CenturyLink Q1 beats but forecast fails to inspire

CenturyLink Q1 beats but forecast fails to inspire

Stock Market Predictions

BANGALORE (Global Markets) - CenturyLink Inc (CTL.N) posted a better-than-expected quarterly profit as gains at high-speed Internet customers offset those disconnecting their home phones, but the rural telephone operator forecast second-quarter earnings below market.
Regional phone companies like CenturyLink, which acquired rival Qwest for $10.6 billion last month, face the challenge of finding new ways to grow as consumers disconnect home phones in favor of Web and mobile services.

The company agreed to buy Savvis Inc (SVVS.O) for $2.5 billion last month to beef up its data center business and cash in on growing demand for cloud services.

CenturyLink forecast second-quarter earnings of 63-67 cents a share, on revenue of $4.40-$4.43 billion, including the impact from operations of its recent Qwest buy and certain other items.

Analysts, on average, had expected earnings of 72 cents per share, according to Thomson Global Markets I/B/E/S.

For full-year 2011, the company expects earnings of $2.55-$2.65 per share, while analysts were expecting $2.96.

CenturyLink's 2011 outlook looks conservative, brokerage UBS said in a note to clients.

"While the clear focus today is on updated guidance post-Qwest, we do not think investors should penalize the shares for a headline EPS guide that is below expectations," Nomura analyst Mike McCormack said.

CenturyLink shares fell nearly 3 percent as investors flagged its outlook numbers.

Nomura's McCormack said the Qwest merger has the potential to draw out meaningfully higher synergies than current estimates. "We think CenturyLink will reward patient investors."

CenturyLink said it expects to achieve about $375 million in annual run-rate synergies end of 2011 in connection with its 2009 acquisition of Embarq.

STRONG Q1 INTERNET SUBSCRIBER ADDS

During the first quarter, CenturyLink was able to slow the rate of line loss in its business and tap the demand for high-speed Internet and high-bandwidth services, Chief Executive Glen Post said in a statement.

The company lost 516,000 access line customers, ending the quarter with 6.4 million lines, down 7.5 percent from a year ago.

However, it added more than 52,000 high-speed Internet customers to end the quarter with about 2.4 million.

"Access line and broadband subscriber trends were both slightly better than our forecast," Stifel Nicolaus analyst Christopher King said.

For January-March, excluding items, CenturyLink earned 76 cents a share, topping estimates of 70 cents per share.

CenturyLink shares were trading flat at $40.31 on Thursday on the New York Stock Exchange. They touched a low of $39.28 earlier in the day.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Unnikrishnan Nair and Joyjeet Das)

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Peltz fund no longer owns PepsiCo shares: report

Peltz fund no longer owns PepsiCo shares: report

Stock Market Predictions

(Global Markets) - Activist investor Nelson Peltz's Trian Fund no longer owns shares in PepsiCo Inc (PEP.N), cable television network CNBC reported on Thursday, and the company's shares fell more than 2 percent.

Earlier this week, Trian Fund Management LP disclosed in a regulatory filing that it held 2.36 million shares in the soft drink and snack company as of September 30.

The shares jumped 3 percent the following day, as investors hoped Peltz's move would usher in a shake-up to the company, where Chief Executive Indra Nooyi is under pressure from many on Wall Street to split it up or make other big changes.

A CNBC anchor reported on his Twitter feed on Thursday that Peltz owned the shares only "for a short-term 'trade,'" citing unnamed sources.

"Assuming the report is accurate, we consider it negative," Stifel Nicolaus analyst Mark Swartzberg said in a research note. "Trian's lack of involvement means the absence of a proven and influential agent of corporate change, in our opinion."

There was no new filing with the U.S. Securities Exchange Commission to reflect any change in Trian's stake in PepsiCo. A spokeswoman for Trian Fund did not immediately return calls seeking a comment.

PepsiCo shares were down 2.3 percent at $63.62 on Thursday afternoon on the New York Stock Exchange.

