The Edge: A Quick Peek into Earnings Season

The Trading Edge with Derek HoffmanNews Corp. (NWSA): Avatar and Ad Dollars lift the Big Media Ship

Earnings: Earned $.10 per share in the quarter ending Dec. 31st compared to a loss of $2.45 per share in the same period a year ago.

Revenue grew 10% this quarter, doubling analysts’ expectations.

News Corp. chairman and chief executive Rupert Murdoch said, “We continue to reap the benefits from the restructuring and cost containment measures we instituted before the downturn began.”

Comment: There is much anticipation surrounding the content payment model being tossed around for WSJ and other NWS properties. Rupert Murdoch reiterated that content shall have a price tag for access in the brave new world of iPads and other devices. Avatar was a tremendous success to the NWS top line this quarter. Additionally, on the conference call, Rupert Murdoch said he expects a sequel to ‘Avatar,’ which means you can expect another legendary revenue generator for NWS in the future. It might take the next decade to create the sequel, so think long-term with your NWS investment.

Polo Ralph Lauren (RL): Revenues miss; shares sink

Earnings: Earned $1.10 per share in the recent quarter compared to $1.05 per share in the same period a year ago.

Net revenue declined .6%, missing analyst expectations and further showing consumer weakness. Polo said it expects fiscal 2010 net revenue to decline by a low-single-digit rate.

Tracey Travis, CFO of Polo Ralph Lauren, said on the conference call, “Overall traffic trends in our stores remained challenging during the third quarter especially in the US.”

Comment: The trend toward online purchases continued as online sales rose 13% over the quarter. Put RL on your watchlist until the fears of unemployment are eased. No jobs = less consumers at retail.

Time Warner (TWX): A pure play content company?

Earnings: In its first release since spinning off AOL, Time Warner said it earned $.53 cents per share, compared to $.19 cents per share in the same period a year ago.

Revenue slightly rose 2% from the prior year’s quarterly revenue.

On the conference call, John Martin, CFO at Time Warner, said, “We are seeing improved trends virtually across the board.”

Comment: The company’s board raised the quarterly dividend by 13% and improved Time Warner’s ability to make stock repurchases from $1 billion to $3 billion. With the AOL spinoff, TWX flexes a leaner operation and foresight of new media adaptability (i.e. the future of Sports Illustrated: Alas, both TWX and AOL can shine their true colors as separately standing entities!

Disclosure: No positions in the stocks mentioned.

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