Research In Motion Profit Doubles on BlackBerry Sales Research In Motion Ltd. said third- quarter profit doubled and gave a forecast that topped analysts' estimates on consumer demand for the BlackBerry e-mail phone, spurring a 12 percent gain in the stock.
Sales of devices with map functions and music players helped propel net income to $370.5 million, or 65 cents a share, from $175.2 million, or 31 cents, a year earlier. Analysts in a Bloomberg survey had estimated profit of 62 cents.
Research In Motion added 1.65 million BlackBerry subscribers last quarter, luring holiday shoppers with new entertainment features, co-Chief Executive Officer James Balsillie said. Lower prices for e-mail service plans and retailer ad campaigns also spurred sales.
``These numbers are very strong, thanks to a consumer push,'' said Peter Misek, an analyst at Canaccord Capital Corp. in Toronto. He advises buying the stock, which he doesn't own. ``The momentum is still clearly there, and they are able to get new designs out in the market faster than anyone else.''
Research In Motion rose $12.37 to $119.50 in extended trading after the report. The shares had climbed $4.86, or 4.8 percent, to $106.99 at 4 p.m. New York time in Nasdaq Stock Market trading. They have more than doubled this year.
Forecast
Profit in the fourth quarter will rise to between 66 cents and 70 cents a share, the company said. Sales will increase to between $1.8 billion and $1.87 billion. Analysts in the Bloomberg survey had estimated profit of 66 cents on sales of $1.76 billion.
The company said it expects to add 1.82 million subscribers in the fourth quarter. Analysts on average estimated about 1.88 million, according to Morgan Keegan analyst Tavis McCourt.
Sales doubled to $1.67 billion in the third quarter, which ended Dec. 1, the company said in a statement. Analysts had projected $1.65 billion.
AT&T Inc., Verizon Wireless and other phone companies pay Research In Motion for each subscriber that uses BlackBerry e-mail. The fee is about $6 a month, estimates Goldman, Sachs & Co. analyst Brantley Thompson.
``The story continues,'' Matthew Kelmon, a fund manager at Kelmoore Investment Co. in Palo Alto, California, said in a Bloomberg Radio interview. ``They continue to sell devices at a remarkable clip. As networks get better, you're going to see better products and they're the leader.''
Next year's revenue growth will come from China, Kelmon said.
Shift to Consumers
Research In Motion fended off competition last quarter from Apple Inc., whose iPhone went on sale in June, as well as e-mail devices from Nokia Oyj and Motorola Inc. Sales on Black Friday, the day after Thanksgiving, broke the company's one-day record, Balsillie said on a conference call today. Black Friday is considered the start of the holiday shopping season.
``The thing we learned this year is the retail programs are really good,'' said Balsillie, 46. ``We've got to do more of that in more places really fast. ''
Small businesses and consumers accounted for about half of all new subscribers last quarter, up from about 30 percent in the second quarter. Most of the company's sales have come from larger businesses, which buy BlackBerrys for their workers.
Balsillie said in October that his company was benefiting from Apple's iPhone, which drew attention to mobile phones with advanced features. Sales of such phones almost tripled in the U.S. in the third calendar quarter, according to research firm NPD Group Inc. in Port Washington, New York.
BlackBerry Curve
Research In Motion's $200 BlackBerry Curve, released in May, helped the company move beyond corporate customers, said Pablo Perez-Fernandez, an analyst with Global Crown Capital in San Francisco. The device has a media player and a camera of similar quality to the one in the iPhone. The Curve is the company's smallest and lightest device with a full keyboard.
Research In Motion also boosted sales with the $99 Pearl, which is smaller than other BlackBerrys and has no full keyboard, said Perez-Fernandez, who advises buying the company's shares.
``They're going to continue to pump out winning products,'' Robert Pavlik, who helps manage $325 million as Oaktree Asset Management's chief investment officer in New York, said today in an interview on Bloomberg Radio. Consumer demand ``is going to be driving this company forward.''
Research In Motion may release a touch-screen BlackBerry next year, challenging the iPhone more directly, Oppenheimer & Co. analyst Lawrence Harris said in a report this month. The iPhone operates without a keypad, letting users make calls and surf the Web by tapping on its screen. http://www.bloomberg.com/apps/news?pid=20601087&sid=aVl4hZExVOSQ&refer=home
Micron Reports $262 Million Loss on Falling Prices Micron Technology Inc., the largest U.S. maker of computer-memory chips, reported its fourth straight quarter of losses because of slumping prices. The shares fell 4 percent in late trading.
