If companies that you own haven't preannounced poor quarterly earnings yet, either they don't announce earnings at all in July, or they'll preannounce something soon, or (smile) they'll announce earnings that are within expectations. Or -- one more possibility -- they'll surprise everybody and announce poor results without any preannouncement.
Two of our portfolio's companies announce results next week: eBay (Nasdaq: EBAY), where you can buy just about anything that your thumping heart desires, and AOL Time Warner (NYSE: AOL), where "synergy" means promoting Warner movies and music on the AOL mainpage (and who can blame them).
The week after next, Amazon.com (Nasdaq: AMZN), an innovative retailer that receives all kinds of ribbing from writers who have, well, built less than Bezos and Co., shares results. Prepare yourself for a flood of coverage -- good, bad and nitpicking. God bless it. It wouldn't be America without it.
None of our Rule Breaker companies have preannounced results, which -- even though we're long-term and therefore not very concerned -- is good. Some rumors have floated that AOL Time Warner could fall short of expectations, at least with its advertising revenue, but that remains to be seen. Whether it does or not, we already know that advertising is cyclical, so we wouldn't view a modest shortfall as indicative of much, although other investors might.
eBay is expected to post another healthy quarter, and Amazon is generally expected to show modestly improved metrics across the board.
In the wake of those three companies, our others -- Starbucks (Nasdaq: SBUX) and biotechs -- will announce quarterly results, too. But aside from Amgen (Nasdaq: AMGN), our upstart biotechs' earnings don't mean much.
Human Genome Sciences (Nasdaq: HGSI) won't show much revenue at all; we'll just be looking at its cash burn rate and research & development costs. Revenue at Celera (NYSE: CRA) has more meaning. We'll look for its sales to grow significantly since last year, and we'll eye its cash burn and R&D, too. Celera's sales last quarter were $23.3 million, up from $11 million the prior year. $25 million is expected this quarter.
Be they duds or of brilliant hues, we'll see some numbers fireworks on these dates:
7/18: AOL Time Warner
7/26: Human Genome and Starbucks
Let's set up the hurdles and then see if the companies can clear them, starting next week. Today we'll preview second-quarter expectations for our first three companies to report: AOL, eBay, and Amazon (this motley threesome represents three of the biggest standouts, so far, to emerge from the online world.)
AOL Time Warner
The New York/Virginia company is expected to announce earnings of $0.28 per share on revenue of about $9.6 billion, according to average estimates. It earned $0.23 last quarter on $9 billion in sales. For a company operating in a poor economy, so far AOL Time Warner is doin' all right.
Investors will be most critical of the advertising numbers and in the conference call the outlook for advertising will likely be the most popular topic. AOL Time Warner executives recently hinted that the ad industry should improve soon, but they are, like all of us, guessing.
The leading online commerce platform is expected to earn $0.09 per share this quarter on about $160 million in revenue. It earned $0.11 per share on $154 million in revenue last quarter, which was its seasonally strongest quarter. It earned $0.05 per share last year in the second quarter, so eBay is clearly a company that is growing despite the economy, and perhaps in part due to it. (Many large networking and computer products are for sale at this colorful place. Along with sailboats, too. And Brian Lund's house.)
The number-one online consumer retailer (in a traditional sense) is expected to lose $0.22 per share on $678 million in second-quarter revenue. Amazon lost $0.21 per share in the first quarter on $700 million in sales, and $0.33 in the second quarter of glorious 2000 on $577 million in revenue. What will the critical focus be this quarter? Got me. It changes every quarter, with critics choosing to focus on shipping costs, or customer retention, or what have you.
We're long-term investors. Our main concern, outside of the obvious profitability questions, is the company's $2 billion in long-term debt. It's too early to call this fight one way or another, but Amazon is slowly scoring points one by one with each step that it takes closer to breakeven. If it does make breakeven, and then profitability, the stock should see significant valuation appreciation from current prices. However, retaining that valuation increase will likely prove challenging, as the stock already prices in eventual profitability.
That's all the time we have today, boys and girls. Next week, the fireworks begin here. Put on your Fool cap and pull up a chair.
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Jeff Fischer skipped the fireworks this year in Washington, D.C. -- it was rainy. Besides, the capital's fireworks on January 1, 2000 were so lame that he's still downright furious with angry rage... He owns shares of eBay. The Fool has a full disclosure policy.