The third-quarter earnings season is in full gear. In the week ended October 30 that marks the fourth-week of the reporting season, the following few companies issued a disappointing outlook.
Sohu.com - Slows Down
After reporting 15% lower profit and record total revenues for the third-quarter Monday, Chinese web portal Sohu.com Inc. (SOHU) issued a tepid fourth-quarter profit and revenue outlook.
Sohu foresees fourth-quarter total revenue to range between $134.5 million and $138.5 million. The fourth-quarter revenue outlook represents -1.5% to +1.4% change over the revenue of $136.6 million reported in the preceding third-quarter. Wall Street analysts now have a consensus revenue estimate of $136.21 million.
Sohu.com derives revenue from advertising, online games, wireless services like providing short messaging services, Ring Back Tone, Wireless Application Protocol, multimedia messaging services and interactive voice response.
The company's advertising revenue for the fourth-quarter is expected in the range of $48.0 million to $50.0 million while online game revenue is anticipated to be between $69.0 million and $71.0 million.
Excluding profit from its stake in Changyou, Sohu foresees fourth-quarter non-GAAP net income to be between $35.0 million or $0.90 per share and $37.0 million or $0.95 per share. Analysts polled by Thomson Reuters now have earnings estimate pegged at $0.88 per share. Analysts' estimate for fiscal fourth-quarter has fallen by 11 cents over the past seven days. Sohu's fourth-quarter per share earnings outlook represents a decline of 34%-38% from earnings reported last year.
Sohu remains confident that its online game business will retain its leadership position while continuing to capture additional market share. Sohu conducts online game business via Changyou, which currently operates two massively multi-player online role-playing games, namely Tian Long Ba Bu and Blade Online.
Changyou is a spin-off from Sohu and is still majority-owned by Sohu. Changyou was listed on the Nasdaq in April of this year.
SOHU, which has lost over 22% of its value over the past five days, closed Friday's trading at $55.60.
Changyou.com - Play It Safe
Changyou.com Ltd. (CYOU), an online game developer and operator in China and a spin-off from Sohu.com Inc. (SOHU), which reported better-than-expected third-quarter net income on 3% higher revenues, gave a mixed outlook for its fourth-quarter.
The company expects fourth-quarter non-GAAP net income, excluding share-based compensation expenses, to range between $41.5 million or $0.78 per ADS and $42.5 million or $0.80 per ADS. Changyou.com's earnings outlook is well ahead of analysts' estimate of $0.73 per ADS.
However, the company forecast fourth-quarter revenue slightly below analysts' estimates. Changyou's sees fourth-quarter revenue in the range of $69.0 million-$71.0 million, below analysts' estimate of $71.4 million.
The company said it is gearing up to launch a number of differentiated products with various graphic styles and themes in the coming quarters.
CYOU shares have nearly doubled from their IPO price of $16. Over the past five days, the stock has lost nearly 14% of its value and closed Friday's trading at $30.13.
Corning Inc. - Brittle Or Tempered?
Corning Inc. (GLW), the largest glass-maker of LCD screens, which reported better-than expected third-quarter earnings Monday, anticipates the overall glass market to be slightly lower sequentially in the fourth quarter.
However, the company remains optimistic about retail sales of LCD televisions in the fourth-quarter. According to the company, attractive retail pricing for LCD televisions should drive additional demand in the fourth-quarter.
Though the company expects panel pricing to continue to decline in the fourth quarter, it does not expect the results to be negatively impacted by it.
With its Taichung manufacturing facility suffering a power disruption, the company expects fourth-quarter glass volume to be flat to slightly down sequentially. The fourth-quarter results will also factor accelerated depreciation charges of $11 million related to repairs from the power disruption.
The company operates in five reportable business segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences.
For the fourth-quarter, Corning expects sales of its Telecom segment to be down 15% and sales of its Environmental segment to be between 10% and 15% lower sequentially. In sharp contrast, the company foresees fourth-quarter sales of its Life Sciences segment to grow more than 25% sequentially, helped by Axygen, a supplier of laboratory plastics for the research industry, which was acquired in mid-September.
GLW, which lost more than 6% of its value over the past five days, closed Friday's trading at $14.61.
General Cable Corp. - Crippled
General Cable Corp. (BGC), a provider of copper, aluminium and fibers optics and cable products for the communications, energy and electrical markets, reported a 68% drop in third-quarter profit Monday, due to significant contraction in its end markets and forecast fourth-quarter earnings below analysts' estimates.
Looking ahead, the company sees a continuing decline in non-residential construction spending and a slow recovery in residential construction market in the U.S. The non-residential construction and residential construction markets are direct or indirect end markets for many of General Cable's products.
As a result of the ongoing weak conditions, the company has decided to reduce production further in the fourth quarter. The continuing impact of weak demand and rapidly increasing metal costs could further pressure earnings in the fourth quarter, according to General Cable.
