Q3 Earnings Preview: EMC Corp, Corning, Wyndham, Dr Pepper and Delta

Q3 Earnings Preview: EMC Corp, Corning, Wyndham, Dr Pepper and Delta

Dozens of large corporations report earnings this morning. We are covering the notable names. Below are five of some of the companies reporting before the opening bell (check out our other articles to see other companies reporting earnings today),  EMC Corporation (NYSE:EMC), Corning Incorporated (NYSE:GLW), Wyndham Worldwide Corporation (NYSE:WYN), Dr Pepper Snapple Group Inc. (NYSE:DPS), and Delta Air Lines, Inc. (NYSE:DAL).

Q3 Earnings Preview: EMC Corp, Corning, Wyndham, Dr Pepper and Delta

  • EMC Corporation (NYSE:EMC) is reporting earnings shortly.  For 3Q12 RBC estimates call for $5.4B in revenues and $0.42 in EPS, estimates are in-line with consensus expectations. In Sept-quarter they believe EMC Corporation (NYSE:EMC) saw relatively stable demand across verticals coupled with benefits from better federal spending and share gains in the channel (ISLN). From a product perspective, they believe mid-range storage (ISLN, VNX and DDUP) had a strong quarter while the high-end VMAX sales may have been softer heading into Dec-qtr. RBC predicts gross-margins of 62.7% in Sept-qtr and Operating margins of 23.7%.  During the conference call the focus will be on 1) IT Spending in year-end , 2) Flash Strategy and TAM, 3) Mid-range competition (ISLN/VNX), 4) Government budget flush and 5) Possible M&A. For the six months ended 30 June 2012, EMC Corporation (NYSE:EMC) revenues increased 10% to $10.41B. Net income increased 21% to $1.24B. Revenues reflect Information Storage segment increase of 7% to $7.51B, VMware Virtual Infrastructure segment increase of 23% to $2.17B, RSA Information Security segment increase of 15% to $427.3M, Domestic segment increase of 13% to $5.49B, Asia/Pacific segment increase of 17% to $1.46B.
  • Corning Incorporated (NYSE:GLW) is reporting third quarter earnings on Wednesday, October 24th. BAML recently changed its estimates for Corning Incorporated (NYSE:GLW) for F3Q12 revenue and EPS to $2.05bn/$0.33 from $2.03bn/$0.32. Their FY 2013 revenue and EPS estimates move to $8.69bn/$1.55 from $8.63/$1.54.  BAML expects Corning to report results that show a stable pricing environment in LCD glass, coupled with the first quarter of gross margin expansion in 2012. Sentiment around Corning Incorporated (NYSE:GLW) shares has improved lately, with strong sell through for China golden week driving increased confidence around near term positive volume trends, benign pricing and increased dividend. Investors  expect some downside risk to telecom, weakness in Dow Corning (expected), but in-line results for environmental, life sciences and specialty (driven by strength in Gorilla Glass). Multiple new product introductions should help Gorilla glass demand in the near term. The yen will likely provide a small q/q benefit to display revenues. Analysts expect  Corning to announce incremental share repurchase authorization once it exhausts its existing program. For the three months ended 31 March 2012, Corning Incorporated (NYSE:GLW)’s revenues remained flat at $1.92M. Net income decreased 38% to $462.0M. Revenues reflect increased income from Display Technologies, Telecommunications, Life Sciences, Specialty Materials and higher revenue from Environmental Technologies segment. Net income was offset by an increase in selling, general & administrative expenses and reasearch, development expenses.
  • Wyndham Worldwide Corporation (NYSE:WYN)  reports 3Q:12 before the bell tomorrow and holds its conference call at 8:30 am. Cantor Fitzgerald analyst, Robert LaFleur, expects WYN  to report EPS and EBITDA of $1.10 and $329 million, respectively. Consensus EPS also stands at $1.10, essentially where it settled out after the 2Q:12 earnings report in July. Robert  believes that Wyndham’s attractive free cash flow story remains intact, and expects that the company continued to aggressively buy shares throughout the quarter. By the time Wyndham Worldwide Corporation (NYSE:WYN) reported 2Q:12 earnings on July 25 — nearly four weeks into the 3Q — it had already repurchased 1.1 million shares. On Wednesday’s call he also expect to hear more about the recent acquisition of, and integration strategy for, Shell Resorts. Wyndham Worldwide Corporation (NYSE:WYN)’s ability to offer sustainable EBITDA growth and strong EPS accretion via buybacks remains a compelling story, according to Robert. For the six months ended 30 June 2012, Wyndham Worldwide Corporation (NYSE:WYN) revenues increased 7% to $2.18B. Net income decreased 14% to $160M. Revenues reflect Vacation Ownership segment increase of 8% to $1.07B, Lodging segment increase of 23% to $418M. Net income was offset by Early extinguishment of debt increase from $13M to $106M (expense), Marketing and Reservation increase of 23% to $357M (expense).
