PG: Income Statement Analysis for the December 2010 Quarter

Procter & Gamble (NYSE: PG) earned $1.11 per diluted share on a GAAP basis in the December-ending second quarter of fiscal 2011, down 26 percent from $1.49 in the same three months of the previous year.

A better view of P&G's results can be gained from Core earnings, which is a non-GAAP measure that excludes certain items and discontinued operations.  In the December quarter, Core earnings per share rose from $1.10 to $1.13. Note that the December 2009 quarter included $1.5 billion in earnings from discontinued operations, primarily the pharmaceuticals business that P&G sold to Warner Chilcott (NASDAQ: WCRX).

This post examines P&G's Income Statement for the quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were $0.02 more than our $1.09 EPS estimate.  (This small number masks some significant item-by-item differences.)


The principal sources for this income statement analysis were the earnings announcement and the ensuing conference call (transcript made available by Seeking Alpha).

In a second article, we will report P&G's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

Procter & Gamble creates and markets many well-known Household and Personal products to customers around the world.  The company, based in Cincinnati, traces its roots back to 1837.

P&G reported Net Income of $12.7 billion ($10.9 billion from continuing operations) on Net Sales of $78.9 billion in fiscal 2010, which ended in June.

The company's market value is currently close to $200 billion on a fully diluted basis, which makes P&G one of the ten most-valuable U.S. corporations.

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COP: Income Statement Analysis for the December 2010 Quarter

ConocoPhillips (NYSE: COP) earned $1.39 per diluted share on a GAAP basis in the December-ending fourth quarter of 2010, up 63 percent from $0.86 in the same three months of 2009. 

Adjusted earnings rose from $1.20 to $1.32 per share, a 10 percent increase.   Adjusted earnings exclude gains on asset sales, impairment charges, and other special items.

This post examines ConocoPhillips' Income Statement for the latest quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were 15 percent below our $1.64 EPS estimate.

The principal sources for this income statement analysis were the earnings announcement, the ensuing conference call presentation [pdf], and transcript (the latter provided by Seeking Alpha).

In a second article, we will report ConocoPhillips' scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

ConocoPhillips is one of the ten biggest Integrated Oil and Gas companies, which produce, refine, transport, and market energy products.  The company was formed in 2002 when Conoco, Inc., merged with Phillips Petroleum.  It added Burlington Resources, with its extensive natural gas operations, in March 2006 (when gas prices were much higher than they are now).

The market value of the company is now around $100 billion, double its low in March 2009 but still well below the all-time high of $150 billion.

ConocoPhillips has business interests in 26 countries around the world, from Algeria to Vietnam.

For financial data reporting, ConocoPhillips has six operating segments:  Exploration & Production, Midstream, Refining & Marketing, Lukoil Investment, Chemicals, and Emerging Businesses.  The Chemical segment consists of a joint venture with Chevron (NYSE: CVX).

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MSFT: Income Statement Analysis for the December 2010 Quarter

Microsoft (NASDAQ: MSFT) earned $0.77 per diluted share on a GAAP basis in the December-ending second quarter of fiscal 2011, up 4 percent from $0.74 in the same three months of 2009. 

The year-earlier results were boosted by the release of Windows 7, which became available in October 2009.

This post examines Microsoft's Income Statement for the quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were a substantial $0.10 per share better than our $0.67 EPS estimate.

The principal sources for the income statement analysis were the earnings announcement, the ensuing conference call presentation [pptx] and transcript [docx], and the formal 10-Q report.

In a second article, we will report Microsoft's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take one step back to introduce the subject of today's analysis.

First, we present some background information about Microsoft and the business environment in which it is currently operating.

Microsoft develops and sells the operating system software that runs on more than 90 percent of personal computers.  It also has dominant application software and server software franchises.  In addition, the company provides various online services, such as the Bing search engine and online advertising.  Microsoft also sells video game consoles, entertainment devices, and computer peripherals.

Net Income in fiscal 2010 was $18.8 billion, up nearly 30 percent from the prior year.  Revenue increased 7 percent, from $58.4 billion in 2009 to $62.5 billion.

