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GM announced strong core Q2 results on Thursday despite heavy expenses related to car recalls and unfavorable FX effects. While car sales were up in the U.S. and China, the company's global market share declined by 0.3% due to weak performance in Russia and Venezuela and the withdrawal of the Chevrolet brand in Europe. In our earnings note we discuss these earnings and our outlook for the company.

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The World of Warcraft was once the world's largest massively multiplayer online role-playing game (MMORPG) franchise.

However, the online gaming landscape has changed considerably as new free-to-play online MMORPGs have entered the fray.

Activision's Call of Duty, Skylanders, Diablo III and other franchises have filled the void.

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Electronic Arts' Q1 Earnings: Digital Domain & Increased Sales Of Sports Titles Drive Revenues
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  • Gaming giant  Electronic Arts (NASDAQ:EA) is off to a strong start for the fiscal year 2015, as it delivered excellent revenue figures in its first quarter report, released on July 22. The company reported non-GAAP net revenue of $775 million, up 57% year-over-year, whereas operating cash flow improved $252 million year-over-year. In EA’s first quarter, gamers played around 13.6 billion online sessions of EA games across the console, mobile and PC platforms. The company’s Trailing Twelve Month (TTM) operating cash flow reached a record high of $964 million. Non-GAAP diluted EPS was $0.19, much above the company guidance. The  2014 Electronic Entertainment Expo (E3) provided a huge platform to EA to showcase its upcoming title releases and other partnerships planned that will help define its space in the industry. EA received more than 40 E3 awards including Best Role playing game (RPG) and Best Sports game. Moreover, the EA Mobile games drew 140 million monthly active players in Q1. Over the last 6 months, EA’s leading titles such as FIFA 14, Titanfall, Battlefield 4 and UFC contributed in making it the number 1 publisher on both the new twin consoles-the  Microsoft (NASDAQ:MSFT) Xbox One and the Sony PlayStation 4. The company accounted for nearly 14% of global video game software sales last year. Our $27 price estimate for  Electronic Arts’ stock is 40% below the current market price. See our complete analysis of Electronic Arts stock here EA was able to reach its anticipated GAAP revenue of $1.20 billion with GAAP diluted EPS of $1.04. The company expects its non-GAAP net revenue to be around $1.14 billion and non-GAAP diluted EPS to be approximately $0.50 for the second quarter. Digital Segment Continues To Generate Significant Profits Digital expansion is the main focus for Electronic Arts as the gaming giant heads into a new era of gaming. For EA, the main stream is its extra Downloadable Content (DLC), accounting for nearly half of the digital revenues earned by the company. For the first quarter, non-GAAP digital net revenues rose to $482, an increase of 27.5% year-over-year. The company expects this segment of its business to grow further in fiscal 2015, as it accounted for more than 60% of first quarter’s revenue. The trailing twelve-month digital net revenue rose 10% to $1.9 billion. Extra content and free-to-play mode contributed $211 million, up 19% over the prior year period, driven by 90% growth in our Ultimate Team mode. The Ultimate Team mode for sports-based titles such as Madden NFL and FIFA has gained much popularity in the digital domain, with live updates, new content and daily competitions. NHL Ultimate Team grew 50%, FIFA Ultimate Team rose 80% and Madden NFL’s Ultimate Team saw a significant growth of 350% year-over-year. Non-GAAP gross margins increased to 70%, primarily due to digital revenue offerings and continued focus on reducing online fees and costs. With the annual editions of FIFA and Madden NFL to be released later this year and digital content of these titles gaining momentum every year, we can expect digital segment to play a more vital role in the coming quarters. Tough Competition In The FPS Domain First person shooting games (FPS) are a major genre, accounting for about 14% of the video game market in 2013. EA is making a fresh foray in this genre with its futuristic first-person multiplayer shooter- Titanfall and  Battlefield 4, directly in competition with Activision’s Call Of Duty franchise, the leader in this genre with nearly 50% of the total shooter game sales worldwide. According to NPD’s May report,  Titanfall slipped down to 8 th place on the top-selling titles chart, but still lead the FPS genre. The increasing popularity of Battlefield 4 Premium among the gamers is one of the key factors that led to increase in the subscription revenue. EA has announced the release of the next edition of Battlefield franchise: Battlefield Hardline, which would be directly competing with Activision’s Call of Duty: Advanced Warfare to be released in the first week of November, 2014. The company expects the impressive first quarter results to compensate any negative impact that could delay Battlefield Hardline’s release. FIFA World Cup Boosts FIFA Franchise Sales FIFA is one of the major money minting franchise for EA, accounting for 57% of the total sports title sales worldwide in 2013. FIFA contributed nearly 27% to the company’s total revenue and 22% to the company’s gross profits in 2013. In April, EA released a special edition of its FIFA franchise:  2014 FIFA World Cup Brazil for the PlayStation 3 and Xbox 360 consoles, ahead of the mega event: FIFA World Cup (June 12- July 13) held in Brazil this year. The excitement of the football season continues, as FIFA World Cup Brazil nicely captures the spirit of the recently concluded event. World Cup fever boosted the sales of  FIFA 14, as well as  FIFA World Cup Brazil .  FIFA 14 climbed up to 5 th spot in the top selling games in the month of June, while  FIFA World Cup Brazil stood at 12 th spot. Moreover, the new edition of the FIFA franchise:  FIFA 15 is all set to release at the end of September. The company forecasts a significant jump in sales of FIFA titles as football fans and gamers all around the world eagerly wait for the new release. Sales of the annual FIFA franchise went up 25% after the last world cup in 2010. During the first quarter, around 53 million matches were played in FIFA Ultimate Team World Cup mode. The World cup update to FIFA 14 on mobile devices drove record high players this quarter. The world cup craze among the football fans and gamers might also drive initial sales of FIFA 15. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology  
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    PepsiCo Earnings Review: Both Beverages and Snacks Boost Organic Revenues in Q2
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  • tags: PEP KO DPS KRFT
