Abbott Laboratories Q3 2013 Results

Abbott announced this morning a 57% increase in its dividend, demonstrating confidence in the long-term growth of the company and their commitment to increasing shareholder returns. This declaration increases the company’s quarterly dividend to $0.22 per share from $0.14 a share, effective with the dividend to be paid in February 2014.

Total company sales increased 4.3%, operationally, but excluding the sales disruption in International Nutrition, sales would have increased approximately 6%. Sales growth in International Nutrition was affected by the supplier recall initiated in early August in China and two other markets for certain pediatric nutritional products.

Diagnostics delivered double-digit growth and Medical Devices delivered nearly 4% growth with double-digit growth in Medical Optics. Abbott again saw a strong growth in emerging markets and also began to see better performance in developed markets.

Diagnostics, one of Abbott’s most durable growth businesses, increased more than 6% in developed markets with double-digit growth in point-of-care and strong growth in U.S. Core Laboratory Diagnostics, driven by several large customer account wins.

Medical Optics, also contributed to the company’s improvement in developed markets, growth of Cataract business has accelerated over the last three quarters, driven by new product launches, including the TECNIS Toric in the U.S. and TECNIS OptiBlue in Japan.

In Established Pharmaceuticals this quarter, sales increased modestly. While recent macroeconomic and market pressures in certain emerging markets resulted in somewhat lower sales growth this quarter, growth rates in emerging markets have been and are expected to continue to be higher than the growth rates of the developed world of the overall global economy.

Established Pharmaceuticals remains well aligned with the fundamentals driving long-term growth in emerging markets, rising middle-class, improving access to healthcare consumers that are seeking and willing to pay for high-quality brands. Emerging markets projected drive, 70% of the global pharmaceutical growth over the next several years, the majority of that growth will be from branded generics.

Sales increased 4.3% on an operational basis that is excluding an unfavorable 2.3% impact from foreign exchange. The sales disruption in Abbott’s International Nutrition business is estimated to have reduced its worldwide sales growth by nearly 2%. So sales would have increased around 6% without this event.

Outlook for the Full Year 2013:

Today Abbott confirmed its ongoing full year earnings per share guidance range of about $1.98 to $2.04 reflecting double-digit growth. Based on current exchange rates, the company would expect exchange to have a negative impact of around 2% on full year reported sales. This would result in reported sales growth in the low single digits. The company forecast an ongoing adjusted gross margin ratio for the full year of approximately 55.5% percent of sales, ongoing R&D at around 6.5% of sales and ongoing SG&A expense of somewhat more than 30% of sales.

Abbott also forecast the full year net interest expense of approximately $100 million, non-operating income of around $50 million and around $40 million of expense on the exchange gain/loss line. As previously indicated, the company forecast the full year ongoing tax rate of 19%.

Outlook for the Fourth Quarter of 2013:

Operational sales growth is expected to be in the low-to-mid single digits, which includes the impact of the Nutrition disruptions. At current exchange rates, the company would expect roughly 3% negative impact from exchange and forecast an ongoing adjusted gross margin ratio in the fourth quarter of approximately 55.5% of sales. Abbott also forecast an ongoing tax rate of 19% for the fourth quarter, in line with the year-to-date rate.

Lastly, similar to the third quarter, the company expects the recent sales disruption in its International Nutrition business to impact ongoing earnings per share by approximately $0.05 in the fourth quarter, which is factored into the company’s forecast.

Yahoo! Q3 2013 Results

This quarter Yahoo! released more than 15 significant new product updates, modernizing and increasing user engagement across their digital daily habits. 

In late September, Yahoo! Screen was launched, a new video destination for mobile, tablet and desktop. Yahoo! Screen is home to Yahoo! original programming as well as the Saturday Night Live Archives, NBC Sports, South Park, the Daily Show, the Paul Bearer Report and ARF. 

The company has seen a 100% growth in daily active users over the last quarter and a 50% increase over last season. In late July, Yahoo! launched fantasy mobile apps for Android and iOS complete with native live draft capabilities. For the more engaging experience on mobile, the company has already seen a 50% increase in daily active users for this app over last season.

