EIX: Earnings Report for the Quarter Ending December 31, 2020

Edison International reported after the market closed on February 25, 2021, it earned $1.39 per diluted share in the quarter that ended on December 31, 2020, up 248 percent from earnings of $0.40 in the same 3 months of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

Core earnings, a non-GAAP figure, rose 21 percent to $1.19 per share from $0.98 one year earlier, a less robust change than the GAAP percentage. The most significant exclusions contributing to the $0.20 per share difference in the latest quarter between the GAAP and Non-GAAP earnings were: Gain on sale of of investment in power plant in Vidalia, LA [$0.26 per share], Wildfire Insurance Fund expenses [($0.20) per share], and Sale of nuclear fuels [$0.15 per share].  Non-GAAP earnings, by excluding unusual and non-cash items that could obscure the results of a business's primary, ongoing operations, are intended to be cleaner measures of corporate profits.

This post compares the quarterly Income Statement published by Edison to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by Edison's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  Edison International is the parent of Southern California Edison, which provides electric power to more than 15 million people.  Per government mandates, a growing percentage of this power has been derived from renewable sources. Electric utilities in California have been blamed for, and are spending considerable sums to prevent, wildfires caused by their equipment.

The following table is a simplified version of Edison's Income Statement for the quarter that ended in December 2020, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the December 2020 quarter totaled $3.2 billion, 6 percent more than last year. 

I was expecting Edison to report revenue of $3.3 billion for the December 2020 quarter.  The actual amount  fell short of my estimate by $143.0 million (4.3 percent).

The Cost of Revenue (also known as Cost of Goods Sold) was $2.0 billion in the latest quarter, which translates into a Gross Margin of 38.1 percent of revenue. Since it was higher than the 37.8 percent Gross Margin achieved in the year-earlier quarter, it signifies that Edison sold its products and services at more profitable prices relative to production costs. I was expecting the Gross Margin to be 37.2 percent in the December 2020 quarter, and Edison exceeded that prediction by 0.9 percent.

The Depreciation expense was $504 million, up from $470 million in the year-earlier quarter.  I was expecting Depreciation of $485 million.  

The last operating expense line on the Income Statement is where the sum of other operating income and charges, such as restructuring, may be listed.  For Edison the amount listed on this line was a $94 million gain in the latest quarter.  I was expecting a net loss of $50 million.  A large non-recurring gain on the sale of an investment boosted this item unexpectedly.

Edison's Operating Income was $794 million in the quarter, up 176.7 percent from the year-earlier period.  Operating Income exceeded my $693 million estimate by $101 million.

As for non-operating items, the major item is the Interest expense, and it was $226 million in the December quarter, very close to my estimate.  But, miscellaneous non-operating items were about $50 million less than I expected.

The effective income tax rate was 8.3 percent.  I expected the tax rate to be 10.0 percent.

Net income attributable to Edison was $526 million, $1.39 per share in the quarter ending December 2020.  The figures for the year-earlier quarter were $143 million, $0.40/share. My earnings estimate for  the latest quarter was $454 million ($1.20/share), so Edison International earned $0.19 per share more than I had predicted.

The average number of shares outstanding during the last quarter was 5.0 percent higher than one year ago, which was a drag on earnings per share.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  Gross Margin + Misc non-operating items + Income tax rate 

      – Worse than expected:  Revenue growth 

      – Met or close to expectations:  Depreciation + Special operating items + Interest + Non-controlling interests 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #edison    #eix    #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis

NVDA: Earnings Report for the Quarter Ending January 31, 2021

NVIDIA reported after the market closed on February 24, 2021, it earned $2.31 per diluted share in the quarter that ended on January 31, 2021, up 51 percent from earnings of $1.53 in the equivalent 14 weeks of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

Non-GAAP earnings rose 64 percent to $3.10 per share from $1.89 one year earlier, a much better change than the GAAP percentage. The most significant exclusions contributing to the $0.79 per share difference in the latest quarter between the GAAP and Non-GAAP earnings were: Stock-based compensation [$0.58 per share], Acquisition-related costs [$0.23 per share], and Gains) from non-affiliated investments [$0.01 per share].  Non-GAAP earnings, by excluding unusual and non-cash items that could obscure the results of a business's primary, ongoing operations, are intended to be cleaner measures of corporate profits.

