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Five Important Wall Street Q3 Results [Apple, Goldman, BoA, Citigroup, Yahoo]

Viral Dholakia — Wed, 19 Oct 2011 08:26:45 +0000

Even as India Inc moves forward with its Q2 fiscal earnings, the top Wall Street companies are slowly oozing out with their Q3 results performance amid slowdown and deficit-reeling US economy.

While the global sentiment is mired by the unanimous downgrade of Spain’s creditworthiness by three credit rating agencies – Fitch Ratings, S&P and now even Moody’s; the Wall Street earnings have been no show-stealer amid mixed-bag of results with some banks doing well, while few others including Apple missing earnings forecast.

Let me summarize a few important Wall Street earnings performance over here:

Apple drags on lower iPhone sales

In a rare instance on missing its earnings forecast, Apple Inc reported a net profit of $6.62 billion (up 54% from $4.31 billion last year) on revenues of $28.3 billion, which came in a tad lower than Wall Street expectation of $30 billion, for its fiscal fourth quarter of this year.

At 17.7 million, Apple sold 21% more iPhones than last year during the July to September 2011 quarter, with no new next-generation iPhone and iPad releases. However, the iPhone sales fell short by 19% when compared with its previous quarter figures.

Goldman stutters with underwriting losses

Investment banker Goldman Sachs reported a quarterly loss of $428 million for the three months ended September 2011, run down by slump in its investment portfolio and fall in trading revenues. This was its second-ever quarterly loss in at least a decade, next only to post-Lehman era loss of $1.6 billion in Q4-2008.

Goldman’s net revenues came in at $3.59 billion, down 60% from $8.9 billion a year ago period. The Q3 results include $1.05 billion losses from investment in Industrial and commercial Bank of China. Its investment and lending business lost $2.48 billion during the quarter under review.

Bank of America prospers with one-time gains

Bank of America, the second biggest US bank by assets next only to JP Morgan Chase, posted a net profit of $6.23 billion. Revenues recorded a growth of 6% to $28.7 billion mostly led by one-time accounting gains related to debt valuations.

In the race to claim position of top-most American bank, Bank of America came in second with its $2.22 trillion in assets, behind JP Morgan Chase’s which reported assets of $2.29 trillion in this latest quarter.

Citigroup in the pink of health

Citigroup posted positive Q3 results with net income of $3.77 billion, up 74% from $2.17 billion in the corresponding quarter last year, backed by lower losses from loans and $1.9 billion from credit valuation adjustment gains.

Citigroup, which is fourth largest US bank, posted revenues of $20.8 billion, almost at par with its revenues clocked in the year-ago period. The bank’s losses from bad loans came down by 41% during the July-September quarter to $4.5 billion.

Yahoo beats estimates

Internet portal Yahoo announced its third quarter results with dwindling sales and profitability, led by growing prominence of social media platforms and Google search products. Yahoo Inc posted Q3 profit of $293 million, with search queries showing tepid growth.

Revenues for the third quarter came in at $1.07 billion, down 4.5% from $1.12 billion recorded last year for the September-end quarter. The revenues exclude traffic acquisition costs. The internet giant is aiming for more business partnerships to target growing monetization.

[Image Source]

Online Ads going the desi way!

Satyam Gambhir — Thu, 31 Mar 2011 11:47:13 +0000

See the two demo ads by Google – Which ad are you more likely to click on given an option in the same screen? (Provided you know Hindi)

Google India has started displaying Hindi, Tamil, Telegu, Malyalam and other regional languages ads depending upon geographical location of visitors.

A comparison of the efficiency of ads by Ozone Media Performance Users Study (OPUS) reveals that resident Indians respond better to regional language ads as compared to English ads, by almost 30 per cent. Moreover, Tamil and Telugu are driving conversions in language specific advertising across ad categories for performance campaigns.

It is said that business is usually done better if customers and company executives share the same language. Any kind of communication gap w.r.t. language is only a hitch. However, if marketing and promotions are also done in the local language, the results are likely to be better for obvious reasons, whether it’s an international product or local.

Technology has made the concept of glocalisation even simpler where the companies aiming to go global can still have a local flavors in products. What better can it be if the promotion & advertisement is given a local touch!

I believe these ads are more beneficial for matrimonial, healthcare, astrology, banking and related industries as it requires more trust which may be reflected through the right lingual communication. This could also be because with use local languages, a product/service and be better explained and right message can be conveyed.

