NTT Posts Higher Net Earnings – Analyst Blog

Nippon Telegraph & Telephone Corp. (NTT) declared first quarter fiscal 2011 (ended June 30, 2010) financial results that were mostly in line with the company’s revised guidance. On a GAAP basis, net income in the reported quarter was approximately $1,693.5 million, up 11.7% year over year. Quarterly ADS was around 69 cents, up 11.7% year over year.

 

Quarterly total revenue of $27,138 million decreased 0.16% year over year. Improvement in IP/packet communications business was more than offset by a decline in both Fixed voice and Mobile voice related services business.

 

Quarterly operating expense was around $23,450 million, down 0.8% year over year. Operating income in the reported quarter was approximately $3,689 million, up 4.3% year over year. In the reported quarter, operating margin was 13.6% compared to 13% in the prior-year quarter. This was mainly due to a reduction in cost of system integration and depreciation & amortization charges.

 

In the first quarter of fiscal 2011, Nippon generated $5,578 million of cash from operations, up 7.6% year over year. Free cash flow (cash flow from operations less capital expenditures), in the same quarter was $1,288 million, up 53% year over year.

 

At the end of the first quarter of fiscal 2011, Nippon had approximately $16,373 million of cash & marketable securities on its balance sheet compared to around $17,202 million at the end of fiscal 2010. Total debt was around $48,981 million at the end of fiscal 2010 compared to $48,206 million at the end of fiscal 2010. At the end of the reported quarter, debt-to-capitalization ratio was 0.25 compared to 0.26 at the end of fiscal 2010.

 

 

For full fiscal 2011, management is expecting that the total revenue of the company will be approximately $110,338 million. Operating expenses will be around $97,686 million. Operating income will be around $12,652 million and net income will be approximately $5,430 million.

 

We maintain our Neutral recommendation for Nippon supported by the current Zacks #3 Rank (Hold).