Miscellaneous Earnings Call Notes 1.21.16

Delta Air Lines’ (DAL) CEO Richard Anderson on Q4 2015 Results

Lower crude prices put pressure on ability to drive revenue growth

“it certainly push additional pressure on getting to a positive RASM result and we made those comments this morning based on where the four sit today, but clearly crude were to fall another 15%, 20% and some people are calling for over the next few month that will put incremental pressure. These are good trades and we’re happy about crude continuing to fall, but we want to make sure our investor base understands that we appreciate the importance of getting the positive RASM”

But we’re pretty optimistic on the demand environment

“We’re pretty optimistic relative to what you read on CNBC or Wall Street Journal or some of the thunders out there that are predicting the future. We are booked ahead in terms of load factor for each of the months for February, March, April and really add into early summer, in case of early summer, its little bit early to call that, but we see demand is very strong”

Ed Bastian

Corporate Demand is also strong

“Let me add to that, because we also see as I’ve said in the remarks, continued strength in corporate demand. Our corporate demand in the fourth quarter was up 3% across the Board. Obviously, internationally it was down a bit in Europe given some of the effects of the Paris attacks. But broadly speaking our corporates continue to tell us that they expect growth in 2016 over 2015 level.”

Morgan Stanley’s (MS) CEO James Gorman on Q4 2015 Results

Significantly restructuring the FICC business

“we give more details on the FIC restructuring. Given the cyclical, and in some cases structural challenges facing fixed income, driven by the work ” and Ted did at the end of last year, we took the decision to downside headcount by 25%, along with our ongoing balance sheet and capital focus. We took this action alongside the recent installation of a new management team with the objective of credibly sizing of the business going forward.”

We’ll sell the assets opportunistically

“On the exact timing of year-end and the trajectory year-end 2017, I can’t really help you. We’re going to do it opportunistically. We’ll do with sort of minimum damage. We don’t want to get rid of assets on a distressed basis. We have some natural roll off. So we feel very comfortable with these targets. And it’s fair to say we haven’t disappointed in the last few years. That hasn’t been an issue in FIC.”

Our balance sheet was too big in the business

“As it relates to the capital with just arithmetically, if you run these numbers through the models, it does actually free up that much capital. It just means the business doesn’t need that capital. Our view is that we were overcapitalized that our balance sheet was too big in the business given the revenue and business opportunity.”

Interactive Brokers Group’s (IBKR) CEO Thomas Peterffy on Q4 2015 Results

Discussing some funky dynamics in treasury markets leading to short term treasury yields below fed funds

“in this quarter, we booked unfavorable marks in our treasury portfolio. Unlike most of our peers, we do not own or are we owned by a brand, and as a broker, we must mark our treasury portfolio to market, while they do not. This quarter, the negative marks amounted to $52 million. For the entire year, the marks were negative $33 million. Our treasury portfolio is $16 billion and its duration is about one year, the longest instrument being just less than two years. The yields on the two year averaged 1.06% on the last day of the year. It reversed from there to 87 basis points as of today. The safest way to secure our customers’ cash is to hold treasuries. It is also our understanding that according to the new banking regulation, these type of financial deposits this year will have to be secured by treasuries even of the banks which may result in a squeeze on treasuries. Indeed, we see treasuries maturing within three months currently being traded well under the fed fund rates.”

Brinker International’s (EAT) CEO Wyman Roberts on Q2 2016 Results

Saw considerable regional variability

“It is important to note, we saw considerably more regional variability during the quarter than we’ve seen traditionally. Some parts of the country performed significantly better than others, though none as strong as we’d like. Chili’s is deeply penetrated in areas like Texas and Louisiana, they’re dealing with economic pressures linked to declining oil prices.”

Tom Edwards

California, Florida and Midwest did relatively well

“In contrast, two of our largest states, California and Florida perform relatively well for the quarter, as did our more Midwest focused franchisees highlighting some of the regional variability we have been seeing.”

Logitech International’s (LOGI) CEO Bracken Darrell on Q3 2016 Results

Demand exceeded supply for iPad Pro accessory

“The bright spot for us in Q3 was the strong sales of our CREATE keyboard for the iPad Pro. Demand exceeded supply during the quarter due to the strong initial reception.”

Even though the PC market is shrinking, PC usage is not declining

“even though the PC – the PC market continues to decline 11% this quarter, if you look in front of you, most of you – if you’re in your offices probably have a PC. So the PC usage actually is not declining like that at all. And so as a result, people are still using PCs.”

Logitech 3Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

” With two quarters behind us, we are on track in our turnaround. We significantly increased operating profitability and the signs generally look good inside our growth businesses. Total sales declined by 3% in Q2 and by 1% on a year-to-date basis, better in both cases and expectations at the start of the year.”

“I am very pleased with the improvements we have made to accelerate our time to market in the tablet accessories category, and the benefits from those improvements will soon become visible.”

“Our outlook is based on the prudent assumption that the sales performance of our PC peripherals will not be sustainable in the phase of a double-digit PC market decline.”

