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Saturday October 25, 2014

Finances

Finances
 

Google Reports Quarterly Earnings

Google, Inc. (GOOGL), a company most famous for its search engine, reported its latest quarterly earnings on Wednesday, April 16. While revenue met expectations, earnings per share did not.

The company reported revenue for the quarter of $15.42 billion. This represents an increase from the same quarter last year when Google reported revenue of $12.95 billion.

Google reported quarterly net income of $3.45 billion. Last year, the company reported net income of $3.35 billion. Earnings per share came in at $5.04 per share. This was $0.15 per share below what analysts had expected. In addition to this earnings per share miss, Google’s cost-per-click revenue dropped 9%.

Larry Page, CEO of Google, had this to say about the company’s quarterly results. “We completed another great quarter. Google’s revenue was $15.4 billion, up 19% year-on-year. We got lots of product improvements done, especially on mobile. I’m excited with [the] progress on our emerging businesses.”

Google recently purchased Titan Aerospace, a manufacturer of high-altitude solar powered drones. Titan will help Google with several of its current projects. One of these is Project Loon, which is sending large weather balloons into the atmosphere in order to bring internet connection to as yet un-connected parts of the world.

Facebook, Inc. has also been looking at ways to bring the internet to un-connected communities. Facebook tried to acquire Titan earlier this year for $60 million. However, it seems that Google may have outbid Facebook for the company. The use of unmanned aerial vehicles for commercial purposes has been a hot topic lately. Amazon was the first major company to bring this idea into the realm of public debate when it announced it was considering the use of drones to deliver packages. It is too early to tell whether drones in the commercial space will become commonplace. However, many of the major technology companies are testing the waters.

Google, Inc. (GOOGL) shares ended the week of 4/14 at $543.34, down 0.06% for the week.

Johnson & Johnson Reports Quarterly Earnings


Johnson & Johnson (JNJ), a health care and pharmaceutical company, reported its fiscal 2014 first quarter results on Tuesday, April 15. The company reported strong earnings and continues to impress investors.

Johnson & Johnson reported quarterly revenue of $18.12 billion. This represents an increase of 3.5% from the same quarter last year when the company reported revenue of $17.51 billion.

In addition, the company reported net income of $4.73 billion. This is an increase of 3.5% from last year when the company reported net income of $3.5 billion. Earnings per share came in at $1.64 per share.

“Johnson & Johnson delivered strong first-quarter results driven by successful new product launches and the continued growth of key products,” said Alex Gorsky, Chairman and CEO of Johnson & Johnson. “Our talented colleagues around the world continue to bring meaningful innovations to patients and customers, addressing significant unmet needs. We also advanced our near-term priorities and long-term growth drivers, positioning us well to deliver sustainable results.”

The company’s strong quarter was due mostly to strong pharmaceutical sales, which increased 10.8% year-over-year. The primary reason for this was the release of a new Hepatitis C drug in November of last year. The drug, Olysio, captured global sales of $354 million during the latest quarter.

Johnson & Johnson (JNJ) shares finished the week of 4/14 at $98.96, up 1.73% for the week.

Coca-Cola Reports Quarterly Earnings


The Coca-Cola Company (KO), an international beverage company, reported its latest quarterly earnings on Tuesday, April 15. Earnings for the latest quarter were below earnings for the same quarter last year.

The company reported revenue for the quarter of $10.58 billion. This represents a decrease from the same period last year when the company reported revenue of $11.04 billion.

Coca-Cola announced quarterly net income of $1.62 billion. This represents a decrease from the comparable quarter last year when the company had net income of $1.75 billion. Earnings per share came in at $0.36 per share for the quarter.

Muhtar Kent, Chairman and CEO of Coca-Cola, commented on the company’s quarterly results. “Our growth momentum is steadily improving in line with our expectations, as we delivered sequentially stronger volume growth of 2% in the quarter while gaining global volume and value share in nonalcoholic ready-to-drink beverages. In the near term we are committed to delivering on our performance goals and generating increased shareowner value through improved productivity efforts and targeted investments. All of us at The Coca-Cola Company remain confident in our ability to deliver strategies while further strengthening our foundation for profitable and sustainable long-term growth toward our 2020 Vision.”

