Netflix's Reports Earnings Stock Soars Again In After hours Trading

In this tough stock market it is good to see there are still a few winners... Netlfix stock symbol NFLX reported stellar earnings today and boosted their quarterly and yearly guidance. How high can this one go? Well as long as they don't disappoint this stock could easily go way higher, if they do though it could fall rather sharply.

Don't get me wrong, overall the picture for Netflix is looking pretty bright with it's recent major deals and increase in subscribers as well as gross margins.  The shorts certainly are getting cooked on this one that is for sure... I would find it hard to bet against them with the kind of increase in subscribers quarter over quarter over quarter and I think many people are still covering their positions.

Here are the highlights of the quarter...

“Q3 represents our fourth consecutive quarter of more than one million net subscriber additions. This growth is clearly driven by the strength of our streaming offering. In fact, by every measure, we are now primarily a streaming company that also offers DVD-by-mail,” said Reed Hastings, Netflix co-founder and CEO. “At the same time, the introduction of our streaming offering in Canada in late September has provided us with very encouraging signs regarding the potential for the Netflix service internationally.”

Third-Quarter 2010 Financial Highlights
Subscribers. Netflix ended the third quarter of 2010 with approximately 16,933,000 total subscribers, representing 52 percent year-over-year growth from 11,109,000 total subscribers at the end of the third quarter of 2009 and 13 percent sequential growth from 15,001,000 subscribers at the end of the second quarter of 2010.

Net subscriber change in the quarter was an increase of 1,932,000 compared to an increase of 510,000 for the same period of 2009 and an increase of 1,034,000 for the second quarter of 2010. Gross subscriber additions for the quarter totaled 4,101,000, representing 88 percent year-over-year growth from 2,180,000 gross subscriber additions in the third quarter of 2009 and 34 percent quarterover-
quarter increase from 3,059,000 gross subscriber additions in the second quarter of 2010. Of the 16,933,000 total subscribers at quarter end, 94 percent, or 15,863,000, were paid subscribers. The other 6 percent, or 1,070,000, were free subscribers. Paid subscribers represented 98 percent of total subscribers at the end of the third quarter of 2009 and 97 percent at the end of the second quarter of 2010. Revenue for the third quarter of 2010 was $553.2 million, representing 31 percent year-over-year growth from $423.1 million for the third quarter of 2009, and 6 percent sequential growth from $519.8 million for the second quarter of 2010.

Gross margin for the third quarter of 2010 was 37.7 percent compared to 34.9 percent for the third quarter of 2009 and 39.4 percent for the second quarter of 2010. GAAP net income for the third quarter of 2010 was $38.0 million, or $0.70 per diluted share compared to GAAP net income of $30.1 million, or $0.52 per diluted share, for the third quarter of 2009 and GAAP net income of $43.5 million, or $0.80 per diluted share, for the second quarter of 2010. GAAP net income grew 26 percent on a year-over-year basis and GAAP EPS grew 35 percent on a year-over-year basis.
Percentage of subscribers who watched instantly more than 15 minutes of a TV episode or movie in the third quarter of 2010 was 66 percent compared to 41 percent for the same period of 2009 and 61 percent for the second quarter of 2010. In Q4 a majority of Netflix subscribers will watch more content streamed from Netflix than delivered on DVD. With that transition in the business from mostly DVD to mostly streaming, this will be the last quarter the company will report this metric. Subscriber acquisition cost for the third quarter of 2010 was $19.81 per gross subscriber addition compared to $26.86 for the same period of 2009 and $24.37 for the second quarter of 2010. Churn for the third quarter of 2010 was 3.8 percent compared to 4.4 percent for the third quarter of 2009 and 4.0 percent for the second quarter of 2010. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Free cash flow4 for the third quarter of 2010 was $7.8 million compared to $25.5 million for the third quarter of 2009 and $34.2 million for the second quarter of 2010. Trailing twelve-month free cash flow for the third quarter of 2010 was $109.8 million compared to $117.9 million for the third quarter of 2009 and $127.5 million for the second quarter of 2010. Cash provided by operating activities for the third quarter of 2010 was $42.2 million compared to $78.3 million for the third quarter of 2009 and $60.3 million for the second quarter of 2010.

Business Outlook
The Company’s performance expectations for the fourth quarter of 2010 and full-year 2010 are as follows:
Fourth-Quarter 2010
 Ending subscribers of 19.0 million to 19.7 million, up from 17.7 million to 18.5 million
 Revenue of $586 million to $598 million, versus $580 million to $596 million
 GAAP net income of $32 million to $40 million, unchanged
 GAAP EPS of $0.59 to $0.74 per diluted share, unchanged

Google Reports Solid 2nd Quarter Earnings Again

Wall Street yawn as Google reported stellar earnings as usual. Here are some highlights from the release...

