NVDA: Look Ahead to October 2009 Quarterly Results

The GCFR Overall Gauge of NVIDIA (NASDAQ: NVDA) was nearly unchanged at 20 of the 100 possible points after July, when the second quarter of fiscal 2010 ended.  Our income statement, financial gauge, and gauge update analyses explained in some detail how the score was attained.

NVIDIA lost $0.19 per share during the July quarter, which was a slight improvement over the loss of $0.22 in the same period of 2008.  On a non-GAAP ("pro forma" or "ex-items") basis, Net Income fell from $0.13 per share to $0.07.  The non-GAAP results exclude a warranty charge of $119 million and certain other items.

Revenue in the quarter was 13 percent less than last year, but it was a surprising 17 percent more than in the immediately preceding (April 2009) quarter.  Semiconductor sales in the spring were recovering from late 2008's awful slump.


We have now modeled NVIDIA's Income Statement for fiscal 2010's third quarter, which will end on 25 October 2009.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data the company will announce in November.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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CSCO: Look Ahead to October 2009 Quarterly Results

The GCFR Overall Gauge of Cisco Systems (NASDAQ: CSCO) dropped from 53 to 36 of the 100 possible points in the fourth quarter of fiscal 2009, which ended 25 July.  Our income statement, financial gauge, and gauge update analyses explained in some detail how the score was attained.

Revenue fell sharply in the July quarter, down 17.6 percent when compared to the same period of 2008.  Sales of routers were especially weak, plunging 27 percent.  For fiscal 2009 as a whole, Revenue contracted 8.7 percent relative to 2008. 

If weak sales in the quarter were not enough of a drag on profits, the overruling of a court decision dealing with share-based compensation expenses at Xilinx (NASDAQ: XLNX) led to a $174 million tax provision that further diluted Cisco's Net Income.  Earnings per share fell 44 percent.

We have now modeled Cisco's Income Statement for fiscal 2010's first quarter, which will end on 24 October.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company will announce on 4 November.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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KG: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of King Pharmaceuticals (NYSE: KG) dropped from 28 to 18 of the 100 possible points in the second quarter of 2009.  Our income statement and financial gauge analysis reports explained this result in some detail.

Reported Revenue in the June 2009 quarter was 12 percent more than in the second quarter 2008.  However, the recent period included sales of products King acquired when it purchased Alpharma and the 2008 period did not.  This Alpharma deal was timely because some of King's best-selling branded pharmaceuticals have come under pressure.  Altace® sales dropped 82 percent because of the loss of patent protection and the availability of generic substitutes.  Sales of Thrombin-JMI®, Avinza® and Levoxyl® declined 17 to 24 percent each.

Second-quarter earnings fell from $0.17 last year to $0.15 per share.  Non-GAAP earnings per share slipped from $0.35 to $0.32.


We have now modeled King's Income Statement for the third quarter, which will conclude on 30 September.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company will announce in early November.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

Given the Alpharma acquisition, some substantial challenges, and the uncertain possibilities of new products, our model's range of uncertainty is especially wide.  If new information comes to light that reduces the uncertainty, we will revise our estimates as expeditiously as possible.

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ADP: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of Automatic Data Processing (NASDAQ: ADP) was unchanged at 59 of the 100 possible points in the June 2009 quarter, which was the fourth quarter of ADP's fiscal year.  Our income statement, financial gauge, and gauge update analyses explained in some detail how the score was attained.

Revenue in the June quarter fell 4.5 percent because of the weak economy and unfavorable currency exchange rates.  However, a $120 million income tax benefit caused quarterly earnings to soar from $0.45 to $0.70 per share.  If this one-time benefit due to favorable settlements had not been realized, earnings per share would have been more or less flat.


We have now modeled ADP's Income Statement for the September 2009 quarter, which is the first of fiscal 2010.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data the company will announce in early November.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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WPI: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of Watson Pharmaceuticals, Inc. (NYSE: WPI) slipped from 43 to 39 of the 100 possible points in the second quarter of 2009.  Our income statement and financial gauge analyses explained in some detail how the score was attained.

New generic drugs helped Watson bring in 9 percent more Revenue than in the second quarter of last year.  The additional Revenue was offset, however, by product-launch costs and by expenses related to the planned acquisition of Arrow Group.  As a result, Net Income fell by 12 percent.


