>>> Verizon beats by $0.01, beats on revs; reaffirms FY14 guidance (50.70)

Verizon beats by $0.01, beats on revs; reaffirms FY14 guidance (50.70)
Reports Q2 (Jun) adj. earnings of $0.91 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.90; revenues rose 5.7% year/year to $31.48 bln vs the $31.09 bln consensus.

Co reaffirms guidance for FY14, sees FY14 revs +4% to ~$125.4 bln vs. $125.41 bln Capital IQ Consensus, adj. consolidated EBITDA margin expansion in 2014, with positive contributions to profitable growth from both wireless and wireline.
  • Verizon continues to target 2014 investments in the range of $16.5 billion to $17 billion, with a decrease in capital spending as a%age of total revenues for the full year.
Continued effective cost management drove second-quarter 2014 operating income to $7.7 billion, a 17.2% increase compared with second-quarter 2013. Consolidated operating income margin was 24.4% for second-quarter 2014, compared with 22.0% for second-quarter 2013. Consolidated EBITDA margin was 37.6% for second-quarter 2014, compared with 35.9% for second-quarter 2013.

In Q2, Verizon Wireless delivered strong growth in retail postpaid net connections and revenues, co-record tablet additions, an increase in smartphone penetration, and continued high segment EBITDA margin on service revenues (non-GAAP).
  • Wireless Financial Highlights
    • Total revenues were $21.5 billion in second-quarter 2014, up 7.5% year over year. Service revenues in the quarter totaled $18.1 billion, up 5.9% year over year. Retail service revenues grew 5.3% year over year, to $17.3 billion. Retail postpaid ARPA (average revenue per account) increased 4.7% over second-quarter 2013, to $159.73 per month. In second-quarter 2014, wireless operating income margin was 32.5% and segment EBITDA margin on service revenues was 50.3%. This compares with 32.4% and 49.8%, respectively, in second-quarter 2013.
  • Wireless Operational Highlights
    • Verizon Wireless added 1.4 million retail net connections, all of which were postpaid, in the second quarter. These additions exclude acquisitions and adjustments. At the end of the second quarter, the company had 104.6 million retail connections. This includes 98.6 million retail postpaid connections, a 4.6% increase year over year. Verizon Wireless had 35.2 million retail postpaid accounts at the end of the second quarter, up 0.7% over second-quarter 2013, and 2.80 connections per account, up 3.7% year over year. During second-quarter 2014, the company added 304,000 postpaid phone net additions and 1.15 million postpaid tablets. Verizon's wireline segment reported continued strong results for consumer services, where year-over-year quarterly revenues now have grown by more than 4% for eight consecutive quarters.
  • Wireline:
  • In Q2, consumer revenues were $3.9 billion, up 5.3% compared with second-quarter 2013, with FiOS revenues representing 75% of the total. Consumer ARPU for wireline services increased to $122.57 in second-quarter 2014, up 11.0% compared with second-quarter 2013. Total FiOS revenues grew 14.4%, to $3.1 billion, comparing second-quarter 2014 with second-quarter 2013.
  • Verizon added 139,000 net new FiOS Internet connections and 100,000 net new FiOS Video connections. Verizon had totals of 6.3 million FiOS Internet and 5.4 million FiOS Video connections at the end of the second quarter, representing year-over-year increases of 9.3% and 7.6%, respectively.

(BFW) *WACKER CHEMIE WACKER UPGRADES ANNUAL EARNINGS FORECAST

BN 07/22 10:19 *WACKER CHEMIE SEES 2014 EBITDA RISING AT LEAST ONE THIRD
BFW 07/22 10:19 *WACKER CHEMIE WACKER UPGRADES ANNUAL EARNINGS FORECAST
BN 07/22 10:18 *WACKER CHEMIE WACKER UPGRADES ANNUAL EARNINGS FORECAST
BN 07/22 10:18 * WACKER CHEMIE WACKER UPGRADES ANNUAL EARNINGS FORECAST
DGAP-Adhoc: Wacker Chemie AG: WACKER upgrades annual earnings forecast
2014-07-22 10:18:35.906 GMT


DGAP-Adhoc: Wacker Chemie AG: WACKER upgrades annual earnings forecast

Wacker Chemie AG / Key word(s): Change in Forecast/Final Results

22.07.2014 12:18

Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted
by DGAP - a company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

WSJ : Jana Partners Wants Changes at Apache

Jana Partners Wants Changes at Apache
Activist Investor Wants Oil Producer to Exit Some Projects to Free Up Cash Flow

Activist investor Jana Partners LLC has built a stake worth more than $1 billion in Apache Corp. APA -0.02% , and is calling on the oil and gas producer to sell off its international holdings to drill exclusively on American soil.

"Investors are unimpressed by [Apache]'s global diversification and have voted with their feet," Jana wrote in a letter to investors on Monday that was reviewed by The Wall Street Journal.

The hedge fund said the company had poor performance compared with rivals, several of which are pure-play companies that drill exclusively in U.S. shale formations such as the Permian Basin.

Jana also wants Apache to free up cash flow by exiting two major projects in Canada and Australia that aim to export natural gas, which will take years and billions of dollars to fully develop. If the company doesn't take further steps to increase its value, Jana said it should consider selling itself.

Houston-based Apache has already taken steps in line with Jana's goals, raising $10 billion in the last 18 months by selling properties from Egypt to Argentina. Executives said in May the company was working on finding a buyer for some of its stake in the Canadian gas export project, while finding another source of financing for investment in the Australian liquefied natural gas plant.

Apache said it welcomes Jana's investment. "We are focused on continuing to execute our strategic plan to rebalance our portfolio and to focus our strategy on more predictable and profitable production growth in our North American onshore assets," spokesman Patrick Cassidy said.

Jana's stake was reported earlier by Bloomberg News. Apache's shares closed down Tuesday at $98.56, but rose 5.4% in after-hours trading. The company has a stock-market value of $38.45 billion.

Apache's recent moves have marked a break with its historical strategy of buying oil and gas holdings cheaply and squeezing more value out of them. Now, the company is trimming its international investments and showering dollars on drilling domestically, with more than two-thirds of its $8.5 billion budget for 2014 earmarked for North America.

The company has also taken steps that tend to placate activist investors, spending more than $2 billion to buy back its own stock in the past year. The company's board of directors recently authorized repurchasing even more shares.

Jana nodded to these moves in its letter, but wants the company to go further, increasing its focus on exploring the Permian basin of West Texas.

"The recent words and deeds of Apache's management indicate they see the opportunity and will do what it takes to realize shareholder value," Jana wrote.

If they don't, the hedge fund added, the company would be better off selling itself. "A value-unlocking opportunity this obvious and extraordinary is unlikely to persist."

>>> DuPont reports EPS in-line with conssens & pre-announcement, revs in-line; g

DuPont reports EPS in-line with conssens & pre-announcement, revs in-line; guides Q3 EPS below consensus; reaffirms FY14 EPS guidance; raises quarterly div 4%

Reports Q2 (Jun) earnings of $1.17 per share (co pre-announced EPS of lower than $1.28 on Jun 26), excluding non-recurring items, in-line with the Capital IQ Consensus Estimate of $1.17; net revenues fell 1.4% year/year to $9.71 bln vs the $9.75 bln consensus.

  • Co issues downside guidance for Q3, sees EPS of 40% of 1.25-1.35 or ~$0.50-0.54 vs. $0.60 Capital IQ Consensus Estimate.
  • Co reaffirms guidance for FY14, sees EPS of $4.00-4.10 vs. $4.02 Capital IQ Consensus Estimate.
  • Agriculture -- Operating earnings of $836 mln declined $105 mln, or 11 percent, on lower corn seed volumes, lower North America herbicide volumes and higher seed inventory write-downs. This was partially offset by higher seed prices, higher insecticide volumes, higher soybean volumes and lower seed input costs.
  • Performance Materials -- Operating earnings of $303 mln decreased $29 mln, or 9 percent. Gains from strong Performance Polymers volumes into global automotive markets were offset by a scheduled maintenance shutdown at the company's Orange, Texas ethylene unit. Absent that shutdown, segment operating earnings would have increased.
  • The Performance Chemicals separation remains on track for mid-2015.
  • The company also announced a 4% increase in its 3Q 2014 dividend, its third increase in the past 27 months.
  • Guidance Details: The company reaffirms its recently updated outlook for full-year 2014 operating earnings of $4.00-$4.10 per share, an increase of 3 to 6 percent from $3.88 per share earned in 2013, based on expected growth in global industrial market demand. The company anticipates a strong second half in 2014 with operating earnings per share of $1.25 - $1.35, about 40 percent of which is expected in the third quarter.

WSJ : Next iPhone Will Offer Bigger Screens

Next iPhone Will Offer Bigger Screens
Apple Tells Suppliers to Gear Up for 4.7-inch and 5.5-Inch Screen Sizes

Apple Inc. AAPL -0.52% is preparing for its largest initial production run of iPhones, betting that larger-screen models will lure consumers now attracted to similar phones from Samsung Electronics Co. 005930.SE -0.37% and others.

The Cupertino, Calif., company is asking suppliers to manufacture between 70 million and 80 million units combined of two large-screen iPhones with 4.7-inch and 5.5-inch displays by Dec. 30, according to people familiar with the matter.

Its forecast for what is commonly called the iPhone 6 is significantly larger than the initial order last year of between 50 million and 60 million versions of the iPhone 5S and 5C—which had a display measuring 4-inches diagonally, these people said. Both of the coming models are expected to feature metal cases similar to the iPhone 5S and likely come in multiple colors, these people said.

Apple stuck with smaller displays on iPhones even as rival smartphone makers rolled out bigger screens and customers clamored for larger phones. Demand for larger-screen smartphones boosted Samsung, which started offering a 4.8-inch display in its Samsung Galaxy S models in 2012 and introduced an array of bigger phones.

Apple is scheduled to report its fiscal third-quarter results on Tuesday and provide a financial outlook for the current period ending Sept. 28. Historically, Apple has released a new iPhone in mid-September.

Analysts are forecasting Apple will report sales of about 35.9 million iPhone units for the three months ended June 30. That would be up about 15% from a year earlier.

For Apple, one possible hiccup with the larger screen is that display makers for the new iPhones are struggling to improve the production of the larger 5.5-inch screens, people familiar with the matter said. The production is complicated because the displays are using in-cell technology, which allows the screens to be thinner and lighter by integrating touch sensors into the liquid crystal display and making it unnecessary to have a separate touch-screen layer.

To factor in the possibility of a higher failure rate for displays, Apple has asked component makers to prepare for up to 120 million iPhones by year-end, the people familiar with the matter said. It made a similar request last year to prepare enough parts for a combined 90 million iPhones to provide some slack in its supply chain.

The 5.5-inch iPhone screen would face an additional manufacturing complication if it uses a cover using sapphire crystal, a more durable but costly alternative to glass, people familiar with the matter said.

Apple's iPhone production forecast assumes a surge in demand from Apple's partnership with China Mobile Ltd. 0941.HK +2.08% , the world's largest carrier, which started offering the iPhone earlier this year. Bigger-screen smartphones are also popular in China and other emerging markets where the smartphone is replacing the personal computer as a main computing device.

As Apple competes against Google Inc. GOOGL -1.10% 's Android operating system, larger screens are now common in Apple's core mobile market—high-price phones. In May, 98% of Android smartphones that sold globally at the equivalent of $400 or above featured a display greater than 5 inches, according to Counterpoint Research.

The new iPhones are coming to market as Samsung's smartphone business is showing signs of sluggishness. Earlier this month, Samsung warned that its earnings would fall for a third straight quarter due to a glut of unsold smartphones. It is feeling the pinch in emerging markets where its low- to mid-end smartphones are facing intense price competition from rival Asian handset makers including Lenovo Group Ltd. 0992.HK -1.47% and Xiaomi Inc.

Every year, Apple faces a delicate balancing act. It is critical for Apple to ensure that it has enough supplies of a new iPhone during the holiday season when demand is greatest. Shortages can often result in sales for its rivals, although too much inventory also is a concern.

Apple disappointed investors in last year's December quarter when iPhone sales rose 7% from a year earlier, falling short of Wall Street expectations of a 15% increase as it struggled to fulfill demand for the 5S and failed to move enough 5C units. The slump proved temporary, with Apple reporting a 17% increase in the following quarter.

Michael Walkley, an analyst at Canaccord Genuity, said there is "strong pent-up demand" for the iPhone 6 because customers have held off on upgrading from older iPhone models.

To fulfill Apple's demands, the company's two main iPhone assemblers—- Pegatron Corp. 4938.TW +0.17% and Hon Hai Precision Industry Co. 2317.TW -0.45% , also known as Foxconn—are on a hiring binge at their respective manufacturing sites in China. Foxconn, for example, is hiring workers by the hundreds a day to staff production lines at their respective manufacturing sites in China, said people familiar with those companies.

Foxconn and Pegatron plan to start mass producing the 4.7-inch iPhone model next month and Hon Hai will begin making the 5.5-inch version exclusively in September, the people said.

Often, Apple's production forecasts are adjusted based on early demand, according to people familiar with the matter. For example, Apple tweaked its initial forecasts for the iPhone 5S and iPhone 5C last year when the more expensive 5S initially sold better than expected and the 5C slumped in the first few months, these people said.

Apple Chief Executive Tim Cook has also warned that the supply chain is "very complex" and that it is impossible to take a data point from a supplier and extrapolate a broader meaning for Apple's business.

Suppliers also say that Apple likes to build up inventory heading into the new year, because it is difficult to keep production lines humming at full capacity since many workers go home during Lunar New Year, which is in February next year.

(GMO) Jeremy Grantham - Q2 letter - Summer Essays

Bubbles Again: Setting Up for a Deal Frenzy

Despite a shocking 2.9% setback in first quarter GDP (quarterly decline at annualized rate), the extent of which was
forecast by no one, and despite a substantial decline in NIPA corporate earnings, the market has climbed slowly
but steadily in recent months. Market volatility has declined to very low levels despite these setbacks and despite
Middle Eastern problems. (The negative January Rule this year has, for that matter, also been ineffective so far.)
So, all is apparently well, as we have arrived within three months of the dreaded (by bears) Presidential third year.
Accordingly, my recent forecast of a fully-fledged bubble, our definition of which requires at least 2250 on the S&P,
remains in effect.
What is worse for us value-driven bears, a further bullish argument has struck me recently concerning the probabilities
of a large increase in financial deals. Don’t tell me there are already a lot of deals. I am talking about a veritable
explosion, to levels never seen before. These are my reasons. First, when compared to other deal frenzies, the real
cost of debt this cycle is lower. Second, profit margins are, despite the first quarter, still at very high levels and are
widely expected to stay there. Not a bad combination for a deal maker, but it is the third reason that influences my
thinking most: the economy, despite its being in year six of an economic recovery, still looks in many ways like
quite a young economy. There are massive reserves of labor in the official unemployment plus room for perhaps a
2% increase in labor participation rates as discouraged workers potentially get drawn into the workforce by steady
growth in the economy. There is also lots of room for a pick-up in capital spending that has been uniquely low in this
recovery, and I use the word "uniquely" in its old-fashioned sense, for such a slow recovery in capital spending has
never, ever occurred before. The very disappointment in the rate of recovery thus becomes a virtue for deal making.
Previous upswings in deals tended to occur at market peaks, like 2000 and 2007, which in complete contrast to today
were old economic cycles already showing their wrinkles. Worse than being in full swing, they were usually way over
capacity. Thus, 2000 was helped along by the bubble in growth stocks to over 60 times earnings, allowing companies
like Cisco, possibly correctly, to believe they were dealing with a near-zero cost of capital in making deal after deal
for their massively overpriced stock.
In 2007 the housing bubble led to an extra one and a half to two million houses being built, with all the usual
accoutrements of furniture sales and more jobs for realtors, bank officers, and Goldman Sachs designers of ingenious
new ways to be of service to real estate speculators. Now that the smoke has cleared, the 2007 economy at its peak
looks to have been 2% or so above trend capacity (allowing, incidentally, for the overstating of the U.S. long-term
growth capability, a misjudgment that is still hanging around).
GMO Quarterly Letter – Second Quarter 2014 7
If I were a potential deal maker I would be licking my lips at an economy that seems to have enough slack
to keep going for a few years. Also, individuals and institutions did feel chastened by the crash of 2009 and
many are just now picking up their courage. And as they look around they see dismayingly little in the way of
attractive investments or yields. So, the returns promised from deal making are likely to appear, relatively at
least, exceptional. I think it is likely (better than 50/50) that all previous deal records will be broken in the next
year or two. This of course will help push the market up to true bubble levels, where it will once again become
very dangerous indeed.
My final thought on this issue is the following point, which I failed to make in my bubble discussion last
quarter: perhaps the single best reason to suspect that a severe market decline is not imminent is the early-cycle
look that the economy has. And even Edward Chancellor last quarter conceded that there was as yet no sign of
a bubble in the quantity of credit that was being created.