Q3 2009 Earnings Call

October 27, 2009 5:00 pm ET

NYSE:TSS - August 27, 2009 : $15.18

52-week range: $10.36 (Nov. 21, 2008) - $20.45 (Sep. 2, 2008)

• MSFT, Yahoo reach search deal. At long last, sources say Microsoft (MSFT) and Yahoo (YHOO) have reached a search deal and will announce it within the next 24 hours. Yahoo will use Microsoft's Bing search-engine technology on its own sites, including the Bing brand, and will supply search text ads on its sites and some of Microsoft's. The deal appears to be structured as a revenue share with no upfront fee, with Yahoo taking 110% the first two years and 90% in the third. The deal is on a smaller scale than previously envisioned, but both Microsoft and Yahoo are hoping that a combined attack will be more effective against Google (GOOG). UPDATE: Microsoft, Yahoo officially announce the deal. Premarket: MSFT +0.8%, YHOO -5.8% (8:30 ET).
• Say-on-pay makes headway. A congressional committee approved a bill that would put new restrictions on executive pay, giving shareholders the right to cast non-binding annual votes on executive compensation and special pay packages, and enabling regulators to ban pay structures that incentivize inappropriate risk-taking. The House of Representatives is expected to vote on the measure on Friday.
• Santander plans bank IPO. Banco Santander (STD) will spin off its Brazilian unit in an initial public offering that could raise at least $3B, creating one of the biggest publicly listed banks in Latin America. The listing will likely occur in the next three months.
• Nasdaq backs flash trading ban. As the debate on flash trading heats up, Sen. Charles Schumer said the Nasdaq Stock Market supports a ban on the trading practice and only 'reluctantly' started offering flashes early last month. Meanwhile, the SEC was apparently investigating the practice even before Schumer's letter calling for action, and may move to ban flash trading 'within the next couple of weeks.'
• Sprint buys Virgin Mobile. Sprint (S) agreed to buy Virgin Mobile USA (VM) for $5.50/share ($483M) in an all-stock deal, and will retire $205M of Virgin's debt. Sprint already owns 13.1% of Virgin, which offers cheap prepaid wireless plans. Sprint is hoping the cheaper, non-contract service will help stem a tide of customer defections.
• IBM buys software maker. IBM (IBM) will buy SPSS for $1.2B, a 42% premium on SPSS' closing price on Monday. The deal, the latest in a series of IBM acquisitions, expands IBM's software portfolio and is a further sign of improvement in the technology sector deal market. The deal should be completed by year-end.
• NJ sues Merrill. New Jersey is suing Merrill Lynch, alleging the firm sold the state's investment division $300M in preferred stock based on misleading information. New Jersey officials said if the state's investment unit "had known Merrill’s true financial condition, it would not have participated in the January 2008 offering and would not have agreed to a conversion in July 2008."
• GM returns to car loans. After a year-long hiatus, General Motors plans to get back into the car-leasing business and is said to be eyeing August 1 as its re-entry date. GM has said credit availability is still hurting auto sales, and that its exit from the leasing business forced many customers to defect to other automakers. Rivals including Ford (F) and Toyota (TM) have scaled back their leasing but haven't pulled out of the business entirely.
• Apple bars Google Voice app. Apple (AAPL) banned two iPhone applications based on Google Voice (GOOG) as the rivalry between the two tech giants grows. An Apple representative said some of the applications offered functions too close to what the iPhone already provides.
• American Air expects alliance approval. American Airlines (AMR) said it expects to win approval by October to form an alliance with British Airways (BAIRY.PK) and Iberia. The airline is betting on intra-alliance competition and global partnerships to help it survive.
• KKR preps Dollar General IPO. Kohlberg Kravis Roberts is reportedly in advanced preparations for an initial public offering of Dollar General and will also serve as one of the lead underwriters of the deal. It marks the first time KKR will underwrite one of its own IPOs as it tries to strengthen its reputation ahead of its own planned listing.
• SEC files fraud charges. The SEC filed suit against four individuals, accusing them of fraud in connection to over $197M raised from at least 900 investors nationwide which was funnelled to a commercial real estate venture. The SEC contends the defendants made "material misrepresentations to investors," including false claims about the use of the funds and the safety of investments.
• Home prices improve (.pdf). The S&P/Case-Shiller 20-City Home Price Index was -17.1% in May vs. last year, narrower than last month's 18.1% drop, and the fourth monthly improvement in a row as "the pace of descent in home price values appears to be slowing." The 0.5% month-on-month increase was the first uptick in three years.
• Consumer confidence. Conference Board's July Consumer Confidence came in at 46.6 vs 49.0 consensus, down from 49.3 in June. The decline was aggravated by a worsening job market, as the percentage of consumers claiming jobs are hard to get rose sharply. According to ABC's poll, consumer confidence registered at -47, up from last week's -50 and breaking the -50 threshold for the first time since mid-June. Twenty-six percent of Americans say it's a good time to buy things, up from 22% last week, while 44% rate their personal finances positively.
• Retail sales. Chain store sales fell 1.6% in the first three weeks of July, Redbook said, worse than the -0.9% expected. According to ICSC, weekly sales were up 1%, but July sales will be off around 5.5% Y/Y with "leaner clearance than last year hurting the reported sales pace."

