Wednesday, January 31, 2018

Seattle, WA-Based Microsoft's Dec 2017 Quarter Pretax Income Increased By 14% or By $1.147 Bil Over the Dec 2016 Quarter ....................................................................................... Microsoft's Dec 2017 Quarter Reported Net Income Deteriorated By a Massive $12.569 Bil From the Dec 2016 Quarter ....................................................................................... Why the Huge Difference Between Pretax and After-Tax Differences? Predominately, It's Because Microsoft Had a Net $13.8 Bil Dec 2017 Quarter Income Tax Expense Charge To Reflect the Impact of the Trump Tax Bill ....................................................................................... If This $13.800 Bil Dec 2017 Quarter Earnings Charge Is Excluded, Then Microsoft's Dec 2017 Quarter's Net Income of $7.498 Bil Would Be 20% Above Dec 2016 Quarter Net Income of $6.267 Bil: But I Would Focus on the Much More Reliable 14% Pretax Income Growth Than This Highly Unreliable 20% Growth ....................................................................................... When A Company Has Roughly $151 Bil of Unremitted Foreign Earnings in late Dec 2017 Like Microsoft Has, the Whole Ball Game is How Cheap Is the Related US Income Tax Rate on this $151 Bil of Mandatory Foreign Earnings To Be Repatriated? Microsoft Reflected a Net Income Tax Expense of $13.800 Bil: If the $13.800 Bil Was Gross, Then the Income Tax Rate is Incredibly Cheap at Under 10% and Frankly a Steal ....................................................................................... I Can't See the Offsetting Income Tax Benefit(s) Being Very Large and Thus My Hunch Is That the Related Tax Cost of Repatriation Will Still Be Pretty Cheap ....................................................................................... To Illustrate Just How Cheap It Is For Microsoft To Repatriate All of Its Unremitted Foreign Earnings At an Income Tax Rate of Roughly 10% or Slightly Above It, in Its June 2017 Annual Report Income Tax Footnote, Microsoft Stated That at June, 30, 2017, It Had $142 Bil of Unremitted Foreign Earnings and That the Income Tax That It Would Have To Pay Then To Repatriate All of These Unremitted Foreign Earnings Was $45 Bil Which Results in an Income Tax Rate of 31.7% ....................................................................................... Suffice It To Say That Microsoft Is Cleaning Up Due To the Trump Tax Bill

All of Facebook's 4Q 2017 Pretax Income Amounts are Still Great ....................................................................................... 4Q 2017 Revenues Up 47% Over the 4Q 2016, the Same Revenue Growth of 47% For the Entire Year 2017 Over Annual 2016 ....................................................................................... 4Q 2017 Operating Income Was Up 61%, Very Little Growth Deceleration From the 63% Growth For Annual 2017 Over Annual 2016 ....................................................................................... The 4Q 2017 Pretax Income Growth of 65% is the Same as the 65% Pretax Income Growth For Annual 2017 Over Annual 2016 ....................................................................................... But The Huge Problem Facebook Has in Its 4Q 2017 Earnings Release Is Its Pretty Much Complete Lack of Transparency on Its Income Taxes ....................................................................................... In Its 4Q 2017 Earnings Release, Facebook Mentions Three Items Making Up Its 4Q 2017 Total Income Tax Expense Charge Due To the Trump Tax Bill of $2.270 Bil: (1) The Tax Cost of Mandatory Foreign Earnings Repatriation, (2) The Impact of the Remeasurement of Net Deferred Income Tax Liabilities or Assets Due To the 40% Drop in the US Federal Income Tax Rate From 35% to 21% and (3) The Change in the Deferred Income Tax Valuation Allowances For Their Realizability Because of the Trump Tax Bill ....................................................................................... But What Astute Investors Want is an Individual Breakdown of Those Three Item Amounts: (For Instance, They Would Much Rather See a Large Tax Benefit Amount Due To Net Deferred Income Tax Liabilities Because That Is a Real Economic Gain From Tax Debt Forgiveness and They Hate To See Any Income Tax Expense From Decrease in Value of a Deferred Income Tax Asset Because of a Decline in Tax Rates Because That Is a Real Economic Loss ....................................................................................... What Astute Investors Also Want To See is a Cheap Income Tax Rate on the Mandatory Foreign Earnings Repatriated (They Even Like a Higher Total Cost of Foreign Earnings Repatriation If It Still Yields a Related Really Cheap Income Tax Rate) ....................................................................................... The Worst Thing You Can Do Is To Tell Them Nothing On This Critical Issue, Which is What Facebook Elected To Do ....................................................................................... When I Review the 2016 Income Tax Footnote, at Dec 31, 2016, I See Only $2.87 Bil of Cumulative Unremitted Earnings Which Have Been Permanently Reinvested and I Also See $357 mil of Deferred Income Tax Liabilities on Unremitted Foreign Earning That Are Not Permanently Invested ....................................................................................... The Best Outcome Is If Those Two Amounts Increased Substantially in 2017 ....................................................................................... And Lastly, It Would Be Wise To Emphasize the Increase in 4Q 2017 Net Income If the $2.270 Bil Income Tax Expense Charge Related To the Trump Tax Bill Were Removed: If My Quick Math is Right, 4Q 2017 Net Income Would Increase By an Extremely Impressive 83% If the Impact of the $2.270 Bil Trump Tax Bill Earnings Charge Were Removed

Indianapolis, IN-Based Drug Co Eli Lilly's 4Q 2017 Revenues Were Up 7% From the 4Q 2016 and Pretax Income Was Down 68% or Down $608 Mil, But Excluding Asset Impairments, Restructuring Charges and Other Special Charges in Both Periods, Pretax Income Would Be Up By 24% or Up By $247 Mil Rather Than Down the Reported $608 Mil ....................................................................................... Reported Net Loss in the 4Q 2017 Was $1,657 Mil, An Earnings Deterioration of $2,429 Mil From the Reported Net Income of $772 Mil in the 4Q 2016 ....................................................................................... The Main Reason For the Reported Net Income Decline Was the Income Tax Expense Charges of $1.914 Bil Caused By the US Trump Tax Bill, Including $3.6 Bil Related To the Tax Cost of Foreign Earnings Repatriation (Lilly Did Not Say What the Other $1.686 Bil of Tax Benefits Related To)

