Equity Earnings

Equity Earnings

Bank of America loses $2.24B as loan losses rise

Bank of America loses $2.24B as loan losses rise; warns credit environment still difficult

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  By Ieva M. Augstums, AP Business Writer
  
• On 3:41 pm EDT, Friday October 16, 2009
  

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  Companies:
  
  
  
  • Bank Of America Corporation
    
  • Citigroup, Inc.
    
  • General Electric Co.
    
  
  

CHARLOTTE,
N.C. (AP) -- Bank of America Corp. said Friday it lost more than $2.2
billion in the third quarter as loan losses kept rising, providing more
evidence that consumers are still struggling to pay their bills.



AP - In this photo made Wednesday, Sept. 30, 2009, a branch office of Bank of America is shown in ...

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SymbolPriceChangeBACCGEGSJPM

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{"s" : "bac,c,ge,gs,jpm","k" : "c10,l10,p20,t10","o" : "","j" : ""}






The nation's
second-largest bank said it wrote down loans on its books by almost $10
billion during the July-September period, up almost $1 billion from the
second quarter. The bank also added $2.1 billion to its reserves to
cover bad loans, bringing its provision for credit losses to $11.7
billion. The bank's total allowance for loan and lease losses now
totals $35.83 billion.Bank of America's results were aided by
profit from its wealth management business, which includes the bank's
Merrill Lynch division. While theJan. 1 acquisition of Merrill Lynch
has brought widespread criticism and legal problems for Bank of
America, the deal was paying off during the third quarter, when Merrill
Lynch's revenue and profit more than doubled from a year ago.The
bank's earnings follow the pattern set earlier this week by Citigroup
Inc. and JPMorgan Chase & Co., which also reported more loan losses
during the third quarter as consumers struggled to keep up with their
credit card and mortgage payments. And on Friday, General Electric Co.
reported that its GE Capital business, which includes credit cards, saw
an 87 percent drop in profits, although it was also weighed down by
commercial real estate losses.Together, the reports depict a
financial industry that is still deeply troubled, although the trading
operations at companies like Bank of America, JPMorgan and Goldman
Sachs Group Inc. mitigated some of the bad news.Banks have
predicted for some time that their loan losses would keep rising. And
Bank of America's CEO Ken Lewis, joining his counterparts at JPMorgan
and Chase, confirmed that this trend will continue into the near future
as unemployment rises and consumers keep struggling."Based on
(the) economic scenario, results in the fourth quarter are expected to
continue to be challenging as we close the year," Lewis said on a
conference call with analysts.Bank of America said it lost $2.24
billion, or 26 cents per share, after accounting for the preferred
dividends of $1.24 billion. That compared with earnings of $704
million, or 15 cents per share, a year earlier.Revenue in the quarter increased 33 percent to $26.04 billion.The
loss was 5 cents more per share than the 21 cents forecast by analysts
surveyed by Thomson Reuters Inc. Investors sent Bank of America shares
down 67 cents, or 3.7 percent, to $17.43 in afternoon trading."Obviously,
credit costs remain high, and that is our major financial challenge
going forward," Lewis said in a statement accompanying the earnings
report. He added, "we are heartened by early positive signs, such as
the leveling of delinquencies among our credit card numbers."During
the analyst call, Lewis said the bank believes it may have peaked in
total credit losses this quarter, "although the levels going forward
will continue to be elevated and certain businesses will still
experience higher losses."Bank of America is considered
particularly vulnerable to unemployment, which climbed last month to
9.8 percent in the U.S. Economists predict the jobless rate will pass
10 percent in the coming months.The bank's massive portfolio of
credit-card loans could help investors determine where the economy is
headed and how well the industry at large will fare, said Doug
Dannemiller, senior analyst at Boston-based research firm Aite Group."As
unemployment rates are in the 10 percent range, the results on consumer
lending aren't going to improve until that number gets lower," he said.The
bank has about 53 million consumer and small business customers, making
it vulnerable to delinquencies and defaults, yet also ready to thrive
when the economy recovers.Bank of America's global card services unit loss widened significantly to $1.04 billion from $167 million a year ago.The
loss in the bank's home loans and insurance division grew to $1.6
billion from $54 million a year ago, as credit costs continued to rise.Income
from the global wealth and investment management division, including
Merrill Lynch, rose to $271 million from $80 million a year earlier."The
inclusion Merrill Lynch into the BofA umbrella is a very strong
competitive position in the wealth management market place and will
continue to help their business through the recovery," Dannemiller said.The
bank, which being investigated by federal and state authorities for its
Merrill Lynch acquisition, has received $45 billion in bailout funds as
part of the Treasury Departments $700 billion financial rescue package.
It's not known when it will repay the government the money from the
Troubled Asset Relief Program, or TARP."It's a milestone for
banks to repay TARP and the ability to repay TARP is a sign of your
financial health," said Ethan M. Heisler, Managing Director of Hexagon
Securities LLC.The Securities and Exchange Commission and the
New York attorney general's office have been looking into whether Bank
of America officials misled shareholders about Merrill Lynch's losses
and the billions of dollars in bonuses it awarded before the
acquisition closed on Jan. 1.Lewis is believed to have decided
to retire at this time because of the strife that has surrounded BofA
since the Merrill Lynch deal closed.On the analyst call, Lewis said that "there's an appropriate sense of urgency" about his succession."It's
the most important decision (the) board can make. So I am assured that
there's an appropriate balance in getting it right and doing it with a
sense of urgency but I can't give you a date," he said.Later, he added, "I felt like it was an appropriate time" to retire.Lewis,
who is retiring at year's end, has agreed to give up his salary and
other compensation for 2009 at the suggestion of Kenneth Feinberg, the
U.S. Treasury Department's special master for compensation .



--------------


Do they have more crap on their books, they as in the other major banks or is it just a BAC thing? Are the other banks hiding this better? Got to start diggin into those financial statements.

