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By David Gibbs

Staples (NASDAQ: SPLS): Earnings beat demonstrates industry out-performance.

Earnings: Q1 profits (excluding items) of $0.28 vs. $0.27 consensus and $0.20 for Q1 last year (see call transcript).

Revenue: Up 4.1% to $6.1 billion.

“People are willing to consider spending and making discretionary purchases,” remarked SPLS’ CFO. “We are continuing to see steady improvement. (But) there’s no rapid recovery. Headcount increase is what drives those business purchases. We are somewhat moderate in terms of our optimism.”

“Our first quarter performance was strong across the board,” added CEO Ron Sargent.

Comment: On top of the 32% increase in profits, SPLS also reported increasing gross margins and upped the low end of FY guidance. The company weathered the downturn more effectively than its smaller competitors by marketing more lower-cost goods and expanding its private label brands, which yield higher margins than comparable products. North American retail sales rose 6% mostly due to currency fluctuations and same-store sales were up 1% as increased customer traffic was partly offset by lower average order size.

Shares are off 17.2% since March 1st and closed roughly flat on Friday despite an initial pop off the better-than-expected earnings report. SPLS’ financial well-being is clearly tied to the strength of American businesses and thus the company is a solid play off of any potential economic recovery.

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Salesforce.com (NYSE: CRM): Shares rise on litigation speculation.

Earnings: Q1 profits of $0.30, meeting analyst expectations (see call transcript).

Revenue: Up 24% to $376.8 million.

CRM is “throwing off a nice bit of cash but (is) putting that back into investing in sales and marketing” of the company, remarked one analyst.

Comment: After dropping more than 5% after-hours following Thursday night’s report, shares rallied during Friday’s trade to finish up 5% plus another 1.5% after-hours. Besides the general market strength that pushed shares up across the board on Friday, investors seemed pleased with CEO Marc Benioff’s bold rebuttal to Microsoft’s (NASDAQ:MSFT) patent infringement claims levied earlier in the week. Benioff referred to MSFT as a “patent troll” and “a former leader of our industry,” and added that the suit “is not material to its day-to-day business.”

Though they came in a bit light on EPS, cash flows are likely a better gauge of CRM’s fiscal health due to the company’s subscription-based business model. CRM is a solid overall company but jumping in now will require a “buyer beware” mentality, as the infringement suit looms despite the flamboyant CEO commentary and the company remains exposed to a weak Euro.

Gamestop (NYSE: GME): Still king of the video game retailers.

Earnings: Q2 profits of $0.48 vs. $0.47 consensus and $0.42 for Q2 last year (see call transcript).

Revenue: Up 5.1% to $2.08 billion.

“We believe our prerelease marketing, exclusive content and the immediate currency provided by our trade-in program will allow us to continue to gain market share as it has for the last few years,” remarked CEO Daniel DeMatteo.

Comment: Gamestop, the foremost retailer of video games by sales, has launched several new initiatives, including a new section of its website and promotions for shoppers preordering new game titles. This should buoy GME’s current stranglehold on new-game sales, as the company already holds 60%-70% share of first-week sales of games.

For the quarter, U.S. video game sales were up 4% but hardware sales were down 12% which is somewhat troubling. GME nonetheless maintained FY guidance and closed up 3.3% on Friday, last trading at $21.30 and still well off recent highs of nearly $26 within the last month.

Disclosure: No holdings in SPLS, CRM, MSFT, GME.

Source: Earnings Review: Staples, Salesforce.com, Gamestop