Tag: Computer Services

Manufacturing stalled in the first half. But now the stage is set for a recovery, says JPMorgan.

[ad_1]

The Institute for Supply Management’s manufacturing index is due for release Tuesday, which outside of inflationary periods (i.e., now), tends to be one of the more important economic indicators for financial markets, given its record as a bellwether.

ISM manufacturing data during the current rate-hike cycle (in red) has lagged other periods.

Even compared to other rate-hike cycles, the ISM manufacturing series has been one of the worst in history, points out Jason Daw, head of North America rates strategy at RBC Dominion Securities. Daw makes the case that the U.S. economy overall is not very strong for this period of the cycle, and the manufacturing data, not just ISM but also industrial production, has been particularly feeble.

But the call of the day comes from JPMorgan’s economic team. They note that while global manufacturing stalled in the first half, the non-manufacturing components rose at a 3.2% annualized rate, allowing the global economy to grow at an above trend 2.7% rate.

The team led by Bruce Kasman say that the typical channels through which weak manufacturing would bring down the broader economy haven’t materialized. “A major channel by which weakness in goods sectors broadens out is through depressing corporate income and pricing power. While our start-of-year outlook anticipated elevated wage gains to pressure corporate profits, the surprising strength in [first-half] global GDP was accompanied by upside surprises to inflation,” they say. In turn, there have been solid gains in both labor income and profits, and while margins have come off their peaks, they are well above pre-pandemic levels.

Business hiring, they add, is the ultimate signal of confidence, and employment growth has continued even though expectations have soured.

Now, say the JPMorgan team, the stage is set for a goods sector recovery. Labor income, when adjusted for inflation, is rising, while finished goods inflation is falling sharply.

Also, business capital spending continues to expand, particularly in emerging economies outside of China. And importantly, inventories are swinging from a drag to a lift. In the first half, the step down in the pace of stock building depressed global industrial production by 3.4 percentage points.

“Even if the pace of stockbuilding was only to level off, the impulse to global industry would be material. Add to that a potential desire to align the pace to firming demand growth and the boost could generate a jump in factory output in the coming months,” they say.

Finally, they note, the tech spending decline after the 2020 to 2021 surge looks to be ending, and global motor vehicle production is picking up as supply-chain bottlenecks ease.

The markets

After an okay finish for the S&P 500
SPX,
-0.29%
to a strong July, U.S. stock futures
ES00,
-0.36%

NQ00,
-0.42%
were a bit lower as the seasonally weak month of August commenced. Gold futures
GC00,
-1.28%
were trading below $2,000 an ounce. The dollar
DXY,
+0.42%
rose.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

The ISM report is due out at 10 a.m. Eastern, when the job openings and construction spending reports also come out. Monthly auto sales also will be released throughout the day.

Pfizer
PFE,
-0.03%,
Caterpillar
CAT,
+4.05%,
Uber Technologies
UBER,
-3.96%
and after the close, Starbucks
SBUX,
-0.35%
and Electronic Arts
EA,
-0.61%
highlight the day’s earnings reports. Pfizer lowered its sales guidance while Caterpillar beat Wall Street earnings estimates and Uber reported a surprise profit.

JetBlue Airlines stock
JBLU,
-8.56%
slumped as the airline says it no longer expects to report a profit in the third quarter, owing to what it called a challenging environment in the northeast, as well as a preference by consumers for long-haul international flights.

CVS Health
CVS,
+0.48%
is going to cut 5,000 corporate jobs, according to The Wall Street Journal.

Best of the web

BlackRock
BLK,
-0.56%
and MSCI
MSCI,
-0.42%
are targets of a Congressional probe into facilitating U.S. investment in China.

The first new U.S. nuclear reactor in nearly seven years starts operations.

Modern-day Oppenheimers see the future of nuclear energy — and it’s mobile.

Top tickers

Here were the most active stock-market tickers as of 6 a.m. Eastern.

Ticker	Security name
TSLA, -1.13%	Tesla
TUP, +14.28%	Tupperware Brands
NIO, -4.97%	Nio
AMC, -0.27%	AMC Entertainment
PLTR, -2.60%	Palantir Technologies
GME, -1.80%	GameStop
NVDA, -0.74%	Nvidia
AAPL, -0.15%	Apple
NKLA, +14.79%	Nikola
AMSC, +54.02%	American Superconductor

The chart

The inflation-adjusted equity premium is looking pretty bleak. That’s calculated by taking the expected return to the S&P 500 and subtracting 10-year TIPS yields. “While admittedly this graphic is skewed by the few megacaps trading at huge multiples, it’s sobering nonetheless,” says Michael Ashton, better known as the Inflation Guy.

