McDonald's August sales miss; Japan drags

McDonald's August sales miss; Japan drags

Stock Market Predictions

NEW YORK/CHICAGO (Global Markets) - McDonald's Corp (MCD.N) reported a lower-than-expected rise in worldwide August sales at established restaurants on a steep drop in Japan and a lull in new product launches in the United States.

The world's largest hamburger chain, whose shares fell 4.4 percent on Friday, said sales at restaurants open at least 13 months rose 3.5 percent globally. Analysts polled by Thomson Global Markets were looking for an increase of 4.3 percent.

Same-restaurant sales rose 3.9 percent in the United States, just shy of analysts' 4.0 percent expectation. In Europe -- McDonald's largest market -- the company reported an increase of 2.7 percent, missing analysts' estimate of a 4.7 percent increase.

To help increase sales, McDonald's has relied on new products like breakfast oatmeal and a beverage overhaul that has included the introduction of fruit smoothies and other drinks.

In August 2010, demand for smoothies helped drive up U.S. same-restaurant sales by 4.6 percent.

This year "new product launches were really weighted toward the front half of the summer," Morningstar analyst R.J. Hottovy said.

But he noted the company was still doing better than its competitors in terms of same-restaurant sales.

"It's still comping positive while a lot of their competitors are still squarely in negative territory," Hottovy said.

McDonald's sales and profits for months have been the envy of the global fast-food industry, which means that the company is punished when results meet or miss expectations.

The company has been outpacing rivals like Wendy's Co (WEN.N), Burger King Corp BKCBK.UL and Yum Brands Inc's (YUM.N) KFC by attracting a broader range of diners than fast-food's typical young adult males.

WEAK JAPAN WEIGHS

McDonald's reported a 0.3 percent decline in Asia/Pacific, Middle East and Africa, while Wall Street had forecast a rise of 3.5 percent.

Asia was dragged down by a sharp decline in comparable sales in Japan, where consumers are still adjusting to the aftermath of the March earthquake and tsunami.

Janna Sampson, co-chief investment officer at Oakbrook Investments, said the weak results in Japan were troubling, given how many months have passed since the earthquake and tsunami struck in March.

"I would have thought that was already priced into expectations," Sampson said. "But one month does not make for a pattern ... If we see that continue in September, it becomes more problematic."

Earlier this week, Red Lobster and Olive Garden parent Darden Restaurants Inc (DRI.N) warned that Hurricane Irene had dented its quarterly earnings by 2 cents per share.

But Irene had only minimal impact on McDonald's sales, a company spokeswoman said.

Oak Brook, Illinois-based McDonald's shares were down 4.4 percent at $84.71 in New York Stock Exchange trading.

(Additional reporting Lisa Baertlein in Los Angeles; Editing by Lisa Von Ahn, Dave Zimmerman)

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First Solar project loan delay hits stock

First Solar project loan delay hits stock

Stock Market Predictions

(Global Markets) - First Solar (FSLR.O) said the U.S. Department of Energy has not released loan funds for a big California solar project because of construction permit issues, sending its shares down as much as 11 percent.

The DOE loan delay threatens to cancel a sale of the project to Exelon Corp (EXC.N), potentially leaving First Solar on the hook for $75 million.

In September, the DOE had finalized a $646 million loan guarantee to support the 230-megawatt Antelope Valley Solar Ranch One project in northern Los Angeles County.

If initial funding for the project does not come by February 24, it will have to buy the project back from Exelon, First Solar said in a regulatory filing on Thursday.

The DOE's loan program has faced intense scrutiny after the high-profile collapse of Solyndra, a solar panel maker that was the first company to receive funding under the program.

"We believe Exelon will not exit (the Antelope project) over minor issues like a construction permit," Auriga USA analyst Hari Chandra Polavarapu wrote in a note to clients.

First Solar, which developed and sold the Antelope project to Exelon for $75 million, said it can buy back the project with its existing cash and resources.

"We note the DOE loan/loan guarantee itself is not under any threat," Polavarapu said.

First Solar had secured DOE loan guarantees for three major projects last year. They were then sold to NextEra Energy (NEE.N), NRG Energy (NRG.N) and Exelon.

GERMANY PRODUCTION CUT

The world's most valuable solar company, which has been hit by falling renewable energy subsidies in top market Europe, also said it will idle half of its production capacity in Frankfurt (Oder), starting March 1.

"To minimize the impact on our 1,200 associates there, we plan to evenly divide shifts amongst the workforce and have applied to German authorities for temporary short-time support. We intend to meet demand in the EU with production from our German factory," a First Solar spokesman said in Germany.

The German factory's capacity is about 500 megawatt (MW). About 46 percent of the company's 2010 net sales came from the country.

Shares of the Tempe, Arizona-based company were down 9 percent at $44.65 in morning trading on the Nasdaq. The stock has dropped more than 66 percent in the past year.