Microsoft is included in the Dow Jones Industrial Average and the S&P 500.  For many years, the company's shares have generally traded at a price between $20 and $30, with occasional excursions outside the range.  The company's market value is now about $250 billion on a fully diluted basis.

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NOK: Income Statement Analysis for the December 2010 Quarter

Nokia Corp. (NYSE: NOK and HEL:NOK1V) earned €0.20 per diluted share on an IFRS basis in the December-ending fourth quarter of 2010, down 21 percent from €0.26 per share in the same three months of 2009. 

On a non-IFRS basis, which excludes special items, fourth-quarter earnings fell from €0.25 to €0.22 per share.

This post examines Nokia's Income Statement for the most recent quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were €0.08 less than our €0.28 EPS estimate.

In a second article, we will report Nokia's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take one step back to introduce the subject of today's analysis.

A Finnish company with a rich history, Nokia Corporation has been the leading global producer of mobile phones since 1998.  The company also sells the network infrastructure that supports these phones. 

Nokia's sales, earnings, and share price have fallen precipitously in recent years.  In 2007, Apple's (NASDAQ: AAPL) iPhone was launched and quickly became a runaway success, one that Nokia has been unable to stem.  The financial crisis that also began in 2007 eventually led to a worldwide decline in the number of mobile phones sold, which compounded Nokia's difficulties. 

Smartphones based on the Android architecture and Blackberry products sold by Research in Motion (NASDAQ: RIMM) have also become popular at Nokia's expense. 

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ADP: Income Statement Analysis for the December 2010 Quarter

Automatic Data Processing (NASDAQ: ADP) earned $0.62 per diluted share on a GAAP basis in the December-ending second quarter of fiscal 2011, unchanged from the same three months of 2009. 

This post examines ADP's Income Statement for the latest quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were $0.02 more than our $0.60 EPS estimate.

The principal sources for the income statement analysis were the earnings announcement and the associated webcast presentation [pdf].

In a second article, we will report ADP's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.

Before getting into the details, we will take a step back to introduce the subject of today's analysis.

Automatic Data Processing performs payroll, human resource, data processing, and outsourcing Business Services for well over 500,000 clients, large and small, in the United States and other countries.  ADP pays one of every six private sector employees in the U.S.

ADP is one of four remaining U.S. companies with a AAA bond rating.  An S&P 500 Dividend Aristocrat, ADP recently announced its 36th-consecutive annual dividend increase. 

The company's market value is currently close to $25 billion, on a fully diluted basis.

As the processor of many payrolls across the U.S., ADP quickly senses macroeconomic changes in Employment.  ADP uses the data it collects to issue the monthly ADP National Employment Report on non-farm private employment. 

Fortune Magazine deemed ADP to be Most Admired in the Financial Data Services industry.

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IBM: Income Statement Analysis for the December 2010 Quarter

IBM (NYSE: IBM) earned $4.18 per diluted share on a GAAP basis in the December-ending fourth quarter of fiscal 2010, up 16 percent from $3.59 in the same three months of 2009.

This post examines IBM's Income Statement for the quarter.  Please note we did not issue "look-ahead" estimates in advance of the earnings release.

The principal sources for this income statement analysis were the earnings announcement and the Chief Financial Officer's prepared remarks for the ensuing conference call.

In a second article, we will report IBM's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take one step back to introduce the subject of today's analysis.

International Business Machines, often called Big Blue, is an information technology powerhouse that sells hardware, software, and integration solutions and services to meet the needs of businesses and other large enterprises. 

With roots that can be traced back more than a century, IBM was in the vanguard of the computer industry.  Its mainframes dominated the business for decades and are still a profitable product line for IBM.  Of course, they now work alongside a varied array of personal computers and servers.  IBM successfully adapted to the new technologies enabled by Moore's Law, and it is still considered a bellwether for the sector.  It remains the top ranked Information Technology Services firm in Fortune Magazine's list of the World's Most Admired Companies.

