November 23rd, 2009

HP reports Q4; raises outlook for 2010

Posted by Sam Diaz @ 1:31 pm

Categories: Earnings, Hewlett-Packard

Tags:

Hewlett Packard today reported its fourth-quarter earnings that were in-line with a preliminary release last week, when the company announced plans to acquire 3Com. For the quarter, the company reported earnings of $1.14 per share on $30.8 billion in sales. Analysts had been expecting of $1.13 per share on $30.4 billion. (Statement)

For the full year 2009, the company reported earnings of $3.85 per share on sales of $114.6 billion.

Looking ahead, the company forecast earnings of $1.03 to $1.05 per share on sales of $29.6 billion to $29.9 billion for the first quarter - which would include the holiday season. For the full year 2010, the company raised its projection to $118 billion to $119 billion, up from $117 billion to $118 billion and also upped its earnings projection to $3.65 to $3.75 per share, up from $3.60 to $3.70. The projections do not reflect any impact from the 3Com acquisition, the company said.

Among the highlights of the quarter was the eight percent jump in revenue, to $8.9 billion, in Services, which has been a darling of the company as its integrated EDS.

On a call with analysts, Hurd said the integration of EDS, which he called an “enormous asset,” has gone well and that the company is just starting to leverage it to position HP in not only services offerings but through hardware and software, as well. In a statement, HP Chairman and CEO Mark Hurd said:

HP’s solid performance in Services drove record profit, and the accelerated pace in signings creates strong momentum going into 2010. Our operational execution and improving cost structure generated strong quarterly and year-end results. We expect to outperform the market due to our significant scale, broad portfolio and market-leading position.

In contrast, the imaging and printing group saw a revenue decline of 15 percent, down to $6.5 billion. Supplies - aka ink - revenue was down 8 percent. Printer unit shipments were down 20 percent, with commercial units down 38 percent and consumer units down 14 percent.

Also see: HP’s printing business: Will ink spending be questioned in the long run?

Hurd said the group is positioning itself for recovery with strategic moves, including controlling costs and inventory levels, as well as corporate partnerships and web-connected printers. He said the company sees mergers and acquisitions as a way of quickly entering adjacent businesses that work well with HP’s strategies. He touted the 3Com deal as one that will advance HP’s offerings in security and networking, enabling it to “deliver the next generation of data centers.”

Finally, Hurd said the company is positioned stronger than when it entered the economic downturn. The economy remains challenging, Hurd said, but that there are “encouraging signs of recovery” that are starting to emerge in certain markets.

Shares of HP were up about 2 percent in regular trading, closing at $51.02. In after hours trading, shares saw a slight decline.

November 20th, 2009

Mozilla: Still too dependent on Google for revenue; Can it diversify?

Posted by Larry Dignan @ 4:49 am

Categories: Browser technology, Earnings, General, Google, Mozilla, Web Technology

Tags: Revenue, Google Inc., Mozilla Firefox, Mozilla Corp., Operational Accounting, Web Browsers, Finance, Internet, Larry Dignan

Mozilla reported its 2008 audited financials and the organization behind the Firefox browser delivered consolidated revenue of $78.6 million, up 5 percent from 2007. And the revenue picture looks even better if you exclude the $7.8 million loss in Mozilla’s investment portfolio. The worry: Google, now a competitor, is still bankrolling Mozilla.

Mitchell Baker, chairman of the Mozilla Foundation, outlined the financial picture on her blog. There’s a lot of good stuff in there.

To wit:

• Mozilla funds 200 people working full or part-time on Mozilla.
• The company has outposts across the globe and Firefox comes in 70 languages.
• Mozilla is launching messaging software.
• And Firefox has 110 million daily users as of November.

The worry for me as a Mozilla fan: The foundation’s financial stability depends on Google. Baker noted that Mozilla is diversifying its revenue base somewhat, but not enough in my view. She notes on her blog the majority of Mozilla’s revenue “is generated from the search functionality in Mozilla Firefox from organizations such as Google, Yahoo, Amazon, eBay, and others.”

A trip to the actual audited PDF of Mozilla’s financial results and a note on “concentrations of risk” reveals:

Mozilla has a contract with a search engine provider for royalties which expires in November 2011. The contract was recently amended and extended to November 2011. Approximately 91% and 94% of Mozilla’s revenue for 2008 and 2007, respectively, was derived from this contract. The receivable from this search engine provider represented 80% and 86% of the December 31, 2008 and 207 outstanding receivables, respectively.

Obviously that search provider is Google. Simply put, Mozilla needs to diversify that revenue base from Google, which funds the foundation, but is increasingly a competitor. Having a rival fund your operations isn’t comfortable for any organization. Mozilla’s current situation is like Oracle accounting for the bulk SAP’s revenue. Or Microsoft providing most of Red Hat’s revenue. Or MySpace accounting for the majority of Facebook revenue. You get the idea.