Sorry Batman, I accidentally deleted the Goog and IBM earings article as i was trying to move them into this thread

Oct. 16 (Bloomberg) -- General Electric Co. fell the most
since July after third-quarter profit declined 45 percent and
lower real estate and consumer lending caused sales to drop more
than analysts predicted.
GE fell 71 cents, or 4.2 percent, to $16.08 at 4:15 p.m. in
New York Stock Exchange trading, the most since the company’s
previous earnings report on July 17.
Chief Executive Officer Jeffrey Immelt is shrinking the
finance unit and weighing a reduced stake in NBC Universal as he
builds energy, transportation and health-care businesses. The GE
Capital plan is ahead of schedule and cut into sales, he said on
a call after today’s earnings report. Higher consumer finance
losses and fewer real estate transactions hurt GE Capital.
“We expected GECS to report a pretax loss of about $275
million,” Citigroup Inc.’s Jeffrey Sprague, ranked the top
multiple-industry analyst by Institutional Investor in 2009,
wrote in a note to clients today. “Instead the loss was $997
million” at the finance arm before a $1.14 billion tax credit.
Revenue fell 20 percent to $37.8 billion, trailing the
$39.7 billion average estimate in a Bloomberg survey, GE said in
a statement today. Fairfield, Connecticut-based GE said sales
were in line with its expectations.
Profit from continuing operations declined to $2.45
billion, or 22 cents a share, from $4.48 billion, or 45 cents, a
year earlier. The average profit estimate of 13 analysts in a
Bloomberg survey, excluding some items, was 20 cents a share.
Results include 5 cents a share of restructuring costs, GE said.
U.S. Stocks Decline
The results at GE and Bank of America Corp. and a lower-
than-predicted gauge of consumer confidence contributed to a
decline in broader U.S. stock markets. GE had risen 3.6 percent
this year through yesterday and almost tripled from an intraday
low of $5.73 in March.
Total orders declined 18 percent, and equipment and service
contract cancellations remain “insignificant,” GE said. Large
equipment orders in the so-called infrastructure divisions also
fell 18 percent from a year earlier, a slower pace than the
second quarter’s 44 percent drop. The total backlog rose about 2
percent to a record $174 billion.
The third quarter was likely the low point in orders,
Immelt said on the conference call with analysts.
Profit rose 11 percent at GE Energy Infrastructure, while
GE Technology Infrastructure declined 8 percent, dragged down by
lower results at health care, locomotive and factory-automation
units. NBC Universal posted a 13 percent increase. GE Capital
posted profit of $263 million, an 87 percent decline, with only
the GE Real Estate segment recording a loss.
‘Remains Tough’
Health-care profit fell 20 percent as the U.S. market for
orders “remains tough,” Chief Financial Officer Keith Sherin
said on the call. Investments from stimulus programs in health-
care information technology and outside the U.S. should bolster
results in coming years, Immelt said.
GE’s businesses include the world’s biggest makers of jet
engines, locomotives and medical-imaging machines. Its power-
generation equipment produces about a third of the world’s
electricity.
Immelt is seeking sales from emerging markets such as
China, India and the Middle East, and more than half of all GE’s
sales come from outside the U.S. Revenue was hurt in part by a
stronger U.S. dollar than in last year’s third quarter.
Cash generated from GE’s non-financial divisions was $4.4
billion in the quarter, putting GE on track to reach $15
billion, Immelt said in the statement.
“This company is on track now to get back to what I think
it’s capable of doing,” James Hardesty, president of Hardesty
Capital Management, which holds GE shares, said today in an
interview with Bloomberg Television.
Cost Reductions
The company spent $600 million on cost reductions in the
quarter, knocking about 5 cents a share off profit. Total year-
to-date expenses to cut jobs, shut offices and consolidate some
plants have reached $1.3 billion, GE said today.
GE expects its “base cost” structure to be reduced by
about $4 billion, or 10 percent, this year, Sherin said.
The GE Capital unit, helped by tax credits, had a $997
million loss before taxes. The consolidated tax rate was a
negative 25 percent, driven by the credits.
The credit is in-line with what GE forecast in March and in
July, Sherin said in an interview. GE Capital’s assets have
shrunk by about $70 billion year-over-year, reducing the revenue
stream, he said.
“Part of making GE Capital more safe and secure is to
shrink it and be more focused and that’s part of why revenue’s
down,” Sherin said.
GE Capital Agreement
GE will extend its agreement with GE Capital to five years
from three, showing a commitment to the unit and confidence that
regulatory changes won’t force a separation, Sherin said. Any
further extensions of the agreement, which needs support from
the parent company, would require approval from more than 50
percent of bondholders. A GE Capital meeting is set for Dec. 8.
The segment has completed plans to refinance debt in 2009
and is more than 90 percent of the way toward meeting the need
for next year, GE said in today’s statement. GE expects to
complete 2010’s prefunding by the end of this year and begin to
prefund 2011, Sherin said. GE estimates it will need to
refinance $22 billion in debt in 2011, he said.
GE shares have risen since March as Immelt began paring
assets at GE Capital and emphasized businesses such as power
generation, outpacing the Standard & Poor’s 500 Stock Index.
Commercial Lending
Immelt, 53, has said he plans to reduce GE Capital’s assets
to $400 billion to $450 billion, from about $557 billion in the
second quarter, by concentrating on mostly commercial lending.
Credit-default swaps on GE Capital fell 10 basis points to
215 basis points, according to Phoenix Partners Group. That’s
the lowest since Oct. 5, according to CMA DataVision. A decrease
signals improvement in the perception of credit quality. S&P
repeated its credit rating of AA+ on GE Capital, while Moody’s
Investor’s Service repeated its ratings of Aa2 on both the
parent and the finance unit.
“GE Capital’s operating results remain weak,” Moody’s
analysts said in a statement. “GE’s support remains strong.”
Moody’s maintained its ratings and stable rating outlook “based
upon our expectation that GE will continue to demonstrate
unwavering support for its finance subsidiary,” according to
the statement.
NBC Universal Stake
The company is preparing to cut its stake in NBC Universal
in a deal with Comcast Corp. and may divest the media unit
entirely in seven years, according to people familiar with the
discussions. Any transaction hinges on whether Vivendi SA, which
gained 20 percent of NBC Universal when it sold its media assets
to NBC in 2004, decides to sell its stake.
Vivendi has “a window to review their options for NBC, and
this year, we wanted to be ready for several scenarios and one
might be an IPO or other strategic partnership like one that we
have with Vivendi,” Immelt said today on the call. “I don’t
have a specific need for cash and look, in many ways we plan to
operate NBCU over the long term or partner if that accelerates
the growth of the franchise.”
The company is also looking to sell its GE Security unit,
people familiar with GE’s plans said in August, and GE Energy
said earlier this month it’s bidding for Areva’s transmission
and distribution unit. GE will be “disciplined” about
investing, Immelt said.
Evaluating Portfolio
Immelt previously marked the GE Consumer & Industrial unit
and the private-label credit card division for sale, only to
pull them off the block when buyers evaporated in the financial
crisis. “We’ve always evaluated our portfolio,” he said.
The company has about $61 billion in cash on its balance
sheet, with about “$57 billion of that to support GE Capital,
and that is pre-funding debt that matures next year,” Sherin
said in the interview.
“This is the first quarter where we’re building cash at
the parent level as a result of the dividend cut,” Sherin said.
“I think we’ve made great progress.”
To contact the reporter on this story:
Rachel Layne in Boston at
rlayne@bloomberg.net.

Markets are generally shrugging off any bad news from last week aka the BAC and GE earinings. I forget to check earings announcements today...

