Earnings – UA, EMC, VMW and BIDU

VMW

VMW, VM Ware, reported second-quarter results and in sum, the end-market demand for VMware’s solutions appear s strong aside understandable weakness in Europe.

  • Total revenue was $1.12 billion, up 22% on strong growth in maintenance revenue. The company has seen double-digit year-over-year percentage revenue growth for the past five quarters.
  • Net income for the computer software fell to $191.7 million (44 cents per share) vs. $220.2 million (51 cents per share) a year earlier. This is a decline of 12.9% from the year-earlier quarter. Last quarter’s profit decrease ends a four-quarter streak of profit increases.
  • VMware’s operating margin fell 140 basis points year over year.
  • There was a marked deceleration in annual license revenue growth to 11% this quarter, down from the 31% averaged during all of 2011. VMware expects typical seasonality will drop this growth rate even lower during the third quarter, before a strong rebound in the fourth quarter, with full-year license revenue growth between 11% and 15%.
  • The great news is the VMware’s announcement that it acquired Nicira, a start-up focused on software defined networking. At more than $1.2 billion Nicira represents an aggressive acquisition for VMware. Nicira is a player in network virtualization, analogous to what VMware has done for server virtualization. This follows the trend of network related acquisitions – DynamicOps, Zimba & Spring – that the company has embarked upon in recent past. Cisco is down on the news.

UA

Under Armour Inc reported better-than-expected earnings and raised its full-year sales forecast.

  • Second-quarter earnings rose to $7 million, or 6 cents per share, from $6 million, or 6 cents per share, a year earlier. Analysts on average had expected earnings of 5 cents on revenue of $358 million.
  • The revenue rose 27 percent to $369 million.
  • Under Armour also raised its 2012 operating income outlook to $205 million-$207 million.
  • The apparel and footwear maker, raised its full-year revenue forecast to $1.80-$1.82 billion from $1.78-$1.80 billion.
  • Inventory growth trailed revenue growth for the first time in eight quarters. Inventory at quarter end increased 22 percent to $381 million.
  • However, gross margin for the quarter fell to 45.9 percent from 46.3 percent reflecting lower apparel and accessories product margins in North America.

The UA numbers are exciting considering the soft landing that NIKE had projected. The orders for shoes are up and its apparel section is going great guns. Another great take away is that the revenue growth has exceeded the inventory growth, which had been bother few analysts for last few quarters.

EMC

I have been eyeing EMC for three reasons –

  1. EMC is a storage behemoth, and with data from social media showing no signs of slowdown, I expect that the demand of storage will not reduce in foreseeable future.
  2. The company owns 80% of VMWare which has seen double digit growth for last 5 quarters.
  3. Lastly, the phenomenal revenue growth of Mellanox Technologies confirms the uptick in storage demand. Mellanox Technologies creates fast connectors for storage devices.

Back to EMC –

  • EMC reiterated its previous full-year profit forecast of $1.70 per share, 3 cents below analysts’ average forecast. It repeated its revenue outlook of $22 billion, compared with an average estimate of $22.10 billion.
  • It said it expected free cash flow of $4.9 billion this year and it expects to buy back $700 million of its shares.
  • Profit, excluding one-time items, was 39 cents per share, below the average analyst forecast of 40 cents, according to Thomson Reuters I/B/E/S. Revenue rose 10 percent to $5.31 billion, beating the average forecast of $5.29 billion.

But the CEO, Joe Tucci, warned that on the macro front, pretty much everywhere in the world, they are seeing more caution and more scrutiny before any decisions to procure any IT product or service is made.

 

BIDU

BIDU, the darling of 2009 rally is trying to make a comeback.

  • The company posted a 70 percent increase in quarterly profit as net income was up at $436 million ($1.24 per share), on revenue of $858.8 million.
  • Revenue increased nearly 60 percent over its previous year quarter.
  • Analysts had expected the company to report earnings of $1.12 per share on revenue of $850.78 million.
  • Baidu forecast third-quarter sales will grow as much as 54 percent to 6.41 billion yuan. That compares with a 6.39 billion- yuan average of analysts’ estimates.

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