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Tag: computers

  • Apple and Google stocks just had their worst week in more than two years

    Apple and Google stocks just had their worst week in more than two years

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    Shares of Apple Inc. and Alphabet Inc. both suffered their largest weekly declines since the beginning days of the pandemic this week, as Big Tech companies continued to draw closer scrutiny from Wall Street.

    Apple’s stock
    AAPL,
    -0.19%
    finished down 11.2% on the week, its worst weekly performance since the week that ended March 20, 2020, according to Dow Jones Market Data. The stock declined 17.5% during that early-pandemic stretch.

    Shares of Apple fell during all five sessions this week.

    Shares in Google parent Alphabet
    GOOG,
    +3.84%

    GOOGL,
    +3.78%
    declined 10.1% during the week, their worst one-day percentage drop since that same March 20, 2020 week, when they fell 12.03%. The stock’s biggest weekly tumble in more than two years came even as Alphabet snapped a four-session losing streak in Friday trading.

    While Apple’s stock has fared better than that of Alphabet and other Big Tech peers, the company faces potential pandemic-related challenges owing to new COVID-19 setbacks at manufacturer Foxconn’s major facility. In addition, the realities of the current economic climate may be catching up to Apple, as Bloomberg News reported Thursday that the company had paused hiring in several areas unrelated to research and development.

    See more: Apple reportedly pauses hiring for many roles, joining Amazon in belt-tightening

    Though there didn’t seem to be any major news developments pegged to Alphabet specifically in the past week, investors are putting more pressure on big internet companies, according to Bernstein analyst Mark Shmulik. He recently conducted a Big Tech “autopsy” of results from Alphabet, Amazon.com Inc.
    AMZN,
    +1.88%    ,
    and Meta Platforms Inc.
    META,
    +2.11%    ,
    concluding that “perfection is required from here” for the three tech giants since Wall Street has less patience for weak performance in any one of their many business areas.

    Read: Amazon closes below $1 trillion valuation for the first time since 2020

    All three names suffered negative stock reactions in the wake of their latest earnings reports, which indicated challenges in the ad market due to economic pressures. At Alphabet specifically, “Search was more or less in-line with the buy-side bogey and the Cloud beat, but disappointing YouTube results combined with margin contraction drove a ~10% fall after-hours,” Shmulik wrote.

    Alphabet’s stock has declined 40% so far in 2022, while Apple’s is off 22% over the same span. The S&P 500
    SPX,
    +1.36%
    is down 21% on the year while the Dow Jones Industrial Average
    DJIA,
    +1.26%
    is off 11%.

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  • Atlassian stock suffers worst day ever, nearly $13 billion in valuation wiped away

    Atlassian stock suffers worst day ever, nearly $13 billion in valuation wiped away

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    Atlassian Corp. shares dropped nearly 30% Friday, after the business-collaboration software company’s earnings and revenue outlook fell short of Wall Street expectations and executives described signs of economic weakness taking hold.

    Atlassian
    TEAM,
    -28.96%
    shares plummeted to an intraday low of $117.11 in Friday trading, nearly 33% lower than Thursday’s closing price and the lowest price for Atlassian stock since March of 2020. At the close, shares were trading for $123.73, a 29% descent that is easily the worst daily percentage decline on record for Atlassian stock — the previous mark was a 15.9% decline on Feb. 5, 2016.

    Atlassian — known for software programs such as Jira — was worth roughly $44 billion at its closing price Thursday, so Friday’s decline represented a loss of nearly $13 billion in market capitalization, $12.86 billion to be exact. Atlassian shares had already declined 54.3% so far this year as of Thursday’s close, while the S&P 500 index
    SPX,
    +1.36%
    declined 21.1%.

    Atlassian executives forecast revenue of $835 million to $855 million for their fiscal second quarter, while analysts expected $879.3 million on average, according to FactSet. Executives also decreased their revenue guidance for the full year, without providing a specific figure for overall annual revenue; instead, they gave color in a letter to shareholders about the different revenue segments within the company.

    In that letter to shareholders, Atlassian’s co-chief executives and co-founders, Mike Cannon-Brooks and Scoot Farquhar, said that the company tracked slower conversions from free to paid subscriptions for its “freemium” software, and slower growth from its paying customers in the quarter.

    “The above two trends are the result of companies tightening their belts and slowing their pace of hiring. In other words, Atlassian is not immune to broader macroeconomic impacts,” they wrote. “Our outlook assumes these trends will persist, but we’ll monitor, respond and keep you updated accordingly.”

    “We will focus our investments on strengthening our market position and scooping up top-tier talent in this environment. But we will balance these investments with the growth of our business and be responsive to the macroeconomic conditions,” they continued. “So while we’re lowering our revenue outlook for FY23 based on macroeconomic headwinds, we are maintaining our midteens % operating margin outlook for the year.”

    Chief Financial Officer Joe Binz detailed planned cost cuts and a hiring slowdown in response during a conference call Thursday afternoon.

    “First and foremost, we’re making reductions in our non-head count-driven discretionary spending,” he said in response to an analyst’s question. “And then, secondarily, we’ll be moderating the rate of planned head count growth in the second half of FY 2023.”

    Executives reported a fiscal first-quarter loss of $13.7 million, or 5 cents a share, compared with a loss of $411.2 million, or $1.63 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 36 cents a share, compared with 37 cents a share in the year-ago period.

    Revenue rose to $807.4 million from $614 million in the year-ago quarter. Analysts surveyed by FactSet had forecast adjusted earnings of 40 cents a share on revenue of $806.3 million.

    “These results came as a bit of a shock, and are frankly something we thought we’d never see from a high-performing company like TEAM that also possesses a unique value proposition and business model,” Mizuho analysts wrote while chopping their price target on the stock to $255 from $320 but maintaining a “Buy” rating on the stock.

    “Despite the big setback, we believe TEAM is likely to be one of the biggest
    winners once the macro environment improves,” they wrote. “Why? Most notably, we would highlight a very strong competitive position in the important DevOps market, a still vibrant top-of-funnel (35K net new paid customers added over the LTM), a multiyear cloud migration catalyst, and meaningful pricing power as key growth drivers.”

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  • Qualcomm stock plunges to lowest price in more than two years as magnitude of smartphone shortfall shocks Wall Street

    Qualcomm stock plunges to lowest price in more than two years as magnitude of smartphone shortfall shocks Wall Street

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    Wall Street had braced for a bumpy ride as Qualcomm Inc. navigated an oversupplied market for smartphone chips, but the chip maker’s stock still got T-boned Thursday after a disappointing holiday forecast.

    Qualcomm
    QCOM,
    -6.01%
    shares fell as much as 9.4% Thursday morning to an intraday low of $101.93, the lowest price for the company’s shares since July 2020. Investors were reacting to executives saying the company had up to 10 weeks of inventory in the channel, and that its record handset sales would be followed up by, at best, a $2 billion shortfall in the current quarter, compared with the Wall Street consensus at the time.

    “A weak market, and even a potential inventory correction, was likely not entirely unexpected,” Bernstein analyst Stacy Rasgon wrote, while adding that “the magnitude is probably worse than what some might have had in mind (though it is certainly not confined to Qualcomm, with virtually all handset-exposed players showing similar dynamics).”

    Rasgon cut his price target on the stock to $140 from $165, while pointing out that executive color suggested that Qualcomm would keep Apple Inc.’s
    AAPL,
    -3.63%
    business through at least the next iPhone cycle, an important note as the iPhone maker seeks to start building its own wireless components.

    More than half of the analysts who cover Qualcomm cut their price targets in reaction to the report, according to FactSet tracking. Evercore ISI analyst C.J. Muse cut his target to $120 from $130 while maintaining an in-line rating; he wrote that while Qualcomm set up for a miss, as it did last quarter, the actual read was much worse than expected.

    “While the buyside was clearly set up for a miss, the magnitude for the December Q was clearly a lot worse than expected with revenues/EPS guided 20%/32% below consensus,” Muse said.

    Read: More about Qualcomm earnings

    “Here, management highlighted demand weakness (CY22 handsets now expected down low double-digits% vs. prior down mid-single digits%; largely Android market and includes premium tier) and elevated channel inventory (now 8-10 weeks oversupply) as the key drivers of weakness,” the Evercore analyst noted.

    Of the 32 analysts who cover Qualcomm, 20 have buy-grade ratings and 12 have hold ratings. Of those 32 analysts, 19 cut price targets resulting in an average target price of $153.75, down from a previous $172.71, according to FactSet data.

    Qualcomm stock has declined more than 42% so far this year, in line with a 41.2% decline for the PHLX Semiconductor Index
    SOX,
    -0.65%    ,
    but well past the 21.1% year-to-date decline for the S&P 500 index
    SPX,
    -0.50%    .

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  • Tim Cook has been an excellent leader for Apple — these numbers prove it

    Tim Cook has been an excellent leader for Apple — these numbers prove it

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    How good is a company’s chief executive officer at investing your money most efficiently? This is an important question for long-term investors. It may underline the difference between a steady long-term performer and a flash in the pan.

