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business newsQualcomm Coming On Strong
By
Justin Sharon
Nov 04, 2010 4:50 pm
Robust third quarter results sent shares up over 5%.
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However, its current foundations may be much more solid, coming after robust third-quarter results sent shares up over 5%. Moreover Qualcomm, which like Apple tends to issue conservative and easily exceedable earnings guidance, now projects revenue in a range of $3.05 billion and $3.55 billion, well ahead of what the Street was looking for. For its most recent quarter, it reported revenue rose almost 10% from a year-earlier, to $2.95 billion, again in excess of consensus calling for only $2.85 billion. Adjusted per share earnings of $0.68 also exceeded analyst expectations of $0.59.
Qualcomm continues to rake in CDMA royalty checks and is now making silly money on smartphones, being the largest manufacturer of such chips. Edward Snyder at Charter Equity Research expressed the views of many in calling it an “exceptional quarter.” Many people will be inclined to take profits after today’s torrid run up, especially as the emerging brave new world of 4G-compatible phones is expected to prove less lucrative for the firm than its third-generation predecessor. For now however, investors are enjoying partying like it's 1999 once more.
For more on the shifting fate of a famously volatile stock, please see Through Qualcomm’s Eyes, All Is Rosy, Want to Get Into Wireless? Call on Qualcomm, and It May Be Time to Leave Qualcomm Behind.
If Obama needs cheering up after Tuesday, having represented Illinois in the Senate he might take some pleasure in today’s strong share price performance from Chicago Bridge & Iron (CBI). (Okay, it’s actually based in Holland but work with me here.) In fact the dire state of our country’s crumbling bridges, toll roads, and the like may also make Macquarie Infrastructure (MIC) an interesting long-term investment, even if it’s taking far longer than expected to get those fabled stimulus projects “shovel ready.”
Stock in Macquarie, whose holdings interestingly enough include the Chicago Skyway, are similarly up over 5%, after announcing its third-quarter combined free cash flow grew 45% from 12 months ago. CEO James Hooke cited a “continued improvement in operational effectiveness” at the company, which hit a high of $44 in July 2007, which was the year that bridge collapse in Minnesota tragically highlighted our national need for an upgrade of such aging structures. Much changed in the subsequent 24 months, with the stock slumping to a scarcely believable $0.90 when the market bottomed in March 2009 as it eliminated a once-hefty dividend.
The company does have a cumbersome corporate structure but projects such as ports and parking spaces are a reliable profit sector. Expect a pullback after this afternoon’s increase but anyone with a long-term time horizon should be intrigued with this industry. How to amuse yourself in the meantime? Why by counting the cars on the New Jersey Turnpike, of course.
Also check out Turbulent Transports: Is Infrastructure a Good Investment?
On a day when all 10 S&P sectors are up, DirecTV (DTV) is down sharply, although admittedly the shares also hit a 52-weak peak today. The satellite television operator, whose offerings include NFL Sunday Ticket -- this is a company that clearly likes its capitals -- merely met Street third-quarter earnings expectations of $479 million, or $0.55 on an EPS basis, while the stock was priced for perfection. Chief Executive Mike White, who has of late become something of a TV star himself on Undercover Boss, claimed to be “satisfied” with its gridiron package performance, though he conceded that subscription renewals were “slightly less” than a year ago due to competition from NFL Red Zone among others. I'm absolutely the wrong person to ask about this type of football, favoring the European kind and agreeing with the wit who said the US version “combines the two worst features of American life; violence punctuated by committee meetings.” However, with the company’s fast-growing Latin American division adding a better-than-anticipated 206,000 subs even post the fútbol World Cup, and shares boasting an impressive 9.8% Free Cash Flow yield, this is a stock that could soon be set for another run after today’s time out.
DirecTV Drops G4, Geeks Rejoice and Fresh Vibes on TiVO & DirecTV have extra insight.
On an otherwise exceptionally strong day in equities, shares in banana behemoth Chiquita Brands International (CQB) slipped some 4% plus due to an unexpected third-quarter loss. The fruit and veg firm blamed soft European results among other negative factors in posting an adjusted per share earnings deficit of $0.14, well down on the $0.32 profit analysts were expecting, and also off from its year-ago green ink of $0.11. Overall sales also imploded 8% with today revealing that fewer of us are eating salads, no surprise to anyone who's seen the stock action in McDonald’s (MCD) lately. It’s inherently hard to jazz up a product whose most famous jingle dates to the Jazz Age, though lately some have tried hard. Shares should eventually rebound, but for now investors are understandably avoiding them like a banana skin.
To learn about both bananas and banana republics see Skeletons in the Corporate Closet: Chiquita and Dole.
No positions in stocks mentioned.
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