This post compares the quarterly Income Statement published by NVIDIA to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by NVIDIA's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  NVIDIA develops high-speed integrated circuits and cards for demanding data-processing applications, such as gaming, data centers, visualization, artificial intelligence, and even cryptocurrency mining.  NVIDIA announced in September 2020 that it plans to acquire UK-based Arm Limited, a company that has been very successful at licensing designs for integrated circuits, from Softbank for $40 billion in cash and new NVIDIA shares. But, it's uncertain whether regulators will approve this deal and allow it to proceed.  NVIDIA was able to acquire Mellanox Technologies, a maker of high-performance computer networking products for data centers, for $7 billion in April 2020.  

The following table is a simplified version of NVIDIA's Income Statement for the quarter that ended in January 2021, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the January 2021 quarter totaled $5.0 billion, 61 percent more than last year.  The Gaming business was responsible for 50 percent of overall revenue, and this unit's revenue grew by 67.3 percent compared to the year-earlier result.  The Data Center business contributed 38 percent of revenue, and this unit's revenue increased by 96.6 percent.  The Professional Visualization unit supplied 6 percent of revenue, and this business's revenue fell by 7.3 percent.

I was expecting NVIDIA to report revenue of $4.8 billion for the January 2021 quarter.  The actual amount surpassed my estimate by $203.0 million (4.2 percent).

The Cost of Revenue (also known as Cost of Goods Sold) was $1.8 billion in the latest quarter, which translates into a Gross Margin of 63.1 percent of revenue. Since it was lower than the 64.9 percent Gross Margin achieved in the year-earlier quarter, it's a sign that NVIDIA sold its products and services at less profitable prices relative to production costs. I was expecting the Gross Margin to be 62.8 percent in the January 2021 quarter, and NVIDIA exceeded that prediction by 0.3 percent.

NVIDIA spent $1.1 billion on Research and Development in the latest quarter, up from $738 million one year ago. I had estimated that R&D expenses would be $1.1 billion.  R&D was 22.9 percent of Revenue.

Sales, General, and Administrative expenses totaled $503 million in the January 2021 quarter, up 75.3 percent from one year ago.  SG&A expenses increased from 9.2 percent to 10.1 percent of quarterly revenue, which shows NVIDIA spent more per dollar of sales on indirect operational costs, such as marketing. I had estimated that SG&A expenses would be 11.3 percent of revenue, and the actual percentage turned out to be lower than the prediction.

NVIDIA's Operating Income was $1.5 billion in the quarter, up 52.2 percent from the year-earlier period.  Operating Income exceeded my $1.4 billion estimate by $133 million.

Interest and other non-operating items summed to a net expense of $37 million.  My estimate for non-operating items was $55 million.

The effective income tax rate fell by 5.6 percent to 0.9 percent, which had a positive effect on net income.  I expected the tax rate to be 8.0 percent.

Net income attributable to NVIDIA was $1.5 billion, $2.31 per share in the quarter ending January 2021.  The figures for the year-earlier quarter were $950 million, $1.53/share. My earnings estimate for  the latest quarter was $1.2 billion ($1.92/share), so NVIDIA earned $0.39 per share more than I had predicted.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  Revenue growth + SG&A/Revenue + Income tax rate 

      – Worse than expected:

      – Met or close to expectations:  Gross Margin + R&D + SG&A + Interest 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #nvidia    #nvda    #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis

HD: Earnings Report for the Quarter Ending January 31, 2021

Home Depot reported before the market opened on February 23, 2021, it earned $2.65 per diluted share in the quarter that ended on January 31, 2021, up 16 percent from earnings of $2.28 in the equivalent 13 of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

This post compares the quarterly Income Statement published by Home Depot to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by Home Depot's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  Home Depot operates about 2300 big-box home improvement stores in the U.S., Canada, and Mexico that cater both to professionals and do-it-yourself homeowners.  The COVID-19 pandemic, in some ways, benefited Home Depot as house-bound consumers started more renovation projects. However, the pandemic also led to increased labor and cleaning costs and supply chain challenges.  In December 2020, Home Depot acquired HD Supply Holdings, a former subsidiary, for $8 billion.  HD Supply distributes maintenance, repair and operations (MRO) products for use in multi-family and hospitality buildings.