    And Apple Inc.
    AAPL,
    -4.24%
    now makes up 7% of the SPDR S&P 500 ETF Trust
    SPY,
    -1.03%    ,
    the first and largest exchange-traded fund (with $360 billion in assets), which tracks the benchmark S&P 500
    SPX,
    -1.06%    .
    That’s close to an all-time record, and the iPhone maker has a whopping 14.1% position in the Invesco QQQ Trust
    QQQ,
    -1.95%    ,
    which tracks the Nasdaq-100 Index
    NDX,
    -1.98%    .
    Looking at the full Nasdaq Index
    COMP,
    -1.73%    ,
    which has 3,747 stocks, Apple takes a 13.5% position.

    Apple now makes up 7.3% of the S&P 500 by market capitalization, close to the 8% record it set late in September.


    FactSet

    This is very much an Apple stock market, with the company topping the broad indexes that are weighted by market capitalization. You are likely to be invested in the company indirectly. You also might be feeling Apple’s impact in other ways. Apple’s App Store ecosystem drives more than $600 billion in annual revenue for developers.

    Tim Cook’s tenure as Apple’s CEO has been nothing short of breathtaking when measured by the company’s financial performance. Apple is not one of the fastest-growing companies when measured by sales or earnings — it is too big for that. But its excellent stock performance has reflected Cook’s ability to deploy invested capital with improving efficiency. Cook has also been a market trendsetter in other important ways. He has Apple repurchasing $90 billion of its shares annually, setting the pace for stock buybacks in the market. Cook’s steady hand has also helped Apple withstand the market’s tech wreck and remain a stable pillar for the teetering Nasdaq Composite index generally. For all these reasons, Cook has earned a spot on the MarketWatch 50 list of the most influential people in markets. 

    Apple keeps improving by this important measure

    Investors in the stock market are looking for growth over the long term. The best measure of that is whether or not a company’s share price goes up or down. But Cook isn’t just managing Apple’s stock. Digging a bit deeper into the company’s actual operating performance can provide some insight into what a good job Cook has done.

    What should a corporate manager focus on? The stock price? How about the most efficient and most profitable way to provide goods and services? There are different ways to do this, and Apple has focused on quality, reliability and excellent service to build customer loyalty.

    Apple’s commitment can be experienced by anyone who calls the company for customer service. It is easy to get through to a well-trained representative who will solve your problem. How many companies can say that at a time when it seems many companies cannot even handle answering the phone? 

    Getting back to actual performance, Cook took over as Apple’s CEO in August 2011 when Steve Jobs stepped down. The chart below shows the company’s quarterly returns on invested capital from the end of 2010 through September 2022.

    Apple’s returns on invested capital have increased markedly over the past six years.


    FactSet

    A company’s return on invested capital (ROIC) is its profit divided by the sum of the carrying value of its common stock, preferred stock, long-term debt and capitalized lease obligations. ROIC indicates how well a company has made use of the money it has raised to run its business. It is an annualized figure, but available quarterly, as used in the chart above.

    The carrying value of a company’s stock may be a lot lower than its current market capitalization. The company may have issued most of its shares long ago at a much lower share price than the current one. If a company has issued shares recently or at relatively high prices, its ROIC will be lower.

    A company with a high ROIC is likely either to have a relatively low level of long-term debt or to have made efficient use of the borrowed money.

    Among companies in the S&P 500 that have been around for at least 10 years, Apple placed within the top 20 for average ROIC for the previous 40 reported fiscal quarters as of  Sept. 1.

    As you can see on the chart, Apple’s ROIC has improved dramatically over the past five years, even as the wide adoption of the company’s products and services has led to an overall slowdown in sales growth.

    A quick comparison with other giants in the benchmark index

    It might be interesting to see how Apple stacks up among other large companies, in part because some businesses are more capital-intensive than others. For example, over the past four quarters, Apple’s ROIC has averaged 52.9%, while the average for the S&P 500 has been a weighted 12.1%, by FactSet’s estimate.

    Here are the 10 companies in the S&P 500 reporting the highest annual sales for their most recent full fiscal years, with a comparison of average ROIC over the past 40 reported quarters:

    Company

    		 Ticker

    		 Annual sales ($mil)

    		 Avg. ROIC – 40 quarters

    		 Total Return – 10 Years
    Walmart Inc.

    		 WMT,
    -0.02%         		$572,754

    		 11.0%

    		 142%
    Amazon.com Inc.

    		 AMZN,
    -3.06%         		$469,822

    		 6.8%

    		 693%
    Apple Inc.

    		 AAPL,
    -4.24%         		$394,328

    		 33.0%

    		 721%
    CVS Health Corp.

    		 CVS,
    +1.03%         		$291,935

    		 6.8%

    		 161%
    UnitedHealth Group Inc.

    		 UNH,
    +0.03%         		$287,597

    		 13.7%

    		 1,031%
    Exxon Mobil Corp.

    		 XOM,
    +1.36%         		$280,510

    		 9.9%

    		 85%
    Berkshire Hathaway Inc. Class B

    		 BRK.B,
    -1.94%         		$276,094

    		 8.2%

    		 233%
    McKesson Corp.

    		 MKC,
    -0.61%         		$263,966

    		 6.6%

    		 353%
    Alphabet Inc. Class A

    		 GOOGL,
    -4.07%         		$257,488

    		 16.6%

    		 405%
    Costco Wholesale Corp.

    		 COST,
    +0.57%         		$226,954

    		 16.2%

    		 558%
    Source: FactSet

    Among the largest 10 companies in the S&P 500 by annual sales, Apple takes the top ranking for average ROIC over the past 10 years, while ranking second for total return behind UnitedHealth Group Inc.
    UNH,
    +0.03%
    and ahead of Amazon.com Inc.
    AMZN,
    -3.06%    .
    UnitedHealth has been able to remain at the forefront of managed care during the period of transition for healthcare in the U.S., in the wake of President Barack Obama’s signing of the Affordable Care Act into law in 2010.

    Here’s a chart showing 10-year total returns for Apple, UnitedHealth Group, Amazon and the S&P 500:


    FactSet

    Apple is only slightly ahead of Amazon’s 10-year total return. But what is so striking about this chart is the volatility. Apple has had a smoother ride. During the bear market of 2022, Apple’s stock has declined 18%, while the S&P 500 has gone down 20%, the Nasdaq has fallen 32% (all with dividends reinvested) and Amazon has dropped 45%.

    The broad indexes would have fared even worse so far this year without Apple.

    TO SEE THE FULL MARKETWATCH 50 LIST CLICK HERE

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  • Qualcomm stock drops more than 7% after poor outlook, months-long chip glut

    Qualcomm stock drops more than 7% after poor outlook, months-long chip glut

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    Qualcomm Inc. shares fell in the extended session Wednesday following the chip maker’s poor outlook, and estimates of about two months or more of inventory it needs to clear in its core business.

    Qualcomm
    QCOM,
    -4.12%
    shares dropped 7.6% after hours, following a 4.1% decline to close at $112.50 in the regular session. In late July, the San Diego-based chip maker cut its forecast because of weakness in the smartphone market that had yet to creep into the premium handset market.

    On the call with analysts, Chief Executive Cristiano Amon said the accelerated weak demand was related to “macro economic headwinds and the prolonged COVID in China,” and “the rapid deterioration in demand and easing of supply constraints” across the chip industry.” would take out about 80 cents a share in first-quarter earnings.

    “It’s the major factor,” Amon told analysts on the call. “It’s mostly a handset consumer story.” Earnings for the first quarter, as a results, would take a hit of 80 cents a share, the company said.

    Another big factor is that companies are just spending less. Amon said “companies across the board had much higher inventory policies, supply chain got resolved, and you got that macro economic uncertainty, you have a drawdown trying to bring inventory to a different level than it was during the situation of demand constraint.”

    Qualcomm forecast first-quarter earnings of $3 to $3.30 a share on revenue of $9.2 billion to $10 billion, while the Street estimated $3.43 a share on revenue of $12.02 billion.

    Read: Meta spending slams Facebook stock, but here are the chip stocks that are benefiting

    Chief Financial Officer Akash Palkhiwala told analysts there is about eight to 10 weeks of elevated in the channel. In the meantime, Qualcomm was instituting a hiring freeze, and looking into cost-saving measures, execs told analysts.

    While handset-chip sales surged 40% to a record $6.57 billion from a year ago, topping the Street’s expectation of $6.55 billion, the company’s forecast indicates a big glut in inventory in Qualcomm’s CDMA Technologies unit, the one that includes handset and RF chips as well as chips for autos and Internet of Things.

    Qualcomm expects QCT sales of $7.7 billion to $8.3 billion, and sales from Qualcomm’s technology licensing, or QTL, segment of $1.45 billion to $1.65 billion. Analysts had forecast forecast $10.42 billion in QCT sales and QTL revenue of $1.71 billion.

    Qualcomm reported fourth-quarter QCT revenue of $9.9 billion, a 28% gain from a year ago. Analysts had estimated $9.84 billion, based on the company’s forecast of $9.5 billion to $10.1 billion.

    Fourth-quarter auto-chip sales zoomed up 58% to a record $427 million, and Internet of Things, or IoT, sales rose 24% to a record $1.92 billion. The Street was expecting auto sales of $362.4 million, and IoT sales of $1.82 billion.

    Revenue from the QTL segment fell 8% to $1.44 billion compared with Wall Street estimates of $1.58 billion, based on a company forecast of $1.45 billion to $1.65 billion.