Ireland HQed Johnson Controls 4Q 2017 Pretax Income Was Up 40% or Up By $153 Mil, But 4Q 2017 Net Income Was Down 34% or Down By $141 Mil ....................................................................................... This Unusual Result Was Caused Mainly By a Net $200 Mil Income Tax Expense Charge in the 4Q 2017 Due to the Trump Tax Bill (Tax Cost of Foreign Earnings Repatriation of $300 Mil Less the Tax Debt Forgiveness of $100 Mil)

Atlanta, GA-Based Invesco Ltd 4Q 2017 Pretax Income Up Only $2 Mil Over the 4Q 2016, But Net Income Up a Much Higher $148 Mil, Mainly Due to the $131 Mil Reduction in Income Tax Expense in the 4Q 2017 Due To the Trump Tax Bill, Primarily the Tax Debt Forgiveness Feature In It

Arlington, TX Homebuilder D.R. Hortons Had Its 4Q 2017 Earnings Punished By a $109 Mil Income Tax Expense Charge Due To the Trump Tax Bill

Seattle, WA-Based Boeing's 4Q 2017 Revenues Up 9% From the 4Q 2016, Operating Income Up 39%, Pretax Income Up 41% and Net Income Up a Much Higher 92% ....................................................................................... That 92% Net Income Growth Was Buoyed By a Reduction in 4Q 2017 Income Tax Expense of $1.051 Bil Due To the Trump Tax Bill, Primarily the Tax Debt Forgiveness Feature in It ...................................................................................... Absent the Effect of the Trump Tax Bill, Boeing's 4Q 2017 Net Income Would Have Increased By 28% Rather Than the Reported 92% Increase

Glendale, CA-Based Avery Dennison 4Q 2017 Revenues Up 12% Over the 4Q 2016, Pretax Income Up 25%, But With Net Income Down By 196% or Down By $122 Mil, But the Latter is Due to the Trump Tax Bill Increasing Avery Dennison's 4Q 2017 Income Tax Expense By $122 Mil

Indianapolis, IN-Based Health Insurer Anthem 4Q 2017 Revenues Up 4%, But Pretax Income Was Down 81% or Down By $535 Mil, $282 Mil of Which is a Loss on Debt Extinquishment, And For Another But, Net Income Was Up a Blistering 235%, or Up By $863 Mil ....................................................................................... So, How Can You Get Such a Ridiculous Situation Like This? Well, Leave It To the Trump Administration and the Republican-Controlled US Congress ....................................................................................... The Trump Tax Bill Increased Anthem's 4Q 2017 Earnings By $1.108 Bil By Granting a Like Amount of Tax Debt Forgiveness to Anthem, Funded Completely By US Taxpayers

Chicago, IL Area-Based Packaging Corp of America had a Strong 4Q 2017 With Net Sales Up 14%, Pretax Income Up 33% and Net Income Up a Much Higher 143%, With the Latter Buoyed By an Income Tax Expense Reduction of $122 Mil in the 4Q 2017 Due to the Trump Tax Bill, Mostly From the Tax Debt Forgiveness Feature In It

Phoenix, AZ-Based Knight-Swift Transportation Holdings 4Q 2017 Operating Income Up 314% Over the 4Q 2016, Pretax Income Up 294% and Net Income Up an Off-the-Charts 19 TIMES or Up $425 Mil, With the Latter Buoyed By an Income Tax Expense Reduction of $364 Mil in the 4Q 2017, Mostly Related To Tax Debt Forgiveness in the Trump Bill

Sunnyvale, CA-Based Juniper Networks Had Its 4Q 2017 Earnings Punished By a $290 Mil Income Tax Expense Charge Due To the Trump Tax Bill

San Diego, CA-Based Illumina Had a Blowout 4Q 2017 With Revenues Up 26% Over the 4Q 2016, Gross Profit Up 29%, Operating Income Up 61%, Pretax Income Up 67%, But With Net Income Down By 46% or Down By $50 Mil, But the Latter is Due to the Trump Tax Bill Increasing Illumina's 4Q 2017 Income Tax Expense By $150 Mil

New York-Based Computer Software Co CA Inc Had Its Dec 2017 Quarter Earnings Punished By a $318 Mil Income Tax Expense Charge Due To the Trump Tax Bill

Redwood City, CA-Based Electronic Arts Had Its Dec 2017 Quarter Earnings Punished By a $176 Mil Income Tax Expense Charge Due To the Trump Tax Bill

Swiss HQed Chubb Ltd 4Q 2017 Pretax Income Was $1.151 Bil Down 38% or Down $0.718 Bil From the 4Q 2016 Pretax Income of $1.869 Bil ....................................................................................... Net Income Declined By Only 5% Or By Only $0.077 Bil Due Mainly To a Reduction in 4Q 2017 Income Tax Expense of $.450 Bil Due To the US Trump Tax Bill

San Jose, CA-Based Align Technology Had a Blowout 4Q 2017 With Revenues and Gross Profit Both Up 44% over the 4Q 2016, Operating Income Up 60%, Pretax Income Up 84% But With Net Income Down By 78% or By Down By $37 Mil, But the Latter is Due to the Trump Tax Bill Increasing Align Technology's 4Q 2017 Income Tax Expense By $87 Mil

Warsaw, IN-Based Co Zimmer Biomet 4Q 2017 Net Sales Up 3%, Operating Profit Down 112%, Pretax Income (Loss) Down 450% (From 4Q 2016 Pretax Income of $31 Mil to a 4Q 2017 Pretax Loss of $109 Mil), But Net Income Up 17 TIMES, or Up By $1.187 Bil ....................................................................................... So, How Can You Get Such a Ridiculous Situation Like This? Well, Enter the Trump Administration and the Republican-Controlled US Congress ....................................................................................... The Trump Tax Bill Increased Zimmer Biomet's 4Q 2017 Earnings By $1.306 Bil With Much More Than $1.306 Bil Being Due To the Tax Debt Forgiveness Bestowed on Zimmer Biomet and Funded Completely By US Taxpayers: The Exact Amount of Tax Debt Forgiveness Wasn't Disclosed By Zimmer Biomet, Only That It Is Much Higher Than $1.306 Bil

