Archive | October, 2014

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Newell Rubbermaid plans to sell units

Newell Rubbermaid Inc. said Friday that it will pursue the sale of its Endicia online postage and Calphalon retail outlet stores and kitchen electrics businesses to create a more focused portfolio.

It also reported a decline in earnings, as higher expenses offset a slight gain in revenue.

The consumer-products company has undergone a multiyear revamp in efforts to stoke growth, as annual revenue has been flat recently amid the company revamping its portfolio.

The company said divesting its Endicia online postage unit and Calphalon retail outlet stores and kitchen electrics operation will also create a faster growing, higher margin. The company already is working to cut costs, but on Friday, it also unveiled a fresh, three-year cost-savings effort in the areas of procurement, manufacturing, distribution and further overhead reduction. The company also said it is on track to achieve more than $270 million of total annualized savings by midyear 2015.

Chief Executive and President Michael Polk said Friday such savings will be invested in its brands in the emerging markets of Asia and Latin America.

Newell was founded in 1903 as a maker of curtain rods, and in the 1960s began acquiring other businesses, such as housewares. Today, it owns a hodgepodge of brands, including Calphalon cookware, Graco car seats and baby products, Sharpie and Paper Mate pens, and Rubbermaid containers and commercial products.

The company also reported a profit Newell posted a profit of $122.3 million, or 44 cents a share for the latest quarter, compared with $193.3 million, or 66 cents a share, a year earlier.

Excluding special items, per-share earnings rose to 58 cents from 52 cents a year earlier. Sales rose to $1.48 billion from $1.47 billion.

Analysts expected a profit of 55 cents a share on $1.53 billion in sales.

Last month, the company warned its sales growth for the year is tracking toward the lower end of its earlier guidance, and the consumer-products maker also introduced a sales outlook for next year that fell short of estimates at the time. On Friday, the company backed its full-year outlook.

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Dominion earnings fall due to warm weather

Dominion Resources Inc. said its third-quarter earnings fell 7%, dented by a season of milder-than-usual weather.

Dominion is a Richmond, Va.-based energy company that supplies clients in states such as West Virginia, Ohio, North Carolina, and Pennsylvania. In June, the company said it is seeking U.S. regulatory approval for two projects to move natural gas from the Appalachian region to markets in upstate New York and West Virginia.

It is also is among the companies seeking government approval to export natural gas, aiming to take advantage of increased U.S. production and robust global demand.

“Our service territory experienced one of the mildest summers in the last 30 years,” said Chief Executive Thomas F. Farrell II. “Excluding the 8-cents- per-share impact of the mild weather, third-quarter earnings would have been in the upper end of our range.”

For the latest quarter, Dominion posted a profit of $529 million, or 90 cents a share, down from $569 million, or 98 cents a share, a year earlier.

Operating earnings, which Dominion considers its key metric and which exclude discontinued operations, impairments and other items, were 93 cents a share, down from $1 a share a year earlier.

The company had forecast earnings between 90 cents and $1.05 a share.

For the current quarter, Dominion expects operating profits of 80 cents to 90 cents a share, citing an expected return to normal weather, higher revenues from growth projects and higher earnings from farmout transactions. Analysts had called for 89 cents.

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Kraft profit drops on higher commodity costs

Kraft Foods Group Inc. said its third-quarter earnings dropped 11% as the U.S. packaged-foods maker raised costs in a bid to offset higher commodity costs.

Shares edged down in recent after-hours trading as revenue slightly missed expectations. Through Wednesday’s close, the stock has risen nearly 6% so far this year.

Kraft, home to supermarket mainstay brands such as Oscar Mayer, Maxwell House, Velveeta, Kool-Aid and Jell-O, has been forced to raise prices on some products, such as cheese and ground coffee, in response to higher commodities costs. The company said Wednesday that its bid to implement commodity-based pricing has been successful so far.

Meanwhile, soft consumer demand for everything from breakfast cereal to desserts has weighed on sales of U.S. packaged-food makers. Food companies also have been are grappling with tougher competition and pressure from investors to improve margins.