The following table is a simplified version of Home Depot's Income Statement for the quarter that ended in January 2021, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the January 2021 quarter totaled $32.3 billion, 25 percent more than last year. I was expecting Home Depot to report revenue of $31.0 billion for the January 2021 quarter.  The actual amount surpassed my estimate by $1.3 billion (4.1 percent).

The Cost of Revenue (also known as Cost of Goods Sold) was $21.4 billion in the latest quarter, which translates into a Gross Margin of 33.6 percent of revenue. Since it was lower than the 33.9 percent Gross Margin achieved in the year-earlier quarter, it's a sign that Home Depot sold its products and services at less profitable prices relative to production costs. I was expecting the Gross Margin to be 34.0 percent in the January 2021 quarter, and Home Depot missed that prediction by 0.4 percent.

Sales, General, and Administrative expenses totaled $6.2 billion in the January 2021 quarter, up 28.5 percent from one year ago.  SG&A expenses increased from 18.7 percent to 19.2 percent of quarterly revenue, which shows Home Depot spent more per dollar of sales on indirect operational costs, such as marketing. I had estimated that SG&A expenses would be 18.7 percent of revenue, and the actual percentage turned out to be higher than the prediction.

Home Depot's Operating Income was $4.1 billion in the quarter, up 20.0 percent from the year-earlier period.  Operating Income fell short of my $4.2 billion estimate by $130 million.

Interest and other non-operating items summed to a net expense of $327 million.  My estimate for non-operating items was $328 million.

The effective income tax rate rose by 3.7 percent to 23.9 percent, which had a negative effect on net income.  I expected the tax rate to be 24.3 percent.

Net income attributable to Home Depot was $2.86 billion, $2.65 per share in the quarter ending January 2021.  The figures for the year-earlier quarter were $2.5 billion, $2.28/share. My earnings estimate for  the latest quarter was $2.94 billion ($2.72/share), so Home Depot earned $0.07 per share less than I had expected.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  Revenue growth 

      – Worse than expected:  Depreciation + SG&A + SG&A/Revenue 

      – Met or close to expectations:  Gross Margin + Misc non-operating items + Interest + Income tax rate 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #homedepot    #hd    #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis

WMT: Earnings Report for the Quarter Ending January 31, 2021

Walmart reported before the market opened on February 18, 2021, it lost $0.74 per diluted share in the quarter that ended on January 31, 2021, down from earnings of $1.45 in the same 3 months of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

Adjusted earnings, a non-GAAP figure, rose 1 percent to $1.39 per share from $1.38 one year earlier. The most significant exclusions contributing to the $2.13 per share difference in the latest quarter between the GAAP and Non-GAAP earnings were: Loss on international operations held for sale [($2.66) per share], Gain on equity investments [$0.49 per share], and Tax item and officer compensation charge [$0.04 per share].  Non-GAAP earnings, by excluding unusual and non-cash items that could obscure the results of a business's primary, ongoing operations, are intended to be cleaner measures of corporate profits.

This post compares the quarterly Income Statement published by Walmart to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by Walmart's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  Walmart is large retailer known for keeping its costs and prices low.  In addition to its many eponymous storers, Walmart also owns Sam's Club warehouses.  To fight off competition from Amazon and other online retailers, Walmart has invested significant sums to improve Walmart.com.  This strategy is starting to pay off, and the company's online sales are growing rapidly.  The person that led Walmart's ecommerce efforts, Marc Lore, left the company on January 31, 2021, so that might be a concern.  Walmart's reputation for low prices, especially for groceries, cleaning products, and other consumer staples, paid off in the early days of the pandemic when home-bound consumers were stocking up on supplies.  Walmart is now taking steps to reduce its overseas operations.  It announced an agreement to sell its UK subsidiary and business in Argentina.  Walmart also made a deal to sell a majority interest in its subsidiary in Japan.

