It's "live your lives as normal, but be ready to be attacked again" time, and so, with one hand on the keyboard and the other pointing to the door in case we all need to suddenly leave, we're ready to do something we normally do: Preview quarterly earnings releases from our companies.
The third quarter is history, and it was one of the weakest quarters in recent history. The fourth quarter could see improvement as the holidays approach, but the best we can say for the third quarter is that it'll make next year's third-quarter year-over-year comparisons much easier.
But let's stick to the here and now. Here's what's on our plate:
Date announced Company EPS est. 10/16 Millennium ($0.15) 10/17 AOL Time Warner $0.26 10/18 eBay $0.11 10/23 Amazon ($0.16) 10/24 Celera Genomics ($0.46) 10/25 Amgen $0.28
Running down the list, our newest purchase, Millennium Pharmaceuticals (Nasdaq: MLNM), will announce results after the market closes tomorrow. The company is expected to lose $0.15 per share on $68 million in revenue, en route to losing $0.59 per share this year on about $240 million revenue. The main factors that we'll consider when we look at the results are the company's cash burn (is it stable?) and research and development costs (they spent $94 million on R&D last quarter).
We've already gained 43% on our investment in Millennium in less than three weeks-- a result of buying a promising company when most people were selling.
On Wednesday morning, AOL Time Warner (NYSE: AOL) is expected to put up $0.26 in earnings per share, up 18% year-over-year, on $9.3 billion in sales, up slightly from last quarter. Barron's had a negative article on AOL Time Warner a few weeks ago, warning that the company might need to cough up $5 billion to close an overseas contract. Meanwhile, AOL Time Warner already doesn't have a pretty balance sheet. Free cash flow (which is doing well) and the balance sheet are the main things we're watching, now and over the long run.
eBay (Nasdaq: EBAY) is due to chime in the next day, Thursday, with $0.11 per share in earnings, up 57% from last year, on $189 million in revenue. The company is expected to earn $680 million in sales this year, and $980 million next year, as it strives toward earning $3 billion in revenue in 2005.
With more than $1 billion in cash and equivalents, zero long-term debt, and a statement confirming that it'll meet estimates despite a slowdown after September 11 (it took a few weeks for traffic to return near normal), eBay may be the strongest positioned company that we own. Its share price reflects that. Its share price could continue to reflect that, as long as eBay doesn't miss a single beat.
In this quarter's report, we will, as usual, look at the number of auctions hosted, the average amount earned per auction, free cash flow minus gains from stock options, and gross and operating margins, among other things. Maybe that guy Lund will favor us with another column on eBay -- ya think?
Amazon.com (Nasdaq: AMZN) is a company that I want to see succeed, but it's the company I'm most concerned about in our portfolio given its debt, the fact that it operates in a tough business period, and the ongoing expenses of running an immense, cutting-edge website and shipping system. The prospects for tremendous business value creation are just stacked against it.
Next week, Amazon is expected to report $0.16 per share in losses on about $650 million in sales, down slightly from the second quarter. The average estimate still calls for $1.1 billion in fourth-quarter sales, leading to $3.1 billion in revenue for the year, or 13% sales growth rather than at least 20% as was hoped. Perhaps the only thing in Amazon's immediate favor: People are less interested in going out to shop, so they might buy more online this holiday.
With its third-quarter news, we'll be looking at cash flow, working capital, and cash burn, as always.
Celera (NYSE: CRA) and Amgen (Nasdaq: AMGN) report next week as well. Celera is expected to lose $0.46 per share on $28 million in sales, on a path to $158 million in 2001 sales. Celera, our youngest company, is easily our earliest-stage company. Celera has an $18 per share book value, which means something only if it doesn't burn too much cash. It's far too early to talk about eventual profits, though.
Amgen is expected to announce third-quarter sales of about $1 billion, up slightly, and earnings per share of $0.29, flat with last year. For all of 2001, earnings per share are expected to gain 11%. Next year, the growth estimate is 18%. That's based on at least a few new drugs reaching the market by the end of this year. So far, Amgen is behind schedule, which admittedly is the norm in the industry -- to be behind schedule.
Finally, all these companies will host conference calls. Visit their websites for information. Also, visit their discussion boards on the Fool to discuss, post questions, read others' opinions, and generally commiserate.
To close, when we invest, we invest with a long-term objective, but we follow quarterly results just the same in order to understand our companies and be current on their performance. We buy to hold -- to hold great, consistently performing companies. We don't just buy and hold without thought. We'll have plenty of thinking to do the next few weeks.
Keep the faith, citizens.
Of companies mentioned, that guy Fischer owns shares of eBay and Millennium. The Fool has a full disclosure policy.