A key element of IBM's strategy in recent years has been to divest low-margin businesses, such as the personal computer division it sold to Lenovo, to focus on high-value products and services that make use of the company's vaunted research and application expertise.  IBM has also grown by expanding into emerging markets and acquiring firms that provide complementary skills or technology.

For example, IBM obtained data warehousing capabilities that support business analytics when it purchased Netezza in 2010 for $1.7 billion.

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WMT: Look Ahead to January 2011 Quarterly Results

This post describes our model of Wal-Mart's (NYSE: WMT) Income Statement for fiscal 2011's fourth quarter, which will end on 31 January 2011.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Walmart and the business environment in which it is currently operating.

Retailing behemoth Wal-Mart Stores, Inc., operates 4404 stores in the U.S. (including Sam's Club) and 8838 worldwide, at last count.

In fiscal 2010, which concluded in January 2010, Walmart earned over $14 billion on net sales of $405 billion.  Although net sales rose only 1.0 percent, income continuing operations increased 8.8 percent.

These financial results enabled Walmart to regain the top position from Exxon Mobil (NYSE: XOM) on the Fortune 500 list of America's largest corporations.  A drop in energy prices in 2009 cut into the oil giant's revenue.

Economies of scale and ruthless efficiencies allow Walmart to sell many products for prices lower than competitors, which include Target (NYSE: TGT), Kohl's (NYSE: KSS), and Sears Holdings (NASDAQ: SHLD).  Walmart also purchases goods directly from manufacturers to reduce its costs.

Critics of Wal-Mart abound.

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AAPL: Income Statement Analysis for the December 2010 Quarter

Apple (NASDAQ: AAPL) earned $6.43 per diluted share on a GAAP basis in the December-ending first quarter of fiscal 2011, up an astonishing 75 percent from $3.67 in the same three months of 2009.

This post examines Apple's Income Statement for the quarter. 

The results were overshadowed to some extent by the announcement CEO Steve Jobs, the leader of the Apple cult, would take a third medical leave of absence.

Reported earnings were $1.63 per share (34 percent) greater than Apple's guidance of $4.80.  Please note we did not issue our normal "look-ahead" estimates because detailed projections are available from the many professional and amateur analysts that follow Apple's every move.  (Andy Zaky's Bullish Cross is one excellent example.)


The principal sources for this income statement analysis were the earnings announcement, the accompanying data sheet, and the ensuing conference call with analysts (transcript made available by Seeking Alpha).

In a second article, we will report Apple's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

Apple Inc. has been recognized by Fortune as the world's most admired company for the last three years.  It is known for elegant product design, innovation, customer loyalty, brand-building marketing, and secrecy.

A soaring stock price has elevated Apple's market value to almost $320 billion, on a fully diluted basis, making Apple the second-most valuable U.S. company.  Only Exxon Mobil (NYSE: XOM) is worth more.

In fiscal 2010, which ended in September, Apple earned $14.0 billion ($15.15 per diluted share) on sales of $65.2 billion.  Earnings in fiscal 2009 were $8.2 billion ($9.08 per share) on sales of $42.9 billion.

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HD: Look Ahead to January 2011 Quarterly Results

This post describes our model of Home Depot's (NYSE: HD) Income Statement for fiscal 2010's fourth quarter, which will end on 30 January 2011.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Home Depot and the business environment in which it is currently operating.

The Home Depot, Inc., (NYSE: HD) is the largest retailer of do-it-yourself merchandise, which includes building materials, home improvement supplies, and lawn and garden products.  The company at last count has 2,244 retail stores, 88 percent in U.S. states or territories.  Home Depot also operates in Canada, China, and Mexico.

Home Depot earned nearly $2.7 billion in fiscal 2009, which was nearly 18 percent more than in 2008.  Revenue slipped 7 percent to $66.2 billion.  (Fiscal 2009 ended on 31 January 2010.)

In the last couple of months, Home Depot's market value has increased from $50 billion to $60 billion, on a fully diluted basis.  The market value is much less that it had been a decade ago, partially as result of share repurchases.