In Q3, for the first time in eight years, Yahoo! launched a massive upgrade, making it more beautiful, colorful and easier to organize and discover favorite parts of the web, all in one place. 

After years of global traffic decline, Yahoo managed to reverse this negative trend and in June of 2013, it achieved year-over-year growth, effectively erasing the decline from the prior year. 

For core Yahoo!, the page view milestones were another only accomplishment this quarter. In September, Yahoo! announced that they have more than 800 million monthly unique users. This represents a 20% increase in monthly unique users over the past 15 months.

It means that Yahoo! has attracted more than 100 million new monthly users and while with the page views, about surpassing 2011 or 2012, Yahoo! has never before in its history had 800 million monthly unique users on its core network.

Last quarter, Yahoo! recorded a 340 million mobile user number. And today, the company now sees more than 390 million monthly mobile users. This represents nearly 15% growth in the past quarter.

In Q3, Yahoo! received more than 17,000 resumes in a single week. This is up from 12,000 in August, 10,000 in May and 2,000 in January, a more than 8x increase year-to-date.

Yahoo! made eight critical acquisitions in Q3, including Bignoggins, Qwiki, Admovate, Ztelic, Lexity, Rockmelt, IQ Engines and Xobni. The company integrated Bignoggins technology into their widely successful Yahoo! Fantasy App just 24 days after the acquisition.

The capital spending was once again down significantly year-over-year to $78 million a period and $229 million on a year-to-date basis. The nine month spend is down 36% from the same period in 2012. Operating expenses were higher than 3Q as the management forecasted before.

Yahoo! continues to have a very strong balance with nearly $3.2 billion of cash and securities. In this quarter, Yahoo! returned an additional $1.7 billion to shareholders through share buybacks.

This brings their total buyback January 2012 to nearly $5.3 billion with which they repurchased just nearly 250 million shares at an average price of $21.25. Yahoo! generated free-cash flow up $449 million in the third quarter and $530 million year-to-date and have ample liquidity to fund any investment needs.

Guidance:

For the fourth quarter, Yahoo! expects revenue ex-TAC to be in the range of $1.18 billion to $1.22 billion, adjusted EBITDA to be between $400 million and $420 million, and non-GAAP operating income to be between $240 million and $260 million.

Yahoo!’s full year ranges are, revenue ex-TAC to be in the range of $4.4 billion to $4.45 billion, adjusted EBITDA to be between $1.48 billion and $1.5 billion and non-GAAP operating income to be between $840 million to $860 million.

So how is Nike able to succeed in a challenging global economy?

25 years ago NIKE launched its first ‘Just Do It’. These are three simple words that remain a rallying cry for people striving to reach their full potential.

Looking at Q1 results, Nike is off to a great start. First quarter revenues were up 8%, gross margins grew 120 basis points better than projected and diluted earnings per share increased 37% to $0.86.

So how is Nike able to succeed in a challenging global economy?

By focusing on the fundamentals, the competitive advantages that help Nike win and expand their leadership position. Mark Parker, President and CEO provided with three highlights; ability to innovate, the power of the NIKE Inc portfolio and ability to continue to make meaningful connections with consumers.

So let's take a look at the first one, ability to innovate. It's what fuels Nike’s growth and it always starts with the athletes. How can Nike make the athlete faster, stronger, better and help them push themselves to new levels of performance.

In Q1 Nike launched a whole array of products that deliver the promise including the NIKE Free Flyknit, the next generation of Flyknit products in a running category. This shoe demonstrates how Nike takes Flyknit and combines it with other footwear platform like Free in this case to continue to integrate and serve the athletes. As you may have heard before, Flyknit is high performance, visually iconic and manufactured in ways that reduce labor and waste.

First quarter revenue for Nike Inc. increased 8% on both a reported and currency neutral basis as revenue for the NIKE brand including NIKE Golf and Hurley increased 7% and Converse increased 16%.