In all, Kraft Foods reported a profit of $446 million, or 74 cents a share, down from $500 million, or 83 cents a share, a year earlier. The latest period included a hit of four cents a share tied to benefit plans and hedging.

Revenue edged up 0.1% to $4.4 billion. Organic revenue–which typically excludes acquisitions, divestitures and currency impacts–rose 0.9%.

Analysts polled by Thomson Reuters expected a per-share profit of 74 cents and revenue of $4.47 billion.

Revenue at the beverages segment edged up 0.5% to $628 million, reflecting gains from coffee pricing, while operating income more than doubled, helped by lower marketing spending.

Cheese segment revenue rose 1.6% to $937 million on higher prices, while operating income dropped 16% on higher input costs. Refrigerated-meals business revenue improved 3.4% to $908 million, while operating income rose 21% on favorable pricing.

Revenue at the meals and desserts unit dropped 6.7% to $512 million, while operating income decreased 8.2% on lower volumes and pricing.

Kraft’s snacks business Kraft Foods Group Inc. was spun off in late 2012 and is now known as Mondelez International Inc.

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Baidu posts higher revenue on mobile strength

Baidu Inc. posted a 52% revenue increase for the third quarter, with a smaller increase in profit as its expenses were higher.

The Chinese search engine said it had a “very strong” quarter, especially in mobile, with mobile traffic surpassing PC traffic during the quarter. Mobile revenue provided 36% of total revenue.

Baidu’s American depositary shares were down 1.2%, to $221.90, in recent late trading.

Baidu reported a third-quarter profit of 3.88 billion Chinese yuan ($631.5 million), or 11 yuan ($1.79) an ADS, compared with a profit of 3.05 billion yuan, or 8.63 an ADS, a year earlier.

Earnings per share excluding stock-based compensation were 11.67 yuan ($1.90) an ADS.

Revenue surged to 13.52 billion yuan from 8.89 billion.

For the fourth quarter, Baidu expects revenue of 13.85 billion to 14.25 billion yuan, compared with the 14.04 billion yuan expected by analysts polled by Thomson Reuters.

Baidu, which makes the bulk of its top line from search advertising, has been has been spending heavily to migrate its desktop search advertising prowess to mobile devices such as tablets and smartphones. The company has also invested in other ways–such as gaming–to contend in the rapidly growing mobile market in China.

In the third quarter, traffic acquisition cost was equal to about 12.9% of revenue, up from 11.7% a year earlier.

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PG&E profit boosted by revenue from rate decision

PG&E Corp. said its third-quarter earnings surged, mostly on three quarters of additional revenue related to a rate decision and lower charges tied to natural gas matters, including pipeline-related costs.

PG&E also projected 2014 per-share earnings of $3.45 to $3.55, above estimates of analysts polled by Thomson Reuters for $3.05.

The company continues to deal with the fallout from the fatal 2010 San Bruno, Calif., gas-pipeline explosion, and among other things faces federal criminal charges in the matter. PG&E has pleaded not guilty. State administrative-law judges proposed in early September that PG&E pay $1.4 billion in penalties, including a $950 million non-tax-deductible fine. The company, which has appealed, plans to issue stock to pay for any financial penalties related to the pipeline explosion.

Earlier this month PG&E said the Justice Department has started a new investigation into inappropriate communications between utility executives and the staff of the state utilities regulator. The company fired three regulatory-affairs executives in September and released two batches of emails between an executive and various employees of the California Public Utilities Commission.

Overall, PG&E reported a profit of $814 million, up from $164 million a year earlier. On a per-share basis, which includes preferred-dividend impacts, earnings rose to $1.71 from 36 cents. Excluding natural-gas pipeline related charges and other items, earnings rose to $1.73 from 88 cents. Revenue climbed 18% to $4.94 billion.

Analysts expected a per-share profit of $1.12 and revenue of $4.68 billion.

On Tuesday, PG&E again reaffirmed that the cost to shareholders for natural-gas pipeline safety-related work incurred since the San Bruno accident or committed over the next several years totals about $2.7 billion.

