Earnings - 18th Aug 2008

4:13PM Xinhua Finance beats by $0.03, reports revs in-line; guides Q3 EPS above consensus, revs below consensus; raises FY08 EPS above consensus, revs in-line (XFML) 2.72 +0.26 : Reports Q2 (Jun) earnings of $0.10 per share, excluding non-recurring items, $0.03 better than the First Call consensus of $0.07; revenues rose 68.6% year/year to $48.9 mln vs the $49.3 mln consensus. Co issues upside EPS guidance for Q3, sees EPS of $0.11-0.12, excluding non-recurring items, vs. $0.09 consensus; sees Q3 revs of $52-54 mln vs. $54.25 mln consensus. Co raises guidance for FY08, sees EPS of $0.33-0.35, excluding non-recurring items, vs. $0.29 consensus, up from $0.31-0.33; sees FY08 revs of $198-208 mln vs. $199.18 mln consensus, up from $195-205 mln.

4:05PM China Techfaith Wireless beats by $0.01, beats on revs; guides Q3 revs below consensus; co appoints new deputy CEO, President and CFO (CNTF) 2.72 -0.08 : Reports Q2 (Jun) earnings of $0.09 per share, $0.01 better than the First Call consensus of $0.08; revenues rose 76.9% year/year to $56.6 mln vs the $52.8 mln consensus. Co issues downside guidance for Q3 due to seasonality and a weak economic environment, sees Q3 revs of $30-35 mln vs. $59.49 mln consensus. Co says, "However, we foresee a highly competitive environment and challenging economic conditions in the coming quarters. In order to compete in an industry with relatively low profit margins, we are utilizing our engineering knowledge and experience to focus on offering middle to high-end mobile phone products to our customers... As part of the restructuring, the Company also announced the appointment of Mr. Xiaonong Cai as Deputy CEO and member of the Board of Directors, Shugang Li as President, and Ms. Yuping Ouyang as CFO, effective August 15, 2008. Xiaonong Cai will replace Mr. Bob Huo, who has resigned from the co to pursue his personal interests. Bob Huo was also a member of the Co's Board of Directors before his resignation. Shugang Li will replace Dr. Gilbert Lee as the Company's President.

4:02PM VNUS Medical Tech corrects Q2 2008 Results and revises FY08 guidance (VNUS) 23.17 : For the three month period ended June 30, 2008, the Company is adjusting stock-based compensation compared to information disclosed in its press release dated July 29, 2008, resulting in an increase to pre-tax expenses of $183,000. This adjustment reduced reported earnings per share by $0.01 for the three months ended June 30, 2008. Cumulatively, the out of period adjustment and the effect of the correction to reported information originally disclosed in the Company's July 29, 2008 press release reduced earnings per share by three cents, from $0.56 to $0.53. The Company is changing its earning guidance solely due to changes in stock-based compensation expense. Co sees Q2 EPS of $0.06-0.11 and FY08 EPS of $0.73-0.80. (prior guidance $0.06-0.12 & $0.68-0.74)

8:19AM Perrigo misses by $0.02, beats on revs; guides FY09 EPS in-line, revs above consensus (PRGO) 35.37 : Reports Q4 (Jun) earnings of $0.39 per share, excluding non-recurring items, $0.02 worse than the First Call consensus of $0.41; revenues rose 33.6% year/year to $500.2 mln vs the $476.3 mln consensus. Co issues guidance for FY09, sees EPS of $1.90-1.98 vs. $1.95 consensus; sees FY09 rev growth of 13-18%, or roughly $2.06-2.15 bln vs. $2.02 bln consensus.


7:04AM Lowe's beats by $0.08, beats on revs; guides Q3 EPS below consensus; guides FY09 in-line (LOW) 24.50 : Reports Q2 (Jul) earnings of $0.64 per share, $0.08 better than the First Call consensus of $0.56; revenues rose 2.4% year/year to $14.51 bln vs the $14.12 bln consensus. Co issues downside guidance for Q3, sees EPS of $0.27-0.31 vs. $0.33 consensus. Co issues in-line guidance for FY09, sees EPS of $1.48-1.56 vs. $1.50 consensus; sees FY09 rev growth of ~1% which equates to roughly $48.8 bln vs. $48.25 bln consensus.