Kalamazoo, MI-Based Stryker's 4Q 2017 Revenues Up 10%, Operating Income Up 8%, Pretax Income Up 10% But Net Income Down 149% Going From Net Income of $510 Mil in the 4Q 2016 to a Net Loss of $249 Mil in the 4Q 2017 .................................................................................... Stryker Said That Various Tax Matters Totalling $833 Mil Caused the Higher Income Tax Expense in the 4Q 2017 Including the Impact of the Trump Tax Bill, But Unfortunately No Individual Tax Amounts Were Disclosed

German Software Co SAP 4Q 2017 Revenues Up 1%, Operating Income Up 1%, Pretax Income Up 5% and Net Income Up a Much Higher 22%, With the Latter Due to, Quoting From Their Earnings Release, "one-time tax benefits from an intra group transfer of intellectual property rights to SAP SE and the U.S. Tax Reform" ....................................................................................... I Like the Way SAP Also Discloses in Its 4Q 2017 Earnings Release For Each of Its Most Recent Eight Quarters the Following: (1) Number of Employees, (2) Employee Retention in %s, (3) Number of Women in Management and (4) Greenhouse Gas Emissions

Atlanta, GA-Based Homebuilder PulteGroup's 4Q 2017 Revenues Up 12%, Pretax Income Down 1% and Net Income Down By a Much Higher 85%, With the Latter Due to a 4Q 2017 Income Tax Expense Increase of $181 Mil Resulting From the Trump Tax Bill, Primarily a Loss in Value of Its Deferred Income Tax Assets

Pfizer 4Q 2017 Revenues Were Up 1%, Pretax Income Up 23% and Net Income Up 15 TIMES, or up By $11.5 Bil (No, That's Not a Misprint) .................................................................................... At Dec 31, 2016, Pfizer Had a Net Deferred Income Tax Liability of $30.1 Bil, With $23.1 Bil of It Being For the Tax Cost of Unremitted Foreign Earnings Repatriation: Yeah, Pfizer Had Been Extremely Conservative In Its Accounting For Its Unremitted Foreign Earnings (Apple Has a Somewhat Similar Sutuation) .................................................................................... Since With the US Trump Tax Bill, Pfizer Will Be Paying as a Tax Cost of Foreign Earnings Repatriated Only $15 Bil, It Gets a Huge 4Q 2017 Income Tax Expense Reduction Earnings Benefit of Roughly $8 Bil For That .................................................................................... And Pfizer Gets Another Large Tax Benefit in 4Q 2017 Earnings For the Other Net Deferred Income Tax Liabilities on the Books Which Must Be Written Down From 35% to 21% Due To the Trump Tax Bill .................................................................................... When You Put It Altogether, Pfizer Is Saying That It Is Getting a 4Q 2017 Total Income Tax Expense Reduction of $11.3 Bil Due To the Trump Tax Bill ...................................................................................... I View a Huge Portion of That $11.3 Bil Income Tax Expense Reduction From the Trump Tax Bill as Tax Debt Forgiveness Since the Trump Tax Bill Requires This Net Deferred Federal Income Tax Liability To Be Reduced Down To 21% And Thus This Is All Being Funded By US Taxpayers .................................................................................... What US Taxpayers Should Be Asking Themselves Is Just What Are They Getting For Funding Not Just Tax Debt Forgiveness of $11.3 Bil Granted To Pfizer But the Tax Debt Forgiveness Totalling Roughly $800 Bil Being Granted To All US Corporations Combined Including to Ones Which Are Subsidiaries of Foreign Corps: This Is the Moral Outrage of the Trump Tax Bill Stealing $800 Bil of US Taxpayer Funds and Pocketing It Into the 4Q 2017 Bottom Line Earnings of the Largest US Corps and Nearly Every Republican in the US Congress Is Proud of This Achievement

UK HQed Pentair 4Q 2017 Revenues Up 6%, Operating Income Down 15%, Pretax Income Down 1% and Net Income Up 85%, With the Latter Due to a 4Q 2017 Income Tax Expense Reduction of $85 Mil Resulting From the Trump Tax Bill Comprised of Tax Debt Forgiveness of $148 Mil Less the Tax Cost of Foreign Earnings Repatriation of $63 Mil

Tuesday, January 30, 2018

Bellevue, WA-Based Large Truck Co Paccar's 4Q 2017 Revenues Up 34%, Pretax Income Up 26% and Net Income Up a Much Higher 126%, With the Latter Due to a 4Q 2017 Income Tax Expense Reduction of $173 Mil Resulting From the Trump Tax Bill

Charlotte, NC-Based Steel Co Nucor's 4Q 2017 Revenues Up 29%, Pretax Income Up 26% and Net Income Up a Much Higher 126%, With the Latter Due To a 4Q 2017 Income Tax Expense Reduction of $175 Mil Due To the US Trump Tax Bill

Chicago, IL Area-Based McDonald's Corp Had a Strong 4Q 2017 With Global Sales Comparables of +5.5%, Operating Income Up 9% and Pretax Income Also Up 9% .................................................................................... 4Q 2017 Net Income Was $699 Mil, Down 41% or Down $494 Mil, From the 4Q 2016 Net Income of $1,193 Mil .................................................................................... The 4Q 2017 Top Line Income Tax Expense and Net Income Numbers Look Bad Superficially, But When You Look Under the Surface, McDonald's Cleans Up On the Income Tax Front Under the Trump Tax Bill .................................................................................... McDonald's Clearly Understands How Complex and Subjective the Computation is of the Trump Tax Bill Effect on 4Q 2017 Earnings, Especially For a Multi-National Company With Operations All Over the Globe and With a High Percentage of Its Earnings Overseas (70% in 2016) ....................................................................................... McDonald's Says There Are Two Hugely Material Effects on Its 4Q 2017 Earnings: The Clearly Rounded $1.2 Bil Tax Cost of Foreign Earnings Repatriation and the Also Clearly Rounded $0.5 Bil Tax Windfall From Net Deferred Income Tax Liability Revaluation From 35% to 21% (I Call That the Tax Debt Forgiveness) and These Two Components Net To Only $0.7 Bil Income Tax Expense On the Total Unremitted Foreign Earnings Which Were $16 Bil at Dec 31, 2016: Yeah, That Effective Tax Rate Is a Steal ....................................................................................... The Tax Numbers McDonald's Discloses All Make Sense: It Says Its Effective Tax Rate is 27.4% If You Exclude the Trump Tax Bill Effect and 27.4% X Pretax Income of $1.885 Bil = $516 Mil as Compared To the Reported 4Q 2017 Income Tax Expense of $1.186 Bil and the Difference Is $0.670 Bil ($1.186 Bil - $0.516 Bil = $0.670 Bil), Which Is Consistent With the Rounded Net Effect It Disclosed of $0.7 Bil ....................................................................................... Also McDonald's 4Q 2017 Net Income Does Increase By 15% and EPS By 19% If You Exclude the Trump Tax Bill Effect and From What I've Seen So Far, There Are Only a Handful of Very Large Stock Market Cap US Companies Which Can Say That (Facebook, UnitedHealth and Alphabet To Name 3 and There Are a Few Others)