Random reads

Granted, Philadelphia’s a big sports town, but there were actual tailgates to get the Eagles’ throwback Kelly green jerseys that went on sale.

A Chinese zoo has denied that a bear is human after video of the creature standing on two feet.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

[ad_2]

Source link

August 1, 2023

Amazon and Apple to headline Q2 earnings this week

[ad_1]

When Amazon.com Inc. and Apple Inc. report quarterly results on Thursday, we’ll get a look at two big companies, with big expectations, trying to do smaller things — or at least less exciting things, or things that might be more inconveniencing to customers — to stay bigger.

For Apple
AAPL,
+1.35%,
D.A. Davidson analyst Tom Forte said, the focus will be on the iPhone, as always, as well as demand abroad and a new VR headset, as its stock hovers near record highs and its market value holds above $3 trillion. And he said that Amazon
AMZN,
+3.09%,
meanwhile, could face questions about the impact of cost cuts on e-commerce growth, and what AI could do to boost slower growth in its cloud business.

The results from those companies, which are big enough to make or break a single quarter’s worth for the S&P 500 Index
SPX,
+0.99%,
will follow those from the other tech giants like Microsoft Corp.
MSFT,
+2.31%
and Facebook parent Meta Platforms Inc.
META,
+4.42%.
And they’ll arrive as Wall Street starts to get a tad more realistic about AI: Microsoft shares fell after management said the expansion of its AI capabilities would be “gradual” — and gradually more expensive.

D.A. Davidson analyst Tom Forte, in a research note this month, said Amazon, like other big tech companies, was taking more steps to control its costs. That might help margins, he said. But he said he’d be watching for any impact to e-commerce sales growth, following thousands of layoffs and pulling back on its expansion of Amazon Fresh.

Amazon began tacking on servicing fees onto some Amazon Fresh delivery orders this year. And Forte noted what he said were other tweaks to service: Charging for a home pickup of a defective smoke alarm that used to be free, and incentives to wait longer during Prime Day.

“In our view, Amazon is playing a ‘game of chicken’ and banking on other e-commerce companies not to offer a superior service, instead of its historical approach of working backwards with a customer-obsessed approach,” D.A. Davidson analyst Tom Forte said in a research note.

He added later: “We believe there is something to be said about the experience of having an Amazon-branded delivery vehicle show up at your house EVERY day. Having one show up once a week or twice is not the same.”

At Apple, Forte said in a separate note, the iPhone, whose sales were still solid, had turned into more of a consumer staple than a discretionary buy. He also said he’d be looking for more detail about the upcoming iPhone 15 — likely to be modestly fancier than previous iPhones — the recovery in China and growth in India. Apple last month also unveiled its Vision Pro VR headset — for $3,499. Forte said he had his doubts.

“We believe Apple will have to overcome a number of structural challenges to achieve mass adoption for its AR/VR headset,” he said.

This week in earnings

Apple and Amazon will report as more companies than normal report quarterly profit ahead of estimates, according to a FactSet report on Friday. For the week ahead, 170 S&P 500 companies report results, with four from the Dow, the repot said.

Results from Uber Technologies Inc.
UBER,
+3.28%
and DoorDash Inc.
DASH,
+4.20%
will offer an update on the gig economy and how far app-based deliveries can go, while results from Kraft Heinz Inc.
KHC,
-0.11%
will offer an update on food prices and how much they might ease from the highs seen in recent months.

With the “Barbie” movie lifting rival Mattel Inc.
MAT,
-2.40%,
results from Hasbro Inc
HAS,
-0.29%
during the week will offer a glance at the rest of the toy industry, where demand hasn’t exactly been great, and what entertainment options Hasbro has up its sleeve to keep apace with its archrival. Drug maker Pfizer Inc.
PFE,
-0.36%
reports, as does video-game maker Electronic Arts Inc.
EA,
+0.25%.
Starbucks Corp.
SBUX,
+0.47%
reports as well.