Earnings: Wednesday Before Open

• American Tower (AMT): Q2 EPS of $0.14 misses by $0.03. Revenue of $423M (+7.5%) vs. $414M. (PR)
• ArcelorMittal (MT): Q2 net loss of $792M ($0.57/share) vs. +$5.84B a year ago and vs. consensus of +$336M. Sales of $15.2B (-60%). Sees Q3 Ebitda of $1.4-1.8B. Says it achieved annualized fixed-cost cuts of $8.4B by the end of Q2. Shares -4.2% in Amsterdam. (Bloomberg)
• Arrow Electronics (ARW): Q2 EPS of $0.31 beats by $0.02. Revenue of $3.4B (-22%) in-line. (PR)
• Brookfield Properties (BPO): Q2 FFO of $0.38 beats by $0.03. Revenue of $619M (-13.5%) vs. $527M. (PR)
• Coca-Cola Enterprises (CCE): Q2 EPS of $0.67 beats by $0.16. Revenue of $5.9B (-0.4%) vs. $6B. Issues upside EPS guidance for FY '09 of $1.44-1.49 vs. $1.33 consensus. Shares +5.9% premarket (8:00 ET). (PR)
• EQT Corp. (EQT): Q2 EPS of $0.20 misses by $0.03. Revenue of $238M (-29%) vs. $236M. (PR)
• General Dynamics (GD): Q2 EPS of $1.61 beats by $0.04. Revenue of $8.1B (+11%) in-line. Shares +2% premarket (8:00 ET). (PR)
• Hecla Mining (HL): Q2 EPS of $0.00 beats by $0.02. Revenue of $75M (+10.5%) vs. $53M. Shares +2% premarket (8:20 ET). (PR)
• Hess (HES): Q2 EPS of $0.31 beats by $0.30. Revenue of $6.8B (-42%) vs. $7.4B. Shares +1.6% premarket (8:00 ET).(PR)
• Honda (HMC): FQ1 net profit fell 96% to ¥7.56B ($79.9M), vs. consensus of -¥56.4B, and vs. a FQ4 net loss of ¥186.1B. Sees full-year earnings of ¥55B, down 60% from last year, but 38% higher than its previous outlook of ¥40B. Revenue of ¥2T (-30%). (WSJ)
• Hospira (HSP): Q2 EPS of $0.73 beats by $0.13. Revenue of $957M (+6.1%) vs. $878M. (PR)
• IAC/InterActiveCorp (IACI): Q2 EPS of $0.02 misses by $0.07. Revenue of $340M (-4%) vs. $335M. Shares +0.5% premarket (8:10 ET). (PR)
• Jones Apparel Group (JNY): Q2 EPS of $0.29 beats by $0.22. Revenue of $804M (-3%) vs. $777M. Shares +9.5% premarket (8:10 ET). (PR)
• MeadWestvaco (MWV): Q2 EPS of $0.22 vs. consensus of $0.01 (may not be comparable). Revenue of $1.4B (-16%) vs. $1.5B. (PR)
• Medco Health Solutions (MHS): Q2 EPS of $0.69 beats by $0.04. Revenue of $14.9B (+17%) vs. $14.5B. (PR)
• Moody's (MCO): Q2 EPS of $0.43 beats by $0.03. Revenue of $451M (-7.6%) vs. $427M. (PR)
• New York Community Bancorp (NYB): Q2 EPS of $0.16 vs. consensus of $0.25 (may not be comparable). Non-performing assets of $341.6M at the end of June, representing 1.04% of total assets, vs. $176.8M, or 0.55% of total assets, at the end of March. (PR)
• Nissan (NSANY): FQ1 net loss of ¥16.5B vs. a net profit of ¥52.8B a year ago, and vs. consensus of -¥108.5B. Last quarter Nissan posted a ¥276.9B loss. Sales of ¥1.51T (-36%). Still sees full-year loss of ¥170B. Sources say Nissan will announce today a new China plant capable of producing 240,000 vehicles/year. (WSJ)
• Penske Automotive Group (PAG): Q2 EPS of $0.22 beats by $0.07. Revenue of $2.3B (-30%) vs. $2.4B. (PR)
• Praxair (PX): Q2 EPS of $0.96 misses by $0.03. Revenue of $2.3B (-26%) vs. $2.1B. (PR)
• Qwest Communications International (Q): Q2 EPS of $0.13 beats by $0.03. Revenue of $3.1B (-9%) in-line. (PR)
• SAP AG (SAP): Q2 net profit of €423M vs. €408M a year ago and consensus of €385M. Revenue of €2.58B (-10%) vs. €2.64B. Software revenue of €543M (-40%) vs. consensus of €556M. Operating margin 27.7%. Sees full-year operating margin of 25.5-27%, up from previous guidance of 24.5-25.5%. Shares +1.8% in Frankfurt. (DJ)
• Sealed Air (SEE): Q2 EPS of $0.34 in-line. Revenue of $1B (-20%) vs. $1.1B. (PR)
• Scotts Miracle-Gro Company (SMG): FQ3 EPS of $2.32 beats by $0.07. Revenue of $1.3B (+9%) in-line. (PR)
• Sprint Nextel (S): Q2 EPS of -$0.13 misses by $0.11. Revenue of $8.1B (-10%) in-line. (PR)
• Wyndham (WYN): Q2 EPS of $0.41 beats by $0.04. Revenue of $920M (-19%) vs. $917M. Issues downside Q3 EPS guidance of $0.53-0.57 vs. $0.58 consensus. Issues in-line guidance for FY '09, sees FY '09 revenue of $3.5-3.9B vs. $3.6B consensus.