The Netherlands Co Royal Philips 4Q 2017 Sales Were Precisely Flat, Operating Income Up 4%, Pretax Income Up 14% and Net Income Up a Lower 2%, With the Latter Due to an Income Tax Expense Earnings Charge of EUR 72 Mil Resulting From the US Trump Tax Bill

Nashville, TN-Based Hospital Co HCA Healthcare's 4Q 2017 Revenues Up 9%, Pretax Income Down 12% and Net Income Down a Much Higher 41%, With the Latter Due To an Earnings Charge of $301 Mil Resulting From the Trump Tax Bill

Melbourne, FL Technology Co Harris Corp's Dec 2017 Quarter Revenues Up 6%, Operating Income Down 2%, Pretax Income Down 3% and Net Income Down By a Higher 15% Due to an Earnings Charge of $52 Mil Resulting From the Trump Tax Bill

Milwaukee, WI-Based Mototcycle Co Harley Davidson's 4Q 2017 Pretax Income Was Up 51% Over the 4Q 2016, But Its Net Income Declined Due to a $53 Mil Earnings Charge Due To the Trump Tax Bill

San Mateo, CA-Based Investment Advisory Firm Franklin Resources Dec 2017 Quarter Pretax Income Was Up 5% Over the 4Q 2016 ....................................................................................... Dec 2017 Quarter Net Income Declined By $991 Mil, But That Was Due to the Tax Cost From Repatriating Foreign Earnings Exceeding By an Estimated $1.1 Bil the Tax Debt Forgiveness Granted to Franklin Resources By the US Trump Tax Bill ....................................................................................... Surprisingly, Franklin Resources Decided To Not Break Out For Investors the Two Material Tax Components of Impact of the Trump Tax Bill on Its Dec 2017 Quarter Earnings

Washington,DC-Based Danaher Had a Fabulous 4Q 2017 With Sales Up 11%, Gross Profit Up 14%, Operating Profit Up 30% and Pretax Income Up 41% ....................................................................................... 4Q 2017 Net Income Was Up a Lower 15%, But That Was Because of Several One-Time Tax Gains in the 4Q 2016 ....................................................................................... I Particularly Liked Danaher's First Class Transparent Disclosure of Two Offsetting Items That Netted To Only $1 Thousand Dollars But Informatively Were Still Shown Separately as Follows: "Transition tax on deemed repatriation of foreign earnings as a result of the Tax Cuts and Jobs Act of 2017 $(1.218) Bil" and "Remeasurement of deferred tax assets and liabilities as a result of the Tax Cuts and Jobs Act of 2017 $1.219 Bil" ....................................................................................... It Doesn't Get Much Better For Danaher Than When Its Tax Cost To Repatriate Its Foreign Earnings is Effectively Being Funded By US Taxpayers Who Are Funding Danaher's Tax Debt Forgiveness Due to the Trump Tax Bill

New York-Based Glass & Ceramic Materials Co Corning: I Read the First Part of Corning's 4Q 2017 Earnings Release and I Think Things Are Fantastic For Corning ....................................................................................... Then I Focus on the Detailed Numbers Actually Reported and I Get Just the Opposite Feeling Including a Headache ....................................................................................... Corning's 4Q 2017 Sales Were Up 7%, Gross Margin Up 4%, Operating Income Down 14% or Down By $60 Mil, Pretax Income Down 76% or Down By an Amazingly High $1,838 Mil and Net Income (Loss) Deteriorated By an Off-the-Charts $2,984 Mil, Going From a Net Income of $1,572 Mil in the 4Q 2016 to a Net Loss of $1,412 Mil in the 4Q 2017 (Whoa!) ....................................................................................... The Biggest Reason For the Pretax Income Reduction was Related To Translated Earnings Hedging Contract Gains of $1,847 Mil in the 4Q 2016 and of a Much Lower $72 Mil in the 4Q 2017 (It Appears That Something Went Askew With Corning's Hedging Program of Many Foreign Currencies) ....................................................................................... The Biggest After Tax Earnings Deterioration Was Related To the $1,755 Mil Increase in Income Tax Expense in the 4Q 2017 Due To the Total Negative Impact of the US Trump Tax Bill on Corning's 4Q 2017 Earnings ....................................................................................... Corning States the Four Items Comprising This $1,755 Mil Income Tax Charge "a provisional amount related to the one-time mandatory tax on unrepatriated foreign earnings, a provisional amount related to the remeasurement of U.S. deferred tax assets and liabilities, changes in valuation allowances as a result of the 2017 Tax Act, and adjustments for the elimination of foreign tax credits", But Unfortunately Corning Does Not Disclose the Amounts of Each Item

UK HQed Capital Goods Co CNH Industrial 4Q 2017 Total Revenues Were Up 16%, Pretax Income Up 4%, But With Net Income Down Due Primarily To a $123 Mil Income Tax Expense Earnings Charge Mostly From the Trump Tax Bill

Detroit, MI-Based Auto Lender/Lessor Ally Financial 4Q 2017 Pretax Income Up 8% But With Net Income Down Due To $119 Mil Earnings Charge From Reflecting the Value Decline in Its Deferred Income Tax Assets Resulting From the Trump Tax Bill

