Q3 2009 Earnings Call

October 22, 2009, 8:30 am ET

• U.S. AAA rating not guaranteed. The U.S. could lose its AAA rating if it fails to reduce its deficit over the next 3-4 years, Moody's says. Steven Hess, Moody's lead analyst for the U.S., acknowledges reducing the gap won't be easy: "Raising taxes is never popular and difficult politically, so we have to see if the government can do that or cut expenditures." Earlier this year, markets were spooked after S&P cut its outlook on Britain to Negative from Stable. Meanwhile, Moody's said today European countries' rising debt won't trigger across-the-board downgrades.
• Deep pay cuts coming to TARP recipients. In a plan to be made public within the next few days, the government will order deep pay cuts at the biggest bailout recipients - Citigroup (C), Bank of America (BAC), AIG (AIG), GM, Chrysler, GMAC and Chrysler Financial. The plan targets the 25 top earners at each company, who will see their compensation decline this year by about 50%, while bonus payments will be slashed by up to 90%, to be replaced by stock that they'll be restricted from immediately selling. The plan does not address firms that didn't receive bailout funds, or that have already repaid their loans.
• South Korea's $3.9B oil buy. State-owned Korea National Oil Corp. agreed to buy Canada's Harvest Energy (HTE) for $3.9B - $1.7B for its outstanding shares and the assumption of $2.2B in debt. Shareholders will receive $9.52/share - a 37% premium to Wednesday's close. The deal is South Korea's biggest outbound cross-border deal ever in the Oil & Gas sector, and ranks seventh in global Oil & Gas sector M&A transactions in 2009. Harvest produced 53K b/d in Q2, 70% of which was crude oil and 30% was natural gas. Shares +29.1% premarket to $9.05.
• Bove drops a bomb. Rochdale Securities analyst Richard Bove sent stocks into a tailspin late Wednesday after he downgraded shares of Wells Fargo (WFC) to Sell, despite a consensus-beating Q3. Bove is concerned by the positive impact mortgage hedges have had on Wells' recent results, which "keep coming through for the company whenever it needs to bolster earnings," but are a nightmare for investors who shouldn't look at such activity as generating predictable or repeatable profits. Bove also called the portfolio Wells acquired from Wachovia 'cancerous.' WFC -5.1% yesterday.
• eBay falters on gloomy outlook. eBay (EBAY) posted Q3 earnings that exceeded expectations, but shares traded lower after-hours after its guidance gave a gloomier vision of the near future than many expected (read eBay's Q3 earnings call transcript). eBay has struggled as online shopping habits have shifted away from auctions to fixed-price purchases on sites such as Amazon.com (AMZN).
• Beige Book sees signs of growth. The Fed said most regional economies are on the mend, as home sales rebound and manufacturers restart idled operations. "Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered," the Fed said in its beige book tally. The report also highlighted how heavily businesses are relying on government spending: "There were several reports that the only 'sure' business will come from government stimulus projects, although funding for such projects has been slow to materialize," it said.
• Microsoft's big day. Microsoft's much-anticipated OS upgrade, Windows 7, goes on sale today. The company hopes Windows 7 will gain more traction among retail and corporate clients than its most predecessor, Vista, which was seen as slow and clunky. Analysts say the new OS isn't likely to cause a sudden spike in PC sales, a point conceded by Microsoft CEO Steve Ballmer, who said recently IT budgets "aren't going to rise just because we shipped a new version."
• Twin deals for Twitter. Twitter inked deals to sell the rights to mine its pipeline of 'tweets' with both Google (GOOG) and Microsoft (MSFT) Wednesday, underscoring the growing importance of real time search. Neither would say how much it's paying for the rights to index the millions of daily tweets, considered to be Twitter's most valuable asset. The deals could be the first meaningful revenue for Twitter since its 2006 inception, and begin to answer the much-explored question of "where's the beef?"
• A strong Q3 for China. China's Q3 GDP came in at 8.9%, just below the 9% economists forecast. Separate reports showed industrial production and retail sales also accelerated. China's return to robust growth continues to raise the question of when policy makers will withdraw record fiscal and monetary stimulus in order to avoid another bubble.
• Galleon wind down begins. Managers of Galleon Group's $500M Asia fund are considering buying the unit, sources say. On Wednesday, Galleon told employees and investors it would wind down the firm after its founder was charged with insider trading. Unless the government intervenes, investors likely won't get their money back until Jan. 1, 2010.