(Reporting by Krishna N Das in Bangalore, Ernest Scheyder in New York and Christoph Steitz in Frankfurt; Editing by Anil D'Silva, Dave Zimmerman, Sriraj Kalluvila)

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Coca-Cola FEMSA Q2 profit seen up almost 6 percent

Coca-Cola FEMSA Q2 profit seen up almost 6 percent

Stock Market Predictions

MEXICO CITY (Global Markets) - Mexican bottler Coca-Cola FEMSA, the largest coke bottler in Latin America, will report an almost 6 percent rise in second-quarter profit, helped by price increases and solid sales, analysts say.

According to a Global Markets survey of five analysts, Coca-Cola FEMSA (KOFL.MX) (KOF.N) will report a profit of about 2.62 billion pesos ($224 million), compared to a profit of 2.48 billion pesos in the year-earlier period.

The company, a joint venture between The Coca-Cola Co (KO.N) and Mexican company FEMSA (FMSAUBD.MX), will report revenue up almost 9 percent in the quarter, according to the survey.

Analysts said investors will be listening for any comments Coca-Cola FEMSA may make about opportunities to expand and deploy the large sums of cash it has on hand.

"In the second quarter, we expect growth rates to remain attractive, but investors may continue to question (Coca-Cola FEMSA and parent FEMSA's) "unhealthy" balance sheets," wrote HSBC analysts in a report.

Coca-Cola FEMSA, which will report second-quarter results on July 20, recently announced plans to buy the drinks division of Mexican company Grupo Tampico in an all stock deal that allows it to maintain a strong cash position on its balance sheet.

The company has more than $1 billion in cash, which it could use to finance further acquisitions, invest in its business or pay a large dividend to shareholders.

Following is a table with the expected results.

(Reporting by Gabriela Lopez)

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Verizon iPhone sales dash hopes; shares fall

Verizon iPhone sales dash hopes; shares fall

Stock Market Predictions

NEW YORK (Global Markets) - Verizon Communications may have the iPhone, but the blockbuster smartphone has yet to pay off in its battle against AT&T Inc.

In the second quarter, Verizon Wireless, the No. 1 U.S. mobile service, signed up 1.3 million fewer iPhone customers than AT&T, dashing high hopes of investors who sent its shares down almost 3 percent.

On top of this, Verizon Wireless customers spent less per month than expected as the company changed its data service price plans, further disappointing Wall Street on Friday.

While Verizon Wireless added three times more net subscribers in the quarter than AT&T, it only activated 2.3 million Apple Inc iPhones compared with 3.6 million activations at AT&T.

"AT&T has done a much better job of hanging on to iPhone customers than anybody expected," said Credit Suisse analyst Jonathan Chaplin.

There was simply not enough good news in the report to justify Verizon's richer valuation than AT&T's, said Chaplin, who said Verizon shares have been trading at about 14 times 2012 earnings estimates compared with AT&T's 12 multiple.

Verizon Wireless' 1.9 percent growth in average monthly revenue per user (ARPU) was well behind Chaplin's expectation for 2.9 percent.

"Without the share gain in the smartphone category driving the ARPU, which would drive earnings per share growth, it's difficult to get enthusiastic about the (Verizon) shares at this valuation," Chaplin said.

AT&T may leapfrog Verizon Wireless and become the top U.S. mobile service next year if regulators approve its plan to buy Deutsche Telekom unit T-Mobile USA.

WRONG KIND OF SUBSCRIBERS

And while the subscriber numbers were strong on the surface "they were the wrong kind of subscribers," Chaplin said. Subscribers using devices such as the iPhone spend more on data services on a monthly basis than other wireless customers.

Verizon Wireless said it would now take it a quarter longer than expected to increase its smartphone user base to 50 percent of is subscribers. It blamed the delay on the launch of the next iPhone a quarter later than it had expected. Verizon said it now expects to sell the next version of iPhone in the autumn.

Still, Verizon Wireless, owned by Verizon and Vodafone Group Plc, added 1.3 million net subscribers in the quarter compared with the average expectation for about 930,000, according to seven analysts contacted by Global Markets.

Stifel Nicolaus analyst Chris King was impressed with Verizon's customer growth and its sale of 1.2 million high-speed wireless devices for the new 4G network it is building.

While some investors had worried that the relatively expensive iPhone would hurt Verizon's profit margins, King said its wireless service margin of 45.4 percent was well ahead of his expectation for 43.9 percent.

Verizon's quarterly profit was $1.61 billion, or 57 cents a share and was ahead of the average analyst estimate of 55 cents per share, according to Thomson Global Markets I/B/E/S.

Revenue rose 2.8 percent to $27.53 billion, ahead of Wall Street expectations for $27.42 billion.

Also on Friday, Verizon named Chief Operating Officer Lowell McAdam as chief executive, starting August 1. McAdam, the former CEO of Verizon Wireless, is replacing Ivan Seidenberg, who will remain chairman. The move follows its succession plan announced late last year.