Earnings: Tuesday After Close

• American Financial Group (AFG): Q2 EPS of $1.09 beats by $0.16. Revenue of $1.1B (+8%) vs. $815M. (PR)
• Brandywine Realty Trust (BDN): Q2 FFO of $0.56 beats by $0.10. Revenue of $146M (-3%) in-line. Raises full-year FFO to $1.75-1.80 from $1.60-$1.74, vs. $1.71. (PR)
• Carter's (CRI): Q2 EPS of $0.23 beats by $0.17. Revenue of $318M (+5%) vs. $300M. Sees Q3 EPS growth in mid to high single digits. (PR)
• Chicago Bridge & Iron (CBI): Q2 EPS of $0.45 beats by $0.05. Revenue of $1.2B (-14%) in-line. (PR)
• Dreamworks Animation SKG (DWA): Q2 EPS of $0.30 beats by $0.14. Revenue of $132M (-7%) vs. $117M. (PR)
• Fidelity National Information Services (FIS): Q2 EPS of $0.42 beats by $0.06. Revenue of $835M (-4%) vs. $832M. Raises full-year EPS view to $1.71-1.75 vs. $1.62. (PR)
• FMC Technologies (FTI): Q2 EPS of $0.84 beats by $0.23. Revenue of $1.1B (-6%) in-line. Sees full-year EPS of $2.55-2.65 vs. $2.36. (PR)
• Hertz Global Holdings (HTZ): Q2 EPS of $0.12 beats by $0.06. Revenue of $1.8B (-23%) in-line. (PR)
• Integrated Device Technology (IDTI): FQ1 EPS of $0.02 beats by $0.02. Revenue of $116M (-38%) vs. $113M. (PR)
• Life Technologies (LIFE): Q2 EPS of $0.79 beats by $0.13. Revenue of $833M (+126%) vs. $803M. Sees full-year EPS of $2.70-2.80 vs. $2.63. (PR)
• Massey Energy Company (MEE): Q2 EPS of $0.24 beats by $0.08. Revenue of $698M (-16%) vs. $661M. (PR)
• McKesson (MCK): FQ1 EPS of $1.06 beats by $0.20. Revenue of $27B (flat) in-line. (PR)
• Nalco Company (NLC): Q2 EPS of $0.11 misses by $0.13. Revenue of $913M (-14%) vs. $950M. (PR)
• Norfolk Southern (NSC): Q2 EPS of $0.66 beats by $0.02. Revenue of $1.9B (-33%) vs. $2.1B. (PR)
• Panera Bread Company (PNRA): Q2 EPS of $0.65 beats by $0.01. Revenue of $331M (+3%) in-line. Company targets 15-20 new unit openings in Q3. (PR)
• Parametric Technology (PMTC): FQ3 EPS of $0.03 misses by $0.13. Revenue of $226M (-17%) vs. $223M. Sees Q4 EPS of $0.25-0.30 vs. $0.31. (PR)
• Psychiatric Solutions (PSYS): Q2 EPS of $0.63 beats by $0.07. Revenue of $471M (+6%) vs. $469M. Reaffirms full-year EPS of $2.24-$2.32 vs. $2.23. (PR)
• Questar (STR): Q2 EPS of $0.54 in-line. Revenue of $613M (-26%) vs. $525M. (PR)
• SBA Communications (SBAC): Q2 EPS of $0.25 beats by $0.42. Revenue of $136M (+22%) vs. $137M. (PR)
• STMicroelectronics (STM): Q2 EPS of -$0.36 misses by $0.04. Revenue of $2B (-16%) vs. $1.8B. Sees Q3 revenue of $2.07B-2.27B vs. $2.02B. (PR)
• Superior Energy Services (SPN): Q2 EPS of $0.35 misses by $0.09. Revenue of $361M (-21%) vs. $392M. (PR)
• TECO Energy (TE): Q2 EPS of $0.29 beats by $0.04. Revenue of $825M (-7%) vs. $864M. (PR)
• THQ (THQI): FQ1 EPS of $0.10 beats by $0.18. Revenue of $244M (+77%) vs. $203M. Sees Q2 revenue of $85M-95M vs. $123M. (PR)
• Total System Services (TSS): Q2 EPS of $0.27 in-line. Revenue of $415M (-4%) vs. $401M. Sees full-year decline in revenues of 3-5% and in net income of 11-13%. (PR)
• Trimble Navigation (TRMB): Q2 EPS of $0.31 misses by $0.01. Revenue of $290M (-23%) vs. $300M. Sees Q3 EPS of $0.25 vs. $0.27. (PR)
• Western Digital (WDC): FQ4 EPS of $0.76 beats by $0.48. Revenue of $1.9B (-5%) vs. $1.6B. (PR)
• XL Capital (XL): Q2 EPS of $0.96 beats by $0.34. Revenue of $1.73B (-19%) vs. $1.71B. (PR)

