24/7 Wall St. » CSC

Morning Movers (SANW, CALX, CSC, SGI, TNK)

Paul Ausick — Wed, 08 Feb 2012 15:18:47 +0000

The three major US equities indexes opened higher this morning as traders await an agreement on the still-pending Greek debt swap. The DJIA is about 13 points at about 12,891, the Nasdaq Composite is up about 9 points at about 2,913, and the S&P 500 is up more than 3 points at about 1,350.

There are several stocks trading more heavily than usual this morning, and also experiencing large gains or drops in share prices. These include S&W Seed Co. (NASDAQ: SANW), Calix Inc. (NYSE: CALX), Computer Sciences Corp. (NYSE: CSC), Silicon Graphics International Inc. (NASDAQ: SGI), and Teekay Tankers Ltd. (NYSE: TNK)

After the first half hour of trading this morning, S&W seed is up nearly 26% at $5.82 after posting a new 52-week high of $6.19 earlier. Volume is about already about 40x the daily average of about 12,500 shares traded. The seed supplier reported better-than-expected earnings this morning.

Calix is up about 35% at $11.59. Volume is already equal to the daily average of about 360,000 shares traded. The broadband communications provider beat earnings expectations last night.

Computer Sciences is up nearly 25% at $32.99. Volume has already surpassed the daily average of about 2.4 million shares traded. The enterprise software company reported a loss for its third quarter on writedowns, but adjusted EPS handily beat expectations.

SGI is down more than -24% at $10.88. Volume is about 7x the daily average of 540,000 shares traded. The high-performance computer maker posted weak quarterly earnings and cut its forecast for the full year.

Teekay Tankers is down more than -12% at $3.98. Volume is already about 10x the daily average of about 512,000. The shipping company this morning priced a secondary stock offering of 15 million shares at $4/share.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: CALX, CSC, SANW, SGI, TNK

Top Earnings Previews For Wednesday (AKAM, CSCO, CSC, ENB, GRPN, IM, ICE, LVLT, MCO, NWSA, PNG, PAA, PRU, RL, RAI, S, TWX, VICL, V, WFM)

Administrator — Tue, 07 Feb 2012 18:30:51 +0000

We are entering into the last waves of the normalized quarterly earnings reports for companies with December 31 quarter-end dates, and we are entering the first waves of the earnings reports from companies with off-normal quarter-ends. Wednesday is going to be another busy day with many earnings.

The earnings previews are for the following: Akamai Technologies, Inc. (NASDAQ: AKAM); Atmel Corporation (NASDAQ: ATML); Cisco Systems Inc. (NASDAQ: CSCO); Computer Sciences Corporation (NYSE: CSC); Enbridge Inc. (NYSE: ENB); Groupon Inc. (NASDAQ: GRPN); Ingram Micro Inc. (NYSE: IM); IntercontinentalExchange Inc. (NYSE: ICE); Level 3 Communications Inc. (NASDAQ: LVLT); Moody’s Corporation (NYSE: MCO); News Corp. (NASDAQ: NWSA); PAA Natural Gas Storage L.P. (NYSE: PNG); Plains All American Pipeline L.P. (NYSE: PAA); Prudential Financial Inc. (NYSE: PRU); Ralph Lauren Corporation (NYSE: RL); Reynolds American Inc. (NYSE: RAI); Sprint Nextel Corporation (NYSE: S); Time Warner Inc. (NYSE: TWX); Vical Inc. (NASDAQ: VICL); Visa Inc. (NYSE: V); and Whole Foods Market Inc. (NASDAQ: WFM).

We have compiled earnings preview on each company using Thomson Reuters consensus estimates and added color on each if applicable. Some are market moving, some are sector moving, and some are just interesting for traders to watch around the earnings reports.

Akamai Technologies, Inc. (NASDAQ: AKAM) has estimates of $0.40 EPS and $311.26 million in revenues.

Atmel Corporation (NASDAQ: ATML) has estimates of $0.09 EPS and $401.5 million in revenues. Growth is gone, but it still screens as value.

