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Fifth Street Finance Corp. Message Board

  • thewisejman thewisejman Apr 21, 2013 10:47 AM Flag

    It is all about Earning

    I believe what will decide if the recent market rally will continue or not, will depend on the future earnings announced by many of the large US corporations. The recent earnings by some of our larger corporations are quite sporadic. Walmart's earning top estimate but future guidance was weak. Microsoft's recent earning report was exceptional, but according to Computer World:
    " Overall Microsoft reported revenue of $20.5 billion for the quarter that ended March 13, an increase of 18 percent compared to the same quarter a year ago. The big surprise was Windows Division revenue of $5.7 billion, up 23 percent compared to the quarter a year previous. That certainly sounds like good news.

    But it's not necessarily so. That revenue includes $1.1 billion of revenue that was really gained in previous quarters, from Windows 7 sales under a program to offer free Windows 8 upgrades. So in truth, Windows sales were flat from the year previous."

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    • "Alcoa reported first quarter results that topped expectations on both the top and bottom lines as revenue surged to a record high, the company said this afternoon." on Business Insider, 4/10/13.

      Yet, "Philip Morris International (NYSE: PM [FREE Stock Trend Analysis]) is down on Thursday after posting a weak first quarter and lackluster guidance."
      "Shipments Stink

      Shipment volumes declined in three of the world's largest tobacco company's segments.

      The most substantial setbacks occurred in Asia and the EU, with volumes dropping 10.4 and 10.1 percent, respectively. Revenue fell 4.6 percent to $1.34 billion in Asia and around nine percent to $938 million in the EU.

      Shipments in Latin America and Canada took a significant hit, as well, falling 7.5 percent during the quarter. Interestingly, though, revenue from this segment rose 7.2 percent to $254 million.

      The only bright spot from a shipment standpoint was the company's Eastern Europe, Middle East and Africa segment, which shipped 1.4 percent more cigarettes. Revenue on this front soared 15.4 percent to $935 million.

      Overall, Philip Morris shipped nearly 205 billion cigarettes, down 6.5 percent year-over-year.

      A Taxing Experience in the EU

      Philip Morris' EU business was hit hard by an increase in excise taxes. Two-thirds of its net sales were eaten up by excise taxes in this segment as compared to around half in all other segments. In other words, of the approximately $0.15 cost per cigarette, Europeans paid about $0.10 in taxes.

      Overall, 59 percent of the company's sales came in the form of excise taxes, representing a slight increase versus Q1 2012. Investors should note that excise taxes were not included in the reported revenue of $7.6 billion."

      It appears that any US companies whose future earning depend on Europe will be affected by their economies and increased tariffs/taxes.

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