Here is what Kiran Gopinath – CEO and founder of Ozone Media has to say:

“Consumption of regional language ad signifies the emerging trend in online marketing campaigns of the kind of spread and specific targeting brands adopt to reach their desired audience”

What’s your take on this regionalisation of online advertising model?

Buzzing News of the Week – World Cup, Octopus, Indians vs Americans, Tax Collections, Brand Satyam & more…

Viral Dholakia — Sat, 10 Jul 2010 09:57:50 +0000

The last week has been packed with surprising events wherein the laggards have made a sort of amazing comeback – be it Re-rating of the depressed Telecom Sector or even FIFA World Cup Favorites having been shown the door by the minnows (not to mention Octopus-led Germany ouster).

The Octopus mania does not end with Germany’s exit from the World Cup! It has further hinted that Spain will clinch the finals of this World Cup. However, the latest prediction by Paul, the Octopus, that Germany may be on top for the 3^rd position, won’t be good enough to soothe the nerves of Germans who are eager to make a delicacy out of this innocent creature in order to take their revenge.

Here are some of the other buzzing news of the week:

Indians more Financially literate than Americans

Yes, that’s an unbiased third party call taken by economists at the Federal Reserve Bank of Chicago – which indicates that Indians can take prudent financial decisions and avert an economic crisis better than the Americans.

The study further says that 80% of the Indians correctly responded to a financial literacy test, as against 60% appropriate entries registered from their US counterparts.

The report says that most of the Americans do not even understand the simpler math of difference between compound and simple interest, leave aside basic financial concepts and products.

Indirect Tax Collections up 43% in Q1 2010-11

The indirect tax collections have zoomed by 43% from Rs. 39694 crore in the year-ago period to Rs.56930 crore during the first quarter of 2010-11 fiscal. As per the budget estimates, the exchequer aims to mop-up Rs.3.16 lakh crore from the collections routed through the indirect tax model.

Collections from customs were higher by 60% at Rs.28135 crore. Even Excise collections notched a robust growth of 55% at Rs.19536 crore. However, accumulation of indirect tax from the service tax came at a lower Rs.9258 crore, down by 3% during the April to June quarter.

A Come Back of sorts for the Brand Satyam

Coming back a bit to the soccer world cup, Mahindra Satyam seems to have hogged the limelight as being the first Indian company to sign a Rs.90 crore contract with FIFA as a sponsor and official IT provider for the 2010 and 2014 editions of the tournament.

This FIFA deal, which was signed during 2007 by the tainted former Chairman of Satyam Computers Ramalinga Raju, has come as a blessing in disguise for the IT service provider as the grand event which has a loyal viewership in the US, is a major market for Indian outsourcing companies. The company has also pitched with the ICC for an accreditation for the Cricket World Cup scheduled in 2011.

Government mulling Sugar Price Decontrol

The Union Food and Agriculture Minister, Mr Sharad Pawar, has indicated that time is ripe to start groundwork towards decontrolling the country’s sugar industry and thus favoring the market determined policies for this price-sensitive sector.

Mr Pawar further said that the country’s sugar production in the 2010-11 crop season is likely to be sufficient to meet domestic demand of 23 million tones. However, despite the decontrol, right to fix the fair and remunerative price is expected to remain under the government’s purview.

Emerging markets to see 25% rally by year end

For all the stock market enthusiasts, here is pleasant news! According to a Citigroup report, emerging market stocks will rally 20-25% by the end of this year as the world economy avoids a double-dip recession and attractive valuations lure investors.

The report further says that the developing nations will lead to global economic recovery with growth of 6.8% this year and 6% in 2011. It further shrugs off the fears of double-dip recession and banks on emerging market economies to lead the curve.

Finance Friday : Infosys Results , Industrial Index, Rising Inflation

Ankit Agarwal — Fri, 15 Jan 2010 04:47:41 +0000

Infosys Quarter Results Beat Industry Estimates , raises Revenue Guidance

The year has started on a promising note as far as financial numbers are considered.Infosys, the IT bellwether beat delivered better then expected third quarter results which bought a short term cheer to the Indian Stock Markets.

