Greenberg: 'Blame the Weather' Season in Full Swing
SAN DIEGO (TheStreet
) -- With earnings "season" officially under way, so is "blame the weather."
In many cases, including retail, restaurants and construction, it's justified. The Northeast got blasted and that, on occasion, kept people from getting where they were going.
One of the most legitimate weather-related claims was Alcoa
(AA - Get Report)
, whose CEO Klaus Kleinfeld said:
Let me also address one other thing that has been discussed quite a bit. And we also saw it in our order intake in the first quarter here in the US, where it slowed down. It slowed down -- the order intake there slowed down -- and this has pretty much single-handedly been driven by the extremely cold weather.
So what do we see now? We're seeing on those sites now, as the sites got delayed, the concrete couldn't get poured, people are now trying to catch up, and trying to make the dates that they had projected for their projects. So, we continue to be optimistic in the recovery of that market and don't believe that there's any substantial change in this. It was really weather that hit there.
Of course, that merely means deferred or delayed revenue, not cancelled revenue.
Which brings us to Intuitive Surgical
(ISRG - Get Report)
. Late Tuesday, the robotics company warned that its first-quarter revenue would fall 59% and, perhaps more disturbing, robotic procedures would rise just 7%; a year earlier they were up 20%.
As I wrote in Reality Check
this morning (subscription required), it's proof that that the hard reset at Intuitive is continuing -- and that one quarter's less-bad results (in the fourth quarter) did not make a trend.
Then, almost on cue, along come analysts, blaming the lower-than-expected procedure rate on (drumroll!) the weather.
JPM's Tycho Peterson went so far as to write that "weather played a meaningful role" in the procedure slowdown. Peterson wasn't alone. Leerink's Richard Newitter wrote that people were bracing for a miss given weather trends and potential seasonality.
The big however
: Not even the company publicly blamed the weather
And, FYI: Several analysts continue to urge investors to stay on the sidelines. Suraj Kalia at Northland Securities doesn't see headwinds abating anytime soon. Sterne Agee's Greg Chodaczek initiated coverage Tuesday, just before the company's warning (good timing department!) with an underperform. And CRT's Shagun Chadha didn't budge from her sell.
"There are no two ways to look at a 7% year-over-year growth in procedure volumes, in our view," she says. "It reflects weak underlying demand that is not fixable with a new product."
She believes investors will be surprised by margin compression and its impact on free cash flow -- a key reason people own Intuitive.
: Weather may have genuinely caused surgery delays, but not all-out cancellations. When you need surgery, you need surgery, which is why a Reality Check red flag on Intuitive remains.
-- Written by Herb Greenberg in San Diego