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What: Shares of Harman International (NYSE:HAR) were blasting higher today, gaining as much as 14% after the audio entertainment specialist bumped up its full-year forecast in its quarterly report.
So what: The owner of JBL and other brands said revenue dropped 3% on a slow European car market, to $1.06 billion, while adjusted earnings per share fell all the way from $2.38 a year ago, to $0.79, but that still easily cleared analyst expectations at $0.61. More importantly, after sharply cutting back its full-year projection in its last quarterly report, Harman bumped it up to $3 a share from $2.70-$2.90. The speaker maker also said it will begin a five-year cost-cutting program to shift jobs from Europe and America to lower-cost developing countries.
Now what: The forecast bump is encouraging, but that essentially comes from this quarter's earnings beat, and Harman still has some headwinds ahead of it. Sales to German carmakers make up 43% of Harman's revenue, with the rest of Europe contributing another 20%, and European carmakers have reported lower earnings so far this season as the continent is still struggling to put the debt crisis in the rearview window. Cost-cutting may help boost profits, but I'd be happier seeing top-line growth.
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Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.