Cisco Systems Inc. (NASDAQ: CSCO) has estimates of $0.43 EPS and $11.23 billion in revenues. Preliminary preview notes are available.

Computer Sciences Corporation (NYSE: CSC) has estimates of $0.58 EPS and $3.98 billion in revenues. As a reminder, CSC has warned on earnings. This one shows up as a value stock in all sorts of investor screens but it is a value trap.

Filed under: 24/7 Wall St. Wire, Calendar, Earnings Tagged: AKAM, CSC, CSCO, ENB, GRPN, ICE, IM, LVLT, MCO, NWSA, PAA, PNG, PRU, RAI, RL, S, TWX, V, VICL, WFM

24/7 Wall St. Closing Bell (VMW, YHOO, SNE, EA, SRE, DLPH, CALM, DMAN, SHLD, CSC, PARL, WHR, MHR)

Paul Ausick — Tue, 27 Dec 2011 21:04:38 +0000

US equity markets rose rather steeply in the first hour of trading this morning, but weren’t able to sustain the momentum for long. Consumer confidence indexes rose this month, but home prices fell according to the Case-Shiller index report this morning. The lower housing prices combined with a weaker dollar index held down equities but boosted most commodities. A renewed threat from Iran to close the critical Strait of Hormuz helped push up crude oil prices. WTI crude rose 1.61% to $101.28 and Brent crude is up 0.93% at $108.96. Gold prices fell again today, to $1,594.80, off -0.70%. Last minute selling appears to have pushed the DJIA to a lower close today.

The unofficial closing bells put the DJIA down about 2 points to 12,291.73 (-0.02%), the NASDAQ rose more than 6 points (0.25%) to 2,625.20, and the S&P 500 rose 0.01% or less than 1 point to 1,265.47.

There were several analyst upgrades and downgrades today, including VMWare Inc. (NYSE: VMW) raised to ‘outperform’ at Oppenheimer; Yahoo! Inc. (NASDAQ: YHOO) maintained ‘buy’ with a price target of $18 at BofA/Merrill Lynch; Sony Corp. (NYSE: SNE) Japanese target price cut by Barclays; Electronic Arts Inc. (NASDAQ: EA) maintained ‘buy’ with a $28 price target at BofA/Merrill Lynch; and Sempra Energy Inc. (NYSE: SRE) reiterated as ‘buy’ with a $61 target price at Argus. Delphi Automotive (NYSE: DLPH) received four ratings this morning: initiated as ‘outperform’ at Credit Suisse; started as ‘buy’ at BofA/Merrill Lynch; started as ‘overweight’ at JPMorgan; and started as ‘outperform’ at R.W. Baird.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Cal-Maine Foods Inc. (NASDAQ: CALM) is up nearly 5% at $35.84; and DemandTec, Inc. (NASDAQ: DMAN), which is being acquired by IBM Corp. (NYSE: IBM), is down about -0.04% at $13.13. This is the beginning of a very light week for earnings.

Other standouts from today include the following stocks:

Sears Holding Co. (NASDAQ: SHLD) is down about -26% at $33.95, a new 52-week low. The department store has announced that it will miss its previous earnings forecast by at least 50% and that it will close another 100-120 stores. See more coverage here and here.

Computer Sciences Corp. (NYSE: CSC) is down more than -9% at $24.06. The technology and IT services company has said it may have to take a $1.5 billion writedown on a UK contract. More coverage here.

Parlux Fragrances Inc. (NASDAQ: PARL) is up more than 72% at $5.98, after posting a new 52-week high this morning of $6.60. The perfume maker is being acquired by Perfumania Holdings Inc. (NASDAQ: PERF) for about $170 million.

Whirlpool Corp. (NYSE: WHR) is down more than -8% at $46.95. The appliance maker, which makes products for Sears, is caught in that company’s dismal announcement.

Magnum Hunter Resources Corp. (NYSE: MHR) is up nearly 19% at $5.54. The oil & gas producer has raised its production estimate from 10,000 barrels/day of oil equivalent to 12,500 barrels/day.

