Moving the Market

NVIDIA (NVDA 12.27) reported third quarter earnings results after the close yesterday of $0.19 per share. After excluding non-recurring items, this was $0.09 better than the First Call consensus of $0.10.

Revenue rose 0.6% to $903.2 million, which was well above the $838.1 million consensus. The company's gross margins for the quarter were 41%, also well above consensus, which was 37.3%.

Looking ahead, the company issued upside guidance for the fourth quarter, saying it expects revenue to be up slightly, approximately 2%, from the third quarter, which equates to approximately $921.0 million vs. $868.11 million consensus.

The company said, "Revenue was up from a year ago, with improvement in each of our PC, professional solutions and consumer businesses. It's great to see us shipping orders with our Tegra mobile-computing solution, and growing enthusiasm for our Tesla platform for parallel computing in the server and cloud-computing markets."

American International (AIG 39.28) reported third quarter earnings results of $2.85 per share. After, excluding non-recurring items, this was $0.87 better than the First Call consensus of $1.98.

The company reported that at September 30, 2009, total equity was $76.5 billion, a $14.4 billion increase from $62.1 bln at June 30, 2009. The increase includes $455 million of net income attributable to AIG, $12.1 billion of unrealized appreciation of investments, $2.1 billion from a draw-down of the Department of the Treasury Commitment related to the Series F Fixed Rate Non-Cumulative Preferred Stock, partially offset by a $350 million reduction in non-controlling interests.

The company said, "Our results reflect continued stabilization in performance and market trends. AIG employees are working to preserve the strength of our insurance businesses in a challenging market by working closely with our distribution partners, with third quarter 2009 showing signs of stabilization. Pricing in our commercial property casualty business has been stable. Management continues to monitor rates closely and maintain underwriting discipline, turning away some renewal business due to aggressive pricing by existing and new competitors. At AIGFP, virtually all key risk measures are down significantly and the earnings again benefited from a positive unrealized market valuation gain on the Super Senior Credit Default Swap portfolio.

The company also said, "Additionally, we announced the sales of Nan Shan and a portion of AIG's investment advisory and asset management business, as well as the combination of our Domestic Life Insurance & Retirement Services businesses and ongoing efforts to build their value as part of AIG... Improved market performance, together with application of the new investment impairment accounting standard adopted in the second quarter of 2009, drove a reduction in net realized capital losses compared to third quarter 2008 and positive valuation changes for our Maiden Lane Interests, as well as increases in partnership and mutual fund income. These gains were offset by impairments in the Asset Management segment, higher current accident year losses related to credit crisis exposures and prior accident year losses in General Insurance and lower income from Life Insurance & Retirement Services investment-linked and annuity products globally. When we close the special purpose vehicles with respect to AIA and ALICO with the Federal Reserve Bank of New York (FRBNY), we expect to recognize an approximate $5 bln charge for accelerated amortization of the prepaid commitment asset. These transactions are expected to close in the fourth quarter."

Starbucks (SBUX 20.53 +0.83) reported earnings and revenue results after the close yesterday, which topped Wall Street estimates.

The company reported fourth quarter earnings of $0.24, which was $0.03 better than the First Call consensus of $0.21. Revenue fell 3.7% year/year to $2.42 billion vs. the $2.39 billion consensus.

Non-GAAP operating margin improved 570 basis points y/y to 10.4%, previous quarter was 10.6%. Co delivered cost savings of $580 million for FY09, above its target of $550 million.

The company had restructuring charges of $53 million in the quarter compared to $51.6 million in the third quarter. Same store sales declined 1.0% compared to street expectations of -2.6%.

For the fiscal year 2009, the company issued upside EPS guidance of $0.80 vs. the consensus of $0.76. Separately, the company raised operating margins target improvement year/year to 200 to 250 bps from 150 to 200 bps.

For 2010, the company says it expects to see little impact from commodities.

Activision Blizzard (ATVI 11.36 +0.50) reported third quarter earnings per share of $0.04. After excluding non-recurring items, this was in-line with the First Call consensus of $0.04.

Revenues rose 5% year/year to $755 million vs. the $724 million consensus.

Looking ahead, the company issued earnings per share guidance for the fourth quarter of $0.43, which was slightly below the $0.44 consensus. Also, the company issued revenue guidance of $2.2 billion vs. the $2.3 billion consensus.

The company said, "Our performance was driven by positive audience response to Activision Publishing's Guitar Hero 5, Marvel: Ultimate Alliance 2, and the Guitar Hero and Call of Duty franchises, as well as Blizzard Entertainment's World of Warcraft. Year to date through September 30, the Guitar Hero franchise was the #1 best-selling third-party franchise in North America and Europe."

Crocs (CROX 5.76 -1.08) reported third quarter earnings results of $0.25 per share, which may not be comparable to the First Call consensus of ($0.08).

Revenues rose 1.7% year-over-year to $177.1 million vs. the $156.4 million consensus. Third quarter 2009 net income includes the effects of the following: $9.6 million gross margin impact related to sales of product that had been previously impaired -- $1.0 million gain from foreign currency exchange rate fluctuations during the 2009 third quarter, and -- $14.4 million one-time tax benefit related to a change in the Company's corporate tax structure. On a non-GAAP basis, the company reported earnings per share of $0.01.

For the fourth quarter, the company issued in-line guidance of ($0.20)-($0.15) vs. ($0.16) consensus and guided revenue of $110 million to $115 million vs. the $113.62 mln consensus.

The company said, "While we are encouraged by our top-line growth and return to profitability in the quarter, the normal seasonality of our business will make it difficult to maintain profitability in the fourth quarter. However, future wholesale bookings for the spring 2010 line are strong in all regions. When coupled with the launch of our new, targeted marketing programs, this provides us with increased confidence that we will return to profitability during 2010. In the meantime, we will continue to invest in the products, systems, processes and customer relationships necessary to deliver the best long-term results."