Business & Financial Reporting

This is information relative to my Business & Financial Reporting class; I’d like to keep it somewhat separated from my work –

Common Size Balance Sheet

2011

$ in Millions

Boeing (BA) Lockheed Martin (LMT) Raytheon (RTN)
Assets: Cash & Securities 7% 9.15% 8.8%
Liabilities: Accounts Payable 22.1% 18.4% 24.9%
Total Liabilities & Equity: Shareholders’ Equity 6.56% 9.2% 42.38%

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Walmart story block structure:

1st 3 paragraphs: Lede

Paragraph 2: nut graph

Paragraph 3: introduce business strategy -> tension

P4 & 5: Walmart’s voice in Boston area

P6 & 7: Opposition’s voice in Boston area

P8 & 9: Change in setting, Boston -> Dallas

P10: brief history graph.

P11 – 13: What you’ll find in a Walmart, a shopper’s voice.

P14 – 16: Details of Dallas Markets, an analyst’s voice.

P17 – 19: Negative impact on Market, a local shopper’s voice.

P20 – 21: Walmart’s strategy in Dallas area -> Boston area, industry publicist’s voice.

P22: Walmart origin

P23 & 24: Conflict between Walmart’s strategy and New English Markets.

Possible Ledes:

1: Walmart’s disproportionate wage, labor, and pricing practices are ringing alarm bells for local business advocates who fear the corporate juggernaut’s appetite for Massachusetts’s markets.

“We know the general public needs affordably priced goods, but Walmart, in our view, has a long history of predatory pricing, typically done to push out competition,” said Joe Grafton, executive director of Somerville Local First, an advocacy group for independent businesses.

2: Walmart’s attempts to break into the New England marketplace in an effort to expand it’s sales of affordable, healthy food in urban areas such as Roxbury and Somerville have pressing, but with fierce brand loyalty and local business leaders’ fears of market saturation, there is a strong sentiment against the corporation’s expansion.

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P/E ratio for Boeing on October 19 –

$63.11 per share / $4.72 EPS = Price/Earnings ratio, $13.37

P/E ratio for Yahoo on October 19 –

$15.94 per share / $.82 EPS = P/E ratio, $19.44

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What sticks out in the SWOT Analysis of Boeing based on Datamonitor’s company profile, August 2011 –

Boeing has a strong market position based on it’s history as one of the world’s largest producers of commercial and private aircraft, as well as producing aircrafts for military contracts. A firm focus on R&D allows Boeing to strengthen its product portfolio and remain competitive.

According to Boeing’s commercial market outlook report, the world’s fleet, which includes both passenger (from 100 seats to very large aircraft) and freighter aircraft, will grow from 18,890 beginning of 2009 to nearly 36,300 by 2029. Boeing is in a significant position to supply these needed aircraft, as well as the estimated 13,490 existing aircraft that will need to be replaced for safety needs.

In addition, Chinese and Indian security spending is increasing as they modernize their militaries. This increasing in defense spending could provide the topline growth for the company in the short to medium term, as Boeing already has a significant presence in both nations.

However, Boeing faces threats from competitors at home such as Lockheed Martin, Northrop Grumman, and Raytheon, as well as established and emerging competition abroad that takes away from its market share. Foreign producers such as Bombardier and Embraer continue to make more competitive commercial aircraft, while producers in China, Russia and Japan are looking to break into the 70 – 190 seat aircraft market.

Furthermore, with the recent earthquake in Japan, many of Japan’s heavy manufacturing industries have had to be shut down. Boeing is heavily reliant on Japanese components for their aircraft, with 35% of the structural weight of the 787 being supplied from Japan. Producers such as Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries have had to delay production; further production will force Boeing to have to delay deliveries, which will adversely impact the company’s reputation and financial performance.

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Stock story

Boeing Airlines reported a strong third quarter performance, with earnings up 30%, to $1.26, as opposed to the expected $1.10.

Boeing’s third quarter results were reported on the day of the first commercial flight of Boeing’s long-awaited 787 Dreamliner, a light-weight, carbon-composite widebody craft. Boeing has taken more than 800 orders for the craft. However, Boeing has cut the projected production of the 787 by roughly 10 planes, from roughly 30 planes to an expected 15 – 20. This is most likely due to a shortage of parts.

In the third quarter, Boeing delivered 127 commercial airplanes, for which it gets paid for on delivery. However, in the wake of the earthquake that devastated many of Japan’s heavy industries earlier this year, Boeing’s production is expected to fall as Japanese production of their parts has been delayed

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Southwest Airlines earnings story

Southwest Airlines Co. reported its third quarter 2011 results Thursday, October 30. The company reported a third quarter net loss of $140 million, or $.18 per share. Excluding special items, net income was $122 million, or $.15 per share, down from $195 million from third quarter 2010.

The company’s third quarter results also includes $277 million in unrealized, noncash mark-downs relating to a portion of the company’s fuel hedges for future periods. However, the company said it believes it is more meaningful to provide its financial results on an ‘economic’ basis.

However, according to Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, “excluding special items, third quarter 2011 operating income was $285 million… total third quarter operating revenues were very strong and reached an all-time quarterly record of $4.3 billion.” Kelly said that passenger revenues were driven by strong load factors, revenue yields and unit revenues, all of which were third quarter records. “Third quarter passenger unit revenues increased approximately six percent, compared to third quarter last year.” Said Kelly, “despite the cautious economic outlook, our booking trends remain strong.”

It is ambiguous how the recent JetBlue tarmac incident over Halloween weekend will affect Southwest Airlines passenger revenue.

The company’s total operating revenues for the third quarter increased 35.1 percent to $4.3 billion, compared to $3.2 billion in 2010; while third quarter operating expenses were up 68.3% from $2.8 billion in 2010 to $4.1 billion.

$22 million of third quarter 2011 operating expense is due to the company’s acquisition of Airtran. The company expects total integration expenses with the air transportation industry to be approximately $500 million. However, Kelly said the company remains “focused on achieving our target of net annual pre-tax synergies in excess of $400 million by 2013.”

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Federal Reserve Board Beige Book piece

Despite a malaise in the global economy, New England travel and tourism sectors reported timid, if not budding, growth according to the Federal Reserve Board’s most recent Beige Book report. Domestic and international business travel remained between 5 and 7 percent higher than 2010, as business in the First District mostly continued to see demand growth.

However many businesses are toning down their outlooks as September growth slowed to 4 percent, the report said, compared to the 5 percent to 7 percent year-over-year gains seen earlier in 2011.

But with advance hotel bookings for the first quarter of 2012 up, the Federal Reserve report cited industry expectations of slow but positive growth in the coming year.

 

 

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