Wednesday, May 20, 2009

Earnings and other news 05/20/09

AlphaNinja - Deere(DE) beats 2nd quarter consensus estimates by 4cents. Net sales down 17% this quarter, an acceleration to the downside. Non-US sales down 30%, 1/3 of which is thanks to unfavorable currency-translation.

Forecasting full year sales to be down 19% and q3 down 26%, meaning they might be a bit over-rosy on q4. Full year earnings guidance of "about $1.1 billion for 2009, with more risk on the downside." That looks to be a "best-case" 2.48 cents EPS versus street consensus of 3.08 and street low of 2.73. Deere has $25billion in debt with a $20billion market value. And the stock is up 5% this morning while offering VERY negative comments about their end markets...........I wouldn't get anywhere near this stock.


AlphaNinja - AnnTaylor(ANN) beats by 9cents on light revenue. Comp store (stores open at least a year, to exclude new store openings) sales down 30% from a year ago - UGLY. But gross margin up massively to 55% from 35%. Less sales, but more full-priced selling is a strategy I fully support. This can be a long-term "structural shift" for a company if this mindset takes hold, and can lead to outperformance once the economy turns.


Pomeroy(PMRY) takeover/under:

AlphaNinja - The risks of investing when the CEO owns 20% of the company. The stock is up 27% today but still far off its lows of the past few years. As is always the case when management takes over a company, they're saying it offers shareholders the "best" opportunity to realize value on their investment. Maybe the company will be better off without the costs/demands of being a publicly traded entity, but it always depresses AphaNinja to see a company yanked from common shareholders by someone who obviously think there's value there.
"We believe this transaction provides the greatest likelihood for achieving the highest value for the Company's stockholders, and that this is also in the best interests of our customers, partners and employees. The added flexibility of being a private company will help us to focus on supporting our customers with the highest levels of service that they have come to expect," said Christopher C. Froman, Pomeroy's President and CEO. "After an extensive review of strategic alternatives with Company management and our financial advisors, we determined this all cash sale of the Company to Dave Pomeroy is in the best interests of the Company's stockholders," said Debbie Tibey, the Chairwoman of the Special Committee.

AlphaNinja - From the recent earnings announcement. The company decided to discontinue a staffing contract because it was unprofitable, and sales have cratered.

"Technical Staffing revenue decreased $24.9 million, or 76.6%, in the first quarter of fiscal 2009. In June 2008, the Company elected not to renew a technical services contract with a major customer because the proposed terms would have been unprofitable for the Company. As a result of the loss of this business, we expect a decline of approximately $80 million in technical staffing revenue for the full year in fiscal 2009. Technical Staffing revenue accounted for approximately 21.0% of total service revenues in the first quarter of fiscal 2009 compared to 51.0% in the first quarter of fiscal 2008."

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