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Saturday September 20, 2014

Finances

Finances
 

Adobe is on Cloud Nine

Adobe Systems Inc. (ADBE), an international software company, reported its quarterly earnings on Tuesday, March 18. The company impressed investors with strong earnings.

Adobe reported quarterly revenue of $1 billion. The company reported revenue of about $1 billion during the same quarter last year as well.

The company reported net income of $47.05 million for the quarter. This represents a decrease from the comparable period last year when Adobe reported net income of $65.12 million. The company reported earnings per share of $0.09, a slight decrease from the same quarter in Fiscal 2013 when the company reported earnings of $0.13 per share.

Despite the drop in net income, Executive Vice President and CFO of Adobe Systems, Mark Garrett, was optimistic about the company's performance. "We achieved a significant milestone with our transition to the Cloud in our first quarter with more than half of Adobe's total revenue coming from recurring sources such as Creative Cloud subscriptions and Adobe Marketing Cloud adoption. In our Creative business, reported revenue from subscriptions exceeded revenue from legacy perpetual licenses for the first time."

Investors were impressed with the revenue generated by Adobe this quarter. Adobe's first quarter revenue of $1 billion beat Wall Street analysts' expectations that the company would generate revenue of $973 million. Most of the credit for such a strong showing is due to Adobe's Marketing Cloud revenue, which increased by 24% year-over-year. Adobe's future success will be closely linked to how well its customers adopt its Cloud-based software products.

Adobe Systems, Inc. (ADBE) shares ended the week of 03/17 at $67.14, down 1.1% for the week

Nike Continues to Impress


Nike, Inc. (NKE), an iconic retailer of sports apparel and accessories, reported its Fiscal 2014 third quarter results on Thursday, March 20. The company reported increased sales in the months leading up to the World Cup this summer in Brazil.

Nike reported third quarter revenue of $6.97 billion. This represents an increase of about 13% from the same quarter last year when the company reported revenue of $6.19 billion.

The company reported quarterly net income of $685 million. This represents a decrease of about 21% from the comparable period last year when the company reported net income of $866 million. Earnings per share came in at $0.76 for the quarter, which is an increase from last year at this time when earnings per share were $0.73.

"Our strong Q3 results demonstrate our relentless focus on delivering innovations that resonate with consumers," said Mark Parker, President and CEO of Nike, Inc. "Despite macroeconomic challenges, Nike delivers consistent results because we focus on the biggest opportunities for growth while we manage risk across our diverse global portfolio. This is how we continue to drive long-term value for our shareholders."

Nike noted in its conference call following the earnings release that they have seen a noticeable increase in sales leading up to the World Cup this summer in Brazil. In addition, they also saw a sales spike in Western Europe where it competes with sports retailer Adidas. Finally, sales in China continue to increase. All of these signs bode well for Nike and for investors.

Nike, Inc. (NKE) shares ended the week of 03/17 at $75.21, down 4.64% for the week.

Tiffany & Co. Earnings Disappoint


Tiffany & Co. (TIF), a well-known jewelry retailer, reported its fourth quarter and annual results for Fiscal 2013 on Friday, March 21. The retailer disappointed investors with earnings that missed Wall Street expectations.

Tiffany & Co. reported fourth quarter and annual revenue of $1.3 billion and $4.03 billion, respectively. These are both increases from last year when the company reported fourth quarter revenue of $1.24 billion and annual revenue of $3.79 billion.

The company reported a net loss of $103.6 million for the fourth quarter and net income of $181.37 million for the year. Both of these figures are decreases from last year when the company reported net income of $179.64 million for the fourth quarter and $416.16 million for the year. The company reported earnings per share of $1.41 for the year.

"We are proud of our performance this past year," said Michael J. Kowalski, Chairman and CEO of Tiffany & Co. "Sales and operating earnings – excluding the arbitration-related charge – rose to record levels. Sales growth was led by fine and statement jewelry, new or expanded jewelry collections including the ATLAS, ZIEGFELD, and HARMONY collections, and continuing strength in our iconic jewelry designs. Tiffany's marketing communications more effectively engaged global consumers wherever they shopped, our distribution network was expanded by 14 additional stores, and everywhere the store experience was enhanced by improved visual merchandising. And we made important additions to our management team to strengthen our ability to capitalize on the global growth opportunities before us."

Tiffany & Co. had to pay a sizeable amount this quarter after receiving an unfavorable ruling in an arbitration. However, even if one removed the charge the company would still have missed Wall Street estimates for earnings per share. Without the arbitration charge earnings per share were $1.47 per share, which missed analysts' estimates that earnings per share would be $1.51. As stated by CEO Michael Kowalski, the company did much this year to move Tiffany & Co. forward. Time will tell whether these efforts will improve the company's bottom line.

Tiffany & Co. (TIF) shares ended the week of 03/17 at $90.69, down 1.75% for the week.

The Dow started the week of 3/17 at 16,066 and closed at 16,303 on 3/21. The S&P 500 started the week at 1,843 and closed at 1,866. The NASDAQ started the week at 4,274 and closed at 4,277.
 

Treasury Yields Rise on Fed Outlook

Treasury yields rose and prices fell this week following Federal Reserve Chair Janet Yellen's first post Federal Open Market Committee meeting press conference. Her comments caused markets to fluctuate.

The press conference was held on March 18, following the FOMC's March meeting. When pressed about a timetable for increasing the federal funds rate, Janet Yellen said that rates might rise in around six months when monthly bond purchases end. This six-month time period is much shorter than many analysts had expected. As a result, Yellen's comments caused investors to sell their bonds in fear that they will lose value if interest rates begin to rise.

While Yellen did set a possible timetable of six months for increasing the federal funds rate, she also tied the decision to increase the federal funds rate to the level of inflation the country is experiencing. "If we had a substantial shortfall in inflation, if inflation is persistently running below our 2% objective, that is a very good reason to hold the funds rate at its present range for longer," said Yellen.

In addition to giving some interest rate guidance, the Fed announced that it will reduce bond purchases by $10 billion in the month of April to $55 billion. This is the third monthly decrease.

The sell-off generated by Yellen's comments caused the 10-year Treasury note yield to rise to 2.78% on Wednesday. The 30-year bond yield rose to 3.67%.

The 10-year Treasury note yield finished the week of 3/17 at 2.75% while the 30-year Treasury note yield finished the week at 3.61%.
 

Interest Rates Decrease Slightly

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, March 20. The results show mortgage rates decreasing slightly after last week's increase.

The 15-year fixed rate mortgage averaged 3.32% this week. This represents a decrease from last week when it averaged 3.38%. One year ago at this time, the 15-year fixed rate mortgage averaged 2.72%.

This week, the 30-year fixed rate mortgage averaged 4.32%. This represents a slight decrease from last week when it averaged 4.37%. Last year at this time, the 30-year fixed rate mortgage averaged 3.54%.

"Mortgage rates eased this week as housing starts declined 0.2% in February to a seasonally adjusted annual rate of 907,000, below consensus forecast. The rate on the 10-year Treasury note rose following the Fed's announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week."

The money market fund finished the week of 3/17 at 0.4%. The 1-year CD finished at 0.6%.

Published March 21, 2014


Previous Articles

Williams-Sonoma's Great Quarter

Adidas Finishes Strong

Pizza Wars: Papa John's v. Domino's

Coca-Cola Reports Disappointing Earnings

PepsiCo's Quarter Fails to Impress

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