earnings briefs III

So many reported in the last few days I'm going crazy. I will try to update thoughts now and then provide more thoughts over the next few days -- it will be hard because work is busy right now and the in-laws are in town so finding time to do research and blog posting should prove interesting -- there is always Sunday....

CME -- nice move in that stock huh? wow. Volumes were strong and rate per contract only fell a slight amount and expenses were only slightly higher -- that translates to 64% operating margins and an earnings upside. Deals with Brazilian and Korean exchanges could be nice additions. The key to korean part is taking advantage of the downtime in the systems -- Korean trades would be processed while we are asleep (well normal people anyway). Volumes are only up 14% so far in Q4 so growth rate will slow relative to Q3's huge rates but I am pretty sure everyone expected that. Merger integration should help volumes -- once CBOT is added to globex they should see some pick up in volume.

AB -- hedge fund performance fees as of June 30th were supposed to be enough to drive earnings around $1.8 in Q4 but instead they are going to earn close to $1.40. That is quite a drop and explains the drop in the stock Thursday. I'm a long term owner -- since 2001 so I'm used to the volatility of earnings. Hedge fund performance fees can be quite large (20% of 2006 Q4 revenues) but sometimes they are going to mess up performance and not earn the extra fees. asset flows from institutional clients are a little light of expectations but they have had strong growth the last year. Private client growth is most important -- 14% of assets now but they generate 28% of advisory revenues. asset growth in private client was very strong. they are very well position in terms of global assets (non-US clients now 39% of total AUM, non-US assets now 60% of total AUM) as well as private client and hedge funds. The price you pay for having strong probability of outperformance is some quarters they stink.

FLIR -- UGH!!!!! so much for the theory they might disappoint given how strong the stock has been prior to the report. Wow. up 14% is pretty darn good. Had the chance to buy some wednesday at $56-57 but didn't. That would have been sweet. Government revenues up 70% is huge. backlog is up $80 mill since June and almost all the backlog is in gov biz. Thermography accelerates to 21%, while commercial side is now 29% growth. To have overall revenue growth of 43% is awesome. Operating margins now reach 27% -- they are going to 30% its just a matter of time. most estimates assume a slowdown next year but that seems a stretch to me -- they have won a bunch of new contracts on the gov side and they have new product cycles in commercial and in thermography. definitely been way too timid about building this position. now I figure the best I can hope for is low $60's. Convinced of the long term picture more than ever -- unlikely to hose up a quarter in the next few either. will keep trying to buy more but man that $56 price sure looks good now!

GGG -- similar to last quarter in that revenues were light but earnings came in better than expected due to cost cutting and share repurchases. I don't like the fact that they are borrowing money to buy back shares. I am wondering how long it will be before the non-US housing related revenues are small enough that the fast growing non-US businesses can sustain high single digit revenue growth. its going to be awhile.

CLB -- don't have as much info yet -- other than they had good results. stock reacted to same level as first purchase. had the chance to buy in at $122 or so but didn't take it. wanted to leave some powder dry in case the stock kept falling. instead you had less than a day to buy it at those prices.

LH -- haven't seen the post call comments but so far it looks like UNH contract is pressuring prices and that is leading them to miss numbers. key question was why was 08 guidance assuming lower margins? not sure. could be conservatism or price competition. That means both of my lower multiple consistent growth stories (MDT LH) that are supposed to act as ballast vs. the high fliers like ILMN have disappointed this month. ouch. LH has shown consistent 7% free cash flow growth over the last 5 years. not many companies can say that -- many might have the revenue growth or the EPS growth but often something gets in the way of the FCF growth -- could be one year they grow huge and the next they see a decline in FCF. LH has seen consistent growth. that is one reason why I like the story. Still all things considered I would rather own more TECH than LH right now and that's very different from my actual holdings.

MSFT -- only number I needed to see was the 27% revenue growth. that's what matters. They beat estimates and raised guidance on 2008 all due to better revenues. not chump change but raising guidance by 1.5-2 bill or so. that's real money. stock was up 10% in AH trading.

that's it for now!