The following table is a simplified version of Walmart's Income Statement for the quarter that ended in January 2021, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the January 2021 quarter totaled $152.1 billion, 7 percent more than last year.  The Walmart U.S. business was responsible for 65 percent of overall revenue, and this unit's revenue grew by 7.9 percent compared to the year-earlier result.  The Walmart International business contributed 23 percent of revenue, and this unit's revenue increased by 5.5 percent.  The Sam's Club unit supplied 11 percent of revenue, and this business's revenue rose by 8.1 percent.

Based on an extrapolation of Census Bureau data on U.S. Retail and Food Service Sales, I was expecting Walmart to report revenue of $145.0 billion for the January 2021 quarter.  The actual amount surpassed my estimate by $7.1 billion (4.9 percent).  

The Cost of Revenue (also known as Cost of Goods Sold) was $115.3 billion in the latest quarter, which translates into a Gross Margin of 24.2 percent of revenue. Since it was higher than the 23.9 percent Gross Margin achieved in the year-earlier quarter, it signifies that Walmart sold its products and services at more profitable prices relative to production costs. I was expecting the Gross Margin to be 25.0 percent in the January 2021 quarter, and Walmart missed that prediction by 0.8 percent.  Perhaps costs were higher than expected because of additional labor and cleaning expenses due to COVID-19.

Sales, General, and Administrative expenses totaled $31.3 billion in the January 2021 quarter, up 9.5 percent from one year ago.  SG&A expenses increased from 20.2 percent to 20.6 percent of quarterly revenue, which shows Walmart spent more per dollar of sales on indirect operational costs, such as marketing. I had estimated that SG&A expenses would be 20.3 percent of revenue, and the actual percentage turned out to be higher than the prediction.

Walmart's Operating Income was $5.5 billion in the quarter, up 3.1 percent from the year-earlier period.  Despite better-than-expected Revenue, Operating Income fell short of my $6.9 billion estimate by $1.4 billion because expenses were even higher.

The Interest expense was consistent with expectations, but other non-operating expenses far, far exceeded what I had predicted.  The principal reason for this discrepancy was that Walmart recorded a $7.3 billion charge for selling certain international businesses, and I was expecting only $2.4 billion.

Net income attributable to Walmart was ($2.1) billion, ($0.74) per share in the quarter ending January 2021.  The figures for the year-earlier quarter were $4.1 billion, $1.45/share. My earnings estimate for  the latest quarter was $3.6 billion ($1.25/share), so Walmart earned $1.99 per share less than I had expected.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  Revenue growth 

      – Worse than expected:  Gross Margin + SG&A + Misc non-operating items 

      – Met or close to expectations:  SG&A/Revenue + Interest + Non-controlling interests 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #walmart    #wmt    #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis

PEP: Earnings Report for the Quarter Ending December 26, 2020

PepsiCo reported before the market opened on February 11, 2021, it earned $1.33 per diluted share in the quarter that ended on December 26, 2020, up 6 percent from earnings of $1.26 in the equivalent 16 weeks of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

Core earnings, a non-GAAP figure, rose 1 percent to $1.47 per share from $1.45 one year earlier, a less robust change than the GAAP percentage. The most significant exclusions contributing to the $0.14 per share difference in the latest quarter between the GAAP and Non-GAAP earnings were: Mark to market impact [($0.05) per share], Restructuring and impairment charges [$0.09 per share], and Pension-related settlement charge [$0.11 per share].  Non-GAAP earnings, by excluding unusual and non-cash items that could obscure the results of a business's primary, ongoing operations, are intended to be cleaner measures of corporate profits.

This post compares the quarterly Income Statement published by PepsiCo to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by PepsiCo's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  PepsiCo is a global food and beverage company. In addition to the eponymous soft drinks, PepsiCo also owns the Frito-Lay snack food business. In April 2020, PepsiCo acquired energy drink maker Rockstar for $3.85 billion. PepsiCo bought SodaStream in 2018 for $3.2 billion.