Earnings: Thur. Before Open

• 3M Company (MMM): Q3 EPS of $1.37 beats by $0.20. Revenue of $6.19B (-5.6%) vs. $5.77B. Shares +1.2% premarket. (PR)
• AT&T (T): Q3 EPS of $0.54 beats by $0.04. Revenue of $30.9B (-1.3%) in-line. Wireless subscribers +2M to 81.6M. Shares +2% premarket. (PR)
• AU Optronics (AUO): Q3 EPS of $0.26 beats by $0.01. Revenue of $3.5B (+8.4%) vs. $3.21B. Operating margin 6.8%. Shares -2.3% in Taiwan. (PR)
• Black & Decker (BDK): Q3 EPS of $0.91 beats by $0.09. Revenue of $1.21B (-23%) in-line. Sees Q4 EPS of $0.68-0.78 vs. $0.50 consensus. Shares +2.2% premarket. (PR)
• Bristol-Myers (BMY): Q3 EPS of $0.52 beats by $0.01. Revenue of $5.49B (+4.4%) in-line. (PR)
• Bunge (BG): Q3 EPS of $1.62 beats by $0.15. Revenue of $11.3B (-23.6%) vs. $12B. Sees full-year EPS of $3.10-$3.50 vs. consensus of $4.69. Says fertilizer business continues to be pressured by high-cost inventory and a weak pricing environment. (PR)
• Celgene (CELG): Q3 EPS of $0.56 beats by $0.02. Revenue of $692M (+16.8%) vs. $671M. Shares +5.4% premarket. (PR)
• Check Point Software (CHKP): Q3 EPS of $0.52 beats by $0.03. Revenue of $234M (+17%) vs. $231M. (PR)
• CONSOL Energy (CNX): Q3 EPS of $0.48 misses by $0.18. Revenue of $1.09B (-6.7%) in-line. Shares -3.1% premarket. (PR)
• Cooper Industries (CBE): Q3 EPS of $0.70 beats by $0.06. Revenue of $1.29B (-25.6%) in-line. "Revenue and orders for maintenance and repair items and product lines that declined rapidly at the beginning of the economic downturn are beginning to improve, while the longer cycle products appear to have now bottomed." Shares -0.3% premarket. (PR)
• Danaher (DHR): Q3 EPS of $0.89 beats by $0.03. Revenue of $2.75B (-14.2%) in-line. (PR)
• Delta Air Lines (DAL): Q3 EPS of $0.06 beats by $0.11. Revenue of $7.57B (+32.4%) in-line. (PR)
• Diamond Offshore Drilling (DO): Q3 EPS of $2.62 beats by $0.32. Revenue of $908M (+0.9%) vs. $874M. Declares special dividend of $1.875/share. (PR)
• Dow Chemical (DOW): Q3 EPS of $0.24 beats by $0.14. Revenue of $12.05B (+6.4%) vs. $11.85B. "The economic outlook for the rest of 2009 appears to be stabilizing with strong growth in Asia Pacific, especially China, and other emerging geographies. The global economy is now on firmer footing, and, in our view, the U.S. economy is beginning a slow and tenuous recovery, with unemployment continuing to be a drag on consumer spending." (PR)
• EMC (EMC): Q3 EPS of $0.23 beats by $0.02. Revenue of $3.52B (-5.3%) vs. $3.45B. Says customers are signaling more comfort spending their IT budgets. Shares +1.5% premarket. (PR)
• Ensco International (ESV): Q3 EPS of $1.05 beats by $0.01. Revenue of $425M (-31.3%) vs. $439M. (PR)
• Entergy (ETR): Q3 EPS of $2.40 misses by $0.08. Revenue of $2.94B (-25.9%) vs. $3.9B. "We continue to experience the negative effects of the slowed economic recovery." (PR)
• Ericsson (ERIC): Q3 EPS of 0.25kr misses by 0.61kr. Revenue of 46.4Bkr (-5.7%) vs. 49.46Bkr. "Sales of network equipment declined due to lower demand in the current tougher market environment. Despite lower volumes, Network margins remain stable." Shares -8.9% premarket. (PR)
• Fifth Third Bancorp (FITB): Q3 EPS of -$0.20 beats by $0.03. Revenue of $M in-line. "The credit environment remains challenging, and we continue to aggressively work to manage risk in the portfolio." Shares -2.1% premarket. (PR)
• Goodrich (GR): Q3 EPS of $1.12 beats by $0.09. Revenue of $1.65B (-7%) in-line. (PR)
• Hershey Foods (HSY): Q3 EPS of $0.73 beats by $0.06. Revenue of $1.48B (-0.3%) vs. $1.54B. "As we look to 2010, we assume the economic environment for consumers in the U.S. and international markets will continue to be challenging." Shares +2.5% premarket. (PR)
• Huntington Bancshares (HBAN): Q3 EPS of -$0.33 misses by $0.05. Revenue of $M in-line. Shares -2.1% premarket. (PR)
• IMS Health (RX): Q3 EPS of $0.40 beats by $0.04. Revenue of $541M (-5.7%) vs. $522M. (PR)
• Janus Capital Group (JNS): Q3 EPS of $0.05 misses by $0.10. Revenue of $228M (-17.4%) vs. $225M. (PR)
• JetBlue Airways (JBLU): Q3 EPS of $0.04 misses by $0.01. Revenue of $854M (-5.3%) vs. $847M. Shares +1.2% premarket. (PR)
• Kimberly-Clark (KMB): Q3 EPS of $1.40 beats by $0.27. Revenue of $4.91B (-1.7%) in-line. Sees full-year EPS of $4.50-$4.60 vs. consensus of $4.26, citing increased cost savings, better organic sales growth and a further recovery in currency exchange rates. Shares +5.5% premarket. (PR)
• Laboratory Corp. (LH): Q3 EPS of $1.22 beats by $0.07. Revenue of $1.19B (+4.4%) in-line. (PR)
• Legg Mason (LM): FQ2 EPS of $0.30 beats by $0.11. Revenue of $660M (-31.7%) vs. $652M. (PR)
• Logitech (LOGI): FQ2 EPS of $0.11 beats by $0.06. Revenue of $498M (-25.1%) vs. $474M. Sees FQ3 revenue of $575-595M vs. $623M. Shares +7.2% in Zurich. (PR)
• McDonald's (MCD): Q3 EPS of $1.15 beats by $0.04. Revenue of $6.05B (-3.5%) in-line. Comps +3.8%, with U.S. +2.5%, Europe +5.8% and the rest +2.2%. Shares +1.3% premarket. (PR)
• Mead Johnson (MJN): Q3 EPS of $0.53 misses by $0.02. Revenue of $700M (-5.8%) vs. $737M. Shares -8.4% premarket. (PR)
• Merck (MRK): Q3 EPS of $0.90 beats by $0.08. Revenue of $6.05B (+1.8%) in-line. (PR)
• NCR (NCR): Q3 EPS of $0.19 misses by $0.05. Revenue of $1.14B (-17.7%) vs. $1.22B. Sees full-year EPS of $0.45-0.55 vs. $0.67. "The willingness of customers to invest in Q2... did not spill over into Q3. That said, we were more encouraged by the conversations we were having with our customers about Q4 and 2010." Shares -5.9% premarket. (PR)
• New York Times (NYT): Q3 EPS of $0.16 beats by $0.17. Revenue of $571M (-16.9%) vs. $562M. Shares +2.7% premarket. (PR)
• NII Holdings (NIHD): Q3 EPS of $0.69 beats by $0.14. Revenue of $1.14B (-3.5%) in-line. (PR)
• Nucor (NUE): Q3 EPS of -$0.10 beats by $0.05. Revenue of $3.12B (-58.1%) vs. $2.98B. "Our view remains that there has been little improvement in real demand and the uncertainty in our economy is still very high. We also continue to believe that real demand is in for a long, slow recovery." Shares -0.6% premarket. (PR)
• Occidental Petroleum (OXY): Q3 EPS of $1.14 beats by $0.06. Revenue of $4.1B (-41.9%) in-line. Shares +1.2% premarket. (PR)
• Old Republic International (ORI): Q3 EPS of -$0.283 misses by $0.11. Revenue of $959M (+2.4%) vs. $910M. (PR)
• Philip Morris (PM): Q3 EPS of $0.93 beats by $0.02. Revenue of $6.59B (-5.3%) vs. $6.71B. "While we experienced lower organic volume in the quarter, this was largely anticipated given our pricing actions and the on-going impact of the economic crisis on total consumption levels." Shares +0.75% premarket. (PR)
• PNC Financial Services (PNC): Q3 EPS of $1.00 beats by $0.69. Revenue of $4.05B (+144.7%) vs. $3.8B. (PR)
• Potash (POT): Q3 EPS of $0.82 beats by $0.01. Revenue of $1.1B (-64.1%) in-line. Sees Q4 EPS of $0.65-0.85 vs. consensus of $1.18. "The uncertainty among fertilizer buyers has lasted far longer than we anticipated, but cannot continue indefinitely." Shares -2.9% premarket. (PR)
• ProLogis (PLD): Q3 EPS of $0.21 beats by $0.02. Revenue of $274M (-72.3%) vs. $228M. Shares +2.4% premarket. (PR)
• Raytheon (RTN): Q3 EPS of $1.25 beats by $0.09. Revenue of $6.21B (+5.8%) in-line. Shares +0.7% premarket. (PR)
• Reliance Steel & Aluminum (RS): Q3 EPS of $0.57 beats by $0.11. Revenue of $1.24B (-57.1%) vs. $1.34B. Declines Q4 guidance. "We believe that demand is fairly stable at low levels." (PR)
• Reynolds American (RAI): Q3 EPS of $1.24 beats by $0.07. Revenue of $2.15B (-5.3%) in-line. Shares -0.1% premarket. (PR)
• Ryder System (R): Q3 EPS of $0.50 beats by $0.05. Revenue of $1.26B (-20.3%) in-line. Anticipates the weak overall economic environment and protracted freight recession will continue to impact its performance. (PR)
• Schering-Plough (SGP): Q3 EPS of $0.40 in-line. Revenue of $4.5B (-1.7%) in-line. (PR)
• Starwood Hotels (HOT): Q3 EPS of $0.14 beats by $0.04. Revenue of $1.22B (-20.7%) vs. $1.16B. "It is very difficult at this time to provide any definitive point of view on 2010. While business conditions have clearly stabilized, it is very hard to forecast the pace of recovery, especially rate." (PR)
• SunTrust Banks (STI): Q3 EPS of -$0.60 misses by $0.05. Revenue of $1.94B (-21%) vs. $2.11B. Earnings include $131M writedown on debt. Allowance for loan losses +128M to $3.02B. (PR)
• Sybase (SY): Q3 EPS of $0.63 beats by $0.06. Revenue of $293M (+3.3%) vs. $281M. Shares +2.2% premarket. (PR)
• TASER International (TASR): Q3 EPS of -$0.05 misses by $0.02. Revenue of $26.8M vs. $20.9M. Shares -1.2% premarket. (PR)
• Temple-Inland (TIN): Q3 EPS of $0.24 beats by $0.06. Revenue of $885M (-9.3%) vs. $876M. "As we look forward, economic conditions, while still uncertain, have stabilized and appear to be on a slow path to recovery." (PR)
• Terra Industries (TRA): Q3 EPS of $0.45 misses by $0.07. Revenue of $347M (-56.1%) vs. $356M. Shares +0.8% premarket. (PR)
• Thermo Fisher (TMO): Q3 EPS of $0.78 beats by $0.02. Revenue of $2.53B (-2%) in-line. (PR)
• Travellers (TRV): Q3 EPS of $1.61 beats by $0.30. Revenue of $6.3B vs. $6B. Sees full-year EPS of $5.30-5.50 vs. consensus of $5.28. Raises quarterly dividend to $0.33 from $0.30. Authorizes an additional $6B share buyback. "We remain cautious about the magnitude of rate gains that are achievable in the near term given general economic conditions." (PR)
• Union Pacific (UNP): Q3 EPS of $1.02 beats by $0.02. Revenue of $3.67B (-24.2%) in-line. "Business volumes seem to have stabilized, but at very low levels." (PR)
• UPS (UPS): Q3 EPS of $0.55 beats by $0.03. Revenue of $11.15B in-line. Volume of 927M packages, -2.4%. "I'm encouraged by the signs of economic recovery that are becoming apparent, although we still have a long way to go," CEO Scott Davis said. Shares -1% premarket. (PR)
• US Airways (LCC): Q3 EPS of -$0.83 beats by $0.11. Revenue of $2.72B, including $110 from a la carte revenue initiatives, in-line. Shares +3.4% premarket. (PR)
• Xerox (XRX): Q3 EPS of $0.14 beats by $0.02. Revenue of $3.67B (-15.9%) in-line. Sees full-year EPS of $0.55-0.57 vs. consensus of $0.53. (8-K)
• Zimmer (ZMH): Q3 EPS of $0.88 beats by $0.02. Revenue of $976M (+2.5%) vs. $954M. Shares +1.8% premarket. (PR)