Baker notes in her blog:

The past few years have seen an explosion of innovation and competition in web browsers, demonstrating their critical importance to the Internet experience and marking the success of our mission. In 2008 not only did Microsoft and Apple continue developing their web browsing products, but Google announced and released a web browser of its own. Competition, while uncomfortable, has benefited Mozilla, pushing us to work harder. Mozilla and Firefox continue to prosper, and to reflect our core values. We expect these competitive trends to continue, benefiting the entire Web.

Can Mozilla realistically diversify its revenue base away from Google? That’s unclear on many fronts. Google has the dominant market share in search. Yahoo is a non-factor. And Microsoft has the Bing search engine, but isn’t likely to support Firefox, a browser that competes (and often wins) against the software giant’s Internet Explorer.

Given that landscape Mozilla needs to get creative about that lucrative search box. Of Mozilla’s revenue generating partners only Amazon and eBay have the heft to really help diversify the foundation away from Google. Instead of a search box, perhaps Firefox needs a commerce box that would allow eBay and Amazon to pick up some of the revenue slack.

How do you think Mozilla can diversify away from Google?

November 20th, 2009

Michael Dell sticks to Windows 7 big bang theory

Posted by Larry Dignan @ 4:30 am

Categories: Dell, Earnings, Economy

Tags: Revenue, Dell Computer Corp., Theory, PC, Microsoft Windows 7, Microsoft Windows, Desktops, Operational Accounting, Operating Systems, Software

Dell chief Michael Dell is projecting a Windows 7 upgrade cycle that could put PC growth “well into the teens.” What’s unclear is whether Dell will be able to grab a bigger share of the revenue pie or be outmaneuvered by rivals like HP and Acer.

Following the company’s disappointing quarter, Dell executives said the timing of the Windows 7 launch hurt revenue and earnings. That’s why Dell’s third quarter results fell short of expectations.

On a conference call, Dell executives sounded upbeat about the fourth quarter and the fiscal year to come.

When asked about the potential for a PC replacement cycle that would be above the 10 percent growth rate usually expected, Michael Dell said:
Read the rest of this entry »

November 19th, 2009

Intuit grows revenue for Q1, continues push into "connected services"

Posted by Sam Diaz @ 1:52 pm

Categories: Earnings, Intuit

Tags: Revenue, Intuit Inc., Operational Accounting, Corporate Governance, Tools & Techniques, Personal Finance, Finance, Business Operations, Corporate Law, Management

Updated

Intuit, the maker of TurboTax and Quicken software, beat Wall Street’s estimates for its first quarter, reporting a 2 percent growth in revenue for the period. The company reported a net loss of $32 million, or 10 cents per share, on revenue of $493 million, which is a 2 percent increase from the year-ago quarter. Wall Street had been expecting a net loss of 16 cents per share on revenue of $487.7 million. (Statement)

The company reported 11 cents worth of charges in the quarter. Adjusted for that, it reported a loss of $68 million, or 21 cents per share.

The company highlighted strong customer growth across core businesses and the repurchasing of $300 million shares of stock during the quarter, as well as as a board approval of a new repurchase program if $600 million. It ended the quarter with more then $1 billion cash and investment.

During the quarter, it also acquired Mint.com and reaffirmed its full-year 2010 guidance inclusive of the transaction. In a statement, Intuit president and CEO Brad Smith said:

Intuit’s solid revenue and operating results give us a good start to the fiscal year, with our most important quarters ahead of us… We continue to see growth in our core businesses and are making progress in building out adjacent businesses. At the same time, we are accelerating our transition to a connected services company, with the recent acquisitions of online payroll provider PayCycle and the fast-growing online personal finance service Mint.com. We’ll also continue to invest in our products and in innovations that position us well for future growth.

Intuit has been pushing the adjacent segments and emerging technologies that moves it closer to the connected services company it wants to be, by leveraging strengths, such as being a brand name that’s trusted with details of our finances, and moving strategically and cautiously into the cloud.

Last month, the company enhanced its Quickbooks accounting software by unveiling an app store and opening its API so developers can help companies free their financial data into custom apps. What was interesting about that was the hybrid approach - a button embedded into the desktop software that takes users to an apps marketplace in the cloud.

Earlier this month, the company launched Customer manager, a new online and mobile app software that brings CRM tools to Quickbooks, largely targeted at the small business market.

Looking forward, guidance for the second quarter is non-GAAP EPS of 29-32 cents on revenue of $800 million to $835 million, representing growth of 1-6 percent.

Shares of Intuit were down slightly in regular trading, closing at $30.27. Shares dipped slightly - about 1.5 percent - in after hours trading.

Correction: An earlier version of this post inadvertently contained results based on the adjusted GAAP basis, instead of non-GAAP, and said the company missed Wall Street estimates when it actually beat. I extend my apologies for any confusion.

November 19th, 2009

Dell's third quarter disappoints yet it sees IT demand improving

Posted by Larry Dignan @ 1:17 pm

Categories: Dell, Earnings, Economy, General

Tags: Dell Computer Corp., Information Technology, Financial Accounting, Finance, Larry Dignan

Dell’s fiscal third quarter financials fell well short of estimates across the board.