Today's Markets

Asian markets were broadly down, but Europe is off to a strong start. U.S. futures have dipped into negative territory.

Q2 2009 Earnings Call

July 28, 2009 5:00 pm ET

Traditional Discounted Cash Flow (DCF) models have been been underutilized in equity analysis over the years primarily because of the assumptions one has to sign off on. We will concentrate on just two of the major issues we have with traditional DCF models, the lack of ability to deal with competition and the perpetuity assumption embedded in a DCF model. These assumptions lead to irrational calculations of intrinsic value and force analysts to make compromising decisions in their model building efforts.

AFG uses a modified DCF model that accurately addresses the competitive nature of the business while also dealing with the perpetuity issue through our Economic Margin decay or competitive advantage period.

• Six banks fall short on capital. As news of the preliminary stress test results continues to leak out, sources say at least 6 of the nineteen largest U.S. banks will need additional capital. Some may get extra money from the government, but most of the capital will likely come from the conversion of preferred shares to common equity. The Federal Reserve is in the process of hearing appeals from banks (including Citigroup (C) and Bank of America (BAC)) that were told they need a larger capital cushion. Final test results are due to be released next week.
• Citigroup tries to plug capital hole. Citigroup (C) is trying to convince the government that the bank doesn't need more capital beyond recent plans to shore up its balance sheet and cut costs. However, executives have also told regulators that a capital shortfall identified in the stress tests could be filled by selling large businesses (potentially including core business units), further reducing its balance sheet or asking more investors to convert preferred shares into common stock. In short, anything but accepting additional government aid. Separately, Citigroup has reportedly asked the Treasury for permission to pay bonuses to many key employees. Shares +6.6% premarket (7:00 ET).
• Lewis on the line. Bank of America (BAC) holds its annual meeting today, and shareholders will vote on whether CEO Ken Lewis should be re-elected as the company's chairman of the board. Though Lewis is likely to win re-election to the board by a wide margin, a separate shareholder proposal forcing Lewis to give up his position as chairman is still too close to call. The votes come amid news that the company could require up to $70B in extra capital as a result of the government's stress tests. Shares +3.9% premarket (7:00 ET).
• New mortgage mod rules. The White House unveiled new guidelines in its foreclosure-prevention program to address borrowers with home-equity loans and other second mortgages. The original plan didn't address this group of borrowers, despite the fact that roughly half of seriously delinquent borrowers have a second mortgage. Under the revised plan, companies participating in the loan modification program must automatically modify the second mortgage when the first is reworked. The government will share in the cost of reducing the interest rate on second mortgages for five years.
• Chrysler reaches debt deal. Chrysler's largest lenders and the government reached a major breakthrough on debt reduction, agreeing to write down $6.9B in debt to just $2B ahead of Chrysler's bankruptcy deadline tomorrow. Despite the progress, "there is still some way to go in the negotiations," said a White House spokesman, "so I wouldn't rule anything in or out."
• SEC's fraud-fighting team. After a series of high-profile failings, the SEC is creating a team of specialists to focus on fighting fraud and to make the agency "more smart, more swift and more successful." The idea is a major shift for the SEC, which traditionally has relied on enforcement personnel who were generalists. Details of the new plan are not yet finalized.
• AIG tries to lower default risk. Less than a month after resigning, senior AIG (AIG) executive James Shephard has reportedly decided to stay on as the deputy chief of Paris-based Banque AIG. Insiders say Shephard was pressed to stay in order to help stave off the risk of default on $234B of derivatives; his continued presence at the unit will likely deter several European banks that bought derivatives from taking legal action to force AIG to repay them.
• Verizon, MSFT team up on iPhone rival. Verizon (VZ) is said to be holding talks with Microsoft (MSFT) over a touch-screen music-playing mobile phone that could compete with Apple's (AAPL) iPhone. Talks are still in the early stages, but a phone could be introduced next year. Verizon is also reportedly in talks with Apple about selling a version of the iPhone.
• Falling demand, prices hurt ArcelorMittal. ArcelorMittal (MT) posted a wider-than-expected quarterly loss (see details below) as demand slumped and falling metals prices forced the company to lower the value of its inventories. Steel consumption is expected to drop another 15% in 2009, and the company is bracing for market conditions to 'remain challenging.' Shares -2.0% premarket (7:00 ET).
• Dendreon shares yo-yo on prostate drug. Dendreon's (DNDN) shares plunged dramatically yesterday, falling 45% before trading was halted. The sudden drop was in advance of a meeting at which the company presented data on prostate cancer drug Provenge. As it turns out, Dendreon executives reported that Provenge extended the median survival of prostate cancer patients by 4.1 months and improved 3-year survival by 38%. The findings raise fresh expectations of FDA approval, and sent the stock soaring in premarket trading (+127% at 7:00 ET).
• IBM boosts dividend. IBM (IBM) raised its dividend by 10%, and authorized another $3B in stock buybacks. Despite losing Sun Microsystems (JAVA) to Oracle (ORCL), IBM executives said the company absolutely still has the flexibility to make a major acquisition.
• Retail sales. Retail chain store sales fell 0.7% from a week ago, ICSC reported, and dropped 1.7% Y/Y. Consumer traffic fell for most segments, including grocery, drug, department stores and discounters. Redbook recorded that chain store sales gained 1.6% in the first three weeks of April, better than the 1.3% rise expected. Strong seasonal sales drove the improvement.
• Home prices fall (.pdf). S&P/Case-Shiller's 20-city home price index fell 18.6% in February from a year ago, slightly better than the 19% drop seen last month. All 20 areas were still lower from a month ago, but 16 of the 20 saw an improvement in their annual returns. It's the first time since Oct. 2007 that the index didn't post a record annual decline.
• Confidence ticks up. Conference Board's Consumer Confidence Index improved considerably in April, rising to 39.2 from March's 26.9. Expectations rose to 49.5 from 30.2. "The sharp increase in the Expectations Index suggests that consumers believe the economy is nearing a bottom, however, this Index still remains well below levels associated with strong economic growth."
• Mfg contraction slows. The Richmond Fed's Manufacturing Index contracted more slowly in April, rising to -9 from March's -20. Shipments gained twelve points to -3, new orders rose eighteen points to -2, and the jobs index edged up two points to -26.
• Mortgage apps fall. Mortgage applications fell 18.1% from a week ago, MBA reported. The average interest rate on 30-year fixed-rate mortgages inched down to 4.62% from 4.73%.