    Read about: Intel’s quarterly results, AMD’s quarterly results

    The company reported fiscal fourth-quarter net income of $2.87 billion, or $2.54 a share, compared with $2.8 billion, or $2.45 a share, in the year-ago period. The chip maker reported adjusted earnings, which exclude stock-based compensation expenses and other items, of $3.13 a share, compared with $2.55 a share in the year-ago period. Total revenue for the third quarter rose to $11.4 billion from $9.34 billion in the year-ago period.

    Analysts had estimated earnings of $3.13 a share on revenue of $11.32 billion, based on Qualcomm’s forecast of $3 to $3.30 a share on revenue of $11 billion to $11.8 billion.

    Year to date, Qualcomm shares are down 38%, compared with a 41% decline for the PHLX Semiconductor Index 
    SOX,
    -3.09%    ,
     a 21% decline by the S&P 500 index 
    SPX,
    -2.50%
     and a 33% drop by the tech-heavy Nasdaq Composite Index 
    COMP,
    -3.36%    .

    Shares of Advanced Micro Devices Inc.
    AMD,
    -1.73%
    outperformed the broader market Wednesday after the chip maker said it would clear excess inventory by the end of the year, and forecast that data-center and embedded product sales would continue to rise.

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  • Roku stock plunges as downbeat earnings forecast assumes ad budgets could ‘degrade’

    Roku stock plunges as downbeat earnings forecast assumes ad budgets could ‘degrade’

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    Roku Inc. shares plummeted 19% in after-hours trading Wednesday after the streaming company topped expectations with its latest results but gave a weaker-than-anticipated outlook for the holiday quarter as economic conditions could further “degrade advertising budgets.”

    For the fourth quarter, Roku executives anticipate $800 million in revenue and a loss of $135 million on the basis of adjusted Ebitda. The FactSet consensus called for $899 million in revenue as well as a $48 million adjusted Ebitda loss.

    “As we enter the holiday season, we expect the macro environment to further pressure consumer discretionary spend and degrade advertising budgets, especially in the TV scatter market,” the company said in its shareholder letter. “We expect these conditions to be temporary, but it is difficult to predict when they will stabilize or rebound.”

    Chief Financial Officer Steve Louden shared on a call with reporters following the release that the company’s forecast “reflects the fact that we see a lot of challenges in the macro environment.”

    He explained that Roku tends to be more exposed to the scatter ad market — which represents ads bought during the quarter — than the typical TV network. Scatter spending is easy for marketers to turn on, but also easier for them to turn off, he noted.

    The forecast overshadowed the results from Roku’s third quarter, which were broadly better than expected.

    The company posted a net loss of $122.2 million, or 88 cents a share, whereas it logged net income of $68.9 million, or 48 a share, in the year-earlier period. Analysts tracked by FactSet were expecting a $1.29 loss on a per-share basis.

    Roku also reported a loss of $34 million on the basis of adjusted earnings before interest, taxes, depreciation and amortization. The company had posted positive adjusted Ebitda of $130 million in the year-before quarter. The FactSet consensus was for a $74 million loss on the non-GAAP metric.

    Revenue rose to $761 million from $680 million, while analysts were anticipating $696 million.

    The company generated $670 million in platform revenue and $91 million in player revenue. Analysts were expecting platform revenue of $613 million and player revenue of $87 million.

    Roku had 65.4 million active accounts in the latest quarter, up from 63.1 million in the second quarter. Average revenue per user was $44.25 on a trailing-12-month basis, compared with $44.10 in the second quarter and $40.10 in the prior year’s third quarter.

    Analysts were anticipating 64 million active accounts and $43.40 in average revenue per user.

    Louden noted on the media call that the account numbers “outperformed expectations.” The company has seen “strong sales of smart TVs both in the U.S. and internationally,” with Louden adding that “it’s hard to tell how much is driven by a shift back to home or back to streaming, which is a very good value proposition if money is tight.”

    Viewers spent 21.9 billion hours streaming content through Roku’s platform in the period. The FactSet consensus was for 20.9 billion hours streamed.

    As companies like Netflix Inc.
    NFLX,
    -4.80%
    and Walt Disney Co.
    DIS,
    -3.94%
    explore ad-supported streaming more deeply, Louden sees opportunity for Roku to be of further value.

    “That changes their focus a bit from only thinking about subscribers to thinking about engagement” and he sees Roku’s team members as “experts in understanding how consumers look at that.”

    The company also noted in its shareholder letter that CFO Louden intends to leave Roku at some point in 2023 after helping to recruit and train his successor.

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  • Qualcomm stock drops more than 7% after poor outlook, months-long chip glut

    Qualcomm stock drops more than 7% after poor outlook, months-long chip glut

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    Qualcomm Inc. shares fell in the extended session Wednesday following the chip maker’s poor outlook, and estimates of about two months or more of inventory it needs to clear in its core business.

    Qualcomm
    QCOM,
    -4.12%
    shares dropped 7.6% after hours, following a 4.1% decline to close at $112.50 in the regular session. In late July, the San Diego-based chip maker cut its forecast because of weakness in the smartphone market that had yet to creep into the premium handset market.

    On the call with analysts, Chief Executive Cristiano Amon said the accelerated weak demand was related to “macro economic headwinds and the prolonged COVID in China,” and “the rapid deterioration in demand and easing of supply constraints” across the chip industry.” would take out about 80 cents a share in first-quarter earnings.

    “It’s the major factor,” Amon told analysts on the call. “It’s mostly a handset consumer story.” Earnings for the first quarter, as a results, would take a hit of 80 cents a share, the company said.

    Another big factor is that companies are just spending less. Amon said “companies across the board had much higher inventory policies, supply chain got resolved, and you got that macro economic uncertainty, you have a drawdown trying to bring inventory to a different level than it was during the situation of demand constraint.”

    Qualcomm forecast first-quarter earnings of $3 to $3.30 a share on revenue of $9.2 billion to $10 billion, while the Street estimated $3.43 a share on revenue of $12.02 billion.

    Read: Meta spending slams Facebook stock, but here are the chip stocks that are benefiting

    Chief Financial Officer Akash Palkhiwala told analysts there is about eight to 10 weeks of elevated in the channel. In the meantime, Qualcomm was instituting a hiring freeze, and looking into cost-saving measures, execs told analysts.

    While handset-chip sales surged 40% to a record $6.57 billion from a year ago, topping the Street’s expectation of $6.55 billion, the company’s forecast indicates a big glut in inventory in Qualcomm’s CDMA Technologies unit, the one that includes handset and RF chips as well as chips for autos and Internet of Things.

    Qualcomm expects QCT sales of $7.7 billion to $8.3 billion, and sales from Qualcomm’s technology licensing, or QTL, segment of $1.45 billion to $1.65 billion. Analysts had forecast forecast $10.42 billion in QCT sales and QTL revenue of $1.71 billion.

    Qualcomm reported fourth-quarter QCT revenue of $9.9 billion, a 28% gain from a year ago. Analysts had estimated $9.84 billion, based on the company’s forecast of $9.5 billion to $10.1 billion.

    Fourth-quarter auto-chip sales zoomed up 58% to a record $427 million, and Internet of Things, or IoT, sales rose 24% to a record $1.92 billion. The Street was expecting auto sales of $362.4 million, and IoT sales of $1.82 billion.

    Revenue from the QTL segment fell 8% to $1.44 billion compared with Wall Street estimates of $1.58 billion, based on a company forecast of $1.45 billion to $1.65 billion.

    Read about: Intel’s quarterly results, AMD’s quarterly results

    The company reported fiscal fourth-quarter net income of $2.87 billion, or $2.54 a share, compared with $2.8 billion, or $2.45 a share, in the year-ago period. The chip maker reported adjusted earnings, which exclude stock-based compensation expenses and other items, of $3.13 a share, compared with $2.55 a share in the year-ago period. Total revenue for the third quarter rose to $11.4 billion from $9.34 billion in the year-ago period.

    Analysts had estimated earnings of $3.13 a share on revenue of $11.32 billion, based on Qualcomm’s forecast of $3 to $3.30 a share on revenue of $11 billion to $11.8 billion.

    Year to date, Qualcomm shares are down 38%, compared with a 41% decline for the PHLX Semiconductor Index 
    SOX,
    -3.09%    ,
     a 21% decline by the S&P 500 index 
    SPX,
    -2.50%
     and a 33% drop by the tech-heavy Nasdaq Composite Index 
    COMP,
    -3.36%    .

    Shares of Advanced Micro Devices Inc.
    AMD,
    -1.73%
    outperformed the broader market Wednesday after the chip maker said it would clear excess inventory by the end of the year, and forecast that data-center and embedded product sales would continue to rise.

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  • Digitunity to Host Webinar Series Highlighting Digital Divide Survey Findings

    Digitunity to Host Webinar Series Highlighting Digital Divide Survey Findings

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    The national digital inclusion organization will share findings on how cities and community groups are working to close the ‘digital divide.’

    Press Release
    –

    Nov 2, 2022 08:00 EDT


    CONWAY, N.H., November 2, 2022 (Newswire.com)
    –
    Digitunity, a national nonprofit organization that advances digital equity through device ownership, and network science agency Visible Network Labs (VNL) are hosting a series of webinars to present findings from a survey on how 10 U.S. cities are working to close the digital divide.

