by Dan Burrows | April 24, 2014 12:30 pm
Apple (AAPL) earnings might be dominating the headlines and investors’ attention, but there’s a string of equally impressive and in some ways more important news to digest.
True, anytime shares in the world’s largest company by market cap bounce by 8%, it’s bound to be the biggest story of the day. AAPL did just that after Apple earnings surprised the Street with a bunch of upside catalysts.
Apple earnings exceeded the Street estimate by a comfortable margin. Revenue did too, rising when it was forecast to fall. The Apple dividend hike and increase to the Apple stock buyback program was widely expected. The 7-for-1 stock split was assuredly not.
Put it all together, and Thursday news became all Apple all the time.
Meanwhile, one of the peak weeks of first-quarter earnings season also unleashed a pack of exciting and important news from other quarters — all of which was overshadowed by Apple and its market cap topping half a trillion dollars.
So as not to be remiss, here are five important stories getting buried by Apple earnings that warrant more attention:
Facebook (FB) not only crushed it with its quarterly earnings report, but it did so in a way that quashed any doubts about its place in the advertising firmament and its future in mobile.
That had FB stock jumping at the open, though at more modest gains by midday.
Facebook earnings beat the Street by 10 cents a share and top-line growth delivered an upside surprise too. The results were driven by strength in advertising and mobile, and that is what’s generating all the excitement over FB stock.
FB has established itself as an advertising powerhouse, becoming an automatic buy for advertisers. That’s a big deal. So is FB topping 1 billion mobile monthly active users. Mobile is a highly competitive area and a critical key to future revenue growth for all digital players.
General Motors (GM) wasn’t fazed by its massive ignition-switch recall in the first quarter after all, though the morning’s early exuberance in GM stock has worn off.
True, GM profit declined, but GM earnings delivered a massive earnings beat of 25 cents a share, according to a survey by Thomson Reuters. Strip out $1.3 billion in charges for the recall and GM’s core business looks like a finely tuned engine, generating operating income of $590 million. Revenue rose to $37.4 billion from $36.9 billion a year ago.
As beleaguered CEO Mary Barra said in a statement:
“The performance of our core operations was very strong this quarter, reflecting the positive response of customers to the new vehicles we are bringing to market.”
Lost amid all the first-quarter earnings reports was a large potential deal on the mergers and acquisition front involving Dow Jones Industrial Average component General Electric (GE).
GE is in talks to acquire struggling French turbine and train manufacturer Alstom (ALSMY) for $13 billion, according to a Bloomberg report. That would represent a 25% premium for Alstom and a windfall for its shareholders. Meanwhile, GE would get a large industrial asset in Europe just as its economy looks to be picking up.
M&A has been gearing up as expected in 2014, but most of the heat and light is coming from the healthcare sector. General Electric breaks the trend, and on a slower news day, this GE deal chatter would get a lot more attention.
Telecom giant and Dow component Verizon (VZ) closed one of the biggest acquisitions in history last quarter, and the deal is already juicing earnings.
VZ said profit more than doubled last quarter, helped by higher-margin Verizon Wireless, which it bought out by paying Vodafone (VOD) $130 billion for its 45% stake. On the other hand, adjusted earnings still missed Street estimates by 3 cents per share, weighing on VZ stock.
Although AT&T (T) added more of the most lucrative post-paid subscribers in the first quarter, Verizon stayed out of an industry price war, which helps protect margins.
The big takeaway, however, is that Verizon Wireless is already boosting the top and bottom lines, giving this dependable dividend stock a chance for better price appreciation going forward.
Apple is sexier, no doubt, but Caterpillar (CAT) is the world’s largest maker of heavy construction and mining equipment. That makes CAT something of a bellwether, and its latest results suggest a mixed picture of the global economy.
CAT dug up the market’s favorite gem — a beat-and-raise quarter — and that’s boosting CAT stock. The good news is that construction in the U.S. is healthy and accelerating. Construction in China is building up again after a prolonged period of sluggishness. That’s all very optimistic.
The bad news is that the global mining industry continues to be in a major funk, despite improvement in Europe’s economy and China’s moves to support its growth targets. That means more weakness for mining and commodities stocks for the foreseeable future.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
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