10:05 am S&P Consumer Discretionary Index +1.1%
The consumer discretionary group is in-line with the broader market in early trade. The retail group is also in the green with the Retail HOLDRS Trust (RTH) 0.8% and the SPDR S&P Retail ETF (XRT) 1.6%.
Trading higher following earnings/guidance: RUTH +8%, WTW +8%, AXL +7.1%, NCMI +4.2%, OPEN +3.7%, SUP +2.9%, CCO +2.6%, NWL +2.3%, HST +1.1%... Trading lower following earnings/guidance: LNKD -8.8%, DOLE -4.8%, HAIN -3%, WPO -1.2%, SPF -0.7% Other notable mentions: DIS (halts production in Bangladesh, Ecuador, Venezuela, Belarus and Pakistan, according to reports), NFLX 0.3% and CSTR 1.5% (reports out that Target (TGT) is launching TV/movie service)... Leaders: SHLD 2% (Sears Hldg CEO not finished unloading stores, according to reports ), LEE 5.3% (promotes Kevin Mowbray to Chief Operating Officer), GMCR 3.1% (announces its Keurig K150 Series Commercial Brewing System has been certified by the National Sanitation Foundation for foodservice use) Analyst related: Upgrades: TSCO 2.1% (upgraded to Outperform from Perform at Oppenheimer), BEAM 0.7% (upgraded to Buy from Neutral at Citigroup), GIL 1.8% (upgraded to Neutral from Sell at Citigroup, SNAK 2.5% (upgraded to Buy at B. Riley ), NCMI 4.2% (upgraded to Overweight from Neutral at JP Morgan)... Downgrades: BBBY -0.3% (downgraded to Perform from Outperform at Oppenheimer), PETM flat(downgraded to Perform from Outperform at Oppenheimer), BONT -2.9% (downgraded to Hold from Buy at KeyBanc Capital Mkts, RDEN flat (downgraded to Market Perform from Outperform at BMO Capital), SBH flat (downgraded to Equal Weight from Overweight at Barclays), MELI -1.1% (downgraded to Neutral from Buy at BofA/Merrill), LULU -0.9% ( downgraded to Neutral from Outperform at Wedbush)
9:02 am Strong Employment Growth Masks a Decline in Aggregate Wages
On the surface, the employment report for April looked good. Payroll growth exceeded expectations, increasing by 165,000 . That was 10,000 more than the 155,000 expected by the Briefing.com consensus. Revisions in March, to 138,000 from 88,000, and February, to 332,000 from 268,000, were strongly positive. Yet, the underlying details point toward weaker consumption levels. The average workweek dropped to 34.4 hours in April from 34.6 and average hourly earnings increased 0.2%. The decline in workweek more than offset the increase in payrolls and earnings. Altogether, aggregate wages declined 0.3% in April. That would be the first decline in wages since January. We are working under the assumption that consumers will gradually raise their savings rate back toward the 3.5% that it averaged during most of 2012. If households increase their savings amid declining wages, there is no chance that consumption levels can remain positive. It would not be surprising, given these figures, if retail sales decline for a second consecutive month in April. The unemployment rate ticked down to 7.5% in April from 7.6% in March. The consensus expected the unemployment rate to remain at 7.6%. Unlike in past months, the drop in the unemployment rate was due to more workers finding jobs. The number of employed rose by 293,000. Unfortunately, most of those new jobs were found in part time employment. The number of employed persons working part time for economic reasons increased by 278,000. That could explain why the average workweek shrank.
7:48 am Zagg shares plunge 24% following miss on earnings and downside guidance
ZAGG (ZAGG $5.20 -1.68) reported first quarter earnings of $0.11 per share, $0.09 worse than the Capital IQ consensus of $0.20; while revenues fell 7.2% year/year to $51.5 million vs the $66.52 million consensus. The company issued downside guidance for FY13, sees FY13 revs of $274-280 million vs. $315.78 million Capital IQ Consensus Estimate. "This was a uniquely challenging quarter in which our results were impacted by a number of circumstances, some that were macro in nature and others that were company specific. Though the company experienced reduced sales, ZAGG also realized benefits to its financial activities through the pay down of our line of credit and the repurchase of company stock," said Randy Hales, president and CEO. "We are working internally to make necessary changes to build a superior company and increase shareholder value over the long-term. While the consequences of these changes in the near-term are challenging, I remain confident that we are building a stronger foundation for growth. Our creative product solutions, go-to-market strategies and diversification of our overall portfolio are what set ZAGG apart from the competition and our retailers have recognized that. In fact, next week a large retail customer will highlight us as one of its top suppliers in 2012 and the first ever in the mobile accessories industry."