Earnings: Wednesday Before Open

• Aetna (AET): Q1 EPS of $0.96 beats by $0.03. Revenue of $8.6B (+10.5%) vs. $8.5B. Reaffirms FY '09 EPS guidance of $3.85-$3.95. (PR)
• American Tower (AMT): Q1 EPS of $0.15 beats by $0.01. Revenue of $409M (+6.9%) vs. $408M. Issues in-line guidance for FY '09, see revenue of $1.64-$1.77B vs. $1.68B consensus. (PR)
• ArcelorMittal (MT): Q1 EPS of -$0.78 misses by $0.39. Revenue of $15.1B (-49.3%) vs. $15.9B. (PR)
• Baker Hughes (BHI): Q1 EPS of $0.82 beats by $0.06. Revenue of $2.7B (-0.1%) vs. $2.6B. (PR)
• Burger King (BKC): FQ3 EPS of $0.34 in-line. Revenue of $600M (+1.0%) vs. $607M. Sees FY '09 EPS of $1.39-$1.42. (PR)
• Endo Pharmaceuticals (ENDP): Q1 EPS of $0.67 beats by $0.04. Revenue of $335M (+15.5%) vs. $338M. (PR)
• FTI Consulting (FCN): Q1 EPS of $0.60 beats by $0.08. Revenue of $348M (+13.3%) vs. $341M. (PR)
• General Dynamics (GD): Q1 EPS of $1.54 beats by $0.08. Revenue of $8.3B (+18%) vs. $7.8B. (PR)
• Hess (HES): Q1 EPS of -$0.18 beats by $0.09. Revenue of $6.9B (-35.8%) vs. $5.6B. (PR)
• IAC/InterActiveCorp (IACI): Q1 EPS of -$0.02 misses by $0.02. Revenue of $332M (-10.4%) vs. $330M. (PR)
• Jones Apparel Group (JNY): Q1 EPS of $0.28 beats by $0.18. Revenue of $891M (-8.6%) vs. $875M. (PR)
• MeadWestvaco (MWV): Q1 EPS of -$0.46 misses by $0.22. Revenue of $1.35B (-10.8%) vs. $1.44B. (PR)
• MedcoHealth Solutions (MHS): Q1 EPS of $0.63 in-line. Revenue of $14.8B (+14.4%) vs. $13.7B. Sees FY '09 EPS of $2.67-$2.77 vs. $2.73 consensus. (PR)
• MGIC Investment (MTG): Q1 EPS of -$1.49 misses by $0.12. Revenue of $435M (+2.7%) vs. $436M. (PR)
• Moody's (MCO): Q1 EPS of $0.41 beats by $0.07. Revenue of $409M (-5.1%) vs. $393M. Declares a quarterly dividend of $0.10/share. (PR)
• PepsiAmericas (PAS): Q1 EPS of $0.20 beats by $0.04. Revenue of $1.1B (-3.7%) in-line. Issues upside guidance for FY '09, sees EPS of $1.83-$1.90 vs. $1.80 consensus. (PR)
• Praxair (PX): Q1 EPS of $0.93 beats by $0.01. Revenue of $2.1B (-20.3%) vs. $2.4B. Sees FY '09 EPS of $3.85-$4.15, revenue of around $9B. (PR)