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AutoNation third-quarter profit rises 20%

AutoNation Inc. Tuesday reported a 20% increase in third-quarter profit, and said it would spend another $250 million buying back shares.

The No. 1 U.S. auto dealership chain said earnings from continuing operations rose to a record 90 cents a share, beating the 86-cents-a-share consensus among analysts surveyed by ThomsonReuters.

AutoNation Chief Executive Mike Jackson forecast U.S. car and light truck sales would rise in 2015 to “above 17 million units.” The company indicated it is continuing to add franchises, including acquisitions last month that will add annual revenue of $355 million, and the award of a new Porsche franchise projected to add $100 million in annual revenue once it is up and running in 2016.

New and used vehicle unit sales rose 8%, and the company reported increased profits and profit margins in its used vehicle business. Some of AutoNation’s rivals had previously reported weaker results from used vehicle operations, prompting concern among investors that falling used car prices would dent AutoNation’s results as well.

But AutoNation said its used vehicle gross profit was up 9.8%, as used vehicle operating margins rose to 8.8% from 8.6%. Margins on new vehicles fell to 5.6% from 6.1%.

Wells Fargo analyst David Lim, in a note, credited the company’s “impressive SG&A/Gross profit cost control.”

AutoNation said revenue rose 10% from a year ago to $4.9 billion, and operating income rose 11% to $207 million.

AutoNation highlighted recent acquisitions of new dealerships in its release, but the company signaled it considers its own shares an equally good investment. The company said it plans to plow another $250 million into share buybacks after acquiring 8% of its shares outstanding so far this year. AutoNation said it has a total of $281 million authorized for share repurchases. The company has a market capitalization of $6.2 billion.

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Daniels Corporate Advisory Co. Inc.

Consultancy Accelerator Reports Record Earnings and Potential for Cash Dividends in the Future:

Daniels, A Corporate Strategy Consulting Company that incubates start-ups in a variety of industries as subsidiaries, builds them to critical mass and eventually orchestrating their IPO’s, reported record financial results, based on the successful launch of a subsidiary in the Transportation Industry.

The Daniels Accelerator Model was instrumental in taking the financial results of a November 2013 start-up, Daniels Logistics, Inc., a truck brokering/ freight forwarding operation within the Transportation Industry; to record levels. Sales for the nine months for its fledgling Logistics subsidiary were $625,026 and Net Operating Income was $328,115. Negotiations are current underway with several logistic/freight forwarding acquisitions, any one of which, could increase revenues and earnings potential.

Consolidated Earnings for Daniels Corporate Advisory Co. Inc. for the nine months ended August 31, 2014 were $639,057 or $.06 per share on 9,891,319 shares outstanding. The stock currently trades at $. 25.

All of these figures can be verified on their 10Q, filed on 10-15-14. You can see this for yourself here:

Finally, please take a look at their past press releases, some of which we have already alerted you to in this newsletter:

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Trucept Inc – TREP

You’ve worked hard to get your company where it is today, but managing workforce costs and keeping track of complex human resources laws and payroll administration as your business grows is no small task. To stay ahead of the game, team up with Trucept for comprehensive Professional Employer Organization (PEO). Key products and services include HR Services, Administration, Employee Benefits and Risk Management.

Trucept provides an outsourced human resources, employee benefits, and payroll solution tailored to the needs of financial services firms, business services firms, technology companies, startup companies, and other professional services firms. With the help of Trucept, over 900 great small businesses have been able to free resources to focus on their core activities.

It’s important to understand that PEOs are not temp firms, staffing agencies or payroll administration companies. Instead, Trucept offers a comprehensive suite of HR services to their clients –- everything from recruiting services to benefits administration. Sometimes these services are offered as a bundle; sometimes they’re offered a la carte.