For the fourth quarter ending December 31, the company forecast GAAP earnings of $0.05-$0.15 per share and non-GAAP earnings of $0.20-$0.30 per share. Analysts have reduced their forecasts in the last seven days, sending the fourth-quarter consensus down by 32 cents per share to $0.25.
General Cable expects fourth-quarter revenue to range between $1.05 billion and $1.10 billion and analysts are looking for revenue of $1.07 billion. In the fourth-quarter of 2008, the company reported GAAP earnings of $0.21 per share, non-GAAP earnings of $0.52 per share and revenue of $1.29 billion.
BGC has lost more than 19% of its value in the last five days and closed Friday's trading session at $31.14.
Limited Brands Inc. - Knows Its Limits
Limited Brands Inc. (LTD), which operates apparel stores, on Monday, cut its comparable store sales forecast for October. Comparable store sales, an indicator of a retailer's health, measure sales growth at stores that have been open for over a year.
Limited Brands, which operates specialty stores like Victoria's Secret, Pink, Bath & Body Works, now expects October comparable store sales to decline low-to-mid single digits, compared to its previous estimate of roughly flat. The company's comparable store sales for August had declined 4% while September comparable store sales were up 1%.
Limited Brands is scheduled to report its third-quarter financial results on November 18. The company now expects third quarter bottomline to range between $0.00 and a loss of $0.04 per share, compared to its previous outlook of a loss of $0.07 to $0.12 per share. Wall Street analysts now expect the company to lose $0.02 per share.
LTD has lost more than 8% of its value over the past five days to close Friday's trading at $17.60.
Winn-Dixie Stores Inc. - Consumption In Check
Winn-Dixie Stores Inc. (WINN), a grocery-store operator, which reported a wider loss and lower revenue for its first-quarter of fiscal 2010 on Monday, gave a weak outlook for full-year fiscal 2010, citing changes in the economic environment and customer behavior.
With identical store sales declining and consumers shifting towards generic pharmaceuticals, the company now expects full-year fiscal 2010 adjusted EBITDA to range between $140 million and $160 million, down from its prior expectation of $170 million to $180 million.
In the past seven days, analysts have sharply lowered their earnings forecast for full-year fiscal 2010 to $0.25 per share from their prior estimate of $0.41 per share.
WINN lost 18% of its value in the last five days to close Friday's trading session at $11.09.
American Financial Group Inc. - Still Cloudy
American Financial Group Inc. (AFG), a holding company in insurance and investments, which posted 8% growth in third-quarter core operating earnings Monday, also raised its core operating earnings guidance for 2009. However, for 2010, the company forecast core earnings, significantly lower than the anticipated 2009 results.
For 2009, American Financial now expects core net operating earnings guidance to be between $4.05 and $4.25 per share, up from its prior forecast of $3.80 to $4.10 per share, thanks to the strong third quarter results.
Looking further ahead to 2010, the company anticipates core earnings to range between $3.10 and $3.50 per share, well below the 2009 outlook. The company cited the level of favorable reserve development recorded in 2009, the above average profitability in its crop operations in 2009, a continued soft market and lower investment returns expected in 2010 for the lackluster 2010 outlook.
Baidu Inc. - The Big Shift
Chinese language Internet search provider Baidu Inc. (BIDU), which reported nearly 42% increase in net income and 39% increase in revenue for its third-quarter Monday, warned that its fourth-quarter revenue will fall shy of analysts' estimate.
The anticipated temporary negative impact on the revenue is due to a shift to Phoenix Nest - a new online marketing system in the fourth-quarter when the older Online Marketing Classic Edition will be discontinued. According to the company, the Phoenix Nest, which was launched six months ago, contributed over 20% to the total revenue at the end of the third-quarter.
For the fourth-quarter, Baidu currently expects to generate total revenues in an amount ranging from RMB1,190 million ($174 million) to RMB1,230 million ($180 million), representing 32% to 36% year-over-year growth. Analysts now have a consensus revenue estimate of $178.03 million, down from their previous estimate of $204.68 million.
Analysts have taken a bearish view on Baidu and over the past seven days, have reduced their earnings forecast for the fourth-quarter by 17 cents to $1.79 per share.
In the third-quarter of 2009, Baidu's share of the Chinese internet search market was 63.9% while Google had 31.3% share, according to Analysys International, a Beijing research firm.
BIDU lost 13% of its value in the last five days to close Friday's trading at $377.92.
AGCO Corp - A Dry Spell Ahead
AGCO Corp. (AGCO), which reported lackluster third-quarter results Tuesday, amid weak markets and significant production cuts, forecast a gloomy outlook for the fourth-quarter too.