    The digital divide is the disparity between those who have ready access to computers and the internet, and those who do not. Studies show that this deep, persistent inequity keeps under-resourced people from achieving economic and educational success.

    “When the COVID-19 pandemic began, it highlighted a longstanding issue in our country, which is that millions of people in America are still unable to benefit from the opportunities that the internet provides,” said Scot Henley, Executive Director of Digitunity. “The survey findings explore the relationships across sectors in each city and create opportunities for new or improved partnerships to embrace the power of collective action to achieve digital equity.”  

    Conducted during the summer of 2022, participants of the survey included nonprofits, government offices, businesses, and other organizations in each of the cities that: 

    • Are currently involved in or leading their city’s digital equity efforts.
    • Would like to be involved in digital equity efforts.
    • Have resources to provide to advance digital equity.
    • Have opinions about or a stake in digital equity in their city.

     Details about each upcoming webinar, including registration links, can be found below:

    • Thursday, Nov. 3, 3-4 p.m. EDT
    • Friday, Nov. 4, 12-1 p.m. EDT
    •  Thursday, Nov. 10, 2-3 p.m. EST
    •  Thursday, Nov. 10, 3-4 p.m. EST

    A critical step towards advancing digital equity is ensuring everyone has access to a large-screen device, such as a desktop, laptop, or tablet. The survey led to the creation of network maps for each city along with geographic information system (GIS) maps. Through this visualization tool, stakeholders and community groups have a better understanding of who is involved and connected.

    “Working with a network of partners is essential to building a collaborative advantage,” said Dr. Amanda Beacom, Vice President of Research & Data Science, VNL, “Most organizations build networks using a ‘more is better’ mentality that saps their time and resources. The community partner relationship manager is designed to track, map, and adapt networks in real-time using network science data and insights.”

    Having a connected computer and the skills to use it productively is a fundamental need. The issue of the digital divide disproportionately affects communities of color but persists across all boundaries. Digitunity remains committed to eliminating the technology gap, so everyone can thrive in a digitally connected society. To learn more, please visit www.digitunity.org. 

    About Digitunity

    Since the 1980s, Digitunity has advanced digital inclusion by connecting donors of technology with organizations serving people in need. Our mission is to ensure everyone who needs a computer has one, along with robust internet connectivity and digital literacy skills. To learn more about our mission, please visit www.digitunity.org. 

    About Visible Network Labs (VNL)

    Visible Network Labs is a team of network scientists, developers, data analysts, evaluators, and technologists working together with a shared mission of building society’s capacity to transform and strengthen social connectedness at all levels of life. VNL focuses on creating new tools, training, and services to make network science and analysis accessible to those who need it.

    They worked with the Bill and Melinda Gates Foundation to evaluate their Networks for School Improvement portfolio and guide their strategy moving forward. They also worked with LA County to strengthen the LA Mamas collaborative health partnership for low-income mothers in the Los Angeles metro area. To learn more, please visit https://visiblenetworklabs.com. 

    Source: Digitunity

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  • Apple stock surges toward best day since 2020 as it’s dubbed rare ‘bright spot’ amid Big Tech ‘carnage’

    Apple stock surges toward best day since 2020 as it’s dubbed rare ‘bright spot’ amid Big Tech ‘carnage’

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    Which Big Tech company is not like the others?

    Apparently it’s Apple Inc.
    AAPL,
    +7.56%    ,
    which is set to become the only mega-cap technology company not to see a sharp post-earnings decline in its stock price this week, after the smartphone giant delivered a somewhat mixed earnings report but seemed to reassure Wall Street just enough about the state of its demand.

    Read: Apple earnings beat as record back-to-school Mac sales outweigh a slight miss on iPhones

    The stock was up 7.6% in Friday morning trading and on track to log its largest single-day percentage gain since July 31, 2020, when it increased 10.5%, according to Dow Jones Market Data.

    Apple is “the bright spot amid mega-cap carnage,” wrote Wells Fargo analyst Aaron Rakers, as Apple topped expectations with its headline results despite the backdrop of “a lot of macro/geopolitical uncertainties” as well as foreign-exchange pressures.

    While Apple fell short with its iPhone sales numbers for the September quarter, Rakers noted that the company has been constrained by supply for its Pro models. At the same time, he noted that Mac revenue easily exceeded the consensus view, which supported his thesis that “Apple is solidly positioned as share taker in PCs.”

    He further pointed out that Apple results were burdened by a deeper-than-expected impact from foreign exchange. But “look past the FX headwinds & you’ll see why everyone is hiding in Apple,” he said.

    Rakers rates the stock at overweight with a $185 price target.

    Evercore ISI’s Amit Daryanani called Apple “the last FAANG standing.”

    “Overall, revenue and EPS estimates will shift higher from current levels and given the broadly disappointing EPS calls from big tech this was an impressive set of numbers and guide,” he wrote in his note to clients.

    Though Apple didn’t give formal financial guidance, it offered various pieces of commentary around the December quarter, including that it could see a 10-point headwind from foreign exchange in the period and recognize a “few hundred” basis points of impact from an extra week being added to the quarter, even as Mac revenue is set for a substantial decline.

    “All this results in our assessment that revenue growth will be mid-single digits (our model is at 5% vs. Street was at 2%),” Daryanani wrote.

    Admittedly, it’s not just about the December quarter, he noted.

    “Eventually the question will be on durability of demand beyond Dec-qtr and the impact from macro not just on iPhones but also services,” Daryanani wrote, though he likes Apple’s long-term potential to grow sales at a mid- or high-single-digit clip and grow earnings at a mid- to low-teens rate.

    He rates the stock at outperform with a $190 target.

    Wedbush’s Dan Ives wrote that Apple was “the one bright spot” amid “a horror show week for Big Tech earnings.”

    “Given the perfect storm of currency/macro this quarter, we would characterize Apple’s results and commentary around the December quarter as net bullish around underlying demand and help throw out the noise that iPhone 14 upgrades are slowing in this cycle,” he wrote, while keeping an outperform rating but cutting his price target to $200 from $220 to reflect a lower multiple.

    The latest results could help change what Citi Research analyst Jim Suva said was a relatively negative attitude towards Apple’s stock when compared to the rest of Big Tech.

    “The amount of investor negativity on mega-cap tech stocks, especially Apple, is well known as recent surveys show Apple as the least favored stock amongst its peers,” he wrote. “Yes there are valid concerns of electronic retailers working down inventory and consumers having less disposable income given inflation but we believe consumers will adjust their spending allocations and continue to spend on Apple’s growing platform of products and services.”

    He rates the stock a buy with a $175 price target, down from $185 before.

    Barclays analyst Tim Long stayed more cautious.

    “Stepping back from the print, things get tougher heading into Dec-Q and beyond and we maintain our [equal-weight] rating, mainly on headwinds sustaining current demand levels as high-end consumers potentially weaken, tougher comps on Mac, Services weakening further, regulatory overhang (App Store, Google TAC), macro impacting digital advertising as well as a rich valuation,” he wrote as he bumped his price target up by a dollar to $156.

    Whether that plays out in the shares is another question.

    “Near term, we expect heightened macro uncertainty to remain an overhang for the stock, although some may view AAPL as a relative safe haven in the macro storm,” Long continued.  

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  • Apple stock surges toward best day since 2020 as it’s dubbed rare ‘bright spot’ amid Big Tech ‘carnage’

    Apple stock surges toward best day since 2020 as it’s dubbed rare ‘bright spot’ amid Big Tech ‘carnage’

    [ad_1]

    Which Big Tech company is not like the others?

    Apparently it’s Apple Inc.
    AAPL,
    +7.56%    ,
    which is set to become the only mega-cap technology company not to see a sharp post-earnings decline in its stock price this week, after the smartphone giant delivered a somewhat mixed earnings report but seemed to reassure Wall Street just enough about the state of its demand.

    Read: Apple earnings beat as record back-to-school Mac sales outweigh a slight miss on iPhones

    The stock was up 7.6% in Friday morning trading and on track to log its largest single-day percentage gain since July 31, 2020, when it increased 10.5%, according to Dow Jones Market Data.

    Apple is “the bright spot amid mega-cap carnage,” wrote Wells Fargo analyst Aaron Rakers, as Apple topped expectations with its headline results despite the backdrop of “a lot of macro/geopolitical uncertainties” as well as foreign-exchange pressures.

    While Apple fell short with its iPhone sales numbers for the September quarter, Rakers noted that the company has been constrained by supply for its Pro models. At the same time, he noted that Mac revenue easily exceeded the consensus view, which supported his thesis that “Apple is solidly positioned as share taker in PCs.”

    He further pointed out that Apple results were burdened by a deeper-than-expected impact from foreign exchange. But “look past the FX headwinds & you’ll see why everyone is hiding in Apple,” he said.

    Rakers rates the stock at overweight with a $185 price target.

    Evercore ISI’s Amit Daryanani called Apple “the last FAANG standing.”

    “Overall, revenue and EPS estimates will shift higher from current levels and given the broadly disappointing EPS calls from big tech this was an impressive set of numbers and guide,” he wrote in his note to clients.

    Though Apple didn’t give formal financial guidance, it offered various pieces of commentary around the December quarter, including that it could see a 10-point headwind from foreign exchange in the period and recognize a “few hundred” basis points of impact from an extra week being added to the quarter, even as Mac revenue is set for a substantial decline.