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INTC: Income Statement Analysis for the December 2010 Quarter

Intel (NASDAQ: INTC) earned a record $0.59 per diluted share on a GAAP basis in the December-ending fourth quarter of fiscal 2010, up 47 percent from $0.40 in the same three months of 2009.

This post examines Intel's Income Statement for the quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were $0.07 more than our $0.52 EPS estimate, with a substantial amount of the difference attributable to legislation passed in late 2009 that reinstated and extended certain tax credits.

The principal sources for this income statement analysis were the earnings announcement, the CFO's commentary [pdf], and the ensuing conference call (transcript available from Seeking Alpha).

In a second article, we will report Intel's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take one step back to introduce the subject of today's analysis.

Intel is the foremost manufacturer of integrated circuits for computers, servers, hand-held devices, and communication products.  In fiscal 2009, Intel had Net Income of $4.37 billion ($0.77 per share), down 17 percent from $5.29 billion ($0.92 per share) in the previous year.  Revenue slipped 6.5 percent, from $37.6 billion to $35.1 billion.

Intel is included in the Dow Jones Industrial Average and the S&P 500.  It has a market value of about $120 billion.

The company's business is organized around nine product groups.  The two largest groups are PC Client and Data Center.  The PC Client Group sells microprocessors and related products for desktop, notebook, and netbook computers.  It also markets wireless connectivity products.  PC Client was responsible for $26.2 billion of Revenue in 2009, nearly 75 percent of Intel's total Revenue.

The Data Center Group sells microprocessors and related products for servers, workstations, and storage computing equipment.  It also has products for wired network connectivity.  The Data Center Group had Revenue of $6.45 billion in 2009, 18 percent of the company's total sales.

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CSCO: Look Ahead to January 2011 Quarterly Results

This post describes our model of Cisco Systems's (NASDAQ: CSCO) Income Statement for fiscal 2011's second quarter, which will end on 29 January.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Cisco Systems and the business environment in which it is currently operating.

Cisco Systems, Inc., the proud plumber of the Internet, has a dominant role in markets for enterprise networking products and services. 

Cisco's earnings rose 27 percent in fiscal 2010, which ended in July, from $6.13 billion to $7.77 billion.  Revenue increased 11 percent, from $36.1 billion to $40.0 billion.  Fiscal 2010 included a 53rd week.

The market value of the company is currently around $120 billion, on a fully diluted basis. 

In fiscal 2011, Cisco will issue its first cash dividend.  The amount and timing of the dividend have not yet been disclosed.

Cisco categorizes its products as Routers, Switches, Advanced technologies, and other.  Switches generated the most Revenue in fiscal 2010, $13.6 billion, which was 42 percent of net product sales. 

Revenue from product sales was supplemented by $7.6 billion in Revenue from services in fiscal 2010.  Service revenue was 19 percent of total Revenue in fiscal 2010.

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NVDA: Look Ahead to January 2011 Quarterly Results

This post describes our model of NVIDIA's (NASDAQ: NVDA) Income Statement for fiscal 2011's fourth quarter, which will end on 30 January 2010.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about NVIDIA and the business environment in which it is currently operating.

NVIDIA is best known for its powerful Graphics Processing Units that rapidly perform the complex calculations required to produce hyper-realistic images for computers and video games.

The company's share price shot up earlier this month in a favorable response to announcements NVIDIA made in conjunction with the Consumer Electronics Show in Las Vegas.  NVIDIA proclaimed its latest chips for mobile devices, such as the dual-core Tegra 2, are being used in increasing numbers of notebook computers, tablets, and smartphones.  NVIDIA also made known it would develop CPUs using technology from ARM Holdings (NASDAQ: ARMH) for a wide variety of other platforms.  This latter disclosure is significant because Microsoft (NASDAQ: MSFT) decided to enable a future version of the Windows operating system to work on ARM chips, allowing these devices to compete directly against the x86 devices developed by Intel (NASDAQ: INTC).