The Coca-Cola Company recently launched its biggest marketing program to date entitled “The World’s Cup.” The stated purpose of the campaign is to celebrate soccer as a force for social good. As part of the campaign the company has put together a full-length digital film, a documentary short-film, the official music anthem for the 2014 FIFA World Cup and “The Happiness Flag” – the largest photo-mosaic ever created featuring fan faces and messages. In addition, the company sponsored the largest FIFA World Cup Trophy Tour ever. The World Cup Trophy is now in the U.S. for the last leg of its 90-country, 92,000 mile journey to Rio De Janeiro, Brazil.

The Coca-Cola Company (KO) shares ended the week of 4/14 at $40.72, up 5.19% for the week.

The Dow started the week of 4/14 at 16,028 and closed at 16,409 on 4/18. The S&P 500 started the week at 1,818 and closed at 1,865. The NASDAQ started the week at 4,038 and closed at 4,096.
 

Treasuries Fall This Week

Treasuries fell and yields rose for the first time in four weeks as economic data showed that the U.S. economy may be improving. Also, an accord between the Ukraine and Russia encouraged investors and decreased demand for fixed-income assets.

The Department of Labor released its weekly unemployment benefits report. The report stated that initial claims for jobless benefits were 304,000 for the week ending April 12. This is 2,000 more than the previous week; however, the increase was less than the 315,000 claims expected by economists. The number of initial claims for jobless benefits is near a six and a half year low reached in the jobs report for the week ending April 5 of 302,000 claims. Analysts believe this shows an underlying strength in the economy.

In addition to the economic figures released this week, the Ukraine and Russia came to an accord on Thursday, April 17. The accord requires both sides to refrain from violence, intimidation and provocative actions. It calls for disarming all illegally armed militias and returning buildings to the Ukrainian authorities that have been seized by pro-Russian separatists. The tension between Russia and the U.S. and Europe has continued to increase since Russia’s annexation of Crimea. Those with investments tied to the European economies have been increasingly worried about sanctions levied upon Russian officials. Europe relies heavily on Russia for its natural gas supplies. While U.S. officials are skeptical of the agreement, the accord signals to investors that perhaps disruption of natural gas supplies to Europe is not imminent.

The markets were also affected by Fed Chair Janet Yellen’s statement on April 16. In her statement she gave some much needed guidance on the timing of the increase in the Federal Funds rate. She commented, “The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained.”

As a result, many investors left the safety of fixed income assets this week in search of higher returns. The 10-year Treasury note yield rose 10 basis points to 2.72% in early trading on Friday. “Geopolitical issues, while still here, have ebbed into the weekend, allowing the market to focus more on fundamentals,” said Christopher Sullivan, Chief Investment Officer at United Nations Federal Credit Union. “Investors are starting to feel more comfortable that the economic data is starting to take a turn for the positive and that has allowed rates to start to climb.”

The 10-year Treasury note yield finished the week of 4/14 at 2.72% while the 30-year Treasury note yield finished the week at 3.52%.
 

Interest Rates Decline

Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, April 17. The results showed average fixed mortgage rates falling to a six week low.

The 30-year fixed rate mortgage averaged 4.27% this week. This represents a decrease from last week when it averaged 4.34%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.41%.

This week, the 15-year fixed rate mortgage averaged 3.33%. Last week the 15-year fixed rate mortgage averaged 3.28%. Last year at this time, the 15-year fixed rate mortgage averaged 2.64%.

“Mortgage rates continued to ease this week as housing starts rose 2.8% in March, but not as much as expected,” said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. “Also, permits fell 2.4% in March to a seasonally adjusted annual rate of 990,000, which followed a slight downward revision of 4,000 permits in February.”

The money market fund finished the week of 4/14 at 0.4%. The 1-year CD finished at 0.7%.

Published April 18, 2014


Previous Articles

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CarMax Misses Expectations

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Adobe is on Cloud Nine

Williams-Sonoma's Great Quarter

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