Earnings, earnings, and more earnings

S&P 500: -6.53 (-0.77%)


SunPower Corp (SPWRA) +7.91%
Before we all get lost in the earnings madness, SunPower announced a joint venture with Exelon Corp to develop the nation’s largest urban solar power plant at a former industrial site on Chicago’s South Side.

SunPower wants to construct more power-plant sized solar parks to profit from rules that require utilities to buy a portion of their electricity from renewable sources.


T. Rowe Price Group (TROW) +0.77%
T. Rowe’s earnings came in above expectations and CEO James Kennedy said, “financial certainty around the globe is beginning to stabilize,” but added, “we are not expecting a recovery any time soon.”

T. Rowe had net inflows of $4.5 billion in the first quarter, an encouraging improvement from net outflows of $2.4 billion in the previous quarter. T. Rowe’s target-date retirement funds accounted for “substantially all” of new money flowing into mutual funds during the first quarter.

Despite the inflows, assets under management (AUM) fell 3 percent during the first quarter to $268.8 billion, down from their peak of $400 billion at the end of 2007. Still, this is an improvement compared to the 20 percent decline in AUM in the fourth quarter of 2008.

T. Rowe was one of the few fund firms that had not announced layoffs during the current downturn, but today said it would reduce its staff by 5.5 percent – the majority of layoffs in the phone, processing, and technology areas where lower volumes of work led to overcapacity.


St. Jude Medical (STJ) +3.38%
Medical device company St. Jude beat expectations amid solid sales for its heart-rhythm and cardiovascular businesses. The company lowered the top end of its 2009 sales outlook to reflect a stronger dollar – nearly half of their revenues come from outside the U.S. – but maintained its full-year earnings outlook.

More importantly, St. Jude reported market share gains in several key product categories, which they attribute to aggressive research and development spending in the higher-growth areas like atrial fibrillation and neurostimulation.

CEO Daniel Starks said today’s results reflect the “resilience of St. Jude Medical’s growth program in an environment of global economic recession. Growth dynamics in our core markets are remarkably stable.”


WellPoint (WLP) +0.53%
WellPoint’s first-quarter profit fell 1.3 percent on investment losses and enrollment declines. The largest U.S. health insurer by membership also lowered its 2009 projections.

WellPoint’s medical-loss ratio – a key indicator of profitability calculated as the percentage of premium revenue used to pay patient bills – fell 3.5 percentage points to 81.6 percent, which shows nice operating improvements.

Volatile financial-markets, unexpectedly high medical-cost increases, and service and pricing problems created significant challenges last year. Even more, margins are weakening after years of solid growth amid intense competition in the shrinking pool of corporate business.

Health insurers so far have avoided the string of profit warnings seen last year, but rising unemployment and uncertainty about the effects of a healthcare overhaul continue to weigh on sentiment.


Ingersoll-Rand (IR) +15.66%
Ingersoll recorded a smaller loss than anticipated and provided a much more optimistic outlook than analysts expected. Ingersoll’s businesses are particularly exposed to suffering sectors such as housing construction, the trucking industry, and retailing.

The company said the operating loss resulted from a rapid drop off in end-market orders caused by the downturn in the global economy and a reduction in business capital spending. Operating margins plunged during the quarter to 1.7 percent from 9.3 percent, mostly from lower production volumes.

The company said it’s aggressively shrinking operations to align production with end-market demand and paying down its heavy debt load from the Trane heating and air condition systems acquisition last June.

In addition to a better forecast than expected, investors were excited by the fact that savings from the restructuring program and the integration of Trane, which was purchased in June 2008, are finally adding to the bottom line.


Norfolk Southern Corp. (NSC) +0.35%
Railroad operator Norfolk Southern reported earnings that missed expectations after the market closed Wednesday. Investors had high expectations following solid results from competitor CSX.

The largest transporter of metals and automotive products in North America said the slow economy was evident across all of its business segments, with total volume falling 20 percent year-over-year. The company also brought in less money from fuel surcharges as the price of diesel fell sharply.

The company expects its intermodal business (transfers between trucks and trains) will be hurt soon by weak international business, and coal transports will be dragged down by an increase in natural gas use and weak demand for the kind of coal used to make steel. Norfolk expects general merchandise shipments will be helped by higher municipal waste and ethanol carloads, but the sharp drop-off in transports of cars, car parts and lumber will continue to hurt that segment.

On the bright side, Norfolk expects shipping demand to bottom in the second quarter and improve as early as the second half of 2009. The company also cited the U.S stimulus package as a catalyst for shipping demand.


Northrop Grumman (NOC) -0.21%
Northrop, the third largest U.S defense contractor, beat earnings expectations and said full-year profit will exceed their prior forecast because of a legal settlement.

Northrop is the second of the Pentagon’s five biggest supplier to raise its forecast for 2009 profit, the other being Lockheed Martin (LMT).

Revenue and profit rose at all five of the company’s divisions, led by growth in sales of electronic systems, such as the anti-missile defense for military planes, and technical services, including training and simulation programs.


Boeing Co. (BA) +1.77%
Boeing missed earnings estimates due to lower airplane prices and charges related to the delayed delivery of the new 747-8 jumbo jet.

The company lowered its 2009 outlook to reflect a surge in deferred orders due to weak airline traffic and tight financing for customers, but the outlook was cut less than expected. This caused shares to rally because the low valuation makes it hard to be more negative on a company with such a massive backlog.

Boeing’s backlog for 3,589 planes is valued at $266 billion, or about 7.5 years of manufacturing. Going forward, the key for Boeing will be keeping the backlog intact in this tough economic environment.


AT&T (T) +1.82%
AT&T reported first quarter earnings that topped consensus estimates and said that it achieved solid wireless subscriber gains. Growth in wireless and wireline data services in large part offset declines in wireline voice access lines and business voice revenues.

Although total wireline revenue fell, AT&T reported that revenue per household was slightly higher thanks to strong additions to its high-speed Internet and television businesses.

The wireless business remains the primary growth engine for AT&T, but after years of rapid expansion, investors worry that the market may be nearing saturation. The iPhone remains a significant boost to this business and the company is seeking to extend its exclusive deal to carry the phone, which expires next year.


Other Approved List earnings reports
Kimberly-Clark (KMB) -0.34%
Dover Corp (DOV) +0.66%



Peter Lazaroff, Junior Analyst