no official end to the earnings season, but it is considered to be over when most major companies have released their quarterly earnings reports, which generally occurs about six weeks after the start of the season.
The season is a very active time in the market as participants (analysts, traders and investors) review the earnings reports, which may affect their positions on or in a company.
There is extensive media coverage of the major earnings releases from a general recap of the earnings to reporting on whether the companies missed, met or beat analyst expectations.
The major companies that reported results during the past two weeks are: Alcoa Inc. (NYSE: AA), Google Inc. (NASDAQ: GOOG), JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C), International Business Machines Corp. (NYSE: IBM), Halliburton Co. (NYSE: HAL), Apple Inc. (NASDAQ: AAPL), Bank of America Corp. (NYSE: BAC), The Coca Cola Co. (NYSE: KO), The Goldman Sachs Group Inc. (NYSE: GS), Johnson & Johnson (NYSE: JNJ), Yahoo! Inc. (NASDAQ: YHOO), Abbott Laboratories (NYSE: ABT), American Express Co. (NYSE: AXP), eBay Inc. (NASDAQ: EBAY), Intel Corp. (NASDAQ: INTC), Qualcomm Inc. (NASDAQ: QCOM), BlackRock Inc. (NYSE: BLK), Advanced Micro Devices Inc. (NYSE: AMD), Nokia Corp. (NYSE: NOK), AT&T Inc. (NYSE: T), Eli Lilly & Co. (NYSE: LLY), Microsoft Corp. (NASDAQ: MSFT), Morgan Stanley (NYSE: MS), PepsiCo Inc. (NYSE: PEP), Caterpillar Inc. (NYSE: CAT), General Electric Co. (NYSE: GE), Honeywell International Inc. (NYSE: HON), McDonald's Corp. (MCD), and Verizon Communications Inc. (NYSE: VZ).
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