Earnings: Wed. After Close

• Alliance Data Systems (ADS): Q3 EPS of $0.83 misses by $0.51. Revenue of $483M (-5%) vs. $500M. Expects 2010 EPS of $6.00 vs. $6.10. Shares -6.3% AH. (PR)
• Amgen (AMGN): Q3 EPS of $1.49 beats by $0.22. Revenue of $3.8B (-2%) in-line. Raises full-year EPS guidance to $4.90-5.05 from $4.80-4.95, vs. $4.88. Shares -3% AH. (PR)
• Ameriprise Financial (AMP): Q3 EPS of $1.03 beats by $0.39. Revenue of $2B (+20%) vs. $2.1B. Debt-to-total-capital ratio of 18.7%. Shares +1.6% AH. (PR)
• Citrix Systems (CTXS): Q3 EPS of $0.43 beats by $0.02. Revenue of $401M (+1%) vs. $400M. Sees full-year revenue up 8-9% sequentially to $1.73B. Shares -3.6% AH. (PR)
• Covanta (CVA): Q3 EPS of $0.28 beats by $0.04. Revenue of $409M (-7%) vs. $388M. Shares +0.3% AH. (PR)
• eBay (EBAY): Q3 EPS of $0.38 beats by $0.01. Revenue of $2.2B (+6%) vs. $2.1B. Shares -4.9% AH. (PR)
• Equifax (EFX): Q3 EPS of $0.57 beats by $0.02. Revenue of $452M (-7%) in-line. Shares -3.2% AH. (PR)
• F5 Networks (FFIV): FQ4 EPS of $0.50 beats by $0.09. Revenue of $175M (+2%) vs. $164M. Shares +8.1% AH. (PR)
• Fidelity National Information Services (FIS): Q3 EPS of $0.46 misses by $0.01. Revenue of $851M (-4%) vs. $870M. Shares -0.4% AH. (PR)
• Fidelity National Financial (FNF): Q3 EPS of $0.32 misses by $0.02. Revenue of $1.5B (+52%) in-line. Shares +0.2% AH. (PR)
• Intersil (ISIL): Q3 EPS of $0.10 in-line. Revenue of $168M (-23%) vs. $162M. Sees Q4 EPS of $0.14-0.17 vs. $0.13. Shares -2.8% AH. (PR)
• Knight Transportation (KNX): Q3 EPS of $0.16 in-line. Revenue of $173M (-17%) vs. $165M. Shares +1.2% AH. (PR)
• Lam Research (LRCX): FQ1 EPS of $0.03 beats by $0.11. Revenue of $319M (+46%) vs. $288M. Shares +3.2% AH. (PR)
• Newfield Exploration (NFX): Q3 EPS of $1.58 beats by $0.24. Revenue of $375M (-45%) vs. $536M. Shares -0.1% AH. (PR)
• Noble (NE): Q3 EPS of $1.63 beats by $0.10. Revenue of $906M (+5%) in-line. Shares +1.1% AH. (PR)
• Novellus Systems (NVLS): Q3 EPS of -$0.03 beats by $0.01. Revenue of $177M (-29%) vs. $172M. Shares +0.9% AH. (PR)
• OSI Pharmaceuticals (OSIP): Q3 EPS of $0.81 beats by $0.49. Revenue of $111M (+18%) vs. $106M. Shares -1% AH. (PR)
• Pactiv (PTV): Q3 EPS of $0.54 beats by $0.03. Revenue of $839M (-9%) vs. $858M. Shares -0.2% AH. (PR)
• QLogic (QLGC): FQ2 EPS of $0.21 beats by $0.03. Revenue of $132M (-23%) vs. $126M. Shares -2.6% AH. (PR)
• Range Resources (RRC): Q3 EPS of $0.26 beats by $0.04. Revenue of $204M (-67%) vs. $261M. Shares -0.2% AH. (PR)
• Skechers (SKX): Q3 EPS of $0.52 beats by $0.17. Revenue of $405M (+1%) vs. $385M. Shares +5.2% AH. (PR)
• Terex (TEX): Q3 EPS of -$0.95 misses by $0.61. Revenue of $1.2B (-51%) vs. $1.3B. Shares -10.5% AH. (PR)
• TriQuint Semiconductor (TQNT): Q3 EPS of $0.10 in-line. Revenue of $173M (-7%) vs. $178M. Shares -19.9% AH. (PR)
• VMware (VMW): Q3 EPS of $0.24 beats by $0.04. Revenue of $490M (+4%) vs. $474M. Sees Q4 revenue of v$540M-560M vs. $523M. Shares +1.6% AH. (PR)

Today's Markets

Asian and European markets followed the U.S. into the red Thursday. Stock futures are marginally lower.

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A security credit freeze is one way to achieve peace of mind instead of worrying about identity theft. I just tried to extend a credit freeze and replace a lost PIN. I forgot my PIN, so I needed a new one in case I wanted new credit. I contacted all three credit bureaus--Equifax (EFX), Transunion, and Experian (EXPGY.PK)--to request new PINs.

I learned in California, a credit freeze is indefinite, so I didn't need to worry about "extending" my freeze. (In less consumer-friendly states, a freeze may be limited to seven years unless extended by the consumer.) If you are a victim of identity theft, you may receive a credit freeze without charge. If you are not a victim of identity theft, you may have to pay a fee to activate a credit freeze and to unfreeze your account later. When you apply, you are given a PIN that allows you to temporarily deactivate the freeze.

Dun & Bradstreet (DNB) is a provider of business information with a history dating back over 165 years. Today's company has 3 business segments. Risk Management, driving about 64% of sales, provides reports and other information products that allow companies to determine creditworthiness of potential customers. This unit may best be thought of as a Moody's (MCO) or S&P (MHP) rating agency for private companies... In fact Moody's was spun off from the "old" Dun & Bradstreet in 2000.

The second business unit is Supply, Sales, and Marketing (28% of sales), which provides information to help customers identify market segments, profile potential customers, build mailing lists, and evaluate current and potential suppliers. The third and final segment is Internet Solutions, consisting mainly of Hoover's, which has basic information on thousands of public and private companies, and AllBusiness.com, a resource and advice portal for business managers.

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President Obama’s effort to reform the banking system doesn’t address the system’s biggest problem, which is how consumer credit is underwritten in the United States.

Without exception, no material consumer loan is made in America without the borrower’s credit bureau first being polled by prospective lenders and a credit score used to classify the borrower as good, bad or middle risk. Credit scores are supposed to accurately predict the probability of default by consumers, but in practice, credit scores don’t predict much of anything. Banks blindly rely upon the junk put out by consumer credit rating agencies and are getting burnt by ignoring the most basic rule of underwriting, which is to know their customer. While banks know borrowers' credit scores and information on the credit report, that isn’t the same thing as knowing their customer or things like their customer’s assets, liabilities and earning power.

By Robin Wauters

During the video interview with OpenID evangelist Chris Messina I recorded earlier this year at a German conference about the state of OpenID, he expressed his wish that the Obama administration would soon start to embrace the decentralized, single sign-on method as a way for citizens to engage with the U.S. government online. Four months later, it looks like his dreams are becoming reality.

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Note: Nielsen Online, AdRelevance service uses a proprietary methodology for estimating online advertising expenditures and only takes into account image-based technologies and advertising sold per CPM. Data does not reflect house advertising activity, strategic partnerships between publishers and advertisers, or text units, compound image/text ads, paid search, sponsorships, email, units contained within applications (e.g., messengers and pre-rolls) or performance based advertising.

Q2 2009 Earnings Call

July 23, 2009 8:30 am ET

• Goldman is TARP-free at last. Goldman Sachs (GS) became the first major bank to completely shed its bailout ties, paying $1.1B to redeem the government's TARP warrants and calling the Treasury's valuation 'full and fair' given the government's support of the financial system. With the warrant redemption and the $318M Goldman paid in dividends on its $10B TARP aid, taxpayers received a 23% annualized return for the nine-month transaction.
• S&P flip-flops on ratings. Standard & Poor's unexpectedly switched its rating of some bonds backed by commercial mortgages, upgrading the bonds to AAA just days after the same bonds had been sharply downgraded. The unusual move further damaged S&P's credibility and unsettled investors in the $700B market for commercial mortgage-backed securities [CMBS]. The reversal came after S&P realized bonds with a shorter lifespan were less risky than similarly structured bonds with a longer lifespan, a mistake that could reflect a basic misunderstanding of the way cash flows are distributed across CMBS.
• Bristol-Myers buys biotech firm. Bristol-Myers Squibb (BMY) agreed to acquire Medarex (MEDX), the biotech firm it already owns a 2% stake in, for $2.4B in cash. Bristol-Myers said the $16/share deal, which marks a 90% premium to Medarex's closing price on Wednesday, buys it proven antibody discovery technology and rights to an immunotherapy the companies developed. MEDX +89% premarket (7:00 ET).
• Intel fights antitrust fine. Intel (INTC) is fighting back against a record €1.06B ($1.45B) fine levied by EU antitrust regulators in May, saying the fine violates protections granted by European human rights law. Since the EU antitrust body handles both the investigation and judgment of a given case, companies don't have the opportunity to fully defend themselves as they would in a court. However, the appeal is a bit of a long shot as no EU antitrust appeal has ever won on this argument.
• Amazon's shoe-in to online apparel. Amazon (AMZN) will buy online shoe retailer Zappos.com for around $928M, an aggressive expansion into online apparel after Amazon's solo attempts at selling footwear were unsuccessful. Zappos is known for its fiercely loyal customer base, good customer service and free shipping/free returns policy. AMZN +0.6% premarket (7:00 ET).
• Bair wants large firms to pay. FDIC's Sheila Bair is scheduled to testify before the Senate Banking Committee this morning, and will ask lawmakers to impose fees on the country's biggest financial firms. Bair wants Congress to create an industry-supported Financial Company Resolution Fund which will provide working capital and cover unanticipated losses if the government has to wind down a failed firm. In addition to minimizing government outlays, this would also "provide an economic incentive for an institution not to grow too large."
• SEC targets pay-to-play. The SEC voted unanimously to propose rules preventing investment advisers from managing public programs for two years if they make political contributions. The proposal is an attempt to curb pay-to-play practices, in which public contracts are awarded to those who make political contributions.
• Chrysler warns on dealership legislation. Chrysler warned it could face liquidation for a second time if lawmakers move forward with a plan to reinstate terminated dealership agreements. The House of Representatives has already approved a measure to restore contracts with 789 dealerships, but the bill's future in the Senate is less certain.
• Moody's rebuffed in Berkshire sale. Moody's (MCO) fell 10.3% in after-hours trading following a disclosure by Berkshire Hathaway (BRK.A) that it sold 7.99M shares of the ratings company this week. Though Berkshire remains Moody's largest shareholder, the sale reduced its stake by 17%. Moody's has reported a profit decline for seven consecutive quarters.
• Porsche CEO, CFO resign. Porsche's CEO Wendelin Wiedeking and CFO Holger Haerter both resigned from the company with immediate effect, after coming to "the conclusion that the further strategic development of Porsche... is better off, if they are not on board as acting persons," said a company spokesman. The move is expected to facilitate a merger agreement with Volkswagen (VLKAY.PK).
• eBay beats as Paypal, marketplace show signs of life. eBay (EBAY) managed to beat quarterly earnings expectations (see details below), even as profit fell 29% and revenue fell 4%. The company's PayPal online-payments unit continued to grow strongly and a decline in eBay's core marketplace leveled off.
• ING may sell private banking unit. ING Group (ING) reportedly hired JPMorgan Chase (JPM) to advise it on the possible sale of its private banking business in Europe and Asia. A deal could be worth over $1B.
• House prices rise. The FHFA House Price Index was up 0.9% in May vs. -0.2% consensus, after falling 0.3% in April (revised). Nationwide prices are down 5.6% from a year earlier, and 10.7% from the April 2007 peak.