    “All this results in our assessment that revenue growth will be mid-single digits (our model is at 5% vs. Street was at 2%),” Daryanani wrote.

    Admittedly, it’s not just about the December quarter, he noted.

    “Eventually the question will be on durability of demand beyond Dec-qtr and the impact from macro not just on iPhones but also services,” Daryanani wrote, though he likes Apple’s long-term potential to grow sales at a mid- or high-single-digit clip and grow earnings at a mid- to low-teens rate.

    He rates the stock at outperform with a $190 target.

    Wedbush’s Dan Ives wrote that Apple was “the one bright spot” amid “a horror show week for Big Tech earnings.”

    “Given the perfect storm of currency/macro this quarter, we would characterize Apple’s results and commentary around the December quarter as net bullish around underlying demand and help throw out the noise that iPhone 14 upgrades are slowing in this cycle,” he wrote, while keeping an outperform rating but cutting his price target to $200 from $220 to reflect a lower multiple.

    The latest results could help change what Citi Research analyst Jim Suva said was a relatively negative attitude towards Apple’s stock when compared to the rest of Big Tech.

    “The amount of investor negativity on mega-cap tech stocks, especially Apple, is well known as recent surveys show Apple as the least favored stock amongst its peers,” he wrote. “Yes there are valid concerns of electronic retailers working down inventory and consumers having less disposable income given inflation but we believe consumers will adjust their spending allocations and continue to spend on Apple’s growing platform of products and services.”

    He rates the stock a buy with a $175 price target, down from $185 before.

    Barclays analyst Tim Long stayed more cautious.

    “Stepping back from the print, things get tougher heading into Dec-Q and beyond and we maintain our [equal-weight] rating, mainly on headwinds sustaining current demand levels as high-end consumers potentially weaken, tougher comps on Mac, Services weakening further, regulatory overhang (App Store, Google TAC), macro impacting digital advertising as well as a rich valuation,” he wrote as he bumped his price target up by a dollar to $156.

    Whether that plays out in the shares is another question.

    “Near term, we expect heightened macro uncertainty to remain an overhang for the stock, although some may view AAPL as a relative safe haven in the macro storm,” Long continued.  

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  • Apple earnings beat as record back-to-school Mac sales outweigh a slight miss on iPhones

    Apple earnings beat as record back-to-school Mac sales outweigh a slight miss on iPhones

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    At the end of a woeful week for Big Tech earnings, Apple Inc. managed to top expectations on revenue and earnings with the help of Macs selling at a record pace during the back-to-school season, which outweighed a slight miss on iPhone sales.

    Apple
    AAPL,
    -3.05%
    shares bounced between slight gains and losses in after-hours action Thursday, even as executives projected that revenue growth could slow in the holiday quarter. As has been the case throughout the COVID-19 pandemic, Apple executives declined to offer a traditional financial forecast, but Chief Financial Officer Luca Maestri told investors on a conference call that they expect a sequential slowdown in growth during the December quarter, driven in part by sharp currency impacts, tough comparisons for the Mac business and pressures on the services business.

    The smartphone giant’s revenue grew 8% in its fiscal fourth quarter, to $90.1 billion from $83.4 billion a year earlier, and came in ahead of the FactSet consensus of $88.7 billion. Apple generated $42.6 billion in its biggest business, iPhone sales, up from $38.9 billion a year before, but analysts were projecting $43.0 billion.

    A big driver of the upside came from Apple’s
    AAPL,
    -3.05%
    Mac segment, which posted a massive beat even as iPhone sales came up light. The Mac business set an all-time quarterly revenue record at $11.5 billion in the back-to-school quarter, up from $9.2 billion a year before and easily above the FactSet consensus, which called for $9.3 billion.

    Chief Executive Tim Cook explained on the call that the Mac category benefited from the launch of the MacBook Air with Apple’s custom M2 chip, as well as easing supply constraints that allowed Apple to meet a prior demand backlog. Maestri said he expects that Mac revenue will “decline substantially” on a year-over-year basis in the December quarter, however, as that period faces tough comparisons.

    A key question coming into Apple’s report was how demand for the company’s new iPhone 14 line has held up, especially given reports that the company has scaled back earlier production goals. Cook shared that while it was still early, “consumer demand was strong and better than we anticipated that it would be.”

    The company is supply-constrained on the iPhone 14 Pro and iPhone 14 Pro Max models, Cook said, adding that it is difficult for the company to “determine the accurate mix” of its phones until it is able to fulfill all of its demand.

    Revenue performance across Apple’s product lines was mixed. While Mac sales were strong, iPad revenue fell to $7.2 billion from $8.3 billion, whereas analysts were modeling $7.8 billion in iPad revenue. That category saw “opposite” trends relative to the Mac business in that iPads were up against an “exceptionally strong iPad quarter” from a year before that included a product launch.

    The company raked in $9.7 billion in revenue across its wearables, home and accessories category, up from $8.8 billion in the same period a year ago. Analysts had expected revenue of $9.2 billion.

    Services revenue climbed to $19.2 billion from $18.3 billion but fell short of the FactSet consensus, which was for $20.0 billion. Maestri shared that while he expects the segment to grow in the December quarter, the business could be impacted by pressures on advertising and gaming, as well as foreign-exchange effects.

    For the latest quarter, Apple recorded net income of $20.7 billion, or $1.29 a share, compared with $20.6 billion, or $1.24 a share, in the year-earlier period. Analysts tracked by FactSet were expecting $1.27 a share in earnings.

    If Apple’s stock managed to hold gains through Friday’s close, it would likely be the only Big Tech company to see positive post-earnings stock performance this week. Shares of Microsoft Corp.
    MSFT,
    -1.98%    ,
    Alphabet Inc.
    GOOG,
    -2.34%

    GOOGL,
    -2.85%    ,
    and Meta Platforms Inc.
    META,
    -24.56%
    each posted sharp declines in the session after their respective reports, and Amazon.com Inc.
    AMZN,
    -4.06%
    shares were off 12% in late trading Thursday.

    Shares of Apple have lost 18% so far this year, as the Dow Jones Industrial Average
    DJIA,
    +0.61%
    — which counts Apple as one of its 30 components — has declined 12%.

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  • Apple earnings show iPhone sales miss amid questions about smartphone demand; stock dips

    Apple earnings show iPhone sales miss amid questions about smartphone demand; stock dips

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    Apple Inc. joined the chorus of Big Tech woes Thursday, falling short of expectations on quarterly iPhone sales and sending its stock lower in late trading.

    The smartphone giant delivered $90.1 billion in fiscal fourth-quarter revenue, up from $83.4 billion a year earlier and ahead of the FactSet consensus, which was for $88.7 billion. A big driver of the upside came from Apple’s
    AAPL,
    -3.05%
    Mac business, which posted a massive beat even as iPhone sales came up light.

    Apple generated $42.6 billion in iPhone sales during its latest quarter, up from $38.9 billion a year before, while analysts were projecting $43.0 billion.

    The stock was down 1% to 4% in after-hours trading immediately following the release of the report Thursday.

    As has been the case throughout the pandemic, Apple declined to offer a financial forecast in its release, so investors will need wait for the company’s earnings call to get a sense for how things have fared since the September quarter ended and what expectations are like going into the holiday period.

    A key question coming into Apple’s report was how demand for the company’s new iPhone 14 line has held up, especially given reports that the company has scaled back earlier production goals. While the company isn’t likely to offer a traditional quantitative outlook on the call, executives could give some indication of how consumer behavior has played out recently amid the backdrop of economic pressure and more incremental upgrades within the newest family of iPhones.

    For the latest quarter, Apple recorded net income of $20.7 billion, or $1.29 a share, compared with $20.6 billion, or $1.24 a share, in the year-earlier period. Analysts tracked by FactSet were expecting $1.27 a share in earnings.

    Revenue performance across Apple’s product lines was mixed. The company saw $11.5 billion in Mac revenue, up from $9.2 billion a year prior, along with $7.2 billion in iPad revenue, down from $8.3 billion. Analysts tracked by FactSet were modeling $9.3 billion for the Mac line and $7.8 billion in iPad revenue.

    The company raked in $9.7 billion in revenue across its wearables, home and accessories category, up from $8.8 billion in the same period a year ago. Analysts had expected revenue of $9.2 billion.

    Services revenue climbed to $19.2 billion from $18.3 billion but fell short of the FactSet consensus, which was for $20.0 billion.

    Shares of Apple have lost 18% so far this year, as the Dow Jones Industrial Average
    DJIA,
    +0.61%
    — which counts Apple as one of its 30 components — has declined 12%.

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  • Amazon stock sinks after holiday forecast and cloud growth, profit disappoint; $150 billion in market cap at risk

    Amazon stock sinks after holiday forecast and cloud growth, profit disappoint; $150 billion in market cap at risk

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    Amazon.com Inc. predicted Thursday that holiday sales and profit would come in well lower than analysts expected as cloud growth slowed and Amazon Web Services profit missed expectations by nearly $1 billion, sending shares south in after-hours trading.