The company on Thursday reported third quarter net income of $337 million, or 17 cents a share. That tally is down 54 percent from a year ago. Wall Street was expecting earnings of 28 cents a share. Dell’s earnings included pre-tax expenses and other moving parts that knocked 6 cents a share off of the earnings sum. But even excluding those items, Dell fell short.

Revenue wasn’t much better relative to expectations. Dell reported revenue of $12.9 billion, down 15 percent from the $15.16 billion in the third quarter a year ago. Wall Street estimates: $13.18 billion.

Meanwhile, Dell’s gross margins fell short of targets too. Dell reported gross margin of 17.3 percent in its fiscal third quarter compared to Wall Street estimates calling for 18.19 percent.

Simply put, Dell is either taking hits in the PC market or analysts got way ahead of themselves predicting a rebound. In a presentation, Dell did note that pricing has been aggressive (statement).

On a conference call, Dell CFO Brian Gladden said:

Our third quarter reported revenue was adversely affected by the timing of the Windows 7 launch and our SMB and consumer businesses where we did build more backlog than normal due to the later quarter order dynamics. We expect our backlog to return to more normal levels in the fourth quarter.

For its part, Dell did say that things were improving sequentially. Shipments were flat sequentially and down 5 percent from a year ago.

Here’s Dell’s view of the PC market:

Read the rest of this entry »

November 11th, 2009

HP announces $2.7 billion acquisition of 3Com; raises outlook

Posted by Sam Diaz @ 1:36 pm

Categories: Earnings, General, Hewlett-Packard

Tags: Revenue, Acquisition, Data Center, Hewlett-Packard Co., Network, 3Com Corp., Data Centers, Networking, Operational Accounting, Storage

Hewlett Packard said today that it will acquire networking company 3Com for $2.7 billion. or $7.90 per share, a move that attempts to even the playing field with networking company Cisco, which rocked the industry earlier this year with plans to broaden its data center offerings. (Statement, Techmeme) In a statement, Dave Donatelli, HP’s executive vice president and general manager of Enterprise Servers and Networking, said:

Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor. By acquiring 3Com, we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry. By combining HP ProCurve offerings with 3Com’s extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center.

The boards of directors of both companies have already approved the deal, leaving it subject to approval by shareholders and regulators. The companies said they expect the deal to close in the first half of 2010.

Also see: Cisco vs. HP: 3Com acquisition ups the ante

In a call with analysts, Donatelli presented reasons that 3Com and HP is a good fit for a changing industry and said that today’s news would be remembered as the day that the networking industry is being “completely transformed.” He said it was important to note that both companies are entering this deal with “great momentum.” 3Com, for example, already had 30 percent share in networking in China.

HP was pretty straight-forward about its reasons for the acquisition. It made this deal to grow and change what’s occuring in the market today. Donatelli said the deal is part of the company’s bigger Converged Infrastructure strategy, a push that brings networking, PCs, servers, storage into the mix. When the deal is complete, the combined company would be ready “from Day One” to launch its new portfolio of offerings.

Also see: HP’s Hurd: Cloud computing has its limits (especially when you face 1,000 attacks a day)

Separately, HP also released preliminary fourth quarter results, with earnings coming in at $1.14, beating Wall Street’s estimates of $1.12. Revenue was $30.8 billion, down 8 percent from a year ago but up 12 percent sequentially. Wall Street had been expecting revenue of $29.8 billion, according to Thomson Reuters. In a statement, Chairman and CEO Mark Hurd said:

Solid execution drove exceptional performance for HP this quarter, fueled by significant growth in China, We are delivering on our strategy and are well positioned going into 2010.

The company also raised its earnings and revenue guidance for the fourth quarter and fiscal year. For thej first quarter of fiscal 2010, it expects earnings of $1.03 to $1.05 on sales of $29.6 billion to $29.9 billion. Full year revenue is now expected to come in between $118 billion and $119 billion, up from the previous estimate of $117 billion to $118 billion. Full year earnings per share is expected to be in the range of $4.25 to $4.35, up from its previous estimate of $4.20 to $4.30.

November 4th, 2009

Cisco's beats for Q1; bullish on investments and recovery

Posted by Sam Diaz @ 1:33 pm

Categories: Cisco, Earnings

Tags: Recovery, Investment, Cisco Systems Inc., Sam Diaz

Cisco, which went on quite a buying spree last month, beat Wall Street’s expectations for its fiscal first quarter and said that its investments are showing signs of paying off now that the economy is starting to show signs of recovery.

For its first quarter, which ended October 24, the company reported adjusted net income of $2.1 billion, or 36 cents per share, a 14 percent dip from a year ago, on sales of $9 billion, which was down 13 percent from a year ago. Analysts had been expecting adjusted earnings of 31 cents per share on sales of $8.7 billion. (Statement)

In a call with analysts today, CEO John Chambers said that, from a financial perspective, the quarter was very strong, compared to its expectations and given the challenges that remain in the global economy. He said that almost off of the company’s internal financial measurements exceeded or came in at the high end of the company’s expectations.

