Science & Technology
Science and Technology
Science and Technology
Thu, October 28, 2010
Wed, October 27, 2010
Tellabs, EI DuPont de Nemours & Company, The McGraw-Hill Companies, Airgas and Air Products & Chemicals
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Tellabs Inc. (Nasdaq: [ TLAB ]), EI DuPont de Nemours & Company (NYSE: [ DD ]), The McGraw-Hill Companies Inc. (NYSE: [ MHP ]), Airgas Inc. (NYSE: [ ARG ]) and Air Products & Chemicals Inc. (NYSE: [ APD ]).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: [ http://at.zacks.com/?id=4579 ]
Here are highlights from Thursdaya™s Analyst Blog:
Tellabs Beats, Gets Beaten
Tellabs Inc. (Nasdaq: [ TLAB ]) declared third quarter 2010 financial results that exceeded the Zacks Consensus Estimate. Total revenue of $429.2 million was up 10.2% year over year.
Third quarter revenues were above the Zacks Consensus Estimate of $427 million. During the quarter, increased revenues in the Transport and Services segments offset lower revenues in the Broadband segment.
On a GAAP basis, net income in the reported quarter was $56.5 million or 15 cents per share compared with a net income of $29.3 million or 7 cents per share in the prior-year quarter. However, adjusted (excluding special items) earnings were 15 cents per share, a penny above the Zacks Consensus Estimate of 14 cents.
GAAP gross margin was 50.2% compared with 41.7% in the year-ago quarter. This reflects favorable product-mix for high-margin Data products. Operating expenses in the same quarter were $149.9 million compared with $137.2 million in the prior-year quarter.
The increase in operating expenses was mainly due to higher research and development as well as sales and marketing costs associated with the acquisition of WiChorus. Operating margin was 15.2% versus 6.4% in the year-ago quarter.
Our Take
We believe, in the long run, a huge demand for high-speed mobile data and video services will result in rapid growth for mobile backhaul and optical transport products as smartphones are becoming the choice of the next-generation. Additionally, we believe the U.S. Presidenta™s endorsement of wireless spectrum hike plan will highly benefit Tellabs. On the other hand, our major concern is the growing competitive threat in the wireless backhaul industry.
Additionally, Tellabs is facing ongoing economic headwinds, which still persist in several parts of the world, especially the European regions. Tellabs also faces a high level of customer concentration. Three customers -- AT&T, Verizon Wireless and Sprint-Nextel -- account for more than 60% of its total revenue. Losing any of these customers would have a significant material impact on the companya™s top line.
We maintain our long-term Neutral recommendation for Tellabs. Currently, it is Zacks #4 Rank (Sell) stock. Shares of TLAB were down more than 13% in Tuesday trading.
DuPont Misses 3Q Consensus
Net earnings of chemical giant EI DuPont de Nemours & Company (NYSE: [ DD ]) plunged 11% to $367 million or 40 cents per share in the third quarter of 2010 compared with $409 million or 45 cents in the prior-year period.
The decline in earnings is attributed to the patent expiration in the Pharmaceutical business. DuPonta™s Cozaar and Hyzaar drugs patent expired this quarter, which affected profits by 13 cents. Reported earnings, however, were ahead of the Zacks Consensus Estimate of 34 cents.
Quarterly revenues grew 17% to $7.0 billion on a 14% volume gain, driven by higher international sales and a 5% rise in selling prices. Sales exceeded the Zacks Consensus Estimate of $6.7 billion.
DuPont saw sales volumes rising in double digits across all business segments, with the Safety & Protection segment and Electronics & Communications reporting a pronounced 31% and 24% year-over-year volume expansion. DuPont recorded a 19% year-over-year rise in costs to $5.4 billion. Operating margins were minimal at 4% versus last yeara™s 6.6%.
McGraw-Hill Tops, Ups Outlook
The McGraw-Hill Companies Inc. (NYSE: [ MHP ]), a publisher and provider of financial information and media services, posted higher-than-expected third-quarter 2010 results on the heels of robust performance across Standard & Poora™s (S&Pa™s) services, U.S. elementary-high school and higher education markets, and global energy information products.