The call to put on your calendar

“Barbie,” the Hollywood strike and Warner Bros. Discovery: Mattel has said it wants to turn “Barbie” into a content franchise. Now we’ll hear what Warner Bros. Discovery Inc.
WBD,
+4.07%,
the media conglomerate that produced the film, thinks about the film’s results and its prospects, as studios increasingly pump out sequels or offshoots of well-known, established character universes like “Star Wars,” Marvel and DC. The company — which reports oversees Warner Bros. CNN, TNT and the streaming service Max — reports quarterly results on Thursday. But even as “Barbie” and “Oppenheimer” carry the parts of the entertainment industry that are still functioning through the Hollywood strike, Wall Street will likely be focused on contingency plans, and any sense of whether more viewers are turning to streaming with productions on pause.

The number to watch

Payments and crypto volumes: Results this week from trading app Robinhood Markets Inc.
HOOD,
+4.09%
and crypto exchange Coinbase Global Inc.
COIN,
+2.23%,
along with PayPal Holdings Inc.
PYPL,
+2.71%
and Block
SQ,
+3.42%,
will land at the intersection of rebounding markets and job-market concerns.

UBS analysts predicted solid growth and cost control for Block, and “steady” e-commerce trends for PayPal. But BofA analysts said PayPal’s search for a new chief executive, following the announcement of Dan Schulman’s retirement at the end of the year, would become more important, adding that “we think investors should rightfully expect the CEO search to conclude in the near-term.” While Bitcoin’s rebound helped Coinbase, the company and others in the industry face the prospect of tougher regulations. Robinhood and PayPal report on Wednesday. Coinbase and Block report on Thursday.

[ad_2]

Source link

July 30, 2023
Intel stock rallies after earnings show AI data-center beat, strong PC sales

[ad_1]

Intel Corp. shares surged in the extended session Thursday after the chip maker posted a surprise profit, but while data-center sales came in better than expected, a larger beat in PC product sales drove margin improvement.

Intel
INTC,
+0.55%
shares surged around 8% after hours, following a 0.6% rise to close the regular session at $34.55.

The company reported second-quarter net income of $1.48 billion, or 35 cents a share, versus a loss of $454 million, or 11 cents a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported 13 cents a share, versus net income of 28 cents a share a year ago.

Revenue fell to $12.95 billion from $15.32 billion in the year-ago period, and adjusted gross margins came in at 39.8%, the company said.

Intel had forecast an adjusted second-quarter loss of 4 cents a share on revenue of about $11.5 billion to $12.5 billion for the current period, and adjusted gross margins of about 33.2% for the quarter.

Analysts surveyed by FactSet, on average, expected a loss of 4 cents a share on revenue of $12.12 billion.

The margin beat was “largely a function of revenue,” Intel Chief Financial Officer David Zinsner told analysts on a conference call, and that revenue beat was much more pronounced in Intel client, or PC, business than it was data center.

“We had obviously beat revenue significantly, and we’ve got a good follow-through in the fixed-cost nature of our business, and so that really was what helped us outperform significantly on the gross-margin side in the second quarter,” Zinsner told analysts.

Intel posted PC-group sales of $6.8 billion and data-center sales of $4 billion, while analysts surveyed by FactSet had forecast $6.08 billion and $3.8 billion, respectively.

Before the conference call, Edward Jones analyst Logan Purk told MarketWatch in an interview following the report that most of the improvement in Intel’s gross margin came from the unexpected amount of growth in the PC business.

“The magnitude of client computing growth, and how the PC market is recovering faster than anticipated,” came as a surprise, Purk told MarketWatch. The analyst, who has a hold rating on Intel, said he expects sequential single-digit improvement in data center going forward.

Still, on the call, Intel Chief Executive Pat Gelsinger hammered home the point that Intel was wholeheartedly going after the AI market, which is expected to be dominated by Nvidia Corp.
NVDA,
+0.99%,
and to a lesser extent, by Advanced Micro Devices Inc.
AMD,
+0.92%,
which reports earnings on Tuesday.

“We see AI being infused in everything and there’s going to be AI chips for the edge, AI chips for the communications infrastructure, AI chips for sensing devices, for automotive devices, and we see opportunities for us both as a product provider and as a foundry and technology provider across that spectrum,” Gelsinger said.