But he also warned that analysts should not get ahead of themselves to use the positives of the first quarter to make assumptions about the full year but instead to wait and see how the second quarter, which is expected to be strong, actually plays out. For the second quarter, the company forecast revenue to grow one percent to four percent over the previous year, or sequentially by two to five percent. Chambers was careful to not declare an economic recovery but instead said that the signs of recovery are getting stronger.

Despite the declines from 2008, the company was bullish on the future, specifically on the work they’ve done to transform the Cisco beyond a networking company and position itself to be competitive with other technology bellweathers as the economy starts to recover. In a statement, CEO John Chambers said:

We believe that key market transitions across collaboration, virtualization and video will drive productivity and growth in network loads for the next decade, and are evolving even faster than expected. Our ability to launch four proposed acquisitions, the ecosystem-shifting coalition with EMC/VMware, and five new products and industry solutions into the Cisco pipeline in the past few months alone underscore this momentum. Our build — buy — partner innovation engine is clearly running on all cylinders, while our operational machine is pulling costs out of the business even as we scale new models for growth. Execution and results over time will demonstrate the long-term impact of this vision and strategy — but a new model of productivity based on collaboration is clearly emerging and we believe this may be the most profound opportunity for businesses in our 25 years as a company.”

As the economy remained uncertain for most of 2009, Cisco spent the year transforming itself, starting with the announcement of its Unified Computing System in March. More recently, the company made three acquisiton announcements in the month of October - $3 billion for Tandberg, a video conferencing equipment maker, $2.9 billion for Starent, a provider of mobile Internet Protocol gear, and $183 million for ScanSafe, an Internet security company.

Earlier in the year, Cisco bought Pure Digital, which makes the popular Flip Video camera, for $590 million and picked up Tidal Software, which makes application management and automation software, for $105 million.

Shares of Cisco were up slightly in regular trading, closing at $23.29. Shares were on the upswing in after-hours trading, up more than 5 percent.

October 30th, 2009

McAfee vs. Symantec: Dueling in consumer and enterprise

Posted by Larry Dignan @ 3:00 am

Categories: Earnings, Economy, General, Security, Symantec

Tags: McAfee Inc., Revenue, Symantec Corp., Security, Larry Dignan

The most recent quarterly reports from McAfee and Symantec highlight some trench warfare in both the enterprise and consumer markets.

Both companies reported solid quarters, but Symantec was the one that really knocked the cover off the ball. Symantec reported fiscal second quarter net income of $150 million, or 18 cents a share, on revenue of $1.47 billion. Non-GAAP earnings were 36 cents a share, three cents ahead of Wall Street estimates.

But what was curious is the reason behind Symantec’s surge. Sure, CEO Enrique Salem has given Symantec more focus, but the quarter got a lift from small and mid-sized businesses and consumers. The consumer business coupled with improving enterprise trends enabled Symantec to maintain its outlook for the next quarter.

Salem said on a conference call:

We started to see initial signs of progress in SMB security as we renewed our relationships with channel partners given the launch of our new security products. We also saw strength in the consumer segment as our business continues to benefit from our market-leading products…The strength of our Consumer business was driven by strong Norton 360 sales and by our relationships with eight of the top nine OEMs…During the quarter, we won consumer online backup deals with Toshiba and Acer. We now have backup relationships with four of the top five OEMs.

Add it up and Symantec’s consumer business was up 6 percent to $463 million in the second quarter compared to a year ago. All other businesses—security and compliance and storage—were down anywhere from 3 percent to 9 percent.

Enter McAfee. McAfee’s quarter was also solid (statement). The company reported fiscal third quarter earnings of $36.8 million, or 23 cents a share, on revenue of $485.3 million, up 18 percent from a year ago. Non-GAAP earnings were 62 cents a share, two cents better than estimates. Revenue, however, fell short of the $487 million projected by Wall Street.

McAfee also projected fiscal fourth quarter non-GAAP earnings of 61 cents a share to 65 cents a share. Wall Street was looking for 63 cents a share.

Under the hood though, McAfee showed a 25 percent jump in its corporate business. Third quarter corporate revenue checked in at $308 million. On the consumer side of the house, McAfee had revenue of $177 million, up 8 percent from a year ago.

Based on growth rates, it appears Symantec is taking it to McAfee in the consumer market. In the enterprise, McAfee, which is much smaller than Symantec, appears to be gaining some strength from a smaller base.

October 29th, 2009

Motorola delivers profit; Android-powered future awaits

Posted by Larry Dignan @ 5:29 am

Categories: Android, Earnings, Economy, General, Mobile, Motorola

Tags: Mobility, Motorola Inc., Droid, Sales Strategy, Wireless And Mobility, Sales, Larry Dignan

Motorola reported a slight third quarter profit and projected  better-than-expected fourth quarter earnings. But Motorola’s real prospects going forward will depend on how many Android devices it can sell. Sanjay Jha, co-CEO of Motorola, said the company met its commitment to deliver Android devices. Now consumers just have to show up.