Stay tuned for Wednesday. Here are the noteworthy events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
11:30 a.m. – Four-week T-bill auction

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: CALM, CSC, DLPH, DMAN, EA, MHR, PARL, SHLD, SNE, SRE, VMW, WHR, YHOO

Morning Movers (SHLD, PARL, MHR, CSC, END)

Paul Ausick — Tue, 27 Dec 2011 15:52:27 +0000

There are several stocks trading more heavily than usual this morning, and also experiencing large gains or drops in share prices. These include Sears Holdings Corp. (NASDAQ: SHLD), Parlux Fragrances Inc. (NASDAQ: PARL), Magnum Hunter Resources Corp. (NYSE: MHR), Computer Sciences Corp. (NYSE: CSC), and Endeavor International Corp. (NYSE: END).

After the first hour of trading this morning, Sears is down about -20% at $36.66, after posting a new 52-week low earlier of $36.36. Volume is already about 3x the daily average. The department store has announced that it will miss its previous earnings forecast by at least 50% and that it will close another 100-120 stores. See more coverage here.

Parlux is up nearly 80% at $6.23 after posting a new 52-week high of $6.60 earlier. Volume is already 20x the daily average. The perfume maker is being acquired by Perfumania Holdings Inc. (NASDAQ: PERF) for about $170 million. Estimated per share price is $7.91-$8.55.

Magnum Hunter is up nearly 16% at $5.41. Volume is already equal to about 70% of the daily average. The oil & gas producer has raised its production estimate from 10,000 barrels/day of oil equivalent to 12,500 barrels/day.

Computer Sciences is down more than -7% at $24.53. Volume is heavy, about one-third of the daily average so far. The technology and IT services company has said it may have to take a $1.5 billion writedown on a UK contract. More coverage here.

Endeavor is up more than 9% at $7.01. Volume is already about a third of the daily average. The oil & gas company has announced that a subsidiary will purchase producing assets from ConocoPhillips Corp. (NYSE: COP) for about $330 million. The assets include current production of about 10,000 barrels/day of oil equivalent and proved and probable reserves of 33 million barrels.

Paul Ausick

Filed under: HI/LOW, Market Roundups Tagged: CSC, END, MHR, PARL, SHLD

CSC Contract Woes… Is Dividend Now At Risk? (CSC)

Administrator — Tue, 27 Dec 2011 15:36:34 +0000

If you ever run a “value screen” in the world of stock strategies, Computer Sciences Corporation (NYSE: CSC) shows up all the time as a “cheap tech stock.” Unfortunately, this is a situation where “value” is really a “value trap.” Fresh news of a contract charge is taking a serious bite out of CSC’s share price and it brings up other serious questions.

An SEC filing from Tuesday shows that things have not improved on its contract negotiations. Things have deteriorated. The age of austerity may be at fault. For CSC investors, the hope is that this is just austerity.

The company disclosed all the way back in May 2011 it had “substantially completed negotiation of the terms of a memorandum of understanding with NHS which set forth the key terms of a reduction in the scope and related contract value of the parties’ agreement relating to the NHS IT program.” Between May 2011 and the end of September 2011, U.K. government reviews of the NHS IT program occurred and U.K. government officials confirmed that they would continue to work with existing suppliers to determine the best way to deliver services in a way that allows the local NHS trusts to exercise choice while delivering the best value for the expense.

It was further disclosed that the parties have been engaged in further discussions relating to the MOU since mid-November 2011, including a proposed contract amendment with different scope modifications and contract value reductions than those contemplated by the MOU. The problem is here: “CSC recently was informed that neither the MOU nor the contract amendment then under discussion would be approved by the government.” The company said that it expects that the parties will continue discussions in January 2012.

Due to the circumstances, CSC will recognize a material impairment of its net investment in the contract in the third quarter of fiscal year 2012… the company is unable to estimate the amount of such impairment… The failure of the parties to enter into a contract amendment, a significant delay in entering into a contract amendment or the execution of a contract amendment on terms unfavorable to CSC would result in a material impairment of CSC’s net investment in the contract and could have a material adverse effect on CSC’s consolidated financial position, results of operations and cash flows.