  • Snacks and beverages manufacturer  PepsiCo (NYSE:PEP) reported 0.5% growth in net revenues in Q2, with organic revenues rising 3.6%, on July 23. As expected, the snacks business, which constitutes more than half the net sales for PepsiCo, drove top line growth in the quarter. Organic revenue grew 5% for the snacks division, which forms over 60% of the company’s valuation by our estimates, while beverage sales rose 2% globally during this period. Non-sparkling beverages such as sports drinks, ready-to-drink (RTD) teas and coffee continued to rise owing to healthier consumer perception and low current penetration levels. On the other hand, sparkling volumes declined in North America, reflecting continued headwinds in the domestic carbonated soft drinks (CSD) category, which declined for the ninth consecutive year in 2013. PepsiCo had earlier in the year expected around two-thirds of its top line growth this year to come from emerging countries. As expected, organic sales in developing and emerging nations increased 8% in Q2, however, unfavorable currency translations and the Vietnam refranchising dragged down net revenue growth from these countries to negative 1%. For the full year, PepsiCo expects organic revenues to increase by a mid-single-digit percent over 2013 levels, while foreign currency translation to have a negative 3% impact on the net sales. We estimate a $86.82 price for PepsiCo, which is roughly 5% below the current market price. However, we are currently in the process of incorporating the latest quarterly results into our forecasts. See Our Complete Analysis For PepsiCo North America Sparkling Volumes Continue to Fall While PepsiCo’s still beverage portfolio grew 1% in North America this quarter, the sparkling unit witnessed 2% decline in volumes. This decline is in line with the trend of contracting soda volumes in the domestic market as consumers look to avoid high-sugar and calorie fueled CSDs. Soda sales fell by 3.2% year-over-year to less than 13 billion gallons last year, capping-off the ninth consecutive year of decline in sales. Dollar sales of CSDs further fell by almost 3% in the twelve weeks ended April 12 in measured channels. The bright spot for PepsiCo’s sparkling portfolio was the mid-single-digit growth in the drink Mountain Dew’s volumes in measured retail channels this quarter. PepsiCo’s soft drink volumes decreased 1% in North America in Q1, similar to the decline seen by its chief rival Coca-Cola during the period. However, Coca-Cola’s sparkling volumes remained flat in North America in Q2, while PepsiCo’s volumes declined 2% in the region. This means that the gap between both the beverage giants further widened in the domestic CSD market this quarter. Coca-Cola leads the U.S. soft drinks market with 42.4% share, while PepsiCo commands 28.7% value share at present, by our estimates. Snacks Deliver Solid Growth Amid Rising Health Concerns PepsiCo’s Frito-Lay North America (FLNA) division saw 2% revenue growth this quarter. This division alone constitutes 35% of PepsiCo’s valuation by our estimates, compared to only 17% constituted by the company’s entire CSD portfolio. Although Frito-Lay North America generated 21% of the net sales in 2013, this division is highly valued as it is PepsiCo’s most profitable division, and its revenue-growth is also expected to continue to outpace that of the beverage segments going forward. Core constant currency operating profit for FLNA also rose by 5% in Q2, fueled by sales growth and net pricing gains, and also due to the productivity savings plan initiated by the company. PepsiCo had earlier in the year announced its five-year productivity savings plan for 2015-2019, according to which it plans to save $1 billion each year by optimizing global manufacturing operations and simplifying organization systems to drive efficiency. The company is on course to draw an incremental $1 billion in savings this year, after saving $900 million in 2013, as part of its savings program for the period of 2012-2014. Core operating margins expanded by 65 basis points in the second quarter, excluding the gain from the Vietnam refranchising from Q2 2013 results. Although PepsiCo reported headwinds in the domestic packaged foods business this quarter, the company’s food lineup continued to post growth, mainly due to an established strong brand appeal and loyal consumer base. The U.S. snack food market worth $35 billion grew at a CAGR of 3.8% between 2009-2013. PepsiCo dominates the savory snacks market in the country with a 36.6% market share. The next biggest manufacturers in this sector are Kellogg’s and Mondelez with much smaller 7% and 5.6% shares respectively. The salty snack market is worth $28.2 billion presently, with potato chips and tortilla chips forming 20% and 13% of the sales respectively. Frito-Lay commands the lead in salty snacks, with market shares of 60% in 72.4% respectively in potato chips and tortilla chips. Sales for the brands Lay’s, Doritos and Cheetos grew again this quarter by low to high-single-digit percentages. Latin America Snack Food Volumes Fall While Beverages Grow As expected, Mexico food sales for PepsiCo fell this quarter, primarily impacted by the tax imposed by the government on certain foods with high amounts of saturated fat, sugar and salt in January. This effectively increased prices of some savory snacks by 8%. With more than half of the country’s population living below the national poverty line, a rise in junk food prices dissuaded price-sensitive customers from consumption, and resulted in PepsiCo’s organic food revenues decreasing by a low-single-digit percent in Q2. However, the company’s beverage volumes in the country grew in the quarter, with overall Latin America drink unit sales rising 3% year-over-year. PepsiCo’s beverages grew in Mexico despite the one-peso-per-liter (~8 cents) soda tax on sugary drinks enacted in January, which raised prices of beverages. In contrast, Coca-Cola’s Mexico volumes fell 3% this quarter. Mexico is the third largest market for PepsiCo behind the U.S. and Russia, contributing 6.5% to the net revenues last year. With growth in the Mexico drinks business despite the impact of the soda tax, PepsiCo could have further improved its market share in the country. On the other hand, PepsiCo’s food and beverage sales climbed in Brazil this quarter, despite continued economic instability in the country this year. Although Coca-Cola was the official sponsor for the recently completed FIFA World Cup held in Brazil, PepsiCo also launched its worldwide ad campaign centred on the World Cup, and strengthened its marketing initiatives. The football World Cup, being a global event, attracted large crowds from all over the world, also increasing demand for junk food and cold beverages in the country. Brazil is PepsiCo’s fifth largest international market after Russia, Mexico, Canada and U.K., contributing nearly 3% to the top line in 2013. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    New Product Adoption Boosts Revenues and Margins for Constant Contact
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  • tags: CTCT