Earnings Watch
More than 130 other companies in the S&P 500 are scheduled
to report this week, data compiled by Bloomberg show. The
benchmark index for American equities has rallied 61 percent
from a 12-year low in March on speculation the economy is
emerging from the worst recession in seven decades.
Analysts surveyed by Bloomberg estimate that profits for
S&P 500 companies will rebound 65 percent in the last three
months of the year after falling for nine straight quarters, the
longest streak since the Great Depression.
Gannett rose 4 percent to $13.52. The publisher had third-
quarter profit of 44 cents a share on an adjusted basis, beating
the average analyst estimate by 3 cents as the rate of decline
in print advertising abated.
Eaton gained 7.3 percent to $64.85. The Cleveland-based
manufacturer reported third-quarter profit excluding some items
of $1.21 a share, higher than the 95-cent average estimate of
analysts in a survey. Eaton also said earnings this year will be
higher than previously estimated.

Batman wrote:

Earnings Watch
More than 130 other companies in the S&P 500 are scheduled
to report this week, data compiled by Bloomberg show. The
benchmark index for American equities has rallied 61 percent
from a 12-year low in March on speculation the economy is
emerging from the worst recession in seven decades.
Analysts surveyed by Bloomberg estimate that profits for
S&P 500 companies will rebound 65 percent in the last three
months of the year after falling for nine straight quarters, the
longest streak since the Great Depression.
Gannett rose 4 percent to $13.52. The publisher had third-
quarter profit of 44 cents a share on an adjusted basis, beating
the average analyst estimate by 3 cents as the rate of decline
in print advertising abated.
Eaton gained 7.3 percent to $64.85. The Cleveland-based
manufacturer reported third-quarter profit excluding some items
of $1.21 a share, higher than the 95-cent average estimate of
analysts in a survey. Eaton also said earnings this year will be
higher than previously estimated.

I love how we already calculated these numbers on the bloomy already!

Batman wrote:

• BB&T (BBT): Q3 EPS of $0.23 beats by $0.01.
  Revenue +16.1%. Provision for credit losses almost doubled to $709M.
  "Our earnings continue to be negatively affected by a significant
  provision for credit losses and other costs related to the credit
  environment." Shares -2.1% premarket. (PR)
  
• Eaton (ETN): Q3 EPS of $1.21 beats by $0.29. Revenue of $3.03B vs. $3.13B. Sees Q4 EPS of $1.15-1.25 vs. $1.06. (PR)
  
• Hasbro (HAS): Q3 EPS of $0.99 beats by $0.06.
  Revenue of $1.28B (-1.8%) in-line. “We believe we can grow revenues in
  2009 if our consumer retail takeaway continues to improve in line with
  recent fourth quarter trends." (PR)
  
• Weatherford International (WFT):
  Q3 EPS of $0.13 in-line. Revenue of $2.15B (-15.4%) in-line. North
  America rig count -52%; international rig count -11%. Shares +1.4% premarket. (PR)
  

Im surprised hasbro is doing well? consumption indicator anyone? X-mas/holiday season is gonna be very critical to watch this year. we could get some nice retail plays in.

Maybe consumption is up going into the holiday season. Black friday is coming soon...


Apple smashes forecasts, stock hits record

By Gabriel Madway


SAN FRANCISCO (Reuters) - Apple Inc's profits and sales streaked
past Wall Street forecasts as iPhone and Mac sales hit quarterly
records, sending its shares rocketing to all-time highs on Monday.


Sales of Mac computers -- the largest single contributor to Apple's
revenue -- jumped a better-than-foreseen 17 percent, but shipments of
the closely watched iPhone were held back by problems in producing
enough to meet demand, particularly abroad.


"The big story is the renewed ascendancy of the Mac," said Barry Jaruzelski, a partner at consulting firm Booz & Co.


"The only surprise would be when Apple doesn't surprise on earnings
.... The Mac and iPhone continue to grow and take share, and they're
taking share with premium pricing."


IPhone sales had been expected to steal the limelight. Yet unit
sales rose 7 percent to 7.4 million, just shy of Wall Street
expectations of 7.5 million units.


But it was the company's venerable Mac warhorse, which has steadily
expanded market share for years, that starred. The stellar shipment
numbers came just days before rival Microsoft Corp was set to unveil
its latest version of Windows operating system, to be followed a day
later by its own quarterly results.


Mac sales hit 3.05 million in the September quarter, above average
estimate for about 2.8 million. Sales of laptop units alone leapt 35
percent, at a time the global PC market is stagnant.


"These are huge numbers tonight. Apple is probably the best growth
story in tech, maybe one of the best growth stocks in the market. I bet
this stock can go to $250 in six to nine months," said Jane Snorek,
analyst at First American Funds.


"This makes me think Apple will have a great Christmas."


Apple's fiscal fourth quarter marked the return of Chief Executive
Steve Jobs to his offices at 1 Infinite Loop, Cupertino, California.
The master showman had a liver transplant while on a six-month leave of
absence.


In his absence, Apple showed resilience to the slump in consumer
spending that pummeled rivals, such as BlackBerry maker Research in
Motion's and Nokia.


"The number of Macs sold shows that Windows 7 has not been a threat
to the Apple franchise," said Shannon Cross of Cross Research. "These
are phenomenal results."


OUTSIZED HOPES, BLOCKBUSTER RESULTS


According to industry tracker IDC, Apple holds 9.4 percent of the U.S. PC market.


Net profit rose to $1.67 billion, or $1.82 a share, in the quarter
ended September 26, from $1.14 billion, or $1.26 a share, in the
year-earlier period. Analysts were expecting a profit of $1.42 a share,
according to Thomson Reuters I/B/E/S.

Revenue rose 25 percent to $9.87 billion, ahead of the average Wall
Street estimate of $9.2 billion. For a look at how major technology
companies have performed this earnings season, click here: here


Shares of Apple jumped 7.5 percent to above $204 in extended
trading. It had closed at $189.86 on Nasdaq. The stock's record
intraday high was $202.96 on December 27, 2007.


Prior to the results, some analysts said expectations for Apple
might be too high after the stock doubled in value this year, lifting
it to about 32 times forward earnings versus RIM's and Nokia's 16. But
after Apple's results came on Monday, some saw its stock rising to $250
-- implying an even loftier 35 times forward earnings.


Looking ahead, Apple said demand outstripped supply for much of the
quarter in most of the countries where it sells the iPhone 3G S -- its
newest model -- before a balance was struck in late September and early
October. The company is rolling out the phone to China -- the world's
top cellular market -- this quarter.


"We were very surprised by the demand," admitted Chief Operating Officer Tim Cook.


The company also hinted at lower-cost products yet to come. It
forecast gross margins falling to 34 percent in the fourth quarter.


"For the new products that we have and will announce, we are
delivering greater value to our customers, and these products have
lower gross margins than their predecessors," Chief Financial Officer
Peter Oppenheimer said.


Apple posted a gross margin of 36.6 percent, up from 34.7 percent a
year ago. Wall Street had been expecting a margin of 35.5 percent.


Stronger margins came from higher-than-anticipated sales of its
"Snow Leopard" operating system for Mac computers, and component cost
increases that were lower-than-expected.


Apple's outlook is typically conservative, though its revenue
forecast this quarter was not far off from Wall Street averages. Apple
forecast current-quarter earnings of $1.70 to $1.78 a share on revenue
of $11.3 billion to $11.6 billion, versus the Street's $1.91 a share on
revenue of $11.4 billion.


"While we knew they were gaining share in those categories -- PCs
and phones -- it's still surprising to see this degree of
outperformance," said Daniel Ernst, an analyst with Hudson Square
Research.

nice post on apple, all those talks about iphone and mac were relevant after all. We should keep up the discussion

I read techcrunch today and the tech nerds seem pretty adamant about the Tablet's birth in 2010. Also, due to new accounting rules apple willbe able to report subscriber revenues and profits from apple TV and Iphones on the income statement when recognized. This is an alternative for waiting two years until the contract has fully matured.

=====================================================================

Of course, the big fish in the touch sea is Apple’s long-rumored tablet. More rumors today suggest that device could be announced in January 2010 (which is what earlier rumors suggested as well), and would be released sometime around the middle of 2010.
I don’t think I’m going out on any limb by assuming the device is real at this point (we, along with many others, have been hearing about it
for months now). So when it does launch, it will likely be the most
important test yet of Apple’s touch goals. For all intents and purposes
it will be a computer that is just a 9 or 10 inch screen. It
undoubtedly will not have a physical keyboard, which means it will be
entirely touch-based.
w
consumers react to this will be important. I would bet that at first,
many will wish there was a physical keyboard to go along with it (and
maybe Apple would even offer such an accessory as an option add-on).
But then, as they get used to it, many of those people will forget all
about the keyboard.
The same thing has happened with iPhone. While plenty of people
still bitch about its lack of keyboard, most of those people seem to be
those who don’t actually have one (yes, there are exceptions), and/or
haven’t used the touch keyboard extensively. Many iPhone users I talk
to thought they would hate having no keyboard, but now would just
consider it a waste of space.

Apple Soars After Mac and IPhones Sales Top Estimates (Update1) 2009-10-20 07:59:22.754 GMT

By Rochelle Garner and Connie Guglielmo
Oct. 20 (Bloomberg) -- Apple Inc. rose to a record in extended trading yesterday after fourth-quarter profit and revenue topped estimates, fueled by back-to-school orders for the iPhone, iPod and Macintosh computer.
Apple climbed as much as $14.99, or 7.9 percent, to $204.85 in late trading, exceeding the intraday record of $202.96 set in 2007. The shares, which have more than doubled this year, closed at $189.86 yesterday on the Nasdaq Stock Market. Apple rose 6.4 percent in German trading to the equivalent of $200.3 at 9:54 a.m. in Frankfurt.
"I’m glad I didn’t sell," Hakim Kriout, portfolio manager for Grigsby & Associates, said in an interview from New York.
"I’m sitting back and looking at what Apple has done, and I think Apple is the new Sony. An entire generation is growing up demanding Apple’s products, and nothing but Apple’s products."
Apple’s shares are trading at a level not seen since the iPhone first emerged as a hit product two years ago, when the device opened up a third major business for the company. While Apple’s growth slowed during the recession, earnings have continued to top analysts’ estimates. A faster iPhone called the 3GS debuted this year, reigniting sales.
Fourth-quarter net income rose 47 percent to $1.67 billion, or $1.82 a share, Apple said yesterday. Sales advanced 25 percent to $9.87 billion in the period, which ended Sept. 26.
Analysts surveyed by Bloomberg estimated revenue of $9.22 billion and profit of $1.43 a share.

Company Forecast

First-quarter revenue will be between $11.3 billion and $11.6 billion, Chief Financial Officer Peter Oppenheimer said.
Profit will be $1.70 to $1.78 a share in the quarter, which is one of Apple’s biggest sales periods. Analysts had anticipated revenue of $11.5 billion and profit of $1.92 a share.
"Apple is traditionally conservative with their expectations," Ryan Jacob, portfolio manager of Jacob Internet Fund, said in an interview from Los Angeles. Apple is his firm’s largest holding. "The fact that their revenue guidance is in line with estimates suggests analysts’ estimates are low, and will be revised higher."
Chief Executive Officer Steve Jobs cut iPod prices, added new models and ran a back-to-school Mac promotion to fuel sales.
That helped Apple sell 7.4 million iPhones, 3.1 million Macs and
10.2 million iPods last quarter. Brian Marshall, an analyst with Broadpoint AmTech Inc. in San Francisco, had predicted shipments of 7 million iPhones, 2.8 million Macs and 10 million iPods.
The iPhone is now available in more than 80 countries. It will go on sale in China, the world’s largest mobile-phone market, by Oct. 31.

IPhone Demand

Demand for the iPhone outstripped supply for most of the quarter, said Chief Operating Officer Tim Cook. "Until September, the iPhone 3GS was short virtually everywhere," he said on a conference call.
"The Mac sales show growth rates that are returning to pre-recession levels, and the iPhone shows this isn’t a product cycle -- it’s a movement," said Gene Munster, an analyst with Piper Jaffray & Co. in Minneapolis. "They beat the Street’s revenue estimate by 8 percent, and that’s unheard of."
Apple’s gross margin, the percentage of sales remaining after taking out production costs, was 36.6 percent, up from
34.7 percent a year earlier. Fourth-quarter net income rose from
$1.14 billion, or $1.26 a share, a year earlier.
The stock’s run-up signals that investors have put concerns about Jobs’s health behind them, said Shaw Wu, an analyst at Kaufman Bros. in San Francisco.

Jobs’s Leave

Jobs, a cancer survivor, had a liver transplant this year.
During his medical leave, Cook took charge of day-to-day management and worked with a cadre of executives to unveil new products. Apple beat analysts’ earnings estimates while Jobs was out.
"Apple is a culture, it’s a style, it’s a way of thinking," Wu said. He recommends buying Apple shares, which he doesn’t own personally. "Investors have become accepting that it’s ingrained in the company, rather than in one individual."
Jobs, 54, made his first public appearance in September after having the transplant. He introduced updated iPods, such as a Nano player with a built-in video camera.
Apple’s results may prod analysts to raise their price targets to $250 or higher, said Jane Snorek, an analyst with Minneapolis-based First American Funds, which owns Apple shares.
"Everything looked fantastic," she said. "They had a great back to school. For any company, back to school is a pretty good indicator of Christmas, because it shows you have the right products."

Job's leave of absence was the best think aapl could have done for their stockholders. It allowed Tim Cook to show the world he is an able and capable successor. Apple closed above $203 @ 5 p.m. EST. That is an all-time high stock price. Though one thing that worries me about the firm is their continued ability to innovate and integrate new products. Ipod sales were down almost 8% from last year. Is the iPod done? Is the iPhone/iTouch the permanent replacement? Will their be a pauy as you go iTouch? What is the profitability of iAir? These are innovative questions the company needs to answer going forward. If aapl intends to have iPhone revenue make up 30-40% of future earnings they better start diversifying sooin. Google now has android technology powered phones on every major service provider. The Motorola Droid is rumored to launch on October 31, for Verizon. According to techcrunch, this phone has a great deal of potential.
Pc's will never die. H-P, Dell, IBM/Lenovo are too good at what they do. One can argue long-term profitability but I will argue product placement. Institutions time and again return to PC's and not Macs, even when Vista failed miserably. Undoubtedly, Mac will have to at some point enter this market if continued growth is imminent. WIll the company be able to maintain a differentiated product approach at this level of success? Microsoft suffers from market saturation. Their product is ubiquitous. The problem is there is no real underlying value derived from windows. Whereas Apple has the advantage of offering something unique and pricing it at a premium. However, I do not see Apple sustaining this momentum for the next 5-10 years. With so much open-source technology something is bound to catch on. I understand that the privatization of products is a large contributor to capitalism, but one cannot dismiss quality product for free (see the failing music industry). My main concern is that Apple never lets the markets know what they are up to. It is always a wait and see approach for better or worse. How long can the company afford to lack transperancy for when investors become disgruntled?

Oct. 22 (Bloomberg) -- Amazon.com Inc., the world’s largest
Internet retailer, reported profit that topped analysts’
estimates after its broader product selection and discounts
lured more buyers to the site. The shares jumped 11 percent.
Third-quarter net income increased 69 percent to
$199 million, or 45 cents a share, from $118 million, or
27 cents, a year earlier, the Seattle-based company said today
in a statement. Analysts had predicted 33 cents, according to a
Bloomberg survey. Sales rose 28 percent to $5.45 billion.
Chief Executive Officer Jeff Bezos has used price cuts,
shipping promotions and a growing array of products to attract
customers from other online retailers. Amazon.com has announced
four acquisitions this year, including the online shoe seller
Zappos.com Inc., to broaden its reach. The company’s Kindle
electronic reader also fueled sales.
“This level of outperformance was unexpected,” said Sandeep
Aggarwal, an analyst at Collins Stewart LLC in San Francisco. He
rates the shares hold and doesn’t own any. “They are doing
everything right.”
Amazon.com rose $10.13 to $103.58 in extended trading after
closing at $93.45 on the Nasdaq Stock Market. The shares have
climbed 82 percent this year.
Sales in the fourth quarter will rise to between $8.13
billion and $9.13 billion, Amazon.com said. That compares with
the $8.19 billion predicted by analysts. Operating income will
be $300 million to $425 million in the period, the company said.
New Kindle
This month, Amazon.com unveiled an international version of
its $259 Kindle. The company also is trying to get its e-books
onto more devices. Today, Amazon.com introduced an application
that lets consumers read Kindle books on personal computers.
The books are also available through an application on
Apple Inc.’s iPhone. Amazon.com’s Whispersync technology lets
readers continue reading on the same page they left off when
they switch between the Kindle, the iPhone or the desktop
application.
“Kindle has become the No. 1 best-selling item by both unit
sales and dollars -- not just in our electronics store but
across all product categories on Amazon.com,” Bezos said in the
statement.
Amazon.com has about 60 percent of the e-reader market in
the U.S., according to Forrester Research Inc. Sony Corp.’s e-
reader ranks second with 35 percent. Barnes & Noble Inc., the
largest U.S. bookstore chain, introduced a device this week that
competes with the Kindle.
Sales Gain
The Kindle will bring in about $1.9 billion in annual
revenue in 2012, up from $300 million this year, Aggarwal said.
Amazon.com doesn’t disclose Kindle sales.
Amazon.com has stepped up competition with Wal-Mart Stores
Inc., the world’s largest retailer. Over the past decade,
Amazon.com has grown from an online bookstore to a seller of
general merchandise, including everything from motorcycle
accessories to groceries. It also markets its own line of
furniture and electronics.
After Walmart cut the price of books in the past week by
best-selling authors to $9, Amazon.com matched the offer. Target
Corp., the second-largest U.S. retailer, followed with a similar
price cut.
About 30 percent of Amazon.com’s sales come from third-
party merchants who sell on the site. That puts the company in
competition with EBay Inc., the most visited U.S. online
marketplace.
EBay gave a fourth-quarter profit forecast yesterday that
missed some analysts’ estimates, sending the stock down today.
EBay is building up its PayPal and Bill Me Later payment
services, which carry lower profit margins than other parts of
the business.

Oct. 22 (Bloomberg) -- American Express Co., the biggest
U.S. credit-card issuer by purchases, posted profit that
exceeded most analysts’ estimates and said the recession may be
nearing an end.
Third-quarter income from continuing operations fell 25
percent to $642 million, or 54 cents a share, from $861 million,
or 74 cents, in the same period last year, the New York-based
lender said today in a statement. The average per-share estimate
of 20 analysts surveyed by Bloomberg was 38 cents.
Chief Executive Officer Kenneth Chenault signaled
increasing confidence in the economic climate during the third
quarter when he told his staff of about 60,700 on Sept. 24 he’s
reversing pay cuts imposed eight months ago. Card write-offs
fell in September for the fifth straight month.
“While there is still reason to be cautious about high
unemployment levels, we are seeing broad-based improvements in
credit quality, the trends in cardmember spending are
encouraging and there are signs that the recession may be
approaching an end,” Chenault said in the statement.
Chenault had said he would eliminate about 11,000 jobs, or
17 percent of the workforce, in the past year as part of a $2.6
billion “re-engineering” plan and slashed marketing expenses
as the recession squeezed profit. As defaults began to ease, the
company decided to direct $1.5 billion of those savings toward
“marketing and promotions and other investments,” Chief
Financial Officer Daniel Henry told analysts in a July 23
conference call.
American Express, this year’s top performer in the Dow
Jones Industrial Average, rose $1.34 to $36.44 at 4 p.m. in New
York Stock Exchange composite trading. The shares gained 96
percent in 2009, compared with 15 percent for the Dow. The
shares traded at $36.53 in extended hours.
Consolidated provisions for losses fell 13 percent to $1.2
billion, AmEx said. Results included a $113 million one-time
accounting benefit. Net income fell 21 percent to $640 million,
the statement said.
Write-Offs
Annualized credit-card write-offs last month dropped to 8.4
percent after climbing as high as 10.1 percent in April,
American Express said in an Oct. 15 federal filing. Loans at
least 30 days overdue held steady at 4.1 percent. AmEx was the
only one among the six biggest U.S. card lenders, including
JPMorgan Chase & Co. and Citigroup Inc., that didn’t report
higher defaults or delinquencies.
Rising U.S. unemployment still threatens to squeeze profit,
even after AmEx posted five straight monthly declines in credit-
card defaults, according to Michael Taiano, an analyst at
Sandler O’Neill & Partners LP. Card write-offs typically track
the U.S. jobless rate, which climbed to 9.8 percent last month,
and economists surveyed by Bloomberg project it will reach 10
percent by the first quarter of 2010.
President Alfred F. Kelly Jr. will leave April 10 and seek
a CEO job at another company, according to an Oct. 5 memo from
Chenault. Kelly, 51, decided to step down after Chenault, 58,
said he intends to remain as CEO for “the foreseeable future,”
spokeswoman Joanna Lambert said.

Oct. 22 (Bloomberg) -- EBay Inc., the most visited U.S. e-
commerce site, slumped in Nasdaq trading after a shift to
faster-growing yet lower-margin businesses hampered its profit
forecast.
Excluding some costs, fourth-quarter earnings will be 38
cents to 40 cents a share, the San Jose, California-based
company said yesterday. The midpoint of that range missed the 40
cents predicted by analysts in a Bloomberg survey.
Chief Executive Officer John Donahoe, who took over last
year, is steering EBay toward fixed-price sales and away from
its former hallmark of auctions. He’s also building up the
company’s PayPal and Bill Me Later payment services, which carry
lower profit margins. And EBay is offloading its Skype Internet-
phone unit -- a move that will hurt profit this quarter --
because the business doesn’t fit with the rest of the company.
“People are just looking at the earnings guidance for the
fourth quarter, which is a little below the Street’s
expectations,” said Aaron Kessler, an analyst at Kaufman Bros.
in San Francisco. He recommends buying the shares and doesn’t
own any. “They’re heading in the right direction. It’s not
going to be an easy road.”
EBay fell $1.06, or 4.2 percent, to $23.97 at 4 p.m. New
York time on the Nasdaq Stock Market. The shares have gained
72 percent this year.
Skype Breakup
EBay’s forecast didn’t include a full quarter’s worth of
results from Skype, a business that lets users place calls over
the Internet. The company expects to complete the sale of Skype
about halfway through the quarter.
Third-quarter net income declined 29 percent to $349.7
million, or 27 cents a share, from $492.2 million, or 38 cents,
a year earlier. Sales rose to $2.24 billion, topping estimates
of $2.14 billion. Excluding some items, earnings were 38 cents a
share, compared with the 37 cents predicted by analysts.
Sales this quarter will be $2.2 billion to $2.3 billion,
EBay said. Analysts had projected $2.26 billion.
EBay’s Marketplaces unit, which includes its main site,
StubHub and Shopping.com, grew 4 percent last quarter, excluding
currency fluctuations. That likely outpaced the broader e-
commerce market, Donahoe said.
“We’re seeing progress on our turnaround,” he said in an
interview. “People are buying with more frequency on EBay than
in the market.”
Forrester Research Inc. predicts that total online sales in
the U.S. will expand 13 percent next year and 10 percent in
2011.
Comeback Plan
EBay’s turnaround plan has included changing listing fees
and fighting fraud. The company also has revamped its search
feature to make it easier to find items.
This month, EBay said it would eliminate about 60 workers.
It also announced plans in May to close a 700-person customer-
service office in Vancouver.
While EBay attracts more visitors than any other U.S. e-
commerce site, it has lost customers to Amazon.com Inc., the
world’s largest online retailer. The shift toward fixed-price
transactions is an effort to tap faster-growing markets.
EBay is selling Skype to a group of investors led by
private-equity firm Silver Lake. EBay had originally planned to
spin off Skype as an initial public offering, saying the
business had little synergy with the parent company.
Skype’s revenue rose 29 percent to $185.2 million last
quarter. The service added 40.3 million users in the period and
now has more than 520.8 million in total.
Excluding Skype’s 13-cent per-share contribution to
earnings, EBay’s profit for the full year will be $1.41 to
$1.43, the company said.
Revenue at EBay’s payments business advanced 15 percent to
$688.1 million last quarter. Active accounts rose 19 percent to
78 million as the service began working with more Web sites.
PayPal competes with Discover Financial Services and Visa
Inc., as well as smaller companies such as Obopay Inc. EBay
expects PayPal to eventually become its biggest business, with
revenue reaching $5 billion by 2011.

AMR Falls Most Since October After First-Quarter Loss (Update1)

By Mary Schlangenstein

April 21 (Bloomberg) -- American Airlines parent AMR Corp. slid as much as 7.7 percent in New York trading, the most since October, as higher fuel prices and stagnant passenger traffic led to a wider quarterly loss than analysts expected. The first-quarter deficit was $452 million, or $1.36 a share, excluding costs linked to currency devaluation, Fort Worth, Texas-based AMR said today. That was wider than the $1.31 average in 9 analysts’ estimates compiled by Bloomberg.

American, the second-biggest U.S. carrier, paid 16 percent more per gallon for jet fuel, tempering the benefit from the return of some high-fare overseas travel as the recession eased. AMR spent $1.48 billion for fuel, its second-largest cost after labor, as total traffic for the quarter was little changed. “We were expecting a little more pricing traction” in the quarter, said Hunter Keay, a Stifel Nicolaus & Co. analyst in Baltimore who recommends buying AMR shares. The carrier missed Keay’s revenue estimate by about $20 million. AMR tumbled 55 cents, or 6.4 percent, to $8.01 at 2:29 p.m. in New York Stock Exchange composite trading. The shares slid as low as $7.90 for their biggest intraday percentage drop since Oct. 30. The company’s net loss widened to $505 million, or $1.52 a share, from $375 million, or $1.35, a year earlier, according to its statement. Sales rose 4.7 percent to $5.07 billion. “That disappointing result, which was driven by lingering weakness in the economy combined with rising fuel prices, underscores the reality that despite a lot of hard work and progress, we remain regrettably far from our goal of sustained profitability,” Chief Executive Officer Gerard Arpey told employees in a letter today.

AirTran Shares Fall

AirTran Holdings Inc., a low-fare carrier based in Orlando, Florida, that flies mostly in the eastern U.S., today said its quarterly net loss was $12 million, or 9 cents a share, compared with net income of $28.7 million, or 21 cents, a year earlier. AirTran slid 53 cents, or 9.1 percent, to $5.27 in NYSE trading, the shares’ biggest intraday decline since October. Delta Air Lines Inc., the world’s biggest carrier, said yesterday that its first-quarter loss narrowed to $256 million and forecast a profit this quarter. Continental Airlines Inc. and Southwest Airlines Co. report results tomorrow. American’s passenger traffic on international flights rose 1.7 percent in the quarter, after a 12 percent plunge a year earlier. The increase for all traffic was 0.4 percent, the carrier said.