7:02AM Yucheng Technologies beats by $0.02, beats on revs; guides FY08 revs above consensus (YTEC) 14.23 : Reports Q2 (Jun) earnings of $0.15 per share, excluding non-recurring items, $0.02 better than the First Call consensus of $0.13; revenues rose 139.8% year/year to $25 mln vs the $19.6 mln consensus. Co issues upside guidance for FY08, sees FY08 revs of $88 mln vs. $83.51 mln consensus.

3:41AM Perfect World reports EPS in-line, beats on revs; guides FY08 revenue above consensus (PWRD) 25.40 : Reports Q2 (Jun) earnings of $0.40 per share, in-line with the First Call consensus of $0.40; revenues increased 157.8% year/year to $48.75 mln vs the $48.24 mln consensus. Co issues upside guidance for FY08, sees revenue of RMB368.0-385.0 mln vs the RMB360.88 mln consensus.

1:22AM R.H. Donnelley mentioned positively in Barron's (RHD) 1.88 : Barron's reports R.H. Donnelley (RHD) shares represent a risky but attractive option on the financial viability of the co. RHD expects to generate $475 mln to $525 mln in FCF this year. It has no major debt maturities until 2010. Thus, investors probably get a two-year "look" at Donnelley's business before possible problems loom in 2010, when it will have $1.4 bln in maturing debt. The problem for equity investors is that none of that cash flow is heading directly to them. Instead, management is earmarking all its free cash for debt repayment. The co could take advantage of the depressed prices of its bonds to repurchase debt and reduce its financial leverage, a step management is considering. An activist investor also may get involved. A key issue for R.H. Donnelley is whether recent ad declines represent a permanent shift away from yellow pages, or simply reflect a weak economy. Chief executive David Swanson argues the latter, saying this economy is one of the "worst" he's seen in 30 years for small and medium-sized concerns. Donnelley's strategy is to offset declines in high-margin print yellow pages with online yellow pages and business-to-business e-commerce, which it calls its "triple play." The overall strategy is having some success, though the co doesn't break out the electronic contributions.
1:21AM Fannie Mae and Freddie Mac mentioned negatively in Barron's : Barron's reports it is growing increasingly likely that the Treasury will recapitalize Fannie Mae (FNM) and Freddie Mac (FRE) in the months ahead at taxpayer's expense, availing itself of powers granted it under the new housing bill signed into law last month. Such a move almost certainly would wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 bln of subordinated debt also suffering losses. An insider in the Bush administration tells Barron's Fannie and Freddie are being informally persuaded by the Treasury and their new regulator, the Federal Housing Finance Agency, to raise more equity. But government officials don't expect the agencies to succeed. For one thing, only a "capital raise" of $10 bln or more apiece wouldn't have any credibility. The cost of selling new preferred stock, meanwhile, would seem to be prohibitive for Fannie and Freddie. Should the agencies fail to raise fresh capital, the administration is likely to mount its own recapitalization, with Treasury infusing taxpayer money into the enterprises, according to our source. The infusion would take the form of a preferred stock with such seniority, dividend preference and convertibility rights that Fannie's and Freddie's existing common shares effectively would be wiped out, and their preferred shares left bereft of dividends.

1:19AM Broadcom mentioned positively in Barron's (BRCM) 27.46 : Barron's reports shares of Broadcom (BRCM) don't look expensive at around 16x EPS, well below their median level of 24x EPS for the past five years. On a price-to-sales and price-to-book ratio, Broadcom is trading at about half of where it has historically. "It's cheap, and revisions are going up," says Tony Weber, president and chief investment officer of Veredus Asset Management. Weber is especially interested in Broadcom because of the opportunity presented by its entry into the smartphone market. Broadcom's goal is to achieve a 10% to 15% market share in smartphones, compared with 2% to 3% now. And because most of the research and development for that effort is complete, R&D costs should soon start to fall, boosting the bottom line. Furthermore, its growth in free cash flow suggests shares could be worth 40% more than current levels.

1:17AM Focus Media beats by $0.04, beats on revs; guides Q3 EPS above consensus, revs in-line (FMCN) 26.25 : Reports Q2 (Jun) earnings of $0.44 per share, excluding non-recurring items, $0.04 better than the First Call consensus of $0.40; revenues rose 106.8% year/year to $211.7 mln vs the $191.8 mln consensus. Co issues mixed guidance for Q3, sees EPS of $0.53-0.54, excluding non-recurring items, vs. $0.49 consensus; sees Q3 revs of $225-235 mln vs. $230.11 mln consensus.