The following table is a simplified version of PepsiCo's Income Statement for the quarter that ended in December 2020, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the December 2020 quarter totaled $22.5 billion, 9 percent more than last year.  The Beverages North America business was responsible for 30 percent of overall revenue, and this unit's revenue grew by 8.6 percent compared to the year-earlier result.  The Frito-Lay North America business contributed 24 percent of revenue, and this unit's revenue increased by 5.7 percent.  The Europe unit supplied 18 percent of revenue, and this business's revenue rose by 3.8 percent.

I was expecting PepsiCo to report revenue of $21.6 billion for the December 2020 quarter.  The actual amount surpassed my estimate by $855.0 million (4.0 percent).

The Cost of Revenue (also known as Cost of Goods Sold) was $10.4 billion in the latest quarter, which translates into a Gross Margin of 53.6 percent of revenue. Since it was lower than the 54.7 percent Gross Margin achieved in the year-earlier quarter, it's a sign that PepsiCo sold its products and services at less profitable prices relative to production costs. I was expecting the Gross Margin to be 55.0 percent in the December 2020 quarter, and PepsiCo missed that prediction by 1.4 percent.

Sales, General, and Administrative expenses totaled $9.2 billion in the December 2020 quarter, up 7.1 percent from one year ago.  SG&A expenses decreased from 41.6 percent to 41.0 percent of quarterly revenue, which shows PepsiCo spent less per dollar of sales on indirect operational costs, such as marketing. I had estimated that SG&A expenses would be 42.0 percent of revenue, and the actual percentage turned out to be lower than the prediction.

PepsiCo's Operating Income was $2.8 billion in the quarter, up 4.7 percent from the year-earlier period.  Operating Income exceeded my $2.8 billion estimate by $18 million.

Interest and other non-operating items summed to a net expense of $469 million.  My estimate for non-operating items was $350 million.

The effective income tax rate rose by 1.7 percent to 21.1 percent, which had a negative effect on net income.  I expected the tax rate to be 21.0 percent.

Net income attributable to PepsiCo was $1.8 billion, $1.33 per share in the quarter ending December 2020.  The figures for the year-earlier quarter were $1.8 billion, $1.26/share. My earnings estimate for  the latest quarter was $1.9 billion ($1.39/share), so PepsiCo earned $0.06 per share less than I had expected.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  SG&A/Revenue 

      – Worse than expected:  Gross Margin + Misc non-operating items + Non-controlling interests 

      – Near expectations:  Revenue growth + SG&A + Interest + Income tax rate 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #pepsico    #pep    #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis

CSCO: Earnings Report for the Quarter Ending January 23, 2021

Cisco Systems reported after the market closed on February 9, 2021, it earned $0.60 per diluted share in the quarter that ended on January 23, 2021, down 12 percent from earnings of $0.68 in the equivalent 13 weeks of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

Non-GAAP earnings rose 3 percent to $0.79 per share from $0.77 one year earlier, a much better change than the GAAP percentage. The most significant exclusions contributing to the $0.19 per share difference in the latest quarter between the GAAP and Non-GAAP earnings were: Stock-based compensation [$0.10 per share], Acquisition-related expenses [$0.06 per share], and Asset impairments and restructurings [$0.06 per share].  Non-GAAP earnings, by excluding unusual and non-cash items that could obscure the results of a business's primary, ongoing operations, are intended to be cleaner measures of corporate profits.

This post compares the quarterly Income Statement published by Cisco to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by Cisco's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  Founded in 1984, Cisco is a leading seller of products, such as routers and switches, and related services, for connecting devices via the Internet.  The company makes products related to the following technologies: software-defined wide area networks, cloud computing, 5G and WiFi-6, optical networking, next generation silicon, and artificial intelligence.  A frequent acquirer of other companies, Cisco expects it will soon complete the $4.5 billion acquisition of Acacia Communications, Inc., a company that sells high-speed coherent optical interconnect products.