Seidenberg has led Verizon since its inception in 2000 and before that he was CEO of Verizon's predecessor companies. The executive, who started out as a cable splicer's assistant at New York Telephone, has worked at the company for more than 40 years.

Verizon shares were down $1.06 or 2.8 percent at $36.51 in morning trading on the New York Stock Exchange, after falling as much as 3 percent shortly after the market opened.

(Reporting by Supantha Mukherjee in Bangalore and Sinead Carew in New York; Editing by Joyjeet Das, Derek Caney and Phil Berlowitz)

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Brady Corp Q1 beats Wall Street view

Brady Corp Q1 beats Wall Street view

Stock Market Predictions

(Global Markets) - Identification products maker Brady Corp (BRC.N) posted first-quarter earnings that beat market estimates, helped by higher organic sales in the United States and Europe, and backed its fiscal 2012 outlook despite short-term impact from the flooding in Thailand.

It continues to see full-year earnings at $2.30-$2.50 per share. Analysts on average were expecting earnings of $2.36 a share, according to Thomson Global Markets I/B/E/S.

The company, founded as W.H. Brady Co in 1914 and renamed Brady Corp in 1998, makes printable labels, photo ID cards, laboratory labels and exit signs.

August-October net income rose to $32.7 million, or 62 cents a share, up from $26.3 million, or 50 cents a share, a year ago.

Excluding after-tax restructuring charges of $2.6 million, the company earned 67 cents.

Sales at the Milwaukee, Wisconsin-based company rose about 6 percent to $349.5 million.

Analysts had expected the company to earn 59 cents a share, before special items on revenue of $338.2 million.

Shares of the company closed at $28.74 on Thursday on the New York Stock Exchange.

(Reporting by Kartick Jagtap in Bangalore; Editing by Don Sebastian)

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LinkedIn jumps on surge in paying users

LinkedIn jumps on surge in paying users

Stock Market Predictions

(Global Markets) - Shares of LinkedIn Corp (LNKD.N) jumped 17 percent on Friday, after the professional networking services company said the number of premium subscribers doubled during fiscal 2011 and forecast an upbeat first quarter.

The company's shares, which have gained about 35 percent in value since hitting a year-low of $56.51 in November, rose to $89.69 in midday trade on the New York Stock Exchange.

They were, however, far below the $121.97 touched during their debut last May.

On Thursday, the company, which makes money by selling paid subscriptions to its members and by helping companies with hiring and marketing, said revenue from premium subscriptions surged 87 percent during the fourth quarter.

LinkedIn's performance and outlook is keenly watched by investors as an indication of whether the business model of Internet companies is solid -- especially in light of the upcoming Facebook IPO.

"We view LNKD as arguably one of the strongest assets arising out of the 2011-2012 Internet IPO cycle," Citigroup said in a research note to clients on Thursday.

The brokerage raised its price target on the stock to $90 from $83.15, but maintained its "neutral" rating saying it did not find the company's current valuation compelling.

LinkedIn -- started in the living room of ex-PayPal executive Reid Hoffman in 2002 and officially launched in May 2003 -- is similar to Facebook in trying to connect people with each other but is much smaller and geared towards professionals.

Canaccord Genuity raised its price target on the stock by $10 to $95 and has a "buy" on the stock.

(Reporting by Rachana Khanzode and Sayantani Ghosh in Bangalore; Editing by Joyjeet Das, Sreejiraj Eluvangal)

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EXCO ends strategic review without deal

EXCO ends strategic review without deal

Stock Market Predictions

HOUSTON (Global Markets) - A special committee of the EXCO Resources Inc (XCO.N) board said on Friday it ended a review of strategic alternatives for the U.S. oil and natural gas company because no deal was struck.

The committee's review included a proposal from EXCO Chief Executive Officer Douglas Miller and Texas oilman T. Boone Pickens to take the company private. Miller initially valued EXCO at $20.50 per share in a proposal made in November, but lowered the bid earlier this week.

"We conducted a thorough review of strategic alternatives available to the company," a committee statement said. "As that process did not result in a transaction the Special Committee determined is in the best interests of the company and all of its shareholders, the special committee has decided to terminate the process."

A representative of the Dallas company could not immediately be reached for comment on the committee's decision.

The bulk of EXCO's output is natural gas, a fuel with a price burdened by massive supply. Quarterly natural gas prices at benchmark Henry Hub have not averaged above $6 per thousand cubic feet in over 2 years.

EXCO has oil and natural gas assets in the Haynesville shale in East Texas and North Louisiana, and the Marcellus and Huron shales in Appalachia and the Permian Basin.

Miller's latest proposal -- restructured because he was having difficulty raising financing -- involved a mix of cash and equity.

Barclays Capital Inc and Evercore Partners served as financial advisers to the special committee.

Shares of EXCO were down 4.0 percent at $15.98 in afternoon New York Stock Exchange trading.

(Reporting by Anna Driver; Editing by Lisa Von Ahn and Gerald E. McCormick)

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