The first-quarter net loss was $262 million, or 34 cents a share, compared with profit of $115 million, or 15 cents, a year earlier, the Boise, Idaho-based company said today in a statement. Sales rose less than 1 percent to $1.54 billion in the three months ended Nov. 29.
A collapse in prices caused by overproduction undermined Chief Executive Officer Steve Appleton's attempts to expand beyond personal-computer memory chips. Micron's push into the market for so-called Nand flash memory, used in cameras and music players, faces the same challenge of falling prices.
``It seems the pricing environment is still pretty tough,'' said Robert Burleson, a San Francisco-based analyst for ThinkEquity Partners, who recommends buying the shares and doesn't own any. ``They did better on the top line and worse on the bottom than expectations.''
Prices for dynamic random access memory chips, which are used in PCs, fell about 20 percent in the quarter from the previous period, Micron said. Nand-chip prices fell 30 percent.
Micron declined 32 cents to $7.60 in extended trading, after rising 8 cents to $7.92 at 4 p.m. in New York Stock Exchange composite trading. The stock has fallen 43 percent this year, making it the second-worst performer on the 18-member Philadelphia Semiconductor Index.
Production Peaking
On average, analysts had predicted a loss of 15 cents a share on sales of $1.49 billion, according to a Bloomberg survey. A $62 million expense for chip inventory that had declined in value and a cost of $13 million for job cuts contributed to the loss, Micron said.
Appleton said memory-chip makers boosted capacity in 2007, causing a surge in production. He said he expects spending on new plants to decline in 2008.
``We're feeling the effects of what was a pretty big expansion year in 2007,'' Appleton said on a conference call with analysts. ``Output is probably peaking.''
The fall in prices was a result of too many chips in the market, sales chief Mike Sadler said on the call. Demand remains ``quite strong,'' he said.
Nand flash-memory prices have already fallen 40 percent in the first three weeks of the second quarter, Sadler said. Computer-memory chip prices have dropped 10 to 15 percent, he said.
Loss-Making
``They are likely to go down further from here,'' said Kevin Vassily, an analyst at Portland, Oregon-based Pacific Crest Securities, who has a hold rating on the stock. ``That's just not going to get these guys out of loss-making mode any time soon.''
Memory-chip plants run 24 hours a day and chips take about three months to manufacture from start to finish. That means it's more expensive to start and stop production than to keep plants running at full capacity and sell products at a loss, said Daniel Amir, a San Francisco-based analyst for Lazard Capital Markets.
Micron competes with South Korea's Samsung Electronics Co. and Hynix Semiconductor Inc. in the market for computer-memory chips. The company also has a joint venture with Intel Corp., the world's largest semiconductor maker, in the market for Nand chips. http://www.bloomberg.com/apps/news?pid=20601103&sid=aMlgt8b704Vc&refer=us
FedEx 2Q Profit Falls on Fuel Costs Thursday December 20, 5:26 pm ET By Woody Baird, Associated Press Writer Fuel Costs Push Down FedEx 2Q Profit 6 Pct, Outlook for 3Q Below Wall Street Forecasts
MEMPHIS, Tenn. (AP) -- FedEx Corp. predicts profits will still be back on track for the year, though high fuel prices and a sluggish U.S. economy dropped second quarter net profits by 6 percent on Thursday. The prediction for the fiscal year included some "ifs," however, and the package courier offered earnings forecasts for the current quarter below Wall Street estimates.
For the second quarter, ending Nov. 30, the pain of the U.S. economic slowdown was tempered by the an ongoing expansion abroad that is expected to pay Fedex large dividends for years.
"The domestic economy is hurting in a number of ways and some of those ways are hitting FedEx pretty hard," said Edward Jones analyst Dan Ortwerth. "(But) they're still expanding their business globally, getting real traction, and they're still taking market share in the home delivery business here in the United States."
FedEx earned $479 million, or $1.54 a share, in the second quarter, compared with $511 million, or $1.64 a share, for the same period last year.
The company's shares fell 94 cents to $93.69 in afternoon trading Thursday.