Swedish Air Bag Co Autoliv's 4Q 2017 Total Revenues Up 5% But Pretax Income Down By $239 Mil Due Predominately To a Goodwill Impairment Charge of $234 Mil ....................................................................................... Autoliv Gave No Quantification of the Impact of the Trump Tax Bill on Its 4Q 2017 Earnings

Health Insurer Aetna, Which is Being Acquired By CVS Health, Reported 4Q 2017 Total Revenues Down 6%, Pretax Income Up 91% and Net Income Up 98% ....................................................................................... Aetna Says the Moderate Medical Cost Trend (Washington DC Should Listen) Helped Its Operating Results ....................................................................................... The Trump Tax Bill Only Increased Aetna's Income Tax Expense By $99 Mil in the 4Q 2017

Monday, January 29, 2018

Data Storage Co Seagate Technology, With Operational HQs in Cupertino, CA, Posted a Dec 2017 Quarter Increase in Pretax Income of a Robust 20% ....................................................................................... Its Dec 2017 Quarter Net Income Decline Was All Due To a $208 Mil Tax Earnings Charge Related To Reflecting the Decline in the Value of Its Deferred Income Tax Assets Required By the Trump Tax Bill

St Louis-MO Area Reinsurance Group of America Increases Its 4Q 2017 Earnings By 540%, or By $1.027 Bil, Due Almost Entirely To a $1.0 Bil Reduction of Its Income Tax Expense, Primarily Related to the Tax Debt Forgiveness Included in the Trump Tax Bill

Des Moines, IA-Based Insurance Co Principal Financial 4Q 2017 Earnings Benefit From a $625 Mil Tax Expense Reduction Due to Tax Debt Forgiveness Included in the Trump Tax Bill

Bethesda, MD-Based US Defense Contractor Lockheed Martin 4Q 2017 Pretax Income Up a Very Robust 35% ....................................................................................... 4Q 2017 Net Income Declined, But It Was All Due To a $1.8 Bil Tax Earnings Charge Related To Reflecting the Decline in the Value of Its Deferred Income Tax Assets Required By the Trump Tax Bill

Richmond,VA-Based Dominion Resources Generated 4Q 2017 Net Income of $1.470 Bil, Up 199%, or Up $0.979 Bil From Their 4Q 2016 Net Income of $1.017 Bil ....................................................................................... Excluded in Their 4Q 2017 Earnings Was a Huge Amount of Tax Debt Forgiveness Granted By the Trump Tax Bill, and Completely Funded By US Taxpayers, To the Regulated Activities of Dominion Resources. Non-Utility Companies Have Properly Included Their Tax Debt Forgiveness Granted To Them as an Increase To Their 4Q 2017 Earnings. ....................................................................................... Logically and Fairly, Regulated Utilities Should Be Passing on all of Their Tax Debt Forgiveness To Their Utility Customers and Not in the Future But Currently, Just Like Large US Non-Utility Corps Are Getting This Same Tax Benefit Reflected in Their Earnings Currently. This Economic Gain to Utility Customers Has Absolutely Nothing To Do With Future Utility Customers and Everything To Do With the Regulated Utility Getting the Tax Benefit of These Past Huge Tax Writeoffs and Sharing None of Them With Past Utility Customers. With The Tax Debt Forgiveness, the Regulated Utility Should Do Its Best To Refund These Overpaid Utility Bills Paid By Past Utility Customers. Especially With the Financial Pressure of Their High Monthly Utility Bills on Their Personal Budgets, If They Don’t Get This Tax Benefit Passed On To Them Currently, Utility Customers Will Get Very Upset. Especially the Very Sick and Very Elderly Who Will Be Dying in Several Years Get Absolutely Shafted Here ........................................................................................ In Its 4Q 2017 Earnings Release, Dominion Resources Made This Comment ….. “The Tax Cuts and Jobs Act reduced the corporate income tax rate from 35% to 21%, effective 1/1/2018. Deferred taxes are required to be measured at the enacted rate in effect when they are expected to reverse. As a result, deferred taxes were re-measured to the 21% rate. For regulated entities, where the reduction in deferred taxes is expected to be recovered or refunded in future rates, the adjustment was recorded to a regulatory asset or liability instead of income tax expense.” There are two big problems with this comment from a fairness to Utility customer’s perspective. First, the Utility should be paying the past Utility customers for their past overpayment of utility bills, not future ones. And second, the fact that it is asserted that this Tax Debt Forgiveness Windfall will be recovered or refunded in future utility rates is pure fantasy. The Utility Rate Approval Process is very politicized and has many subjective aspects to it. And there are so many computations in it that this Tax Windfall could easily get lost in the rounding.

Columbus, OH-Based American Electric Power (AEP) Reported 4Q 2017 Net Income of $401 Million, Up 8% From Their 4Q 2016 Net Income of $373 Mil. ....................................................................................... Excluded From Their 4Q 2017 Earnings Was a Huge Amount of Tax Debt Forgiveness Granted By the Trump Tax Bill, and Completely Funded By US Taxpayers, To AEP. US Non-Utility Corps and Non-Regulated Utility Corps Have Properly Included Their Tax Debt Forgiveness Granted To Them as an Increase In Their 4Q 2017 Earnings. ....................................................................................... Logically and Fairly, Regulated Utilities Like AEP Should Be Passing on all of Their Tax Debt Forgiveness To Their Utility Customers and Not in the Future But Currently, Just Like Large US Non-Utility Corps Are Getting This Same Tax Benefit Reflected in Their Earnings Currently. This Economic Gain to Utility Customers Has Absolutely Nothing To Do With Future Utility Customers and Everything To Do With the Regulated Utility Getting the Tax Benefit of These Past Huge Tax Writeoffs and Sharing None of Them With Past Utility Customers. With the Tax Windfall From The Tax Debt Forgiveness, the Regulated Utility Should Do Its Best To Refund These Overpaid Utility Bills Paid By Past Utility Customers. ....................................................................................... Especially With the Financial Pressure of Their High Monthly Utility Bills on Their Personal Budgets, If They Don’t Get This Tax Benefit Passed On To Them Currently, Utility Customers Will Get Very Upset. Especially the Very Sick and Very Elderly Who Will Be Dying in Several Years Get Absolutely Shafted Here.