Infosys reported a 2.7% rise in consolidated net profit for the third quarter ended December 31, 2009 (Q3FY10) at Rs 1,582 crore when compared with Rs 1,540 crore in the previous quarter of the current fiscal (Q2FY10)

The Indian Stock Markets especially the BSE IT index rejoiced and rose 3.84 per cent to a 52-week high of 5410.9 on Wednesday after the results were announced.The numbers reported were significant for various reasons.The Third quarter has lesser working days and the rupee has been appreciating quite a bit against the dollar.Other IT stocks like TCS, WIPRO rose quite a bit.

However, Infosys which is considered a trendsetter has also raised it revenue guidance for the year 2010.The guidance is cautious yet signifies that the worse might be over for the IT sector in India.

The company expects revenue growth of 3.6-3.8% for FY10 and 1.8-2% in dollar terms on a annual basis. Infosys has also raised the EPS( Earnings Per Share) to 107 from 100 for FY10.So much so, that the industry analysts are betting on 18 to 20% growth for 2011 fiscal.

What are your thoughts on the IT stocks after the Infosys quarter results? Do you think that other IT giants will report positive numbers and boost the Sensex?

You may also want to help Arun with your Stock Market predictions for 2010

The market outlooks looks positive but there are other factors which might play spoil sport in seeing a strong market going forward.More details later in the post.

Industry Production at two year high, Food Inflation continues to rise

That’s one good and bad news rolled into one :-) Industrial Production Index(IIP) touched a 2 year high at 11.7% for November.This is an upbeat news and signifies that the economic recovery is well on course.The consumer durables sector was the top performer with a stupendous 37% growth. The Fiscal Stimulus provided by the government in the form of lower excise duty,service tax etc. has seemed to help the CPG and the manufacturing sector by increasing the demand.

This also suggests that the stimulus may not be taken away too soon as the government has been speculating.Government has seen the benefits of the stimulus in the form of promising IIP numbers but the finance ministries problems seem far from over.

WPI Inflation rose up to 7.3% for the month of December which is way ahead from Government’s expectation.The sharp rise from 4.78% in November presents a worrisome picture.The surprising increase might see the RBI tightening the fiscal policies which were relaxed to a great extent last year in the wake of a slowdown.The government had predicted a 6-6.5% rate of Inflation by March, whereas the December figures have beaten their estimates well in advance.

The finance minister had been hinting at taking some stern measure by tightening the monetary policies.Rate hikes seem to be inevitable now with an immediate increase in CRR rates as per the industry analysts.This might put the government into a Catch-22 inflation situation where the industrial sector is expecting the existing rates to stay to ensure that the country remains steady on its path to economic recovery.

Now, that’s some situation the finance department will have to handle. Fiscal stimulus and relaxed rates seemed to have helped India chalk out a path to recovery,but for the industrial sector to stay on course, any changes to the existing scenario might prove a big hurdle.However, the rising inflation is one monster which if not tamed early might turn into a catastrophically huge problem later.

What is your take? Do you think the government should continue with the stimulus and rate cuts to help the industrial sector or a rate hike is inevitable to control the inflation?

An Airline That Is Bucking The Trend,Paramount To Expand Fleet and Provide Value Additions

Ankit Agarwal — Sat, 28 Nov 2009 10:59:46 +0000

The Indian airline industry has been living on the edge for sometime now. With skyrocketing fuel prices , the operating margins of all major airlines are being shot. Moreover, with the Indian skies opening up to a lot of players , it has become a different ball game to maintain profitability for airlines.

The plight was intensified with the advent of Low Cost Airlines which led to a increase in the number of people flying but also led to a crazy price war. This has the Indian airline sector struggling to maintain their profitability since the pricing has to be at par to lure the customers.

The past one year or so has seen a lot of drastic measure adopted by airline players. Jet Airways has already reduced its capacity by 20 per cent this year and Vijay Mallya-led Kingfisher Airlines too has reduced its fleet to 71 aircraft this year from 84 earlier and opted for the no-frills format in a major way. The Air India story is already talked about to call for further discussion.

But, then when every other airline is struggling to maintain its margins and operate at full capacity, Paramount is going the expansion way and bucking the trend. Paramount Airlines is actually planning to increase its fleet 4 fold with a focus on targeting tourist destinations. The airline with headquarter in Chennai is eying to become a major player in connecting the South sector with the north eastern sector , a route which does not enjoy good air connectivity right now.

