F2Q10 Earnings Call Transcript

October 27, 2009 at 5:00 pm ET

BBOX [NDQ]: Sep. 24, 2009 $25.15

52-week range: $16.24 (Mar. 9, 2009) - $37.67 (Jun. 19, 2009)

4:06 PM, Jul 29, 2009 --

• NYSE down 48 (0.8%) to 6,280.51.
• DJIA down 24 (0.3%) to 9,072.
• S&P 500 down 4.5 (0.5%) to 975.13.
• Nasdaq down 7.75 (0.4%) to 1,968.

GLOBAL SENTIMENT

At the end of each trading week, Hillbent scans the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

Black Box Corp. (BBOX) July 9, 2009 : $29.60
52-week range: $16.24 (Mar. 9, 2009) - $39.53 (Sep. 19, 2008)
Dividend = $0.06 quarterly = 0.80% current yield

Black Box* is a network infrastructure services provider. Black Box offers one-source network infrastructure services for communication systems. The Company’s service offerings include design, installation, integration, monitoring and maintenance of voice, data and integrated communication systems. The Company’s primary service offering is voice solutions. The Company also offers premise cabling and other data-related services and products. The Company provides around the clock technical support for all of its solutions, which encompass all voice and data product manufacturers, as well as 118,000 network infrastructure products (Hotline products) that it sells through its catalog and Internet Website (such catalog and Internet Website business, together with technical support for such business, being referred to as Hotline Services) and its Voice Services and Data Services (collectively referred to as On-Site services) offices.

*Company Profile from MSN MoneyCentral

This weekend we ran the Alert HQ process and generated the list of Trend Leaders. These stocks and ETFs are distinguished by strong recent performance. Using daily data, we look for stocks that are over their 50-day moving average. We then use three different technical indicators to determine trend: Aroon, DMI and MACD. All three indicators must be registering strong readings in order for a stock or ETF to make the list of Trend Leaders.

Below we present those stocks from the Tech sector that made this week's list. Data is as of the close on Friday, 3/20/09.

F3Q 2009 (Qtr End 12/27/08) Earnings Call Transcript

January 27, 2009 5:00 pm ET

F2Q09 (Qtr End 9/27/08) Earnings Call

October 28, 2008 5:00 pm ET

I have not done well in the markets for the last six weeks.  Here is why:

• Overweight in Life Insurers.  Yes, they are in better shape than the banks, but that only means they got hit later, not that they would not get hit.
• Too much economic sensitivity.  I felt that global demand would hold up better than US demand, but that only means they got hit later, not that they would not get hit.
• I suspect that hedge funds have been blowing out my positions.

I’ve been talking about stock survivability lately.  What does that mean?

Black Box (BBOX) offers technical network services and related products to businesses in North America [84% of sales], Europe [13% of sales] and elsewhere [3% of revenues]. They list and sell over 90,000 products in their catalog as well.

In FY 2007 [ended March 2008] revenues grew marginally while EPS grew 11% going from $2.00 to $2.22. Each of the past two quarters showed year-over-year improvement and FY 2008 is projected to come in much stronger. Current FY estimates run from Value Line’s $2.90 to Zack’s $3.36 /share.