“However, depending on the terms of such an amendment or if no amendment is concluded, such impairment could be equal to the Company’s net investment in the contract, which, as of November 30, 2011, was approximately £943 million ($1.5 billion).”

As you might have expected, CSC has withdrawn its previously disclosed fiscal year 2012 financial guidance. Shares are down over 7% at $24.44 and the 52-week trading range is $22.80 to $56.61. With shares under $25.00 and with Thomson Reuters having (prior) earnings estimates of $3.73 EPS in March-2012 and $3.88 EPS in March-2013, the “value stock” screen shows a blended forward 2012-2013 price/earnings ratio of about 6.5-times expected earnings. The problem is that those figures will come down greatly now.

Our question is whether or not the $0.20 per quarter dividend, now 5 straight quarters in, is safe. When the first $0.20 payout was made in December 2010 the CSC share price was around $47.00. Now that price is under $25.00 and the new dividend yield is now 3.2%.

CSC now has a market capitalization rate of only $3.8 billion. Its net tangible assets and total equity have come down this year while its long-term debt had increased slightly in the last two quarter-end reports.

Unfortunately, this is just not good regardless of how you measure it… Unless you were selling this one short.

JON C. OGG

Filed under: Accounting, Business Services, Compensation, Corporate Governance, Dividend, Earnings Warning, Technology Companies, Value Investing Tagged: CSC

24/7 Wall St. Top Analyst Calls of the Week (ALU, AMZN, AAPL, CSCO, CSC, CXW, DF, EPD, GNW, GMCR, GRPN, HD, MPEL, PIR, SRDX, TEVA, VRTX, YRCW, ALIM)

Administrator — Sat, 12 Nov 2011 14:19:38 +0000

Each morning 24/7 Wall St. issues a summary list of key analyst upgrades, downgrades, and initiations issued by Wall Street research firms. We review these calls and other calls made throughout the week to see which stand out the most. Some are great calls that were full of insight, while others were total flops. After reviewing and filtering all of these research reports, we end up with the top analyst calls of the week.

We had many key calls that stood out this week in shares of the following: Alcatel-Lucent SA (NYSE: ALU); Amazon.com Inc. (NASDAQ: AMZN); Apple Inc. (NASDAQ: AAPL); Cisco Systems Inc. (NASDAQ: CSCO); Computer Sciences Corporation (NYSE: CSC); Corrections Corporation of America (NYSE:CXW); Dean Foods Company (NYSE: DF); Enterprise Products Partners LP (NYSE: EPD); Genworth Financial Inc. (NYSE: GNW); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Groupon, Inc. (NASDAQ: GRPN); The Home Depot Inc. (NYSE: HD); Melco Crown Entertainment Ltd. (NASDAQ: MPEL); Pier 1 Imports, Inc. (NYSE: PIR); SurModics Inc. (NASDAQ: SRDX); Teva Pharmaceutical Industries (NASDAQ: TEVA); Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX); and YRC Worldwide. Inc. (NASDAQ: YRCW).

We have broken each of these calls out and added in color where applicable.

Alcatel-Lucent SA (NYSE: ALU) can’t get off the floor and it keeps disappointing. Shares even closed at $1.99 after seeing a year low of $1.92 on Friday. Alcatel’s chart looks almost the same as the chart of late-2008, but it cannot blame the market this time. We saw three downgrades worth noting this last week: Cut to Sell at Citigroup; Cut estimates and target at Argus; and Cut to Neutral at BofA/Merrill Lynch.

Amazon.com Inc. (NASDAQ: AMZN) had two big calls this last week. The main call was on Friday when Nomura issued a very unenthusiastic NEUTRAL rating. The other call came on Thursday when Zacks added it to the STRONG SELL list. With valuations still very high and with profit margins running razor-thin, it seems that at least some caution should prevail unless the holiday season is going to blow the doors of the hinges here.

