Tesla, Groupon, Sony Face Earnings Challenge

Tesla Model S
Tesla Model S

Several companies announced earnings recently, and each one has to withstand suspicions that their successes will be short lived. Based on what some investors can see in the numbers, the positive results will not last. Many analysts are skeptical that Tesla Motors Inc. (NASDAQ: TSLA), Groupon Inc. (NASDAQ: GRPN) and Sony Corp. (NYSE: SNE) can repeat their profits or continue their growth. It is a unique challenge for the three well-known companies, which have issued numbers during a quarter when most other public corporations are not dogged by worries about their survival.

The great bulk of earnings from other branded companies can only be questioned as to how strong their prosperity will be in the future. However, Tesla, Groupon and Sony cannot convince most of Wall Street that they can remain viable at all.

Among the three, the company least likely to continue to do well, or even survive, is Tesla. It bragged that it had produced 5,000 cars in the first quarter, a pitifully small number. Hours to build a car dropped 40% from December to March. However, Tesla's revenue was only $562 million. Net income was only $11 million. Most worrisome of all, 12% of Tesla's revenue came from selling zero-emission credits to other car companies. Tesla cannot count on this activity to drive its success. And, to further build cause for concern, the company will ship barely any more cars in the current quarter than in the first.

Tesla stands as an example of a novelty company that will lose its shine as soon as sales slip only slightly, undermined by either lack of demand or competition. Losses will trump novelty every time.

Groupon's future should be no better than its past, based on financial results that stretch back two years. As business school professors say, it has no moat. Very unlike Tesla, it does not have a premium product, but a very ordinary one. Groupon's challengers include much larger firms like Amazon.com Inc. (NASDAQ: AMZN) and Wal-Mart Stores Inc. (NYSE: WMT) that can marshal tens of millions of customers and exploit their balance sheets to push Groupon out of some lucrative markets. Groupon is supposed to be one of the fast-growing Web 2.0 public corporations. As such, its success derives from surging sales. Instead, its revenue rose only 8% quarter over previous year's quarter, to $601 million. Groupon lost $4 million. Revenue in the current quarter is expected to be between $575 million and $625 million. Where is the success, or even reason for hope, in any of those numbers or trends?

The longest standing turnaround among this group is Sony, the company that was supposed to be the Apple Inc. (NASDAQ: AAPL) of the past decade but never came remotely close. Sony had no reason to trumpet its revenue, which rose 5% in the fiscal year that ended March 31, to $72.3 billion. Sony made $458 million for the year. Without the sales of some of its security assets, Sony would not have been profitable at all. Sales in gaming, one of its core divisions, dropped 12% to $7.5 billion. The positive results of its mobile division came almost entirely from its consolidation into Sony's results for the first time.

Sony, Groupon and Tesla each posted results that were no better than mirages, if the results are supposed to be signs of improvement. Each has a bleak future and little chance of sustaining what is almost certainly temporary success, if it can be taken as any success at all.

Filed under: 24/7 Wall St. Wire, Earnings Tagged: AAPL, AMZN, featured, GRPN, SNE, TSLA, WMT