Headlines this morning include earnings from Walmart, Tesla and Chesapeake Energy, IBM moving into the mobile market and an dividend increase at WellPoint. Also, Defense Secretary Leon Panetta warns that the sequester could result in furloughs for the department's 800,000 workers.
Mega retailer Walmart (WMT) reported earnings of $1.67 per share for the quarter that ended Jan. 31, while net sales were $127.1 billion. Analysts had expected earnings of $1.57 per share on net sales of $127.8 billion. For the current quarter, the company said it expects to earn $1.11 per shre to $1.16 per share. That range is short of estimates for $1.18 per share. The company acknowledged that February sales are off to a slow start, but attributed the weakness to a delay in tax-refund checks. That suggests the company is less worried about the impact of an increase in the payroll tax and expects sales to pick up as tax-refund checks are issued.
Another possible headwind to consumer spending is the large package of government spending cuts set to take effect on March 1. Defense Secretary Lion Panetta warned Congress Wednesday that his department's 800,000 workers could face furloughs which would amount to a 20 percent pay cut. The furloughs could last for as long as 22 weeks beginning in late April. Furloughs could save the Defense Department $4 billion to $5 billion each year if they ran from late April through the Sept. 30 end of the government's fiscal year. Defense will have to cut $46 billion for the year if the cuts are not averted, which would likely mean significant reductions in pay for private-sector defense workers as well.
International Business Machines
Mobile computing will be a new focus for International Business Machines (IBM). The company has trained thousands of employees in mobile technologies and will spend millions on research and development in coming years, The New York Times is reporting Thursday morning. In keeping with the company's recent strategy, new devices don't seem to be on the table, but the company will focus on services and consulting work to help client companies develop mobile apps, shopping strategies and to analyze mobile data. IBM will also help clients keep their own mobile assets secure.
The board of directors at WellPoint (WLP) approved a 30 percent increase in the company's quarterly dividend. The insurance company will pay 37.5 cents per share for the first quarter, compared to 28.7 cents paid out in the fourth quarter of 2012.
Electric car maker Tesla (TSLA) reported earnings of 79 cents per share for the fourth quarter on revenue of $306 million. On an adjusted basis, the company lost 65 cents per share. Analysts had expected the company to lost 59 cents per share on $311 million in revenue.
Chesapeake Energy (CHK) reported fourth-quarter earnings of 26 cents per share excluding one-time items, which beat a mean analyst estimate of 14 cents per share. The outperformance was largely due to lower-than-expected expenses. The company announced earlier this week that an internal investigation had found no “intentional” wrongdoing in the financial dealings of outgoing CEO Aubrey McClendon.