After the bell --- Lori (slow)
AMD -- Bob (fast)
G.E. --- Suzanne (slow)
>> welcome back to “after the bell.” i’m lori rothman. gains across the benchmark indices today, stocks rose on optimism earnings growth is sustainable even as energy costs rise. at the bell, the dow was up 40 points, 11,129. the s&p 500 rose 1.5 points, closing at 1288. and the nasdaq closed at 2314 today after a gain of 4.33 points. recapping the top stories off of the bloomberg terminal, the u.s. trade deficit shrank in february more than economists expected. the gap narrowed by 4.1% to $65.7 billion. the u.s. imported fewer goods from china making the deficit with china the smallest in almost a year. economists say the narrowing trade gap may be temporary. a jump in oil costs and growing demand for chinese goods suggest imports from that country may increase again. profit at circuit city stores jumped 65% in the fourth quarter, selling more flat-panel televisions. the company plans to boost customer service by expanding home theater installation. jeff skilling, enron’s former chief executive, told the jury at the houston trial today, that the company did not use off-the-books partnerships to hide losses. skilling said hedges set up through the partnerships were created to protect investment profit rather than manipulate enron’s earnings. skilling is responding to counter charges that he conspired to defraud investors. the government says that skilling and kenneth lay conspired to use off-the-books partnerships to hide enron’s losses. prosecutors are expected to cross examine skilling next week. advanced micro devices reporting first-quarter earnings a few minutes ago. bob bowden joins me with a breakdown of the numbers.
>> trade appears to be halted still but we had a trade crossing. the stock closed at $35.42 today, a trade a second ago for lower than that at $34.64, but that’s just one trade. we’ll continue to monitor that. the headline earnings number for a.m.d., 38 cents a share, that is eight cents higher than the 30-cent analyst estimate from thomson financial. revenue at $1.33 billion, 8.6% more than the $1.23 billion from the same period last year and the $1.33 billion is precisely what analysts predicted. on the forecast, a.m.d. says it sees second-quarter sales unchanged to slightly down seasonally from the first quarter. not sure what they mean quantifiably by slightly down seasonally but to show you that first-quarter sales came in at $1.33 billion and currently analysts expecting second-quarter sales at $1.35 billion so that is not slightly down from the first quarter so perhaps a disappointment on the revenue forecast and we will probably learn more from a.m.d.’s conference call. the press release from the c.f.o. of the company who said we once again gained dollar market share based on strong customer demand for a.m.d.64 single and multicore processors. we expanded our global customer base in the quarter, achieved record a.m.d. opteron processors and increased their average selling price and realizationed year-over-year sales growing of 71%. checking the 71% number, doesn’t agree with our 8.6% number cited on bloomberg and the 1.23 from a year ago but that’s what they said. we’ll get more on that sales comparison to the year before, as well. checking in the extended hours, no additional trades, 4:26 p.m., the last trade we had. also, we did get a few trades on intel. intel a bit higher in the extended hours, four cents, reacting to a.m.d. intel, a competitor of a.m.d. and not halted when a.m.d. has earnings and h.p., one of the biggest sellers of a.m.d. chips in their computers, up 16 cents.
>> thank you very much for that. tomorrow morning, general electric, world’s second largest company by market value, will report earnings. suzanne o’halloran is covering that report for us. how are g.e.’s numbers expected to show up?
>> they’re supposed to be pretty good. if analysts are on the mark, g.e. could be on track to report the fastest annual earnings growth in six years. as for the quarter, the company will probably say profits from continuing operations come in at 39 cents a share, an 18% increase from a year ago. and quarterly profit is expected to increase in all of the company’s six major divisions except for its media unit, nbc universal. for the year, analysts expect per-share profit to rise 16%, the most since 2000.
>> right now what we’ve got, we have a combination of a cyclic recovery in the company’s businesses paired with strong long-term fundamental growth at both the healthcare businesses and the financial services businesses.
>> c.e.o. jeff immelt is focusing on faster growing areas such as finance and healthcare to boost earnings and revive g.e.’s stock price. shares are down about 1.5% this year, underperforming the broader market . g.e. is one of the dow’s weaker performers so far this year. besides finance and healthcare, analysts say g.e. is benefiting from higher sales of jet engines, power plant turbines and other large equipment, thanks to growth in developing countries. investors say that growth, mainly from china and india, should continue to boost sales and profit.
>> they’re both billion dollar populations so when you’re talking about aerospace, flights, energy infrastructure, things like that, these companies could be five times as big as the united states, so definitely g.e. could have more of their business outside of the united states in the next decade.