Q2 Financial Summary

Google reported revenues of $5.52 billion for the quarter ended June 30, 2009, an increase of 3% compared to the second quarter of 2008. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2009, TAC totaled $1.45 billion, or 27% of advertising revenues.

Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

• GAAP operating income for the second quarter of 2009 was $1.87 billion, or 34% of revenues. This compares to GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008. Non-GAAP operating income in the second quarter of 2009 was $2.17 billion, or 39% of revenues. This compares to non-GAAP operating income of $1.85 billion, or 34% of revenues, in the second quarter of 2008.
• GAAP net income for the second quarter of 2009 was $1.48 billion as compared to $1.25 billion in the second quarter of 2008. Non-GAAP net income in the second quarter of 2009 was $1.71 billion, compared to $1.47 billion in the second quarter of 2008.
• GAAP EPS for the second quarter of 2009 was $4.66 on 319 million diluted shares outstanding, compared to $3.92 for the second quarter of 2008 on 318 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2009 was $5.36, compared to $4.63 in the second quarter of 2008.
• Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the related tax benefits. In the second quarter of 2009, the charge related to SBC was $293 million as compared to $273 million in the second quarter of 2008. The tax benefit related to SBC was $69 million in the second quarter of 2009 and $48 million in the second quarter of 2008. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.

As of June 30, 2009, cash, cash equivalents, and short-term marketable securities were $19.3 billion.

Google also increases it ever growing stock pile of Cash, as of June 30, 2009, cash, cash equivalents, and short-term marketable securities were $19.3 billion. Impressive, but then again I was sold on Google a long, long, time ago. Let's see how the aftermarket treats it...

Google Keeps On Trucking As The Rest Of The World Burns

The recession proof Google proved that well... it's recession proof! Even with the major downturn in essentially all the economies around the world Google managed to beat analysis estimates and actually grow year over year and quarter over quarter. They manged to make GAAP operating income for the fourth quarter of 2008 of $1.86 billion! That is nothing to sneeze at when a lot of other companies are reporting losses. They also have 15.85 billion in cash, cash equivalents, and short-term marketable securities as of December 31, 2008. Not too bad either... Here are the other highlights from the quarter...

• Revenue growth of 18% Y/Y and 3% Q/Q
– Google properties revenue growth of 22% Y/Y and 4% Q/Q
– Network revenues increased 4% Y/Y and 1% Q/Q
– International revenue was $2.9 billion
• Operational Highlights
– Traffic and revenue solid in Q4 despite difficult economic environment
– Key investments continue in our core search and ads businesses
– Increasing prioritization of our newer investments:

And my personal favorite the visual evidence of Google's growth...I don't have to tell you what to do... the numbers speak for themselves...

Google Misses By 9 Cents... Big Deal

Today Google reported numbers that most companies would kill for. Revenues grew 39% year over year, but this still wasn't enough to keep the bears at bay. Analysts were looking for Earnings Per Share of $4.72 Google came in at $4.63. Revenues for Google's 2nd Quarter 2008 came in at 5.37 Billion, analysts were looking for 5.4 Billion. Of course, the knee jerk reaction to this created a sell off in after hours where Google (goog) fell about 7%.

Giving Google's already decent P/E ratio this earnings report has created a fabulous buying opportunity. There P/E ratio is currently 37, but after today's earnings report it will be closer to 32 based on a price of $490 per share! To put that into perspective Yahoo is trading at a 30 P/E ratio and Apple is trading at a 35 P/E ratio. Not to mention Google is sitting on 12.7 Billion in cash! That number alone is more than a lot of companies are even worth and Google can afford to just watch it collect interest.

Do your children a favor and go out and buy some Google stock while it is on sale. That is unless you think that Google, the Internet, Advertising and Youtube are just going to disappear. Just check out these slides below from the 2nd Quarter Earnings Report...

CECO Environmental Corp Reports Earnings

CECO Environmental Corp. (CECE) reported earnings results for the fourth quarter and full year ended December 31, 2007 on March 10, 2008. For the quarter, the company reported net income of $1,818,000 or $0.12 per diluted share on net sales of $67,986,000 compared net income of $1,201,000 or $0.09 per diluted share on net sales of $41,498,000 to for the same period a year ago.

For the year, the company reported net income of $6,305,000 or $0.45 per diluted share on net sales of $235,953,000 compared net income of $3,094,000 or $0.24 per diluted share on net sales of $135,359,000 to for the same period a year ago.