“Many southern cities don’t have direct connection with states located in northeastern parts of India,” according to M.Thiagarajan (Paramount MD)

What’s more ? In these tough time when all other airlines are opting for a no frills arrangement to maintain their operating margins, Paramount is actually going out of the way to introduce some killer value additions to make its customer’s flying experience even sweeter.

Paramount has plans in place to become the first carrier to provide on-board mobile phone facility in the country. Now, that is one service CEO’s will love to have while flying, wont they. The company also expects to launch in-flight services complete with internet connectivity by the end of 2010.

How much of Paramount’s ambitions are completed would only be visible with time, but I like their different approach to steer the company in troubled times.

Sure the airline sector is going through a lean patch , but lower pricing and sub-standard service is not the only answer to its problems, is it ?

Why shouldn’t airlines look at upping the ante with quality service to outperform each other and take it a notch higher by providing some serious value additions to attract the business class

It seems clear that slowdown and shrinking margins calls for optimizing the Bottom Line but does that mean that the focus is taken away from increasing the Top Line growth at the same time.

In the end, a streamlined bottom line will not boost profits alone. The top line growth is going to drive revenues and that will only come with including new features and increasing the quality of the service.

What are your thoughts on this ?

Paramount might be a small player , but then instead of being bothered with the slowdown they are concentrating on expanding their horizon.Will they be able to beat the trend and enjoy higher revenues going forward

Gaming Is a Darn Serious Business , Zygna secures $15 million in funding

Ankit Agarwal — Wed, 18 Nov 2009 17:00:38 +0000

Zynga-The game studio specializing in making games for social networking sites has recently secured a funding of $15 million in venture capital. The company has been on a roll ever since it introduced games for Facebook. What started with Mafia wars turned into a rage with its another sticky offering- Farmville. To gauge an idea of the popularity of the game, FarmVille application boasts of a mind boggling 65,387,640 monthly active users.

Mind you , this is not the first time that Zynga has secured a big ticket funding. They raised $29 million during 2008 and the total funding according to Crunchbase stands at $54 million. To me, that looks like loads of cash for a gaming company. Zynga seems to have stumbled upon a cash cow with its association with Facebook and enticing users to play it games.

What is interesting to note here is the revenue model which has taken a lot of flak during recent times and one of its new game Fishville was taken off for this very reason. Â The gaming apps lure the users to sign up forÂ confusing offers and misleading advertisements in lieu of virtual cash and rewards.Even with all the skepticism surrounding the revenue model , Zynga is definitely doing good to attract a lot of venture capital.

To put things into perspective, Internet Gaming in general is a seemingly a brilliant business idea. Everyone likes to have a little fun and the best part about games of any sort is the sense of competition they create. This in itself leads to a word-of-mouth publicity and creates the Viral factor for the product. However, not all gaming portals click and from my experience playing Farmville (yes, I am a culprit too) , it is the stickiness and the recall factor that seems to be working for Zynga .The games are no brainer and extremely simple to play is another factor which help them go viral.

Here are some of the striking features that Zynga games have in common

All have a Neighborhood concept making the user invite others to create a community kind of thing.There are obvious rewards on offer for having more neighbors and this leads to automatic promotion of the game and more and more users signing up
All the games keep up the Recall factor with handy notifications.If you have played Farmville , you would have noticed every single activity that happens with your farm. Eg: If someone helps you the farm , if someone adds you as a neighbor etc.
They keep the Stickiness factor by constantly coming up with the so called Mystery elements at regular intervals.The additions are very minor but they are big on the surprise and uniqueness factor.

These are some of the aspects I discovered during the time I spent playing Farmville. The question that got triggered in my mind is ,

Can non-gaming products take a lesson from these apps and work on the Stickiness and Recall Quotient

I have encountered innumerable start-ups that start with a bang and a lot of offering during their betas , but then stop offering new value additions.A few internet based forums/apps miss out on increasing the recall factor by not creating any notification mechanisms.

Games like Farmville and Mafia wars may not be high on the intellectual aspect but then they do offer a lot of fine learning points to analyze and absorb in other areas.

Do you think Gaming apps will continue to attract the user and the Venture Capitalists alike? Zynga sure seems to be doing it just right

Rupee appreciation or Rupee depreciation – What is good for us?