Filed under: Analyst Calls, Research, The Week Tagged: AAPL, ALIM, ALU, AMZN, CSC, CSCO, CXW, DF, EPD, GMCR, GNW, GRPN, HD, MPEL, PIR, SRDX, TEVA, VRTX, YRCW

24/7 Wall St. Closing Bell (AMZN, AAP, CSCO, NOK, SD, CSC, ENS, FRO, FF, FTK, QUAD, GMCR, IL, HFC, P, LEAP)

Paul Ausick — Thu, 10 Nov 2011 21:10:34 +0000

Markets opened higher today, and after some backsliding in the mid-morning, pulled ahead again by mid-afternoon. Crude oil closed up more than 2% at $97.78/barrel and gold was down by about -1.8%, at about $1,759/ounce. The EIA natural gas inventory report showed a bigger inventory gain than expected, pushing natural gas prices around all day, before closing at $3.65/thousand cubic feet. Commodities also traded lower today, led by wheat, which was off by about -3.5%, at $6.20/bushel. On the NYSE, advancing stocks led decliners by about 2:1.

The unofficial closing bells put the DJIA up nearly 113 points to 11,893.86 (0.96%), the NASDAQ rose 3.5 points (0.13%) to 2,625.15, and the S&P 500 rose 0.86% or more than 10 points to1,239.70.

There were several analyst upgrades and downgrades today, including Amazon.com (NASDAQ: AMZN) was added to Zack’s ‘Strong Sell List’. Other changes included Advance Auto Parts Inc. (NYSE: AAP) cut to ‘neutral’ at Credit Suisse; Cisco Systems Inc. (NASDAQ: CSCO) raised to ‘buy’ at Deutsche Bank and Citigroup and target price raised to $26 at Credit Suisse; Nokia Corp. (NYSE: NOK) maintained at ‘hold’ with a $7.50 price target at Canaccord Genuity; SandRidge Energy, Inc. (NYSE: SD) cut to ‘neutral’ at Goldman Sachs; and Computer Sciences Corp. (NYSE: CSC) cut to ‘underweight’ at JPMorgan.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: EnerSys (NYSE: ENS) is up more than 18%, at $26.09; Frontline Ltd. (NYSE: FRO) is up nearly 18%, at $6.05; FutureFuel Corp. (NYSE: FF) is up about 9.5%, at $11.44; Flotek Industries, Inc. (NYSE: FTK) is up more than 13%, at $8.41; Quad Graphics, Inc. (NYSE: QUAD) is down -24%, at $13.90; and Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) is down more than -41%, at $39.44.

Several other standouts from today are as follows…

IntraLinks Holding, Inc.) is down nearly -13.5%, to $4.76, a new 52-week low. The company’s stock was downgraded yesterday from ‘buy’ to ‘hold’ following a disappointing earnings report and another 52-week low earlier this week.

HollyFrontier Corp. (NYSE: HFC) is down more than -3.5%, at $29.38. The company has sold some assets to Holly Energy Partners LP (NYSE: HEP). Because HFC owns 44% of HEP, the deal’s long-term effects could reduce HFC’s revenues somewhat.

Pandora Media, Inc. (NYSE: P) is down about -4.5%, at $14.70. There’s no news, other than that there is so much competition in the streaming music business that it’s tough to pick a winner. Sirius XM Radio Inc. (NASDAQ: SIRI) is a current favorite following its turnaround.

Leap Wireless International Inc. (NASDAQ: LEAP) is up more than 6%, to $8.84. The company may be willing to sell part of its valuable spectrum assets. Shares are also likely to be getting some help from T-Mobile USA’s report today that it has added subscribers.

Here are some things on tap for Friday. It’s Veteran’s Day, so banks and the bond market are closed though the stock market is not. Federal Reserve Bank governor Janet Yellen and San Francisco Fed president John Williams are giving speeches tomorrow afternoon. We have noted the following events (all times Eastern):

9:55 a.m. – Reuters/University of Michigan consumer sentiment index.