• Qwest Communications International (Q): Q1 EPS of $0.12 beats by $0.04. Revenue of $3.2B (-6.6%) in-line. (PR)
• Reynolds American (RAI): Q1 EPS of $1.00 beats by $0.05. Revenue of $1.92B (-6.6%) vs. $1.97B. Sees FY '09 EPS guidance of $4.15-$4.45. (PR)
• Rockwell Automation (ROK): FQ2 EPS of $0.29 in-line. Revenue of $1.1B (-24.8%) in-line. (PR)
• Royal Dutch Shell (RDS.A): Q1 EPS of $0.54 misses by $0.54. Revenue of $58.2B vs. $55.2B. Q1 dividend +5% to $0.42/share. "Industry conditions remain challenging, and our focus is on capital discipline and costs." (PR)
• SAP AG (SAP): Q1 EPS of $0.22 misses by $0.07. Revenue of $2.4B (-4%) vs. $2.6B. (PR)
• Sealed Air (SEE): Q1 EPS of $0.33 beats by $0.05. Revenue of $988M (-16.3%) vs. $1.03B. (PR)
• Siliconware Precision Industries (SPIL): Q1 EPS of $0.01 beats by $0.01. (PR)
• Southern Company (SO): Q1 EPS of $0.42 beats by $0.01. Revenue of $3.7B (-0.3%) vs. $3.5B. (PR)
• SPX (SPW): Q1 EPS of $0.81 beats by $0.06. Revenue of $1.2B (-13.9%) in-line. (PR)
• Talisman Energy (TLM): Q1 EPS of $0.30 beats by $0.16. Revenue of $1.8B (-21.5%) vs. $1.7B. (PR)
• Time Warner (TWX): Q1 EPS of $0.45 beats by $0.07. Revenue of $6.9B (-7%) vs. $6.8B. Reaffirms FY '09 guidance of $1.98 EPS. (PR)
• Time Warner Cable (TWC): Q1 EPS of $0.75 beats by $0.14. Revenue of $4.4B (+4.9%) in-line. (PR)
• Tyco Electronics (TEL): FQ2 EPS of $0.14 beats by $0.10. Revenue of $2.5B (-32.9%) vs. $2.4B. Sees FQ3 EPS of $0.01-$0.06, revenue of $2.35B-$2.45B. (PR)
• United Microelectronics (UMC): Q1 EPS of -$0.09 beats by $0.04. Revenue of $319M (-59.6%) vs. $337.5M. (PR)
• ViroPharma (VPHM): Q1 EPS of -$0.77 misses by $0.93. Revenue of $60M (+18.2%) vs. $65M. (PR)
• Waste Management (WMI): Q1 EPS of $0.42 beats by $0.01. Revenue of $2.8B (-14.1%) vs. $3.0B. (PR)
• Wyeth (WYE): Q1 EPS of $0.89 beats by $0.01. Revenue of $5.4B (-5.8%) vs. $5.5B. Reaffirms FY '09 guidance, sees EPS of $3.33-$3.53 vs. $3.50 consensus. (PR)
• Wyndham Worldwide (WYN): Q1 EPS of $0.41 beats by $0.06. Revenue of $901M (-11%) vs. $839M. Reaffirms FY '09 EPS guidance of $1.61-$1.85, FY '09 revenue of $3.5-$3.9B. (PR)

