Netflix (NFLX) Beats but Guides Weak; IBM Mixed; United, CSX Top
A busy afternoon for Q1 earnings results after today's closing bell are taking headlines today: Netflix NFLX and IBM IBM, along with transportation giants United UAL and CSX Corp. CSX, have all reported Tuesday afternoon. Results overall are decidedly mixed.
Although Netflix outperformed expectations notably on its top and bottom lines -- 76 cents per share as compared with the Zacks consensus 57 cents (8 cents higher than the year-ago 64 cents per share) on $4.52 billion that outpaced the expected $4.49 billion -- weaker subscriber guidance sent shares tumbling directly following the earnings release. Netflix currently sees 5 million added subscribers total for Q2, whereas previously the company had expected nearly that amount from International alone.
Average Revenue per User (ARPU) dipped 2% in the quarter, while net additions outperformed expectations: 9.6 million versus 8.9 million forecast. The company noted it also experienced some "modest near-term" churn following price increases. As for the entry of Disney+ and other competitors to the streaming entertainment space, CEO Reed Hastings said they will not "materially affect" growth at Netflix. Shares had initially fallen 6+% on the news, but have buoyed somewhat since.
Zacks Rank #4 (Sell)-rated IBM posted better-than-expected earnings on weaker revenues in its Q1 report Tuesday afternoon: $2.25 per share was a 4-cent beat, and sales of $18.18 billion were beneath the $18.68 billion in the Zacks consensus. This marks the third straight quarter of revenue declines for Big Blue.
The company no longer reports a Strategic Imperatives segment, and its Cloud Cognitive space outperformed expectations. Analysts will be interested to hear about plans to integrate IBM's Red Hat acquisition. And full-year earnings guidance has not changed: it remains $13.90 per share.
United Airlines put up a big beat on its bottom line, $1.15 per share versus 94 cents expected, on revenues of $9.589 billion which just barely missed the $9.6 billion analysts had been looking for. But shares are up 2.75% after normal trading, perhaps due to these figures performing relatively well considering myriad headwinds in the quarter: a polar vortex, U.S. government shutdown and other issues. Cost per available seat mile has been guided up, from flat to 2% previously to +0.5% to 2.5% now.
CSX also outpaced expectations on the bottom line while coming in-line on the top: $1.02 per share bettered the 91 cents expected, on $3.01 billion which was exactly the Zacks consensus. Operating ratio improved in the quarter, with merchandise in-line with expectations but coal +7%. Shares are up 4% in after-hours trading. CSX has not missed an earnings estimate in at least 5 full years.
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