Juno Beach, FL-Based NextEra Energy Generated 4Q 2017 Preliminary Net Income of $2.068 Bil, Up 103%, or Up $1.051 Bil From Their 4Q 2016 Preliminary Net Income of $1.017 Bil ....................................................................................... Not Included in Their 4Q 2017 Earnings is a Huge Amount of Tax Debt Forgiveness Granted By the Trump Tax Bill, and Completely Funded By US Taxpayers, To Florida Light & Power Co, a Subsidiary of NextEra Energy. Non-Utility Companies Have Properly Included Their Tax Debt Forgiveness Granted To Them as an Increase To Their 4Q 2017 Earnings. ....................................................................................... Logically and Fairly, Regulated Utilities like Florida Power & Light Should Be Passing on all of Their Tax Debt Forgiveness To Their Utility Customers and Not in the Future But Currently, Just Like Large US Non-Utility Corps Are Getting This Same Tax Benefit Reflected in Their Earnings Currently. This Economic Gain to Utility Customers Has Absolutely Nothing To Do With Future Utility Customers and Everything To Do With the Regulated Utility Getting the Tax Benefit of These Past Huge Tax Writeoffs and Sharing None of Them With Past Utility Customers. With The Tax Debt Forgiveness, the Regulated Utility Should Do Its Best To Refund These Overpaid Utility Bills Paid By Past Utility Customers. ....................................................................................... Especially With the Financial Pressure of Their High Monthly Utility Bills on Their Personal Budgets, If They Don’t Get This Tax Benefit Passed On To Them Currently, Utility Customers Will Get Very Upset. Especially the Very Sick and Very Elderly Who Will Be Dying in Several Years Get Absolutely Shafted Here.

Sunday, January 28, 2018

Large US Corps Total Real US GAAP Pretax Earnings Decline Unexpectedly and Precipitously By 9.9% So Far For the Quarter Ending in December 2017 ..................................................................................... In Comparison, These Same Large Corps Generated Total Real US GAAP Pretax Earnings Which Increased By a Very Robust 10.5% For the Quarter Ending in September 2017: That's What a Call a Massive, Very Quick Deterioration in Pretax Income From Up 10.5% in the Sept 2017 Quarter To a Decline of 9.9% in the Current Dec 2017 Quarter (Whew!) ..................................................................................... The 114 US Corps With Stock Market Caps Above $10 Bil Which Have Released Their December 2017 Quarter Earnings By Friday, January 26, 2018 Registered Total US GAAP Pretax Income of $105.0 Bil in the December 2017 Quarter, Down 9.9% From Their December 2016 Quarter Total US GAAP Pretax Income of $116.5 Bil ..................................................................................... These Same 114 US Corps Registered Total US GAAP Pretax Income of $137.8 Bil in Their September 2017 Quarter, Up a Very Robust 10.5% Over Their September 2016 Quarter Total US GAAP Pretax Income of $124.7 Bil ....................................................................................... I Used US GAAP Pretax Income Amounts Because They Are the Most Reliable 4Q 2017 Earnings Data Available Since the 4Q 2017 Income Tax Expense Amounts Being Reported Are Not Even Close To Being Sufficiently Reliable

