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Tag: Consumer electronics

  • All eyes on China as Apple and Foxconn outline zero-COVID issues. Meanwhile, cases are rising again in the U.S.

    All eyes on China as Apple and Foxconn outline zero-COVID issues. Meanwhile, cases are rising again in the U.S.

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    China’s strict zero-COVID policy was making headlines Monday after Apple and iPhone manufacturer Foxconn said over the weekend that restrictions are crimping production and will delay shipments of the high-end iPhone 14.

    “We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models,” Apple
    AAPL,
    -0.82%

    announced in a Sunday evening press release. “However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products.” 

    Also read: Will Apple’s latest production issues destroy demand?

    Foxconn, meanwhile, which trades as Hon Hai Precision Industry Co.
    2317,
    -0.50%
    ,
    lowered its fourth-quarter guidance and said anti-COVID measures were affecting some of its operations in Zhengzhou, China, as Dow Jones Newswires reported.

    Foxconn said that the Henan provincial government had made it clear that it would fully support the company. Foxconn’s most advanced iPhone plant, located in the provincial capital of Zhengzhou, has been battling a COVID outbreak.

    Foxconn said it is working with the government to halt the outbreak and resume production at full capacity as quickly as possible.

    Workers at the world’s biggest assembly site for Apple’s iPhones walked out last week as Foxconn struggled to contain a COVID-19 outbreak. The chaos highlighted the tension between Beijing’s rigid pandemic controls and the need to keep production on track. Photo: Hangpai Xinyang/Associated Press

    Investors have been closely watching China for signs that its government would start to lift the tough pandemic restrictions that have been in place for almost three years. The Wall Street Journal reported Monday that the country’s leaders are considering steps but have not yet set a timeline.

    Chinese  officials have become concerned about the costs of their zero-tolerance approach to COVID, which has resulted in lockdowns of cities and whole provinces, crushing business activity and confining hundreds of millions of people to their homes for weeks and sometimes months on end.

    But they are weighing those concerns against the potential costs of reopening on public health and on support for the Communist Party. On Saturday, officials from China’s National Health Commission again reaffirmed their commitment to a firm zero-COVID strategy, which they described as essential to “protect people’s lives.”

    Still, there are plans in Beijing to further cut the number of days incoming travelers must quarantine in hotels from 10 to seven, followed by three days of home monitoring, the paper reported, citing people involved in the discussions.

    And officials have told retail businesses that they intend to reduce the frequency of PCR testing as soon as this month, partly because of the cost.

    In the U.S., known cases of COVID and hospitalizations are climbing again for the first time in a few months.

    The daily average for new cases stood at 39,954 on Sunday, according to a New York Times tracker, up 6% compared with two weeks ago. But cases are sharply higher in several states, led by Nevada, where they are up 96% from two weeks ago, followed by Tennessee, where they are up 69%; Louisiana, where they are up 68%; Utah, where they have climbed 61%; and New Mexico, where they are up 56%.

    Cases are climbing in 30 states and in Washington, D.C.

    The daily average for hospitalizations was up 2% to 27,419, while the daily average for deaths was down 11% to 320.

    Physicians are reporting high numbers of respiratory illnesses like RSV and the flu earlier than the typical winter peak. WSJ’s Brianna Abbott explains what the early surge means for the winter months. Photo illustration: Kaitlyn Wang

    The Centers for Disease Control and Prevention said the BQ.1 and BQ.1.1 variants accounted for 35.3% of new cases in the week through Nov. 5, up from 27.1% a week ago.

    The two variants accounted for 52.3% of all cases in the New York region, which includes New Jersey, Puerto Rico and the Virgin Islands, up from 42.5% the previous week. That was more than the BA.5 omicron subvariant, which accounted for 24.9% of new cases in the New York area in the latest week.

    The BA.5 omicron subvariant accounted for 39.2% of all U.S. cases, the data show.

