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J&J's Headache-Relieving Earnings, Coke's Healthy Earnings in Emerging Markets, and Yahoo!'s "Turnaround" Earnings

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With so many corporate earnings reports to digest this week, we just want to sit down to some Game of Thrones and pig out on whatever that new jalapeno-pineapple-infused chicken dish is at Domino's. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) jumped 89 points Tuesday as some headline companies announced their first-quarter performances.

1. Yahoo! jumps on turnaround hopes
Purple might be the new black. After reporting earnings late Tuesday afternoon, shares of Internet giant Yahoo! (NASDAQ: YHOO  ) jumped nearly 7% in after-hours trading after a half-decent performance to kick off 2014. Yahoo!'s $1.08 billion in sales matched Wall Street's expectations, driven by a 9% rise in search revenues to $444 million and steadily growing 430 million mobile users.

So why are investors pumped? Because of Yahoo!'s exclamation point-worthy 24% stake in the Alibaba Group, the e-commerce mammoth of Asia. Not only did the megasite recently announce its initial public offering in the U.S. later this fall, but Yahoo! also reported Tuesday that Alibaba's revenues rose 66% to $3.1 billion last quarter. Not too shabby.

The takeaway is that Wall Street has been keeping a close eye on the once-struggling Yahoo! ever since Marissa Mayer became CEO in late 2012. In addition to rebranding with a new logo, word on the street is that Mayer is now planning to budget millions of dollars for half-hour Yahoo! comedy shows and other turnaround tricks. Investors are excited for anything that will prevent the company from disappearing like your middle-school AOL screen name.

2. Coca-Cola stock pops, despite flat sales
Sip on this. Classic American beverage phenom Coca-Cola (NYSE: KO  ) announced first-quarter earnings Tuesday that dropped 2% compared with the year before. That's actually what Wall Street expected, but overall drink sales were up 2%. Some caffeine-worthy highlights in emerging markets and non-soda drinks made the results impressive.
So why did the stock rise 3.7% Tuesday? Emerging markets. Sales in countries without nationwide indoor plumbing are booming (up 12% in China, 6% in Russia, and 4% in Brazil). The proud Atlanta-based member of the Dow also hopes that Brazil's 2014 World Cup and 2016 Summer Olympics sell Coca-Cola as well as its sponsorships did in the Atlanta '96 Olympics (the Games with the weird, '90s-looking mascot, Izzy, that you thought was kind of cool as a kid).
The bad news was that volumes of carbonated soft drinks (i.e., "pop" for our readers up north) dropped 1% globally, the first quarterly decline for Coke since 1999. But that drop is led by the U.S. and other developed countries in Europe. Apparently word is out that consuming mountains of sugar is bad for you and people are listening (thanks, First Lady Michelle Obama and former New York City Mayor Michael Bloomberg).
The takeaway is that sales of non-carbonated drinks, like PowerAde and Vitamin Water, grew 8%. These "other" Coke products represent only 25% of the company's global sales, but health campaigns and global warming (Coke's polar bears are sweating in this heat) continue to discourage people in developed countries from drinking soda.
3. Johnson & Johnson earnings ease investors' pain
Their profits were so nice, they named it twice. Shares of pharmaceutical legend Johnson & Johnson (NYSE: JNJ  ) rose 2.1% Tuesday after reporting first-quarter earnings -- JNJ's $18.1 billion in revenues from January through March were a 3.5% rise from the same period last year, while profits popped almost 8%.

Drugs are bad, but prescription drugs are good -- especially for JNJ over the past few months. While the company pops out rock stars of the medical world, like Aveeno and Listerine, its worldwide pharmaceutical sales jumped over 10%. Leading the charge were HIV drug Prezista, psoriasis drug Stelara, and (just in time for SAT season) ADHD drug Concerta.

The takeaway is that investors can finally take a chill pill. Back in January, Johnson & Johnson had lowered its forecasts for 2014 as a number of its patents expire. But the company's first-quarter performance made Wall Street feel better than a couple of pops of Vicodin, and JNJ raised its 2014 full-year earnings forecasts as a result.

  • March housing starts
  • Federal Reserve Chairwoman Janet Yellen speaks
  • First-quarter earnings reports: Google, Bank of America, Credit Suisse

MarketSnacks Fact of the Day: The average U.S. employee takes only half of his or her eligible vacation days -- and over 60% still work via email on vacay.

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  • Report this Comment On April 16, 2014, at 4:35 AM, sofiacaden wrote:

    I think they should carry on with their Beverage business as they are not the only ones suffering but at least in a better position than others major Beverage Brands.

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9/2/2015 4:36 PM
^DJI $16351.38 Up +293.03 +1.82%
JNJ $93.35 Up +1.26 +1.37%
Johnson & Johnson CAPS Rating: ****
KO $38.90 Up +0.15 +0.39%
Coca-Cola CAPS Rating: ****
YHOO $31.77 Up +0.17 +0.54%
Yahoo CAPS Rating: ***