In many respects, Motorola’s third quarter is anticlimactic (statement). The results—a profit of $12 million, or a penny a share—reversed a loss from a year ago and topped Wall Street estimates for a break-even quarter. Excluding a charge, Motorola had a profit of 2 cents a share. Revenue for the third quarter was $5.45 billion, down from $7.48 billion a year ago.

Meanwhile, Motorola projected fourth quarter earnings between 7 cents a share to 9 cents a share excluding charges. That outlook was better than the 6 cents a share profit Wall Street expected. The company also named Edward Fitzpatrick, acting CFO, as CFO.

Motorola remains a tale of two companies. A broadband and wireless mobility gear unit and the recovering device division.

But given the Droid launch on Wednesday most of the Motorola focus is on new devices. On a conference call with analysts, Jha described the launch of the Droid and Cliq as the first step in revamping Motorola’s smartphone lineup. “These devices have what is required in a smartphone today,” said Jha, who added that Motorola will continue to closely collaborate with Google and Android developers.

Also see: The Droid assault begins

See full review and hand-on gallery. Plus: All Droid resources

Jha was asked whether Motorola will be prepared to meet demand if Droid is a big hit. Motorola has supply chain and component planning to account for dramatic upside in the company’s base demand scenario, said Jha.

“With our devices we’ll continue to offer differentiated functionality,” said Jha. He said MotoBlur, which integrates social contacts, will be weaved throughout the device lineup. He also added that MotoBlur will be used to solve other consumer problems in the future.

“In 2010 we will launch a variety of new devices,” said Jha. Jha added that Motorola’s financial performance will largely be driven by demand for its smartphones. He wouldn’t be pinned down on the timing of sustainable profits for the device unit and emphasized that Motorola will be focused on evolving the smartphone lineup. “I would be surprised if I don’t break even in one quarter in 2010,” said Jha.

By the numbers:

• Mobile device sales in the third quarter were $1.7 billion, down 46 percent from a year ago. The unit had an operating loss of $183 million.
• Motorola shipped 13.6 million handsets and had a market share of 4.7 percent.
• The home and networks mobility unit had sales of $2 billion, down 15 percent from a year ago. Operating earnings were $199 million, down from $263 million a year ago.
• Enterprise mobility sales were $1.8 billion, down 13 percent from a year ago. Operating earnings were $306 million, down from $403 million a year ago.

October 29th, 2009

Sprint loses money, more subscribers in third quarter

Posted by Larry Dignan @ 5:04 am

Categories: Earnings, Economy, Mobile, Sprint, Sprint Nextel, Wired & Wireless

Tags: Sprint Communications, Operational Accounting, Finance, Larry Dignan

Sprint Nextel continues to lose money and subscribers.

The company said Thursday that it reported a third quarter net loss of $478 million, or 17 cents a share. That tally was 3 cents worse than Wall Street expectations. Revenue was $8 billion, down 9 percent from a year ago.

In addition, Sprint lost 135,000 retail subscribers (statement). However, Sprint said that its year-over-year post paid gross additions were a sign the company was headed in the right direction. Sprint has been saying that for a few quarters, but it’s unclear how long the Wall Street patience will last.

The big question: Is this blip something for Sprint to really get excited about?

As for the outlook, Sprint said it expects that subscriber losses should improve in 2009 from 2008. The company also expects sequential subscriber improvement.

By the numbers:

• Post-paid wireless churn in the third quarter was 2.17 percent compared to 2.15 percent a year ago and 2.05 percent in the second quarter. The uptick was due to “seasonality and heightened competition.”
• Prepaid churn—Sprint owns Boost Mobile—was 6.65 percent, down from 8.16 percent a year ago and 6.38 percent in the second quarter.
• Wireless service revenue in the third quarter was $6.3 billion, down 8 percent from a year ago.
• Sprint generated free cash flow of $664 million.
• The company has $5.9 billion in cash, equivalents and investments.

October 28th, 2009

SAP: Enterprise software market 'difficult'; Emerging markets weak

Posted by Larry Dignan @ 3:46 am

Categories: ERP, Earnings, Economy, General, SAP, Software Infrastructure

Tags: Software, Revenue, Enterprise Software, Emerging Market, SAP AG, Howlett, Operational Accounting, Tools & Techniques, Marketing Research, Financial Services

SAP’s third quarter was a mixed bag. Earnings were a touch better than expectations, but revenue and the outlook disappointed investors. Meanwhile, SAP said the software market showed “signs of stabilization,” but remained difficult.

The third quarter breaks down like this:

• Revenue for the quarter ending Sept. 30 was 2.51 billion Euro down 9 percent from a year ago. Estimate: 2.57 billion Euro.
• Software and software related services revenue were 1.94 billion Euro, down 3 percent.
• Software revenue was 525 million Euro, down 31 percent from a year ago.
• Net income was 435 million Euro, up 12 percent from a year ago. Earnings of 0.37 Euro a share were two cents better than Thomson Reuters expectations.
• Add it up and you have a quarter that was roughly in line with estimates, but the outlook disappointed. Non-GAAP software and software related revenue will fall 6 percent to 8 percent for 2009.