We have now modeled Watson's Income Statement for the third quarter of 2009, which will end on 30 September.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company will announce in October.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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PG: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of Procter & Gamble's (NYSE: PG) dropped from 52 to 44 of the 100 possible points in the June quarter.  This period was the fourth quarter of P&G's fiscal 2009.

Our income statement, financial gauge, and gauge update analyses explained in some detail how the score was attained.

In the June quarter, earnings fell to $0.80 per diluted share from $0.92 in the same period last year ($0.90 excluding income from discontinued operations).  The June 2008 quarter benefited from "significant adjustments to tax reserves."  Revenue skidded 10.6 percent, but the company indicated that the stronger U.S. dollar caused much of the decline.  A rising greenback diminishes the reported value of non-U.S. sales.


We have now modeled P&G's Income Statement for fiscal 2010's first quarter, which will end on 30 September.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company will announce in October.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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WMT: Financial Gauge Analysis (Update) for the July 2009 Quarter

We previously posted Wal-Mart Stores (NYSE: WMT) preliminary Financial Gauge scores for the three months ended 31 July 2009, which was the second quarter of fiscal 2010.

The retailing behemoth sold more than $400 billion last year at its discount stores.

Data from Walmart's press release announcing earnings were used to calculate the preliminary scores.  Subsequently, on 9 September, Walmart filed a 10-Q with more complete financial statements for the quarter. 

We have now reviewed the 10-Q to discover whether the financial metrics that determine the GCFR scores had changed.

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TDW: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of Tidewater Inc. (NYSE: TDW) slipped from 67 to 59 points of the 100 possible points in the June 2009 quarter, which was the first of fiscal 2010.  Our income statement and financial gauge analyses explained in some detail how the score was attained.

Tidewater earned $0.86 per share in the June quarter, down from $1.64 in the same period of 2008.  Earnings were $1.80 per share if we exclude a $48.6 million charge related to the seizure of Tidewater vessels in Venezuela.

Revenue in the June quarter fell by 4 percent.  The decrease was due, for the most part, to a significant decline in demand for U.S. vessels.


We have now modeled Tidewater's Income Statement for the soon-to-be-concluded September 2009 quarter.  The intent of this exercise was to produce a baseline for identifying any deviations, positive or negative, in the actual data that the company will announce in late July.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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COP: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of ConocoPhillips (NYSE: COP) fell from 44 to 27 of the 100 possible points in the second quarter of 2009.  Our income statement and financial gauge analyses explained in some detail how this score was attained.

Lower energy prices and refining margins caused Conoco's Revenue to drop by 50 percent in the June quarter.  Earnings plunged from $3.50 to $0.87 per share. 

More positively, reported production in the quarter, on a barrel-of-oil equivalent basis, was about 6.5 percent higher than in the second quarter of 2008. 


We have now modeled ConocoPhillips's Income Statement for the soon-to-be-concluded September 2009 quarter.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data the company will announce in late July.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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CSCO: Financial Gauge Analysis (Update) for the July 2009 Quarter

We previously posted Cisco Systems' (NASDAQ: CSCO) preliminary Financial Gauge scores for the fourth quarter of fiscal 2009, which ended 25 July 2009.

Cisco, the proud plumber of the Internet, has a dominant (but not unassailable) position in the market for enterprise networking products and services, such as routers.  The company also sells devices intended for home use.

Data from Cisco's press release announcing earnings were used to calculate the preliminary scores.  Subsequently, on 11 September 2009, Cisco filed a 10-K with complete financial statements from the Annual Report to Shareholders. 

We have now reviewed the 10-K to discover whether the financial metrics that determine the GCFR scores had changed.

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BP: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of BP (NYSE: BP) dropped from 51 of the 100 possible points to 31 in the second quarter of 2009.   Our income statement and financial gauge analyses explained in some detail how the score was attained.

BP's operations improved in the second quarter.  Reported production, on a barrel-of-oil equivalent basis, was 4 percent higher than in the same period last year.  In addition, the Gross Margin (as we define it) was the highest it had been since 2005.

However, these improvements were overshadowed by lower energy prices.  Revenue fell by 50 percent, which was actually better than we expected.  Earnings, despite a large gain on the sale of a business, fell from $2.98 per ADR to $1.39. 


