U.S. Indexes Lower; Chipotle Plunges 15%, Microsoft Revenues Fall

Arthi Gupta
19 Oct, 2012
New York City

U.S. indexes edged lower after Google, Microsoft, McDonald

[R]9:50 AM New York – U.S. indexes edged lower after Google, Microsoft, McDonald’s and Chipotle Mexican Grill reported disappointing earnings. Investors also sold stocks after European leaders delayed the implementation of Spanish banking aid legislation.[/R]

U.S. indexes declined after General Electric, Microsoft and McDonald’s reported earnings that missed analysts’ expectations.

General Electric, the largest U.S. conglomerate said quarterly revenues increased 2.8% and earnings rose 8.3% and sales in aviation and healthcare divisions fell 1%. GE said foreign exchange fluctuations lowered its revenue by $1.1 billion.

GE stock has jumped 41% in the last one year of trading and the stock is trading at a level last seen before the 2008 crisis. GE also left its annual earnings and revenues guidance unchanged.

Microsoft reported fiscal first quarter revenues declined 22% as sales were affected in parts by customers delaying the purchase of Windows 8 operating system.

The fast casual burrito chain Chipotle Mexican Grill Inc ((CMG)) reported third quarter revenues increased 18% and net income rose 20%. The stock fell 10% after revenue growth came below expectations and as of yesterday’s close the stock has declined 28% in the last three months.

Same store sales growth in the quarter declined to 4.5%, a sharp decline from 11% rise a year ago.

European indexes edged lower after leaders agreed on a plan to enact legislation that provides aid directly to Spanish banks but failed to agree on the timetable to implement it.

Barclays Plc is said it plans to slash nearly 10% of workforce in its equities unit in Europe, Middle East and Africa as trading volume declines in the region.

Earnings Review

General Electric Company ((GE)), the diversified conglomerate reported third quarter revenues increased 3% to $36.3 billion. Net earnings in the quarter rose to $3.5 billion or 33 cents per diluted share compared with $3.2 billion or 22 cents per share in the prior-year quarter.

McDonald''s Corporation ((MCD)), the foodservice retailer stated third quarter total revenues dropped 0.2% to $7.15 billion, from a year earlier. Net income in the quarter fell to $1.46 billion or $1.43 per share compared with $1.51 billion or $1.45 per share last year.

Microsoft Corporation ((MSFT)), the software company said first quarter revenue fell 8% to $16.01 billion from the same quarter last year. Net income in the quarter declined to $4.47 billion or 53 cents per diluted share compared to net income of $5.74 billion or 68 cents per share for the year-ago quarter.

Schlumberger Limited ((SLB)), the oilfield services provider reported third quarter revenue increased 11% to $10.61 billion. Net income in the quarter increased to $1.42 billion or $1.07 per diluted share from $1.3 billion or 96 cents per share in the previous year.