From reviewing daily Morningstar Earnings Calendars and Company Financial Statements filed with the SEC, below here are the 114 US Corps with Stock Market Caps Above $10 Bil which have released their  Earnings For the Quarter Ended December 2017 and which have disclosed Pretax Income From Continuing Operations Amounts through Friday, January 26, 2018.  This is the best 4Q 2017 Earnings data available since the Income Tax Expense amounts being reported are not even close to being sufficiently reliable.
 US GAAP   US GAAP 
Pretax Pretax
Earnings Income Income Increase Increase
Release Dec Qtr Dec Qtr (Decrease) (Decrease)
Date 2017 2016 Amount %
mils $ mils $ mils $
1-11-18 Delta Air Lines          1,089             952             137 14%
1-12-18 BlackRock          1,490          1,187             303 26%
1-12-18 JPMorgan Chase          8,254          8,679            (425) -5%
1-12-18 PNC Financial Services          1,074          1,366            (292) -21%
1-12-18 Wells Fargo          4,599          7,562         (2,963) -39%
1-16-18 Citigroup          5,099          5,100                (1) 0%
1-16-18 Comerica             330             226             104 46%
1-16-18 CSX Corp             983             751             232 31%
1-16-18 First Republic Bank             237             229                 8 3%
1-16-18 Interactive Brokers Group             364               28             336 1200%
1-16-18 UnitedHealth Group          3,669          2,919             750 26%
1-17-18 Alcoa             216            (123)             339             NM
1-17-18 Bank of America          6,161          5,803             358 6%
1-17-18 Fastenal             201             181               20 11%
1-17-18 Goldman Sachs          3,108          3,397            (289) -9%
1-17-18 Kinder Morgan             324             388              (64) -16%
1-17-18 Charles Schwab             953             824             129 16%
1-17-18 US Bancorp          1,311          2,040            (729) -36%
1-18-18 American Express          1,821          1,161             660 57%
1-18-18 Atlassian Corp              (14)                (1)              (13) -1300%
1-18-18 Bank of New York Mellon             728          1,152            (424) -37%
1-18-18 BB&T Corp             876             930              (54) -6%
1-18-18 JB Hunt Transport Services             140             188              (48) -26%
1-18-18 International Business Machines          4,469          4,986            (517) -10%
1-18-18 KeyCorp             447             270             177 66%
1-18-18 M&T Bank Corp             629             510             119 23%
1-18-18 Morgan Stanley          2,471          2,246             225 10%
1-18-18 PPG Industries             376             138             238 172%
1-19-18 Citizens Financial Group             503             414               89 21%
1-19-18 Kansas City Southern             193             166               27 16%
1-19-18 Regions Financial             548             428             120 28%
1-19-18 Schlumberger Ltd         (2,210)            (213)         (1,997) -938%
1-19-18 SunTrust Banks             668             660                 8 1%
1-19-18 Synchrony Financial             875             908              (33) -4%
1-22-18 Halliburton             244            (175)             419             NM
1-22-18 Netflix             131               90               41 46%
1-22-18 Resmed             142               96               46 48%
1-22-18 Steel Dynamics             161                 3             158 5267%
1-22-18 TD Ameritrade             303             339              (36) -11%
1-22-18 Zions Bancorp             259             207               52 25%
1-23-18 Capital One Financial          1,308          1,135             173 15%
1-23-18 Fifth Third Bancorp             393             509            (116) -23%
1-23-18 Huntington Bancorp             412             313               99 32%
1-23-18 Johnson & Johnson          2,560          4,324         (1,764) -41%
1-23-18 Kimberly Clark             743             760              (17) -2%
1-23-18 Procter & Gamble          4,033          3,256             777 24%
1-23-18 Prologis             351             485            (134) -28%
1-23-18 State Street Corp             717             345             372 108%
1-23-18 Texas Instruments          1,550          1,497               53 4%
1-23-18 Total Systems Services             146             100               46 46%
1-23-18 Travelers Companies             860          1,302            (442) -34%
1-23-18 United Continental Holdings             600             884            (284) -32%
1-23-18 Verizon Communications          2,934          6,949         (4,015) -58%
1-23-18 Waters Corp             226             203               23 11%
1-24-18 Abbott Labs             574             875            (301) -34%
1-24-18 Ameriprise Financial             600             469             131 28%
1-24-18 Amphenol             379             324               55 17%
1-24-18 Baker Hughes GE            (135)             265            (400)             NM
1-24-18 Comcast Corp          3,422          3,736            (314) -8%
1-24-18 Crown Castle             113             129              (16) -12%
1-24-18 Discover Financial Services             899             883               16 2%
1-24-18 Ford Motor          1,889         (1,117)          3,006             NM
1-24-18 General Dynamics          1,008             745             263 35%
1-24-18 General Electric       (12,603)          2,893       (15,496)             NM
1-24-18 WW Grainger             207             145               62 43%
1-24-18 Illinois Tool Works             796             726               70 10%
1-24-18 Lam Research             734             385             349 91%
1-24-18 Las Vegas Sands             931             659             272 41%
1-24-18 Norfolk Southern             893             641             252 39%
1-24-18 Northern Trust             436             390               46 12%
1-24-18 Progressive Corp             691             538             153 28%
1-24-18 Raymond James Financial             312             208             104 50%
1-24-18 Rockwell Automation             298             258               40 16%
1-24-18 Rollins Inc               69               53               16 30%
1-24-18 Royal Caribbean             288             261               27 10%
1-24-18 Stanley Black & Decker             342             282               60 21%
1-24-18 TE Connectivitity Ltd             561             460             101 22%
1-24-18 United Rentals             336             242               94 39%
1-24-18 United Technologies          1,705          1,273             432 34%
1-24-18 Varian Medical             123               19             104 547%
1-24-18 Whirlpool             209             308              (99) -32%
1-24-18 Xilinx             195             163               32 20%
1-25-18 3M          1,672          1,610               62 4%
1-25-18 Alliance Data Systems             306               62             244 394%
1-25-18 American Air Lines             425             500              (75) -15%
1-25-18 Biogen          1,400             838             562 67%
1-25-18 Caterpillar          1,111         (1,348)          2,459             NM
1-25-18 Celanese             265             156             109 70%
1-25-18 Celgene          1,131             499             632 127%
1-25-18 E Trade Group             299             205               94 46%
1-25-18 Freeport McMoran          1,325             492             833 169%
1-25-18 Arthur J Gallagher & Co             155             124               31 25%
1-25-18 Intel          6,035          4,440          1,595 36%
1-25-18 Intuitive Surgical              339             276               63 23%
1-25-18 KLA-Tencor             347             307               40 13%
1-25-18 L3 Technologies             226             241              (15) -6%
1-25-18 Maxim Integrated Products             198             148               50 34%
1-25-18 Northop Grumman             684             748              (64) -9%
1-25-18 NVR Inc             261             229               32 14%
1-25-18 Praxair             595             561               34 6%
1-25-18 Raytheon             834             825                 9 1%
1-25-18 Sherwin-Williams             285             304              (19) -6%
1-25-18 Southwest Air             737             809              (72) -9%
1-25-18 Starbucks          3,006          1,133          1,873 165%
1-25-18 SVB Financial Group             260             158             102 65%
1-25-18 Union Pacific Corp          2,092          1,831             261 14%
1-25-18 Western Digital             774             321             453 141%
1-26-18 AbbVie          1,193          1,998            (805) -40%
1-26-18 Air Products             455             337             118 35%
1-26-18 Colgate Palmolive             896             934              (38) -4%
1-26-18 Honeywell          1,617          1,432             185 13%
1-26-18 Lear Corp             367             308               59 19%
1-26-18 Nextera Energy               86          1,521         (1,435) -94%
1-26-18 Rockwell Collins             257             203               54 27%
               -  
Total all 114      104,960      116,489       (11,529) -10%