We have now modeled BP's Income Statement for the September 2009 quarter.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company is scheduled to announce on 27 October 2009.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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PEP: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of PepsiCo (NYSE: PEP) slipped from 48 of the 100 possible points to 44 in the 12 weeks that ended 13 June 2009.  This period was the second quarter of the company's fiscal 2009.  Our income statement and financial gauge analyses explained in some detail how the score was attained.

PepsiCo's GAAP earnings increased from $1.05 to $1.06 per diluted share in the second quarter.  Revenue was 3.2 percent less than in the same period last year; however, the decline was due to the strengthening of the U.S. dollar.  Revenue would have increased 5.5 percent had currency exchange rates remained constant.


We have now modeled PepsiCo's Income Statement for fiscal 2009's third quarter, which ended on 5 September.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company will announce in October.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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MSFT: Look Ahead to September 2009 Quarterly Results

The GCFR Overall gauge of Microsoft (NASDAQ: MSFT) slipped from 69 of the 100 possible points to 61 in the three months that ended 30 June 2009.  This period was the fourth quarter of the company's fiscal 2009. 

Our income statement, financial gauge, and gauge update analyses explained in some detail how the score was attained.

Microsoft's Revenue in the June quarter was 17 percent less than in the same period last year, primarily because fewer personal computers were purchased by economically challenged consumers and businesses.  In addition, an increasing proportion of the new computers were netbooks, which result in less Revenue per device. (Most netbooks run an older, low-priced version of Windows, and some run Linux.)

Earnings in the June quarter fell from $0.46 to $0.34 per share.

The problems were not confined to the most recent quarter.  Fiscal 2009's total Revenue was less than that of fiscal 2008, an unprecedented decline for Microsoft.  Earnings per share for the year fell from $1.87 to $1.62.


We have now modeled Microsoft's Income Statement for the quarter that will end on 30 September 2009.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company will announce on 22 October.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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HD: Financial Gauge Analysis (Update) for the July 2009 Quarter

We previously posted The Home Depot's (NYSE: HD) preliminary Financial Gauge scores for the July quarter, which actually ended 2 August 2009.

Home Depot is the largest retailer of do-it-yourself merchandise, which includes building materials, home improvement supplies, and lawn and garden products.

Data from Home Depot's latest earnings announcement were used to calculate the scores posted earlier.  This press release included an Income Statement, a condensed Balance Sheet, and some limited Cash Flow data, but no Cash Flow Statement. 

Home Depot later filed a more complete 10-Q report, which included the details missing from the earnings announcement.  We then updated the financial metrics that determine our scores to take advantage of the new information.

This post reports on the changes to the metrics and scores.

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NOK: Look Ahead to September 2009 Quarterly Results

The GCFR Overall gauge of Nokia (NYSE: NOK) fell from 45 to 29 of the 100 possible points after the second quarter of 2009, which ended on 30 June.  Our income statement and financial gauge analyses explained in some detail how the score was attained.

Nokia sold 15 percent fewer mobile devices in the second quarter than in the same period last year, and the average price per unit sold declined by 16 percent. The company's share of the mobile device market fell to 38 percent from 40 percent.

Revenue fell by 25 percent, and the Gross Margin dropped from 33.6 percent of Revenue to 32.6 percent.  Greater-than-expected operating expenses, including a €135 million charge for amortization of acquired intangible assets, contributed to a 71-percent decline in Operating Income.  The bottom line Net Income "attributable to equity holders of the parent" was 65.5 percent less than in June 2008 quarter.

The Overall gauge reflects this weakness.  The best score any of our four category-specific gauges could manage was 10 of the 25 possible points.  Growth and Cash Management are both scraping the bottom in the zero-to-five range.  The Value gauge was particularly hard hit by the 25 percent rebound in the price of Nokia ADRs during the second quarter.


We have now modeled Nokia's Income Statement for the quarter that will end on 30 September 2009.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data that the company will announce on 15 October.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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INTC: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of Intel Corporation (NASDAQ: INTC) slipped from 30 to 27 of the 100 possible points in the second quarter of 2009, which ended 27 June 2009.  Our initial and updated analysis reports explained in some detail how the score was attained.

Second-quarter Revenue exceeded expectations by rebounding 12.3 percent above the first quarter's disappointing result. However, Revenue was still 15 percent less than in last year's second quarter.  A bright spot was robust sales of the low-power Atom™ microprocessors and associated components used in netbooks and mobile devices.

