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Earnings Reveal The Consumer Pulse

Posted: Dec 10, 2009 09:39 AM by Billy Fisher

Tickers in this Article: ADBE, BBY, ERTS, THQI, TTWO

Next week multiple companies in the technology space will report quarterly earnings. Here are three companies in particular to keep an eye on when they release their results in the days ahead.

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Great Expectations
Shareholders of the video game publisher Take-Two Interactive Software (Nasdaq:TTWO) took one on the chin earlier this week when the company said that it expects its Q4 results to be lower than previous guidance due to multiple factors including weaker-than-expected sales from its Major League Baseball titles and inventory write-downs. The company is slated to report its earnings on Monday, so there should be little in the way of additional surprises.

Take-Two's competitors have also been struggling. Last month, Electronic Arts (Nasdaq:ERTS) posted a fiscal Q2 loss of $1.21 per share compared to a loss of $0.97 per share in the year-ago quarter. Unfortunately, the company now plans to lay off 17% of its workforce. THQ (Nasdaq:THQI) also posted a fiscal Q2 loss last month.

Feelin' the Holiday Spirit
When Best Buy (NYSE:BBY) announces its quarterly earnings on Tuesday, analysts will be calling for the company to check in with a 20% rise in EPS on a 3.9% improvement in Q3 revenue when compared to the same time period last year. Shares of Best Buy have surged over 50% so far this year.

In September, the electronics retailer reported its Q2 results which showed a 12.5% increase in revenue accompanied by market share gains. Diluted EPS did fall by 22.9%, but Best Buy management was still able to increase its FY 2010 outlook as consumer traffic has finally begun to stabilize.

Seizing Acquisition Opportunities at Adobe
On Tuesday after the market close, Adobe Systems (Nasdaq:ADBE) will also release its fiscal Q4 results. Wall Street is anticipating that the company will announce a 38.3% drop in EPS on an 18% slide in sales on a year-over-year basis. Shares of Adobe presently trade near a 52-week high and are up close to 70% from the beginning of the year.

Back in September, Adobe announced similar trends in its Q3 results, but continued along a path of expansion. The company has since successfully completed its tender offer to acquire the business optimization software provider Omniture. In 2008, Omniture achieved record revenue with $296 million in sales. This figure more than doubled the company's 2007 top line results.

The Bottom Line
The results should be mixed when these companies report their quarterly results next week. Best Buy and Adobe could serve as indicators that the economy is headed back in the right direction while Take-Two will likely remind us that it still could be some time before consumers really begin to reach deeper into their wallets.

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By Billy Fisher

Filed Under: Stock Analysis,Stocks

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