Meanwhile, network and edge sales came in at $1.4 billion, while analysts called for $1.48 billion, and foundry services revenue rose to $232 million for the quarter, while Wall Street looked for $149.2 million.

“In the third quarter, we do obviously at the midpoint see revenue growth sequentially and so that will be helpful in terms of gross margin,” Zinsner told analysts on the call. “We expect, again, pretty good follow-through as we get that incremental revenue.”

Intel forecast third-quarter earnings of about 20 cents a share on revenue of about $12.9 billion to $13.9 billion and adjusted gross margins of about 43% for the current quarter. Analysts surveyed by FactSet had forecast third-quarter adjusted earnings of 16 cents a share on revenue of $13.22 billion.

Read: Intel may have bottomed, but earnings will show if chip maker can hope to catch up to Nvidia and AMD in AI

Year to date, Intel shares have gained nearly 31%, while the PHLX Semiconductor Index
SOX,
+1.86%
has surged 49%, the S&P 500
SPX,
-0.64%
has grown 18%, the Nasdaq Composite
COMP,
-0.55%
has gained 34% and the Dow Jones Industrial Average
DJIA,
-0.67%
is up more than 6%.

[ad_2]

Source link

July 27, 2023
Microsoft earnings top estimates, but stock falls as execs detail AI’s costs

[ad_1]

Microsoft Corp. easily topped profit and revenue expectations for its latest quarter, though its shares were moving more than 3% lower in extended trading Tuesday after the company discussed the year ahead.

The technology giant has won favor on Wall Street for its positioning in the artificial-intelligence revolution, though Chief Financial Officer Amy Hood said on Tuesday’s earnings call that “even with strong demand and a leadership position,” Microsoft’s
MSFT,
+1.70%
“growth from our AI services will be gradual.” Microsoft’s AI for its Azure cloud-computing business needs to ramp, and the company is working toward the general availability of its Copilot productivity product.

Microsoft’s AI revenue impacts will thus be weighted toward the second half of the new fiscal year that just began, she continued. Meanwhile, she expects that Microsoft’s capital expenditures will rise sequentially each quarter “as we scale to meet demand signals.”

Hood’s commentary came as Microsoft posted fiscal fourth-quarter results Tuesday afternoon that showed a 15% jump in revenue for the company’s cloud-computing segment, which it calls Intelligent Cloud. Revenue for the segment came in at $24.0 billion, while analysts had been anticipating $23.8 billion. The growth rate was 17% on a currency-neutral basis.

The company said revenue for Azure and other cloud services was up 26%, or 27% in constant currency. Microsoft’s forecast had been for 26% to 27% in constant-currency Azure sales growth, while the company posted 31% constant-currency growth on the metric in the March period. The FactSet consensus was for 27% growth in constant currency.

“While we believe the Street was hoping for Azure growth more in the ~28% range, we believe the consumption part of the business held up well,” Evercore ISI analyst Kirk Materne said in a note to clients.

For the September quarter, Microsoft anticipates 25% to 26% in constant-currency Azure growth.

The cloud migration is still in the “early innings,” Chief Executive Satya Nadella said on the call, while also highlighting a “new world of AI driving a set of new workloads.”

“We think of that, again, being pretty expansive from a TAM [total addressable market] opportunity and we’ll play it out,” he continued, though the company is also up against the “law of large numbers” given the massive scale of its cloud business.

The company generated fiscal fourth-quarter net income of $20.1 billion, or $2.69 a share, compared with $16.7 billion, or $2.23 a share, in the year-earlier period. Analysts tracked by FactSet were modeling $2.55 a share.

Overall revenue for Microsoft climbed to $56.2 billion from $51.9 billion, whereas analysts had been expecting $55.5 billion.

See also: Microsoft bulls are excited as company reveals pricing for AI offering

Microsoft logged $18.3 billion in revenue for its productivity and business processes unit, up 10% from a year before, or up 12% in constant currency. That part of the business includes LinkedIn and both commercial and consumer versions of Office. Analysts had been looking for $18.1 billion.

Revenue for the More Personal Computing segment, which includes Windows and Xbox content and services, dropped 4% to $13.9 billion and was off 3% on a constant-currency basis. The FactSet consensus was for $13.6 billion.

Nadella, meanwhile, expressed optimism about the eventual opportunities brought upon by Microsoft’s Copilot offerings.