Earnings: Thursday Before Open

• 3M (MMM): Q2 EPS of $1.20 beats by $0.26. Revenue of $5.7B (-15%) vs. $5.4B. Adjusts guidance for FY '09 - sees EPS of $4.10-4.30 vs. prior guidance of $3.90-4.30. Shares +1.3% premarket (7:40 ET). (PR)
• Alexion Pharmaceuticals (ALXN): Q2 EPS of $0.20 beats by $0.04. Revenue of $92M (+55%) vs. $89M. Shares +1.9% premarket (8:00 ET). (PR)
• AT&T (T): Q2 EPS of $0.54 beats by $0.03. Revenue of $30.7B (-0.4%) in-line. Shares +2.9% premarket (7:45 ET). (PR)
• Bristol-Myers Squibb (BMY): Q2 EPS of $0.56 beats by $0.09. Revenue of $5.4B (+3.5%) vs. $5.3B. Issues upside EPS guidance for FY '09 of $1.95-2.05 vs. prior guidance of $1.85-2.00. (PR)
• Bunge (BG): Q2 EPS of $2.28 beats by $1.57. Revenue of $11B (-23.5%) vs. $12B. (PR)
• Celestica (CLS): Q2 EPS of $0.11 beats by $0.01. Revenue of $1.4B (-25%) in-line. (PR)
• Celgene (CELG): Q2 EPS of $0.46 in-line. Revenue of $629M (+10%) vs. $621M. Shares +8.9% premarket (7:45 ET). (PR)
• CME Group (CME): Q2 EPS of $3.37 beats by $0.14. Revenue of $648M (+15%) vs. $652M. (PR)
• Danaher (DHR): Q2 EPS of $0.89 beats by $0.01. Revenue of $2.7B (-19%) vs. $2.8B. (PR)
• Diamond Offshore Drilling (DO): Q2 EPS of $2.79 beats by $0.15. Revenue of $946M (-0.8%) vs. $942M. (PR)
• EMC (EMC): Q2 EPS of $0.18 beats by $0.01. Revenue of $3.3B (-11%) vs. $3.2B. Sees FY '09 EPS of $0.82 vs. &0.78 consensus. Shares +4.8% premarket (7:30 ET). (PR)
• EnCana (ECA): Q2 EPS of $1.22 beats by $0.25. Revenue of $3.8B (-49%) vs. $4.4B. (EnCana news release (.pdf))
• Fifth Third Bancorp (FITB): Q2 EPS of $1.15 vs. consensus of -$0.34 (may not be comparable). Tier 1 ratio of 12.9%. Shares +7% premarket (7:30 ET). (PR)
• FLIR Systems (FLIR): Q2 EPS of $0.35 in-line. Revenue of $278M (+6.5%) vs. $297M. Shares +1.9% premarket (7:50 ET). (PR)
• Ford Motor (F): Q2 EPS of -$0.21 beats by $0.27. Revenue of $27.2B (-34%) vs. $24.8B. (PR)
• Goodrich (GR): Q2 EPS of $1.15 beats by $0.04. Revenue of $1.7B (-8%) in-line. (PR)
• Hershey (HSY): Q2 EPS of $0.43 beats by $0.08. Revenue of $1.2B (+6%) vs. $1.1B. (PR)
• Huntington Bancshares (HBAN): Q2 EPS of -$0.40 misses by $0.22. Increased provision for credit losses 42% from Q1 to $413.7M. Tier 1 capital ratio of 11.86%. Shares -3.1% premarket (7:50 ET). (PR)
• ITT Educational Services (ESI): Q2 EPS of $1.87 beats by $0.14. Revenue of $317M (+29%) vs. $307M. (PR)
• JetBlue Airways (JBLU): Q2 EPS of $0.05 beats by $0.03. Revenue of $807M (-6%) vs. $800M. (PR)
• Kimberly-Clark (KMB): Q2 EPS of $1.16 beats by $0.22. Revenue of $4.7B (-5.6%) vs. $4.6B. Issues upside FY '09 EPS guidance of $4.10-4.25 vs. $4.12 consensus. (PR)
• Newmont Mining (NEM): Q2 EPS of $0.43 misses by $0.04. Revenue of $1.6B (+7%) in-line. (PR)
• NII Holdings (NIHD): Q2 EPS of $0.79 beats by $0.23. Revenue of $1.1B (-4%) vs. $1B. (PR)
• Omnicom Group (OMC): Q2 EPS of $0.75 beats by $0.01. Revenue of $2.9B (-17%) in-line. (PR)
• PNC Financial Services Group (PNC): Q2 EPS of $0.14 vs. consensus of $0.45 (may not be comparable). Revenue of $4B (+95.5%) vs. $3.65B. (PR)
• Potash Corp. (POT): Q2 EPS of $0.62 misses by $0.07. Revenue of $856M (-67%) vs. $981M. Issues downside Q3 EPS guidance of $0.80-1.20 vs. $1.56 consensus. Issues downside FY '09 EPS guidance of $4.00-5.00 vs. $5.24 consensus. Shares -2.3% premarket (6:50 ET). (PR)
• Raytheon (RTN): Q2 EPS of $1.24 beats by $0.11. Revenue of $6.1B (+4%) vs. $6.2B. (PR)
• Starwood Hotels & Resorts Worldwide (HOT): Q2 EPS of $0.22 beats by $0.05. Revenue of $1.2B (-23%) in-line. Issues downside guidance: sees Q3 EPS of $0.06-0.10 vs. $0.21 consensus, FY '09 EPS of $0.65 vs. $0.76 consensus. (PR)
• Terra Industries (TRA): Q2 EPS of $0.81 misses by $0.10. Revenue of $453.5M (-46%) vs. $568M. (PR)
• Thermo Fisher Scientific (TMO): Q2 EPS of $0.74 beats by $0.08. Revenue of $2.5B (-8%) vs. $2.4B. (PR)
• Wyeth (WYE): Q2 EPS of $0.94 beats by $0.09. Revenue of $5.7B (-4%) vs. $5.6B. Issues upside FY '09 EPS guidance of $3.48-3.58 vs. prior guidance of $3.33-3.53. (PR)
• Xerox (XRX): Q2 EPS of $0.16 beats by $0.05. Revenue of $3.7B (-18%) in-line. (PR)

Earnings: Wednesday After Close

• Alliance Data Systems (ADS): Q2 EPS of $0.95 misses by $0.07. Revenue of $460M (-9%) vs. $481M. Sees Q3 EPS of $1.34 in-line. Maintains 2009 EPS guidance of $5.15 vs. $5.00. (PR)
• Amdocs (DOX): Q3 EPS of $0.53 beats by $0.05. Revenue of $690M (-16%) vs. $679M. Sees Q4 EPS of $0.47-0.51 vs. $0.48. Sees Q4 revenue of $670M-690M vs. $668M. (PR)
• Citrix Systems (CTXS): Q2 EPS of $0.39 beats by $0.01. Revenue of $393M (+0%) vs. $387M. Sees Q3, FY09 revenues flat vs. 2008. (PR)
• Covanta Holding Corp. (CVA): Q2 EPS of $0.21 beats by $0.01. Revenue of $376M (-11%) vs. $391M. Reaffirms 2009 EPS $0.65-0.80 vs. $0.71 and adjusted EBITDA of $500M-540M. (PR)
• C.R. Bard (BCR): Q2 EPS of $1.23 beats by $0.02. Revenue of $625M (+1%) vs. $634M. (PR)
• eBay (EBAY): Q2 EPS of $0.37 beats by $0.01. Revenue of $2.1B (-4%) vs. $2B. Sees Q3 EPS of $0.34-0.36 vs. $0.35. Sees Q3 revenue of $2.05B-2.15B vs. $2B. (PR)
• Equifax (EFX): Q2 EPS of $0.57 in-line. Revenue of $455M (-9%) vs. $453M. Sees Q3 EPS of $0.52-0.57 vs. $0.59. (PR)
• Equinix (EQIX): Q2 EPS of $0.44 beats by $0.11. Revenue of $213M (+7%) vs. $209M. Sees Q3 revenue of $221M-225M vs. $220M. Sees FY09 revenue of $860M-$875M vs. $861M. (PR)

• E*TRADE Financial (ETFC): Q2 EPS of -$0.22 beats by $0.09. Total loan loss allowance was flat at $1.2B, or 5% of gross loans receivable. (PR)

Equifax Inc. (NYSE:EFX) Jun. 7, 2009: $26.13
52-week range: $19.38 (Nov. 21, 2008) - $37.29 (Aug. 18, 2008)
Dividend = $0.04 quarterly = 0.61% current yield

Equifax Inc. collects, organizes, and manages various financial, demographic, employment, and marketing information primarily in the United States, Canada, the United Kingdom, and Brazil. The U.S. Consumer Information Solutions segment includes credit information and credit scoring as well as fraud detection. Its TALX segment offers employment and income verification services, and employment tax and talent management services.

