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Archive for July, 2008

Visa (V) June 2008 Earnings Conference Call Notes

July 31st, 2008 No comments

-EPS 59c vs. 48c est. Revenue $1.6B vs. $1.55B est.
-Increasing longer term operating margin guidance to mid to high 40% range
-Although tougher climate is here and will likely continue, we expect fourth quarter to be on the upper end of revenue guidance range
-U.S. payment volume though softening has held up pretty well
-Seeing secular shift to plastic particularly debit cards in U.S.
-Payment volume +19%. Credit growth 19% world-wide and 8% in the U.S. However debit growth was 20% world-wide and 16% in the U.S.
-U.S. payment growth was 10% vs. 12% in Q1. Seeing “fairly consistent monthly rate through the end of June and continuing into July”

Take-aways
-Debit card growth is helping off-set weakening credit card numbers.
-Tone was more upbeat than Mastercard call.

Categories: News

CB Richard Ellis Group (CBG) June 2008 Earnings Conference Call Notes

July 31st, 2008 No comments

-EPS of 16c vs. 44c est. Revenue of $1.3B vs. $1.42B est. Could see earnings down as much as 40-50% in 2008 which would mean 1.16 EPS vs. 1.83 est.
-Margins could get 300-400bps worse vs. previous worst case scenario of 100-200bps. This is a “classic stagflation environment”
-“Current environment as being very challenging and still have high probability of getting worse before we see improvement”
-“Global markets have taken a decided turn for the worse” “no indication of recovery anytime soon”
-EMEA growth slowed considerably from last quarter. Asia is slowing as well
-Expect more bad news over the next 6 to 9 months from the economy, as job cuts continue, and for the real estate markets occupancy, rents, and prices fall

Take-aways
-Huge EPS miss and potential guide-down for the rest of 2008.
-Things got materially worse in the U.S., UK, Europe, and Asia. They expect things to stay bad for at least 6-9 months.
-Commercial real estate business nose-dived in the last 3 months. “Classic stagflation environment” = brutal

Categories: News

Mastercard (MA) June 2008 Earnings Conference Call Notes

July 31st, 2008 No comments

-EPS was 2.11 vs. 2.02 est. Revenue 1.2B vs. 1.21B est.
-Growth in Gross Dollar Volume 12.8% vs. 14.1% Q1
-Transactions 13.6% vs. 15.7% Q1
-Cross-border 18.9% vs. 23.6% Q1
-World-wide purchasing volume 14% vs. 15% Q1
-Cards Issued 11% (951M total) vs. 12.1% Q1
-U.S. Gross Dollar Volume growth went from 10.6% in Q4 to 8.9% in Q1 to 6.2% in Q2
-Customers are experiencing “extraordinary challenging conditions in current economic environment
-“We are not insulated from the pain that our customers are feeling and we are actively working our expense structure to deal with the changing demands of our customers
-Full year 2008 guidance of double-digit growth, but below 2007’s 22% growth
-Cutting marketing spending in second-half of 2008 vs. previous expectation
-“Managing our business plans in light of a tougher market and are taking the necessary expense management actions as we see our customers realigning their plans”
-Spending trends came down in June and continued in July

Take-aways
-They beat estimates, but the magnitude was much smaller than in the past.
-The tone on the business climate was very negative on the call. Actions speak even louder than words as cutting marketing spend means we’re likely to see tough sledding for the rest of the year.
-Economy sucks and is getting worse.

Categories: News

GDP Numbers Weak

July 31st, 2008 No comments

GDP grew 1.9% in the June 2008 quarter, which was below 2.3% est. Q1 GDP was revised down to 0.9% vs. 1%. Q4 2007 was revised down to -0.2% vs. 0.6% previously reported.

Initial jobless claims went up 44,000 to 448,000, the highest number since April 2003.

Categories: News

Electronic Arts (ERTS) June Q1-FY2009 Earnings Conference Call Notes

July 30th, 2008 No comments

-33 cent loss vs. 42 cent loss est. Revenue $609M vs. $639M est. Guidance $1.30-1.70 EPS vs. $1.59 est.
-Pre-orders for Madden are down. Pre-orders for NCAA were down 20% y/y, but sales came in consistent with last year
-40 SKUs to ship this year on Nintendo platforms vs. 26 last year
-Made $90M in revenue from their digital/direct to consumer business, up 21% y/y
-Battlefield Bad Company sold 1.6 million units, UEFA Euro 2008 sold 1 million, Nascar 09 sold nearly 500k, Bloom Box sold 450K, Rock Band sold 800K

Take-aways
-This quarter came in a bit below street estimates, but it really doesn’t matter. All eyes are on the upcoming Spore, Sims 3, Madden, Warhammer MMO, and the Star Wars KOTOR MMO games.
-It was quite telling they did not want to give a pre-order % decline number for Madden. It must of been pretty ugly.

Categories: News

Merrill Agrees Takes Another $5.7 billion Loss

July 29th, 2008 No comments

-Selling $30.6 billion of mortgage related securities at 22 cents on the dollar, which will be an additional write-down of $5.7 billion
-$46 billion in write-downs since June of 2007
-Will issue another $8.5 billion in common stock which will dilute existing shareholders by 38%
-Lone Star, a private equity firm, is paying $6.7 billion for the $30.6 billion in assets. Merrill itself will finance 75% of the $6.7 billion

Categories: News

U.S. Budget Deficit to Reach $490 Billion in 2009

July 28th, 2008 No comments

The U.S. budget deficit is forecasted to reach a record $489 billion in 2009 (September fiscal year), which is higher than the $407 billion President Bush put out in February. A Bloomberg survey of analysts had the forecast at $447 billion.

Categories: News

Toyota Cuts Annual Sales Goals

July 28th, 2008 No comments

Toyota cut their annual sales goals today for 2008 by 350,000 to 9.5 million vehicles. This is only a 1% increase over 2007. The company also decreased their global production plan from 9.95 million to 9.5 million.

U.S. goals were cut by 200,000 to 2.44 million vehicles, 7% fall from 2007. Japan goes down only 4,000 to 2.23 million vehicles and Europe 80,000 to 1.19 million vehicles. It sounds like Toyota expects the U.S. to be far worse economically than Asia or Europe.

Categories: News

U.S. Oil Imports

July 27th, 2008 No comments

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Categories: News

KKR to go Public

July 27th, 2008 No comments

WSJ is reporting KKR is going to go public. Poor timing as public investors in both Fortress (FIG) and Och-Ziff (OZM) have taken a bath. The only people that got rich in the process were the insiders who got paid large cash distributions before going public. I guess that is the whole point.

Update: The valuation according to people familiar with the matter will be $12-$15 billion. The firm has an annual return of 26% in the last 32 years. It’s pretty likely the next few yaers aren’t going to be anywhere near those numbers.

Update2: From Bloomberg, KKR forecasts $1.2 billion in profits in 2009. 10-12Xs earnings would be the $12-15 billion valuation. As of June 30th, 2008, KKR managed $60.8 billion in assets. Blackstone managed $113.5 billion and Carlyle $81 billion. The KKR Millenium Fund which finished raising funds in 2002 has had a 41% annual return since then. KKR funds have averaged 29% return to investors.

Categories: News