For Immediate Release
Chicago, IL – January 22, 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), Goldman Sachs Group Inc. (GS), eBay Inc. (EBAY), Starbucks Corporation (SUBX) and Freeport-McMoRan Copper & Gold Inc. (FCX).
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Here are highlights from Thursday’s Analyst Blog:
Google Beats, But Stock Slides
Google Inc. (GOOG) announced solid growth numbers in its fourth quarter and fiscal 2009 earnings after the bell today. The Internet services giant reported earnings of $6.13 per share for the quarter, soundly beating the Zacks Consensus Estimate of $5.69 per share. In contrast to the general treatment on the Street, we at Zacks prefer the expensing of stock-based compensation, which is reflected in the reported EPS ($6.13) and the Zacks Consensus ($5.69).
And, in anticipation of Google’s earnings report, GOOG shares were up very slightly, even as the Nasdaq as a whole was down on the day. Nevertheless, once Google’s earnings hit the wires, after-market trading sold off GOOG shares.
Sometimes good just isn’t good enough? “As we enter 2010, we remain hugely optimistic…” said CEO Eric Schmidt in Google’s press release. It would seem difficult to read anything negative in that expression. But then the search engine business has been maturing, and impressive growth rates of the last few years may be getting difficult to replicate going forward for GOOG.
Goldman Sachs Reports Big Beat
Goldman Sachs Group Inc.’s (GS) fourth quarter 2009 earnings of $8.20 per share were significantly ahead of the Zacks Consensus Estimate of $5.18. Results reflected strong performance in investment banking and increased inflows which offset the weak performance in the trading operations. The company also reported a significant drop in expenses on a sequential basis.
GAAP net income in the fourth quarter of 2009 was $4.8 billion compared to $3.0 billion or $5.25 per share in the prior quarter, and a loss of $2.3 billion or $4.97 per share in the prior-year quarter.
Total revenue decreased 22% sequentially but was significantly higher than the negative revenue in the prior-year period to $9.6 billion. Fourth quarter revenue by business segment are as follows:
Investment Banking generated revenue of $1.6 billion, up 82% sequentially and 58% year-over-year. Results reflected an increase in revenue of debt and equity underwriting. Also, revenues were spurred by the financial advisory business as a result of significant increase in high-yield client activity across the industry.
Trading and Principal Investments generated revenue of $6.4 billion, down 36% sequentially but significantly higher than the prior-year quarter. Sequentially results were down as a result of a decrease in revenues in fixed income (down 34%) and equity trading (down 45%). Even the Principal Investment portfolio declined 60% sequentially.
Asset Management and Securities Services generated revenue of $1.6 billion, up 8% sequentially but down 10% year-over-year. Results reflected higher incentive, management and other fees coupled by strong inflows in fixed income assets. This was partially offset by outflows in money market assets and market appreciation across all asset classes.
eBay Soars on Skype Sale
eBay Inc. (EBAY) reported third quarter pro forma earnings that beat consensus estimates by a penny. However, shares were up 8.1% after hours, as the company recorded a $1.1 profit per share on the sale of Skype.
Gross revenue of $2.37 billion was up 5.9% sequentially and 16.5% year over year. Around 88% of total revenue was transactions-based, while the remaining 12% came from marketing services. Both existing segments contributed to the revenue increase in the last quarter.
Marketplaces revenue increased 7.2% sequentially and 15.4% compared to the year-ago quarter. The sequential revenue increase was driven by a 5.9% increase in transaction revenue and a 14.2% increase in marketing services revenue. The year-over-year increase was due to a 16.6% increase in transaction value and a 10% increase in marketing services. Vehicles volume continued to decline both sequentially and year over year. The segment generated 62% of total revenue.
Payments revenue increased 15.6% sequentially and 27.7% from the year-ago quarter. Revenue from transactions was up 16.6% sequentially and 25.3% year over year, as both the number of active users and the number of transactions increased. Although the revenue generated per transaction declined, this was partially offset by the lower cost per transaction and lower transaction loss rate. Marketing services revenue was flat sequentially (down 0.8%), but up a whopping 104.2% from the year-ago quarter. The segment generated 34% of total revenue.
Communications revenue was down 39.5% sequentially and 22.9% from the year-ago quarter. Both comparisons were impacted by the sale of the unit (Skype) in November 2009. Transactions represented 92% of communications revenue, while marketing services accounted for the rest.
Starbucks Reports Strong Q1
Starbucks Corporation (SUBX) reported first quarter results with earnings of 33 cents per share. Earnings were 5 cents above the Zacks Consensus Estimate of 28 cents per share, and were up 120% compared to 15 cents in the prior-year quarter. The strong results were driven by continued innovation and implementation of efficient cost structure.
Net revenues for the quarter increased 4.1% year-over-year to $2.7 billion, primarily due to a 4% increase in comparable stores sales and the positive impact of foreign currency translation related to the weakening of the U.S. dollar, most notably against the Canadian dollar, which was partially offset by a smaller store base and a decline in specialty revenues.
Segment-wise, U.S. segment revenues increased marginally by 1.1% to $1.93 billion due to a 4% increase in comparable store sales, partially offset by the closure of 369 underperforming company-operated stores over the last 12 months.
Net revenues in the International segment grew 19.2% year-over-year to $591 million mainly due to the impact of a weaker U.S. dollar relative primarily to the Canadian dollar, the effect of consolidating the previous joint venture operations in France and 4% increase in comparable-store sales.
Global Consumer Products Group segment reported a net sales decline of 4.4% to $196.8 million due to lower licensing revenues in the packaged coffee business and lower foodservice revenues, driven by ongoing softness in the hospitality industry.
Freeport McMoRan Outperforms
The world’s largest publicly traded copper company, Freeport-McMoRan Copper & Gold Inc. (FCX), reported fourth-quarter 2009 earnings of $2.15 per share, ahead of the Zacks Consensus Estimate of $1.59 per share. Earnings represented a significant turnaround from a $14 billion loss in the same quarter the previous year. Revenues more than doubled to $4.61 billion.
Phoenix-based Freeport-McMoRan has been showing signs of recovery. The company’s earnings rose in the third quarter for the first time in 2009 on higher sales to China and other developing countries, as well as lower costs for production and delivery. Freeport’s performance reflects a successful execution of various cost-reduction initiatives and higher ore grades at Grasberg.
The company is responding aggressively to the economic downturn by curtailing production levels, cutting costs, reducing exploration expenditures and deferring capital spending. Total cost of sales declined 34% year over year.
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