Q1 2009 Earnings Call

April 23, 2009, 08:30 am ET

• Stress tests may reveal banks' capital needs. As the May 4 reveal date for stress tests draws closer, officials are considering releasing assessments for each of the 19 banks and may require those that need more capital to disclose how they plan to raise additional funds. Under that scenario, lenders would have to specify whether they want to convert government preference shares, issue more stock or rely on an additional bailout. The push for disclosure is meant to help the public better discern between the health of individual banks. Sources say regulators want the banks to have at least 3% tangible common equity.
• Lewis: Fed, Treasury urged Merrill silence. According to a recently obtained copy of CEO Ken Lewis' February testimony to New York's attorney general, Bernanke and then-Treasury chief Paulson pressured Bank of America (BAC) to stay silent on its increasingly troubled deal to acquire Merrill Lynch. Despite an obligation to disclose any material financial hits to shareholders, officials pressed Lewis to keep quiet during government-funding negotiations to ensure important financial institutions wouldn't fail. Publicizing Merrill's losses would have allowed Bank of America's shareholders the opportunity to stop the deal and let Merrill collapse.
• Counter-counter-offer on Chrysler debt. After rejecting a too-rich counter-offer from Chrysler creditors, the Treasury has reportedly raised its own offer in an effort to reach a deal with lenders by the end of the month. The new deal would see lenders get $1.5B of first-lien debt and a 5% equity stake in a restructured Chrysler in exchange for the $6.9B of debt they now hold. The Treasury had previously suggested lenders write off all but $1B of the debt and receive no stock.
• GM to miss debt payment, idle plants. Trying to avoid bankruptcy ahead of the government's June 1 deadline, General Motors (GM) may rush to close dealerships, scrap models and could idle most of its plants for around two months this summer. The moves could help GM break even with annual sales as low as 10M vehicles. Meanwhile, CFO Ray Young said the company doesn't plan to pay off $1B of debt due June 1, and will instead swap the debt for shares or rely on bankruptcy protection. The tougher public stance towards bondholders is meant to lay the groundwork for what promises to be an ugly debt-for-equity swap GM expects to launch by next week.
• Hard times for Hartford. Hartford Financial Services (HIG) is said to be seeking bids from rivals including Travelers Companies (TRV) for its flagship property insurance business. Sources said Hartford has been shopping the unit after losses in its life division led to credit downgrades, and that damage from the financial crisis may ultimately lead to a breakup of the insurer. The property unit is estimated to be worth $4B-$8B.
• Obama meets with credit card chiefs. Obama will meet with executives from the credit card industry today, one day after a congressional panel approved legislation to curb credit card fees and limit consumer penalties. The American Bankers Association is concerned such restrictions will tighten the availability of consumer credit and make it more expensive. Bank of America (BAC), American Express (AXP), Citigroup (C), Wells Fargo (WFC), JPMorgan Chase (JPM), Capital One (COF), Visa (V) and Mastercard (MA) will be among the 13 companies represented.
• NY cracks down on pension agents. New York State's public pension fund will ban the use of middlemen who help private-equity funds and other investors secure its business. The state is investigating whether these middlemen, called placement agents, were involved in a scheme to receive illegal payments from firms trying to win state business. As one of the nation's largest public pension funds, New York's decision could prompt other states to follow suit.
• Morgan mulls TARP repayment. Despite reporting a larger-than-expected quarterly loss, Morgan Stanley (MS) CFO Colm Kelleher said the company will 'consider' repaying $10B to the government. The statement comes less than a month after CEO John Mack told employees 'it's the wrong time' to return the money. Morgan Stanley had a Tier 1 ratio of 16.4% at the end of March, or 12.9% if the bank repays TARP funds. Shares +2.9% premarket (7:00 ET).
• Credit Suisse profit beat. Credit Suisse (CS) posted a better-than-expected Q1 profit, bouncing back from several quarterly losses in 2008. The bank saw a net profit of 2B Swiss francs ($1.72B), more than double analysts' forecasts. Though short on details for its 2009 outlook, the bank said it is "in a position to weather the storms and perform well when market opportunities arise." Shares +10.5% premarket (7:00 ET).
• Apple shines on iPhone sales. Apple's (AAPL) quarterly earnings easily beat consensus estimates (see details below) as strong sales of iPods and iPhones held up despite the weak economy. Profit was also helped by declining commodity prices for key product components like aluminum and memory chips. This was the company's first quarter since CEO Steve Jobs went on medical leave.
• eBay gets okay on Gmarket buy. eBay (EBAY) won regulatory approval from South Korea's antitrust watchdog to proceed with its planned purchase of Gmarket (GMKT). A majority of Gmarket shareholders have already agreed to the cash tender offer.
• Glaxo to release study after long delay. GlaxoSmithKline (GSK) will release the first study comparing its cervical cancer vaccine with Merck's (MRK) blockbuster Gardasil at a May 10 medical meeting. The fact that the results are being released 14 months after the study concluded and at a relatively unknown meeting have left investors and analysts puzzled.
• Freddie CFO takes his own life. Acting CFO of Freddie Mac (FRE) David Kellerman was found dead in his home in what appears to be a suicide. Kellerman had worked at the mortgage giant for 16 years.
• House prices rise slightly (.pdf). FHFA's House Price Index showed U.S. home prices rose 0.7% in February M/M, bringing the twelve-month total to -6.5%. January's previously reported 1.7% gain was revised down to 1.0%.