  • Digital marketing services provider Constant Contact (NASDAQ:CTCT) posted a strong set of second quarter results. Q2FY14 revenues kept pace with the accelerated year-on-year growth rate of 16% posted in Q1FY14. The company has delivered on both revenue drivers, namely customer additions and average revenue per user (ARPU). In terms of customer additions, Constant Contact has been able to add 10,000 unique new customers onto its marketing platform every quarter for the last 6 quarters. Year-on-year growth in ARPU accelerated to 8% in H1FY14 from 4% in FY13, driven by upselling and bundling of services. The strong top-line performance resulted in a 38% jump in quarterly adjusted EBITDA for the company. Operating profit for the quarter crossed $3 million, compared to a loss of approximately $98,000 in Q2FY13. Having invested significantly into Research and Development (R&D) activities such as its newest offering, Toolkit, for the last three quarters prior to Q2FY14, Constant Contact eased on R&D investments this quarter. As a proportion of revenues, quarterly R&D expenses declined to 15.8% compared to 17.1% in Q2FY13. However, sales and marketing expenses in Q2FY14 have increased by 1.15 percentage ponts on a year-on-year basis to support adoption of the new product offering from customers. See our complete coverage of Constant Contact Strong Operational Performance Prompts Share Repurchase Program In the Q2FY14 earnings conference call, Constant Contact CEO Gail Goodman announced a $30 million share repurchase program to distribute some of the cash that the company has on its books. Its net cash reserve has expanded nearly 75%, from $81.9 million in June 2012 to $141.4 million now. These net cash reserves include cash and cash equivalents, marketable securities and restricted cash and excludes debt. The company had a similar excess cash position of approximately $143.7 million on its books in March 2012, which it utilized to acquire SinglePlatform in June 2012. However, its intention to return the excess cash to shareholders this time could mean that the management views the stock as relatively undervalued for future growth. The company looks to be testing different metrics to find the right long-term balance between ARPU growth and customer additions for new product offerings such as Toolkit and SinglePlatform. In Q2FY14, SinglePlatform added 11 large enterprise deals, each with more than 100 individual locations. As these products continue building scale, revenue growth rate and adjusted EBITDA margins are bound to trend higher, leading to higher valuations. Margins Expected to Surge Ahead of Revenue Growth in Q3FY14 In the near term, management expects a healthy growth in gross and EBITDA margins. Guidance for Q3FY13 indicates adjusted EBITDA margin between 21-21.5% on a revenue base range of $83.4-$83.7 million. Comparatively, adjusted EBITDA for Q3FY13 stood at approximately 20.4%. Quarterly net income is expected to arrive between $4.3-$4.6 million for Q3FY14. This translates into 13-14 cents of earnings/share. However, any progress on the share repurchase program could boost EPS for the quarter. Moreover, sales and marketing dollars spent in Q2FY14 are expected to be the high point of operating expenses in absolute terms for full fiscal 2014. This relieves downward pressure on EBITDA margins, particularly because sales and marketing expenses account for nearly 40% of revenues. Additionally, with the kind of EBITDA margin expansion observed in Q2FY14, driven by strong adoption of its new product offerings, there is a strong chance that Constant Contact might exceed its guided Q3FY14 statistics handsomely. We are revising our Trefis price estimate of $31 for Constant Contact to incorporate trends from the recent Q2FY14 earnings. See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Daimler Earnings Review: Profitability For Mercedes-Benz Rises on Improved Efficiency
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  • Auto company  Daimler AG reported revenue growth of 6% to €31.5 billion (around $42.5 billion) in the second quarter on July 23. Excluding the impact of unfavorable currency translations, organic sales rose by 11%. High demand for the company’s luxury vehicle brand Mercedes-Benz globally and trucks in the NAFTA region contributed significantly to the top line growth in the period. The Mercedes-Benz cars and vans division constitutes over 60% of Daimler’s valuation by our estimates. Mercedes sold 418,685 units in the three months, up 3% from 2013 levels, as demand remained high particularly in the U.S. and China. With the brand’s revamped version of the volume model C-Class going on sale in the U.S. and China by the end of the third quarter, volumes are expected to rise further. On the other hand, unit sales for the Daimler Trucks division rose only 2%, despite the 18% volume rise in the NAFTA region, as lower sales in Western Europe and Latin America dragged down net volumes. Mercedes-Benz also neared its mid-term margin target of 9-10% with operating margins rising to over 7.9% in Q2. This comes as a result of the company’s continual efforts to improve production and operational efficiency. We have a  $90.06 price estimate for Daimler AG, which is roughly in line with the current market price. However, we are currently in the process of incorporating the latest quarterly results into our forecasts. See Our Complete Analysis For Daimler AG Mercedes-Benz Achieves Strong Growth in the U.S. Volumes for Mercedes increased 7% to 81,914 units in the U.S. in the second quarter, partly impacted by pent up demand coming from the first quarter, where tough weather conditions slowed sales. Mercedes was the leading luxury vehicle manufacturer in the U.S. last year, however, has since reported lower volumes than its compatriot and chief rival BMW in the country. At 151,624 unit sales through June, Mercedes lagged BMW’s sales by 5,758 units. One of the main reasons why Mercedes hasn’t caught up with its compatriot in the U.S. so far this year is due to pending launches of the compact sedan C-Class and B-Class Electric Drive (ED). The C-Class is a high-volume model for Mercedes, constituting over one-fifth of the company’s U.S. June sales. However, the model’s volumes fell year-over-year through June as consumers waited for the new generation model. In June, the company began local production of the new C-Class in its U.S. plant in Tuscaloosa, Alabama, which presently manufactures only the sports utility vehicles (SUVs) M-, R-, and GL-Class. For this purpose, the automaker has spent over $2 billion on the Alabama plant to expand capacity for the C-Class along with other models. The compact luxury model will roll-out in the U.S. in September, and could strengthen Mercedes’ compact sales in the country, as well as help narrow the company’s gap with BMW, going forward. Daimler Truck Volumes Fall in Western Europe and Latin America While unit sales of trucks in the NAFTA region rose 18%, representing 32.6% of Daimler’s net truck volumes in the quarter, Western Europe and Latin America volumes fell. In 2013, trucks constituted one-fifth of the overall volumes for Daimler, and formed over 90% of the net unit sales for Daimler International. According to our estimates, Daimler International, comprising trucks and buses sold outside North America, is the company’s second most valuable division, contributing almost one-fifth to the net value. Western Europe is the most important market for Daimler Trucks’ international division, constituting 14% of the net volumes last year. With the Euro 6 emission standard going into effect at the beginning of 2014, large-scale pre-buys of Euro 5 vehicles and discounts offered on the new Euro 6 vehicles increased truck sales in the latter half of 2013. Following the panic purchases at the tail-end of 2013, unit sales for Daimler Trucks in Western Europe fell 7% year-over-year in Q2. In the first quarter as well, the company’s truck sales in the region fell 3% year-over-year to 11,632 units, although the net volumes rose 7%. On the other hand, Daimler’s truck sales fell by a large 26% in Latin America (excluding Mexico), representing under 10% of the company’s net truck unit sales this quarter. This decline in truck demand is a consequence of continued economic instability in the region this year. Especially in Brazil, demand for medium- and heavy-duty trucks fell owing to weak economic conditions, with rises in unemployment and interest rates this year. However, amid tough conditions, Daimler improved its market share in Brazil to 25.7% in Q2, up from 24.9% in the second quarter last year. The company expects Latin America volumes to remain relatively weak going forward, with 10% decline in demand for medium- and heavy-duty trucks this year in Brazil. Profitability Rises For Mercedes Due to Price Mix and Higher Efficiency Operating margins for Mercedes-Benz grew around 160 basis points from previous year levels to 7.9% this quarter. Profitability rose on the back of higher unit sales and favorable volume and price mix. Margins expanded on the back of Mercedes’ aim to realize €2 billion in savings in 2014, which will be fully effective by next year. The company accomplished 55% of the planned efficiency volume by the end of Q2 and expects to achieve 70-80% of the total volume by the end of 2014. In addition, sales for the relatively expensive E-Class and S-Class models increased by 8% and 85% respectively to boost net price mix for the brand. On the other hand, the lesser priced compact C-Class model posted lower sales as consumers waited for the new model launch in the U.S. and China. With expansion in margins this quarter, Mercedes closed on its mid-term operating margins target of 9-10%, similar to the operating margins reported by both BMW and Audi. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Dow Earnings Review: Margin Expansion Drives Earnings Growth
  • by , 1 days ago
  • tags: DOW DD MON
  • The Dow Chemical Company’s (NYSE:DOW) second quarter earnings surged higher on thicker margins due to higher pricing and cost savings through productivity improvements and higher capacity utilization. The company’s adjusted earnings per share (EPS) jumped by $0.10 or 16% y-o-y to $0.74. Although, its sales revenue grew by just over 2%, the company’s adjusted EBITDA margin improved by almost 40 basis points year-on-year. Dow is a diversified chemical industry giant operating in specialty chemicals, advanced materials, agro-sciences and plastics business segments. It delivers a broad range of technology-based products and solutions to customers in approximately 160 countries, and in high growth sectors such as electronics, water, energy and agriculture. Last year, Dow reported annual sales of approximately $57 billion earning adjusted net income of around $2.9 billion. Based on the recent earnings announcement, we have updated our price estimate for Dow to $53/share, which is 18.9x our 2014 full-year adjusted diluted EPS estimate of $2.80 for the company. See Our Complete Analysis For Dow Most of the growth in Dow’s consolidated adjusted EBITDA during the second quarter came from the performance materials and performance plastics divisions. Together, these two divisions contribute almost 70% to the company’s total value by our estimates. While the performance materials division serves a wide range of market sectors including agriculture, mining, construction, and electronics and entertainment, the performance plastics division primarily sells flexible plastic packaging products and elastomers. Here, we take a closer look at what drove operating income from these divisions higher during the second quarter and what’s the long-term operating margin outlook for these divisions. Performance Materials Dow’s performance materials division saw a more than 36% y-o-y jump in adjusted EBITDA during the second quarter. This was primarily due to better margins since sales revenue increased by just 1.5% y-o-y. The division’s adjusted EBITDA margin improved by 280 basis points by our estimates. The company attributed this sharp increase in margins to cost savings from productivity improvements and higher asset utilization. Going forward, Dow expects to expand its performance materials adjusted EBITDA margins by as much as a 400 basis points over last year by 2017. Most of this margin expansion is expected to come from a reduction in raw material costs for the division because of the integration of a new on-purpose propylene production facility at Dow Texas Operations in Freeport. Propylene is a key raw material used by Dow’s performance materials division. It is primarily used in the production of propylene oxide, epoxy, and plastics additives. These chemicals derived from propylene are used in the manufacturing of various end products including automobiles. With the new propylene dehydration (PDH) plant, Dow would be able to shift its feedstock exposure from volatile propylene to abundant propane, a natural gas liquid. Construction on the PDH plant is more than 20% complete and it is expected to come online some time next year. The company expects to generate incremental EBITDA of $450 million annually on a run rate basis from this backward integration move. Performance Plastics Dow’s performance plastics adjusted EBITDA was also up around 6% y-o-y, as sales increased by almost 2% and margins expanded by a 100 basis points. Here, the key driving factor was pricing. The company’s average pricing for the division was up 7% y-o-y, mainly driven by the fast-growing demand for packaging and specialty plastics products. These products find use in food packaging and medical and hygiene equipment and make up around 80% of the division’s total sales revenue. The key growth drivers for these products include global population growth, the need to reduce food waste, a growing focus on consumer convenience, and improving socioeconomic status due to the rising middle class. Going forward, Dow expects to improve its performance plastics adjusted EBITDA margins by 200-400 basis points over 2013 levels by 2017. Again, most of the margin expansion at Dow’s performance plastics division is also expected to come from lower raw materials costs as a result of the growth in the company’s ethylene production capacity on the U.S. Gulf Coast. Ethylene, the simplest unsaturated hydrocarbon, is one of the most important feedstock in the plastics value chain. It is used in the manufacture of polyethylene, also called  polythene, which is the most widely used plastic in the world. Ethylene is most commonly derived from steam cracking of either naphtha or ethane. Naphtha is derived from crude oil (naphtha constitutes around 15-30% of crude oil by weight), while ethane is the second-largest component of natural gas after methane. With the shale gas supply boost in the U.S. resulting in a cheap source of ethane, there has been a divergence in operating margins between naphtha and ethane based ethylene production plants in the U.S. Dow is therefore growing its ethylene capacity in the U.S. while also improving feedstock flexibility of its existing ethylene production facilities to leverage the favorable feedstock scenario. Last year, the company restarted its St. Charles Olefins 2 plant in Louisiana, in a bid to lower its operating costs by reducing the amount of ethylene purchased. Going forward, Dow plans to increase its ethylene production capacity by almost 20% over the next three years, most of which would come from the start-up of a new world-scale ethylene production facility in Texas. Dow started construction work on the project last month and it is expected to come online by 2017. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    BP Earnings Preview: Lower Production Volume, Improvement In Refining Margins Expected
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  • tags: BP XOM CVX