“I do think people are going to look at how can they complement their [operating-expense] spend with essentially these Copilots in order to drive more efficiency and, quite frankly, even reduce the burden and drudgery of work on their OpEx and their people and so on,” he said.

Evercore’s Materne called the overall results “solid” amid “a lot of macro headwinds.” Microsoft’s investment story “gets stronger in [the second half of the calendar year] as some optical headwinds reverse and [comparisons] soften, and Microsoft’s position in the enterprise market continues to get stronger as customers look to consolidate spending,” he wrote.

Read: Amazon finally is nearing a bottom on this key measure, analyst says

[ad_2]

Source link

July 25, 2023
Big Tech Is Running Out of Steam. These 3 AI Stocks Merit a Look.

[ad_1]

Technology stocks reigned supreme in the first half of the year, far outperforming the wider market. But sustaining that rally will be tough, and investors need to look now for tech stocks that are ready to benefit from the growth of artificial intelligence.

[ad_2]

Source link

July 5, 2023
Jump in cloud revenue lifts Oracle’s results, and stock gains after hours

[ad_1]

Shares of Oracle Corp. rose after hours Monday after the IT and cloud infrastructure provider reported fiscal fourth-quarter results that topped expectations, helped by a jump in cloud revenue that executives said positioned the company well for the year to come.

The company reported fourth-quarter net income of $3.32 billion, or $1.19 a share, compared with $3.19 billion, or $1.16 a share, in the same quarter last year. Revenue rose 17% to $13.84 billion, compared with $11.84 billion in the prior-year quarter.

Excluding stock-based compensation, amortization and other charges, Oracle earned $1.67 a share, compared with $1.54 a year ago.

Analysts polled by FactSet expected Oracle to report adjusted earnings per share of $1.58, on revenue of $13.74 billion.

Oracle also declared a quarterly cash dividend of 40 cents a share. Revenue from Oracle’s cloud software and infrastructure services rose 54% during the quarter.

“So, both of our two strategic cloud businesses are getting bigger — and growing faster,” Chief Executive Safra Catz said in a statement. “That bodes well for another strong year in FY24.”

Oracle shares
ORCL,
+5.99%
were up 4.8% after hours on Monday. The stock closed regular trading up 5.8% to $116.43, putting it at a record high.

Prior to the results, analysts were focused on Oracle’s cloud business — which has faced concerns about tighter tech budgets in IT departments as inflation raises concerns about the economy — as well as its AI potential, which has catapulted shares of other tech companies higher. More executives inside and outside of tech, hoping for a similar pop from investors, have been talking about AI on earnings calls more this year.

Earlier on Monday, Wolfe Research upgraded Oracle, saying its cloud business could double its market share by 2025 “on the backs of architectural advantages, partnerships” and generative AI.

UBS analysts also said they expected Oracle to highlight its cloud-AI partnership with chip maker Nvidia Corp.
NVDA,
+1.84%,
which analysts say is set to benefit from more AI development. Those expectations were confirmed on Monday, when Oracle management name-checked Nvidia in its earnings release.

“Nvidia themselves are using our clusters, including one with more than 4,000 GPUs, for their AI infrastructure,” Larry Ellison, Oracle’s co-founder and chief technology officer, said in the release.

Shares of Oracle have marched 81.7% higher over the past 12 months. The S&P 500 Index
SPX,
+0.93%
has risen 15.7% over that period.

[ad_2]

Source link

June 12, 2023
Amazon Was the Rare AI and Cloud Play Left Out of the Nvidia Bump. Here’s Why.
[ad_1]
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/amazon-misses-rally-8a6e2511
Updated May 25, 2023 6:10 pm ET / Original May 25, 2023 5:55 pm ET

Order Reprints

Print Article
[ad_2]

Source link
May 25, 2023
U.S. stocks struggle for direction as traders digest inflation data in April

[ad_1]

U.S. stock indexes were little changed in choppy trade on Wednesday after data showed U.S. consumer price inflation cooled to the lowest annul rate in two years in April, though the core inflation, which excludes food and energy prices, remained high.

How are stock-indexes trading

On Tuesday, the Dow Jones Industrial Average fell 57 points, or 0.17%, to 33562, the S&P 500 declined 19 points, or 0.46%, to 4119, and the Nasdaq Composite dropped 77 points, or 0.63%, to 12180.

