For Immediate Release
Chicago, IL – April 16, 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: Google, Inc. (GOOG), Freeport McMoRan (FCX), Peabody Energy (BTU), Vodafone (VOD) and NTT Docomo (DCM).
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Here are highlights from Thursday’s Analyst Blog:
Google Tops, but Stock Falls
Google, Inc. (GOOG) reported solid first quarter 2010 results after the bell, but it appears the market is unimpressed. After an initial 17% drop in after-market trading, GOOG shares have gained back a good portion of that, but remain about 4.6% down after hours.
Once again, Google has handily beat consensus estimates in its report. Earnings per share on a GAAP basis reached $6.06, easily topping the Zacks Consensus Estimate of $5.82. (The Zacks Consensus Estimate accounts for stock-based compensation expense.) Net revenue, which strips out traffic acquisition costs (TAC), reached $5.06 billion.
Revenue from outside the U.S. accounted for 53% of the total, unchanged from the fourth quarter 2009, but up from 52% in the year-ago quarter. It will be interesting to watch how the Internet search giant’s international growth trajectory evolves, given its recent clash with the Chinese government.
Industrial Production Inches Higher
As a quick rule of thumb, 80% represents a healthy, normal economy. If capacity utilization moves up towards 85%, it means the economy is about to over-heat and accelerating inflation is a very real threat. A level of 75% is associated with a recession. The capacity utilization numbers only go back to 1967, but prior to this downturn, the lowest level recorded was 70.9% in December 1982. Last June, we got down to 68.3%.
Put another way, after 9 straight months of rising capacity utilization, the level is still below anything we have ever seen, with the exception of a few of the worst months of the deep Reagan recession.
The total capacity utilization numbers suffer from the same utility/weather flaw that the Industrial Production numbers have. It is much more useful to focus on the capacity utilization numbers for manufacturing. That rose to 70.0% up from 69.4% in February and 69.1% in January. The February numbers were also revised sharply higher from the originally reported 69.0%.
To give the same sort of historical perspective, the long-term average manufacturing utilization rate is 79.2%, and prior to this recession the worst-ever recorded was 67.9%. We got down to 65.2% last June.
Yes, things in manufacturing are getting better, and have been since last June, but they were starting from a place much worse than anything the country had seen since the Great Depression. The improvement in capacity utilization for both manufacturing and overall is also overstated a bit since the total capacity has been shrinking, by 1.2% overall and 1.5% in manufacturing. If some factories are shut down for good and dismantled, it is easier to work the remaining factories at closer to full capacity.
Mine utilization, on the other hand, has fully recovered and is now running at 0.2%, which is substantially above the long-term average rate of 87.5%, and up sharply from the 88.2% rate in February and the 86.6% rate in January. This probably very good news for the mining firms with big operations domestically, such as Freeport McMoRan (FCX) and coal miners like Peabody Energy (BTU), as mines tend to have a fair amount of operating leverage.
In contrast, utility utilization plunged to 78.6% from 84.1% in February as better weather meant that people were not using as much electricity. The long-term average is 86.6% for utility utilization. Unlike manufacturing, capacity has actually expanded for utilities over the last year, by 1.9%.
The weakness in utilities masked the improvement elsewhere in the economy. If one looks past that, this was actually a very solid report, at least in terms of the direction we are headed, even if the location is still a pretty bad one.
India’s 3G Bids Cross $1 Billion
India’s 3G WCDMA spectrum (radio airwave) auction is gaining momentum as the bidding price reportedly climbed to INR45.8 billion (US$1.03 billion) on the fourth day of the auction. This is roughly 31% above the floor price set by India’s Department of Telecommunications (DoT) at INR35 billion (US$791 million).
The DoT is auctioning 3-4 slots of 3G spectrum in the 2.1 gigahertz (GHz) band in India’s 22 service areas (called “circles”). The limited number of available license slots is propelling the bidding price.
After 22 rounds of auction, the Western Indian state of Gujarat surprisingly topped the chart with a bid price of nearly INR4.6 billion ($104 million), exceeding the bid in the key Metro service areas. The lucrative Delhi circle has reached the top among the Metro circles having received a bid price INR4.38 billion ($99 million). Another key circle, Mumbai recorded a bid of INR4.17 billion ($94 million). Four circles have yet to record any bids.
A total of nine bidders for 3G auction include major privately-held carriers Bharti Airtel, Vodafone’s (VOD) Indian arm Vodafone Essar, Reliance Communications, Idea Cellular, Aircel and Tata Teleservices, the Indian partner of NTT Docomo (DCM). Five of these participants have bid for the Gujarat circle while Delhi received bids from four carriers.
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