NIKE brand future orders accelerated to 10% growth on a currency neutral basis reflecting a 7% increase in units and a 3% increase in average selling price. The increase was led by double-digit growth in North America and both European geographies. Weaker foreign currencies reduced reported futures growth to 8%. First quarter diluted EPS increased 37% to $0.86 driven by revenue growth, gross margin expansion and leverage of SG&A expenses which were flat for the quarter.

In North America Q1 revenue increased 9% on both a reported and a constant currency basis, driven by growth across all key categories except Golf, including double-digit growth in Basketball, running and men's training. For the quarter footwear revenue increased 9%, while apparel and equipment grew 9% and 13% respectively.

Q2 Guidance:

For the second quarter, Nike expects to see gross margin expansion of about 50 basis points driven by continued benefits from higher average prices, easing raw material costs and growth in DTC partially offset by higher discounts to clear inventories in Mexico, start-up costs for expanded U.S. distribution center and stiffening FX headwinds .

For the fiscal year, they also expect gross margin expansion of approximately 50 basis points, a modest increase from prior guidance as the ongoing impact of the upside that drove Q1 results are expected to more than offset FX headwinds and labor cost inflation. For Q2, Nike expects SG&A to grow at a mid-teens rate reflecting shifts in demand creation, phasing and ongoing investments in strategic initiatives. The management indicated last quarter that there will be more volatility in the year-over-year comparisons of SG&A due the timing of key sporting events this year and last.

For the full year, Nike continues to expect SG&A to grow at a low double-digit rate as they invest in their brands, DTC and innovation. For FY '14, they continue to expect the effective tax rate will be about 25%. Q1 was a great start for fiscal 2014 delivering strong growth in revenue and profitability. Over the balance of the year, management expects to continue to drive revenue growth and gross margin expansion while making the investment and demand creation and innovation that will deliver sustainable profitable growth and consistent value to their shareholders in the future.

Oracle Corporation Q2 Guidance & Oracle OpenWorld Highlights

Guidance for Q2 2014

New software license and cloud subscription revenue growth is expected to range from negative four to positive six in constant currency and negative six to positive four in recorded dollars.

Hardware product revenue is expected to range from negative 9% to positive 1% in constant dollar and negative 11% to negative 1% in reported dollar. As a result total revenue growth on both GAAP and non-GAAP basis is expected to range from 1% to 4% in constant dollars and negative one to positive two in U.S. dollars. Non-GAAP EPS is expected to be somewhere between $0.65 and $0.70 on constant dollar $0.64 and $0.69 in reported dollars.

GAAP EPS is expected to be $0.51 to $0.66 in constant dollar and $0.60 to $0.55 in reported dollars. I want to remind you that last year Oracle had the benefit of $145 million acquisition related benefit for the pillar earn out. So excluding that benefit GAAP EPS last year would have been $0.61. This guidance assumes a tax rate of 23.5% and a non-GAAP tax rate of 24%. Of course it may end up being very different.

Check Out: Oracle Corporation Q1 2014 Financials and Operations 

Oracle OpenWorld

Starting next week, Oracle plans to have roughly 60,000 people at the event in San Francisco from 145 countries. They expect to have 2 million attendees online. So this is going to be the biggest one yet. They’ve got a great lineup of speakers; EMC, Dell, Fujitsu, Deloitte, Intel will be there.

They’ve got customers: LinkedIn, AT&T, Facebook, Electronics Arts, Thomson Reuters, New York Stock Exchange, Tesco, and Deutsche Telekom. I could just go on. It's going to be a great set of people from the industry, as well as customers, a very large attendee base.

And Oracle will make some significant product announcements at the event as well they’ll be introducing Oracle 12c in-memory database. Oracle will be talking about it being able to deliver 100x faster application performance using their new architectural approach. Oracle will also be talking about existing Oracle apps that can now run in the Oracle Database functionality without change when using this in-memory capability.

Oracle will have some releases in cloud and will talk about some releases in HCM and talent management, and also talk about database as a service, Java as a service that will be available to their customers.

So there'll be a whole slew of product announcements there that Larry Ellison will be talking about Sunday night and will continue on through the week. So we're excited about the upcoming activities at Oracle OpenWorld.