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AAP, AMZN, CSC, CSCO, ENS, FF, FRO, FTK, GMCR, HFC, IL, LEAP, NOK, P, QUAD, SD

Top Analyst Upgrades & Downgrades (AAP, AMZN, BUD, CARB, CSCO, CSC, DF, EPD, HSP, KFT, LOGI, NOK, PCG, SD, SPRD, SRDX, VRTX)

Administrator — Thu, 10 Nov 2011 13:35:27 +0000

These are some of Thursday’s top analyst upgrades, downgrades, and initiations seen from Wall Street research calls.

Advance Auto Parts. Inc. (NYSE: AAP) cut to Neutral at Credit Suisse.
Amazon.com Inc. (NASDAQ: AMZN) added to Strong Sell List at Zacks.
Anheuser-Busch InBev (NYSE: BUD) Cut to Neutral at UBS.
Carbonite, Inc. (NASDAQ: CARB) Reiterated Buy with $16 target at Canaccord Genuity.
Cisco Systems Inc. (NASDAQ: CSCO) Raised to Buy at Deutsche Bank; Raised to Buy at Citigroup; Target raised to $26 from $25 at Credit Suisse.
Computer Sciences Corporation (NYSE: CSC) Cut to Underweight at JPMorgan.
Dean Foods Company (NYSE: DF) Cut to Sell at S&P Capital IQ (late-Wednesday); Maintained Buy at Bof A/ML.
Enterprise Products Partners (NYSE: EPD) named Bull of the Day at Zacks.
Hospira, Inc. (NYSE: HSP) named Bear of the Day at Zacks.
Kraft Foods Inc. (NYSE: KFT) Reiterated Buy with $40 target at Argus.
Logitech International SA (NASDAQ: LOGI) Raised to Hold at S&P Capital IQ (late-Wednesday).
Nokia Corporation (NYSE: NOK) maintained Hold with $7.50 target at Canaccord Genuity.
PG&E Corporation (NYSE: PCG) cut to Neutral at Credit Suisse.
SandRidge Energy, Inc. (NYSE: SD) Cut to Neutral at Goldman Sachs.
Spreadtrum Communications Inc. (NASDAQ: SPRD) Reiterated Buy and raised estimates at Canaccord Genuity.
SurModics Inc. (NASDAQ: SRDX) named as Aggressive Growth at Zacks.
Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) Raised to Equal-Weight at Morgan Stanley.

JON C. OGG

Filed under: Airlines Tagged: AAP, AMZN, BUD, CARB, CSC, CSCO, DF, EPD, HSP, KFT, LOGI, NOK, PCG, SD, SPRD, SRDX, VRTX

Top Earnings & Economic Events In The Week Ahead (PCLN, AONE, ATVI, PAAS, TM, CSCO, CSC, GM, GMCR, M, SLW, MCP, JWN, NVDA, DIS)

Administrator — Fri, 04 Nov 2011 18:51:33 +0000

Earnings season has peaked, but we still have many key earnings reports and economic events coming in the week ahead. 24/7 Wall St. has featured a calendar with events scheduled all-week on the earnings and economic front.

The earnings previews are as follows: priceline.com Inc. (NASDAQ: PCLN); A123 Systems Inc. (NASDAQ: AONE); Activision Blizzard Inc. (NASDAQ: ATVI); Pan American Silver Corp. (NASDAQ: PAAS); Toyota Motor Corporation (NYSE: TM); Cisco Systems, Inc. (NASDAQ: CSCO); Computer Sciences Corp. (NYSE: CSC); General Motors Co. (NYSE: GM); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Macy’s Inc. (NYSE: M); Silver Wheaton Corp. (NYSE: SLW); Molycorp Inc. (NYSE: MCP); Nordstrom Inc. (NYSE: JWN); NVIDIA Corporation (NASDAQ: NVDA); and Walt Disney Co. (NYSE: DIS). Earnings estimates are from Thomson Reuters.

For each day of the week we have also added in the key economic events to watch for as well.

MONDAY, NOVEMBER 7

priceline.com Inc. (NASDAQ: PCLN) is expected to report $9.30 EPS and $1.42 billion in revenues; next quarter estimates are $5.14 EPS and $996.75 million in revenues.

