Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=178517
Story Retrieval Date: 5/21/2013 10:53:36 AM CST
Zebra Technologies Corp. reported a 60 percent rise in fourth quarter profits beating Wall Street expectations. The company attributed the growth to an increase in its sales force, the introduction of new products and a general improvement in the economy. Despite the positive report, its shares fell 6.4 percent.
The Lincolnshire-based printer and tracking device manufacturer posted net income of $28.2 million, or 50 cents per diluted share, in the quarter ended Dec. 31, compared with $17.6 million, or 30 cents per diluted share, a year ago. Analysts polled by Bloomberg LP were expecting the company to earn 47 cents per share.
The vast majority of the company’s sales, 73 percent in the fourth quarter, came from hardware such as printers, scanners and radio frequency chips that are used to track inventory. Additional income resulted from parts, service, and software for the company’s products.
Zebra Technologies reported an 11.5 percent growth in quarterly sales to $248.2 million from $222.5 million in 2009.
Zebra Technologies bought back 900,000 shares of common stock during the fourth quarter as part of a continuing share repurchase program. The company hired 40 new sales representatives in emerging markets including China, India and Turkey, which contributed to its rising operating costs, but also sales growth, according to CEO Anders Gustafsson. Operating costs also rose due to increased research and development, and higher commissions to sales staff.
In light of strong quarterly reports from competitors, Zebra Technologies stock rose in the days leading up to Tuesday’s earnings report. When Zebra’s earnings came in only slightly more than the consensus estimate, share prices fell. “In the context of a strong market, there were probably some disappointed investors,” said Tony Kure, an analyst with Keybanc Capital Markets Inc.
“The company saw a pause in its retail demand in North America in the fourth quarter,” he said, but noted that the earnings were in line with his expectations.
Michael Terzich, senior vice president for global sales and marketing, said “Retail has grown in significance for the business.” While spending was softer in North America, there was growth in the international market, he told analysts in a conference call.
“Today, retail is probably the only vertical market we have where we could leverage the entire Zebra portfolio." He went on to note that the company has recently signed a deal with “one of the bigger box retailers…in the hardware space.” He declined to specify the retailer.
For the year, Zebra Technologies’ net income more than doubled to $101.8 million, or $1.77 per diluted share, from $47.1 million, or 79 cents per share 2009. The 2010 numbers beat analyst expectations of $1.75 per diluted share. Revenue rose 19.1 percent to $956.8 million from $803.6 million in 2009.
In the twelve months ended Dec. 31, international markets represented 57.4 percent of all sales for Zebra, compared with 54.9 percent a year earlier. Sales in the Asia-Pacific region alone grew by 50.8 percent in 2010.
Zebra Technologies is forecasting diluted earnings per share of between 41 cents and 47 cents in the first quarter of 2011, compared with 42 cents per share in 2010. Analysts polled by Zacks Investment Research Inc. are expecting first quarter results of 46 cents per diluted share. Zebra is expecting to complete the sale of its Navis shipping container operation to Cargotec Corp. during the first quarter for approximately $190 million.
Zebra stock closed Tuesday at $38.46, down $2.64.