  • BP Plc. (NYSE:BP) is scheduled to report its 2014 second quarter earnings on July 29. Average  Europe Brent crude oil prices were up by around 7% year-on-year during the second quarter and will positively impact the company’s crude oil revenues. However, we expect BP’s upstream earnings to be negatively impacted by lower hydrocarbon production volume, primarily due to Abu Dhabi onshore concession expiry in January this year and planned turnaround activities at its higher-margin upstream projects in the North Sea and the Gulf of Mexico. On the downstream side, we expect higher crude distillation capacity and the ability to convert greater amounts of heavier crude oil into refined products to boost BP’s second quarter earnings. During the earnings conference call, we will be looking for an update on the ongoing legal issues associated with the 2010 Deepwater Horizon incident. (See:  BP’s Downside Risk From Climbing Oil Spill Expenses ) Headquartered in London, BP is one of the world’s leading oil & gas multinationals with operations in more than 80 countries. As a vertically integrated oil and gas major, it has both upstream as well as downstream operations. The upstream division primarily includes exploration and production activities for oil and gas, while the downstream division focuses on producing refined petroleum products such as gasoline. We currently have a $53.5 price estimate for BP, which is almost 5% above its current market price. See Our Complete Analysis For BP Higher Prices, Lower Production Volumes To Drive Upstream Results We expect BP to report a mixed set of second quarter numbers on the upstream side, as commodity prices were up during the period but the company’s production volume is expected to be lower, primarily due to the expiry of the Abu Dhabi onshore concession agreement. The company lost its 75-year rights to the emirate’s oldest producing fields this January, when the Second World War-era contract expired. These oilfields together account for around 50% of Abu Dhabi’s total oil output (almost 3 million barrels per day) and hold more than a 100 billion barrels of oil and oil equivalent. Until a new concession agreement is signed, Abu Dhabi National Oil Company (Adnoc) will be the sole-risk shareholder of the Abu Dhabi Company for Onshore Oil Operations (Adco), the current concession’s joint-venture operator. As a result, BP and other foreign oil companies, which were previously involved in the concession, will not be able to lift equity oil or book reserves from these oil fields. During the first quarter, BP’s average daily hydrocarbon production rate declined by around 8.5% y-o-y, excluding Russia, primarily due to the expiry of the Abu Dhabi concession agreement. We expect to see a similar impact on volumes during the second quarter as well. Higher Refining Capacity, Thicker Margins To Boost Downstream Earnings On the downstream side, we expect the full impact of the Whiting refinery modernization project to boost BP’s second quarter earnings. BP began the Whiting refinery modernization project in 2008 in order to enhance the refinery’s heavy crude processing capacity from around 20% up to 85%. In other words, the upgrade increased its Canadian crude processing capacity from 85,000 barrels of oil per day (bpd) to 350,000 bpd, though the plant’s overall capacity remained the same. The Western Canadian Select (WCS) crude trades at a discount to the WTI and the Brent crude. This is primarily due to a glut of supply from the Canadian oil sands, a lack of pipeline infrastructure to the gulf coast as well as a higher proportion of impurities present in the WCS.  On July 24th, the September 2014 futures contract of the WCS crude closed at a discount of more than  $23 per barrel to the WTI . BP’s Whiting is the largest refinery in the Midwest region that has access to this cheaper, albeit heavier crude oil from Canada. The company’s decision to undertake a more than $4 billion modernization project of the Whiting refinery was primarily driven by this favorable feedstock scenario. BP expects to generate incremental cash flows of ~$1 billion annually from the project. Although all the major new units associated with the Whiting refinery modernization project were successfully commissioned by the end of last year, the amount of heavy crude processing at the refinery has been ramping up during this year. At the end of the first quarter, the refinery was processing about 200,000 barrels of heavy Canadian crude oil per day. This figure is expected to have reached around 280,000 bpd by the end of the second quarter. This leads us to believe that although the global refining environment continues to remains weak because of industry overcapacity, there could potentially be some respite for BP’s shrinking downstream margins during the second quarter. Also, since BP completed the upgrade of the largest crude processing unit at the Whiting refinery in July 2013, which had been shut down since the fourth quarter of 2012, we expect to see a meaningful year-on-year improvement in the company’s second quarter refining throughput. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Higher Losses and June Slowdown Overshadow Pandora's Strong Q2 Sales
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  • tags: P GOOG AAPL SIRI
  • Pandora Media (NYSE:P) recently reported its Q2 2014 earnings, that were slightly better than the consensus estimate. The Internet radio provider’s non-GAAP earnings per share for the second quarter came in at $0.04, which was marginally ahead of the expected $0.03. Pandora’s overall revenues grew by 38% year over year on a non-GAAP basis with 39% growth in advertising revenues and 35% growth in subscription revenues. Despite reporting good results, the company’s shares declined by 12% in after hours on account of widening losses and growth concerns. With continued investments in sales and marketing, Pandora’s losses in Q2 2014 increased by 72% on a GAAP basis as compared to the same quarter last year. Although the company reported solid 43% revenue growth on a GAAP basis in the second quarter, it was much slower than its growth in Q1 2014 and full year 2013, when sales grew by 69% and 54% respectively. Moreover, while Pandora’s active user count and total listener hours for the quarter increased annually and sequentially, there was a slowdown in these metrics in June. Also, the Internet radio provider’s market share in June declined to 8.9% from 9.1% at the end of Q1. This has raised some concerns among investors regarding sustainability of Pandora’s growth. Following its sluggish June performance, the company projected its Q3 earnings per share to be in the $0.05-$0.08 range, which is below analysts’ estimates. On the plus note, Pandora’s RPM (revenue per 1,000 listener hours) continued to improve during the quarter driven by improving monetization and increased sale of mobile ad inventory. This trend is likely to continue going forward with the expansion of the company’s new advertising solution, Promoted Stations. Our current price estimate for Pandora stands at $24, implying a discount of about 15% to the current market price. However, we are in the process of updating our model in light of the recent earnings release See our complete analysis for Pandora Media Losses Increase due to Aggressive Investments Despite solid revenue growth in Q2 2014, Pandora reported $11.7 million in losses, much of which can be attributed to higher investments in sales and marketing. In line with its earlier announcement, Pandora continued to add new talent to its sales team, that pushed its sales and marketing expenses up by 50% year over year. The company increased its employee headcount by 40% year over year with the addition of 15 new quota bearing sales representatives during the quarter. Pandora now has a total team of 343 sales representatives, while it only had 252 representatives a year earlier. With royalty rates expected to rise each year, the company is focusing on improving its ad targeting in order to command better pricing and sell more mobile inventory slots. Pandora states that its royalty rates have increased by 53% in the last five years and will go up by another 9% in 2015. It seems that growing the sales team is inevitable and a necessary investment. The company’s sales & marketing expenses also include the commissions on subscriptions it pays Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL). During the quarter, these commissions totaled $7.5 million. Pandora appears to be investing a significant amount on the product side as well because its product development expenses soared by 65% during the quarter. June Slowdown Raises Growth Concerns While Pandora’s total listener hours in Q2 2014 increased by a healthy 29% year over year and touched the 5 billion mark for the first time, there was a marginal slowdown in June. The company’s listener hours increased from 1.70 billion in April 2014 to 1.73 billion in May, but declined to 1.61 billion in June. Moreover, Pandora’s active user count declined to 76.4 million in June from 77 million in May. Although most of this decline can be attributed to the fact that June is seasonally weak, it is worth noting that Pandora’s active user count growth has decelerated meaningfully over the past several months. The figure stood at 75.3 million in February, remained flat in March, improved slightly to 76 million in April and rose to 77 million in May. Also, Pandora’s share in the U.S. radio market declined sequentially by 23 basis points to 8.9% in June, which was below its market share in the preceding four months. Although Pandora’s listener hours, active user count and market share have increased significantly over the last one year, their growth is likely to suffer going forward due to rising competition from satellite radio provider Sirius XM (NASDAQ:SIRI) and music streaming services such as Spotify, Songza and Beats. The sluggish audience metrics of June 2014 have somewhat confirmed this threat. Monetization Continues to Improve Pandora’s ad RPM levels for PCs and mobile devices increased substantially during the quarter. Compared to $37.89 in the second quarter of 2013, overall ad RPM rose to $40.11 in Q2 2014. Interestingly, the company’s desktop ads delivered their best ever performance in Q2 2014 generating $62.43 per 1,000 listener hours, beating their previous best of $61.92 in Q4 2013. For mobile and other connect devices, RPM improved to $36 from $29.46 in Q1 2014 and $32.56 in Q2 2013. In terms of RPM, Q2 2014 was the second best quarter for Pandora after Q4 2013, when it generated $40.95 per 1,000 listener hours. Considering that advertisers tend to invest the biggest portion of their annual budget in the fourth quarter, Q2 2014 RPM looks even more pleasing. There is no denying that Pandora has come a long way in terms of creating a sustainable business model. As the company can precisely measure the usage metrics for every user, it can help advertisers in targeting right customers. During the quarter, Pandora rolled out the beta test of its Promoted Stations with 10% of its listeners, where it received good response. Despite the limited launch, the company’s Promoted Stations were responsible for 12.5% of its new brand station additions. Promoted Stations are native ad units built on the basis of listening experience brands want to create for the respective audience. Advertisers such as Kleenex® Brand, SKECHERS USA, StubHub, Taco Bel, and Toyota Motor featured on this beta test. Going forward, as the company extends the reach of its Promoted Stations, it can attract several advertisers, which should have a positive impact on its RPM. See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Boeing's Net Rises On Higher Commercial Airplane Deliveries & One-Time Gains
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  • tags: BA
  • Boeing (NYSE:BA) reported strong growth in its second quarter results on higher commercial airplane deliveries and favorable tax items, partially offset by a charge related to the KC-46 aerial refueling tanker program. The airplane maker’s revenues rose by 1% annually to $22 billion, and its earnings rose by 59% annually to $2.24 per share, in the second quarter. The sharp growth in the company’s second quarter earnings was aided by $524 million in favorable tax items resulting in part from tax settlement from previous financial years. Separately, earlier in July, Boeing announced that it delivered 181 commercial airplanes to airlines during the second quarter, up from 169 airplanes that it delivered to airlines in the same period of last year. These higher commercial airplane deliveries outweighed the decline in Boeing’s defense segment sales to lift its overall revenues. During the second quarter, the company also continued to see strong order inflows for new airplanes. This raised the company’s backlog to $426 billion, comprising of over 5,200 airplanes. At current production rates, it will take Boeing over seven years to clear this backlog. We currently have a stock price estimate of $142 for Boeing, about 15% ahead of its current market price. We are in the process of incorporating the second quarter results, and shall update our analysis shortly. See our complete analysis of Boeing here Hike In 737 and 787 Production Rates Drove Growth In Boeing’s Results In the second quarter, Boeing delivered 12 more commercial airplanes to airlines, compared with the prior year period. This increase in the company’s airplane deliveries was the result of higher production rates across two of its highest selling airplane models – the 737 and 787 Dreamliner. In March, Boeing hiked its 737 production rate to 42 airplanes per month, from 38 airplanes per month. As a result, the company delivered 124 737s to airlines in the second quarter, up from 116 it delivered in the second quarter of last year. Similarly, at its 787 program, around the end of last year, Boeing hiked the production rate to 10 airplanes per month, from 7 airplanes per month. As a result, the company delivered 30 787s to airlines in the second  quarter, compared with 16 in the same period of last year. Boeing undertook these production rate hikes in order to cope with the surging orders for these airplanes. Steady growth in global airline passenger traffic over the last 4-5 years has pushed airlines across the world to add new airplanes to their fleets. At the same time, rising airline profits have provided airlines with the financial muscle needed to order new airplanes. Consequently, airlines from both developed and developing regions of the world have placed large orders for new airplanes. This sudden surge of orders from airlines has grown backlogs at airplane makers, such as Boeing and Airbus. Boeing’s backlog for instance has increased from 3,771 airplanes at the start of 2012, to over 5,200 airplanes at the end of June 2014. In turn, this growth in its backlog has prompted Boeing to hike the production rates of its highest selling models. And, higher deliveries resulting from these increased production rates grew Boeing’s commercial airplane segment revenues by 5% annually to $14.3 billion in the second quarter. Looking ahead, the company plans to further hike its 737 production rate to 47 airplanes per month by 2017. We figure this increase will enable Boeing to continue to grow its deliveries and its commercial airplane segment results over the coming years. Weak U.S. Defense Spending Impacted Boeing’s Defense Segment Results On the flip side, sales growth in the second quarter from Boeing’s commercial airplane segment was partially offset by a 5% sales decline from its defense segment. Boeing’s defense revenues are falling due to lower