10:00 AM EST Employment Trends Index (October)

3:00 PM EST Consumer Credit (September)

TUESDAY, NOVEMBER 8

A123 Systems Inc. (NASDAQ: AONE) is expected to report -$0.38 EPS and $66.3 million in revenues; next quarter estimates are -$0.35 EPS and $84.2 million in revenues.

Activision Blizzard Inc. (NASDAQ: ATVI) is expected to report $0.02 EPS and $558.4 million in revenues; next quarter estimates are $0.53 EPS and $2.1 billion in revenues.

Pan American Silver Corp. (NASDAQ: PAAS) is expected to report $0.78 EPS and $260.8 million in revenues; next quarter estimates are $0.66 EPS and $247.58 million in revenues.

Toyota Motor Corp. (NYSE: TM) is expected to report $0.41 EPS and $52 billion in revenues; next quarter estimates are $1.03 EPS and $66.47 billion in revenues. As a reminder, this will originally be in Yen and the Yen has been at record highs and it could impact the figures.

7:30 AM EST NFIB Small Business Sentiment (October)

4:30 PM EST API Weekly Oil Inventories

Filed under: Calendar, Earnings, Economy, The Week Tagged: AONE, ATVI, CSC, CSCO, DIS, GM, GMCR, JWN, M, MCP, NVDA, PAAS, PCLN, SLW, TM

Business is Good for IT Outsourcers (INFY, WIT, IBM, CSC, CTSH, ACN)

Administrator — Wed, 12 Oct 2011 16:32:16 +0000

India’s Infosys Technologies Ltd. (NASDAQ: INFY) reported second-quarter earnings today, and EPS came in more than 10% higher than in the same period a year ago. The company also lowered its full-year sales guidance in dollars from a July forecast of $7.3 billion to $7.08-$7.2 billion. In rupees, however, full-year guidance rose by about 5% due to the fact that the rupee has depreciated significantly against the dollar in the last year.

Infosys and competitor Wipro Ltd. (NYSE: WIT) are two of India’s largest business outsources. The two companies compete with IBM Corp. (NYSE: IBM), Computer Sciences Corp. (NYSE: CSC), Cognizant Technology Solutions Corp. (NASDAQ: CTSH), and Accenture plc (NYSE: ACN).

Business and government spending in the US and elsewhere is expected to grow as companies invest in new equipment and outsourcing for their IT needs. Even Europe is expected to grow if very slowly.

Those estimates, though, may seem to fly in the face of reality. But Infosys, Wipro, Cognizant, and India’s largest outsourcer, privately-held Tata Consultancy Services, could reduce a company’s IT costs significantly by replacing highly paid fired workers with lower paid, outsourced workers.

Goldman Sachs Group Inc. (NYSE: GS), an Infosys client, plans to fire more than thousand employees to meet its cost reduction goals of $1.45 billion. That’s bad news for the terminated employees, but might offer some good news for Infosys — and Goldman for that matter.

Of course, the big question for the India-based outsourcers is how much of growth they can expect to see between now and the end of the year. Infosys got 6.2% quarterly growth in the Americas during the quarter and expects growth to continue. The other issue they face is whether or not they can control costs. Infosys expects wages to eat away about 1% of the company’s operating margin this year.

Growth that depends on a depreciating currency in a weak economic climate is tenuous at best. There are a lot of things that can go wrong and put a serious crimp in growth forecasts.

But all is well today. Just past noon today, Infosys shares are up more than 8%, at $56.88, in a 52-week range of $46.12-$77.92. Wipro shares are up about 3.5%, at $9.77, in a 52-week range of $8.63-$16.81. Cognizant shares are up nearly 6.5%, at $71.82, in a 52-week range of $53.54-$83.48.

Paul Ausick

Filed under: ADR, Business Services, Corporate Governance, Economy, Emerging Markets, International Markets, PC Companies, Software, Technology Companies Tagged: ACN, CSC, CTSH, IBM, INFY, WIT