• Home prices post record drop. U.S. home prices recorded their first-ever recorded quarterly drop, falling 3.1% from a year ago. Prices also fell 1.7% from last quarter, the largest quarterly drop on record. "The large overhang of real estate inventory awaiting sale continues to force price declines," Ofheo chief economist Patrick Lawler said.
• Ballmer distances himself from Yahoo. Microsoft (MSFT) CEO Steve Ballmer says its bid for Yahoo was "never the strategy we were pursuing," (ok, so what was it?), and that the company now has $50B to spend on other strategic acquisitions. He denied speculation of a tie-up between Adobe's (ADBE) Flash technology and Microsoft's Silverlight as a move to forestall a possible Apple (AAPL)/Adobe merger.
• Yahoo pushes off shareholder meeting. Yahoo (YHOO) delayed its annual shareholder meeting from July 3 to "around the end of July." The move may give Yahoo more time to stave off a proxy fight with activist shareholder Carl Icahn. Icahn will have to reduce his proposed slate to 9 from 10, after Yahoo veteran board member Edward Kozel resigned to spend more time with his family.
• Google makes pitch for white space. Google (GOOG) CEO Larry Page urged Congress and the FCC to open up so-called white space -- TV's unused spectrum. Page says the move would ultimately "blanket" the U.S. with wireless internet access. The FCC has tested white space devices from Motorola (MOT), Microsoft (MSFT) and Philips Electronics (PHG), but has thus far found flaws. Separately, Page said a Microsoft (MSFT)/Yahoo (YHOO) merger would give the two 90% of the communications market -- but that a proposed Google/Yahoo search ad deal could be structured to be reasonable.
• Halliburton hounds Expro. Halliburton (HAL) put in a £1.71B ($3.38B) bid for U.K. oilfield-services company Expro International Group plc, trumping an agreed-upon private-equity deal worth £1.6B. Oil services companies are boosting activity due to robust oil prices and strong demand.
• Regulators wary on BHP/Rio tie-up. European regulators are scrutinizing BHP Billiton's (BHP) $188.5B bid for Rio Tinto (RTP) amid concerns a merger could further lift already high steel prices. BHP CEO Marium Kloppers claims a linkup would result in synergies that could boost iron ore (a critical steel component) production and ease prices, and says he's confident authorities won't block the deal (to which Rio has not agreed). Eurofer, Europe's steel trade and lobbying group, and the China Iron and Steel Association, are opposed to the merger.
• Fed frets foreclosure. Fed governor Randall Kroszner said the rising rate of foreclosures is an urgent problem that requires non-traditional remedies. "High loan-to-value ratios at origination, combined with stagnant and eventually declining home prices, are a key aspect of the recent rise in delinquencies and foreclosures," he said, adding that "risk layering" maneuvers such as piggyback loans and negative amortization are compounding the problem.
• Paulson says end of credit crunch in sight. Treasury Secretary Henry Paulson says the U.S. is approaching the end of the credit crisis. He expressed confidence current policies will succeed in addressing economic issues. "Ultimately, the fundamentals will restore confidence in the U.S. economy."
• Weather Channel bidders down to two. Time Warner (TWX) and an NBC (GE)/Blackstone (BX) partnership are the lead contenders in today's round-two of the Weather Channel auction, sources say. Bids, due today, are expected to come in at $3-4B. Dropouts include CBS (CBS), Liberty Media (LCAPA) and Comcast (CMCSA). Time Warner would join the Weather Channel with CNN (both are in Atlanta), resulting in staff reductions. NBC would merge it with its NBC Weather Plus.
• Merrill shrinking asset book. Merrill Lynch (MER) is setting up a unit to dump underperforming assets such as CDOs. Fixed-income, currencies and commodities assets are among those the group will look to exit.
• NYSE losing grip. Trading on the NYSE (NYX) fell 26% to the lowest since 2001 as traders move their business to alternative options such ECNs Bats Trading and Direct Edge. Nasdaq (NDAQ) trade volume is at its lowest level in more than three years. This, despite an overall jump in trade volume of U.S. equities. A noteworthy side issue is that trading systems that depend on NYSE and Nasdaq trade volume data as a critical input are losing their edge.
• Wyeth drug delayed. The FDA again denied approval of Wyeth's (WYE) osteoporosis drug bazedoxifene, saying it wants more information on stroke and blood-clot issues. Wyeth says the request was expected.
• Kerkorian wants more Ford. Kirk Kerkorian increased his loan request from Bank of America (BAC) to buy Ford (F) shares to $600M from $500M. Kerkorian revealed in late April a 4.6% stake. Ford (F) yesterday warned it will not hit a key return-to-profitability target in 2009, sending shares down 8%. CEO Alan Mulally now expects to be "about break-even" in 2009 before taxes and special items. "Unless there is a fairly rapid turnaround in U.S. business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American automotive profitability goal."
• American Axle strike history. The UAW strike at American Axle & Manufacturing (AXL), which decimated much of General Motors' (GM) production, is officially over.
• Fannie's mortgage purchases jump. Fannie Mae's (FNM) mortgage purchase commitments soared 9.8% in April to $30.7B. Refinance activity fell 19.7%, following a 24.9% drop the month before.
• Debt defaults ominous. Global corporate debt defaults in 2008 have already surpassed 2007's total. S&P reports 28 defaults on $18.9B in debt. Diane Vazza, head of S&P's global fixed-income research group, says defaults will hit 4.7% over the coming year. "Defaults could be significantly more pronounced and severe, especially if the recession would be deeper and longer than expected."