    Amazon
    AMZN,
    -4.06%
    executives guided for fourth-quarter operating profit of break-even to $4 billion and holiday sales of $140 billion to $148 billion, while analysts on average were expecting operating income of $5.05 billion on revenue of $155.09 billion, according to FactSet. AWS sales of $20.54 billion grew 27.5% from the year before, the lowest growth rate for the pioneering cloud-computing product in records dating back to the beginning of 2014, and lower than analysts’ average estimate of $21.2 billion; AWS operating income of $5.4 billion handily missed analysts’ average estimate of $6.37 billion, according to FactSet.

    “As the third quarter progressed, we saw moderating sales growth across many of our businesses, as well as increased foreign-currency headwinds … and we expect these impacts to persist throughout the fourth quarter,” Chief Financial Officer Brian Olsavsky said in a conference call Thursday afternoon. “As we have done in similar times in our history we are also taking action to tighten our belt, including pausing hiring in certain businesses and winding down products and services where we believe our resources are better spent elsewhere.”

    Shares dove as much as 20% in after-hours trading immediately following the release of the results, after closing with a 4.1% decline at $110.96, but ended the extended trading period down 13%. After-hours prices could chop roughly $150 billion from Amazon’s market capitalization and send it lower than $1 trillion for the first time since April 2020 if they were to persist through Friday’s regular trading session, according to FactSet.

    Amazon reported its first quarterly profit of the year for the third quarter, and easily beat analysts’ expectations for the back-to-school period that included the company’s first Prime Day of the year, but earnings still declined from last year. Executives reported third-quarter profit of $2.87 billion, or 28 cents a share, down from 31 cents a share in the year-ago quarter after adjusting for Amazon’s 20-to-1 stock split.

    Revenue grew to $127.1 billion from $110.8 billion, in the middle of executives’ forecast for $125 billion to $130 billion but slightly missing analysts’ expectations; executives said revenue would have been $5 billion higher without the effects of the strengthening dollar. Analysts on average expected earnings of 22 cents a share on sales of $127.39 billion, according to FactSet.

    “There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets,” Chief Executive Andy Jassy said in a statement. “What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.”

    Amazon had reported quarterly losses through the first half of the year, largely because of a rapid post-IPO decline in one of its investments, Rivian Automotive Inc.
    RIVN,
    +0.17%    .
    But the Seattle-based company has also been looking to cut costs after spending wildly during the first two years of the COVID-19 pandemic to keep up with spiking demand for its online store and Amazon Web Services cloud-computing products.

    Amazon’s stock has suffered as it faces comparisons to the headier days of last year, and will do so again in the holiday season, when it faces a comparison with a nearly $12 billion profit from its Rivian investment, which has declined more than 50% from its IPO price and stands at roughly one-fifth its peak post-IPO price.

    There were thoughts that Amazon would be cautious with its holiday forecast, as its attempts to cut costs run into the need to keep its giant logistics operation running smoothly. The company is looking to hire 150,000 workers to get through the holiday season, and recently announced increased pay for fulfillment workers.

    “On 4Q consensus estimates, we believe AMZN will likely err on the side of being more conservative, given the uncertain consumer spend environment,” MKM Partners Managing Director Rohit Kulkarni wrote in a note. “We believe recently announced wage hike, higher near-term content costs amortization (NFL & Lord Of Rings), and potentially greater merchandise discounting might weigh on 4Q Op Margins.”

    Amazon’s e-commerce operations were boosted in the third quarter by the company’s annual Prime Day event in July, and the company tried to replicate the event in October, but analysts saw the second Prime Day as less successful and potentially a sign of weakness.

    “We see Amazon’s decision to hold two Prime Day sales in one calendar year as a red flag for weak e-commerce sales; consistent with retailers, in general, holding more sales when their sales are under pressure,” D.A. Davidson analyst Tom Forte wrote in a preview of Amazon’s report.

    In the third quarter — with back-to-school sales and the first Prime Day event — quarterly retail sales in North America hit $78.84 billion, while overseas revenue totaled $27.72 billion. Analysts on average were expecting $77.24 billion and $29 billion respectively, according to FactSet. Sales in both locations were unprofitable from an operating perspective for the fourth consecutive quarter, losing a total of $2.88 billion.

    Amazon’s profit largely comes from the fat margins of its AWS cloud-computing offering, but there have been concerns about growth leveling off for cloud after rival Microsoft Corp.
    MSFT,
    -1.98%
    reported a deceleration earlier this week and guided for a further decline in growth in the fourth quarter. AWS did provide enough profit in the third quarter to overcome the losses in e-commerce, but the result was the lowest quarterly operating income for Amazon overall since the first quarter of 2018, according to FactSet records.

    Opinion: The cloud boom is coming back to Earth, and that could be scary for tech stocks

    “The ongoing macroeconomic uncertainties have seen an uptick in AWS customers focused on controlling costs and we are proactively working to help customers cost-optimize just as we have done throughout our history, especially in periods of economic uncertainty,” Olsavsky said in Thursday’s conference call, before adding that revenue growth dipped to the mid-20s late in the period from an overall rate of 27.5% for the quarter.

    “So carry that forecast to the fourth quarter, we are not sure how it’s going to play out, but that’s generally our assumption,” he said, suggesting that Amazon expects the AWS revenue-growth rate to decline again in the fourth quarter.

    Amazon’s other higher-margin business is advertising, which has grown strongly in recent years as companies seeking to sell products on Amazon pay the company to list their products higher when consumers search for them on the e-commerce platform. Amazon reported third-quarter advertising revenue of $9.55 billion, up from $7.61 billion a year ago and topping the average analysts estimate of $9.48 billion.

    The results seemed to spread fears to other e-commerce companies and cloud-focused companies. Wayfair Inc.
    W,
    +0.37%    ,
    eBay Inc.
    EBAY,
    +0.71%
    and Etsy Inc.
    ETSY,
    -0.48%
    shares all fell roughly 5% or more in after-hours trading, as did cloud-software providers Snowflake Inc.
    SNOW,
    -0.20%    ,
    MongoDB Inc.
    MDB,
    -0.35%
    and Datadog Inc.
    DDOG,
    +0.81%
    Microsoft’s stock declined about 1.5%.

    Amazon stock has fallen 33.5% so far this year, as the S&P 500 index
    SPX,
    -0.61%
    has dropped 19.6%.

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  • Meta spending slams Facebook stock, but here are the chip stocks that are benefiting

    Meta spending slams Facebook stock, but here are the chip stocks that are benefiting

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    Data-center stocks buoyed an otherwise down chip sector Thursday as shares of Facebook parent Meta Platforms Inc. cratered on torn-in-half profits and a hike in capital spending to fuel Mark Zuckerberg’s metaverse ambitions, prompting one analyst to ask if server chips can only go up now.

    As shares of Meta dropped as much as 25% Thursday, shares of Nvidia Corp.
    NVDA,
    +2.31%
    surged as much as 7%, compared with less than 1% declines on the PHLX Semiconductor Index
    SOX,
    -1.51%
    and S&P 500 index
    SPX,
    -0.69%    .

    Late Wednesday, Meta reported that quarterly profits fell by more than 50% and added that it expects 2022 capital expenditure of $32 billion to $33 billion, compared with a previous range of $30 billion to $34 billion. In 2023, the company said, it expects capital expenditure in the range of $34 billion to $39 billion, “driven by our investments in data centers, servers, and network infrastructure.”

    Meta
    META,
    -24.64%
    noted that an “increase in AI capacity is driving substantially all of our capital expenditure growth in 2023.”

    Soon after Meta made that announcement, Jefferies analyst Mark Lipacis said in a note that “positive capex commentary from Alphabet
    GOOGL,
    -2.80%    ,
    Microsoft
    MSFT,
    -2.03%
    and Meta” was all a positive for data-center equipment providers Nvidia, Advanced Micro Devices Inc.
    AMD,
    -1.92%    ,
    Broadcom Inc.
    AVGO,
    -1.26%
    and Marvell Technology Inc.
    MRVL,
    +3.61%    .
    Lipacis has buy ratings on all four stocks.

    Shares of AMD rallied as much as 5%, Broadcom shares rose as much as 2% and Marvell shares surged as much as 10% Thursday. Intel Corp.
    INTC,
    -3.69%
    shares were up a little more than 1% at one point ahead of its earnings report, scheduled for after the close Thursday.

    Opinion: Facebook and Google grew into tech titans by ignoring Wall Street. Now it could lead to their downfall

    Jefferies noted that Meta’s capital expenditure for 2023 alone charts a 12% year-over-year hike at midpoint, compared with the Wall Street consensus of $29 billion, or a 5% year-over-year decline.

    “We sense investor caution around Nvidia’s datacenter business this quarter, but we expect all four [equipment providers] to discuss positive datacenter trends this earnings season,” Lipacis said, noting he was a buyer of Nvidia stock “in front of its earnings call.”

    From the perspective of the chip industry — which has gone from a two-year global chip shortage to a sudden glut in a matter of months as PC and consumer-electronics demand has dropped sharply, causing chip fabricators to pump the brakes on investments in new capacity — Lipacis questioned whether the glut will ever reach data-center sales, as many have feared.

    “The most common comment we hear from investors on Nvidia is ‘the Datacenter Shoe has to Drop,’” Lipacis said, noting that his data shows that the shoe has already dropped and an uptick is on the horizon.

    Lipacis explained that data-center sales from Nvidia, AMD and Intel combined declined to $10.5 billion in the second quarter from $12 billion in the fourth quarter of 2021 and that he is modeling another $10.5 billion quarter in the third.