(Reporting by Martinne Geller and Phil Wahba in New York, editing by Gerald E. McCormick and Matthew Lewis)

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Pandora shares fall on fears of competition, outlook

Pandora shares fall on fears of competition, outlook

Stock Market Predictions

(Global Markets) - Shares of Pandora Media fell more than 10 percent on Wednesday after the online streaming music service company gave a muted fourth-quarter outlook.

The company posted higher-than-expected third-quarter earnings and revenue after the market closed on Tuesday.

Investors shrugged off that news and focused on broader concerns about the company's growth potential, given a flock of competitors as well as executives' remarks about fourth-quarter revenue.

"We are not comfortable adding to shares at current levels due to valuation and the increased competitive threat from other social music platforms, despite differences in the business models compared to Pandora's Internet radio platform," Stifel Nicolaus analyst Jordan Rohan wrote in a note to investors on Wednesday.

Stifel Nicolaus has a "hold" rating on Pandora stock.

Pandora, which has been around for a decade, runs a mostly free service that recommends different songs based on listener's playlists. Almost 90 percent of its revenue comes from advertising.

The company faces competition on all flanks, from traditional radio companies such as Clear Channel, which has started its own customized online streaming service; satellite radio providers such as Sirius XM Radio Inc; and Spotify, which allows users to integrate its streaming music through Facebook.

Investors had been eagerly awaiting Pandora's initial public offering in June, but the stock price has sunk about 32 percent since then. The company's market capitalization is roughly $2 billion.

Pandora said it expected fourth-quarter revenue of $80 million to $84 million. Rohan wrote that was "below previously implied guidance of $83 million at the mid-point."

During a conference call with analysts on Tuesday, Pandora said it was taking a responsible approach to its forecast, keeping a watchful eye on advertisers who might cut back on fears of a wider economic downturn.

"There's no impact at the moment, but we are paying close attention to what's going on in the marketplace," Pandora Chief Financial Officer Steve Cakebread said during the call.

Shares of the company were down 10.5 percent at $10.60 in morning trading.

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SunTrust, Fifth Third net rises but paths diverge

SunTrust, Fifth Third net rises but paths diverge

Stock Market Predictions

(Global Markets) - A pair of regional U.S. banks reported double-digit gains in fourth-quarter earnings Friday on improving credit quality and higher loan demand, but shares of SunTrust Banks Inc (STI.N) soared while those of Fifth Third Bancorp (FITB.O) tumbled.

Atlanta-based SunTrust, the largest bank based in the southeastern United States, said a 3 percent rise in its business and corporate loan portfolio and a $60 million one-time benefit from freezing its company pension plan helped results.

SunTrust earned $152 million, or 28 cents a share, in the last quarter of 2011 compared with $114 million, or 23 cents a share, a year ago. It beat the 27 cent-per-share consensus estimate of analysts surveyed by Thomson Global Markets I/B/E/S, sending its stock price up 4.6 percent to $21.17 in afternoon trading.

The bank, which has been long battered by its Florida and Georgia home mortgage portfolios, set aside a much lower reserve for credit losses than a year ago and said net interest income rose 2 percent.

It set aside $215 million, however, to cover expected demands from government-sponsored mortgage companies Fannie Mae and Freddie Mac to repurchase loans whose credit quality the bank may have misrepresented. Such demands will continue at elevated levels in the first half of 2012, but should diminish as inventories of subprime loans related to the bottom-of-the-barrel 2006-2008 lending cycle are worked through, bank executives said.

SunTrust's backlog of underwater homes continues to hurt revenue due to insurance, maintenance and other foreclosure costs, and could escalate if the housing market recovery proves temporary, executives warned. "We don't know where this is going," SunTrust Chief Financial Officer Aleem Gillani said on a conference call with analysts. "We're leveraged to the economy."