But what caught my eye was the commentary. SAP CFO Werner Brandt noted in a statement:

Read the rest of this entry »

October 26th, 2009

Verizon preps fourth quarter device barrage; Droid will 'stimulate demand'

Posted by Larry Dignan @ 4:50 am

Categories: Earnings, Economy, General, Telecommunications, Verizon

Tags: Revenue, Verizon Communications Inc., Wireless, Wi-Fi, Operational Accounting, Wireless And Mobility, Finance, Larry Dignan

Verizon delivered a solid third quarter courtesy of its wireless business, which added 1.2 million net customers excluding acquisitions. The company also said it is set up for the fourth quarter with the launch of Research in Motion’s Storm 2 on Wednesday, two Motorola Android devices and 12 other handsets.

However, AT&T added customers at a faster pace in the third quarter on the strength of the iPhone. Verizon is hoping to change that equation via a partnership with Google. John Killian, CFO of Verizon, characterized the company’s wireless performance as strong and said there “are plenty of revenue growth opportunities” ahead. It’s clear Verizon is betting big on Android.

“We think our new device lineup will stimulate demand,” said Killian, on a conference call with analysts. Killian said that the Storm 2 will be available Wednesday and the Droid device “will be groundbreaking.”

Verizon on Monday reported third quarter net income of $2.88 billion, or 41 cents a share, on revenue of $27.3 billion, up 10 percent from a year ago. Non-GAAP earnings were 60 cents a share, a penny better than Wall Street estimates (statement, quarterly presentation).

As usual, the quarter was all about the wireless business. By the numbers:

Read the rest of this entry »

October 22nd, 2009

Amazon delivers strong Q3; shares skyrocket after hours

Posted by Sam Diaz @ 1:27 pm

Categories: Amazon, Earnings

Tags: E-reader, Amazon.com Inc., Sales Strategy, Sales Force Management, Sales, Sam Diaz

Amazon easily beat Wall Street’s estimates for its third quarter, reporting a net income of $199 million, or 45 cents per share, on sales of $5.45 billion, a 28 percent jump from the year-ago quarter. Analysts had been expecting earnings of 33 cents on sales of $5.03 billion. (Statement)

Shares of Amazon immediately jumped, up more than 10 percent in after-hours trading. The company, in its release, was bullish on Kindle, the company’s e-reader device. In a statement, CEO Jeff Bezos said:

Kindle has become the #1 bestselling item by both unit sales and dollars – not just in our electronics store but across all product categories on Amazon.com. It’s also the most wished for and the most gifted. We are grateful for and energized by this customer response. Earlier this week we began shipping the latest generation Kindle. Its 3G wireless works in the U.S. and 100 countries, and we’ve just lowered its price to $259.

Still, Amazon - increasingly referred to as the “Wal-Mart of the Web” - is a company in transition. Some of its core physical products - such as books and music - are increasingly moving into a digital world and Amazon continues to adjust. Its Kindle book reader, which has seen price drops, has become synonymous with e-readers, even as competitors surface.

In a call with analysts today, executives used a few key talking points to answer questions about its success, its outlook for Q4 and its competitive landscape - beefed-up inventory, lower prices and great customer service, but not much specific detail beyond that.

In addition, the company was asked what threshold it might have to cross before it starts sharing specific sales numbers on Kindle. The answer, which really wasn’t much of an answer, said that when something gets to a certain size, it makes sense to break out the numbers by countries. And then it was time for the next question. That’s really not much of an answer to the question that analysts - and tech bloggers - have long been asking: How are sales of Kindle doing?

For the current quarter, which includes the holiday season, the company issued guidance of sales between $8.125 billion and $9.125 billion, a growth of 21 percent to 36 percent, compared to the year-ago quarter.

Shares of Amazon were flat for the day, closing at $93.45 in regular trading. In after-hours trading, shares jumped more than 10 percent and were on the rise.

October 22nd, 2009

AT&T cuts churn rate; Activates 3.2 million iPhones; Touts network upgrades

Posted by Larry Dignan @ 4:52 am

Categories: AT&T, Earnings, Economy, General, Mobile, Telecommunications, Wired & Wireless, iPhone

Tags: Apple iPhone, AT&T Corp., Wireless, Wi-Fi, Wireless And Mobility, Larry Dignan

AT&T’s bet on the iPhone continues to work well. The company reported a better-than-expected third quarter, delivered post paid churn of 1.17 percent (a low for AT&T), activated 3.2 million iPhones and boosted data revenue by 33.6 percent.

The telecom giant on Thursday delivered net income of $3.2 billion, or 54 cents  a share, on revenue of $30.9 billion, down from $31.3 billion a year ago. Wall Street was expecting earnings of 50 cents a share. If you’re an AT&T customer you may be more interested in AT&T’s update on its infrastructure improvements. The company added that dropped calls declined by 12 percent.