    “This looks consistent with the pattern since 2017 of 4-to-5 qtrs above trendline, followed by 2-to-3 qtrs of below trendline ‘digestion,’ i.e., it looks like the datacenter shoe has already dropped,” Lipacis said.

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  • Apple Earnings Are on Deck as Consumer Demand Softens

    Apple Earnings Are on Deck as Consumer Demand Softens

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    Apple


    shares have been remarkably resilient in the face of this year’s tech stock selloff, falling less than 15% since the end of December, and sharply outperforming rivals


    Microsoft



    Alphabet


    and


    Amazon


    which are all down from 26% to 28%.

    Apple (ticker: AAPL) sits with a $2.4 trillion market valuation—$500 billion more than Microsoft, $1 trillion more than Alphabet, and nearly double the size of Amazon.

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  • Mobileye prices IPO above targeted range to raise nearly $1 billion, and most of it will go to Intel

    Mobileye prices IPO above targeted range to raise nearly $1 billion, and most of it will go to Intel

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    Mobileye Global Inc. priced its initial public offering higher than its targeted range late Tuesday to raise nearly $1 billion, most of which will go to Intel Corp.

    Mobileye priced its initial public offering at $21 late Tuesday, the company announced in a news release, after previously stating a targeted range of $18 to $20; shares are expected to begin trading on the Nasdaq under the ticker symbol “MBLY” on Wednesday. Intel
    INTC,
    +0.85%
    will sell at least 41 million shares of Mobileye, which would raise $861 million, and also agreed to a $100 million concurrent sale of stock to General Atlantic, which would make the total raised at least $961 million.

    Intel paid $15.3 billion to acquire Mobileye in 2017, and was reportedly aiming for a valuation as high as $50 billion when originally planning this IPO, but instead will settle for a basic valuation of roughly $16.7 billion. After a record year with more than 1,000 offerings in 2021, the IPO market has largely dried up in 2022.

    Read: Mobileye IPO: 5 things to know about the Intel autonomous-driving spinoff

    Underwriting banks — Intel listed two dozen underwriters, led by Goldman Sachs Group Inc.
    GS,
    +1.13%
    and Morgan Stanley
    MS,
    +1.36%
    — have access to an additional 6.15 million shares for overallotments, which could push the total raised higher than $1 billion and make Mobileye the second-largest offering of the year. Only two offerings thus far this year have raised at least $1 billion — private-equity firm TPG Inc.
    TPG,
    +4.21%
    raised exactly $1 billion in January, and American International Group Inc. 
    AIG,
    -0.11%
    spinoff Corebridge Financial Inc.
    CRBG,
    +1.36%
    raised at least $1.68 billion in September.

    Intel will receive the bulk of the proceeds of the offering — after promising to make sure that Mobileye has $1 billion in cash and equivalents, the chip maker will take the rest of the proceeds for its own coffers. Wells Fargo analysts calculated that Mobileye will need about $225 million to hit that level, leaving at least $736 million for Intel before fees and other costs.

    Intel will also maintain control of the company after spinning it off, keeping class B shares that will convey 10 votes for each share while selling class A shares that convey one vote per share. Intel will retain more than 99% of the voting power and nearly 94% of the economic ownership of the company, and the Mobileye board is expected to include four members with ties to Intel, including Chief Executive Pat Gelsinger serving as chairman of the board.

    Read also: Intel files for Mobileye IPO, creating a share structure that will keep the chipmaker in control

    Mobileye will continue to be led by founder Amnon Shashua, who served as chief executive before Intel acquired the company and stayed at the helm while it was part of the Silicon Valley chip maker. Shashua founded Mobileye in 1999 and turned it into a pioneer in the field of automated-driving technology and one of Israel’s most prominent tech companies.

    Mobileye filed for the initial public offering at the end of September, when executives were still reportedly hoping for a $30 billion valuation.

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  • Microsoft stock slammed by cloud-growth fears, taking Amazon down with it

    Microsoft stock slammed by cloud-growth fears, taking Amazon down with it

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    Microsoft Corp. shares fell more than 6% in after-hours trading Tuesday as the company’s cloud-computing growth hit a sudden deceleration and executives guided for holiday-season revenue to come in more than $2 billion lower than expectations.

    The Azure cloud-computing business has grown into the largest and most important business for Microsoft
    MSFT,
    +1.38%    ,
    and there have been concerns about cloud growth as the U.S. faces a potential recession for the first time since the technology became ubiquitous. Microsoft executives said that Azure grew by 35% in their fiscal first quarter, a marked slowdown from Azure’s 40% growth rate in the previous quarter, as well as the 50% growth shown in the same quarter last year; analysts on average were expecting 36.5% growth, according to FactSet.

    Opinion: The cloud boom is coming back to Earth, and that could be scary for tech stocks

    In the current quarter, Chief Financial Officer Amy Hood suggested a similar sequential decline is in store for Azure, saying percentage growth should decline by five points on a constant-currency basis. Hood also suggested that more cost cuts could be coming to Microsoft, after the company confirmed layoffs of fewer than 1,000 employees earlier this month.

    “While we continue to help our customers do more with less, we will do the same internally,” she said. “And you should expect to see our operating-expense growth moderate materially through the year while we focus on growing productivity of the significant head-count investments we’ve made over the last year.”

    Microsoft shares slid to declines of more than 6% in after-hours trading following Hood’s forecast, which was provided in a conference call. Shares closed with a 1.4% increase at $250.66.

    Concerns about cloud growth immediately spread to Azure’s biggest competitor, Amazon Web Services, as Amazon.com Inc. stock
    AMZN,
    +0.65%
    fell more than 4% in after-hours trading.

    Microsoft reported fiscal first-quarter earnings of $17.56 billion, or $2.35 a share, down from $2.71 a share in the same quarter a year ago, when the tech giant disclosed a 44 cent-per-share tax benefit. Revenue increased to $50.1 billion from $45.32 billion a year ago. Analysts on average were expecting earnings of $2.31 a share on sales of $49.66 billion, according to FactSet.

    For the fiscal second quarter, Hood guided for revenue of $52.35 billion to $53.35 billion, while analysts on average were expecting sales of $56.16 billion, according to FactSet. Hood said that “Intelligent Cloud” revenue should land from $21.25 billion to $21.55 billion, while analysts on average were projecting $21.82 billion heading into the print; Microsoft’s other revenue-segment forecasts were even further off analysts’ average expectations.

    Microsoft has also suffered from the strengthening dollar, as well as a sharp downturn in personal-computer sales, which spiked during the pandemic but are now showing record regression.

    For more: The pandemic PC boom is over, but its legacy will live on

    Microsoft reported PC revenue of $13.3 billion for the quarter, roughly flat from $13.31 billion a year before and beating the average analyst estimate of $13.12 billion, according to FactSet. While PCs have long been what consumers largely know Microsoft for, their importance to the company’s financials has declined in recent years as cloud computing has grown in importance.

    “Historically, Windows was a very large driver of Microsoft revenue and, given its strong margins, a disproportionate driver of earnings,” Bernstein analysts wrote in a preview of the report, while maintaining an “overweight” rating. “Over time other businesses, especially Microsoft’s commercial Cloud, have grown fast while the Windows business has grown quite slower, decreasing the relative impact of Windows.”

    The “Intelligent Cloud” segment reported first-quarter revenue of $20.3 billion, up from $16.96 billion a year ago but slightly lower than the average analyst estimate tracked by FactSet of $20.46 billion. Azure’s 35% growth was the slowest Microsoft has reported in records dating back through the prior two fiscal years; Microsoft only reports percentage growth for its Azure cloud-computing product, even as main rivals Amazon.com Inc.
    AMZN,
    +0.65%
    and Alphabet Inc.
    GOOGL,
    +1.91%
    GOOG,
    +1.90%
    report revenue and profit margin for their cloud-computing products.

    Microsoft’s other revenue segment, “Productivity and Business Processes,” reported revenue of $16.5 billion, up from $15.04 billion a year ago and higher than the average analyst estimate of $16.13 billion, according to FactSet. That segment includes Microsoft’s core cloud-software properties such as its Office suite of products — which is being officially renamed Microsoft 365 — as well as LinkedIn and some other properties.

    Microsoft stock has declined 25.5% so far this year, as the S&P 500 index
    SPX,
    +1.63%
    has dropped 20.3% and the Dow Jones Industrial Average
    DJIA,
    +1.07%
    — which counts Microsoft as one of its 30 components — has declined 13.3%.

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  • Microsoft stock slips as Azure growth slows and cloud sales miss projections

    Microsoft stock slips as Azure growth slows and cloud sales miss projections

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    Microsoft Corp. shares slipped in after-hours trading Tuesday despite an earnings beat, as the company’s cloud-computing revenue came in lower than expected and its core cloud product, Azure, grew at a slower rate than projections.

    Microsoft’s
    MSFT,
    +1.38%
    cloud-computing business has grown into the largest and most important business for the company, especially for investors who like Azure’s high margins and strong growth. There have been concerns about cloud growth as the U.S. faces its first possible recession since the technology became ubiquitous, and Azure’s growth in Tuesday’s report was the slowest Microsoft has reported in the past two years, while Microsoft’s cloud division was the only segment to come in lower than estimates.