defense spending from the U.S. government, which constitutes about 70% of the company’s total defense business. However, international orders now constitute close to 35% of this segment’s backlog. So, we figure Boeing’s dependence on the U.S. government will likely gradually decline in the coming years. For the full year 2014, Boeing anticipates its defense segment revenues to fall by 7-10% annually to $30-31 billion. Unforeseen Charges In The Development Of Aerial Tanker Impacted Profits Separately, we were surprised to see a $272 million after-tax charge related to the KC-46 tanker program in the second quarter. In the absence of this charge, Boeing’s second quarter earnings would have grown at an even higher rate. The company on its part said that it incurred this charge due to some wiring rework on the aerial tanker. We figure if Boeing faces such unforeseen charges again, then its profits from this program will get impacted. Boeing won the contract to build 179 aerial refueling tankers in 2011 from the U.S. government in a deal worth about $41 billion. The company is modifying its 767 airplane’s design to build this refueling tanker. The development work for this jet has proceeded smoothly up till now, but budget overruns due to such charges in future will impact Boeing’s profits. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    McDonald's Q2 Earnings: Decline In Customer Traffic & Rising Commodity Costs Drag Sales Growth
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  • McDonald’s Corporation (NYSE:MCD) continued its streak of disappointing results when it reported its Q2 earnings report on July 22. The company’s financial model is dependent on growing comparable store sales to drive profitability and has been struggling to deliver strong comparable store sales consistently for the last few quarters now. In Q2 2014, company’s global comparable store sales were relatively flat and reported a 1% increase in consolidated revenues. In the U.S., comparable store sales decreased 1.5% while operating income rose 1%. Comparable sales or same-store sales, is an important measure to gauge a restaurant’s performance since it only includes restaurants operating for more than a year and excludes the effect of currency fluctuation. Like the last quarter result, second quarter’s top-line result reflected negative comparable guest traffic, rising commodity prices and increasing competition from the fast-casual segment. Diluted earnings per share increased by 1% to $1.40, while the consolidated operating income decreased by 1% in constant currencies. We have a  $103 price estimate for McDonald’s, which is about 2% above its market price. See Our Complete Analysis For McDonald’s Corporation Rising Commodity Costs Affected Top-line Growth Food inflation has been threatening the restaurant industry since the onset of this year. Although inflation differs from region to region, it was high in almost every operating unit, negatively impacting the net top-line growth. In the U.S., commodity costs were 3% higher than the same period previous year, whereas in Europe, commodity costs were higher in Russia and Ukraine due to weaker currencies. Moreover, rising coffee and milk prices especially hurt the McCafe segment of the company. Rising input costs forced the company to raise its menu prices. The price hike increased the average spend per customer visit for the company, but the operating margins saw a decline. Slight Increase in Average Spend per Customer Visit In the second quarter, pricing had more impact on average spend per visit than the product mix. However, the negative guest count offset the increase in average check and led to relatively flat comparable sales. Decline in Operating Margins In the U.S., operating income saw just a 1% rise, whereas in Europe, operating income decreased 4% in constant currency terms. Even in Asia-Pacific, Middle-east and Africa (APMEA), where the company delivered the most positive performance in terms of comparable sales, operating income declined 2% year-over-year. Higher commodity costs dragged down operating margins. In the U.S., commodity costs rose 3% resulting in a 40 basis points decrease in operating margins, by higher labor costs. In Europe, company operated margins decreased 80 basis points to 18.6%, due to higher commodity costs in Russia and Ukraine, as well as poor performance in Germany. Russia and Ukraine account for nearly 50% of the company’s commodity imports in Europe. Overall, in the second quarter, both the franchised restaurants and company operated restaurants witnessed a 60 basis points decline in operating margins respectively. McDonald’s also witnessed protests from its minimum wage employees in over 33 countries and 80 cities. The company has planned a minimal wage increase in several states in the second half of the fiscal year, resulting in higher labor expenses. This might affect the company-operated margins in the next couple of quarters. Negative Guest Traffic Growth Amid all the changing industry dynamics, top fast food restaurants had to face strong competition from fast casual segments and rising commodity prices, which led to a decline in customer traffic. In the second quarter, McDonald’s witnessed a negative customer traffic growth, resulting in flat global comparable store sales. The most affected region was the U.S., where the comparable sales decreased 1.5% due to negative guest traffic. Moreover, the comparable store sales in Europe declined by 1% due to weak results in Germany and a slowdown in Russia. Tough Competition From Fast-Casual Segment Fast-casual restaurants such as Chipotle Mexican Grill have started gaining momentum and people are shifting towards healthier and hygienic food items. The fast casual segment has started eating into the market share of leading fast food restaurants for the last couple of years and have generated considerable industry attention. According to  Technomic’s 2014 Top 500 chain restaurant report, sales for fast-casual chains rose 11% and store count rose 8% in 2013. Although Chipotle generated $3.2 billion in revenues in 2013, which in comparison to McDonald’s seems to be a much smaller figure, the revenue growth has been consistently at around 20% for Chipotle for 5 years now. Even though fast-casual restaurants lag their fast food counterparts in overall revenues and value, they are closing the gap every quarter. However, when it comes to healthier options and quality of food, fast casual restaurants clearly have an edge over all other restaurant segments. Moreover, people with higher disposable income are inclined more towards high quality, fresh and good-tasting food, even if it is expensive by a few bucks. This has led to decrease in customer traffic gradually. Menu Price Hikes Kept The Customers Away Aware of the rising commodity costs and possibility of further increase in near future, McDonald’s raised prices of some of its top selling items such as Hamburger, Double Cheeseburger, Big Mac and McBacon. This cost is being passed on to the customers, leading to an increase in average spend per visit partially offset by a significant decrease in customer traffic. With fast casual segment gaining popularity and fast food outlets such as McDonald’s raising its prices, customers are ready to pay that extra money for a rather fresh and high quality food in an up-scaled ambiance, which is provided by the fast casual restaurants. Increasing Competition In The Breakfast Segment All the top restaurants in the QSR segment are fighting for a share in the breakfast market. McDonald’s has to fight other top brands such as  Starbucks (NASDAQ: SBUX), Dunkin’ Brands (NASDAQ: DNKN) and  Burger King (NYSE: BKW), but still leads the breakfast segment by a far margin. Other brands are catching up by introducing new and innovative items on their menu. The increasing competition in this segment has resulted in a slight decline in customer traffic. Expansion Still Remains A Focus McDonald’s ended the quarter with 35,683 restaurants worldwide, with more than 14,000 restaurants in the U.S. Over the last couple of quarters, the company has been witnessing weaker performances in markets such as Germany, Japan, U.S. and Australia. These four markets remain focus of attention for the company. Even with mediocre performance, the company continues to generate significant amount of cash and plans to invest this cash in opening 1,500 to 1,600 new restaurants including about 500 restaurants in affiliated and developmental licensee markets, such as Japan and Latin America, and re-imaging over 1,000 existing locations in 2014. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Strength In Infrastructure, Broadband & Connectivity Solutions Will Drive Broadcom's Future Growth
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  • Leading semiconductor provider for wired and wireless communications, Broadcom (NASDAQ:BRCM) reported its Q2 2014 earnings on July 22, as we noted in our recent post-view .  Today we are going to take a deeper look at future trends.  At $2.04 billion, revenue was near the midpoint of company guidance, and increased 2.9% annually but declined 2.3% sequentially on account of diminishing revenue from the baseband business. Non-GAAP EPS came in at $0.65, above first call estimate of $0.61. Last month, Broadcom announced its decision to exit the cellular baseband business on account of intense competition in the market. (Read: Rising Competition Forces Broadcom To Exit The Baseband Market ) The company intends to instead increase its focus and competitiveness in the broadband, infrastructure and connectivity businesses. Broadcom performed well in all the three segment in Q2 2014 and expects to see strong growth from these markets in the future as well. It believes that its decision to exit the baseband business puts it on a path towards being a stronger, more profitable company, that can return more capital to shareholders. Our price estimate of $38.49 for Broadcom is in line with the current market price. See Our Complete Analysis for Broadcom Here Despite The Baseband Exit The Connectivity Business Remains Strong Following its exit from the baseband market, Broadcom incurred losses in some paired connectivity-baseband products in Q2 2014 and expects to see some continued erosion in the low- to mid-range platforms as well. Nevertheless, the company believes that its leadership in connectivity solutions remains intact. It has some new technologies ramping and is seeing higher ASPs for its products, due to additional functionality for some customers. Additionally, Broadcom sees new growth potential in the markets for the Internet-of-Things, as well as automotive and wearable electronics. It continues to drive leading-edge features, to maintain its strength in high end smartphones and tablets, and is strengthening and diversifying its portfolio with new low power connectivity solutions for the Internet of Things and the support of iBeacon and HomeKit. (Read: Broadcom Aims To Be An Early Entrant In The Booming Wearable Technology Market ) Broadcom expects to see strong sequential growth in connectivity solutions over the year driven by product cycles and some launches from key customers. It derives close to 50% of its revenue from the wireless segment and we estimate that 75% of the contribution comes from the connectivity solutions market. Data Center Growth & LTE Build-outs To Drive Growth In Infrastructure At $635 million, Broadcom’s infrastructure and networking revenue came in ahead of expectations and was up 10% sequentially and 24% annually, in Q2 2014. Growth in the quarter was mainly driven by Ethernet switching, particularly in the data center and service provider markets. The service provider market growth was mainly driven by LTE build-outs in China, while data center growth was driven by the transition to public cloud and broad adoption of Broadcom’s leading merchant platforms. Infrastructure strength over the course of the year, so far, was about two-thirds data center driven and one-third service provider driven. Broadcom continues to deliver innovative solutions that set the stage for an industry transition to more virtualized scalable data center architectures. Its next generation Trident II is now in volume production and it expects the same to contribute to its growth momentum in networking through 2014. During Q2 2014, in partnership with with other cloud market leaders, Broadcom announced a new 25-gig and 50-gig Ethernet specification to drive performance and cost efficiency in data centers. We expect Broadcom to benefit from the ongoing transition to 4G LTE in China, where it has secured wins for switches, processors, the back haul and other technologies. Currently, only China Mobile is aggressively building out its TD-LTE network, but we expect the other carriers to join soon as FDD-LTE licenses are rolled out in the coming years. Broadcom has seen double digit growth in this segment over the last three years and it believes that the additional waves of LTE buildouts, especially in China, will be helpful to sustain that growth for the next few years. Broadband Business To Be Driven By The Set-Top Market & Access Business Broadcom’s broadband communications revenue ($625 million) also beat company expectation, growing 12% sequentially and 10% annually with growth across the board. Growth in the segment is being driven by the set-top boxe and broadband access businesses. The set-top box group continues to perform well, delivering 8% sequential growth in Q2 2014, and is a key growth driver for the broadband business. Broadcom claims that in the first half of 2014 it gained share in international markets on account of rising digital penetration and a ramp to richer features, including multi-stream transcoding, more tuners and a stronger mix of MoCA-enabled platforms. Driven primarily by rising demand from emerging markets, the global set-top box shipments are forecast to grow at a CAGR of 9.7% through 2016. Another long-term growth driver for the set-top box market is the transition to HEVC and Ultra HD. This month, Broadcom powered live Ultra HD broadcast of the 2014 World Cup events, in partnership with Sagemcom, Oi and NETServicos. Broadcom claims that the industry is still in the early transition (to Ultra HD) phase and sees this strength as a powerful product cycle that will contribute growth over the coming years. Broadcom is one of the leading players in the worldwide set-top box integrated circuit (IC) market. In the broadband access business, Broadcom’s modem sales reached a multiyear high in Q2 2014, increasing over 15% year on year, with growth across cable, DSL and PON. The company is seeing strong momentum in its VDSL and PON sales due to share gains, increased operator spending and new operator service launches. Its access business is growing as operators continue to deploy the latest technologies, including VDSL upgrades, to power faster connections in the home. Broadcom claims to be gaining share in PON and sees new product cycles coming in Broadband Access. See More at Trefis | View Interactive Institutional Research (Powered by Trefis) | Get Trefis Technology
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