The following table is a simplified version of Cisco's Income Statement for the quarter that ended in January 2021, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the January 2021 quarter totaled $12.0 billion, about the same as last year.  The Infrastructure Platforms business was responsible for 53 percent of overall revenue, and this unit's revenue percent fell by 3.0 percent compared to the year-earlier result.  The Applications business contributed 11 percent of revenue, and this unit's revenue was essentially unchanged percent.  The Services unit supplied 28 percent of revenue, and this business's revenue rose by 2.0 percent.

I was expecting Cisco to report revenue of $11.9 billion for the January 2021 quarter.  The actual amount surpassed my estimate by $60.0 million (0.5 percent).

The Cost of Revenue (also known as Cost of Goods Sold) was $4.2 billion in the latest quarter, which translates into a Gross Margin of 65.1 percent of revenue. Since it was higher than the 64.7 percent Gross Margin achieved in the year-earlier quarter, it signifies that Cisco sold its products and services at more profitable prices relative to production costs. I was expecting the Gross Margin to be 62.5 percent in the January 2021 quarter, and Cisco exceeded that prediction by 2.6 percent.

Cisco spent $1.5 billion on Research and Development in the latest quarter, down from $1.6 billion one year ago. I had estimated that R&D expenses would be $1.6 billion.  R&D was 12.8 percent of Revenue.

Sales, General, and Administrative expenses totaled $2.8 billion in the January 2021 quarter, up 1.0 percent from one year ago.  SG&A expenses increased from 22.8 percent to 23.1 percent of quarterly revenue, which shows Cisco spent more per dollar of sales on indirect operational costs, such as marketing. I had estimated that SG&A expenses would be 21.8 percent of revenue, and the actual percentage turned out to be higher than the prediction.

The last operating expense line on the Income Statement is where the sum of other operating income and charges, such as restructuring, may be listed.  For Cisco the amount listed on this line was a $273 million loss in the latest quarter.  I was expecting a net loss of $200 million.

Cisco's Operating Income was $3.2 billion in the quarter, down 4.6 percent from the year-earlier period.  Operating Income exceeded my $3.0 billion estimate by $185 million.

Interest and other non-operating items summed to a net income of $32 million.  My estimate for non-operating items was $80 million.

The effective income tax rate rose by 3.3 percent to 21.8 percent, which had a negative effect on net income.  I expected the tax rate to be 19.0 percent.

Net income attributable to Cisco was $2.5 billion, $0.60 per share in the quarter ending January 2021.  The figures for the year-earlier quarter were $2.9 billion, $0.68/share. My earnings estimate for  the latest quarter was $2.5 billion ($0.60/share), so Cisco Systems earned the $0.60 I had predicted.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  Gross Margin 

      – Worse than expected:  SG&A + SG&A/Revenue + Special operating items + Misc non-operating items + Interest + Income tax rate 

      – Near expectations:  Revenue growth + R&D 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #cisco    #csco    #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis

GOOGL: Earnings Report for the Quarter Ending December 31, 2020

Alphabet reported after the market closed on February 2, 2021, it earned $22.30 per diluted share in the quarter that ended on December 31, 2020, up 45 percent from earnings of $15.35 in the same 3 months of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

This post compares the quarterly Income Statement published by Alphabet to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by Alphabet's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  Alphabet was formed in 2015 as the holding company for Google and various smaller businesses.  Google's products include Search, Maps, Gmail, Android, Chrome, Google Cloud, YouTube, and (recent acquisition) Fitbit.  Even though Alphabet also owns various additional businesses, which it refers to as "Other Bets" (e.g., Waymo), Alphabet's revenues are mostly entirely due to Google's ability to deliver online advertising.  Google (and, therefore, Alphabet) has been benefitting as commerce moves on line, and the COVID pandemic has accelerated this trend.  But, Google's strength can also be a concern.  In October 2020, the U.S. filed a civil antitrust lawsuit claiming that Google has abused its market position in the search and search advertising markets.  This follows a decision by the European Union in June 2018 to fine Google €4.34 billion ($5 billion) for abusing the dominance it has as the owner of the Android operating system.  One year earlier, the EU fined Google €2.42 billion ($2.74 billion) for violating European competition law in the way shopping search results and ads were displayed.

