Blog Post

What To Look For In This Week’s Earnings Reports

Google (NSDQ: GOOG) started off earnings season this week by easily topping analyst estimates and disclosing for the first time some financial details about its non-search businesses; Gannett (NYSE: GCI) and NBC Universal (NYSE: GE) followed up today with underwhelming reports. Who will outperform next week and what disclosures can we hope for? Below, our calls on Apple (NSDQ: AAPL), Yahoo (NSDQ: YHOO), New York Times (NYSE: NYT), Netflix (NSDQ: NFLX), and Amazon.

Apple

The numbers: Apple’s stock price just passed the $300 mark. Analysts expect the company to report $18.76 billion in sales for the quarter on Monday, almost double last year’s $9.87 billion. Earnings per share is expected to come in at $4.03, up from $2.77 a year ago. Oh, and Apple almost invariably beats expectations.

Possible surprise: This is the first quarter to fully reflect iPad sales, so we should get an update on total sales of the device. There’s some talk that Apple might not live up to the high expectations for financial results it has set because of the iPad. Business Insider quoted analyst Gene Munster today as saying that the iPad has a lower profit margin than people think it does and has also faced some supply issues, meaning it will be much more difficult for the company to blow post analyst projections. Analyst estimates for iPad sales vary widely, ranging between 4.5 million and 6 million.

Yahoo

The numbers: Google may have reported a stellar quarter, but there’s very little growth happening at Yahoo. On average, analysts expect the company’s net sales to stay flat at $1.13 billion, and it’s very possible that the company could report an eighth consecutive quarter of declining net revenue when its earnings come out on Tuesday. Earnings per share are expected to nudge up to 15 cents from 13 cents. The pattern at Yahoo continues to be the same: The company keeps on posting double-digit increases in display ad sales, but they’re offset by declines in search ad sales.

Possible surprise: Will CEO Carol Bartz confront all the speculation about the company’s fate head on? In the past, Bartz has stubbornly dismissed any suggestion that the flow of executives from the company is anything but normal or that that the company will change its approach to its Asian assets. But considering recent events, including the departure of a trio of high-profile executives and takeover talk, it’s hard to believe that she can maintain those lines of argument.

The New York Times

The numbers: The New York Times said late last month that it expected digital ad revenues to be up 14 percent for the quarter, a turnaround from the 7.2 percent drop it saw a year ago. The company also projected that print ad revenue would be down 5 percent. Both figures are similar to those that Gannett reported today, which did not impress Wall Street.

Possible surprise: During the quarter, the NYTCo.-owned Worcester Telegram & Gazette turned on its online meter, while the NYTCo.-owned Boston Globe said it would start charging for access to some online content beginning next year. During last quarter’s call, executives said pricing and other details about the forthcoming paywall at the company’s flagship paper would be coming soon. Will those details come out on Tuesday?

Netflix

The numbers: Sales at Netflix are expected to jump 30 percent to $551 million, while analysts expect earnings per share of 72 cents, up from 52 cents during the same period a year ago. Key figures to watch for in the company’s Wednesday earnings report: The number of subscribers (15 million last quarter) and the percent of those that streamed a TV episode or movie for more than 15 minutes (61 percent last quarter).

Possible surprise: Netflix has had a busy several months. It has increased the selection of content it makes available for instant streaming through new deals with NBC Universal, Sony (NYSE: SNE), Nu Image/Millennium Films, and Epix. It has also introduced an instant streaming-only offering in Canada and has added apps on the iPhone and iPod Touch. Expect CEO Reed Hastings, who is typically very open in his commentary, to provide new details on the success of all of those initiatives, and talk about when an instant streaming-only option will be coming to the U.S.

Amazon.com

The numbers: Yet another big sales increase is expected at Amazon (NSDQ: AMZN), which is projected to post $7.35 billion in sales for the quarter, up from $5.45 billion during the same period a year ago, when it reports its sales Thursday. Earnings per share is expected to come in at 48 cents, up slightly from 45 cents a year ago. Last quarter, despite increases in both, Amazon missed projections, sending its stock down 12 percent.

Possible surprise: It would be naive to think that Amazon will finally tell us how many Kindles it is selling, but the company certainly has a knack for releasing other, auxiliary statistics about the device, and we can expect some new ones on Thursday. We can also hope for some commentary on whether the company in fact has a subscription video service in the works.