Banking, Coffee, Movies, and Chips: Another Spate of Positive Earnings

Q1 2010 earnings season is in full swing and businesses continue their flurry of better than expected reports to start the new year.

Bank sector earnings continued strong with Morgan Stanley reporting strong profits.  The New York-based  investment firm posted a first-quarter profit of $1.78 billion compared with a loss of $177 million a year ago. Sales more than tripled to $9.08 billion.

Coffee profits were steaming in Q1 for Starbucks.  The firm reported on Wednesday that quarterly profit rose more than eight-fold, as more customers visited its U.S. locations — and on average spent more on each visit.  "I think the trends we're seeing in the business are real and sustainable," CFO Troy Alstead told The Associated Press.

Netflix continued its winning ways Wednesday, reporting first-quarter financial results that handily beat expectations.  The company's net income grew 44% to $32.3 million on revenue that rose 25% to $493.7 million.  Netflix ended the quarter with nearly 14 million subscribers -- up 35% compared with a year ago -- and said it expects to end the year with as many as 17.3 million, up from its previous estimate of 16.3 million.

And it is not just Intel, that is enjoying a surge in semiconductor chip demand.  Hynix, the world's second-largest producer of computer memory chips posted a net profit of 822 billion won ($742 million) in the three months ended March 31, sharply reversing from a net loss of 1.18 trillion won a year earlier.

The the montra in this earnings season is clear.  Companies are consistently demonstrating that the economic conditions driving their businesses are improving, and that their forecast data points to an ongoing theme of accelerated growth in 2010.

Deposits (C), Software (IBM), and Toys (HAS) -- All Profitable in Q1

Deposits, software and toys all proved profitable according to the bellwethers in each industry on Monday... and a very positive earnings season surged forward.

CitiGroup(C) posted a profit that more than doubled. With earnings of $4.4 billion, C posted its best showing in over a year. Top executives said that the bank that everyone has loved to hate through the credit crisis has now "turned a corner" is on track to return to consistent profits.

Elsewhere net income for the world's No. 2 toymaker Hasbro (HAS) tripled compared with earnings a year ago. It was the fifth straight quarter the firm has topped Wall Street's per-share profit target. According to the company consumers are spending more money on toys than they did at this time a year ago -- even when a year ago retailers slashed post-holiday-season toy prices in an attempt to clear out excess inventories following their 2008 holiday slump.

And finally, IBM Corp. said Monday that its first-quarter profit jumped 13%. The firm offered additional evidence that corporate technology spending is now rebounding after the recession.
The profit improvement came not just from cost cutting, which IBM relied on much of last year to raise profits, but also from very strong increases in net income from its software division. The software business unit also increased its revenue 11% from a year ago. But beyond software, IBM reaffirmed that the pickup in IT spending is across its entire business, is significant, and broad-based.

The results point to continued strong growth for all three sectors well into 2010 and likely beyond.