What’s driving markets

Stocks…

[ad_2]

Source link

May 10, 2023
‘AI for us is broader than cloud,’ AMD CEO tells analysts, but chip maker still needs PC recovery to improve margins

[ad_1]

AMD reports earnings and revenue that top expectations

[ad_2]

Source link

May 2, 2023
Chegg, Arista, Uber, Pfizer, DuPont, and More Stock Market Movers
[ad_1]
We’ve detected you are on Internet Explorer. For the best Barrons.com experience, please update to a modern browser.

We’ve detected you are on Internet Explorer. For the best Barrons.com experience, please update to a modern browser.Google Firefox

Summary

Summary

U.S

Europe

Asia

FX

Rates

Futures

ETFs

Crypto

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/stock-market-movers-7c17b0b6

Updated May 2, 2023 7:27 am ET / Original May 2, 2023 4:45 am ET

Order Reprints

Print Article

These Stocks Are Moving the Most Today: Chegg, Arista, Uber, Pfizer, DuPont, and More

Stock futures were falling Tuesday ahead of the start of the Federal Reserve’s two-day policy-setting meeting and after Treasury Secretary Janet Yellen said the U.

An error has occurred, please try again later.

Thank you

This article has been sent to
[ad_2]
Source link
May 2, 2023
Amazon stock turns around as CFO admits AWS growth rates are declining further

[ad_1]

Amazon.com Inc. shares zoomed higher in extended trading Thursday after the company posted its biggest quarterly profit since 2021, but shares turned around after the company’s chief financial officer said in a conference call that cloud revenue is decelerating in the current quarter.

Amazon AMZN reported that first-quarter revenue grew to $127.4 billion from $116.44 billion in the same quarter last year. Profit reached $3.17 billion, or 31 cents a share, improving from a loss of 38 cents a share a year ago, which was Amazon’s…

[ad_2]

Source link

April 27, 2023
Intel tops Wall Street estimates, CEO says data-center business is improving

[ad_1]

A previous version of this article included an inaccurate number for Intel’s second-quarter profit forecast. It has been updated.

Intel Corp. shares surged in the extended session Thursday, swinging from an initial loss after the chip maker topped Wall Street estimates for the quarter, and Chief Executive Pat Gelsinger assured analysts that the company’s data-center business was improving.

Intel…

[ad_2]

Source link

April 27, 2023
Amazon stock gives up gains as CFO admits AWS growth rates are declining further

[ad_1]

Amazon.com Inc. shares zoomed higher in extended trading Thursday after the company posted its biggest quarterly profit since 2021, but shares turned around after the company’s chief financial officer said in a conference call that cloud revenue is decelerating in the current quarter.

Amazon AMZN shares jumped more than 10% in after-hours trading immediately following the release of first-quarter results, but those gains disappeared after Chief Financial Officer Brian Olsavsky said in a conference call with analysts that…

[ad_2]

Source link

April 27, 2023
Alphabet’s stock rises as earnings show Google ad sales holding steady

[ad_1]

Alphabet Inc.’s stock rose 1.4% in extended trading Tuesday after Google’s parent company reported quarterly results that slightly topped analysts’ revenue and earnings estimates.

Alphabet also said its board of directors authorized $70 billion in share repurchases.

“Resilience in Search and momentum in Cloud resulted in Q1 consolidated revenues…

[ad_2]

Source link

April 25, 2023
EA laying off 6% of staff in cost-cutting push for videogame publisher

[ad_1]

Electronic Arts Inc. on Wednesday announced intentions to slash 6% of its workforce as the videogame publisher looks to cut costs.

“As we drive greater focus across our portfolio, we are moving away from projects that do not contribute to our strategy, reviewing our real estate footprint, and restructuring some of our teams,” Chief Executive Andrew Wilson said in a note to employees that was also shared publicly.

Wilson…

[ad_2]

Source link

March 29, 2023
Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

[ad_1]

The numbers: The U.S. created a robust 311,000 new jobs in February, raising the odds of another sharp hike in interest rates by the Federal Reserve later this month.

Economists polled by The Wall Street Journal had forecast 225,000 new jobs.

The increase in employment last month followed a revised 504,000 gain (initially 517,000) in January, the government said Friday.

The large back-to-back increases could force the Fed to raise interest rates higher than it had planned to slow the economy and loosen up the tightest labor market in decades. The central bank meets March 21-22 to plot its next move.