Earnings: Thursday Before Open

• AmerisourceBergen (ABC): FQ2 EPS of $0.95 beats by $0.06. Revenue of $17.31B (-2.5%) vs. $17.93B. Sees full-year EPS of $3.18-3.30 vs. $3.19. (PR)
• Alexion Pharmaceuticals (ALXN): Q1 EPS of $0.16 beats by $0.02. Revenue of $81M (+78.7%) vs. $82M. (PR)
• AU Optronics (AUO): Q1 EPS of -$0.71 misses by $0.04. Revenue of $1.5B (-66.7%) in-line. Expects utilization rates to improve substantially in Q2. (PR)
• AutoNation (AN): Q1 EPS of $0.23 beats by $0.07. Revenue of $2.47B (-35.6%) vs. $2.74B. Says it reduced debt by $500M in Q1, and remains in compliance with all debt covenants. Sees sales improving in H2. (PR)
• Black & Decker (BDK): Q1 EPS of $0.22 beats by $0.14. Revenue of $1.07B (-28.2%) vs. $1.16B. Sees full-year EPS of $1.50-1.90 vs. consensus of $1.79. (PR)
• Bunge (BG): Q1 EPS of -$1.76 misses by $2.25. Revenue of $9.2B (-26.2%) vs. $11B. (PR)
• Canadian Pacific Railway (CP): Q1 EPS of C$0.39 misses by C$0.09. Revenue of C$1.07B (-6.6%) vs. C$1.04B. "The unprecedented temporary decline in traffic in some of our key markets (as measured by carloads), particularly potash (-70%), Canadian coal (-30%), and automotive (-43%) has resulted in more than 2,400 employee layoffs to date." (PR)
• Celestica (CLS): Q1 EPS of $0.13 beats by $0.04. Revenue of $1.47B (-20%) vs. $1.51B. Q2 guidance in line. (PR)
• CIT Group (CIT): Q1 EPS of -$1.30 misses by $0.84. Tier-1 capital ration 9.3%. (PR)
• CME Group (CME): Q1 EPS of $3.20 in-line. Revenue of $647M (+3.5%) vs. $656M. Average rate per contract increased 12% to $0.83. (PR)
• ConocoPhillips (COP): Q1 EPS of $0.56 beats by $0.14. Revenue of $30.7B (-44.1%) vs. $26.34B. Shares +4.3% premarket. (PR)
• CONSOL Energy (CNX): Q1 EPS of $1.08 beats by $0.15. Revenue of $1.22B (+18.8%) in-line. "Energy companies with less than stellar financial positions could find it very difficult to obtain reasonable financing terms to maintain their operations. We believe that this will impact supply and could set the stage for higher coal and natural gas prices as early as '10." Shares +3.5% premarket. (PR)
• Cooper Industries (CBE): Q1 EPS of $0.47 beats by $0.01. Revenue of $1.26B (-18.7%) vs. $1.32B. Sees Q2 EPS of $0.50-0.60 vs. $0.60 and full-year EPS of $2.30-2.60 vs. $2.40. (PR)
• Danaher (DHR): Q1 EPS of $0.72 misses by $0.01. Revenue of $2.63B (-13.2%) vs. $2.67B. (PR)
• Diamond Offshore Drilling (DO): Q1 EPS of $2.51 beats by $0.29. Revenue of $886M (+12.7%) vs. $878.5M. (PR)
• EMC (EMC): Q1 EPS of $0.16 in-line. Revenue of $3.15B (-9.2%) vs. $3.25B. Sees global IT spending down in the low-double-digits for 2009. Expects $450M in cost reductions, up from a previous estimate of $350M, but says margins will decline due to weaker IT spending. (PR)
• ENSCO International (ESV): Q1 EPS of $1.56 beats by $0.04. Revenue of $514M (-9.6%) in-line. (PR)
• Exelon (EXC): Q1 EPS of $1.20 beats by $0.07. Revenue of $4.75B (+3.6%) vs. $4.62B. Reaffirms full-year EPS guidance. Shares +0.4% premarket. (PR)
• Fifth Third Bancorp (FITB): Q1 EPS of -$0.04 beats by $0.23. Tier 1 capital ratio of 10.9%. Tangible equity ratio of 7.9%. (PR)
• Goodrich (GR): Q1 EPS of $1.35 beats by $0.28. Revenue of $1.7B (-2.8%) in-line. Sees full-year EPS of $4.50-4.75 vs. $4.63, and revenue of $6.9B vs. $7.1B consensus. (PR)
• Hershey Foods (HSY): Q1 EPS of $0.38 beats by $0.03. Revenue of $1.24B (+6.5%) vs. $1.19B. Reaffirms 2009 net sales growth of 2-3%. Sees EPS increasing at less than its long-term objective of 6-8%. (PR)
• JetBlue Airways (JBLU): Q1 EPS of $0.08 beats by $0.05. Revenue of $793M (-2.8%) vs. $810M. Operating margin of 9.3% vs. 2.2% a year ago. First profitable Q1 since 2005. Shares +9.9% premarket. (PR)
• L-3 Communications (LLL): Q1 EPS of $1.66 beats by $0.03. Revenue of $3.64B (+3.7%) in-line. Reaffirms full-year guidance. (PR)
• Logitech (LOGI): FQ4 EPS of -$0.20 misses by $0.26. Revenue of $408M vs. $496M. Gross margin fell to 25% from 35.6% last quarter. "Our sales were negatively impacted by the combination of weak consumer demand and the accelerating reset by our channel partners of their weeks of supply." Shares -11.3% premarket. (PR)
• Marriott International (MAR): Q1 EPS of $0.24 beats by $0.10. Revenue of $2.5B (-14.8%) in-line. Issues downside EPS guidance for Q2 of $0.20-0.23 vs. $0.26 consensus. Maintains guidance for FY '09 of $0.88-1.02 EPS. (PR)
• Marshall & Ilsley (MI): Q1 EPS of -$0.44 misses by $0.11. Revenue of $M in-line. Q1 loan-loss provision of $478M. Shares +5.6% premarket. (PR)
• National-Oilwell Varco (NOV): Q1 EPS of $1.13 beats by $0.07. Revenue of $3.48B (+29.6%) vs. $3.29B. "Though the pace of new capital equipment orders has slowed in the short run, we believe investment in drilling equipment will resume, to enable the industry to explore new oil and gas frontiers. Nevertheless market conditions remain very challenging, and the timing of a recovery is uncertain." Shares -4.4% premarket. (PR)
• NII Holdings (NIHD): Q1 EPS of $0.43 beats by $0.07. Revenue of $M (+961%) in-line. Shares +2.3% premarket. (PR)
• Novartis (NVS): Q1 earnings of $1.96B ($0.87/share) vs. consensus of $1.89B. Sales fell 2% to $9.71B. Sees drug sales up mid-to-high single-digits. Shares +4.7% premarket. (Bloomberg)
• Occidental Petroleum (OXY): Q1 EPS of $0.50 beats by $0.13. Revenue of $3.07B (-49%) vs. $3.18B. Production was up almost 8% in Q1. (PR)
• Philip Morris (PM): Q1 EPS of $0.74 beats by $0.05. Revenue of $5.6B (-5.5%) vs. $5.48B. Reaffirms full-year guidance of $2.85-3.00 vs. consensus of $3.02. (PR)
• PNC Financial Services (PNC): Q1 EPS of $1.03 beats by $0.61. Revenue of $3.9B (+112.6%) vs. $3.5B. (PR)
• Potash (POT): Q1 EPS of $1.02 beats by $0.16. Revenue of $922.5M (-51.2%) vs. $975.5M. Issues downside EPS guidance for Q2 of $1.10-$1.50 vs. $2.21 consensus, and FY '09 EPS of $7.00-$8.00 vs. $9.65. (PR)
• RadioShack (RSH): Q1 EPS of $0.34 beats by $0.12. Revenue of $1B (+5.6%) vs. $0.94B. Comps were up 5% vs. Q1 2008. (PR)
• Raytheon (RTN): Q1 EPS of $1.11 beats by $0.10. Revenue of $5.88B (+9.9%) vs. $5.6B. Full-year guidance in line. Shares +2.4% premarket. (PR)
• Royal Caribbean Cruises (RCL): Q1 EPS of -$0.17 beats by $0.17. Revenue of $1.33B (-7.2%) in-line. Sees full-year EPS of $1.35 vs. consensus of $0.97. Shares +13.5% premarket. (PR)
• Sigma-Aldrich (SIAL): Q1 EPS of $0.68 beats by $0.04. Revenue of $519M (-8.8%) vs. $532M. Full-year guidance in line. (PR)
• Suncor Energy (SU): Q1 EPS of $0.24 beats by $0.12. The decrease in earnings was primarily from lower price realizations, with benchmark commodity prices significantly weaker in Q1 '09 vs. Q1 '08. (PR)
• SunTrust Banks (STI): Q1 EPS of -$0.46 beats by $0.19. Revenue of $2.24B (+16.3%) vs. $2.06B. Majority of loss was due to a $715M goodwill impairment charge. Tier-1 ratio estimated at 11%, up 13 points from last quarter. (PR)
• Supervalu (SVU): FQ4 EPS of $0.87 beats by $0.08. Revenue of $10.82B (+4.2%) in-line. (PR)
• Thermo Fisher (TMO): Q1 EPS of $0.62 misses by $0.08. Revenue of $2.26B vs. $2.42B. Sees full-year EPS of $2.80-3.10 vs. $3.15, and revenue of $9.6-9.9B vs. $10.14B. "Our customers are clearly delaying their capital purchases in the current environment." Shares -7.6% premarket. (PR)
• Union Pacific (UNP): Q1 EPS of $0.72. beats by $0.06. Revenue of $3.42B (-20%) vs. $3.55B. "The difficult economic conditions continue to affect our business volumes. During this challenging time, we are reducing costs across the board..." Shares +2.7% premarket. (PR)
• UPS (UPS): Q1 EPS of $0.52 misses by $0.04. Revenue of $10.94B (-13.7%) vs. $11.44B. Sees Q2 EPS of 0.45-0.55 vs. consensus of $0.65. "Economic indicators tell us recovery in the U.S. might begin late this year, but more likely not until 2010." Shares -3.7% premarket. (PR)
• US Airways (LCC): Q1 EPS of -$2.28 beats by $0.10. Revenue of $2.46B (-13.6%) in-line. "Our first quarter loss reflects the weakness in the global economy that has negatively impacted revenues throughout our industry. The steps we have taken to adapt to this environment are having a significant positive impact, though, as evidenced by our significant improvement in earnings excluding special items and fuel hedges." Shares +6% premarket. (PR)
• Zimmer (ZMH): Q1 EPS of $0.95 beats by $0.01. Revenue of $993M (-6.3%) vs. $1B. Sees full-year EPS of $3.85-4.00 vs. $3.88. (PR)

Earnings: Wednesday After Close

• Apple (AAPL): FQ2 EPS of $1.33 beats by $0.24. Revenue of $8.16B vs. $7.96B. Sees FQ3 EPS of $0.95-1.00 vs. consensus of $1.12, and revenue of $7.7-7.9B vs. $8.28B. Mac sales of 2.22M (-3% Y/Y). iPod sales 11M (+3%). iPhone sales 3.79M (+123%). (PR)
• Alliance Data Systems (ADS): Q1 EPS of $1.19 beats by $0.09. Revenue of $480M (-3.8%) vs. $488M. Sees Q2 EPS of $1.05 vs. $1.22. (PR)
• eBay (EBAY): Q1 EPS of $0.39 beats by $0.05. Revenue of $2.02B (-7.8%) vs. $1.94B. (PR)
• Equifax (EFX): Q1 EPS of $0.58 beats by $0.04. Revenue of $453M (-10%) vs. $448M. (PR)
• F5 Networks (FFIV): FQ2 EPS of $0.38 in-line. Revenue of $154M (-3.1%) in-line. Says Feb. sales were particularly slow, but March improved significantly. (PR)
• Leggett & Platt (LEG): Q1 EPS of $0.06 misses by $0.01. Revenue of $718M (-28.1%) vs. $807M. Sees full-year EPS of $0.60-0.90 vs. $0.72, and revenue of $2.9-3.3B vs. $3.39B. (PR)
• Lam Research (LRCX): FQ3 EPS of -$0.71 misses by $0.05. Revenue of $174.4M (-71.6%) vs. $175.9M. (PR)
• Noble (NE): Q1 EPS of $1.62 beats by $0.16. Revenue of $896M (+4%) in-line. (PR)
• Novellus Systems (NVLS): Q1 EPS of -$0.47 beats by $0.04. Revenue of $98.9M (-68.6%) vs. $101.7M. Says it's cautiously optimistic order activity has stabilized. (PR)
• Pactiv (PTV): Q1 EPS of $0.69 beats by $0.23. Revenue of $766M (-5.2%) vs. $732.5M. Sees Q2 EPS of $0.54-0.58 vs. $0.51 and full-year EPS of $2.15-2.25 vs. $1.89. "Compared with the first quarter of last year, we benefited from lower raw material costs, as well as lower logistics costs, and improved productivity." (PR)
• Robert Half International (RHI): Q1 EPS of $0.06 in-line. Revenue of $823M (-32.8%) vs. $844M. (PR)
• SLM Corp. (SLM): Q1 EPS of -$0.03 vs. consensus of $0.12. Loss was partly the result of ongoing dislocation in the commercial paper market. (PR)
• VMware (VMW): Q1 EPS of $0.25 beats by $0.05. Revenue of $470M vs. $474M. Sees Q2 revenue flat to down vs. a year ago. (PR)
• Xilinx (XLNX): FQ4 EPS of $0.26 beats by $0.08. Revenue of $395M (-17%) vs. $383M. (PR)
• Yum! Brands (YUM): Q1 EPS of $0.48 beats by $0.08. Revenue of $2.22B (-8.1%) vs. $2.33B. Sees full-year EPS of $2.10 vs. $2.08. Says Q2 likely to be its most challenging quarter. (PR)

