GM Beats but Earnings Down 28%

General Motors Co. (GM) reported a 28.0% fall in earnings to 67 cents per share in the first quarter of the year from 93 cents in the same quarter of 2012 (all excluding special items) due to lower earnings generated from the company’s all geographic operations except Europe.

Despite this, the automaker’s earnings exceeded the Zacks Consensus Estimate by 11 cents per share.

Net earnings fell 31.3% to $ 1.1 billion from $ 1.6 billion in the first quarter of 2012. Including a net loss from special items, earnings were $ 0.9 billion or 58 cents per share in the quarter compared with $ 1.0 billion or 60 cents a year ago.

Revenues in the quarter slid 2.4% to $ 36.9 billion, despite a 3.6% rise in retail unit sales to 2.4 million vehicles globally. It was higher than the Zacks Consensus Estimate of $ 36.4 billion.

Wholesale vehicle sales edged down 2.5% to 1.6 million units. The automaker occupied a worldwide market share of 11.4% during the quarter compared with 11.2% a year-ago.

Adjusted earnings before interest and tax (:EBIT) was $ 1.8 billion in the quarter compared with $ 2.2 billion the first quarter of 2012. EBIT for 2013 included the impact of $ 0.1 billion in restructuring costs.

Segment Results

GM North America (:GMNA) generated revenues of $ 23.0 billion during the quarter, down a 0.8% rise from the prior year. Adjusted EBIT decreased 13.9% to $ 1.4 billion from $ 1.6 billion in the first quarter of 2012.

GM Europe (GME) had revenues of $ 4.8 billion, an 8.3% fall from the previous year quarter. The segment reported a narrower adjusted loss of $ 175 million in the quarter compared with $ 294 million in the year-ago quarter.

GM International Operations (:GMIO) generated revenues of $ 4.8 billion, reflecting a 3.9% decline from the prior year. Adjusted EBIT was $ 495 million in the quarter, down 5.0% from $ 521 million in the comparable quarter of 2012.

GM South America (:GMSA) had revenues of $ 3.7 billion, a decline of 4.6% from the prior-year quarter. The segment had an adjusted loss of $ 38 million in the quarter in sharp contrast to a profit of $ 153 million in the first quarter of 2012.

GM Financial reported a 25.3% rise in revenues to $ 540 million during the quarter. Adjusted EBIT was almost flat at $ 180 million compared with $ 181 million in the year-ago quarter.

Financial Position

General Motors had cash and cash equivalents of $ 20.6 billion as of Mar 31, 2013 compared with $ 18.4 billion as of Dec 31, 2012. Total debt (Automotive and Financial) increased to $ 18.4 billion as of Mar 31, 2013 from $ 16.1 billion as of Dec 31, 2012. Consequently, debt-to-capitalization ratio increased to 32.9% as of Mar 31, 2013 from 30.7% as of Dec 31, 2012.

During the quarter, the company had a net cash flow of $ 543 million from automotive operations, significantly down from $ 2.3 billion in the year-ago quarter. The decline was mainly attributable to lower earnings and a series of timing-related items that GM expects to reverse during the rest of 2013.

After deducting $ 1.9 billion and $ 2.0 billion of capital expenditures in the first quarter of 2013 and 2012, respectively, the company had a free cash flow use of $ 1.4 billion during the quarter compared with an inflow of $ 282 million a year ago.

Outlook

General Motors is gearing up for more than 40 major vehicle launches in 2013 across the globe in order to drive sales and revenues. In addition, the company expects that its European results will improve further based on its cost reduction measures.

Our Take

GM is a leading global automotive company. The company has presence in almost 120 countries and has facilities located in 30 countries. It currently retains a Zacks Rank #3 (Hold).

GM’s major rival Ford Motor Co. (F) posted an increase of 4.1% in earnings to $ 1.6 billion and 5.1% in earnings per share to 41 cents in the first quarter of 2013, beating the Zacks Consensus Estimate by 3 cents. Revenues improved 10.5% to $ 35.8 billion, exceeding the Zacks Consensus Estimate of $ 32.8 billion.

The improvement in revenues and earnings was mainly attributable to Ford’s strong performance in North America and Asia Pacific and Africa. The company’s results were disappointing in South America due to an unfavorable exchange rate as well as in Europe due to the sluggish economy.

Few stocks that are performing well in the industry include Visteon Corp. (VC) and Denso Corp. (DNZOY). They carry a Zacks Rank #1 (Strong Buy).

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Chevron profit down 5 pct. on lower oil prices

Chevron says its net income fell 5 percent in the first quarter as oil prices slipped.

Chevron Corp., based in San Ramon, Calif., reported that net income fell to $ 6.2 billion, or $ 3.18 per share, on revenue of $ 56.8 billion. Last year the company earned $ 6.5 billion, or $ 3.27 per share, on revenue of $ 60.7 billion.

Analysts expected Chevron to earn $ 3.09 per share.