As usual, AT&T was powered by its wireless unit, which represents 44 percent of total sales. Among the key wireless data points (statement, financial supplement, quarterly overview, presentation):

Read the rest of this entry »

October 22nd, 2009

EMC: Customers have 'more comfort' about IT budgets

Posted by Larry Dignan @ 4:43 am

Categories: EMC, Earnings, Economy, General, Storage

Tags: IT Budget, Joe Tucci, Information Technology, non-GAAP, Earnings, EMC Corp., Non-GAAP Earning, GAAP, Storage, Financial Accounting

EMC CEO Joe Tucci said that customers are “signaling more comfort spending their IT budgets.” The company reported better-than-expected third quarter results.

The storage giant reported third quarter earnings of $298.2 million, or 14 cents a share, on revenue of $3.52 billion, down 5 percent from a year ago. Under a non-GAAP basis, EMC reported earnings of $480.3 million, or 23 cents a share, two cents better than Wall Street estimates.

Generally speaking, EMC has been well positioned in the downturn due to a focus on storage, cloud computing, virtualization and data centers — hot areas in enterprise IT. Tucci added in a statement that the company has expanded its product line while cutting costs.

Also see: VMware posts solid third quarter, tops estimates

As for the outlook, Tucci added that the company was well positioned to hit its 2009 targets. EMC expects fourth quarter revenue of $4 billion and 2009 revenue of $13.9 billion. Net income is expected to be 21 cents a share in the fourth quarter and 55 cents a share for the year.

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October 21st, 2009

eBay 'cautiously optimistic' heading into the holidays, but outlook disappoints

Posted by Larry Dignan @ 1:35 pm

Categories: E-commerce, Earnings, Economy, General, eBay

Tags: eBay Inc., GAAP, Financial Accounting, Operational Accounting, Finance, Larry Dignan

EBay’s third quarter results weren’t too shabby, but the company’s outlook disappointed some on Wall Street. In addition, the company said it was “cautiously optimistic” heading into the holiday season.

The company reported net income of $349.7 million, or 27 cents a share. Non-GAAP earnings were $501.5 million, or 38 cents a share, a penny better than Wall Street estimates. Revenue for the quarter ending Sept. 30 was $2.2 billion, up slightly from a year ago.

However, there were a few disappointing items in eBay’s report. Operating margin fell to 19.8 percent in the quarter, down from 24.7 percent a year ago. The margin decline was largely attributed to eBay’s Bill Me Later unit and a weaker U.S. dollar. Bill Me later had a net charge-off rate of 11.5 percent as bankruptcy and credit write-offs increased.
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October 21st, 2009

VMware posts solid third quarter, tops estimates

Posted by Larry Dignan @ 1:19 pm

Categories: Cloud computing, Datacenter, Earnings, Economy, General, VMware, virtualization

Tags: Revenue, Quarter, VMware Inc., Operational Accounting, Virtualization, Finance, Hardware, Larry Dignan

VMware’s third quarter financial results were better than expected based on maintenance renewals and federal IT spending.

The company reported net income of $38 million, or 9 cents a share, down from $83 million, or 21 cents a share a year ago. Non-GAAP net income of $95 million, or 24 cents a share, flat with a year ago. Wall Street was expecting earnings of 20 cents a share. Revenue for the quarter was $490 million, up 4 percent from a year ago.

By the numbers:

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October 20th, 2009

Earnings flash (memory): SanDisk delivers big quarter

Posted by Larry Dignan @ 2:31 pm

Categories: Earnings, Economy, General, Seagate, Storage

Tags: SanDisk Corp., Memory, Earnings, Flash Memory, Financial Accounting, Finance, Larry Dignan

SanDisk CEO Eli Harari said he was encouraged by “improved industry fundamentals.” And there’s a good reason for that. The company crushed third quarter estimates with a blowout quarter.

The flash memory card maker reported net income of $231 million, or 99 cents a share, on revenue of $935 million, up 14 percent from a year ago. Those results reversed a year ago loss of $166 million, or 74 cents a share. Excluding a bevy of items—acquisition expenses, option compensation and interest expenses related to retiring debt—SanDisk reported earnings of $176 million, or 75 cents a share (statement).

To put all of those moving parts in perspective, Wall Street was expecting earnings of 26 cents a share on $787.9 million. Harari also added that he expects strong pricing and orders to continue into the fourth quarter.

A few odds and ends:

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October 20th, 2009

Yahoo: Major businesses have stabilized; update on Microsoft deal

Posted by Sam Diaz @ 1:35 pm

Categories: Earnings, Yahoo

Tags: Revenue, Brand, Yahoo! Inc., Operational Accounting, Branding, Finance, Marketing, Sam Diaz

Yahoo delivered a bit of a surprise for its third-quarter earnings, beating Wall Street’s expectations handily and offering signs that CEO Carol Bartz is turning the company around.