“Our IQ has gone up exponentially since we started into this about a year and a little over year and half ago. First, Apple shares no information directly with us, they are as secretive you hear and we respect that and I think it creates a very fair and level playing for all the competitors in the market that create tablet accessories. But we are working very hard to understand and predict what Apple will try to do with their next generation of products based on what they have done with the last one. And I would say our IQ is proven to be better and better and better. This is probably the best yet. We feel like we really understood where this is going, but honestly they can always come in with a surprise.

So there are no guarantees in this world, we are just going to keep trying to raise all the intelligence we have about what Apple and as well as other tablet accessory makers or tablet makers are doing. And I think we will continue to improve there and therefore become faster and faster to market.”

“Our expectation is that this PC platform decline is deep enough and we don’t see anything underlying that that’s changing right now. So we think it’s prudent to assume if that that’s going to continue and we don’t think it’s prudent to assume that we are going to be outperforming that to the level that we have in the past.”

Logitech Analyst Day Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we missed something which we were slow to react to the transition that happened with tablets. So as tablets really took on a completely life of their own, we were slow to react and we missed opportunity. The early stage of opportunities in the tablets, we just missed that opportunity.”

“we lost something very important. And fortunately we didn’t lose the capability, we lost the expectation. We stopped expecting to have great products…The products we launched became not so interesting. And I think we lost a little bit of brand relevance during those two to three years.”

“Today I am going to tell you, we are back.”

“I see big disadvantages inherit in big companies especially when it comes to consumer products, the bureaucracy creation mechanism is awfully strong in a big company and we adapted some of that to our little small company and we’re headed right back to where we should be which is we are going to be a small company and we are going to be a small company no matter big we get. Small means informal, small means fast in decision making, it means responsive. it just means you’re a learning company. You’re close to your customer. You’re close to you technologies so that’s where we’re headed.”

“product lifecycles are getting faster. The personal computer product lifecycle was about 24 to 36 months…tablet form life it can be as little as 18 months maybe over the future will even be 12 and on average today it’s probably 24 months”

“What it means is we have to be very fast in getting to market when the new form comes out because the life of that product is shorter so to get the best return on investment and have the biggest impact on the marketplace we need to be there almost from the beginning.”

“the whole operating model or supply chain model [has changed]. In the old model, we would make it, we would design it in California or in Switzerland. We would then start manufacturing in China, we would move that to the port, we put it on a boat, we ship it for four to six weeks to one of our distribution location, it would move to the distribution location.

From the distribution location, it would go into a sales area a retailer distribution and then we finally make it to the store. A very-very long supply chain, okay if you are not, if the life cycle approximately is very long….The tablet business is quite different…we’re now designing and making in China, then we’re not putting it on a boat, its flying…It lands either directly into the retailer’s warehouse or into our warehouse is quickly deployed to the retail store.”

“Finally, in the old world honestly, deign wasn’t rewarded to the same extent…But now the standards have changed especially as this becomes a mobile product.”

“So we are going to move from being Logitech as it’s been an engineering led company with a great go to market capability. We’re going to become that but we’re also going to become a design company with the design company that really leverages technology, innovation and consumer insight.”

“the number of people who buy a tablet or an iPad today and actually use the keyboard with it is very small so it’s somewhere between 8% and 10%. The number of people who probably would if they are aware of it and it was presented to them at retail is at least double that.”

“our number one selling product right now in keyboards and desktops is actually a product used for the TV so an increasing number of people who bring their TV talking about the TV bring their computer their laptop connecting up to the TV and then sitting on the couch and surfing this is a phenomenon that started about four or five years ago and it just keeps picking up steam. It is in fact in the U.S. it was 8% of people doing that about three years ago it is 30% doing it now 30% to 31%.”

“When we look at the how consumers behave, we hear very often that consumers have been stopped using the PC for going on Internet…but if we look at statistics actually still most hours on the Internet on the desktop or the laptop because you want to stay long time on the internet it is still much more comfortable to be on your PC”

“I’ll talk more about where we launch keyboard which enable you to jump between devices.”

“Second big trend that is your living space is changing…your living space and your office space is merging…We need products that are beautiful to look at and you can be proud as a consumer and that reflects your personality.”

“18 months ago, we did a survey of iPad owners and 70% of them globally said they love the iPad exactly as it is, don’t need anything else, it’s perfect.

We repeated the same survey 12 months later. This time only 30% of consumers said they like the iPad as it is and 70% of them this time said they want more things around the iPad to accessorize it to make it more useful in new areas, in new use cases, inside the house, outside the house, different family members.”

“When we looked at what consumers were actually buying when they went to accessorize their iPads, four key things showed up consistently, no matter which country. One; a cover or a folio to protect it and also make it easy to use as a stand. Number two; a keyboard to make it productive as you are using it for email as well as other activities that you are typing in. Number three; pens or styluses most often used simply for selecting individual links on the screen. And number four; earphones or ear buds to enjoy music wherever you are around the world.”

“So we worked with leading scientists as well as fashion setters in the world to understand what are the next generation. Over the next 12 months, 18 months, what are the fashion trends going on in clothing, consumer products? What are the colors that are going to be in vogue this Christmas, next spring; and we have learned what are the most important things that we need to be looking to as we design our products in the future.”