    The “Intelligent Cloud” segment reported first-quarter revenue of $20.3 billion, up from $16.96 billion a year ago but slightly lower than the average analyst estimate tracked by FactSet of $20.46 billion. Microsoft said that Azure grew by 35%, while analysts on average were expecting 36.5% growth, according to FactSet.

    Opinion: The cloud boom is coming back to Earth, and that could be scary for tech stocks

    That is a marked slowdown from Azure’s 40% growth rate in the previous quarter, as well as the 50% growth shown in the same quarter last year. Microsoft only reports percentage growth for its core cloud-computing product, even as main rivals Amazon.com Inc.
    AMZN,
    +0.65%
    and Alphabet Inc.
    GOOGL,
    +1.91%
    GOOG,
    +1.90%
    report revenue and profit margin for their cloud-computing products.

    Overall, Microsoft
    MSFT,
    +1.38%
    reported fiscal first-quarter earnings of $17.56 billion, or $2.35 a share, down from $2.71 a share in the same quarter a year ago, when Microsoft disclosed a 44 cent-per-share tax benefit. Revenue increased to $50.1 billion from $45.32 billion a year ago. Analysts on average were expecting earnings of $2.31 a share on sales of $49.66 billion, according to FactSet.

    Microsoft shares fell between 1% and 2% in after-hours trading following the release of the results, after closing with a 1.4% increase at $250.66. Microsoft stock tends to react most strongly in after-hours trading following earnings reports after executives share their forecast for the current quarter in their conference call, which is scheduled to begin at 5:30 p.m. Eastern.

    Microsoft has started to show some effects of a weakening macroeconomic climate, confirming layoffs of fewer than 1,000 employees earlier this month. Microsoft has suffered from the strengthening dollar, as well as a sharp downturn in personal-computer sales, which spiked during the pandemic but are now showing record regression.

    For more: The pandemic PC boom is over, but its legacy will live on

    Microsoft reported PC revenue of $13.3 billion for the quarter, roughly flat from $13.31 billion a year before and beating the average analyst estimate of $13.12 billion, according to FactSet. While PCs have long been what consumers largely know Microsoft for, their importance to the company’s financials has declined in recent years as cloud computing has grown in importance.

    “Historically, Windows was a very large driver of Microsoft revenue and, given its strong margins, a disproportionate driver of earnings,” Bernstein analysts wrote in a preview of the report, while maintaining an “overweight” rating. “Over time other businesses, especially Microsoft’s commercial Cloud, have grown fast while the Windows business has grown quite slower, decreasing the relative impact of Windows.”

    Microsoft’s other revenue segment, “Productivity and Business Processes,” reported revenue of $16.5 billion, up from $15.04 billion a year ago and higher than the average analyst estimate of $16.13 billion, according to FactSet. That segment includes Microsoft’s core cloud-software properties such as its Office suite of products — which is being officially renamed Microsoft 365 — as well as LinkedIn and some other properties.

    Microsoft’s second-quarter guidance will be crucial to investors hoping that the tech giant can withstand any economic jolts headed its way and show stronger growth in cloud. Analysts on average were expecting overall second-quarter revenue of $56.16 billion and “Intelligent Cloud” sales of $21.82 billion heading into the print, according to FactSet, while some wrote that they would like to hear more from Microsoft executives about the picture for the full year.

    “Our hope is that management provides a bit more color on full-year fiscal 2023 beyond just the double-digit revenue growth and operating margins being roughly flat commentary from last quarter,” MoffetNathanson analysts, who have a “market perform” rating and $282 price target on the stock, wrote in their preview. “We would expect headcount-related revenue streams like Office to see increasing headwinds in coming quarters, but volume businesses like Azure, which is tied to data, being more resilient.”

    Microsoft stock has declined 25.5% so far this year, as the S&P 500 index
    SPX,
    +1.63%
    has dropped 20.3% and the Dow Jones Industrial Average
    DJIA,
    +1.07%
    — which counts Microsoft as one of its 30 components — has declined 13.3%.

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  • SAP reports cloud-driven higher revenue, confirms annual profit and sales outlook

    SAP reports cloud-driven higher revenue, confirms annual profit and sales outlook

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    SAP SE, the German business software company, confirmed its profit and sales outlook for the year after posting higher third-quarter revenue led by growth at its cloud business.

    Reporting on a non-IFRS basis, the Walldorf, Germany-based company
    SAP,
    +0.14%

    SAP,
    +4.18%
    said Tuesday that revenue jumped to 7.84 billion euros ($7.74 billion) from EUR6.85 billion, with cloud revenue up to EUR3.29 billion from EUR2.39 billion. Software-licenses revenue fell to EUR406 million from EUR657 million.

    Analysts polled by FactSet had forecast overall revenue of EUR7.65 billion, and cloud revenue of EUR3.19 billion.

    “We have delivered a strong cloud quarter with accelerating momentum across all key cloud indicators,” SAP Chief Financial Officer Luka Mucic said. The company said its cloud business performed strongly in all regions led by the U.S. and Germany, while activity in Brazil, China, India and Switzerland was particularly robust.

    SAP is moving away from software-licenses sales, once its biggest revenue streams, to subscription-based cloud services, banking on a more profitable and predictable model based on recurring revenue.

    “With a recurring revenue share of more than 80%, it’s clear that our transformation has reached an important inflection point, paving the way for continued growth in the future,” SAP Chief Executive Christian Klein said.

    Operating profit for the quarter slipped to EUR2.09 billion from EUR2.10 billion a year earlier, with SAP’s operating margin down to 26.7% from 30.7%. Analysts polled by FactSet had forecast operating profit of EUR2 billion.

    SAP, like other European software companies, presents its figures as two sets of numbers. One set is based on the International Financial Reporting Standards–an international accounting method that seeks to provide a global reporting standard–though analysts and investors tend to follow SAP’s non-IFRS numbers. Those figures exclude share-based compensation, restructuring expenses and acquisition-related charges.

    For the year, SAP continues to expect non-IFRS operating profit at constant currencies between EUR7.6 billion and EUR7.9 billion, and cloud revenue at constant currencies between EUR11.55 billion and EUR11.85 billion. However, free cash flow is now expected at roughly EUR4.5 billion against a previous forecast above EUR4.5 billion.

    Looking ahead, SAP is still targeting double-digit growth in operating profit for 2023, though the company said it expects to update midterm targets in the coming quarters, citing the strong cloud momentum and favorable currency movements.

    Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

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  • IBM stock rallies on third-quarter results, upbeat forecast

    IBM stock rallies on third-quarter results, upbeat forecast

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    Shares of International Business Machines Corp. rallied in extended trading Wednesday, after the tech software, consulting and infrastructure giant reported third-quarter results that beat expectations and offered up a more upbeat full-year sales forecast.

    IBM
    IBM,
    -0.35%
    reported earnings as Wall Street tries to gauge the impact of a tough foreign-exchange environment, and the state of business spending on tech services amid worries over a downturn. But the company saw gains in hybrid cloud services, products like open-source software platform Red Hat, its consulting services and its zSystems servers and software.

    “Globally, clients view technology as an opportunity to enhance their business, which is evident in the results across our portfolio,” Chief Executive Arvind Krishna said in a statement. He added that he now expects full-year sales growth “above our mid-single-digit model.”

    That’s a bit more optimistic than the forecast he gave over the summer, when IBM reported second-quarter results. Krishna, at that time, said he continued “to expect full-year revenue growth at the high end of our mid-single-digit model.”

    Wall Street expects IBM’s full-year sales to come in at $59.667 billion, according to FactSet. Analysts expect 2022 earnings per share of $9.28. IBM also said it continued to expect around $10 billion in consolidated free cash flow for the year.

    For the third quarter, the company reported a net loss of $3.2 billion, or $3.54 per share, compared with a $1.1 billion profit, or $1.25 per share, in the year-earlier period. On an adjusted basis, IBM earned $1.81 per share.

    Sales came in at $14.1 billion, compared with $13.3 billion a year ago.

    Analysts polled by FactSet expected adjusted earnings per share of $1.79, on revenue of $13.517 billion.

    Revenue in the company’s software segment grew 7.5%. Consulting revenue rose 5.4%, while the company’s infrastructure segment jumped 14.8%.

    Shares gained 4.8% after hours on Wednesday.

    Prior to the results, analysts had zeroed in on the impact of the strong dollar and what Morgan Stanley, in a recent note, described as “continued wage pressure in consulting.” IBM has also been trying to lean more into cloud and AI technology, unloading some businesses in an effort to narrow its focus.

    Last year, in a move toward that goal, IBM spun off its infrastructure services business into Kyndryl Holdings
    KD,
    -2.85%    .
    But afterward, some analysts raised questions about IBM’s ability to grow sales and compete in the cloud-services industry. Francisco Partners, an investment firm, this year also acquired health-care data and analytics assets that were part of IBM’s Watson Health segment.

    In January, IBM declined to provide an earnings-per-share forecast. The company also changed how it organizes its business segments at the beginning of this year.

    But during the spring, Krishna said he saw “demand staying strong” even if economic growth flattens or enters into a brief recession, with the decision to halt business in Russia, following its invasion of Ukraine, the only drag on results.

    IBM stock is down 8% year to date. By comparison, the S&P 500 Index
    SPX,
    -0.67%
    is down 22%.

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