Arun Prabhudesai — Tue, 26 May 2009 09:49:08 +0000

Many of you would instantly jump on me saying – what a ridiculous question? – Offcourse an appreciated Rupee is good for us any day.

Is it so?

I actually had this debate couple of days back with a friend of mine who is in USA – He literally gave me 10s of reason on why Rupee hovering around 50 is good, while I thought otherwise.

I am researching a bit and putting my thoughts together – will probably do a post in coming days, In the meanwhile, I would like to carry out a poll to see what do trak.in readers think.

[poll id="10"]

Off course, your views and comments are always appreciated, they may also fuel / influence the post I plan on making.

Pause and be grateful for falling stock markets !

Arun Prabhudesai — Wed, 22 Apr 2009 11:14:18 +0000

Today we have guest post by Alex Frankl CFO at MoneyVidya, an Indian stock picking community. He feels that this gentle correction in Indian Stock Market is much better than a violent one later on.

Six weeks of unprecedented and possibly unjustified gains on global indices seem to be in jeopardy as the recent rally begins to run out of steam. This may be no bad thing as a correction, as long as it remains just that, was certainly needed. Further unchecked gains would only have heightened fears of a more dramatic fall to come.

What is telling is that this correction coincides with reporting season in most major markets. This is the one time when the kind of over-optimism we have seen in recent weeks is hard to maintain. The season when everyone is pouring over numbers which all tell a similar story; corporate earnings are suffering and will, for the foreseeable future, continue to suffer.

In fact even ‘positive’ cases which ‘beat expectations’ cannot provide too much succor when the year-on-year comparisons show exactly how pessimistic beaten expectations were in the first place.

Finally it seems the irresistible force (optimism) has met with the immovable object (reality) and found itself to be slightly more resistible than was previously thought.

Now this may turn out to be only a minor pause before the markets set off at a gallop once more. However, if this doesn’t happen and the markets continue to correct, it will be no bad thing; markets need to be in tune with reality .

Now I’m certainly not praying for another crash but a further correction of 10-12%, which is definitely possible in the short to medium term, would not be a cause for concern. That is unless you were one of the people suckered by the recent rally who bought into it last week thinking you could ride the bull all the way back to 20k.

The reality, which will be driven home by corporate reporting here and overseas, is that economic conditions globally, and to a lesser degree in India, are continuing to worsen just at a slower pace. This is good news for the markets but not a reason to get too carried away and certainly no reason to revalue stocks by 30%, which is what we’ve seen.

I cannot predict with any real confidence where the markets will be in a months time, or even a years time. However one thing I do know is that when valuations are out of touch with reality, the market will at some point down the line correct this discrepancy. Better a gentle correction now than a violent one later on.

24 Indian multi-nationals have foreign assets of $15 bn

Sriram Vadlamani — Mon, 20 Apr 2009 05:45:37 +0000

We have seen enough studies on foreign investments in India. Every month and quarter there will be a report that the Private Equity investment has gone down or up. Venture Capitalists and private equity funds have started looking at new avenues and started investing in listed companies in India. But, that’s the story of the inward flow. But, what about the outward flow?

This study by ISB and Vale Columbia Center studies India’s outward flow, its foreign investments and assets. This study has 24 Indian companies which are classified as multi-nationals because of their presence in multiple countries.

The list is dominated by the conglomerates followed by oil & gas companies. IT, pharma, manufacture, energy and engineering industries share the rest of the pie. All the 24 Indian multi-nationals have a total of $15bn in foreign assets.ONGC has the maximum assets with $4.7 billion, followed by the conglomerate Tata group at $4.2 billion.

Companies which are neither conglomerates nor oil & gas majors have significant foreign assets. IT services companies like Wipro, Patni, Hexaware, iGate, NIIT, Birlasoft, Infosys and HCL has a combined assets of $1.1bn.

Here is the complete list of the 24 companies :

Here is the list rolled up to the respective industries :

The Indian investment overseas is in parallel with the foreign investment in India. There is a factor which can be used to multiply the inward flows to arrive at the outward flows. Not sure if you appreciate this but this is quite a trend. I really liked the way this chart below looks.

One trivial factor to note is the official language of the companies in the list. The official language of 23 of the 24 selected companies is EnglishÍ¾ the official language of ONGC is Hindi. (source)

PS : These are not the assets which is being talked about in the election rally. These are totally legal company assets owned with the proper approvals of Indian and foreign governments.