Amid the deteriorating global markets and European debt crisis, the results were driven by Goldman’s prudent expense management. However, the reported earnings lagged the prior-year quarter’s earnings by 7 cents. Moreover, results declined substantially from $3.92 per share recorded in the prior quarter. Net income declined from $2.1 billion in the first quarter, to $927 million, a significant loss in revenue. Total revenue of Goldman decreased 9% from the prior-year quarter to $6.6 billion, resulting from a decrease in overall businesses, partially offset by higher incentive fees. Within Goldman, the Investment Banking division generated revenues of $1.2 billion, down 17% year over year. However, leading the increase are Institutional Client Services and Investment Management, up 11% and 5%, respectively, year over year.
Coca- Cola
Coca- Cola (KO) reported adjusted operating earnings of $1.22 EPS in the second quarter of 2012, beating the consensus analyst estimate by 2.5%. Earnings were also 4% above the prior-year adjusted earnings driven by positive revenue and volume growth which made up for higher commodity costs and currency headwinds. For Coke, growth was led by a 4% volume rise in emerging markets and with still drinks like water, juices, teas, coffees, energy drinks, and sports drinks. Volume jumped 12% in Eurasia and Africa, 8% in the Pacific, and 3% in Latin America. Net income was $2.79 billion, down from $2.80 billion a year earlier. Net earnings per share rose to $1.21 from $1.20 because of fewer shares outstanding. Excluding items, earnings were $1.22 per share, topping the analysts’ average estimate of $1.19, according to Thomson Reuters. Finally, revenue rose about 3 percent to $13.09 billion. Analysts had expected $12.98 billion.
Johnson & Johnson
Johnson & Johnson (JNJ) reported lower than expected quarterly earnings sales this morning and cuts its full year 2012 profit forecast, citing negative foreign exchange factors, but nevertheless, quarterly estimates beat Wall Street estimates by a slim margin. JNJ earned $1.41 billion or $0.50 per share in the second quarter. However, that number was essentially halved from the first quarter earnings of $2.78 billion, or $1 per share. Looking forward, expectations for the third quarter have not changed from $1.25 with $5.14 EPS expected for the fiscal year.
Mattel
Mattel (MAT) reported second quarter 2012 earnings of $0.28 cents per share, outperforming Wall Street estimates by 7 cents. Second quarter earnings were also above the year-ago quarter earnings of 23 cents per share. During the quarter, net sales remained flat year over year at $1,158.7 million, but were around $20 million higher than expected. While worldwide gross sales for Mattel Girls & Boys Brands declined 1% year over year, sales for Barbie and Hot Wheels led the uptrend, gaining 5% and 11%, respectively. Additionally, the more expensive brands such as American girl jumped 3% to $68.7 million with the Other Girls Brand skyrocketing 96% year over year. Finally, Mattel repurchased nearly 70,000 shares of common stock for approximately $2 million and declared a quarterly dividend of 31 cents per share, a small dividend yield near 1%.
Reporting after the close:
Intel
Intel (INTC) is expected to report earnings after the close today, July 17, 2012. Consensus analyst estimates expect Intel to report an EPS of $0.52 and 13.45B in revenue. Intel’s Q2 revenue forecast is for $13.1B-$14.1B. Intel’s earnings report will reveal details about the health of the semiconductor market and shed some light on the sudden drop-off in demand some are seeing in the IT space. Wall Street analysts have been trimming their expectations as PC sales continue to decline and Intel shares peaked in early May. Additionally, market seems to now widely expect Intel to guide Q3 below consensus — perhaps to $14.0B-$14.5B, but expect a relief rally for almost anything other than “doomsday guidance.” Stifel recently cut its 3Q revenue estimate for Intel to $14.4B, up modestly from Q2 and well below the $14.8B consensus. Intel has a 59% positive surprise history (having topped the whisper in 30 of the 51 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these fifty-one earnings reports is -0.3%. The strongest price movement of -1.1% comes within one trading day when the company reports earnings that beat the whisper number, and +4.7% within thirty trading days when the company reports earnings that miss the whisper number (opposite reactor). Last quarter the company reported earnings thirteen cents ahead of the whisper number.
Yahoo!
Yahoo! (YHOO) is expected to report Q2 earnings after the market close on Tuesday, July 17, with a conference call scheduled for 5:00 pm ET. Wall Street analyst predicts an EPS of $0.23 and $1.10B in revenue. Yahoo’s earnings for Q2 will be clipped by an anticipated charge of up to $145M to cover severance costs for laying off 2,000 employees, or about 14% of its workforce. Yahoo’s Q2 results are likely to highlight challenges facing new CEO Marissa Mayer, imported from Google (GOOG). Most analysts believe Yahoo’s Q2 revenue will be just slightly above last year’s at this time — helped by gains from the ads that Yahoo has been selling to run alongside the widely watched news, sports, finance and entertainment video clips on its website. But investors want to see some of the same robust growth that Google and Facebook (FB) have enjoyed for years. Yahoo also is expected to get a lift from revenue generated from its large stakes in two of Asia’s most successful Internet companies, China’s Alibaba Group and Yahoo Japan. Yahoo! has a 61% positive surprise history (having topped the whisper in 32 of the 56 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these fifty-six earnings reports is +0.1%. The strongest price movement of +2.0% comes within twenty trading days when the company reports earnings that beat the whisper number, and -6.7% within thirty trading days when the company reports earnings that miss the whisper number. Last quarter the company reported earnings five cents ahead of the whisper number.
Thomas Doherty is majoring in Finance and Economics at Villanova University. Thomas@KeeneOnTheMarket.com
