Rogers Communcations 1Q07 Earnings Preview

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Rogers Communications is expected to report 1Q07 EPS of 18 cents on revenues of $2.03 billion. Those figures appear to be in US dollars but the company will report in Canadian dollars so look for about 15% more on both in the press release.
RG has been growing very rapidly over the past year thanks to its wireless business with cable providing an added bump. I expect 1Q07 to show a continuation of these trends. This should be good news for the stock but the likely privatization of BCE Inc. (BCE), Canada’s largest telecom company, has taken precedence in recent stock price action for RG. RG shares have risen by 20% since late March. I think projected 2007 results support the current price but without the BCE news bringing the prospect of private equity taking a run at other Canadian telecoms, I don’t think the shares would be this high already….

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Verizon 1Q07 Earnings Offer Upside

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Verizon 1Q07 earnings were right on target with EPS of 54 cents and revenues of $22.6 billion right in line with the consensus estimates. Key subscriber metrics also closely matched analyst estimates. With the numbers all very close to expectations, I don’t expect a big reaction in the shares. Additionally, analyst estimates for the balance of 2007 should be quite stable.
As always with VZ, it is a story of wireless vs. wireline. Wireless grew very strongly with service revenues up 18% as the company added 1.7 million new subscribers. Industry leading churn was even lower than expected at 1.08%. The mix of new subscribers was virtually all postpaid which is usually greeted favorably by investors. If there was one surprise in VZ’s results it was better than expected wireless ARPU of $50.73. I think most analysts were looking to slightly less than $50. Growing data revenues appear to be the source of the upside with data ARPU at almost $9 per month, up sharply vs. a year ago….

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Comcast: Buy on Weakness

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Comcast (CMCSA/CMCSK) reported solid first-quarter earnings of 26 cents per share on revenue of $7.39 billion. These numbers were extremely close to consensus estimates and all financial and subscriber metrics. The figures did not provide the upside to consensus estimates that I and others were expecting, however, following very bullish comments from CEO Brian Roberts at several Wall Street conferences over the past couple of months.
The results reinforce my positive view of Comcast shares and my belief that they will trade at significant new highs during 2007 but are likely to be met by selling initially due to the lack of upside in the numbers. I am very close to adding Comcast to Northlake client accounts and will limkely pull the trigger if siginficant weakness occurs….

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Lots of Shine to Apple

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Apple (AAPL) 2Q07 results were spectacular and the feared “even more conservative than usual guidance” failed to materialize. I think the shares should be higher and my only concern is technical in that the muted upside suggests the massive battleground that has become AAPL will continue. I was especially pleased with Mac sales which showed a little upside in the quarter. I don’t think the upside was any more meaningful than the slight downside last quarter but the trend is unmistakable: Macs are gaining share. iPod sales were also solid although they were effectively preannounced. Growth in non-US markets continues strong (ex-Japan) which is key as iPod market share is much lower abroad. Assuming a decent stock market I think AAPL shares are entering a new higher trading range of $95-115 ahead of the iPhone launch. I have little fear about initial iPhone demand. What will matter is product reviews. I am perfectly happy to have so many bashers of the product out there as they are keeping expectations in check.
There is really a lot to say about AAPL this quarter than in the past. The quarter was fantastic and there is virtually no reason to complain. EPS came in at 87 cents easily beating consensus of 64 cents and the whisper number of 70 cents. Part of the upside came from better tan expected revenues due to an extra 100,000 Mac sales and stable average selling prices on iPods…..

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Regal Entertainment Has A Great First Quarter

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Regal Entertainment (RGC) shares rose 4% following better than expected 1Q07 earnings. RGC was able to convert the strong 1Q box office into better margins and EBITDA which bodes very well for the next two quarters when the box office should be record breaking. The shares have now regained more than the $2 special dividend paid earlier in April with proceeds of the National Cinemedia (NCMI) IPO. I think box office momentum can drive RGC to $23-24 at which point I expect to be a seller as comps will be tough in 2008. Since I started buying RGC for clients a little over year the company has paid $3.20 in special and quarterly dividends on top of $1.60 in share appreciation. The total return is 24%. Not bad for the supposedly comatose movie theatre industry.
RGC rode a 7% gain in domestic box office to a gain of over 8% in its own 1Q admissions revenue as a favorable mix of PG-13 and R-rated films led average ticket prices to be higher than expected. Coupled with good expense control, the revenue upside pushed operating margins a little above expectations as well. Better than expected EBITDA was the result and this is the key financial measure investors in theatres focus on….