  • Dr Pepper Snapple Group Inc. (NYSE:DPS)  reports third quarter earnings before the market opens. Barclays’ analyst, Michael J. Branca, expects Dr Pepper Snapple Group Inc. (NYSE:DPS) to report third quarter EPS of $0.78 while his full-year earnings estimate remains at $3.00, which is above management’s guidance of $2.90-$2.98 and at the high end of Street expectations ($2.91-$3.00, with a mean of $2.96).  Recent results from both PepsiCo, Inc. (NYSE:PEP) and he Coca-Cola Company (NYSE:KO) paint a less ominous picture than most expected for DPS in the North American soft drink market, especially with respect to both price/mix and Convenience & Gas channel trends. In his view, this has positive implications for  Dr Pepper Snapple Group Inc. (NYSE:DPS), and, he looks for the company to report solid +4.5% top-line growth, driven mostly by price/mix, with a touch of positive shipment volume – supported by solid growth in C&G outlets and the timing of shipments (the Beverage Concentrate segment’s shipment volume decline of -3% is running well below flat CSD case volume growth so far this year).  On a segment basis, Michael forecasts a very low single-digit shipment volume increases for both Beverage Concentrates & Packaged Beverages and note that Latin American Beverages faces a less formidable comp, which should allow for a solid +4.0% volume gain in 3Q12.  No surprise if management narrows the 2012 EPS guidance range (raising the low end), with some adjustments to its outlook on advertising/marketing spending, Rapid Continuous Improvement (RCI) initiatives, input costs and share repurchases.  What investors will be looking for; guidance, top-line growth & value market share performance, price/mix and channel trends, RCI progress & outlook, cash flow & shareholder return updates and commentary, marketing & Advertising spend timing, DP10 trial/repeat rates & prospects,  new product/packaging initiatives. For the six months ended 30 June 2012,  Dr Pepper Snapple Group Inc. (NYSE:DPS) revenues increased 2% to $2.98B. Net income decreased 2% to $280M. Revenues reflect Packaged Beverages segment increase of 3% to $2.19B, Beverage Concentrates segment increase of 2% to $585M. Net income was offset by Beverage Concentrates segment income decrease of 5% to $354M, Latin America Beverages segment income decrease of 4% to $23M.
  • Delta Air Lines, Inc. (NYSE:DAL) is reporting its third quarter earnings before the opening bell. The street expects Delta Air Lines, Inc. (NYSE:DAL) to report Q3 EPS of $0.91, according to Thompson Reuters Estimates. Morgan Stanley is bullish on the stock because, (1) an attractive technical set-up, (2) upside to consensus 4Q EPS ests., (3) moderating fuel prices, and (4) cheap valuations to create a sense of urgency to own shares through year-end …and the longer-term… Looking into 2013, Morgan Stanley believe airlines are well-positioned due to: (1) Continued capacity restraint, (2) Healthier balance sheets, (3) Achievable consensus, and (4) The possibility of M&A. For these reasons, they see significant upside to shares through YE12. Delta Air Lines, Inc. (NYSE:DAL) reported September PRASM growth of 0.5%, a miss vs. management guidance of 1-3% growth. Moreover, Delta Air Lines, Inc. (NYSE:DAL) uncharacteristically issued October PRASM guidance for low-single-digit growth, which also missed MS’ mid-single-digit expectation. For the six months ended 30 June 2012, Delta Air Lines, Inc. revenues increased 7% to $18.15B. Net loss decreased 63% to $44M. Revenues reflect Domestic segment increase of 8% to $6.9B, Load Factor, Total -% increase of 2% to 85.1%. Lower net loss reflects Gain on Extinguishment of Debt decrease from $33M (expense) to $0K. Basic Earnings per Share excluding Extraordinary Items increased from -$0.14 to -$0.05.

Full disclosure: I have a short position in Delta Air. I have no other position in any securities mentioned in this article.

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