A sign advertises job openings outside a business in Illinois. Lots of companies are still hiring, but the economy has slowed and job creation is likely to as well.

Scott Olson/Getty Images

Yet there were a few glimmers of hope for the Fed.

The unemployment rate rose a few ticks to 3.6%. Hourly wages rose just 0.2% to mark the smallest increase in a year. And the share of able-bodied people in the labor force climbed to a three-year high.

All of these are pressure valves on the labor market and the broader economy from high inflation.

Investors appeared to put more weight on those factors than another big increase in employment. Stocks rose and bond yields fell.

Big picture: An expanding U.S. economy has shown lots of resilience in the face of rising interest rates, but analysts doubt the good times can last. Higher borrowing costs typically slow the economy by depressing consumer spending and business investment.

Just look at the housing market, where soaring mortgage rates have crushed sales and new construction. The same could happen to the rest of the economy if the Fed has to jack up rates more than Wall Street expects.

Already, a robust U.S. labor market is showing signs of fraying. Job postings have declined, lots of large companies have announced layoffs and workers who lose a job are taking longer to find a new one.

It just might not be enough for the Fed.

Market reaction: The Dow Jones Industrial Average
DJIA,
-1.66%
and S&P 500
SPX,
-1.85%
trimmed premarket losses in Friday trades. The yield on the 10-year Treasury fell to 3.78%.

Investors hope some signs of cooling in the labor market will encourage the Fed to keep raising interest rates in smaller increments.

[ad_2]

Source link

March 10, 2023
Walmart, Home Depot, Meta, DocuSign, Medtronic, and More Stock Market Movers
[ad_1]
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/stock-market-movers-5b0c54ae
Updated Feb. 21, 2023 9:16 am ET / Original Feb. 21, 2023 5:04 am ET

Order Reprints

Print Article
[ad_2]

Source link
February 21, 2023
C3.ai, BigBearAI, and SoundHound Stock Are Soaring in an AI Feeding Frenzy

[ad_1]

Investors are in a feeding frenzy over artificial-intelligence software plays, and you have to think this isn’t going to end well.

You can date the start of the AI stock craze to the Nov. 30 launch of ChatGPT, the generative AI chatbot created by the start up OpenAI. Recent data show that ChatGPT reached more than 100 million users in January, reaching that market faster than other buzzy apps like TikTok.

[ad_2]

Source link

February 6, 2023
Amazon stock falls as least profitable holiday quarter since 2014 leads to its worst annual loss on record

[ad_1]

Amazon.com Inc. reported its least profitable holiday quarter since 2014 on Thursday, leading to the biggest annual loss on record for the e-commerce giant, which also disappointed Wall Street with its forecast amid concerns about cloud growth.

Amazon
AMZN,
+7.38%
reported a holiday profit of $278 million, or 3 cents a share, down from $1.39 a share a year ago. Revenue increased to $149.2 billion from $137.41 billion a year ago. Analysts on average were expecting earnings of 17 cents a share on sales of $145.71 billion, according to FactSet.

Shares fell 5% in after-hours trading following the release of the results, after closing with a 7.4% increase at $112.91.

“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” Chief Executive Andy Jassy said in a statement.

Amazon was expected to post a loss for the whole year for the first time since 2014, but worse-than-expected holiday earnings actually led Amazon to the company’s worst annual loss on record. For the year, Amazon produced a net loss of $2.7 billion and revenue of $513.98 billion, up from $469.82 billion a year ago and the company’s first annual sales total to surpass a half-billion dollars. Amazon had never lost more than $1.4 billion in a single year since going public in 1997, according to FactSet records.

Amazon’s fourth-quarter profit was hindered again by the decline of Rivian Automotive Inc.
RIVN,
+5.94%
stock, which cost Amazon $2.3 billion in net income in the quarter. In addition, Amazon recognized many of the costs of its recently announced layoffs and other cost cuts in fourth-quarter results as well — a $2.7 billion impairment charge included $640 million in severance charges related to layoffs and $720 million related to closures and impairment of physical stores, Chief Financial Officer Brian Olsavsky said in a call with reporters.

