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Earnings Watch: Barometers for this Week

earnings watch metueGoogle kicked off the earnings season for media and tech companies last week, sending a mixed a message with numbers nearly in-line, or ahead, of analyst expectations but showing net revenue down sequentially for the first time since the company went public in 2004.  This week and next, the earnings pace will pick up steam.  A number of key reports are likely to act as a barometer for the state of different sectors.   Yahoo, Microsoft, Apple, Netflix and more are all on the calendar.

First of the gate was the New York Times Co, which reported a loss of $74.5m for the first quarter this morning.  The Time’s is struggling to navigate the weak ad market and changing look of news distribution.   Shy of some expectations, sales were off more than 18% to $609 million for the first quarter.  Internet businesses took a slightly larger share of the total mix (12.8%  vs 11.1% last year) showing the company’s effort to adapt, but there, like elsewhere, the total draw was weaker than a year ago ($67.6m vs $72m a year ago).

Heading into the afternoon, Yahoo will be the next to report.   After the close today, the company is expected to post earnings of about 8 cents a share on net revenue of $1.2b according to Thomson Reuter’s survey.  Eyes will be watching closely to see how Yahoo’s doing in the search market, and if there’s any indication of the company’s longer term strategy there.  Display advertising is expected to show a 17% year over year decline.  Beyond the numbers, people will be listening carefully to hear what Carol Bartz has to say now that she’s had a chance to really get situated.

Wednesday this week will be Apple’s day.  The company is expected to report second quarter sales of around $7.95b, EPS of $1.08 and a gross margin of around 33%.   With the economy slowing some PC shipments according to third party surveys, attention will be paid to how Apple’s Mac unit sales have held up.  As is always the case with Apple, each product category of reported information will be scrutinized carefully – iPod revenue, iPhone units, and Mac sales.  In the earnings call, questions are sure to be asked (but not likely answered in any detail) about Steve Jobs health and rumored products in the pipeline. 

Thursday, the news will flow from Seattle with both Microsoft and Amazon reporting.  Microsoft is expected to report third quarter sales of $14.1 billion and earnings of $0.39  a share.  Individual analyst expectations of whether the company will hit or miss the consensus are split after last quarter’s weak showing.   Areas to watch: whether netbook sales, or smaller PC shipments have hurt software sales; how the company is handling cost savings plan announced in January, growth in Entertainment and Devices (Xbox numbers), and forward looking plans on next gen. software.

With Amazon, the survey expectations are for earnings of 31 cents a share on revenue of $4.76b.  Amazon previously set guidance for revenue in the range of $.453b to $4.93b.  Watch for news on Kindle.  The company hasn’t reported any sales figures but the buzz generating product will likely be mentioned in some form.

Also Thursday, stay tuned for Netflix.  The company closed out the year with a strong quarter, beating expectations and setting the bar for reaching more than 10m subscribers come this week’s first quarter report. Analysts expect Netflix will report earnings of 31 cents per share on revenue of $390 million.   The company previously set guidance in the range of 25 to 33 cents a share.   A high side result is probable but short term investment upside may already be priced in to the stock.

Things to look for in the announcement: with customer acquisition costs likely benefitting from the weak ad market, and also reduced costs (distribution/fulfillment) resulting from greater uptake on the streaming service, margins should be solid.  Forward looking: watch for guidance on year ahead subscriber growth, churn data and updates on the company’s “Watch Now” on–demand service: new partners, customer reach, and content library improvements.

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