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Cerner Q1 Guidance Flops, New Bookings Flatten, But Q4 EPS Beat

Cerner, the nation’s large pure-play developer of health care information technology software, late Tuesday did a belly-flop with its Q1 EPS guidance, sending shares sharply lower after hours, though it blew its Q4 earnings out the water. Cerner ( CERN ) forecast first-quarter earnings per share minus items of 52 to 54 cents on sales of $1.15 billion to $1.2 billion, both metrics up 18% from the year-ago quarter at their midpoints. Analysts polled by Thomson Reuters were expecting 54 cents on $1.178 billion. In either case, the performance would represent slowing growth. In the year-ago Q1, Cerner grew adjusted EPS 22% and sales 27%. The North Kansas City, Mo.-based company said it expects Q1 new-business bookings of $1.15 billion to $1.25 billion, the midpoint flat with Q1 2015, which had risen 32% from Q1 2014. Cerner is facing single-digit hospital IT spending growth of about 8%, up from 6% to 7% in 2015, as clinicians struggle to keep up with software innovation. Federal rule makers are requiring more health care technology updates while changing the game, complicating buying decisions. For its Q4 ended Jan. 2, Cerner said EPS rose 30% to 61 cents per share minus items, while revenue rose 27% to $1.175 billion. Revenue met analyst views, while EPS beat by 4 cents. Cerner stock was down more than 13% in after-hours trading, after the company released its Q4 results. Cerner stock rose 1% to 55.46 in the stock market today , 26% off its all-time high of 75.72 set April 13. Smaller rival Athenahealth ( ATHN ) rose 7.7% Tuesday but was down more than 1% after hours. Rivals Allscsripts ( MDRX ) and Quality Systems ( QSII ) were flat in after-hours trading. Cerner said its Q4 bookings rose 16% to $1.35 billion. “Our fourth-quarter results reflect a solid finish to a record year,” Cerner President Zane Burke said in the earnings release. “In 2015, we added more than double the number of new EHR (electronic health records) clients than any year in our history, including both large health systems and small hospitals. We also continued to advance our cloud-based HealtheIntent platform and had a very strong year of selling our population health solutions both inside and outside our EHR installed base.” For this year, Cerner forecasts EPS ex items of $2.30 to $2.40, on revenue of $4.9 billion to $5.1 billion. Wall Street had modeled, $2.36 EPS minus items on $5.02 billion in revenue.

Mattel Enters 3D Printing, 360-Degree Imagery With Autodesk, Google

Toymaker Mattel ( MAT ) is revitalizing a few of its analog brands with digital technology from companies such as Autodesk ( ADSK ) and Alphabet ( GOOGL )-owned Google. At the Toy Fair 2016 conference in New York City, Mattel announced a ThingMaker home 3D printer and View-Master 360-degree image goggles . The annual toy fair, sponsored by the Toy Industry Association, opened Saturday and ended Tuesday. The original ThingMaker from Mattel debuted in the 1960s and allowed kids to mold their own rubbery creatures at home. The reimagined product uses 3D printing and was developed in partnership with Autodesk, a computer-aided design software firm. The ThingMaker 3D printing eco-system includes the ThingMaker 3D Printer and ThingMaker Design App. With the easy-to-use 3D printer, kids and families will be able to create and print plastic figures such as dolls, robots and dinosaurs, or wearable accessories like bracelets and necklaces. The ThingMaker 3D Printer will be available in the fall for $299.99, along with a variety of plastic-filament color options. Mattel also announced a collaboration with Google to update its View-Master for the modern age. The original View-Master debuted in 1939 and allowed kids to see 3D images by looking at pictures on swappable cardboard reels. The new View-Master works with Google Cardboard for an immersive surround-image experience. “Mattel’s new View-Master offers an easy-to-use and affordable platform that will enable users to take engaging field trips where they can explore famous places, landmarks, nature, planets and more in 360-degree ‘photospheres,’ ” Mattel said in a press release. “By pairing the View-Master’s ‘experience reel’ and app with an Android smartphone, kids will immediately experience an imaginative and interactive learning environment.” The experience reels will have themes such as nature, adventure destinations and science. The View-Master viewer and a sample experience reel will be available in the fall for $29.99. Mattel will sell packs containing four themed-experience reels for $14.99. The viewer and reels need to be paired with a smartphone and app.

Apple Debt Trajectory Could Pressure Credit Rating By End of 2017

With Apple readying a new bond sale to increase shareholder returns, Moody’s Investors Service says Apple ’s ( AAPL ) debt could top $100 billion by year-end 2017 on its current trajectory, which would put its Aa1 credit rating under more scrutiny. Apple is expected to tap the bond market for its fifth multi-billion dollar offering since 2013, when activist investor Carl Icahn stepped up pressure for Apple to increase capital returns. Cupertino, Calif.-based Apple’s debt has shot up from $17 billion in fiscal Q3, 2013 to $63 billion in its fiscal Q1, ended Dec. 26. Apple is expected to add in a range of $10 billion to $12 billion in new debt. In addition to Apple’s adjusted long term debt, Moody’s includes some $5 billion to $10 billion of commercial paper issuances that the company will likely use to manage its liquidity. The iPhone maker issued $8 billion in bonds in May to boost shareholder returns. Apple’s current $200 billion shareholder return program expires in March 2017. “Under the cadence established by the company’s capital return program, Moody’s calculations show an annual need of $15 billion to $20 billion in external funding or foreign cash repatriation to meet domestic cash needs, which include shareholder payouts and acquisitions,” said Moody’s in a report. “Absent Apple repatriating its foreign-held cash, either due to tax reform or otherwise, the company’s adjusted gross debt balance could exceed $100 billion by the end of 2017. Although the company’s financial metrics will likely still be very strong, Moody’s believes that this level of debt and resulting leverage would pressure the Aa1 long term rating and/or the outlook given that Apple operates in a rapidly transforming technology sector.” Apple has some $216 billion in cash, with nearly 90% of it overseas. If companies tap overseas cash, it’s subject to repatriation taxes. With borrowing costs low, they’ve turned to the bond market. Apple stock has been pummeled on weak March-quarter guidance . Apple expects iPhone sales to fall year over year during the period, the first such drop since the introduction of the iconic product in 2007. A growing market for used, refurbished iPhones in emerging markets and the phasing out of iPhone subsidies by wireless firms in the U.S. could both be playing a role in Apple’s disappointing sales outlook. Credit rater Moody’s said in a report that it “also believes that the company will be challenged to maintain its historic sales growth momentum, as iPhone sales cycles elongate and iPad tablet units fall. Without a new blockbuster product in the near-term pipeline, Moody’s estimates that the company’s sales will likely be flat compared to 2015 results, even as cash generation remains robust.”