For Immediate Release
Chicago, IL – August 05, 2010 – Zacks.com Analyst Blog features: Automatic Data Processing (ADP), Ford (F), Toyota Motor Corp. (TM), Time Warner Inc. (TWX) and SIRIUS XM Radio Inc. (SIRI ).
Here are highlights from Wednesday’s Analyst Blog:
ADP Sees Private Sector Grow Jobs
Automatic Data Processing (ADP) reported that the private sector added 42,000 jobs in July, significantly higher than both the 19,000 gained in June according to its survey (revised up from 13,000, but still well below the 83,000 private sector job gains reported by the Bureau of Labor Statistics) and well ahead of the consensus expectations of a gain of 25,000 on the survey.
As by far the largest payroll processor in the country, ADP is in a good position to assess the overall health of the private sector job market, although its figures have often differed significantly from the official Bureau of Labor Statistics (BLS) numbers, which come out on Friday. This was the sixth straight month of private sector job gains, according to ADP.
If, as this report suggests, the private sector also gains jobs according to the BLS, it will be the seventh straight month according to that report (although the disagreement about January is relatively small in absolute numbers -- a small gain versus a very small loss).
Services vs. Goods Producing
The service sector gained 63,000 jobs in the month, offset by a loss of 21,000 in the goods producing sector. Within the goods producing sector, factory jobs fell by 6,000 -- the first decline in six months. That is at odds with the ISM manufacturing survey that came out on Monday, which suggested further job gains in manufacturing in July.
The construction industry lost another 17,000 jobs (implying that mining added 2,000 jobs to get to 21,000 lost in all of goods producing). That is the smallest loss of construction jobs since November of 2007. The construction industry has been extremely hard-hit in this recession -- it has lost jobs in every month since January of 2007, and the total losses are 2.240 million.
The losses in that industry partially explain why the unemployment rate has risen so much more for those without any college education than for those who have a degree. It is an industry that historically has provided fairly high-paying jobs for those without that much formal education.
Small vs. Medium vs. Big Business
Broken down by firm size, it looks like we are seeing the start of a comeback in small-firm hiring. Small firms (under 50 employees) added a total of 21,000 employees -- 29,000 in the service sector, offset by a decline of 8,000 in the goods producing sector.
Medium-sized businesses (between 50 and 499 employees) also added 21,000 jobs in total -- 24,000 in services offset by a loss of 3,000 in goods producing. The improvement in medium-sized businesses was actually a bit stronger than in small businesses since 48.255 million people work for small businesses, and 41.211 million work for medium-sized businesses, so on a percentage basis, medium-sized businesses did slightly better on the job-creation front.
Large business, in aggregate, kept payrolls unchanged in July, with a gain of 10,000 service jobs offset by a loss of 10,000 goods producing jobs for the month. The decline in large goods producing jobs is somewhat of a surprise since auto companies like Ford F have been adding workers. That is a very small part of the overall job picture, just 3.36 million in total, or 3.23% of all private sector jobs.
Toyota Improves, Raises Guidance
Toyota Motor Corp. (TM) posted a profit of ¥210.6 billion ($2.3 billion) or ¥60.74 (66 cents) per share for the first quarter of its fiscal year ended March 31, 2011, in sharp contrast to a loss of ¥87.2 billion ($946 million) or ¥24.82 (27 cents) per share a year ago.
An increase in vehicle sales, coupled with a reduction in costs related to loan losses and residual losses in the company’s Financial Services segment, led the improvement in results despite the backlash of Toyota’s spate of automotive safety recalls over the last few months.
Revenues in the quarter appreciated 27% to ¥4.87 trillion ($52.9 billion), driven by a 30% increase in global vehicle sales to 1.8 million units. Vehicle sales rose 27% to 970,640 units in Japan, 70% to 342,515 units in North America, 56% to 299,177 units in Asia, and 36% to 97,663 units on Other regions. However, vehicle sales dipped 10% to 83,467 units in Europe.
Operating profit improved to ¥211.7 billion ($2.3 billion) from an operating loss of ¥194.9 billion ($2.1 billion) in the first quarter of the previous fiscal year. The rise in operating profit was attributable to positive impact from marketing efforts, amounting to ¥400 billion ($4.3 billion), and from cost reduction measures, totaling ¥50 billion ($542 million).
These were partially offset by negative factors, including unfavorable exchange rate fluctuations (¥30 billion or $325 million), an increase in expense (¥10 billion or $108 million) and other factors (¥3.5 billion or $38 million).
Time Warner Beats, Lifts View
Time Warner Inc. (TWX) second quarter 2010 GAAP earnings grew 7.3% to $562 million from $524 million in the year-ago period. Excluding special items, adjusted earnings came in at 50 cents per share, beating both the Zacks Consensus Estimate and the year-ago adjusted earnings of 45 cents. The better-than-expected earnings were driven by an improved advertising environment and in-house content revenues.
Buoyed by the strong quarterly performance, Time Warner lifted its guidance for full-year 2010. The company now expects adjusted earnings to rise at least 20% from pro forma earnings of $1.83 per share in 2009, compared to its earlier prediction of a mid-teens growth. Shares of Time Warner gained more than 2.5% in morning trading on the New York Stock Exchange.?
Meanwhile, Time Warner’s total revenue in the second quarter grew 7.7% year-over-year to $6.4 billion, topping the Zacks Consensus Estimate of $6.2 billion. The expansion was driven by growth across all three segments: Networks (+11.0% y-o-y), Filmed Entertainment (+7.8% y-o-y) and Publishing (+0.4% y-o-y). Operating income during the quarter logged a growth of 19.3% year-over-year to $1.2 billion.
SIRIUS XM Posts Excellent Results
SIRIUS XM Radio Inc. (SIRI ) declared highly encouraging financial results for the second quarter 2010. These were the combined results of double-digit growth in revenue, significantly higher net addition to its pay-radio services, and a meaningful improvement in ARPU.
Quarterly net income was $15.3 million or a break-even per share compared to a net loss of $159.6 million or a loss of 4 cents per share in the prior-year quarter. Second quarter EPS of a break-even was exactly in line with the Zacks Consensus Estimate.
Quarterly revenue of $699.8 million was an improvement of 18.4% year-over-year and was also above the Zacks Consensus Estimate of $682 million. This was primarily due to an increase in subscriber base, higher sale of "Best of" programming, and rate increases to the company's multi-subscription and Internet packages.
Quarterly total operating expenses were $574.1 million, compared to $553.6 million in the year-ago quarter. Operating income in the second quarter was $125.6 million, compared to operating income of $37.2 million in the year-ago quarter. Quarterly adjusted EBITDA was $154.3 million, compared to $132.2 million in the prior-year quarter.
During the second quarter of 2010, SIRIUS XM generated $178.7 million in cash from operations, compared to $70 million in the year-ago quarter. Free cash flow (cash flow from operations less capital expenditures) in the same quarter was $108.3 million, compared to $12.7 million in the year-ago quarter.
At the end of the second quarter of 2010, SIRIUS XM had $258.9 million cash & cash equivalents and $3,028.2 million of outstanding debt, compared to $383.5 million cash & cash equivalents and $2,813.6 million of outstanding debt at the end of fiscal 2009
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