When I previewed the earnings report, I noted that “they are on the move. They’re picking up momentum and I suspect they will top estimates.” Clearly my suspicions were wrong, and I probably should have known better than to take a stand on a company doing so much reorganizing. While I think the restructuring will be beneficial in the long term, the report illustrates how much volatility can result in the short term.
The company also updated its full-year guidance:
If we were staying together as one company, we would expect full-year GAAP net income per diluted share of $3.21-$3.31 (including $85-$88 million for separation costs, net of tax, and separation-related tax costs) and net income per diluted share of $3.30-$3.40 on an adjusted basis (an increase of 24-27 percent over adjusted 2006 net income per diluted share).
This compares with a consensus estimate of $3.37, and considering the $0.03 miss in Q2 the midpoint for the rest of the year is actually slightly higher than the previous consensus estimate. I think the market is taking a more cautious approach to the remainder of the year in light of Wednesday’s surprise.
ASD 1-yr chart: