Home > News & Commentary > Earnings Wrap-Up (INTC, JNJ, ABT, JPM, IBM, GOOG, GS, C, BAC, GE)

Earnings Wrap-Up (INTC, JNJ, ABT, JPM, IBM, GOOG, GS, C, BAC, GE)

What a week… We saw saw the Dow break above the 10,000 barrier and some of the biggest and most influential names in the market have reported a mixed bag of earnings that have been interpreted in an equally mixed way.

Intel (INTC) posted great numbers and although they rocketed up on the news, they have since given back all of the gain and then some. Buying on the good news would have hurt and they also set the earnings bar high for other reporting companies.
Earnings: Beat
Revenue: Beat

Johnson & Johnson (JNJ) in my opinion posted ‘Good’ or ‘Very Good earnings’. Unfortunately the street was looking for ‘Great’ and the shares received a 2.5% slap on the wrist. I recently purchased JNJ towards the end of September at $61.38 because I have been trying to take a more defensive posture as we continue at these high levels on the S&P 500. I still stand by these convictions although I wouldn’t pull the trigger to buy more unless it fell into the mid 50’s.
Earnings: Beat
Revenue: Miss

Abbott Labs (ABT) is another diversified healthcare company we own that has a nice healthy dividend of % but has been lagging the market since the bottom in March. Their earnings were well received after the lowered bar from JNJ, who stated that consumer defection to generic drugs were a big contributor to the disappointing sales numbers.
Earnings: Beat
Revenue: Beat

J.P. Morgan & Chase (JPM) posted fantastic earnings across the board, setting the bar high for its competitors as earnings season plays out.  Revenue leaped to $26.62 billion from $14.74 billion, and their Tier 1 capital ratio jumped to 10.2%, up from 8.9% in the year ago quarter. The bank has expressed some misgivings about the future, and has increased its consumer lending loss provisions by over 60%, and non-performing assets have more than doubled since Q3 2008.
Earnings: Beat
Revenue: Beat

International Business Machines (IBM) reported what I felt were good numbers but not enough to justify the bidding up of their shares leading into earnings. IBM still looks very strong fundamentally and I think this bad reaction to their earnings can be used as an opportunity to accumulate (more on this in a later post).
Earnings: Beat
Revenue: Miss

Google (GOOG) reported fantastic earnings, beating the street in both profitability and revenue.  Customer paid “clicks” increased both sequentially and year-over-year, but the average price paid per click by advertisers fell.  CEO Eric Schmidt said the worst of the recession is behind them, and that the company could make one or two “big acquisitions” per year from here on out. Their revenues grew substantially and their Traffic Acquisition Costs (TAC) fell during the quarter.
Earnings: Beat
Revenue: Beat

Goldman Sachs (GS) posted fantastic profitability, but revenue levels were enough to concern the street. Nearly all sector revenues were down sequentially, except for trading and asset management which benefited greatly from the 15% rise in the markets during the quarter.  Going forward, GS will benefit greatly from being the strongest Investment Bank due to greatly diminished competition, but will be hurt in its strongest business if the markets go south again.
Earnings: Beat
Revenue: Beat

Bank of America (BAC) posted poor earnings, slipping to a loss of $.26 per share compared to a profit of $.15 in the year ago quarter.  This highlights the ongoing struggle of consumer banking, as it deals with high unemployment and increasing amounts of non-performing assets.  In this light, the company announced it has increased its loan loss provision account to $11.7 bn, up from $6.45 bn a year ago.
Earnings: Miss
Revenue: Miss

General Electric (GE) reported great profitability, but poor revenues causing traders to drive the stock down 5%.  GE Capital was the main anchor on the company, with its profit declining 87%, but surprisingly NBC Universal was a bright spot with a 13% rise.  Jeff Immelt talked of a tough environment (he noticed!), but that he saw signs of stabilization in GE Cap.
Earnings: Beat
Revenue: Miss

Overall, it looks like the previously strong companies are getting stronger (GS, JPM, GOOG, INTC), while the environment remains troubled for companies who have underlying issues (BAC, GE). IBM dropped after reporting but we view the results positively.

Lucid Markets Team

Disclosure: Long: TSM, JNJ, ABT, IBM, GOOG, GS, BAC, GE, IBKR, JPM

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