Earnings: Thursday After Close

• Aeropostale (ARO): Q1 EPS of $0.26 just beats consensus of $0.25. Revenue of $336M (+21.9%) vs. consensus of $332M. Sees Q2 EPS of $0.22-0.24 vs. consensus of $0.24.
• Alkermes (ALKS): Full-year EPS of $0.31 beats consensus of $0.15. Revenue of $241M in-line. Sees 2009 EPS of -$0.16 to -$0.11, short of consensus of $0.19, and revenue of $175-200M vs. consensus of $246M.
• Aruba Networks (ARUN): FQ3 EPS of -$0.01 in-line. Revenue of $42.6M (+22.8%) in-line.
• Black Box (BBOX): FQ4 EPS of $0.74 misses consensus of $0.77. Revenue of $245M (-2%) vs. consensus of $242M. Sees 2009 revenues of $1B vs. consensus of $1.05B.
• CA Inc. (CA): FQ4 EPS of $0.22 misses consensus of $0.28. Revenue of $1.085B (+8%) in-line. Sees 2009 EPS of $1.45-1.52, better than consensus of $1.32, and revenue of $4.5-4.6B vs. consensus of $4.42B.
• Dillard's (DDS): Q1 EPS of $0.04 misses consensus of $0.21. Revenue of $1.67B vs. consensus of $1.71B.
• Foot Locker (FL): Q1 EPS of $0.14 in-line. Revenue of $1.31B (-0.5%) vs. consensus of $1.28B. Sees full-year EPS of $0.65-0.85, better than consensus of $0.70.
• Gap (GPS): Q1 EPS of $0.34 beats consensus of $0.31. Revenue of $3.38B (-4.6%) vs. consensus of $3.42B. Sees full-year EPS of $1.20-1.27, short of consensus of $1.25
• Pacific Sunwear (PSUN): Q1 EPS of -$0.17 misses consensus of -$0.10. Revenue of $267M (-0.4%) in-line. Sees Q2 EPS of $0.03-0.08, short of consensus of $0.12. Sees full-year EPS of $0.59-0.64, short of consensus of $0.67.
• Verigy (VRGY): FQ2 EPS of $0.23 beats consensus of $0.19. Revenue of $162M (-11.5%) in-line. Sees Q3 EPS of $0.24-0.29, better than consensus of $0.19, and revenue of $170-180M vs. consensus of $159M.
• Zumiez (ZUMZ): Q1 EPS of $0.05 beats consensus of $0.03. Revenue of $78.7M (+14.4%) vs. consensus of $78.1M. Sees full-year EPS of $0.90-0.93 vs. consensus of $0.92.

Earnings: Friday Before Open

• Skillsoft Corp (SKIL): Q1 EPS of $0.06 beats consensus of $0.05. Revenue of $81.6M vs. consensus of $80.4M. Sees Q2 EPS of $0.06-0.07, short of consensus of $0.08. Sees full-year EPS of $0.32-0.35 vs. consensus of $0.35.

Today's Markets

• Asia: Nikkei +0.24%. Hang Seng -1.31%. Shanghai -0.36%. BSE Sensex -1.52%.
• In Europe, markets are off at midday. FTSE -0.39%. CAC -0.76%. DAX -0.33%.
• U.S. equity futures are lower into the open. Dow -0.42%. S&P -0.39%. Nasdaq -0.29%.
• Gold +0.81% to $925.60. Crude +2% to $133.41.

F3Q08 (Qtr End 12/29/07) Earnings Call

January 29, 2008 5:00 pm ET

Black Box Corporation (BBOX)

F2Q08 (Qtr End 9/29/07) Earnings Call

At the time, he cited as "stable" a 14% decline in fiscal fourth quarter, which missed analyst estimates. But nobody cared, the stock continued it's gyrations, and I pretty much took it off the radar.

Until now: Young resigned yesterday. The company offered no explanation, though based on prior disclosures it would appear options backdating might have had something to do with it. Of course, if a company was backdating options, investors should wonder what else it might have been doing.

This appears to be the handiwork of technical types who are so close to the project they do not have perspective on the issues. No wonder the stock suffered an 18% meltdown (-$9.51) on Friday.

BBOX 1-yr chart: