Earnings Recap: Goldman Sachs, Johnson & Johnson, Intel

The markets were down today, with the S&P 500 down -2.01%.  The Dow Jones was down 137.63 points closing at 7920.18, while the NASDAQ was down 1.67% finishing at 1625.72.  Major indices were down despite Goldman Sachs (GS) successfully raising $5B in equity after posting strong Q1 earnings. In the world of commodities, oil and gold contracts were both down today settling at $49.41 and $892.00 respectively.  Prices of the 10-year were up with yields down to 2.788%.

Johnson & Johnson (JNJ) reported earnings today of $3.5 billion, or $1.26 a share.  J&J posted lower earnings than last years’ $1.26 a share on income of $3.5B, but beat analyst estimates of $1.22 a share.  J&J said that it was hurt by a strong US dollar negatively effecting foreign sales, but was able to beat analysts’ estimates by lowering costs.  Sales were down to $15.03B from$16.19B, and J&J says that sales were affected by about 6% due to deteriorating exchange rates.  Pharmaceuticals, medical devices and consumer products, J&J’s three major segments, brought the company down as each reported lower sales.  Investors also have to take into consideration that J&J beat analysts’ EPS expectations this quarter while J&J had a more favorable tax rate than usual and that there were less shares outstanding due to J&J’s stock buyback program.  Despite this fact, investors were happy with sales numbers, expecting worse considering the economy.

In other earnings news, Intel (INTC) reported earnings after hours announcing a net income of $647MM.  Intel also reported revenue of $7.1B, beating analyst estimates of $7B.  Intel reported EPS at $0.11 cents beating the Streets expectations of $0.03 cents a share.  Intel was trading up all day in expectations that they would beat estimates due to an over-correction in inventories and better computer sales behind demand in China.  CEO Paul Otellini believes that the PC market bottomed out in the first quarter, but for internal purposes is planning for revenue to grow flat in relation to the first quarter.  Analysts believe the future of the chip market is unclear, but many believe that chips will carry the tech sector in the recovery period.

In economic news today, the Commerce Department reported the US retail sales dropped a seasonally adjusted -1.1% in March.  Sales data was much worse than the expected with a 0.2% rise that many economists predicted for March sales.  Many thought that the good numbers posted in January and February were going to carry over to March, signaling a rebound in consumer spending, but the results do not support this belief.  Sales across the economy were down, especially durable goods.  Sales of automobile and auto parts fell -2.3%, while sales of electronics and appliances fell -5.9%.  The numbers show a very weak retail sector affected by great job loss and personal financial losses due to deteriorating home values and poor investments.

Disclosure: The Fund the author is associated with is long JNJ.

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