Alphabet has three classes of common shares, with Class B shares, which are primarily owned by Google's founders, having much greater voting rights than the Class A (ticker GOOGL) shares.  Class C shares (ticker GOOG) have no voting rights.

The following table is a simplified version of Alphabet's Income Statement for the quarter that ended in December 2020, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the December 2020 quarter totaled $56.9 billion, 23 percent more than last year.  The Google Services business was responsible for 93 percent of overall revenue, and this unit's revenue grew by 22.4 percent compared to the year-earlier result.  The Google Cloud business contributed 7 percent of revenue, and this unit's revenue increased by 46.6 percent.  The Other Bets unit supplied 0 percent of revenue, and this business's revenue rose by 14.0 percent.

I was expecting Alphabet to report revenue of $51.3 billion for the December 2020 quarter.  The actual amount surpassed my estimate by $5.6 billion (10.8 percent).

The Cost of Revenue (also known as Cost of Goods Sold) was $26.1 billion in the latest quarter, which translates into a Gross Margin of 54.2 percent of revenue. Since it was lower than the 54.4 percent Gross Margin achieved in the year-earlier quarter, it's a sign that Alphabet sold its products and services at (slightly) less profitable prices relative to production costs.  I was expecting the Gross Margin to be 54.5 percent in the December 2020 quarter, and Alphabet missed that prediction by 0.3 percent.

Alphabet spent $7.0 billion on Research and Development in the latest quarter, down from $7.2 billion one year ago. I had estimated that R&D expenses would be $7.4 billion.  R&D was 12.3 percent of Revenue.

Sales, General, and Administrative expenses totaled $8.1 billion in the December 2020 quarter, down 4.9 percent from one year ago.  SG&A expenses decreased from 18.6 percent to 14.3 percent of quarterly revenue, which shows Alphabet spent less per dollar of sales on indirect operational costs, such as marketing. I had estimated that SG&A expenses would be 17.5 percent of revenue, and the actual percentage turned out to be lower than the prediction.

Alphabet's Operating Income was $15.7 billion in the quarter, up 68.9 percent from the year-earlier period.  Operating Income exceeded my $11.6 billion estimate by $4.0 billion.

Interest and other non-operating items summed to a net income of $3.0 billion.  My estimate for non-operating items was $1.4 billion.

The effective income tax rate rose by 18.2 percent to 18.5 percent, which had a negative effect on net income.  I expected the tax rate to be 16.0 percent.

Net income attributable to Alphabet was $15.2 billion, $22.30 per share in the quarter ending December 2020.  The figures for the year-earlier quarter were $10.7 billion, $15.35/share. My earnings estimate for  the latest quarter was $10.9 billion ($15.88/share), so Alphabet earned $6.42 per share more than I had predicted.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  Revenue growth + R&D + SG&A + SG&A/Revenue + Misc non-operating items 

      – Worse than expected:  Interest + Income tax rate 

      – Near expectations:  Gross Margin 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #alphabet  #goog  #googl  #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis

QCOM: Earnings Report for the Quarter Ending December 27, 2020

Qualcomm reported after the market closed on February 3, 2021, it earned $2.12 per diluted share in the quarter that ended on December 27, 2020, up 165 percent from earnings of $0.80 in the same 3 months of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP). 

Non-GAAP earnings rose 119 percent to $2.17 per share from $0.99 one year earlier, a not quite as robust change than the GAAP percentage. The principal exclusions contributing to the $0.05 per share difference in the latest quarter between the GAAP and Non-GAAP earnings were: Strategic initiatives [$0.13 per share], Share-based compensation [($0.20) per share], and Other items [$0.02 per share].  Non-GAAP earnings, by excluding unusual and non-cash items that could obscure the results of a business's principal, ongoing operations, are intended to be cleaner measures of corporate profits.

This post compares the quarterly Income Statement published by Qualcomm to the estimates I made in a previous “Look Ahead” post.  My estimates were based on publicly available guidance provided by Qualcomm's management to financial analysts, news reports, and trends in the company's historical results.  Unless otherwise mentioned, all reported values mentioned below are GAAP figures.

