Chin Up in the Downswing: Technology and Box Companies Pack Up the Profits
by Anne Szustek
Positive business news for April 23, 2009: Radio Shack and Apple post significant year-on-year Q1 profits and Packaging Corp. of America beat earnings estimates.
Electronics retailer Radio Shack posted $43.1 million in net income during the first quarter of 2009, marking an 11 percent year-on-year increase from the $38.8 million in net income the company pulled in during the first three months of 2008. Radio Shack Chairman and CEO Julian Day was quoted as saying by The Wall Street Journal, “We are very pleased with the results.” The profits came on the back of $70 million in sales of digital converter boxes. “Unlike other turnaround names, [RadioShack] seems to be positioned to survive in the near term,” Credit Suisse analyst Gary Balter wrote in a note to clients cited by the Journal. “Yet it does not change what remains a tough growth story over time, as the company searches for its next sales driver.” Technology industry trends suggest that growing sales of smartphones may help Radio Shack meet the gap.
Speaking of smartphone sales, Apple reported a 20 percent y-o-y increase in net income during Q1 2009, thanks to strong retail numbers from the iPhone and iPod. During the first three months of this year, about 11 million iPods were sold and about 3.8 million iPhones, far outpacing analyst projections of 9.8 million and 3.1 million, respectively. “The big surprise was the iPod touch momentum, which we think appears to be a quasi-netbook phenomenon for Apple and could prop-up margins,” MarketWatch quoted JPMorgan’s Mark Moskowitz as saying. In all, Apple posted $1.2 billion in net income this past quarter, up from $1 billion during the same period in the previous year.
Suburban Chicago-based Packaging Corp. of America outpaced analyst projections for earnings this past quarter, posting net income of $26 million, or $0.25 per share, compared to the average projected estimate of $0.19 per share, according to Reuters estimates. Packaging Corp. is among America’s largest manufacturers of containerboard, the paper stock used to construct corrugated boxes.