For Immediate Release
Chicago, IL – March 1, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Garmin Ltd. (GRMN), Leap Wireless (LEAP), MetroPCS (PCS), Sprint Nextel (S) and America Movil (AMX).
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Here are highlights from Friday’s Analyst Blog:
Garmin Sees Weaker 2010 Margins
Garmin Ltd. (GRMN) reported fourth quarter earnings that beat the Zacks Consensus Estimate by 47 cents.
Revenue of $1.06 billion was up 35.6% sequentially and 1.1% year over year. This was the first year-over-year increase in five quarters. Volumes were up a whopping 71.2%, driven by seasonality, although the ASP declined 20.8%, mainly due to pricing pressures in Garmin’s core PND product family. The ASP also declined 3.2% from the year-ago quarter, but this was offset by a 4.4% increase in volumes.
Strength was broad-based across geographies, although North America witnessed the strongest growth. North America contributed 73% of quarterly revenue (up 52.7% sequentially), Europe 23% (up 3.8%), while Asia accounted for the balance (up 9.8%).
Management did not provide guidance for the next quarter, but it did provide guidance for fiscal 2010. Accordingly, revenue is expected to be around $2.9-$3.1 billion, gross margin of around 46-48%, operating income of $675-$725 million, yielding an operating margin of 23-24%. Additionally, the effective tax rate is expected to increase in 2010, yielding a pro forma earnings per share of $2.75 to $3.15.
The Auto/Mobile segment is expected to see a revenue growth of -5% to 5% and margin decline of 200-300 bps. The revenue growth will be driven by mobile and OEM penetration, while PND revenues will be flat. Outdoor/Fitness, Aviation and Marine are expected to see revenue increases of 5-10% each.
Leap Beats, but Loss Widens
Leap Wireless (LEAP) reported fourth-quarter 2009 results with a net loss per share of 82 cents exceeding the Zacks Consensus Estimate of 65 cents. Net loss increased 17.2% year-over-year to $64 million on account of higher operating expenses and lower subscriber growth. The carrier, which operates under the “Cricket” brand, posted a net loss of $54.6 million or 82 cents a year ago.
For full year 2009, net loss climbed 59% year-over-year to $239.5 million or $3.30 per share, exceeding the Zacks Consensus Estimate of a loss of $3.10 and the year-ago quarter loss of $2.21. The current Zacks Consensus Estimate for 2010 net loss is 98 cents.
Leap’s shares fell 16 cents (or 1.08%) to $14.63 in after-hours trading on February 25 following the lower-than-expected quarterly results.
The company plans to revamp its service plans and launch several 3G handsets in 2010, including Blackberry and Android smartphones. Leap recently formed a joint venture with prepaid operator Pocket Communications to boost wireless services in South Texas.
Leap Wireless remains one of the lowest-cost wireless service providers in the U.S., which enables it to roll out a range of cheap service plans that start as low as $30 per month. The company has strategized to expand coverage in urban and suburban markets and avoid less-populated areas which help it to keep infrastructural costs low.
However, Leap Wireless is operating in an intensely competitive low-cost prepaid wireless market. Besides competing directly with MetroPCS (PCS), the company remains challenged by the competitive service plans of its larger rivals, especially Sprint Nextel’s (S) $50 monthly unlimited plan and $45 plan from America Movil’s (AMX) Tracfone.
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