Production of oil and gas rose slightly in the quarter, but revenue and profit fell because of lower oil prices. Chevron’s average sale price for a barrel of oil slipped to $ 94 from $ 102 last year in the U.S., and to $ 102 from $ 110 abroad.

Performance at Chevron’s refining operations also slipped because of maintenance and upgrades at two U.S. refineries.


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Qualcomm’s 2Q numbers, outlook lets down investors

SAN DIEGO (AP) — Qualcomm Inc.’s latest quarterly earnings and forecast fell in line with analyst estimates, disillusioning investors spoiled by the company’s recent run of success as the growing popularity of smartphones fueled the demand for its mobile microprocessors.

After the numbers came out late Wednesday, Qualcomm’s stock fell by nearly 6 percent.

The negative reaction to the results and projections released underscore the challenges that Qualcomm is facing as it strives to maintain the growth that enabled it to surpass Intel Corp. as the world’s most valuable chip company last year. Intel recently reclaimed those bragging rights.

Although smartphone sales are still climbing Qualcomm is now facing fiercer competition from other chip makers, including Intel, which has been redesigning its microprocessors in an attempt to grab a bigger piece of the mobile computing market.

Qualcomm delivered a solid performance during the three-month period ending in March, but the numbers were not as far ahead of analyst projections as they have been in other recent quarters.

The company, which is based in San Diego, earned $ 1.87 billion, or $ 1.06 per share, in its fiscal second quarter. That represented a 16 percent drop from net income of $ 2.23 billion, or $ 1.28 per share, at the same time last year.

If not for certain accounting items, Qualcomm said it would have earned $ 1.17 to match the average estimates of analysts surveyed by FactSet. That was a letdown, based on Qualcomm’s recent track record. The company’s adjusted earnings had been three cents to 13 cents per share higher than the average analyst estimate in 12 of the previous 13 quarter leading up to Wednesday’s report.

Qualcomm’s latest quarterly revenue rose 24 percent from last year to $ 6.12 billion — about $ 40 million higher than analysts anticipated, according to FactSet.

For the current quarter ending in June, the company expects its adjusted earnings to range from 97 cents to $ 1.05 per share on revenue ranging from $ 5.8 billion to $ 6.3 billion. Analysts had predicted adjusted earnings of $ 1.04 per share on revenue of $ 5.87 billion.

Qualcomm’s stock shed $ 3.80 to $ 62.20 in Wednesday’s extended trading.


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Abbott 1Q profit down, but adjusted results grow

NORTH CHICAGO, Ill. (AP) — Abbott Laboratories said Wednesday its first-quarter net income slid as the year-earlier period got a boost from discontinued operations. However, earnings from continuing operations climbed more than 4 percent on sales of the company’s nutritionals and diagnostic tests.

Sales of those products helped offset declines in medical devices, which fell more than 4 percent.

At the beginning of this year Abbott completed the spin-off of its drug business into a separate company, AbbVie, leaving it with a business model built around generic drugs, medical implants and nutritional formula. AbbVie markets the company’s branded prescription drugs, including the blockbuster anti-inflammatory drug Humira.

In the company’s first quarter since the split, Abbott reported net income of $ 544 million, or 34 cents per share, down from $ 1.24 billion, or 78 cents per share. The $ 1.24 billion figure from last year includes earnings from AbbVie.

Adjusted income from continuing operations totaled $ 674 million, or 42 cents per share, up from $ 645 million, or 40 cents per share, in the first quarter of 2012. The latest results exclude various charges associated with the company’s split and reorganization.

Sales increased 1.8 percent to $ 5.38 billion; excluding the impact of foreign exchange rates, they grew 3.5 percent. Sales in emerging markets comprise more than 40 percent of Abbott’s total sales.

Analysts polled by FactSet expected earnings per share of 41 cents on revenue of $ 5.41 billion, on average.

Looking ahead, the North Chicago, Ill.-based company backed its full-year guidance calling for adjusted earnings per share between $ 1.98 and $ 2.04. Analysts expect earnings per share of $ 2.01.

For the second quarter, the company expects to earn 43 cents to 45 cents per share on an adjusted basis; analysts expect 43 cents per share.

Shares of Abbott Laboratories increased 62 cents to $ 37.02 in midday trading.


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News Summary: Infosys profit down, outlook soft

WEAK EARNINGS, OUTLOOK: Indian outsourcing company Infosys reported lower quarterly profit and forecast subdued revenue growth due to fragile business confidence in the U.S. Its shares fell 21 percent in Mumbai.

THE NUMBERS: Net profit for the January-March quarter fell 4.1 percent from a year earlier to $ 444 million. It forecast revenue to grow between 6 percent and 10 percent for the fiscal year ending March 2014, below analysts’ expectations.

U.S. UNCERTAINTY: Infosys said it based the muted forecast on orders from existing customers plus an expectation that economic volatility and uncertainly will persist in the United States, the company’s biggest market.


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