Unlike larger rivals such as US Bancorp (USB.N) and PNC Financial Services Group (PNC.N), SunTrust did not set aside money to resolve claims of robo-signing and other mortgage-servicing abuses. Fourth-quarter losses related largely to servicing grew by $70 million from the prior year. The bank recently began discussions with state attorneys general on a settlement and said it will update shareholders on expected settlement charges in coming months.

SunTrust also spent $20 million to lay off employees in the quarter and reserved $27 million for additional severance costs. The bank said it is on target to meet its goal of cutting $300 million of annual expenses by the end of 2013, but analysts at Stifel Nicolaus said in a report that the company has a weak history of meeting its expense goals. They estimated that SunTrust earned only 17 cents a share in the quarter, excluding one-time items.

SunTrust Chief Executive William Rogers said the company's capital levels are strong enough to warrant more stock repurchases this year, pending approval of its stress-test scenario from banking regulators.

FIFTH THIRD's MISS

Fifth Third, a Cincinnati-based bank with operations in the Midwest and Southeast, said fourth-quarter net income rose 13 percent from a year earlier to $305 million, or 33 cents a share.

Analysts, who according to Thomson Global Markets I/B/E/S had an average forecast of 36 cents a share, said despite relatively strong loan growth the bank's expenses were high.

Shares of Fifth Third were trading down 4 percent at $13.02 on Friday afternoon.

In a conference call with analysts, Fifth Third Chief Executive Kevin Kabat attributed higher costs in part to seasonal factors such as higher federal unemployment insurance taxes and bonuses to mortgage bankers who have been increasing sales.

"We posted very strong loan growth for the quarter," Kabat said, noting that business, mortgage and auto lending is expected to continue growing this quarter.

Fifth Third said it hopes to use excess capital to expand within its current markets through mergers and acquisitions if prices sought by sellers fall by year-end. "We expect some M&A opportunity in 2012," Kabat said, "but don't expect it to happen in the near term."

Like many of their rivals, executives of SunTrust and Fifth Third said they may tweak consumer fees upward to mitigate the effects of low interest rates on loans and investments, and to offset new regulations that cap fees they can collect from merchants on debit card transactions.

"We are earning next to nothing on our deposits, which is a large source of value for a banking company," Fifth Third investor relations head Jeff Richardson said on the conference call.

(Reporting by Jed Horowitz and David Henry, editing by Matthew Lewis)

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Hansen shares rise on Q3 sales beat

Hansen shares rise on Q3 sales beat

Stock Market Predictions

(Global Markets) - Shares of Hansen Natural Corp (HANS.O) rose as much as 6 percent, a day after the company posted quarterly sales that beat analysts' estimates, driven by solid growth of its Monster energy drink brand.

Sales in October were about 31 percent higher than last year, the company said on a conference call with analysts.

Longbow Research analyst Alton Stump said October sales growth accelerated from reported third-quarter revenues, implying fourth-quarter revenues will beat estimates, driving up the stock today.

On Thursday, the company had reported a lower-than-expected quarterly profit sending shares down as much as 5 percent after the bell.

"While EPS came in a penny below the Street, the three focal points to the story -- sales growth, international expansion, gross margin -- didn't skip a beat," SunTrust Robinson Humphrey analyst William Chappell wrote in a note.

Hansen said it is continuing with its strategy to expand the Monster Energy brand into new international markets, with additional launches in South America, Central and Eastern Europe, and Asia planned for the near future.

Net sales for the third quarter rose 24.4 percent to $474.7 million, above analysts' estimates of $463.7 million.

Stifel Nicolaus analyst Mark Astrachan said demand for Monster Energy remains robust and it continues to anticipate sustained low double-digit sales growth for Hansen over the next 3-5 years.

Shares of the company, which competes with privately held Red Bull, were trading up at $95.50 on Nasdaq on Friday noon.

(Reporting by Chris Jonathan Peters in Bangalore;Editing by Supriya Kurane)

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