Posts Tagged ‘Earnings’

January 26th, 2010

EMC Corp.: 4th Quarter earnings, InvesGuard scores and more.

EMC’s 4th quarter earnings were marked by higher revenues. 47% of this revenue was brought by EMC’s operations outside the U.S. further indicating that businesses with interests outside the U.S. are still able to make it through these recessionary times.


EMC believes a number of strategic initiatives have been responsible for a good earnings report. These strategic initiatives include:


- Sustained aggressive investment in research and development, totaling 12% of annual consolidated 2009 revenue.


- Increased strategic acquisitions including deduplication storage solutions company Data Domain.


-Stronger strategic alliances with its partners such as Cisco, Microsoft etc.


-Penetration down market into customer storage technologies through services such as Iomega and Mozy.


EMC has also announced that it expects to repurchase $1 billion of its common stock.




Quickly skimming through their published unaudited full year results, it appears that the contribution of product sales as a percentage of total sales has declined to 63% for full year 2009 as compared to 68% for 2008. On the other hand, revenues from services have grown from 32% in 2008. to 37% for full year 2009.




Cost of Product Sales as a percentage of total revenue has remained constant for 2009 as compared to 2008. Cost of Service as a percentage of total revenue has also remained constant.


VMware Inc.


Share of Net Income attributable to VMware has declined in 2009 as compared to 2008. It was 44725,000 in 2008 as compared to 33,724,000 in 2009.




Although cash and cash equivalents have increased as a whole as compared to full year 2008, there has been a decline in “net cash provided by operating activities” by approximately 6.5%. Free cash flow for consolidated EMC may have marginally increased by 1.7% but free cash flow from EMC information infrastructure has declined by approximately 13%.




InvesGuard has also rated and scored EMC through its proprietory governance model. Its Board of Directors and Senior Management score is dragged down by a few Board Independence and Effectiveness issues. Some directors have directly or indirectly entered into transactions with EMC.I mmediate relatives of directors have also been employed by the company raising Board Independence issues. In adequate information around spending on diverse and minority suppliers and a few other environmental metrics drag down the score as well.


More details on InvesGuard’s scores are available only to subscribers. If you would like to buy InvesGuard’s report for EMC please email with ‘EMC’ as the subject.


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January 15th, 2010

JP Morgan Results- Increased Earnings and Higher Credit Loss Provisions.

The first of the mighty banks have started rolling out their results. JP Morgan disclosed a big bump in the revenues of its investment banking division. The financial statements on the whole were characterized by a higher amount of Credit loss provisions a possible indicator of future defaults and a weaker credit environment.




This division showed a huge bump in its Q4 Net Income and Revenues compared with the same period last year. Provision for credit losses was actually a benefit for Q4 2009 as compared to Q4 2008 driven by lower loan balances, loan sales and repayments.




Effect of the higher credit loss provisions can be seen specially in the Commercial banking division. These provisions increased by almost 160% to $ 494 million for Q4 2009 up by $ 304 million for Q4 2008. Commercial Banking net income on the other hand declined to $ 224 million, a fall of 53% compared to full year 2008.




Both net income and net revenues are up as compared to 2008. Business Metrics for this division indicate an increase int eh number of Client advisors, Retirement planning services participants as well as ….surprise ….Bear Stearn brokers. How the number of Bear Stearn brokers can increase over 2008 is a little hard to understand.


For the company as a whole, for the full year 2009, $100 billion has been kept aside for Compensation expenses as compared to $ 67 billion for 2008. Compensation as a percentage of net revenue actually declined to 27% as compared to 34% for 2008. For Investment Banking division alone, there has been a drop in the percentage of compensation to revenue to 33% from 62% for 2008.


JP Morgan’s spectacular earnings don’t seem to have buoyed the market. As you can see from the image below, these results seem to have dampened JP Morgan’s performance in the market. (Courtesy: The Wall Street Journal)


JP MORGAN Stock Chart

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