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VIDEOCampbell Soup Cools Off
By
Justin Sharon
Sep 03, 2010 3:55 pm
Its shares shed more than 3% after announcing fourth quarter sales slipped 1%. However, net income still rose a tidy 64% from 52 weeks earlier.
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Video-game maker Take-Two Interactive (TTWO) is indeed causing analysts to do a double take today, up over 9% after surprising Wall Street prophets by returning to a profit for its fiscal third quarter. The company earned $5.9 million in the period, equivalent to $0.07 per diluted share. EPS excluding one-time items was $0.28, well ahead of consensus estimates, which called for a $0.06 per share loss. Net revenue of $354.1 million tripled year-earlier results of $94.9 million. Take-Two also raised its fourth-quarter outlook to a profit from its previously projected deficit, crediting stellar sales of Red Dead Redemption. Although not quite in the league of its venerable Grand Theft Auto, this newer title has nonetheless racked up 6.9 million sales since being released in May. Stock seers seem split on their shares today, two assigning upgrades (Hudson Square and Janco Partners) with one going in the opposite direction (Pacific Crest.) Areas of concern include gross margins coming in at only 34% and, looking further out, the Rockstar contract coming up for renewal in two years. Investors should expect an upcoming pullback after recent strength but a profitable trading opportunity exists around the holidays with its NBA offerings. Incidentally, Take-Two’s surge is also having a slight halo (or Halo, for my fellow game boys out there) effect on others in the space, including Activision Blizzard (ATVI) and Electronic Arts (ERTS). To access additional analysis on the video game industry, see Can Video Games Make a Comeback?
Saturday Night Live alum Rob Schneider went from making copies (and making fun of Sting) to making money as a male gigolo in Deuce Bigalow. Though that movie earned a respectable $92 million at the box office, one wonders if he wouldn’t have done better by sticking to his original line of work. Xerox Corporation (XRX) is up a tidy 2% plus today after the Wall Street Journal reported that it's about to branch out beyond its reproductive roots by becoming a bigger player in business services. While being both a noun and verb is hardly cause for Xerox to reach for the Kleenex, it does obscure the fact that fully 50% of its revenue now comes from outside its core photocopying franchise. The services segment posted a healthy 12% increase in its most recent quarter, boosted by last year’s $6.4 billion purchase of Affiliated Computer. Overall, company revenues rose an impressive 48%, so its plain vanilla office products clearly remain immensely lucrative. While Xerox does face real rivals in newer areas, including outsourcing, the company deserves credit for continuing to evolve under the leadership of Ursula Burns. For a look at how she went from summer intern to CEO, check out this entry in our Rags to Riches series.
After falling for several straight sessions recently, Coinstar (CSTR) is appropriately up on a day its chief executive rang NASDAQ’s opening bell. The company’s $1 per day DVD kiosks carry obvious appeal in our belt-tightening era, and its Redbox unit passed 1 billion rentals earlier in the week. Though its coin-counting division still operates in more than 19,000 locations all over the country, its film-borrowing business is really where the money is, accounting for 70% of revenue. Shares, up more than 55% year to date, certainly aren’t inexpensive, but with Coinstar owning more than 24,000 kiosks across America -- on average one is added every hour -- and commanding some 25% of the DVD rental business, the outfit still has ample room to grow. For commentary on their competition, both rising and fading, see Netflix Trains Its Sights on Apple, Hulu Plus and Blockbuster CEO Out of Touch With Reality.
No positions in stocks mentioned.
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