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What to expect from Lam Research’s Q2 earnings report

Semiconductor companies will start their quarterly reporting starting from January 23. Lam Research (LRCX) will be one of them in this group that will be reporting its December quarter financial results on Wednesday, January 23 after the bell. Wall Street analysts estimate Lam Research to post earnings of $3.67 per share on revenue of $2.50 billion for its second quarter of 2019.

For the second quarter of 2019, the company had guided revenue to touch $2.5 billion (plus or minus $150 million) and earnings per share to be $3.65 (plus or minus 20 cents).

For the first quarter of 2019, Lam exceeded Street’s predictions. However, earnings dropped 3% to $3.36 per share and revenue declined 6% to $2.33 billion year-over-year.

According to SEMI, the global sales of new semiconductor manufacturing equipment are projected to increase by 9.7% to $62 billion in 2018, exceeding the historic high of $56.6 billion set in 2017. The equipment market is expected to contract 4% in 2019 but grow 20.7% to reach $71.9 billion, an all-time high.

Apart from Lam Research, other chipmakers that will be reporting their quarterly results on January 23 include Texas Instruments (TXN) and Xilinx (XLNX). These three companies’ quarterly results and their outlook, as well as their discussion on the China impact, will throw some light on other semiconductor stocks’ recently ended quarterly performance and their future.

With the chipmakers facing extreme pressure in 2018 forcing most of the chip stocks to bottom out, market experts hope that the recent rallies would hold momentum in the future. However, Apple (AAPL) cutting its forecast citing the Chinese economy considered to be a headwind for the semiconductor industry.

Shares of the Fremont, California-based chipmaker hit a 52-week low ($122.64) on December 26, 2018. Lam Research stock, which lost about 28% in the last 52-weeks period, rose about 5% during Friday’s mid-day.

Lam Research stock rises on Q1 earnings beat

 

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Earnings Preview: A bumpy ride ahead for Ford in 2019

Ford Motor Company (NYSE: F) is slated to report its fourth-quarter results on January 23 after the bell. The automaker this week has already alerted investors that earnings would miss analyst estimates which haven’t gone down well with the street sending the stock down more than 6% on January 16 post the preliminary results announcement.

The company now expects fourth-quarter adjusted EPS to come in at $0.30 compared to $0.32 expected by the street, and down 23% compared to last year. For the corresponding period last year, the auto major reported EPS of $0.39.

For the full year 2018, earnings per share is expected to be $1.30, which is $0.03 lower than analyst consensus and 27% lower than last year. It’s worth noting that last quarter the company expected adjusted earnings to come in the range of $1.30 to $1.50 per share.

Ford Motor Q3 profit drops 37% but beats estimates

When it comes to 2019 forecast, the auto major provided qualitative guidance stating that there would be growth in revenue, EBIT and cash flow over 2018. On the flip side, General Motors (GM) lifted its EPS outlook for 2019 to be between $6.50 and $7, surpassing analyst estimates. GM’s transformational strategy under the helm of Mary Barra seems to be working well amidst challenging global environment.

Ford declared a dividend of $0.15 per share for the first quarter, which remains unchanged from 2018 levels. The board has set a record date of January 31 and payable on March 31.

Last quarter the automaker reported a 37% slump in profits due to sluggish demand from the European and Chinese markets, but earnings exceeded analyst projections. Revenue saw an increase of 3% aided by the strong performance from the North American region.

Headwinds Galore

The company’s ongoing transformation strategy is to focus on products which would bring in high-margins and register high-growth. With the ongoing trade wars and spiraling costs coupled with flat global sales projected for 2019 and weak sales from China and European regions, there are multiple headwinds lined up against the firm which might impact the transformation plans and bottom line this year.

Ford’s plans might also be impacted due to trade-related issues it might face from Brexit if the UK takes the “no deal” route with European Union. Commenting on the issue, CFO Bob Shanks said, “Such a situation would be catastrophic for the UK industry and for Ford’s operations in the country.” To put things in perspective, UK is the biggest market for Ford in Europe and second biggest outside the US.

Investors would be expecting CEO Jim Hackett to shed more light on how the restructuring efforts are going to shape up in 2019. In addition, they would be expecting more details on the earnings outlook. Will investors’ patience bear fruit? We need to wait till next Wednesday to get answers from Ford’s top brass to know how the ride is going to be for the firm and investors.

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