Today's Markets

Overseas markets moved higher Thursday, giving a boost to futures.

Q4 2008 Earnings Call Transcript

February 5, 2009 8:30 am ET

• Profits amiss, Swiss Re gets Buffett boost. Warren Buffett's Berkshire Hathaway (BRK.A) will invest around 3B Swiss francs ($2.6B) in Swiss Reinsurance (SWCEY.PK) to help the firm raise its capital levels and protect its AA credit rating. In return, Swiss Re will issue a bond with a coupon of 12% which can later be converted into shares, potentially giving Berkshire a stake of over 20% in the world's second-biggest reinsurer. Swiss Re, which has suffered heavy losses from its credit default swaps exposure and wrote down 6B Swiss francs in toxic assets, expects to post a net loss of around 1B Swiss francs for 2008 and may eventually seek another 2B Swiss francs in addition to Buffett's capital injection. The company will also cut its dividend and disband part of its asset-management unit. CEO Jacques Aigrain said the company was "disappointed with our overall results in 2008," but that Buffett's investment "is a testament to the strength of our franchise." Shares -16.6% in Switzerland (7:00 ET).
• Buy American, sort of. The Senate has softened the 'Buy American' plan in its $900B stimulus bill after Obama expressed concern that the original language could trigger a trade war. The new amendment requires the Buy American provision to be "applied in a manner consistent with U.S. obligations under international agreements," providing some relief to Canada, Mexico, the EU and other major trading partners. Some Senators went even further, trying to remove the Buy American provision altogether, but failed to garner the necessary votes. McCain, an opponent of the provision, warned it has "echoes of the disastrous Smoot-Hawley tariff act... It sends a message to the world that the United States is going back to protectionism." Meanwhile, many foreign firms, trying to win a piece of the stimulus package, are increasing their American presence.
• Watchdog calls for government investment strategy. According to a report issued today by a government watchdog, the U.S. needs to develop an investment strategy for its recently acquired holdings. To date, the U.S. government has collected over $271M in dividends from ownership stakes in American banks and holds $279.2B in preferred shares from 319 financial institutions, as well as common stock warrants from 230 institutions. The report also raised questions about potential fraud issues in the Fed's Term Asset-Backed Loan Facility (TALF).
• Parts suppliers want part of bailout. U.S. auto-parts makers are seeking up to $25.5B in federal aid as the auto industry gets slammed, forcing broad production cuts among automakers. Suppliers are asking for $8B in direct federal loans, $7B to flow through automakers so suppliers can be paid in ten days instead of the traditional 45, and $10.5B to guarantee receivables of suppliers whose customers have taken federal loans. Without immediate aid, industry representatives say hundreds of parts suppliers will close or file for bankruptcy.
• Revolving door for Volvo. Looking for cash to avoid a federal bailout, sources say Ford (F) is in talks to sell its Volvo unit to China's Geely Automobile Holdings. Ford has also approached two other Chinese automakers, and will likely recoup less than the $6.4B it paid for Volvo in 1999. The U.S. automaker has already received commitments from Export-Import Bank of China to provide the necessary financing for an acquisition. Ford creditors would likely receive some or all of the proceeds from a Volvo sale.
• P&G gamble on getting out of pharma. Procter & Gamble (PG) is looking to exit the pharmaceutical business, and has hired Goldman Sachs (GS) to identify possible buyers for its pharmaceutical brands. P&G's pharma unit accounts for global sales of over $2B. The company announced in December that it had stopped investing in new drug development, citing the need to create 'maximum value' for shareholders.
• Cisco profit chill. Cisco (CSCO) posted a 27% drop in FQ2 earnings on weaker sales and higher costs, though the firm still managed to report slightly better figures than Wall Street expected (see earnings details below). Cisco also issued a disappointing sales forecast for the current quarter, forecasting a 15-20% drop from last year, or roughly $7.8B-$8.3B less. Analysts had expected sales of about $8.7B. CEO John Chambers expressed optimism about the company, telling analysts "this downturn, in my opinion, is both the biggest challenge of our lifetime, but also represents the biggest opportunity to transform our company as well as our economy through a series of bold steps." (Read the earnings call transcript.)
• Overseas credit use lifts Visa. Profit rose 35% at Visa (V), thanks to a gain in non-U.S. consumers using credit and debit cards (see earnings details below). CEO Joe Saunders said Visa is 'steadfast' in its guidance that EPS will rise at least 20% this year, highlighting the company's "processed transaction growth, the strength of debit, and the global diversity of our business." Total volume rose 44% in Central Europe, the Middle East and Africa, 27% in Latin America and the Caribbean and 20% in the Asia-Pacific region vs. just 7.1% growth in the U.S.
• Congressional hearings on Madoff. Harry Markopolos testified before Congress yesterday, slamming the SEC for 'financial illiteracy' on the Madoff case and for 'an abject failure by the regulatory agencies we entrust as our watchdog.' Markopolos also lodged a serious accusation against the Wall Street Journal, saying "I believe that senior editors of the [Wall Street] Journal respected and feared Mr. Madoff" and wouldn't allow senior investigative reporter John Wilke to pursue the matter when contacted in December 2005. (Read Markopolos' full testimony - .pdf)
• Job cuts soar. According to Challenger, firing announcements rose an astounding 222% last month from January 2008, to 241,749. "Even if the stimulus package is successful, it could take months to make a noticeable impact on the employment picture. There is no light at the end of the tunnel." ADP reported nonfarm employment decreased 522,000 in January, a drop less than the 535K consensus. The goods-producing sector declined for the 24th consecutive month. Employment in the manufacturing sector fell for the 28th time over the last 29 months.
• Online recruiting weakens again. Monster's online employment index dipped 13 points in January to 118 as online recruiting slowed for the fourth straight month. It's down 26% from a year ago - a more negative pace than the previous three months, suggesting further deterioration in labor market conditions. Arts, entertainment, and recreation remains the weakest trending industry, indicating further softening in consumer leisure spending activity. "The fact that employers have chosen to begin recruiting in 2009 on a cautious note is not surprising given the uncertain nature of the global economy," it said.
• Non-mfg sector contracts. Economic activity in the non-manufacturing sector contracted in January, registering 42.9% on the ISM Index vs. December's 40.1%. This was the fourth month in a row of sector contraction, though the rate has slowed slightly.
• BoE rate cut. The Bank of England cut its key lending rate to 1% from 1.5%, as expected. BoE has brought its rate down from 5% in October as the world economy worsened and the U.K. slipped into recession.

