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GS Earnings Stunner; June CPI; Smithfield Surprise; AT&T Turning into Contract Killer

Dan Berman
Hot Stock Minute
GS Earnings Stunner; June CPI; Smithfield Surprise; AT&T Turning into Contract Killer

Every company must wish they could be as good as Goldman (GS). The company absolutely shattered estimates when it released quarterly earnings at 7:30. Goldman earned $3.70 a share when expectations were for $2.82. Revenue was upwards of $8.6 billion when expectations were below $8 billion. Editor-in-Chief Aaron Task has more in the video above.

Johnson & Johnson (JNJ) and Coca-Cola (KO) also reported earnings this morning. J&J had a strong beat with earnings of $1.48 a share when estimates were for $1.39. Revenue was $17.9 billion beating expectations of $17.713 billion. Coke, however, has lost some of its fizz, merely meeting earnings estimates with 63-cents a share. It missed on revenue posting $12.75 billion versus $12.959 billion.

The Consumer Price Index climbed slightly more than predicted in June. The Department of Labor says Consumer Prices rose .5% for the month. Expectations had been for a rise of .4%. CPI rose .1% in May.

If you thought the proposed takeover of Smithfield Foods (SFD) wasn't kosher, listen to this latest development. Reuters reports that once China's Shuanghui buys Smithfield, it wants to list the combined company on the Hong Kong stock exchange. The thinking is, that would place a higher valuation on the stock than if it traded in the U.S. or the smaller Shenzhen which is where Shuanghui trades right now. Smithfield is up 48% year-to-date largely on Shuanghui's $4.7 billion buyout offer, which it made in late May.

AT&T (T) may be turning into a contract killer. The company is set to announce a new program today where customers pay the full price for a smartphone, but can then upgrade after a year instead of two. T-Mobile announced a similar plan last week. A major goal of these programs is to eliminate the subsidies which the carriers currently pay under the contract system.


Charles Schwab (SCHW) is set to report earnings during the trading day. Analysts are expecting earnings of 19-cents a share down a penny from a year ago, despite a slight rise in revenue. Both revenue and net income were down in the last quarter from a year earlier. In fact, per-share earnings fell 25%. Nevertheless Schwab stock is up 44% since we rang in 2013. Shares are up more than 71% in the last year.

Cintas (CTAS) which is down 4% in early trading. The uniform maker just missed estimates when it reported after yesterday's closing bell. Cintas says it earned 19-cents a share when expectations were for 20-cents. The company matched on revenue at $1.13 billion. The real problem here was lowered guidance. Cintas says uncertainty over the economy has caused many companies to hold off on hiring, so there's less demand for its products. The CEO pointed to the new health care law as one hurdle. Cintas is up 21% year-to-date, and actually set a new 52-week high yesterday before releasing the report.

Joe's Jeans (JOEZ), which has been down 14% since reporting earnings after yesterday's closing bell. The company says it made 2-cents a share when analysts expected 3-cents, Revenue was also below estimates, just shy of $31 million. Despite the miss, revenue was up 8% from a year ago. Separately, the company announced that it's buying competitor Hudson Clothing in a deal for almost $100-million. Prior to the drop we're seeing this morning, shares have been up 84% year-to-date.

Finally, we don't want to ignore the fact that our own company, Yahoo (YHOO), will be reporting after the closing bell. Shares are up fractionally at this hour. Tomorrow marks CEO Marissa Mayer's first anniversary with the company. Analysts are expecting revenue to be flat from last year at just over $1 billion. But the consensus is that net income will rise 3-cents to 30-cents a share. Mayer's tenure has been marked by a series of acquisitions, most notably micro-blogging site Tumblr. She is also credited with improving the company's cool factor. But so far ad sales have been stagnant. Yahoo's share price has climbed 75% in the year since Mayer came to the company from Google.