‘Modest Success’

Winter storms in the U.S. and earthquakes in Haiti and Chile reduced revenue in the quarter by as much as $25 million, American said. Unit revenue, which reflects fares and traffic, rose 6.8 percent in the airline’s main jet operations on the resumption of business travel. Corporate revenue increased more than 17 percent from a year earlier. “While average fares are still not where we need them to be, we are seeing fewer sales and, in fact, the industry has had some modest success in raising fares,” Arpey told workers. “It’s fair to say there is cause for some cautious optimism on the revenue side of the equation as we head into summer.”

American’s cost to fly each seat a mile, a measure of efficiency, jumped 9.2 percent. Excluding fuel, expense on that basis increased 5.7 percent. Yield, or average fare per mile, rose 3.7 percent. AMR ended the quarter with $5 billion in cash and short- term investments, including $460 million for specific uses.

Labor Talks

The company and unions for its flight attendants and for ramp workers and mechanics were ordered April 14 to return to contract negotiations by the National Mediation Board. The Association of Professional Flight Attendants and the Transport Workers Union asked the board to declare talks deadlocked and trigger a 30-day countdown to a possible strike.

American is trying to hold down spending on labor, its largest expense, while boosting productivity. The workers want to recoup pay and benefits given up in 2003 to save the airline from bankruptcy.AMR’s first-quarter spending for wages, salaries and benefits rose less than 1 percent to $1.7 billion. AirTran said its quarterly loss excluding a $4.7 million gain related to fuel hedges was 12 cents a share. That was narrower than the 13-cent average of 10 analysts’ estimates compiled by Bloomberg. Sales rose 12 percent to $605.1 million, less than the average of $606.3 million from 7 estimates. Storms in February that forced Washington-area airports to close for several days reduced AirTran’s revenue by at least $10 million, and storms in Atlanta forced more cancellations, CEO Bob Fornaro said today in an interview. AirTran canceled 1,400 flights in this year’s first two months, more than in 2009’s first 10 months of 2009, he said.

Batman wrote:

AMR Falls Most Since October After First-Quarter Loss (Update1)

By Mary Schlangenstein

April 21 (Bloomberg) -- American Airlines parent AMR Corp. slid as much as 7.7 percent in New York trading, the most since October, as higher fuel prices and stagnant passenger traffic led to a wider quarterly loss than analysts expected. The first-quarter deficit was $452 million, or $1.36 a share, excluding costs linked to currency devaluation, Fort Worth, Texas-based AMR said today. That was wider than the $1.31 average in 9 analysts’ estimates compiled by Bloomberg.

American, the second-biggest U.S. carrier, paid 16 percent more per gallon for jet fuel, tempering the benefit from the return of some high-fare overseas travel as the recession eased. AMR spent $1.48 billion for fuel, its second-largest cost after labor, as total traffic for the quarter was little changed. “We were expecting a little more pricing traction” in the quarter, said Hunter Keay, a Stifel Nicolaus & Co. analyst in Baltimore who recommends buying AMR shares. The carrier missed Keay’s revenue estimate by about $20 million. AMR tumbled 55 cents, or 6.4 percent, to $8.01 at 2:29 p.m. in New York Stock Exchange composite trading. The shares slid as low as $7.90 for their biggest intraday percentage drop since Oct. 30. The company’s net loss widened to $505 million, or $1.52 a share, from $375 million, or $1.35, a year earlier, according to its statement. Sales rose 4.7 percent to $5.07 billion. “That disappointing result, which was driven by lingering weakness in the economy combined with rising fuel prices, underscores the reality that despite a lot of hard work and progress, we remain regrettably far from our goal of sustained profitability,” Chief Executive Officer Gerard Arpey told employees in a letter today.

AirTran Shares Fall

AirTran Holdings Inc., a low-fare carrier based in Orlando, Florida, that flies mostly in the eastern U.S., today said its quarterly net loss was $12 million, or 9 cents a share, compared with net income of $28.7 million, or 21 cents, a year earlier. AirTran slid 53 cents, or 9.1 percent, to $5.27 in NYSE trading, the shares’ biggest intraday decline since October. Delta Air Lines Inc., the world’s biggest carrier, said yesterday that its first-quarter loss narrowed to $256 million and forecast a profit this quarter. Continental Airlines Inc. and Southwest Airlines Co. report results tomorrow. American’s passenger traffic on international flights rose 1.7 percent in the quarter, after a 12 percent plunge a year earlier. The increase for all traffic was 0.4 percent, the carrier said.

‘Modest Success’

Winter storms in the U.S. and earthquakes in Haiti and Chile reduced revenue in the quarter by as much as $25 million, American said. Unit revenue, which reflects fares and traffic, rose 6.8 percent in the airline’s main jet operations on the resumption of business travel. Corporate revenue increased more than 17 percent from a year earlier. “While average fares are still not where we need them to be, we are seeing fewer sales and, in fact, the industry has had some modest success in raising fares,” Arpey told workers. “It’s fair to say there is cause for some cautious optimism on the revenue side of the equation as we head into summer.”

American’s cost to fly each seat a mile, a measure of efficiency, jumped 9.2 percent. Excluding fuel, expense on that basis increased 5.7 percent. Yield, or average fare per mile, rose 3.7 percent. AMR ended the quarter with $5 billion in cash and short- term investments, including $460 million for specific uses.

Labor Talks

The company and unions for its flight attendants and for ramp workers and mechanics were ordered April 14 to return to contract negotiations by the National Mediation Board. The Association of Professional Flight Attendants and the Transport Workers Union asked the board to declare talks deadlocked and trigger a 30-day countdown to a possible strike.

American is trying to hold down spending on labor, its largest expense, while boosting productivity. The workers want to recoup pay and benefits given up in 2003 to save the airline from bankruptcy.AMR’s first-quarter spending for wages, salaries and benefits rose less than 1 percent to $1.7 billion. AirTran said its quarterly loss excluding a $4.7 million gain related to fuel hedges was 12 cents a share. That was narrower than the 13-cent average of 10 analysts’ estimates compiled by Bloomberg. Sales rose 12 percent to $605.1 million, less than the average of $606.3 million from 7 estimates. Storms in February that forced Washington-area airports to close for several days reduced AirTran’s revenue by at least $10 million, and storms in Atlanta forced more cancellations, CEO Bob Fornaro said today in an interview. AirTran canceled 1,400 flights in this year’s first two months, more than in 2009’s first 10 months of 2009, he said.

Things are looking bad? Do we see any value by the end of 2010? Will Q2 and Q3 prove to be better with the idea of "economic recovery"... is the consumer ready to start traveling again?

Seasonality maybe a big hint for this... At least its quite positive that the summer quarters are coming up may help out the demand side.

I dunno what the supply story is but, Im sure we will see an increase in prices for gas and oil if supply remainds relatively constant. However if supply numbers are overestimated oil might bein for a nice short depending how numbers coming in the next few months...