Earnings: Tuesday After Close

• Ace Ltd. (ACE): Q1 EPS of $1.99 beats by $0.03. Shares flat AH. (PR)
• Buffalo Wild Wings (BWLD): Q1 EPS of $0.47 beats by $0.01. Revenue of $131.6M (+35.3%) vs. $129.1M. Shares -11.1% AH. (PR)
• Cabot Oil & Gas (COG): Q1 EPS of $0.41 beats by $0.03. Revenue of $234M (+6.5%) vs. $213M. Shares +4% AH. (PR)
• Carter's (CRI): Q1 EPS of $0.19 beats by $0.03. Revenue of $357M (+33.6%) vs. $335M. Sees Q2 EPS of $0.07-0.10 vs. $0.10. Shares -5.3% AH. (PR)
• Cemex (CX): Q1 operating income of $36M (-29%). Revenue of $3.7B (-32%) vs. $4.03B consensus. (PR)Dreamworks Animation SKG (DWA): Q1 EPS of $0.68 beats by $0.23. Revenue of $263.5M (+67.6%) vs. $211.5M. Shares +14.6% AH. (PR)
• Cerner (CERN): Q1 EPS of $0.52 beats by $0.01. Revenue of $392M (+1.9%) vs. $418M. Full-year guidance in-line. Shares -3.5% AH. (PR)
• Chicago Bridge & Iron (CBI): Q1 EPS of $0.51 beats by $0.06. Revenue of $1.3B (-10%) vs. $1.25B. Shares +17.9% AH. (PR)
• CommScope (CTV): Q1 EPS of $0.14 beats by $0.04. Revenue of $742M (-26.1%) vs. $753M. Q2 revenue guidance in-line. Shares +3.8% AH. (PR)
• E*TRADE Financial (ETFC): Q1 EPS of -$0.41 misses by $0.01. Revenue of $497M (+6%) in-line. Allowance for loan losses increased $120M to $1.2B. Says it will need to further boost its capital position, through selling shares and/or a private cash injection. Shares -27.6% AH. (PR)
• Hertz Global (HTZ): Q1 EPS of -$0.25 misses by $0.03. Revenue of $1.56B (-23.3%) vs. $1.8B. (PR)
• Jones Lang LaSalle (JLL): Q1 EPS of -$0.47 misses by $0.40. Revenue of $494M (-12.4%) vs. $541M. Decreases semi-annual dividend to $0.10 from $0.25. Assets under management fell 11% to $41B. Shares flat AH. (PR)
• Life Technologies (LIFE): Q1 EPS of $0.72 beats by $0.15. Revenue of $785M (+124.1%) vs. $749M. Shares -0.7% AH. (PR)
• Massey Energy Company (MEE): Q1 EPS of $0.51 misses by $0.02. Revenue of $768M (+19.2%) vs. $739M. Says it has taken meaningful action to cut costs, and expects positive cash flow this year. Shares +0.6% AH. (PR)
• Nalco (NLC): Q1 EPS of $0.17 misses by $0.02. Revenue of $868M (-13.1%) vs. $933M. "We are pushing aggressively on productivity to help offset the impacts of weaker end markets." Shares flat AH. (PR)
• Psychiatric Solutions (PSYS): Q1 EPS of $0.50 beats by $0.01. Revenue of $450M (+6.3%) in-line. Sees full-year EPS of $2.24-2.32 vs. $2.21. Shares +8.5% AH. (PR)
• RF Micro Devices (RFMD): FQ4 EPS of -$0.10 misses by $0.05. Revenue of $172.3M (-21.9%) vs. $166.1M. Sees FQ1 EPS of flat vs. consensus of -$0.02. Shares -4.15% AH. (PR)
• Stericycle (SRCL): Q1 EPS of $0.47 beats by $0.01. Revenue of $277M (+8.8%) in-line. Shares flat AH. (PR)
• Sun Microsystems (JAVA): FQ3 EPS of -$0.07 beats by $0.12. Revenue of $2.61B (-20%) vs. $2.86B. Shares -0.2% AH (company is being acquired by Oracle (ORCL)). (PR)
• Superior Energy Services (SPN): Q1 EPS of $0.72 beats by $0.04. Revenue of $437M (-1%) vs. $418M. Shares +1.7% AH. (PR)
• Textron (TXT): Q1 EPS of $0.26 beats by $0.25. Revenue of $2.53B (-23.6%) vs. $2.78B. Sees full-year EPS of $0.45-0.75 vs. $0.97 consensus, and revenue of $11B vs. $11.8B. Launches sale of 19M shares, and $300M in convertible senior notes. Shares -5% premarket. (PR I, II)
• Total System Services (TSS): Q1 EPS of $0.26 misses by $0.04. Revenue of $409M (-2.6%) vs. $474M. Sees full-year revenue of $1.63-1.66B vs. $1.95B consensus. Sees net income down 11-13% vs. a previous 0-3%. Cardholder transaction volume was down 4.3%. Shares -8.3% AH. (PR)
• Trimble Navigation (TRMB): Q1 EPS of $0.28 beats by $0.02. Revenue of $289M (-18.7%) vs. $297M. Sees Q2 EOS of $0.32 vs. $0.35 and revenue of $285-315M vs. $320M. Shares -3.6% AH. (PR)
• Trustmark (TRMK): Q1 EPS of $0.41 beats by $0.12. (PR)
• V.F. Corp. (VFC): Q1 EPS of $0.91 misses by $0.03. Revenue of $1.72B in-line. Sees full-year EPS of $4.70-5.00 vs. consensus of $5.31. Shares -8.2% AH. (PR)