Working with a PEO

A reputable PEO offers a variety of professional HR and business services. Typically, when you join a PEO, it’s an opportunity for you to outsource the bulk of your responsibilities, including:

  • Employment administration
  • Government compliance management
  • Employee benefits
  • Workers’ compensation
  • Payroll and payroll tax administration
  • Recruiting and hiring
  • Policies and best practices
  • Performance management
  • Training and development

As a PEO client, you don’t have to devote your valuable time tracking payroll or negotiating rates with benefit providers. Nor do you have to hire additional staff to manage it for you.

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IBM pulls longtime profit goal amid earnings miss

International Business Machines Corp. abandoned a longtime earnings target seen as a test of its turnaround plans and reported sharply lower third-quarter profit on surprising softness in three of its major businesses.

The Armonk, N.Y., company on Monday acknowledged it won’t meet a goal of earning at least $20 a share next year, a forecast it has stood by for five years under two chief executives.

IBM also unveiled a deal under which it will pay chip maker Globalfoundries Inc., which is owned by Abu Dhabi investment entities, to take its unprofitable semiconductor operations off its hands.

Chief Executive Virginia Rometty said “our results this quarter were disappointing” while noting IBM experienced a marked slowdown in September in customer buying, and declines in revenue and profit point to an unprecedented pace of change in the technology industry.

“We’ve got to reinvent ourself like we’ve done in prior generations,” Ms. Rometty said during a conference call with investors.

Its shares fell by as much as 8.4% in early trading, hitting a three-year low, and were recently off 7% at $168.79. IBM’s drop helped to push the Dow Jones Industrial Average lower.

Associated for decades with large computer systems, IBM has been focusing on more profitable computing services and software businesses in recent years. But Big Blue and other old-line technology leaders have been struggling to reignite growth, as information-technology spending is shifting from IBM’s traditional customer base to younger companies that spend less money on services and brand-name hardware.

Under previous Chief Executive Samuel Palmisano, the company had pledged in May 2010 to double its earnings to at least $20 a share by 2015 by more aggressively pursuing business in software and high-growth emerging markets.

However, skepticism about the company’s ability to make the goal has grown in recent quarters. IBM has been stressing hot software areas like data analytics and cloud-style outsourcing services. But those businesses face stiff competition, and haven’t been able to offset slowdowns in hardware and older kinds of computing services.

“IBM is selling the services for the old-school Humvee when customers are buying Teslas,” said Daniel Ives, an analyst at FBR Capital Markets. “The market is evolving and IBM needs to change their strategy accordingly.”

IBM plans to offer a new 2015 forecast in January.

The company also hinted it may cut back on the massive share buyback program that helped support its earnings targets. In the third quarter, IBM bought back $1.7 billion in stock. The company had $1.4 billion remaining under its current repurchase authorization at the end of September and said it would ask to boost that figure at this month’s board meeting.

IBM, which has failed to generate a revenue increase for 10 straight quarters, had been scheduled to report results after markets closed on Monday. But the company put out an advisory Sunday saying it would announce significant news Monday and accelerate its earnings release.

IBM’s plan to divest its semiconductor operations, a big factor in the company’s third-quarter profit decline, is an acknowledgment that the rising cost of chip making is too burdensome. Though IBM was a pioneer in advancing semiconductor technology, its manufacturing capability fell behind others that produced chips in large volume.

Under the deal with Globalfoundries, IBM will pay the semiconductor company $1.5 billion to take over chip manufacturing operations, which will continue to produce processors used in IBM systems. It also took a $4.7 billion charge to earnings for the divestiture.

The deal will transfer about 5,000 IBM employees to Globalfoundries, a chip manufacturing service with a big factory near Albany, N.Y., that is controlled by investors associated with the government of Abu Dhabi. IBM stressed that it will continue to invest heavily in research to advance basic semiconductor technology, sharing that technology with Globalfoundries as a key supplier of microprocessor chips used in IBM server systems.

“We now have a safe, secure supply in our own backyard of these processors,” said John Kelly, an IBM senior vice president and research director, in an interview. “We would not have done this had we not been able to find a trusted partner.”