First, a little background about the company:  Qualcomm makes chips and licenses mobile communications technologies that are used in many advanced wireless devices.  The transition to 5G mobile networks, which is just beginning, should benefit Qualcomm as the technology will motivate consumers to upgrade (again!) to newer, more capable phones.  Qualcomm's licensing business has been criticized on anti-trust grounds by government regulators in multiple countries and also by phone manufacturers.  This threat eased significantly when Qualcomm settled all litigation in April 2019 with Apple and Apple's contract manufacturers.  More progress was made in 2020 when Qualcomm and Huawei settled their disputes and reached a new long-term, global patent-license agreement.  Anti-trust concerns did end up scuttling the company's planned acquisition of NXP Semiconductors for $44 billion. 

The following table is a simplified version of Qualcomm's Income Statement for the quarter that ended in December 2020, with company-reported numbers along side my predictions.  Figures from the year-earlier quarter are also provided to facilitate comparisons.

Revenue in the December 2020 quarter totaled $8.2 billion, 62 percent more than last year. The CDMA Technologies business was responsible for 79 percent of overall revenue, and this unit's revenue grew by 80.6 percent compared to the year-earlier result. The Technology Licensing business contributed 20 percent of revenue, and this unit's revenue increased by 18.2 percent.

I was expecting Qualcomm to report revenue of $8.2 billion for the December 2020 quarter.  The actual amount surpassed my estimate by a mere $35.0 million (0.4 percent).

The Cost of Revenue (also known as Cost of Goods Sold) was $3.5 billion in the latest quarter, which translates into a Gross Margin of 57.6 percent of revenue. Since it was lower than the 58.4 percent Gross Margin achieved in the year-earlier quarter, it's a sign that Qualcomm sold its products and services at less profitable prices relative to production costs. I was expecting the Gross Margin to be 63.0 percent in the December 2020 quarter, and Qualcomm missed that prediction by 5.4 percent.

Qualcomm spent $1.7 billion on Research and Development in the latest quarter, up from $1.4 billion one year ago. I had estimated that R&D expenses would be $1.7 billion.  R&D was 20.1 percent of Revenue.

Sales, General, and Administrative expenses totaled $567 million in the December 2020 quarter, up 7.4 percent from one year ago.  SG&A expenses decreased from 10.4 percent to 6.9 percent of quarterly revenue, which shows Qualcomm spent less per dollar of sales on indirect operational costs, such as marketing. I had estimated that SG&A expenses would be 7.5 percent of revenue, and the actual percentage turned out to be lower than the prediction.

Qualcomm's Operating Income was $2.5 billion in the quarter, up 145.2 percent from the year-earlier period.  Operating Income fell short of my $2.9 billion estimate by $325 million.

Interest and other non-operating items summed to a net income of $78 million.  My estimate for non-operating items was $225 million.

The effective income tax rate rose by 3.4 percent to 5.7 percent, which had a negative effect on net income.  I expected the tax rate to be 16.0 percent.

Net income attributable to Qualcomm was $2.5 billion, $2.12 per share in the quarter ending December 2020.  The figures for the year-earlier quarter were $925 million, $0.80/share. My earnings estimate for  the latest quarter was $2.2 billion ($1.92/share), so Qualcomm earned $0.21 per share more than I had predicted.

In conclusion, the following list shows where the reported results differed from my expectations:

      – Better than expected:  SG&A + SG&A/Revenue + Misc non-operating items + Income tax rate 

      – Worse than expected:  Gross Margin + Interest 

      – Near expectations:  Revenue growth + R&D 

This post is not investment advice, and the accuracy of the information, tables, charts, and any commentary presented is not guaranteed.  Readers are encouraged to independently verify all data using information from original sources. The Income Statements discussed in these blog posts have not been audited and may differ in material respects from those published by the subject company.  These differences are intended to facilitate analysis and cross-company comparisons. Complete financial statements with notes can usually be found in the 10-Q and 10-K filings companies submit to the Securities and Exchange Commission (SEC).

 #qualcomm    #qcom    #gauges  #gcfr  #gcfr2 #QtrlyRpt   #nac_financialanalysis