The ARM products, therefore, open another front in NVIDIA's rivalry with Intel.  NVIDIA has promoted the use of its parallel-processing GPUs for applications now run on Intel's general-purpose microprocessors.  Intel's latest generation of microprocessors, known as Sandy Bridge, includes sophisticated graphics capabilities that might eventually cut into sales of the discrete GPUs made by NVIDIA and Advanced Micro Devices (NYSE: AMD).

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BR: Look Ahead to December 2010 Quarterly Results

This post describes our model of Broadridge Financial's (NYSE: BR) Income Statement for the second quarter of fiscal 2011, which ended on 31 December 2010.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

If the normal seasonal pattern remains in place, earnings in the December quarter will be closer to those in September and March than June.


We begin by reviewing background information about Broadridge and the business environment in which it is currently operating.

Broadridge Financial Solutions, Inc., provides brokerage and other services to financial companies.  Broadridge has been ranked the top Brokerage Process Services Outsourcing Provider for the last three consecutive years in the Black Book of Outsourcing.

Automatic Data Processing (NASDAQ: ADP) spun off Broadridge on 30 March 2007.  (GCFR articles related to ADP can be found here.)

Broadridge earned $190 million ($225 million from continuing operations) in fiscal 2010, which ended in June, on revenue of $2.2 billion.  The company earned $223 million and had revenue of $2.1 billion in 2009.

The market value of Broadridge is currently about $2.8 billion.

Broadridge, for financial data reporting, divides its operations into two business segments: Investor Communication Solutions (ICS) and Securities Processing Solutions (SPS).  The ICS segment, which contributed more than 75 percent of Broadridge's revenue and pretax earnings in fiscal 2010, distributes and processes proxies for public companies and mutual funds.

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EIX: Look Ahead to December 2010 Quarterly Results

This post describes our model of Edison International's (NYSE: EIX) Income Statement for 2010's fourth quarter, which ended on 31 December.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Edison and the business environment in which it is currently operating.

Edison International is the parent of Southern California Edison and Edison Mission Group.  SCE, which traces its roots back to 1886, operates a regulated electric utility serving a population of about 13 million people in central, coastal and southern California.  SCE contributed more than 80 percent of Edison's revenue in 2009.  

Edison Mission Energy owns, or has interests in, various independent power-generation facilities. 

The two other large electric utilities in California are PG&E Corp.'s (NYSE:PCG) Pacific Gas and Electric Company and the San Diego Gas and Electric subsidiary of Sempra Energy (NYSE: SRE).

Edison International earned $849 million for its shareholders in 2009 on Revenue of $12.4 billion, compared to earnings of $1.2 billion and Revenue of $14.1 billion in 2008. 

On 2 July 2010, Fitch Ratings upgraded Edison's long-term issuer default credit ratings from "BBB-" to "BBB," with a stable outlook.  The company increased the dividend on its common stock for 2011 from $1.26 to $1.28 per share.

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TDW: Look Ahead to December 2010 Quarterly Results

This post describes our model of Tidewater's (NYSE: TDW) Income Statement for the third quarter of fiscal 2011, which ended on 31 December 2010.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results that the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Tidewater and the business environment in which it is currently operating.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico.  It now conducts business on a global scale.

In fiscal 2010, which ended last March, Tidewater earned $259 million ($5.02 per share) on Revenue of $1.2 billion.  These figures were down from earnings of $407 million ($7.89 per share) on Revenue of $1.4 billion in fiscal 2009.

The company's Market Value is currently around $2.7 billion.

For financial reporting purposes, Tidewater's business is divided in U.S. and International segments.  In fiscal 2010, the International segment provided 92 percent of total vessel revenues and 96 percent of vessel operating profit.

Profits in the offshore segment of the energy industry have been scarcer the last couple of years.  The industry seems to oscillate between periods of high and low activity.  Energy producers calibrate their exploration and production activities to changing economic and industry conditions.  The Deepwater Horizon disaster in 2010, which led to an offshore drilling moratorium, almost certainly exacerbated the weakness during the current cycle.  (A Tidewater vessel, the Damon B. Bankston, was on the scene when the rig failed with tragic results.)

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