Globalfoundries will take over IBM facilities in East Fishkill, N.Y., and near Burlington, Vt. CEO Sanjay Jha said its Burlington plant is running at full capacity serving customers for specialized products used for wireless devices. He said the IBM plants and technology specialists Globalfoundries is acquiring, besides serving IBM’s needs, should help address an emerging category of connected devices called the Internet of Things.

The two executives said the payments from IBM–rather than Globalfoundries paying for the assets–reflect costs that company will incur in adapting facilities to serve IBM’s future needs. “We wanted to make sure that Globalfoundries was positioned for success,” Mr. Kelly said.

IBM’s other moves to reduce its reliance on hardware include a deal with Lenovo Group Ltd. to purchase a business selling commodity-style servers that use chips from Intel Corp. That deal closed in early October.

In all, Ms. Rometty said IBM has divested three businesses this year that generate $7 billion but have contributed $500 million in losses. They represented “empty calories, as some of my investors would say,” she said.

Most new computing installations use Intel-powered servers, but the business is highly competitive and has produced little profit for IBM. The company has chosen to focus efforts in hardware on mainframe systems, along with a high-end line of servers that use internally developed chips using a technology called Power. Neither did well in the third period.

Total revenue from IBM’s systems and technology segment, which includes the company’s computers and semiconductor operations, declined 15%. Revenues from mainframes were off 35%, while Power systems fell 12%.

Services, the company’s biggest business, also fared poorly. Revenue from IBM’s global business services segment fell 2.9% from the year-earlier period. Software revenue fell 1.6%.

In all, IBM reported net income for the quarter ended Sept. 30 of $18 million, or 2 cents a share, compared with profit in the year-earlier quarter of $4.04 billion, or $3.68 a share. Revenue fell to $22.4 billion from $23.3 billion a year earlier.

IBM said profit excluding items such as acquisition-related charges and retirement-related costs came to $3.68 a share. Analysts had expected earnings on that basis of $4.31 on revenue of $23.37 billion.

Chelsey Dulaney contributed to this article.

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Halliburton CEO: Oil-price drop to be short-lived

Halliburton Corp. beat analyst expectations by boosting third-quarter profit 70%, but shares in the oil-field service company rose only modestly amid persistent worries that low oil prices will slow drilling in the U.S.

Halliburton and its peers, including Schlumberger Ltd., are considered bellwethers for the energy industry because they help oil and gas exploration companies drill and frack wells.

U.S. oil prices are down more than 20% since the start of summer and worries are rife that further declines will be a continued drag on oil-sector stocks such as Halliburton’s. But Chief Executive Dave Lesar told investors on a conference call that he expected lower oil prices would be relatively short-lived.

Still, the recent slide in crude oil prices has raised questions about the sustainability of the North American energy boom. Services companies such as Halliburton are trying to convince investors that their earnings aren’t quickly going away.

Despite some stock-market gains last week, Halliburton shares are down more than 20% from a month ago. The stock was up 35 cents at $52.95 in late trading Monday.

Halliburton on Monday reported net of $1.2 billion, or $1.41 a share, compared with $706 million, or 79 cents a share, a year earlier.

Revenue rose to $8.7 billion from $7.47 billion last year.

Analysts had forecast earnings of $1.10 a share and revenue of $8.53 billion, according to a poll by Thomson Reuters.

Halliburton is a major provider of hydraulic-fracturing services in the U.S. Its North American operations posted the sharpest increase in revenue among the company’s regions, with sales rising 22% to $4.72 billion. The company reported North American profit margins of more than 20% by the end of the quarter–a target that had been out of reach in recent years.

Halliburton and its competitors have said they are putting more drilling and fracking equipment to work in places such as the Permian Basin of West Texas. The number of rigs drilling horizontal wells in the U.S. is up more than 20% from a year ago, and Mr. Lesar said the wells being drilled are bigger and require more service than in the past, something that is good for Halliburton’s business.

Halliburton’s customers show no signs they will stop activity across North America next year, though growth could be slower in other parts of the world because of geopolitical disruptions, he said.

Halliburton’s board approved a 20% increase to the company’s quarterly dividend.

Erin McCarthy contributed to this article.

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