Earnings: Thursday Before Open

• Alpha Natural Resources (ANR): Q4 EPS of -$0.07 misses by $0.29. Revenue of $594M (+16.3%) vs. $631M. (PR)
• Brookfield Properties (BPO): Q4 EPS of $0.49 beats by $0.12. Revenue of $717M (-12.9%) vs. $582M. (PR)
• Bunge (BG): Q4 EPS of -$1.89 misses by $1.60. Revenue of $10.9B (-12.3%) vs. $12.0B. (PR)
• Burger King (BKC): FQ2 EPS of $0.33 misses by $0.04. Revenue of $634M (+3.4%) vs. $659M. (PR)
• Cardinal Health (CAH): FQ2 EPS of $0.93 beats by $0.03. Revenue of $25.1B (+7.8%) vs. $24.5B. (PR)
• CIGNA (CI): Q4 EPS of $0.49 beats by $0.08. Revenue of $4.8B (+6.7%) vs. $4.75B. (PR)
• Cincinnati Bell (CBB): Q4 EPS of $0.10 in-line. Revenue of $356.8M (-0.9%) vs. $349.9M. (PR)
• Cincinnati Financial (CINF): Q4 EPS of $0.57 in-line. Revenue of $1.0B (+4.2%) vs. $915M. (PR)
• Deutsche Bank (DB): Q4 net loss of €4.8B - its first in more than 50 years - including a €5.8B trading loss. Net interest income rose to €3.76B from €2.69B a year ago. But January revenue rose "significantly" to €2.8B, giving CEO Josef Ackermann "confidence" for 2009. Shares -3.4% premarket. (Bloomberg)
• Diamond Offshore Drilling (DO): Q4 EPS of $2.11 misses by $0.23. Revenue of $903M (+45.3%) vs. $912M. (PR)
• Domtar Corp (UFS): Q4 EPS of -$0.04 misses by $0.10. Revenue of $1.5B (-11.4%) in-line. (PR)
• Duke Energy (DUK): Q4 EPS of $0.27 beats by $0.02. Revenue of $3.1B (+3.4%) in-line. (PR)
• EarthLink (ELNK): Q4 EPS of $0.25 misses by $0.13. Revenue of $216M (-23.4%) in-line. (PR)
• Estee Lauder Companies (EL): FQ2 EPS of $0.80 beats by $0.03. Revenue of $2.0B (-11.6%) in-line. (PR)
• FLIR Systems (FLIR): Q4 EPS of $0.41 beats by $0.03. Revenue of $302M (+24.6%) vs. $315M. (PR)
• Flowers Foods (FLO): Q4 EPS of $0.34 beats by $0.03. Revenue of $621.6M (+31.2%) vs. $620.3M. (PR)
• IMS Health (RX): Q4 EPS of $0.50 in-line. Revenue of $580.9M (-4.1%) vs. $609.3M. (PR)
• Kellogg (K): Q4 EPS of $0.53 beats by $0.03. Revenue of $2.93B (+5%) vs. $3.05B. Peanut-related recall will cost it $0.06/share. (PR)
• Kimco Realty (KIM): Q4 EPS of $0.04 misses by $0.03. Revenue of $197M (+10.7%) vs. $190M. (PR)
• MasterCard (MA): Q4 EPS of $1.87 beats by $0.26. Revenue of $1.23B (+14.2%) in-line. Gross dollar volume up 3.4% to $605B. Shares +4.9% premarket. (PR)
• MF Global (MF): FQ3 EPS of $0.13 in-line. Revenue of $422M (+0.9%) vs. $368M. (PR)
• Moody's (MCO): Q4 EPS of $0.37 beats by $0.09. Revenue of $403.7M (-20%) vs. $387.1M. (PR)
• NCR (NCR): Q4 EPS of $0.58 beats by $0.04. Revenue of $1.42B (-6.6%) vs. $1.5B. (PR)
• Sally Beauty (SBH): FQ1 EPS of $0.10 misses by $0.03. Revenue of $645.6M (-1.6%) vs. $689.8M. (PR)
• Spectra Energy (SE): Q4 EPS of $0.32 beats by $0.02. Revenue of $1.3B (-9.1%) in-line. (PR)
• Spirit AeroSystems (SPR): Q4 EPS of $0.14 misses by $0.21. Revenue of $646.1M vs. $730.2M. (PR)
• Western Union (WU): Q4 EPS of $0.37 beats by $0.03. Revenue of $1.29B (-1.3%) vs. $1.37B. (PR)

Earnings: Wednesday After Close

• 99 Cents Only Stores (NDN): FQ3 EPS of $0.18 misses by $0.01. Revenue of $351M (+8%) vs. $327M. Shares +0.1% AH. (PR)
• Akamai Technologies (AKAM): Q4 EPS of $0.44 beats by $0.04. Revenue of $213M vs. $205M. Shares +7.1% AH. (PR)(earnings transcript)
• Assurant (AIZ): Q4 EPS of $1.31 misses by $0.23. Revenue of $2.22B (+1.7%) vs. $2.32B. (PR)
• Atmel (ATML): Q4 EPS of $0.01 beats by $0.04. Revenue of $335M vs. $339M. Won't provide Q1 guidance due to uncertain economic environment. Shares -3.7% AH. (PR)(earnings transcript)
• AvalonBay Communities (AVB): Q4 FFO of $0.30 misses by $0.01. Sees 2009 FFO of $4.50-4.80 vs. $4.82. (PR)
• BMC Software (BMC): FQ3 EPS of $0.64 beats by $0.05. Revenue of $488M (+6.4%) in-line. Sees 2009 EPS of $2.20-2.30 vs. $2.19. Shares +4.7% AH. (PR)(earnings transcript)
• Cadence (CDNS): Q4 EPS of -$0.04 misses by $0.02. Revenue of $227M vs. $218M. Shares flat AH. (PR)(earnings transcript)
• CBL & Associates Properties (CBL): Q4 FFO of $0.80 vs. consensus of $0.96. Revenue of $299M vs. $295M. Sees 2009 FFO of $3.10-3.25 vs. $3.21. Shares +16% AH. (PR)
• Cisco Systems (CSCO): FQ2 EPS of $0.32 beats by $0.02. Revenue of $9.09B vs. $9B. Remains comfortable with long-term vision. Shares -4.4% AH. (PR)(earnings transcript)
• EOG Resources (EOG): Q4 EPS of $0.74 vs. consensus of $1.04. Revenue of $1.63B (+27%) vs. $1.28B. Shares +0.6% AH. (PR)
• Equifax (EFX): Q4 EPS of $0.61 beats by $0.02. Revenue of $447M (-9%) vs. $453M. Sees Q1 EPS of $0.52-0.57 vs. $0.59. (PR)
• Equity Residential (EQR): Q4 FFO of -$0.13 misses by $0.02. Revenue of $530M (+5.4%) vs. $538M. Sees 2009 FFO of $2.00-2.30 vs. $2.37. Shares -2% AH. (PR)
• Harman (HAR): FQ2 EPS of $0.18 misses by $0.35. Revenue of $756M (-29.1%) vs. $798M. Plans to shave another 1,100 bringing total to 2,000. Shares -10.6% AH. (PR)(earnings transcript)
• Harris (HRS): FQ2 EPS of $1.08 beats by $0.06. Revenue of $1.52B vs. $1.47B. Sees 2009 EPS of $3.93-4.03 vs. $4.10. Shares -4.5% AH. (PR)(earnings transcript)
• Novellus Systems (NVLS): Q4 EPS of -$0.21 misses by $0.04. Revenue of $188M in-line. Shares -6.4% AH. (PR)(earnings transcript)
• ON Semiconductor (ONNN): Q4 EPS of $0.15 beats by $0.06. Revenue of $489M (+19.8%) vs. $485M. Sees Q1 revenue of $340-380M vs. $411M. Shares -1.6% AH. (PR)(earnings transcript)
• Prudential Financial (PRU): Q4 EPS of -$2.04 vs. consensus of -$1.19. Revenue of $5.9B vs. $6.35B. Sees 2009 EPS of $5.25-5.65 vs. $5.56. Shares -1.5% AH. (PR)
• Pulte Homes (PHM): Q4 EPS of -$1.33 vs. consensus of -$0.71. Revenue of $1.65B (-43.1%) vs. $1.44B. New home orders down 61% to 1,763. Backlog of $631M vs. $2.5B a year ago. Ends quarter with $1.7B in cash, no debt. Shares -2.6% AH. (PR)
• Sunoco (SUN): Q4 EPS of $2.68 vs. consensus of $2.15. Revenue of $9.14B (-30.6%) vs. $12.46B. Record revenue from its non-refining business. Shares -2.1% AH. (PR)
• THQ (THQI): FQ3 EPS of -$0.14 misses by $0.21. Revenue of $386M (-24.3%) vs. $403M. Continues to experience a cautious retail and consumer environment. No FQ4 guidance. Shares -15% AH. (PR)(earnings transcript)
• Torchmark (TMK): Q4 EPS of $1.40 misses by $0.10. Revenue of $M in-line. Sees 2009 EPS of $6.05-6.25 vs. $6.24. Shares +1.5% AH. (PR)
• Visa (V): FQ1 EPS of $0.78 beats by $0.12. Revenue of $1.74B vs. $1.68B. Payments volume +12% to $701B. Total volume +16% to $1.1T. Shares +7.9% AH. (PR)(earnings transcript)

Today's Markets

• Asia markets closed mostly down. Nikkei -1.1% to 7,950. Hang Seng +0.9% to 13,179. Shanghai -0.5% to 2,098. BSE -1.2% to 9,091.
• In Europe at midday, London -0.2%. Paris -0.8%. Frankfurt -0.5%.
• U.S. futures: Dow +0.1%. S&P -0.1%. Nasdaq -1.5%. Crude +0.4% to $40.47. Gold +1.7% to $917.60.

Thursday's Economic Calendar

• Retail Same-Store Sales
  Monster Employment Index
  7:00 BoE Announcement
  7:45 ECB Announcement
  8:30 Jobless Claims
  8:30 Productivity and Costs
  9:00 RBC CASH Index
  10:00 Factory Orders
  10:30 EIA Natural Gas Report
  4:30 PM Money Supply
• Notable earnings before Thursday's open: ANR, BG, BKC, BPO, CAH, CBB, CI, CINF, DO, DUK, EL, ELNK, FLIR, FLO, K, KIM, MA, MCO, MF, NCR, RX, SBH, SE, SPR, UFS, WU
• Notable earnings after Thursday's close: ALKS, ESLR, HIG, JDSU, NFX, PBI, PWAV, SRCL, SWKS, THOR, VRSN

Seeking Alpha editor Eli Hoffmann contributed to this post.