Moving the Market

Dell (DELL 15.87) reported disappointing third quarter numbers Thursday evening, missing both earnings and revenue estimates, but the company said it is seeing improvement in overall underlying IT demand.

Dell reported third quarter earnings of $0.23 per share, excluding nonrecurring items, $0.05 worse than the First Call consensus of $0.28.

Revenues fell 14.9% year-over-year to $12.9 billion, short of the $13.18 billion consensus.  Sales in China, India, Brazil and Russia were up 18% sequentially and 5% from the prior year.  Dell said that sales in China, its second-largest country in terms of revenue, were up 20% sequentially and 8% year-over-year.

"We are seeing improvement in overall underlying IT demand that is continuing into the fourth quarter. The same is true with momentum in Dell's business, specifically in our Large Enterprise and SMB segments," said CEO Michael Dell.  "The launch of Windows 7 is being very well received by SMBs and consumers, and we'll see the benefits of that more fully in our fiscal Q4."

For the fourth quarter, Dell said it expects seasonal demand improvement in its consumer business and revenue to improve over the third quarter.

Shares of DELL are down 6.8% in premarket trading 30 minutes ahead of Friday's opening bell.

J. M. Smucker (SJM 53.48) reported much better-than-expected earnings for its fiscal second quarter, led by solid sales from the Folgers coffee brand, which was acquired a year ago.

Smucker reported fiscal second quarter earnings of $1.18 per share, excluding $0.04 of amortization.  The results were $0.14 better than the First Call consensus of $1.04.

Revenues rose 51.7% year-over-year to $1.28 billion, slightly ahead of the $1.24 billion consensus.  The addition of Folgers accounted for the year-over-year improvement.  Excluding Folgers and foreign exchange, net sales were down 6% from the prior year.  Smucker said volume was up 1%, more than offset by a 7% decline due to price and mix, with price reductions in the U.S. retail oils and baking segment the key driver.

"With strong momentum in the first half of the year, and confidence in our strategy and our ability to execute this strategy, we are raising our outlook for the year," said co-CEO Richard Smucker.  The company now expects full year earnings of $3.95 to $4.05 per share, up from the previous range of $3.65 to $3.80 and ahead of the current consensus estimate of $3.83.

Smucker reaffirmed its full year revenue forecast of $4.5 billion; the consensus stands at $4.55 billion.

Shares of SJM are 23.3% higher year-to-date and have only slightly outperformed the S&P 500, which is up 21.2% year-to-date.

Gap (GPS 21.68, -0.18) reported in-line third quarter earnings and improved margins, but strong sales results at the company's Old Navy stores were offset by continued declines at Gap and Banana Republic.

Gap reported third quarter earnings of $0.44 per share, in-line with the First Call consensus of $0.44.

Revenues increased 0.8% year-over-year to $3.59 billion; the consensus expected $3.58 billion.  Same-store sales were flat.  Same-store sales at Old Navy increased 10%, while Gap dropped 7% and Banana Republic fell 6%.

Gap said its third quarter gross margin increased 380 basis points to 42.5%; operating margins increased to 13.9% from 11.1% last year.

In a separate release, Gap announced that its board of directors authorized an additional $500 million share repurchase program.

Shares of homebuilder D.R. Horton (DHI 11.02, -1.23) are under pressure early Friday after the company reported a wider-than-expected fiscal fourth quarter loss and missed Wall Street's revenue estimates.

D.R. Horton reported a loss of $0.73 per share for its fiscal fourth quarter, $0.43 worse than the First Call consensus that called for a loss of $0.30.

Revenues fell 34.6% year-over-year to $1.01 billion, short of the $1.11 billion consensus.

The company's sales backlog of homes under contract at Sept. 30 was 5,628 homes (worth $1.1 billion), compared to 5,297 homes (worth $1.2 billion) last year.

"Our net sales orders in the September quarter reflected a 26% increase compared to the prior year quarter," said Donald R. Horton, chairman of the board. "However, market conditions in the homebuilding industry are still challenging, characterized by rising foreclosures, high inventory levels of available homes, increasing unemployment, tight credit for homebuyers and weak consumer confidence."

Shares of DHI are down just over 10% in the first hour of Friday's trading.

Intuit (INTU 29.47, -0.80) reported a narrower-than-expected loss for its fiscal first quarter and issued downside earnings guidance for its second quarter, but the company said it continues to see growth in its core businesses.

Intuit reported a fiscal first quarter loss of $0.10 per share, $0.06 better than the First Call consensus that expected a loss of $0.16.

Revenues rose 2.5% year-over-year to $493 million, topping the $487.7 million consensus.

The publisher of TurboTax said that its operating results exceeded guidance due to a shift in marketing expenses from Q1 to Q2 and to continued diligence on spending and resource allocation.

"Intuit's solid revenue and operating results give us a good start to the fiscal year, with our most important quarters ahead of us," said CEO Brad Smith.  "With these early results, we are confident that we will grow revenue and expand operating margins."  Smith added, "We continue to see growth in our core business and are making progress in building out adjacent businesses."

Intuit said it expects earnings for the second quarter to range from $0.29 to $0.32 per share; the consensus stands at $0.37.  Intuit projects revenues to range from $800 million to $835 million; the consensus expects $832.99 million.

For fiscal 2010, Intuit expects revenues to range from $3.30 billion to $3.43 billion; the consensus estimate stands at $3.38 billion.