Phillip DeZwirek, chairman and CEO, said in a news release that the company's gross profit margin fell slightly over the year because of a lower margin on a large automotive project.

"We anticipate that both gross and operating margins will increase in the future as the large project is completed and anticipated new higher-margin contracts are completed," he said in the release.

The order backlog at the end of 2007 was $85.5 million, compared to $97.1 million at the end of 2006, the company said in a news release.

DeZwirek figures the market for air pollution-control products has soared from $5 billion a couple of years ago to more than $50 billion now. The heightened attention to the environment is the driving force.

"They've really put together a full-service company that no one can compete against," said Bill Gregozeski, analyst at Capstone Investments in Milwaukee.

With the addition of Fisher-Klosterman, Inc. I think CECO Environmental Corp. (CECE) is still a great buy at these levels and will have a very successful 2008 even with a slowdown in the US economy. This site is all about long term investment after all and with a air-pollution controls market that is growing this fast CECO is certainly in the right spot.

Vasco's Growing Pains

Already jittery investors jumped ship today as Vasco Data Securities (VDSI) reported another quarter that missed analysts estimates. Is this the end of the road for VDSI? Well, let's take a look at the numbers, because after all they should mean at least something, even in a crazy market like this one.

In the full year ended December 31, 2007 Vasco’s revenues grew 58% to $120 million, from $76.1 million. Net income rose 67% in 2007 to $21 million, or 55 cents per diluted share, from $12.6 million, or 33 cents per diluted share, in 2006. Vasco Data Securities total sales for the fourth 4th quarter increased 24% to $31.2 million from $25.2 million. Maybe the most assuring statistic is that Vasco won 651 new customers. All of these statistics were within Vasco's management's projections, but still this was not what the analysts anticipated. If you step back and look at these numbers on a yearly basis, it really looks quite cheap. After all VDSI is now trading at a 21 P/E ratio.

So why did they miss? Well, a higher than expected tax rate certainly didn't help things. A tax rate of 49 percent in the 4th quarter, compared with the 28 percent reported in the previous nine months really hit the bottom line. Not only this, but management emphasized that a delay in shipments worth approximately $3.6 million have now been moved to the next quarter. Don't forget Vasco is expanding in several locations around the world, and this is impacting the bottom line as well by increasing expenses.

Still should I be sitting here defending this company after they hurt so many investors the past two quarters? This stock has been in a downward spiral since reporting it's last earnings three months ago and any new investors to this stock must be sweating bullets. Needless to say, if you didn't buy all at once this could be considered an opportunity. I personally still believe they have a lot of long-term value, and I will actually be adding to my position at these levels. Either I am just glutton for punishment, or I think the future for Vasco and online banking security still looks bright, you decide for yourself...

Get Ready For Vasco Data Securities Earnings

With earnings season in full swing one of our favorites here at Stock Picky is set to report. Vasco Data Securities (VDSI) on will report it's quarterly earnings on Thursday, February 21.

In case you haven't heard of them, Vasco is a company that designs and manufactures security tokens for online banking all around the world, but not so much here in The States just yet. Their stock has fallen from grace, and is back down to a price that I certainly find reasonable for the moment. They had a tremendous amount of backlog 33.4 million to be exact, from last quarter which should help out on the earnings release tomorrow.



During the last conference call Vasco did reaffirm their full year guidance for revenue growth, gross margins and operating margins, so things from their standpoint appear to be very healthy. The real question is will the banking crisis hurt Vasco's bottom line? A logical person would think that security for it's customers should be #1 priority, so I find it hard to believe that there will be many cutbacks from banks.

Now, like with any stock it is very easy to get burned in earnings season, ah but that is the beauty of being a long term-investor. You can put some in before earnings, and then add to your position over time. Buying on the dips and selling on the peaks if you so choose.

So is Vasco Data Securities a slam dunk? Of course not, I mean is there really any slam dunks in this market? Just remember that you need to focused on the future, and I can tell you that with Vasco's vast customer base, and growing presence around the world the future sure looks bright for this company...

Zoltek Hits A Speed Bump

Zoltek (ZOLT) reported it's earnings yesterday that dissapointed some investors. Zoltek's net sales for the quarter totaled $40.1 million, compared to $30.3 million in the first quarter of fiscal 2007 and to $43.6 million in the fourth quarter of fiscal 2007. Zoltek's net income was $2.6 million in the first quarter of fiscal 2008, which compared to net losses of $5.7 million and $1.8 million reported for the first and fourth quarters of fiscal 2007.