Without those charges, Amazon would have exceeded expectations, and recognizing them in 2022 leaves a cleaner sheet for this year, when Amazon’s ability to return to strong profitability will be the focus of Wall Street. The end result will likely rest on Amazon Web Services, or AWS, the cloud-computing offering that has supplied the bulk of Amazon’s profit in recent years, including 2022. Last year, AWS had operating profit of $22.84 billion, while the rest of the business produced an operating loss of $10.59 billion.

But cloud-computing growth has slowed, as Microsoft Corp.
MSFT,
+4.69%
displayed in its results and forecast last week, and Olsavsky confirmed the slowdown Thursday after AWS results missed expectations and suggested revenue growth had slowed to mid-teens and could stay there.

“Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions,” he said in a conference call with analysts. “As expected, these optimization efforts continued into the fourth quarter.”

Olsavsky told reporters he expected “slower growth rates for the next few quarters” for AWS, and later disclosed to analysts that revenue growth was in the mid-teens in the first month of this year. He noted that AWS revenue growth rates had been hit by customers looking to cut their cloud spending, and “we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters.”

Opinion: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

Making his first appearance on an earnings call since being named CEO two years ago, Jassy — who led AWS before being promoted to replace Jeff Bezos as CEO — said “if it’s good for our customers to find a way to be more cost effective in an uncertain economy, our team is going to spend a lot of cycles doing that.”

“We’re the only ones that really break out our cloud numbers in a more specific way, so it’s always a little bit hard to answer your question about what we see,” Jassy said to an analyst asking about the larger cloud industry, while referencing rival Microsoft’s refusal to provide full financial information about Azure. “But to our best estimations, when we look at the absolute dollar growth year over year, we still have significantly more absolute dollar growth than anybody else we see in this space.”

In the fourth quarter, AWS produced operating income of $5.21 billion on revenue of $21.38 billion, with sales growing more than 20% and operating income declining slightly. Analysts on average were expecting profit of $5.73 billion on sales of $21.85 billion, according to FactSet.

Any slowdown in AWS would hit Amazon’s bottom line as well as its overall top line, and executives’ forecast for the first quarter shows less optimism than Wall Street expected. Amazon’s guidance calls for operating profit of break-even to $4 billion and revenue of $121 billion to $126 billion, while FactSet recorded an average analyst forecast of $4.04 billion in operating profit on sales of $125.09 billion.

Amazon’s e-commerce business has struggled for growth amid the worst inflation in decades, with Olsavsky saying in a call with reporters that Amazon “saw customers spend less on discretionary items… [while] continuing to spend on everyday essentials.” Amazon recently announced it would start charging for grocery delivery for Prime members, which could increase revenue from sales of fresh food.

For more: Amazon Fresh to start charging Prime customers up to $10 for grocery deliveries

Amazon’s domestic e-commerce business posted an operating loss of $240 million on sales of $93.36 billion, after a $206 million loss on sales of $82.36 billion in the holiday quarter of 2021. Olsavsky said cuts in the company’s physical stores and device businesses would improve operating margins in North America.

Amazon’s international efforts struggled more, with a sales decline and increasing losses, as Olsavsky said the U.K. and other parts of Europe showed slowdowns. Amazon reported an operating loss of $2.23 billion on revenue of $34.46 billion overseas, after a loss of $1.63 billion on sales of $37.27 billion a year ago.

One bright spot in Amazon’s report was a record quarter for its advertising business, which has grown fast in recent years in a challenge to Alphabet Inc.’s
GOOGL,
+7.28%
GOOG,
+7.27%
Google and other online ad giants. Ads brought in $11.56 billion in the holiday quarter, growing nearly 19% from $9.71 billion a year ago and beating the analysts’ consensus.

Amazon stock has fallen more than 25% over the past 12 months, but has experienced a rebound so far in 2023, gaining more than 33% year to date. The S&P 500 index
SPX,
+1.47%
has declined 10.2% in the past year while gaining 7.3% since the calendar flipped to 2023.

[ad_2]

Source link

February 2, 2023
AMD CEO promises to keep taking data-center from Intel even as cloud demand pauses following ‘strong’ 2022

[ad_1]

Advanced Micro Devices Inc. shares rose in the extended session Tuesday after the chip maker’s data-center sales gained and executives forecast sales of more than $5 billion to start 2023, even as cloud-customer demand begins the year light.

AMD shares AMD rose 3% after hours, following a 3.7% gain in the regular session to close at $75.15.

AMD…

[ad_2]

Source link

January 31, 2023