Finances

Domino's Pizza, Inc. (DPZ), the second-largest pizza franchise in the United States, announced its quarterly earnings on October 16, 2012.

The company reported third quarter revenues of $378.1 million. The company's quarterly revenue represents an increase of 0.5% from the same period last year when the company reported revenue of $376.3 million.

Domino's reported net income of $26 million for the quarter. This net income figure represents a 17.6% increase from the same quarter in 2011 when the company reported net income of $22.1 million.

J. Patrick Doyle, Domino's President and Chief Executive Officer, said: "I believe that the consistent, positive performance we have been able to achieve is the mark of a great brand and a great team. This quarter, our franchise partners around the world have collectively reached an important 10,000-store milestone. This puts Domino's among the largest international restaurant brands in the world. Our system's ability to repeat and maintain strong results–coupled with our commitment to innovation and continuous improvement–gives us confidence that we have lots of runway for growth in the years to come."

Domino's Pizza is an internationally recognized company that has stores on every continent. Industry trade publication Pizza Today awarded Domino's its "Chain of the Year" award in 2003, 2010 and 2011.

Domino's Pizza (DPZ) shares ended the week at $40.16

Southwest Airlines Announces Its Third Quarter Results

Southwest Airlines Co. (LUV), the largest low-cost airline in the United States, reported its third quarter results on October 18, 2012.

The company reported third quarter revenue of $4.3 billion. This figure was a slight decrease from third quarter 2011 when the company reported revenues of $4.31 billion.

Southwest reported net income of $16 million for the quarter. This figure compares favorably to the net loss of $140 million Southwest sustained in the same quarter in 2011. The company reported that, excluding special items, the third quarter 2012 net income was $97 million compared to $122 million in third quarter 2011.

Commenting on the results, Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, said, "Our third quarter 2012 net income was $97 million, and operating income was $208 million, each excluding special items. Our third quarter 2012 passenger revenues, unit revenues, and load factor were all third-quarter records and meaningful accomplishments; however, we need sustained revenue momentum to achieve our return on invested capital target. And, that is a priority. While in line with the domestic industry, our third quarter 2012 year-over-year unit revenue growth was more sluggish than planned due to weaker demand, particularly in September. While the economy remains a significant concern, we are encouraged, thus far, by October's bookings and revenue trends. Thus far in October 2012, passenger unit revenues are running ahead of the comparable year ago period by approximately 4%. For next year, we are excited about planned initiatives including the first phase of our new revenue management system."

Southwest Airlines (LUV) shares ended the week at $8.88.

Google Announces Disappointing Third Quarter Earnings

Google, Inc. (GOOG), the leader in search advertising, reported its quarterly earnings earlier than expected on October 18, 2012, leading to an 8% drop in the stock price.

Google reported third quarter revenues of $14.1 billion. This represented an increase of 45% compared to the third quarter of 2011 when the company reported revenues of $9.72 billion.

Net income for the quarter was $2.18 billion, a 20% decrease from the $2.73 billion Google reported during the third quarter of 2011. Analysts expected a rosier picture, causing Google's share price to fall.

Larry Paige, CEO of Google, said, "We had a strong quarter. Revenue was up 45% year-on-year, and, at just fourteen years old, we cleared our first $14 billion revenue quarter. I am also really excited about the progress we're making creating a beautifully simple, intuitive Google experience across all devices."

Google is world-renowned for its search engine, Chrome web browser and mobile device applications. The company continues to be an information technology leader and innovator.

Google (GOOG) shares ended the week at $681.79.

The Dow started the week at 13,328 and closed at 13,344. The S&P 500 started the week at 1,428 and ended at 1,433. The NASDAQ started the week at 3,044 and finished at 3,006.

According to Pacific Investment Management Co. (Pimco), the world's largest bond fund, the credit rating of the U.S. will be cut as "fiscal theater" takes hold of the world's largest economy. The Congressional Budget Office (CBO) warns that the U.S. will fall into recession if $600 billion of government spending cuts and tax increases take place at the start of 2013. Financial markets seem unconcerned, however, about whether the White House and Congress will reach an agreement to defer the so-called "fiscal cliff" until later next year.

Unless spending and debt growth slows, the U.S. will cease to be the first destination of global capital in search of safe returns, believes Bill Gross, manager of Pimco's $278 billion Total Return Fund. He added that the U.S. "frequently pleasures itself with budgetary crystal meth." Mr. Gross reduced his holdings of Treasuries this month for the third consecutive month to the lowest level since last October.

According to data compiled by Bloomberg, a credit rating cut would not necessarily hurt returns. The data showed that about half the time government bond yields move in the opposite direction suggested by new credit ratings. Still, U.S. Treasury yields have dropped to record lows since Standard & Poor's cut the nation's credit rating from AAA to AA+ on August 5, 2011.

The negative outlook, however, is tempered by some good news: U.S. debt levels have shrunk to a six-year low. Including the federal government, state governments and consumers, total indebtedness in the U.S. has fallen to 3.29 times GDP. This ratio is the smallest since 2006 and indicates that positive economic trends may be on the horizon.

The 10-year Treasury note yield finished the week at 1.77% while the 30-year Treasury note yield finished the week at 2.94%.

Freddie Mac released the results of its weekly Primary Mortgage Market Survey (PMMS) on October 18, 2012. The results showed average fixed mortgage rates edging slightly lower, with the 15-year fixed rate dropping to a new all-time record low.

The 30-year FRM averaged 3.37% this week. That represented a decrease from last week when it averaged 3.39%. Last year at this time, the 30-year FRM averaged 4.11%.

The 15-year FRM this week averaged 2.66%, a new all-time record low. This number was a decrease from last week when it averaged 2.70%. A year ago at this time, the 15-year FRM averaged 3.38%

"Mortgage rates remained more or less unchanged this week as home construction builds up steam," said Frank Nothaft, Vice President and Chief Economist for Freddie Mac. "Construction on single-family homes jumped to an annualized rate of 11% in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23% higher than the same period last year. Moreover, homebuilder confidence rose for the sixth consecutive month in October to the highest level since June 2006, according to the NAHB/Wells Fargo Housing Market Index."

The money market fund finished this week at 0.5%. The 1-year CD finished at 0.7%.