>> head of g.e. international says international sales could match u.s. sales by 2008 and as you can see there, shares of g.e. gained about 41 cents in today’s session. back to you.
>> suzanne, thank you. we’ll continue our coverage of g.e., looking ahead of tomorrow’s earnings. g.e.’s been dead money, some would say, for the past year, especially compared to the honeywells and 3m’s of the world. we’ll speak with an analyst who remains a g.e. believer.
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>> we are 20 minutes from the start of “money & politics.” peter cook joins us from washington with a preview.
>> coming up on “money & politics,” we are going to take a closer look at the energy markets and what’s driving prices higher, especially gasoline. we’ll be talking with fimat’s mike fitzpatrick and a.p.i.’s john feldman, chief economist at the american petroleum institute. we’ll look at massachusetts’s new healthcare plan. is it too good to be true? we will debate that issue and chat with the president’s top economic adviser, allan hubbard, about trade issues. that’s coming up on “money & politics.”
>> thank you. general electric set to report first-quarter earnings before the opening bell tomorrow. the stock is down 2% this year and over the last 12 months. our guest rates g.e. a buy. here to explain is mary anne sudol, analyst with caris & company. mary anne, thanks for joining us.
>> great to be here.
>> the first question would be, g.e.’s been dead money for some time now. is there anything the company could say tomorrow that would get the stock to move?
>> what they have to renew is commitment to growth. they stumbled on the top line in the fourth quarter and that made people pull back and say, well, you’re not performing and walking the talk. so i think they have to put up another good quarter and point investors ahead that they can sustain that kind of performance on a consistent basis.
>> what would define a good quarter? we have the numbers, the street is looking for 39 cents a share. revenue, 37.36 billion dollars. does g.e. have to come in ahead of those numbers?
>> i think g.e. just has to meet the top end of its guidance of $38 billion in sales and 40 cents e.p.s. i think that would make investors very happy and i think what might make them happier is if they were to raise the low end of their earnings guidance for the whole year.
>> what are the chances or the likelihood of that happening?
>> i think, if there is a very good first quarter and the outlook stays very optimistic, i’d say there’s a better than even chance that could happen.
>> which of g.e.’s business segments will carry the most weight with investors as they digest tomorrow’s numbers?
>> i think the one that will carry the most weight is the infrastructure group which is 35% of the earnings. and where a lot of the growth is concentrated. it contains the aircraft engines, locomotives, water, energy, all the big areas that are playing. and i think people will be watching especially the new order growth which already, by mid march, was up 20% year on year.
>> you mentioned what you’d like to see from g.e., with the emphasis on growth. therefore, what is the c.e.o., jeff immelt’s, biggest challenge?
>> i think his biggest challenge internally is to keep that organization percolating, the ideas flowing through it, and staying ahead of the curve on new products that will be ready when their customers are―like new jet aircraft engines that are fuel efficient. they’re rolling them out and will be on the dreamliner. new locomotives and they can capitalize if they see it coming. on the investor side, i think the biggest challenge is making that stock sparkle again and that, i think, as long as he continues to put up a string of very good other quarters and keep it going, i think that will make investors very, very happy.
>> and mary anne, you have a buy rating on gher. how patient do investors have to be here?
>> there are a a couple of long trends playing out in g.e. and with 10 billion shares out there, it’s awfully difficult to move it on a gee whiz basis. but i think for a more patient investor, this stock will go a few pennies a day, but it starts to add up. and this time next year, i think you could see a lot of happy shareholders if g.e. delivers.
>> g.e. gets a lot of attention on its nbc unit, of course. this is the only unit where we are expecting quarterly profit to decline. how big of a concern is that? could you give me context on the nbc unit?
>> yes, the big problem in nbc is the broadcast television, which is about 35% of nbc universal’s earnings. the rest is cable channels such as history channel and films with universal studios and the theme park. that’s fine. but they do have some holes in their lineup that they need to fix with better product, again, product, so that people will start turning their way when it comes to television viewing.
>> is it a crisis? if nbc comes out with a profit decline tomorrow?
>> no, i think g.e. does a very good job of guiding investors and managing expectations. so they’re looking for nbc universal earnings to be down approximately 10% year on year. if it comes in around that, i think nobody will get very upset.
>> mary anne, thank you for joining us.
>> my pleasure.
>> mary anne sudol is an analyst with caris & company. coming up, we’ll look at a very obscure cross rate. fear could be rising. we’ll see what that means in the “chart of the day.” stay with us.
