For Immediate Release
Chicago, IL – August 09, 2010 – Zacks.com Analyst Blog features: American International Group Inc. (AIG), Consolidated Edison Inc. (ED), Activision Blizzard Inc. (ATVI) Microsoft Corp. (MSFT) and Sony Corp. (SNE ).
Here are highlights from Friday’s Analyst Blog:
AIG Surpasses Zacks Estimate
American International Group Inc. (AIG) reported second-quarter operating earnings of $1.34 billion or $1.99 per share, significantly ahead of the Zacks Consensus Estimate of 99 cents and operating income of $1.14 billion or $1.71 per share in the year-ago period.
On a GAAP basis, AIG reported a net loss of $2.66 billion or $3.96 per share, compared with a net income of $1.82 billion or $2.30 per share in the year-ago quarter. This included loss from discontinued operations, derivative hedging loss and net realized capital losses, marginally offset by gains from divested businesses.
Although results from insurance operations appeared sluggish due to AIG’s ongoing business restructuring process, stability persists which has driven the book value per share during the quarter. It is notable that premiums, deposits and other considerations were up 24% year over year.
AIG’s continuing insurance operations reported an adjusted operating income (before net realized capital gains) of $2.2 billion, significantly ahead of $1.5 billion reported in the year-ago quarter.
AIG recorded catastrophe losses of $287 million in its General Insurance business. As a result, the division managed to earn $955 million compared with $1.0 billion in the year-ago quarter. Combined ratio was 102.0% compared with 98.2% in the prior-year period.
Con Edison In Line with Consensus
Consolidated Edison Inc. (ED) announced its second quarter fiscal 2010 results of EPS of 51 cents, in line with the Zacks Consensus Estimate and beating the year-ago EPS of 48 cents. On a reported basis, including the net mark-to-market effects of the competitive energy businesses the company reported earnings of 65 cents per share compared with 55 cents per share in the year-ago quarter.
The GAAP EPS variances reflect the year-over-year differences, where Con Edison of New York reported higher operations and maintenance expenses (12 cents), Depreciation and property taxes (9 cents) and Other including dilutive effect of new stock issuances (2 cents). The weighted average number of common shares was 281 million and 274 million for the three months ended June 30, 2010 and 2009, respectively.
The above negatives were partially offset by higher rates authorizing higher recovery of costs (20 cents), and lower net interest expense (2 cents). The net effect was that EPS was down by a penny year over year while the Orange and Rockland utilities and parent company expenses remained steady. In the Competitive Energy businesses, EPS rose by 11 cents.
Earnings from ongoing operations were $144 million compared with $131 million in the year-ago quarter. Consolidated Edison’s net income increased to $183 million from $150 million. The upside came from lower costs at its utilities and stronger-than-expected performance at its competitive energy businesses.
Consolidated Edison raised its earnings per share from ongoing guidance range for fiscal 2010 to $3.25 – $3.45 from the earlier guidance range of $3.10 – $3.30 per share. The higher range reflects, among other things, stronger than projected financial performance at Con Edison of New York through cost control efforts and stronger than projected financial performance at the competitive energy businesses. Earnings per share from ongoing operations exclude the net mark-to-market effects of the competitive energy businesses.
Activision Marginally Beats
A leading publisher of online, personal computers, console, handheld and mobile games, Activision Blizzard Inc. (ATVI) reported second-quarter earnings of 5 cents per share, which beat the Zacks Consensus Estimate by 2 cents but was down a penny per share year over year.
The decline can primarily be credited to declining revenue growth and contraction in operating margins. Fewer releases and continued weakness at retail led to the quarter’s weak results. Earnings include stock-based compensation expenses but exclude one-time items.
Revenues
Revenues on a non-GAAP basis (excluding net effect from deferral) decreased 14.7% year over year to $683.0 million in the second quarter.
Lower revenues were attributable to the 29.0% plunge in sales of consoles from the year-earlier quarter. Sales of handheld games declined 40.0% year over year and distribution revenues were down 19.0% year over year in the quarter. These were partially offset by the sales of digital online channels, which grew more than 20.0% year over year.
Activision published four games during the quarter and two Call of Duty map packs. During the second quarter of 2010, Call of Duty: Modern Warfare 2 game held the number one position in the U.S. in the action category, according to research firm NPD Group.
In June this year, Activision released a map pack for Call of Duty: Modern Warfare 2 Resurgence Pack for Microsoft Corp.'s (MSFT) Xbox Live online entertainment network. This pack was also available for Sony Corp.'s (SNE ) PlayStation 3 and personal computers. Contracts with large companies have enabled Activision to reach the 20 million mark for the Call of Duty game in the second quarter. We expect Call of Duty to drive revenues for the company in the second half of the year.
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