The quarterly earnings of $1.22 per share topped the Zacks Consensus Estimate of $1.09, and rose 14% from $1.07 posted in the prior-year quarter. On a reported basis, including one-time items, earnings came in at $1.23 per share, up 15% from the year-ago quarter.
McGraw-Hill now expects fiscal 2010 earnings to be at the high-end of the new guidance range of $2.60 to $2.65 per share versus $2.55 to $2.65 provided earlier.
McGraw-Hilla™s total revenue of $1,979.8 handily beat the Zacks Consensus Revenue Estimate of $1,946 million, and jumped 5.5% from the prior-year quarter helped by growth in Education and Financial Services segments, but offset by a decline in its Information and Media segment.
An increase in the top-line coupled with effective cost management enabled McGraw-Hill to register an 11.8% growth in total adjusted operating profit of $601.7 million, whereas operating margin expanded 170 basis points to 30.4%.
Airgas Beats, Hikes Guidance
Airgas Inc. (NYSE: [ ARG ]) delivered adjusted earnings per share (EPS) of 83 cents in its second quarter fiscal 2011 ended September 30, 2010, reflecting a growth of 22% from 68 cents in the year-ago quarter and beating the Zacks Consensus Estimate 81 cents. The quartera™s EPS also topped Airgasa™s second quarter earnings guidance range of 78 cents to 82 cents on solid revenue growth and effective cost management.
The adjusted EPS for the quarter under review excluded the per share effect of the following items a"a" legal and professional fees and other costs of 3 cents related to an unsolicited takeover attempt by Air Products & Chemicals Inc. (NYSE: [ APD ]) as well as both debt extinguishment and multi-employer pension plan withdrawal charges of a penny each.
The prior-year quartera™s adjusted EPS excluded a debt extinguishment charge of 2 cents per share and multi-employer pension plan withdrawal charges of 1 cent. Including these items, GAAP EPS in the quarter stood at 78 cents in the third quarter compared with 65 cents in the year-ago quarter.
Guidance
Management has guided third quarter fiscal 2011 EPS in the range of 76 cents to 80 cents, reflecting a year-over-year growth in the range of 15% to 21% from the year-ago EPS of 65 cents. The projection includes 1 cent per share of incremental expense associated with its SAP implementation.
For full fiscal 2011, management projects EPS in the range of $3.22 to $3.32, up from the previous expectation of $3.15 to $3.30. The current guidance depicts growth in the range of 20% to 24% over $2.68 in fiscal 2010. The guidance includes 11 cents per share of expense associated with its SAP implementation.
The third quarter and fiscal 2011 guidance for Airgas, however, do not include the impact of debt extinguishment or multi-employer pension plan withdrawal charges and costs related to the unsolicited takeover attempt.
The company states that it is on track to beat its calendar 2012 earnings goal of at least $4.20 per share.
Update on Air Productsa™ Offer
In February 2010, Air Products & Chemicals made an unsolicited public proposal to acquire Airgas, which was rejected by Airgas. In conjunction with its strong earnings results, Airgas sent a letter to Air Products stating that the current offer of $65.50 per share is grossly inadequate.
Airgas added that given its outstanding prospects, unique industry position, as well as the enormous financial benefits to Air Products post- acquisition, the current offer price is not close to the right price for its sale. Airgas estimates that its value exceeds $70 per share and is willing to negotiate with Air Products if offered the right price.
Based in Randor, Pennsylvania, Airgas, through its subsidiaries, distributes industrial, medical, and specialty gases, as well as hard goods in the United States. Airgas currently has a Strong Buy recommendation over the short term, supported by the Zacks #1 Rank.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: [ http://at.zacks.com/?id=5514 ].
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: [ http://at.zacks.com/?id=5516 ]
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at [ http://at.zacks.com/?id=4580 ].
Visit [ http://www.zacks.com/performance ] for information about the performance numbers displayed in this press release.
Follow us on Twitter: [ http://twitter.com/zacksresearch ]
Join us on Facebook: [ http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts ]
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