Zsolt Rumy, Zoltek's Chairman and Chief Executive Officer, said that although management had expected sales in the recent quarter to approximate the level reported for the immediately preceding quarter, volume was constrained by customer plant shutdowns in Europe over the holiday season and by year-end inventory adjustments by several customers who previously had built up their inventories to address concerns regarding possible shortages. "With our increasing capacity, our customers are more confident that we will be able to supply all their requirements and, consequently, they worked down some safety stocks. Overall demand for our low-cost, high-performance carbon fibers remains strong and we are optimistic that we can reach our sales objective for fiscal 2008," Rumy said.

As a long term investor you need to ask yourself if the overall story has changed. Is this just a hick-up along the way? Don't forget it was a tough quarter for a lot of companies out there with the slow down here in The States. Zoltek still has deals with the largest wind turbine manufactures in the world, and wind energy should only continue to grow in the future. Zoltek is also a smaller company which will lead to these massive stock swings in one direction or the other. Given these facts I think that this situation is presenting us with a buying opportunity.

Remember, as a long term investor you can buy a certain stock over and over again to lower your cost basis. You can always add to your position on dips in most stocks out there. These stocks that are mentioned in this blog are not 1 month stocks, they are not even 6 months stocks. Each one I plan on holding for at least a year or more depending on if the reasons I bought the stock in the first place has changed.

You need to do this same thing when you see your stock take a dive like Zoltek did today. Sometimes panic selling creates the best buying opportunities... Look at Google, it is bouncing off it's low, and should continue to rise as it has just become too cheap, especially with Microsoft's offer to buy Yahoo.

I guess it all depends if you see the glass half empty or half full...

Google Misses By A Penny, Does It Matter In The Long Term?

Well if you are a long term investor no, but the short term could be a little rough as people digest the numbers. First of all, let me just say that most companies would kill for these kind of numbers, but Google is not most companies.

Google (goog) reported revenues of $4.83 billion for the quarter ended December 31, 2007, representing a 51% increase over fourth quarter 2006 revenues of $3.21 billion and a 14% increase over third quarter 2007 revenues of $4.23 billion. Analysts were looking for $4.44 earnings per share and Google came in at $4.43, compared to $3.91 in the third quarter of 2007.

One very important number to look at is aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 30% over the fourth quarter of 2006 and approximately 9% over the third quarter of 2007. This shows you that the core business of Google is still remarkable strong.

Google does not issue guidance so it is not too surprising that the analysts weren't right on. At any rate this stock has already been hammered the past month, and is continuing to get hammered in afterhours. It is trading at a major discount to just a month ago and after this earnings report it looks like it is going to create a great entry point. I know that I will be taking this opportunity to build to my position. Google is a global story, and as the world becomes more connected through the Internet Google will only continue this amazing growth...

For more information about Google stock check out this post.

The Big Overreaction To Vasco Data Securities Earnings!

Anyone who held Vasco Data Securities (vdsi) yesterday is down a whopping 33.95% today! Talk about pain, that was one of the worst days I have ever seen for any stock. So, you might think that this stock is done, over, and just going to keep going down, but I am here to tell you that this is not going to happen.

This was the biggest overreaction to an earnings report that I can remember in recent times. The drooling analysts were looking for 17 cents per share and Vasco came in at 15 cents. That was an amazing 79% over last years earnings. Their revenues came in at 30 million which was below anayists' expectations, but was still a 60% increase over last years revenues. Vasco Data Securities won 608 new customers in the third quarter, including 106 banks and 502 enterprise security customers.
With the 15 cents a share in earnings Vasco's P/E ratio is only 44 based on it's current price of $26.13, which is low for a company that can grow at 79%. Vasco's backlog of orders also grew to an all time high of 33.4 million for the fourth quarter. My point is that the long term story with Vasco is still in tack. They re-affirmed their guidance of full-year revenues to rise 55 percent to 65 percent. Vasco Data (vdsi) also sees gross profit as a percentage of revenue for 2007 to be in the range of a very healthy 60 percent to 68 percent!

I have been a bull of this stock for a long, long time now and I did watch it's valuation get a little a head of itself, but this almost 35% sell off in the stock is just unjustified. This stock may be in for a rough ride the next couple of days, but this is an opportunity that I would jump on soon before the smoke clears.

To learn more about Vasco Data Securities visit their website and to see what I thought going into earnings check out this post!

If you are still looking for more information about the company listen to what the CEO T. Kendall Hunt has to say in this presentation in Chicago...

Buy Evergreen Solar Ahead Of Earnings?

Well I certainly can't say that I would put too much down on the table before earnings on Thursday, but this certainly is a good stock to consider for the long run. Evergreen Solar (eslr) is small company that is quickly expanding it's manufacturing facilities not only here in the states, but in Germany as well with it's joint venture with Everq. Germany is arguable the leader in the world when it comes to Solar technology, so ESLR has it's eggs in the right basket. They are still operating at a loss though, so this play is not for the faint of heart. They are also very small compared to the other players out there with only a 960 million dollar market cap, but with great risk comes great rewards. Here is a look at their 1 year chart courtesy of Google Finance.


I believe things can only get better for this company as governments around the world begin to offer even more incentives for green energy. Climate change is becoming more of a reality ever day and I believe we are soon going to be scrambling to provide the world with cleaner forms of energy.

One of the things that separates Evergreen Solar from the rest of the solar industry is the fact that they manufacture wafers, cells and panels all under one roof which will allow them to more efficiently control costs, and perfect the manufacturing process. They also produce panels that have the smallest carbon footprint of any panels on the market today, and with their revolutionary quad furnace I think Evergreen has a leg up on the competition.

Is Evergreen the best solar play out there right now? Maybe not, two others to consider are SunPower Corp (SPWR) and Suntech (STP) but I think that a year or two down the line Evergreen will be vastly outperforming both of these stocks... What are your thoughts?

NASDAQ ESLR is trading at $9.60 as I write this...

Google Beat's The Street Again

Nothing new here, Google (goog) blows past analysts estimates posting $3.91 earnings per share (eps) vs the estimated $3.78 that analysts were predicting. They also beat on revenues with 3.01 billion which is 70 million above what the analyst were looking for. Mind you this beat was already after many analysts had raised their estimates prior to the release, so the bar was already very high, and Google still had no problem beating!

The only blemish on the quarter was continued hiring by the company that spooked investors a bit in after hours trading. If you listened to the conference call though, they explained that some of that was due to the acquisition of Postini and some due to an overhang of people that were hired in the second quarter that didn't start till the third quarter. The management said that they would keep a watchful eye on hiring in the future as well.

Overall, this looks like another great quarter from the company that never seems to stop growing it's impressive bottom line. They have introduce serveral new ad formats for adsense and have just begun to start making money off of Youtube with the new overlay ads. Also, with the release of the I-Phone, mobile Internet use has only begun to hit and Google just released adsense for mobile which will pad the bottom line a bit next quarter! Basically, with the seasonally strong forth quarter coming up it is hard to find another stock out there with this much potential.

You might be thinking I can afford to buy a $600 stock, but don't forget that you don't have to buy a full share of a company like this and others with such a high price tag. You can buy partial shares though places like sharebuilder and other brokerages. Don't think you missed the boat either, because as grows the Internet grows Google. This is a worldwide play on the growth of the Internet and the push from traditional adverting into Internet advertising which is much easier to track through services like Google Analytics. Plus, with the Summer Olympics coming up in China and the presidential election next year things are only going to get better for this company.

For more information on how I see the Google Story check out these past posts...

Cramer Goes Ga Ga Over Google
Google Should I Stay Or Should I Go?
Putting A Value On A Stock
Evolution Of Traditional Advertising

Google Train And The Forming Tech Alliance

Tearing Down The Microsoft Monopoly

Can Vasco Data Securities Continue This Run?

I have to admit Vasco Data Securities (vdsi) has gone a lot higher then I thought it ever could in this time frame, but there are some fundamental reasons and major momentum moving this stock upwards this quarter and towards the next earnings release on October 25th. Vasco is a security company that is growing at an astounding pace, and judging by the recent additions of a few key contracts this company is poise to continue this growth in the future. It even opened up a new location in Brazil on October 1st to ensure it's growth prospects in the region. Vasco does the majority of it's business outside the United States, and therefore has a huge untapped market that is just beginning to embrace online banking.

As more people realize the convenience of online banking here in The States, customer's will demand higher security just as they did in Europe and the other over 60 countries that Vasco does business in. The only question I have is the growth already priced into the soaring stock price? It is currently trading at a 80 P/E ratio or multiple which is normally considered to be "expensive". Still there is only a couple analysist that even cover this stock, and it is only a 1.6 billion dollar company market cap wise so it certainly has breathing room still.

No matter what happens this earnings report it appears that the long term story remains, they are a small company (184 employees) that has hit the sweet spot of online banking industry and is leading in almost every place but the united states, which they are beginning to penetrate with their recent agreements with The Royal Bank Of Canada and Az-lan Tech Data which both have a very extensive reach!

Just to be clear though this pick is not for the faint of heart is has been on a crazy run, I would personally wait till after earnings or buy some now and buy some after earnings if all continues to go well...