Monday, July 13, 2009

Dell, Take-Two down, CSX up after hours (DELL, TTWO, CSX)

AlphaNinja - Dell and Take-Two released somewhat negative statements after the market closed, and CSX beat earnings estimates.

Dell (DELL) said that while revenue is "stabilizing," they're seeing somewhat weaker gross margins. Comments from CFO Brian Gladden:

Speaking in advance of a Tuesday meeting in Austin with securities and industry analysts, Brian Gladden, the company’s chief financial officer, said that while demand for Dell’s products and services seems to have stabilized, it varies significantly by customer segment and geography.

He added that Dell remains focused on optimizing liquidity, profitability and growth in the midst of a still-challenging operating environment, and is on course to reduce annual costs by more than $4 billion by the end of fiscal 2011. Reductions are coming from a combination of greater efficiencies in design and procurement, optimization of manufacturing and supply chain logistics, and ongoing reductions in operating expenses.

The company stated that, over a longer time horizon, it will be targeting 5 to 7 percent compounded annual sales growth, operating income at or above 7 percent of revenue, and cash flow from operations exceeding net income. However, such results are dependent on broad global economic improvement accompanied by higher worldwide IT spending, including a sustained double-digit growth rate in demand for computer systems.

Dell shares are trading down 3% after hours.

Take-Two's (TTWO) announcement is a bit worse than Dell's. The video game concern is trading down 13% after hours, after deciding to shift the release of Bioshock 2 from fiscal 2009 to 2010.

Ben Feder, Chief Executive Officer of Take-Two, commented, “The decision to shift a release date is never an easy one, especially with a product as highly anticipated as BioShock 2. We felt that it was essential to invest the additional time to ensure that this title will deliver what its fans expect and deserve. As a result, we will now be launching sequels to several of our strongest franchises - including BioShock 2, Mafia II, Max Payne 3 and Red Dead Redemption - during the next fiscal year. These titles will anchor our lineup for fiscal 2010, and along with other products planned for next year, provide a platform for enhanced financial performance in what we hope will be an improved retail environment.”

The release:

Railroad operator CSX Corp (CSX) may have been a bit light on revenues, but earnings beat expectations by 10cents, coming in at 72cents per share. Shares are up 4% after hours.

With the company focusing on safety and cost improvements, they may come out of the recession quite "lean," and earnings may expand nicely:

"While the economy continues to significantly impact our business, there are some signs that we may be seeing the bottom in many markets," said Michael Ward, president, chairman and CEO.

"Even in this difficult business environment, we are still strengthening our operations, optimizing our resources and making the right investments to prepare our network for the future."
CSX continued to improve its safety performance, contributing to a further reduction in its casualty reserves of $70 million compared to last year. Combined with the company's cost management efforts and increased network efficiency, operating expenses declined 27%, allowing the company to produce operating income of $582 million and an operating ratio of 73.4 percent for the quarter.

"By improving safety, reducing costs and increasing productivity we lessened the impact of the struggling global economy on our business," said Tony Ingram, executive vice president and chief operating officer. "We remained aggressive in right-sizing our train network while still providing reliable service for our customers."

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