Intel lost $0.07 per share in the second quarter, compared to earnings of $0.28 in the same period of 2008.  If the European Commission had not fined Intel $1.447 billion for anti-competitive actions, the company would have earned $0.18 per share.


We have now modeled Intel's Income Statement for the quarter that will end on 26 September 2009.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data the company will announce on 13 October.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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ADP: Financial Gauge Analysis for the June 2009 Quarter (Update)

We previously posted Automatic Data Processing's (NASDAQ: ADP) preliminary Financial Gauge scores for the June quarter.

ADP is the largest firm providing payroll and other personnel-related information technology services.   The company is also known for the monthly ADP National Employment Report on non-farm private employment.

Data from ADP's latest earnings announcement were used to calculate the scores posted earlier, but ADP later filed a more complete 10-K report.  For our purposes, Balance Sheet details and a Cash Flow statement, which was not included in the original report, were the most important additions. 


We have now updated the financial metrics that determine our scores to take advantage of the new information in the 10-K.

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Summary of 2nd Quarter 2009 Gauge Scores

We have nearly finished examining the second-quarter 2009 financial results for the 19 companies we're currently tracking.  We posted as many as four articles per company in the following sequence:

• Look Ahead - before earnings release
  
• Income Statement Analysis - soon after release
• Financial Gauge Analysis - 1 to 2 weeks after release
  
• Financial Gauge Update - 1 to 2 weeks after 10-Q/10-K
  

There are some exceptions to the pattern.  We don't post Look Aheads for a few companies, and Financial Gauge updates are not needed if the 10-Q/10-K is filed within a few days of the earnings release.

The following table summarizes the gauges and the changes to the scores from the previous quarter.  Apple (NASDAQ: AAPL) and Procter & Gamble (NYSE: PG) were new additions in the second quarter to the list of companies under analysis.  Bankrupt Nortel Networks (OTC:NRTLQ) was dropped.

Company	Overall Gauge (100 = max)	Strongest Gauge and score (25=max)	Weakest Gauge and score (25=max)	Gauge Rising the Most	Gauge Falling the Most
AAPL	48 (-12)	CM (13)	G (10)	P (+0.1)	V (-7)
ADP	59 (0)	V (19)	G (6)	V (+2)	G (-8.5)
BP	31 (-20)	CM (10)	G (3)	None	V (-9)
BR	52 (+22)	CM (19)	G (6)	V (+10)	None
CSCO	37 (-16)	P (12)	G (1)	None	V (-8)
COP	27 (-17)	CM (10)	G (0)	None	G (-9)
EIX	28 (-6)	V (10)	G (1)	CM (+3)	V (-6)
HD	28 (+1)	P (8)	G (3)	G (+3)	CM (-1)
INTC	27 (-3)	CM (13)	G (0)	CM (+3)	V (-4.5)
KG	18 (-10)	CM (7)	G (0)	CM (0.1)	V (-5)
MSFT	61 (-8)	CM (21)	G (1)	CM (+5)	V (-6)
NOK	28 (-17)	P (10)	G (1)	None	V (-9)
NVDA	20 (-1)	CM (7)	G (0)	P (+2)	V (-2)
PEP	44 (-4)	V (14)	G (1)	P (+.1)	V (-2)
PG	44 (-8)	V (20)	G (1)	None	G (-4)
PRGN	N/A	N/A	N/A	N/A	N/A
TDW	59 (-8)	V (21)	G (6)	P (+2)	G (-5)
WMT	29 (-7)	V (10)	G (1)	V (+1)	G (-10)
WPI	39 (-4)	CM (12)	V (8)	CM (1.5)	V (-2)

CM= Cash Management
G = Growth
P = Profitability
V = Value

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PRGN: Financial Gauge Analysis for the June 2009 Quarter

In an earlier post, we examined Paragon Shipping's (NASDAQ: PRGN) Income Statement for the June quarter.  Earnings in this period, the second quarter of 2009, fell from $0.91 to $0.48 per share.  Net income excluding various items increased from $0.49 to $0.51 per share.

We have since mined the financial statements in Paragon's earnings announcement and the separately released Management's Discussion and Analysis to update the metrics we use to assess Cash Management, Growth, Profitability and Value.  Paragon does not have a long enough financial record for us to calculate meaningful Financial Gauge scores.

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