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  • Highlights of the weeks earnings news

    In a week that was dominated by bad news surrounding sovereign debt ratings and bailouts there was also little to cheer about in the equity markets.  However, there were some notable exceptions in the technology sector that were able to post positive results starting with Elecsys Corporation (NASDAQ: ESYS), which on Monday announced that it had bounced back into profit with net income of $872,000 in 2011 compared to a loss of $674,000 the previous year. 

     

    In 2010 the company, which provides wireless remote monitoring and rugged handheld computing units to the energy, agriculture, security, water management, aerospace, military, and transportation sectors, was severely impacted by the economic slowdown that hit orders and caused a 22% drop in sales.  However, in a remarkable turnaround, the company has reported in 2011 a substantial level of growth with revenues up 38%, an enhancement gross margins to 34% from 31%, and a significantly improved bottom-line performance with a profit of $872,000 generated earnings of $0.22 per share.

     

    Karl B. Gemperli, Chief Executive Officer, said, “Although global market and economic uncertainties still abound, we are looking forward to continuing our growth this coming year.” and the company forecast that sales for each of the fiscal quarters of 2012 will surpass the sales in 2011.  However, with a price of $6.60 and PE ratio of over 30 it will need to.

     

    On Tuesday Video Display Corporation (NASDAQ:VIDE), the manufacturer of rugged display units for military, medical and industrial use, exceeded preliminary expectations and reported a 19% increase in first quarter revenues with net income increasing from $577 thousand to $1.24 million.

    The better than expected results allowed the company to raise per share annual earnings guidance by 10% from $0.36-$0.42 to $0.40-$0.44 for the full year 2012.  The stock closed on Thursday at $4.20.

     

    Next came ASML Holding NV (NASDAQ:ASML), the global provider of semi-conductor lithography systems essential for the production of integrated circuits, who announced 2011 second quarter results on Wednesday with a 43% increase in revenues to €1,529 million and 80.7% increase in net income to €432 million.

     

    The increases were driven by customer capacity build-ups but the slowdown in demand for consumer electronics has impacted the industry and Eric Meurice (President and Chief Executive Officer) warned that customers were taking time to assess end-demand trends for 2012 before determining their overall capacity plans levels and timings.  Consequently ASML expects net sales of around EUR 1.4 billion in the third quarter with new orders of no more than €500 million compared to €1.3 billion in 2010 but reiterated their sales expectation for the 2011 full year to hit a record level clearly above EUR 5 billion.  EPS was $1.11 compared to $0.55 in 2010 and $0.9 in Q1 2011.

     

    But the highlight of the week had to wait until Thursday when Google Inc (NASDAQ:GOOG) reported earnings that far exceeded analyst expectations and caused the stock to surge $66.75 (12.62%) to $595.69 in late trading.  Revenues of $9.03 billion for the quarter ended June 30, 2011 represented an increase of 32% compared to the second quarter of 2010. Net income was $2.51 billion compared to $1.84 billion in 2010 and EPS grew to $7.68 from $5.71.

     

    The improvements came as Google’s expansion into mobile operating systems and social media have begun to pay dividends.  Costs continued to creep up and increased 33% to $2.97bn but the news was rightly overshadowed by the positive jump in revenues.

     

    The surge in price means that Google is now trading on a trailing PE of around 21.5, but if net cash of $35.5 billion ($109 per share) is excluded the multiple falls to around 17.5.

     

    Disclosure: The author has no long or short positions in Elecsys Corporation, Video Display Corporation, ASML Holding NV or Google Inc.

     

    Forward-Looking Statements: Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially.

     

     

     

     

    Jul 16 10:18 AM | Link | Comment!
  • Avis Budget Group acquires Avis Europe for 22 times 2010 earnings
     Avis Budget Group, Inc. and Avis Europe plc have announced that they have reached agreement on the terms of the acquisition by Avis Budget of all outstanding shares of Avis Europe in exchange for £3.15 in cash per Avis Europe share. The acquisition is scheduled to close in October 2011, subject to Avis Europe shareholder approval, court approval and regulatory clearances.

     

    Avis Europe is an independent publicly traded company that operates the Avis brand via a network of over 3,100 locations in 112 countries, through wholly-owned subsidiaries in 13 countries and through license arrangement in an additional 99 countries. Avis Europe also operates the Budget brand through 950 locations in 59 countries. The terms of the transaction value Avis Europe’s ordinary equity at approximately £635 million, or approximately 22 times 2010 earnings.

     

    Disclosure: The author has no long or short positions in Avis Budget Group or Avis Europe.

     

    Forward-Looking Statements: Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially.

    Tags: CAR
    Jun 14 3:15 AM | Link | Comment!
  • VF Corporation to acquire Timberland for 22 times 2010 earnings

    VF Corporation, a leader in branded lifestyle apparel, and The Timberland Company announced yesterday that they have signed a definitive merger agreement. VF will pay Timberland shareholders $43 per share, representing a total enterprise value of approximately $2 billion net of cash acquired. The bid represents a multiple of 21.9 times Timberland’s 2010 financial year end Diluted Normalised EPS.

     

    VF is targeting 10% annual revenue growth for Timberland through:

     

    ·         Leveraging VF's established international platforms in Europe, Asia and Latin America

    ·         Leveraging VF's direct-to-consumer platform, consisting of a global base of retail stores and rapidly growing e-commerce business

    ·         Enhancing the Timberland(NYSE:R) and Smartwool(R) brands' apparel offerings

    ·         Aggressively growing the women's footwear and apparel business

     

    In addition, VF believes it can substantially increase Timberland's profitability through:

     

    ·         Expense management to improve SG&A ratios;

    ·         Supply chain capabilities to reduce sourcing costs;

    ·         Operating disciplines of VF's highly profitable international and direct-to-consumer businesses.

     

    "We look forward to working with Jeff and Timberland's strong team of leaders as we build our plans for the future together," concluded Mr. Wiseman.

     

    The acquisition, which is expected to close in the third quarter, should add approximately $700 million to VF's 2011 revenues. It is also expected to be accretive to VF's earnings per share, by $.25 in 2011 and by $.75 in 2012, inclusive of deal costs and other acquisition related expenses in both periods. Excluding these expenses, EPS accretion would be approximately $.45 in 2011 and $.90 in 2012. Timberland will become part of VF's Outdoor & Action Sports coalition and will remain headquartered in Stratham, New Hampshire.

     

    VF stock closed up $13.21 at $43.20.

     

    Disclosure: The author has no long or short positions in VF Corporation or Timberland.

     

    Forward-Looking Statements: Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially.

     

    Tags: TBL, VFC
    Jun 14 2:46 AM | Link | Comment!
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