"Cash Strapped Consumers"


------




Print Back to story
J.M. Smucker 4Q net income rises 28 percent
J.M. Smucker 4th-quarter net income rises 28 percent, easily beats estimates

Companies:Procter & Gamble Co.The J. M. Smucker Company
Topics:Earnings
Emily Fredrix, AP Retail Writer, On Thursday June 17, 2010, 8:26 am
NEW YORK (AP) -- J.M. Smucker Co.'s fourth-quarter net income rose about 28 percent as cash-strapped shoppers bought more of its brands like Jif peanut butter and its namesake jams and jellies, although they bought less of its Folgers coffee.

The Orrville, Ohio-based food maker on Thursday also issued an outlook for 2011 that topped analysts' expectations, sending shares up more than 3 percent in premarket trading.

Smucker was one the beneficiaries of the recession as shoppers ate out less often and bought more food to eat at home to save money. The company makes baking products such as Pillsbury flour and Crisco oils, as well as Hungry Jack pancake mixes, in addition to its jams, jellies and Folgers coffee. It bought Folgers for $3 billion in November 2008 from consumer products giant Procter & Gamble Co.

In the three-month period ending April 30, Smucker earned $120.6 million, or $1.01 a share. In the same period last year the company earned $94.3 million, or 80 cents a share.

Revenue rose less than 1 percent to $1.07 billion.

Excluding one-time items related to restructuring and other factors such as the sale of its potato business, the company earned $1.07.

Analysts expected Smucker to earn 80 cents a share on revenue of $1 billion.

Shares rose $2, or 3.5 percent, to $59.75 in premarket trading Thursday.

For the full year, net income rose 86 percent to $494.1 million or $4.15 a share, compared to $266 million or $3.11 a share.

Smucker said for fiscal 2011, it expects net income to range between $4.50 and $4.60 a share, excluding restructuring and merger costs of 55 to 60 cents a share. Net sales are expected to rise 3 percent from 2010, excluding acquisitions. According to Thomson Reuters, analysts expect the company to earn $4.42 a share next year on revenue of $4.75 billion.

In the fourth quarter, the company's retail coffee business revenue fell 1 percent to $417.7 million. This year marked the first full fiscal year the company has owned the Folgers brand. Dunkin Donuts brand coffee grew in by a double-digit percentage, continuing previous growth, and Millstone increased as well.

But Smucker said that did not offset a drop in the FOlgers brand, so overall coffee volume fell 4 percent. Smucker noted the drop was expected because of strong volume in last year's fourth quarter.

In the oils and baking division, which includes Crisco and Pillsbury flour, revenue fell 12 percent to $163.2 million

Revenue in the consumer market rose 5 percent to $270.4 million. Volume rose for Jif, Smucker's fruit spreads, Hungry Jack pancake mixes and syrups. When excluding the sale of the potato business, volume in the segment rose 8 percent.

For both those divisions, profit increased because costs for raw materials like soybean oil fell from the prior year.

Smucker's size nearly doubled after the Folger's acquisition and co-CEO Tim Smucker said Wednesday the company is now realizing the potential for the larger company. The company bought Jif peanut butter and Crisco cooking oil from P&G, based in Cincinnati, in a $1 billion stock deal in 2002.

Copyright 2010 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.

Snapman wrote:

"Cash Strapped Consumers"


------




Print Back to story
J.M. Smucker 4Q net income rises 28 percent
J.M. Smucker 4th-quarter net income rises 28 percent, easily beats estimates

Companies:Procter & Gamble Co.The J. M. Smucker Company
Topics:Earnings
Emily Fredrix, AP Retail Writer, On Thursday June 17, 2010, 8:26 am
NEW YORK (AP) -- J.M. Smucker Co.'s fourth-quarter net income rose about 28 percent as cash-strapped shoppers bought more of its brands like Jif peanut butter and its namesake jams and jellies, although they bought less of its Folgers coffee.

The Orrville, Ohio-based food maker on Thursday also issued an outlook for 2011 that topped analysts' expectations, sending shares up more than 3 percent in premarket trading.

Smucker was one the beneficiaries of the recession as shoppers ate out less often and bought more food to eat at home to save money. The company makes baking products such as Pillsbury flour and Crisco oils, as well as Hungry Jack pancake mixes, in addition to its jams, jellies and Folgers coffee. It bought Folgers for $3 billion in November 2008 from consumer products giant Procter & Gamble Co.

In the three-month period ending April 30, Smucker earned $120.6 million, or $1.01 a share. In the same period last year the company earned $94.3 million, or 80 cents a share.

Revenue rose less than 1 percent to $1.07 billion.

Excluding one-time items related to restructuring and other factors such as the sale of its potato business, the company earned $1.07.

Analysts expected Smucker to earn 80 cents a share on revenue of $1 billion.

Shares rose $2, or 3.5 percent, to $59.75 in premarket trading Thursday.

For the full year, net income rose 86 percent to $494.1 million or $4.15 a share, compared to $266 million or $3.11 a share.

Smucker said for fiscal 2011, it expects net income to range between $4.50 and $4.60 a share, excluding restructuring and merger costs of 55 to 60 cents a share. Net sales are expected to rise 3 percent from 2010, excluding acquisitions. According to Thomson Reuters, analysts expect the company to earn $4.42 a share next year on revenue of $4.75 billion.

In the fourth quarter, the company's retail coffee business revenue fell 1 percent to $417.7 million. This year marked the first full fiscal year the company has owned the Folgers brand. Dunkin Donuts brand coffee grew in by a double-digit percentage, continuing previous growth, and Millstone increased as well.

But Smucker said that did not offset a drop in the FOlgers brand, so overall coffee volume fell 4 percent. Smucker noted the drop was expected because of strong volume in last year's fourth quarter.

In the oils and baking division, which includes Crisco and Pillsbury flour, revenue fell 12 percent to $163.2 million

Revenue in the consumer market rose 5 percent to $270.4 million. Volume rose for Jif, Smucker's fruit spreads, Hungry Jack pancake mixes and syrups. When excluding the sale of the potato business, volume in the segment rose 8 percent.

For both those divisions, profit increased because costs for raw materials like soybean oil fell from the prior year.

Smucker's size nearly doubled after the Folger's acquisition and co-CEO Tim Smucker said Wednesday the company is now realizing the potential for the larger company. The company bought Jif peanut butter and Crisco cooking oil from P&G, based in Cincinnati, in a $1 billion stock deal in 2002.

Copyright 2010 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.

Hmm... Maybe a Merger with Hershey or Nestle in the works? The Mars-Wrigley deal 2.5 years ago set in motion the consolidation of the Confectionary industry. Recently we saw Kraft and Cadbury team up.

More PB and J sandwiches? I don't know if this is a reflection of the recession or not. I do believe consumers have become a bit more health concious over the last 2 years though. Maybe this can explain their earnings growth.