FedEx met its expectations for the quarter after lowering them last month -- because of rising fuel prices and a slow domestic economy -- to a range of $1.45 to $1.55, down from an earlier estimate of $1.60 to $1.75.
Analysts surveyed by Thomson Financial predicted quarterly earnings of $1.50 per share on their own lowered expectations.
Revenue for the period rose 6 percent to $9.45 billion from $8.93 billion last year. Analysts were expecting revenues of $9.32 billion.
For the third quarter, FedEx said it expects to earn $1.15 to $1.30 per share, compared with $1.35 per share a year ago. Analysts polled by Thomson Financial expect a profit of $1.37 per share.
Expecting a strong fourth quarter and vowing aggressive cost controls, FedEx reaffirmed its outlook for the year, predicting earnings of $6.40 to $6.70 per share.
That outlook "does assume relative stability and fuel prices and no additional weakening in the economy," said Alan Graf, FedEx chief financial officer.
But Credit Suisse analyst Jason Seidl, predicting annual earnings of $6.30 a share, said the company's assumptions were optimistic.
"We have uncertain economic conditions. We have rising fuel costs, and we have increasing costs defending their contractor model," Seidl said, referring to a legal fight between FedEx Ground, the company's trucking division, and its contract drivers.
Frederick W. Smith, FedEx chairman and chief executive, said the company is well positioned to continue taking advantage of "macro-economic trends" driving a "global trading system."
"You now have, in the form of the Internet, a very low-cost standardized visual medium where people can sell and source goods without regard to time or place," Smith said in a conference call with analysts.
The outlook for the U.S. economy remains poor, but "we don't think that the United States is going to see an economic meltdown," he said. "We don't think there is going to be strong growth in the U.S. economy and that's what our forecast is built around."
FedEx also said it has lowered its capital spending projections, previously put at $3.5 billion, by about 11 percent.
"It's across the board," Graf said, "with the exception of what we need to do at Ground in terms of continuing to expand our facilities to handle the unbelievable volume growth that they have."
FedEx Freight, the company's freight unit, reported a 6 percent decline in less-than-truckload shipments in the second quarter. The unit also reported an operating income of $79 million, a drop of 43 percent from last year.
The demand for freight shipping is "severely restrained" by the weak economy, "and we expect this weakness to continue into our third fiscal quarter," Graf said.
The internal fight with FedEx Ground drivers also cut into the division's operating income, FedEx said.
FedEx Ground is defending itself against challenges from contract drivers around the country who argue they should be company employees with full employee benefits. FedEx is also reorganizing its ground system in California, where single-route drivers are switching to multiple routes.
While vague on its expectations from that fight, the company noted it faces "increased regulatory and legal uncertainty."
"This is a threat they've been facing for years and they've known it," said Edward Jones' Ortwerth. "I would be shocked if they did not have contingency plans in place to preserve the profitability of the business. Sure, it's a problem. Otherwise they wouldn't fight it." http://biz.yahoo.com/ap/071220/earns_fedex.html?.v=11
Moody's cuts Bear Stearns debt on quarterly loss Moody's Investors Service on Thursday cut its ratings on Bear Stearns Cos (BSC.N: Quote, Profile, Research) after the investment bank recorded a much-bigger-than expected quarterly loss from writing down the value of mortgage-backed securities.
It was the first loss in the history of the company, which decided top executives would not receive bonuses. Bank of America analyst Michael Hecht said Bear's smaller bonus pool could lead to attrition and hinder a strong rebound.
"These write-downs overwhelmed the earnings power of Bear's otherwise strong, but less well-diversified franchise," Moody's said in a statement.
Moody's cut Bear Stearns one notch to "A2," the sixth highest investment grade, from "A1." The outlook is stable, indicating an additional cut is not anticipated over the next 12-to-18 months.
"Although these losses occurred during a market inflection point, their size, relative to Bear's earnings, also indicates an increase in the firm's risk appetite," Moody's said. Bear is also exposed to risks in its commercial real estate portfolio, the rating agency said.
The cost to insure Bear's debt with credit default swaps was little changed on Thursday at 181.5 basis points, or $181,500 per year for five years to insure $10 million in debt. http://www.reuters.com/article/BROKER/idUSN2022090520071220
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