Tuesday, January 29, 2013

Earnings Call Notes 1.29.13

Below are quotes from calls that I've read today--snippets of information that I find relevant (typically on a macro/industry level) from companies that I have some working understanding of.  Complete transcripts can be found at Seeking Alpha.

Caterpillar (CAT)
"After a great first half the economies around the world began to slow around mid-year, and as a result dealer sales to end users began to flatten out. We found ourselves with inventory that was too high and dealers also found themselves with too much inventory. As a result dealers slowed orders, and in the third quarter we began the process of scaling back production. Now while production declined somewhat in the third quarter, we took it down much more in the fourth quarter, and because of that we were able to reduce inventory in the fourth quarter. "
"We've already seen pretty substantial pickup in construction orders in the fourth quarter. "
"On mining again, we had massive orders, I mean very large orders in mining throughout much of a ’11 and really through almost the entire first half of ’12. That’s when sentiment changed I think in the world economy it was evident, in China it was softer, you had an easing of commodity demand, although, overall mining activity actually did go up in ’12. So, orders on hand were quite significant and over the past six months customers have really eased off on ordering."
Plum Creek Timber (PCL)
"Lumber and wood panel prices have increased significantly, encouraging lumber mills to increase their output. "
"Mill operators are reinvesting in their mills and some are adding shifts."
"contractor availability is expected to be a meaningful supply constraint to the industry" 
"Southern sawmill owners are running extra hours to increase production to meet demand, and many are at the point where they are contemplating adding employees and an additional shift to meet the expected demand growth this year."
"assumptions that we'll see, 950,000 to 1 million housing starts next year, and we believe for that demand to be met, you're going to have to see an increase in production U.S. South, and the Southern production right now is about 14 billion board feet, and we expect that you'll see an increase in production in North America of about 3 billion board feet, and about half of it should come from the U.S. South."
Harley Davidson (HOG)
"The biggest thing, I think, surprise in 2012 was just how low the retail credit losses were. At 79 basis points, clearly, the lowest we've seen in over a decade and considerably better than what we had seen in 2011."

"we think as far as the consumer is concerned, that they're starting to shift their behavior a little bit. We may see a little bit higher credit losses. "
"we said, I think, 3 years ago, that we were going to open between 100 and 150 new dealers around the world. As you mentioned, we're certainly on plan to do that. We believe that there is still opportunity really in every market."
Yahoo (YHOO)
"talent is fundamental to our success. Attracting the best people to Yahoo! is critical, and we embarked on a number of initiatives to make Yahoo! the absolute best place to work."

"Yahoo! is focused on making the world's daily habits inspiring and entertaining. And while we're starting with unique strengths, exceeding the growth that we aspire to will take multiple years. Essentially, we need to start a chain reaction. First, we need to achieve product excellence and differentiation by launching new revamped and innovative products. With great products, comes user growth and more engaged audiences. And finally, that user adoption drives advertiser attention, spend and, therefore, revenue."
"Focusing more on the pure advertising and monetization standpoint, there's greater opportunity with the big 4: Search, Display, Mobile and Video"
"Deposits are now almost $10 billion, representing over 30% of our total funding."

"I think the competitive dynamics are increasing, as we've kind of talked about. There's the continued focus on loan growth in our competitors as well as ourselves, but we are being very, very disciplined and so we're going to keep that discipline."

On credit spreads: "So cash flow still is probably in the 500 (bps) range, plus or minus, depending on the transactions. Our ABL is probably more in the north of the 300. And then some of the ABL market, more of the retail flow stuff is probably in the 200 range. So at least for our core markets, we feel the risk return is still attractive"

"we have 10 (Boeing 787's) on order. Our first delivery is we have 2 being delivered -- or scheduled to be delivered in 2015. So I think -- from our perspective, I think it's a little premature to kind of sort (concessions from Boeing) out. But the viewpoint is that it's modest in our overall order book and we hope that these issues kind of get resolved because it's something -- the aircraft itself is something that is big in the industry."
Danaher (DHR)
"I was in China 2 weeks ago, and we spent a fair bit of time on this subject. I think it's interesting if you just look at our own trends through the course of last year, we really saw quite the bifurcation between our industrial businesses and our healthcare businesses, both LS&D and Dental. We were basically up 20% for the full year, and we saw that strength throughout the year on the healthcare side of the portfolio. We were down nearly double digit the first half on the industrial side...I think when we look at what's happened in Life Sciences & Diagnostics, we are clearly the beneficiary of a multi-year buildout with respect to the healthcare delivery, particularly in the West but also increased utilization."
 Seagate Technology (STX)
"For the December quarter, we shipped over 47 exabytes of storage with an average of approximately 823 gigabytes per drive. This reflects a 59% year-over-year exabyte growth, which is well over twice the current rate of areal density growth."
"Data consumption and creation, along with the increase of global internet connectivity continue to drive petabyte growth at rates that are significantly greater than the areal density growth rate."
Illumina (ILMN)
"the Illumina Genome Network received orders for approximately 13,000 genomes. Today, interest in sequencing services remains high, including preliminary talks of large hospitals and governments that hope to sequence significant numbers of individuals."
"we've added significant new capacity to our San Diego facility and will open a new lab later this quarter in our Hayward location. This facility, along with improvements to our existing infrastructure, will provide the capacity to sequence approximately 30,000 genomes this year."
"We are squarely focused on several of the hottest areas in IT: cloud computing, big data and trust."
"the companies and entities out there understand that cloud and big data are going to change the landscape and if one doesn’t invest in these technologies, their companies will be left hopelessly behind."

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