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Excellent Results From NII Holdings – $100 Stock Price Within Reach

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NII Holdings (NIHD) 1Q07 numbers were virtually on top of my estimates across the board. Every financial and subscriber number on a corporate and country-by-country basis was right on target. Since my expectations were at the high end of the street estimates, this sets the stage for upside to current estimates later in the year. Despite the strong results, NIHD did not increase its won guidance but this is not anything to be concerned about as the company has typically waited until the second quarter conference call to update guidance.
NIHD has a history of beating estimates and its own guidance and momentum coming out of 1Q is excellent. Subscriber growth, revenue, margins, EBITDA, and free cash flow are all poised to accelerate as the build out of its network in Mexico and Brazil winds down later this year. Subscriber growth in 1Q in both markets was a little ahead of expectations setting up really strong operating leverage later this year and in 2008. Even more encouraging, the cost to acquire customers in 1Q was lower than expected. Normally, when a cellular company acquires more customers than expected operating income is below expectations because of the cost of acquiring the extra customers. If NIHD can sustain the lower cost per gross subscriber addition, operating leverage will be even better than expected….

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The Bloom Comes Off the Scripps Rose

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E.W. Scripps (SSP) reported in line 1Q07 earnings but guidance for 2Q and implied guidance for 2007 is well below street estimates. In my preview I suggested that estimates could come down and that the stock would be attractive in the $30s. It looks like we might get a chance to buy at that level.
1Q results were a little better than expected on the EPS line driven by the Cable Networks segment where revenues rose 13% and EBITDA rose 20%. This good performance was partially offset by worse than expected performance at the Newspapers where revenues fell 9% and EBITDA fell by 37%. SSP’s newspapers outperformed last year partially due to their Florida exposure. That is now coming back to bite as real estate advertising is collapsing and other categories remain poor.
TV station and Interactive results in 1Q were pretty close to estimates. TV actually was a bit better than expected with revenues falling 8% and EBITDA declining 27%. The stations are actually performing well but had tough comps due to political, Super Bowl, and Olympic advertising a year ago. Interactive came in a little worse than expected as pro forma revenues fell 9% and the division at operated at a small loss….

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Apple 2Q07 Earnings Preview

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My colleague at StreetInsight.com, Ben Thomas, will be providing officail coverage of Apple’s earnings report for the site. I’ll be listening to the call and have my own comments but here is Ben’s preview. He captures my views well although I’d add that guidance could be even more conservative than usual given the dealy in Leopard and the psssibility that the iPhone launch leads to a pause in iPod demand. Additionally, I thin consensus on iPod shipments in the March quarter is more like 10.5 million units.
Here is Ben’s preview…

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Regal Entertainment and NII Holdings 1Q07 Earnings Previews

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Regal Entertainment (RGC) and NII Holdings (NIHD) report before the open on Thursday. I’ll be visiting with clients out of town most of Wednesday and Thursday so I won’t be able to get any comments on the results until Friday. The following brief previews should help you put the numbers in perspective….

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San Jose Mercury News Clears Jobs of Criminal Activity in Options Probe

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In a lengthy article, the San Jose Mercury News is reporting that it is unlikely that Steve Jobs will be charged with a criminal offense in the Apple (AAPL) options backdating scandal. The article leaves open the possibility of SEC action but SEC action would not require Jobs to leave the company.
The article contains a timeline of Board actions that seem to exonerate Jobs. We won’t know the outcome of the investigations by the US Attorney’s office or the SEC until they are announced but for the short-term the market is likely to be very happy about the article.
Timing on this article is good as AAPL reports after the close on Wednesday.