For the quarter, the company reported net income of $186 million, or 13 cents per share, on revenue of $1.58 billion. Adjusted for expenses, income was $213 million, or 15 cents per share. Analysts had been expecting earnings of 7 cents per share on revenue of $1.12 billion. Revenue was down 12 percent from the year-ago quarter - before Bartz took the reins of a troubled company in need of a rebound - but was flat, compared to the most recent quarter. (Statement, Techmeme)

In a statement, Bartz said:

With revenue coming in above our guidance and flat sequentially, we had a solid third quarter that signals our major businesses have stabilized. With new products like Yahoo! homepage, our brand revitalization campaign and expansion in the Middle East through Maktoob.com, our execution is improving and we’re focused on what we do best - being the center of people’s online lives.

Earlier this year, Bartz said that a comparison of Yahoo to Google was an inappropriate one - and the company has spent much of the past few months playing up the Yahoo experience, from enhancements to the home page and Yahoo Mail to a new brand marketing campaign that highlights the importance of the user and his/her experience. And then there was that long-anticipated search deal with Microsoft.

A call with analysts today was led by CFO Tim Morse, who said that Bartz “came down with something” and asked him to take the call. Plus, he said, the company is hosting an analyst’s day next week and expects to see many of those same folks for a broader conversation about the company.

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October 19th, 2009

Another strong quarter for Apple; credit strong iPhone, Mac sales

Posted by Sam Diaz @ 1:53 pm

Categories: Apple, Earnings, General

Tags: Apple iPhone, Apple Macintosh, Apple iPod, Apple Inc., Sales Strategy, Smart Phones, Digital Music, Digital Media, Sales, Consumer Electronics

updated: Apple said today that Mac computers and iPhones saw strong year-over-year sales jumps in the fourth quarter, allowing the company to once again beat Wall Street’s expectations for the quarter and sending the stock surging in after-hours trading.

Apple today reported fourth quarter earnings of $1.67 billion, or $1.82 per share, on sales of $9.87 billion, up from $7.9 billion in the year ago quarter. Wall Street analysts had been expecting an eps of $1.42 on revenue of $9.2 billion. (Statement, Techmeme)

For the fiscal year, the company reported earnings of $5.7 billion, or $6.29 per share, on sales of 36.5 billion, up from $32.5 billion last year. In a statement Apple CFO Peter Oppenheimer said:

We are delighted with our September quarter and fiscal 2009 results. For the full year, we grew revenue by 12 percent and net income by 18 percent in extraordinarily challenging times.

Looking forward, Oppenheimer said it expects revenue for Q1 2010 to be between $11.3 billion to $11.6 billion and earnings per share of $1.70 to $1.78.

The fourth quarter was a busy one for Apple. Steve Jobs made his first public public appearance since undergoing a liver transplant during a medical leave of absence earlier this year. Jobs hosted a a September event in San Francisco, where he announced a refresh to the iTunes and the iPod line. During the quarter, the company also released Snow Leopard and plans for the iPhone in China were unveiled as China Unicom said it reached a three-year deal to sell the 3G and 3GS in the country. It also faced Washington regulators in the ongoing questions over the Google Voice app for the iPhone/iPod Touch.

Among the highlights from the quarter:

Mac sales: The company shipped 3.05 million Mac computers, up 17 percent from the year ago quarter. In its third quarter reports, IDC and Gartner showed market share gains for Apple in the U.S., up to 9.4 percent, a year-over-year gain of nearly 12 percent.

iPod: The company sold 10.2 million iPods during the quarter, an eight percent unit drop from a year ago. RBC Capital Markets analyst Mike Abramsky has said in an investor’s note that he sees iPods as a shrinking market - despite the addition of one with video recording capabilities - that’s being replaced by interest in the iPhone and other smartphones. Analysts had expected sales of 9.9 million iPods.

iPod Touch: The company doesn’t break out iPod Touch sales but did say that sales were up 100 percent and that the company anticipates greater growth with the new $199 entry-point price tag.

iPhone: The company sold 7.4 million iPhones in the quarter, a seven percent jump over a year ago. During the quarter, China Unicom announced a three-year deal to sell the iPhone in the planet’s most populated country.

Corporate: Google CEO Eric Schmidt resigned from Apple’s Board of Directors on concerns that the competitive landscape between the two companies (notably the Android smartphone vs. iPhone and Mac OS X vs, the forthcoming Chrome OS.)

Accounting: During a call with analysts, executives explained changes in accounting rules that will likely benefit Apple as it allows the revenue from iPhones and Apple TV to be recognized immediately, instead of over a 24-month period. Adopted earlier this year, companies have until this time next year to adopt the new accounting processes. Apple said it believes the new rules will allow a better reflection of its performance - and analysts believe the numbers will increase Apple’s earnings - but is still looking into how it will transition. It does not yet have a set timeframe for the changover and the forecasts for the next quarter reflect the deferred revenue method.

Shares of Apple were up less than one percent in regular trading, closing at $189.86. Shares were surging in after-hours trading, up more than eight percent.