Today's Markets

Overseas markets were broadly higher Wednesday, fueling gains in overnight futures trading.

Q1 2009 Earnings Call

April 28, 2009 5:00 pm ET

Q4 2008 Earnings Call

January 27, 2009 5:00 pm ET

Q3 2008 Earnings Call

October 10, 2008 8:00 am ET

People often say that when a stock gets added to the S&P 500, it's often the kiss of death, because by the time S&P adds it, the story is already known (examples include tech stocks in 2000, homebuilders in 2005, etc).  Well, 2008 has been no different.  Of the 20 stocks added to the index during the first three quarters of 2008, only six (30%) have outperformed the index since being added.  And even that stat is misleading since three of these stocks (LO, PM, and SNI) were units of existing S&P 500 companies.  Like the rest of us, for the Index committee at Standard and Poor's, this year can't end soon enough!

click to enlarge

Q2 2008 Earnings Call

July 30, 2008 5:00 pm ET

Q1 2008 Earnings Call

April 29, 2008 8:30 am ET

Q4 2007 Earnings Call

January 24, 2008 8:30 am ET

Total System Services (TSS)

Q4 2007 Earnings Call

Q3 2007 Earnings Call

October 23, 2007 8:30 am ET

Last week I added another "starter position" in a high quality company to my portfolio:Total System Services (TSS). I would have liked to use a covered call strategy with this stock, but there are no leaps available, and the shorter term options are quite illiquid. I hope the TSS options will attract more volume in the future.

TSS provides electronic payment processing and associated services to institutions around the globe (e.g. US, Mexico, Canada, Europe, Honduras, Puerto Rico etc.). The company charges based on the number of accounts on file, transactions processed, statements mailed etc.

Total System Services (TSS) is one of the largest credit card transaction processors in the US. It serves bank and private-label card issuers around the world. Offerings include credit authorization, payment processing, account management, e-commerce services, card issuance, and such customer-relations services as call-center operations and fraud monitoring. Synovus Financial, through subsidiary Columbus Bank and Trust Company, owns more than 80% of TSS.

It's the Chinese connection that caught my eye. While it's only 3 banks currently, the potential transactions China represents is extremely large. Of course, there's competition for all that business, but TSS has an established name and strong credibility so it will certainly get its fair share, if not more. In other overseas markets, TSS is beginning to process in Brazil, giving it a stronghold to service all of South America.

The flurry of liquidation will subside as redemptions end, as valuations come to irresistible levels, and as anxiety diminishes. Though bargains, in my view do not yet abound, considerable valuation opportunity has opened in the last week. One day leaps of faith represent little indication of anything beyond traders' bravado. Risk adjustments are taking place fairly quickly in the corporate bond realm, and it is important to recognize that you as the owner of the equity have the bottom rung or the residual position.