7:46 am AIG shares rise 3% following beat on earnings
American Intl (AIG $43.30 +1.17) reported first quarter earnings of $1.34 per share, $0.46 better than the Capital IQ consensus of $0.88. Book value per share, excluding Accumulated other comprehensive income (AOCIF), of $59.39, up 12 percent from the prior-year first quarter. AIG Parent liquidity sources amounted to approximately $15.0 billion at March 31, 2013, including $5.5 billion allocated toward future maturities of liabilities and contingent liquidity stress needs of the Direct Investment book and Global Capital Markets.
7:45 am Digital River shares fall 3% following downside guidance
Digital River (DRIV) reported first quarter earnings of $0.33 per share, excluding non-recurring items, $0.13 better than the Capital IQ Consensus Estimate of $0.20; revenues rose 11.0% year/year to $113.7 million versus the $102.61 million consensus. The company issued downside guidance for Q2, sees EPS of $0.01-0.04, excluding non-recurring items, versus the $0.13 Capital IQ Consensus Estimate; sees Q2 revs of $89-92 million vs. $93.35 million Capital IQ Consensus Estimate. The company issued mixed guidance for fiscal year 2013 wit EPS of $0.55-0.65, excluding non-recurring items, versus the $0.78 Capital IQ Consensus Estimate; sees FY13 revenue growth of 2-5%, equates to ~$394-406 million vs. $395.50 million Capital IQ Consensus Estimate.
7:44 am OpenTable shares fall 2% despite better than expected earnings
OpenTable (OPEN $56.70 -0.96) reported first quarter earnings of $0.45 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.43; revenues rose 15.5% year/year to $45.5 million vs the $45.57 million consensus. Installed restaurant base as of March 31, 2013, totaled 20,128, a 13% increase over March 31, 2012. Seated diners totaled 34.3 million, a 24% increase over Q1 2012. Guidance: The company issued in-line guidance for the second quarter with EPS of $0.45-0.49 versus the. $0.47 Capital IQ Consensus Estimate; sees Q2 revs of $44.9-46.2 million vs. $46.66 million Capital IQ Consensus Estimate The company issued in-line guidance for FY13, sees EPS of $1.88-2.02 versus the $1.90 Capital IQ Consensus Estimate; sees FY13 revs of $185.3-190.9 million vs. $189.43 million Capital IQ Consensus Estimate "We're pleased with seated diner growth during the first quarter in both our North America and International business segments," said Matt Roberts, President and CEO of OpenTable. "More than one third of the 34 million diners we seated in North America during the quarter were attributable to mobile, and we're continuing to optimize our mobile products around the globe to further capitalize on the opportunity."
7:43 am LinkedIn shares plunge 9% following downside guidance
LinkedIn (LNKD $180.00 -19.67) reported first quarter earnings of $0.45 per share, excluding non-recurring items, $0.14 better than the Capital IQ consensus of $0.31, while revenues rose 72.3% year/year to $324.7 million versus the $318.04 million consensus; adj. EBITDA $83.4 million vs. $67-69 million vs. $71 million consensus. The company issued downside guidance for Q2, sees Q2 revs of $342-347 million versus the $359.89 million Capital IQ Consensus Estimate; sees Q2 adjusted EBITDA of $77-79 million vs. the approximately $85 million consensus.
The company raised fiscal year 2013 guidance below consensus, raises FY13 rev to $1.43-1.46 billion from $1.41-1.44 vs. $1.50 billion Capital IQ Consensus Estimate; raised FY13 adjusted EBITDA to $330-345 million from $315-330 million vs. the $357 million consensus. Talent Solutions: Revenue from Talent Solutions products totaled $161.0 million, an increase of 90% compared to the fourth quarter of 2011. Talent Solutions revenue represented 53% of total revenue in the fourth quarter of 2012, compared to 51% in the fourth quarter of 2011. Marketing Solutions: Revenue from Marketing Solutions products totaled $83.2 million, an increase of 68% compared to the fourth quarter of 2011. Marketing Solutions revenue represented 27% of total revenue in the fourth quarter of 2012, compared to 30% in the fourth quarter of 2011. Premium Subscriptions: Revenue from Premium Subscriptions products totaled $59.4 million, an increase of 79% compared to the fourth quarter of 2011. Premium Subscriptions represented 20% of total revenue in the fourth quarter of 2012 and 2011.