And the Chart below compares the Pretax Income (Loss) of these 114 Corps in both the Dec 2017 Quarter vs the Dec 2016 Quarter and also in the Sept 2017 Quarter vs the Sept 2016 Quarter:
 US GAAP   US GAAP   US GAAP   US GAAP 
Pretax Pretax Pretax Pretax
Income Income Increase Income Income Increase
Dec Qtr Dec Qtr (Decrease) Sept Qtr Sept Qtr (Decrease)
US Company 2017 2016 Amount 2017 2016 Amount
mils $ mils $ mils $ % mils $ mils $ mils $ %
Delta Air Lines        1,089           952          137       1,805       1,900              (95)
BlackRock        1,490        1,187          303       1,404       1,210             194
JPMorgan Chase        8,254        8,679        (425)       9,556       8,939             617
PNC Financial Services        1,074        1,366        (292)       1,539       1,348             191
Wells Fargo        4,599        7,562     (2,963)       6,858       8,255         (1,397)
Citigroup        5,099        5,100            (1)       6,003       5,620             383
Comerica           330           226          104          334          213             121
CSX Corp           983           751          232          750          715               35
First Republic Bank           237           229              8          242          202               40
Interactive Brokers Group           364             28          336          268          183               85
UnitedHealth Group        3,669        2,919          750       3,794       3,311             483
Alcoa           216          (123)          339          288          102             186
Bank of America        6,161        5,803          358       7,866       7,304             562
Fastenal           201           181            20          226          201               25
Goldman Sachs        3,108        3,397        (289)       2,976       2,868             108
Kinder Morgan           324           388          (64)          547          194             353
Charles Schwab           953           824          129          945          794             151
US Bancorp        1,311        2,040        (729)       2,158       2,082               76
American Express        1,821        1,161          660       1,827       1,735               92
Atlassian Corp            (14)              (1)          (13)          (22)            (4)              (18)
Bank of New York Mellon           728        1,152        (424)       1,368       1,317               51
BB&T Corp           876           930          (54)          942          915               27
JB Hunt Transport Services           140           188          (48)          157          176              (19)
International Business Machines        4,469        4,986        (517)       3,065       3,263            (198)
KeyCorp           447           270          177          497          188             309
M&T Bank Corp           629           510          119          581          550               31
Morgan Stanley        2,471        2,246          225       2,482       2,381             101
PPG Industries           376           138          238          521        (426)             947
Citizens Financial Group           503           414            89          513          427               86
Kansas City Southern           193           166            27          212          158               54
Regions Financial           548           428          120          451          471              (20)
Schlumberger Ltd       (2,210)          (213)     (1,997)          677          200             477
SunTrust Banks           668           660              8          765          691               74
Synchrony Financial           875           908          (33)          879          963              (84)
Halliburton           244          (175)          419          496          (52)             548
Netflix           131             90            41          116            79               37
Resmed           142             96            46          108            93               15
Steel Dynamics           161               3          158          234          243                (9)
TD Ameritrade           303           339          (36)          338          270               68
Zions Bancorp           259           207            52          243          192               51
Capital One Financial        1,308        1,135          173       1,585       1,512               73
Fifth Third Bancorp           393           509        (116)       1,489          694             795
Huntington Bancorp           412           313            99          365          152             213
Johnson & Johnson        2,560        4,324     (1,764)       4,790       5,281            (491)
Kimberly Clark           743           760          (17)          779          757               22
Procter & Gamble        4,033        3,256          777       3,751       3,738               13
Prologis           351           485        (134)          931          323             608
State Street Corp           717           345          372          822          636             186
Texas Instruments        1,550        1,497            53       1,789       1,381             408
Total Systems Services           146           100            46          171          125               46
Travelers Companies           860        1,302        (442)          320          947            (627)
United Continental Holdings           600           884        (284)          980       1,510            (530)
Verizon Communications        2,934        6,949     (4,015)       5,511       5,576              (65)
Waters Corp           226           203            23          154          145                 9
Abbott Labs           574           875        (301)          626        (179)             805
Ameriprise Financial           600           469          131          628          238             390
Amphenol           379           324            55          358          311               47
Baker Hughes GE          (135)           265        (400)        (167)          161            (328)
Comcast Corp        3,422        3,736        (314)       4,096       3,724             372
Crown Castle           113           129          (16)          118          103               15
Discover Financial Services           899           883            16          903          961              (58)
Ford Motor        1,889       (1,117)       3,006       1,757       1,387             370
General Dynamics        1,008           745          263       1,027          994               33
General Electric     (12,603)        2,893   (15,496)       1,466       2,074            (608)
WW Grainger           207           145            62          250          293              (43)
Illinois Tool Works           796           726            70          906          763             143
Lam Research           734           385          349          688          293             395
Las Vegas Sands           931           659          272          758          675               83
Norfolk Southern           893           641          252          800          705               95
Northern Trust           436           390            46          417          374               43
Progressive Corp           691           538          153          251          259                (8)
Raymond James Financial           312           208          104          282          243               39
Rockwell Automation           298           258            40          274          237               37
Rollins Inc             69             53            16            83            80                 3
Royal Caribbean           288           261            27          753          693               60
Stanley Black & Decker           342           282            60          354          328               26
TE Connectivitity Ltd           561           460          101          520          489               31
United Rentals           336           242            94          322          303               19
United Technologies        1,705        1,273          432       1,940       2,026              (86)
Varian Medical Systems           123             19          104          110          143              (33)
Whirlpool           209           308          (99)          268          305              (37)
Xilinx           195           163            32          187          176               11
3M        1,672        1,610            62       1,997       1,862             135
Alliance Data Systems           306             62          244          334          313               21
American Air Lines           425           500          (75)       1,004       1,189            (185)
Biogen        1,400           838          562       1,610       1,367             243
Caterpillar        1,111       (1,348)       2,459       1,523          383          1,140
Celanese           265           156          109          289          281                 8
Celgene        1,131           499          632          991          256             735
E Trade Group           299           205            94          223          225                (2)
Freeport McMoran        1,325           492          833          626          177             449
Arthur J Gallagher & Co           155           124            31            97            95                 2
Intel        6,035        4,440       1,595       5,930       4,318          1,612
Intuitive Surgical            339           276            63          289          267               22
KLA-Tencor           347           307            40          336          222             114
L3 Technologies           226           241          (15)            26          180            (154)
Maxim Integrated Products           198           148            50          181          165               16
Northop Grumman           684           748          (64)          785          769               16
NVR Inc           261           229            32          245          185               60
Praxair           595           561            34          585          454             131
Raytheon           834           825              9          816          780               36
Sherwin-Williams           285           304          (19)          428          536            (108)
Southwest Air           737           809          (72)          791          618             173
Starbucks        3,006        1,133       1,873       1,152       1,215              (63)
SVB Financial Group           260           158          102          251          193               58
Union Pacific Corp        2,092        1,831          261       1,983       1,805             178
Western Digital           774           321          453          710        (271)             981
AbbVie        1,193        1,998        (805)       2,095       2,014               81
Air Products & Chemicals           455           337          118          479          391               88
Colgate Palmolive           896           934          (38)          900       1,046            (146)
Honeywell        1,617        1,432          185       1,783       1,632             151
Lear Corp           367           308            59          385          310               75
Nextera Energy             86        1,521     (1,435)       1,220       1,207               13
Rockwell Collins           257           203            54          274          296              (22)
            -      
Total all 114    104,960    116,489   (11,529) -9.9%   137,759   124,687        13,072 +10.5%