The company warned that demand for farm equipment is not expected to improve in the fourth quarter. AGCO also said that in North America, demand from the professional farming segment may continue to soften. Demand in Brazil has begun to stabilize, resulting from government-supported finance incentives, but lingering impacts of the drought continue to hurt sales in Argentina. Weakening farm economics in Western Europe are expected to continue to reduce industry sales in key markets.
Looking to the full year of 2009, AGCO expects earnings to range between $1.30 and $1.50 per share. Analysts polled by Thomson Reuters are looking for earnings of $1.41 per share.
The company forecast net sales for the year in the range of $6.4 billion to $6.6 billion, including unfavorable currency translation impacts of approximately $500 million to $600 million. Wall Street analysts have a consensus revenue estimate of $6.48 billion.
In the past 5 days, AGCO lost 4.84% to close Friday's trading at $28.11.
Pool Corp. - Drying Up
Pool Corp. (POOL), whose third-quarter results were worse-than-expected due to lower pool and irrigation construction activity and unfavorable weather, trimmed its 2009 annual earnings per share guidance Tuesday.
Looking ahead to 2009, the company lowered its per share earnings guidance, excluding one-time charges, to $0.95 to $1.00 from its prior outlook of $1.00 to $1.05 per share. Wall Street analysts are looking for earnings of $0.97 per share and revenue of $1.55 billion. The company earned $1.18 per share and generated revenue of $1.78 billion in 2008.
The one-time charge refers to non-cash goodwill and other intangible asset impairment charge recorded on September 1 by Latham Acquisition Corp., in which Pool owns a 38% equity interest investment.
POOL lost over 14% in the past five days to close Friday's trading session at $19.58.
Ceradyne Inc. - Losing Shield
Ceradyne Inc. (CRDN), which reported a 74% decline in net income and a 36% drop in sales for its third-quarter Tuesday, cut its earnings guidance for the full fiscal year of 2009, citing the decline in lightweight ceramic body armor programs.
Ceradyne develops technical ceramic products and components for defense, industrial, automotive/diesel and commercial applications.
Looking ahead, the maker of advanced technical ceramics, trimmed its earnings outlook for 2009 by 10 cents to $0.60 per share from its prior forecast of $0.70 per share. The earnings guidance does not include the impact of the total restructuring and impairment pre-tax charges for all of 2009, which are estimated to be about $0.55 per share.
The company also lowered its sales outlook for the year to $410 million-$415 million from its previous guidance of $420 million-$440 million.
Analysts polled by Thomson Reuters expect the company to earn $0.59 per share on revenue of $410.36 million.
CRDN lost nearly 13% in the past five days to close Friday's trading session at $16.12.
PepsiAmericas Inc. - Loses Fizz
After reporting 13% drop in third-quarter profit, PepsiAmericas Inc. (PAS), Wednesday, reduced its outlook for 2009, citing softer U.S. volumes and weaker economic trends in Europe.
Looking ahead to 2009, the company now expects full year adjusted per share earnings to range between $1.83 and $1.87 per share, down from its prior revised forecast of $1.87 to $1.94 per share. Wall Street analysts are looking for earnings of $1.86 per share.
PAS gained 0.21% in the past five days to close Friday's trading at $29.24.
Medicines Co. - Prescribes Bitter Pill
Medicines Co. (MDCO), which reported a narrower third-quarter loss on 12% higher revenue Wednesday, lowered its outlook for the full-year of 2009.
On a GAAP basis, the company now expects loss per share of $0.25-$0.19 compared with its prior expected profit range of $0.24-$0.34 for 2009.
On a non-GAAP basis, Medicines Co. now anticipates earnings to range between $0.14 and $ 0.24 for 2009, down from its earlier outlook of $0.88-$1.10 per share. Wall Street analysts are looking for earnings of $0.06 per share. Analysts' estimates typically exclude one-time items.
The company also lowered its total net sales forecast for the year to $395 million-$405 million from its earlier revised guidance of $430 million-$455 million. Analysts polled by Thomson Reuters have a consensus revenue estimate of $402.39 million.
MDCO lost 16.97% in the past five days to close Friday's trading at $7.19.
Great Plains Energy - Needs A Power Boost
Great Plains Energy (GXP), which posted disappointing third-quarter profit, hurt by mild weather and recession-driven lower customer demand for electricity Thursday, also trimmed the upper-end of its full-year earnings forecast.
Great Plains Energy is a public utility holding company, which provides electricity to its customers, in the US Midwest.
Based on year-to-date results and its assessment of prospects for the fourth quarter of 2009, the company now expects 2009 earnings in the range of $1.10 - $1.18 per share, compared to its previous guidance range of $1.10 - $1.40 per share. Wall Street analysts are looking for earnings of $1.16 per share. In 2008, the company reported earnings of $1.51 per share.
GXP lost 3.35% in the past five days to close Friday's trading at $17.30.
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