    BQ.1 and BQ.1.1 were still lumped in with BA.5 variant data as recently as three weeks ago, because at that time, their numbers were too small to break out. BQ.1 was first identified by researchers in early September and has been found in the U.K. and Germany, among other places. 

    Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

    Other COVID-19 news you should know about:

    • BioNTEch SE
    BNTX,
    +2.84%
    ,
    the German biotech that has partnered with Pfizer
    PFE,
    -0.53%

    on a COVID vaccine, posted earnings early Monday, showing a roughly 50% drop in profit that sent its stock lower, despite beating consensus estimates. The Mainz-based company said it had invoiced about 300 million doses of its bivalent vaccine, which targets the omicron variant as well as the original virus. The company chalked up €564.5 million ($563.9 million) in direct COVID vaccine sales in the quarter, down from €1.351 billion a year ago. BioNTech raised the lower end of its full-year COVID vaccine revenue range to €16 billion to €17 billion, from a previous €13 billion to €17 billion.

    • Thousands of runners took to the streets of the Chinese capital on Sunday for the return of Beijing’s annual marathon after a two-year hiatus, the Associated Press reported. However, the good news was offset by anger about another death related to COVID restrictions, this time of a 55-year-old woman in a sealed building. An investigation report released Sunday in Hohhot, the capital of China’s Inner Mongolia region, blamed property management and community staff for not acting quickly enough to prevent the death of the woman after being told she had suicidal tendencies.

    • The U.S. flu season is off to an unusually fast start, contributing to an autumn mix of viruses that have patients filling hospitals’ and physicians’ waiting rooms, the AP reported separately. Reports of flu are already high in 17 states, and the hospitalization rate hasn’t been this high this early since the 2009 swine flu pandemic, according to the Centers for Disease Control and Prevention. So far, there have been an estimated 730 flu deaths, including at least two children. The winter flu season usually ramps up in December or January.

    Here’s what the numbers say:

    The global tally of confirmed cases of COVID-19 topped 632.6 million on Monday, while the death toll rose above 6.60 million, according to data aggregated by Johns Hopkins University.

    The U.S. leads the world with 97.7 million cases and 1,072,598 fatalities.

    The Centers for Disease Control and Prevention’s tracker shows that 227.3 million people living in the U.S., equal to 68.5% of the total population, are fully vaccinated, meaning they have had their primary shots.

    So far, just 26.3 million Americans have had the updated COVID booster that targets the original virus and the omicron variants, equal to 8.4% of the overall population.

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  • Apple warns that iPhone 14 Pro shipments will be hit by China production snags

    Apple warns that iPhone 14 Pro shipments will be hit by China production snags

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    Apple Inc. said Sunday that it now expects lower shipments of its high-end iPhone 14 Pro and iPhone 14 Pro Max devices than it did previously, as COVID-19 issues hamper production in China.

    “We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models,” the company announced in a Sunday evening press release. “However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products.”

    Apple
    AAPL,
    -0.19%

    acknowledged in its release that COVID-19 issues have “temporarily impacted” production of the devices at the Zhengzhou site that is the “primary” assembly facility for the iPhone 14 Pro and iPhone 14 Pro Max. That facility is currently seeing “significantly reduced” operating capacity.

    “We are working closely with our supplier to return to normal production levels while ensuring the health and safety of every worker,” the company added in the release.

    Analysts have been discussing iPhone production disruption at manufacturer Foxconn’s
    2354,
    +1.31%

    Zhengzhou facility for the past week amid fallout from COVID-19 restrictions in the city.

    “Although Apple earnings were only a week ago, supply shortages at the high end of the market and recent COVID lockdowns in China impacting a Foxconn plant could negatively impact iPhone units in the December quarter,” UBS analyst David Vogt wrote Wednesday, ahead of Apple’s press release. “While we believe iPhone demand tends to not be perishable, a slippage of a couple of million units is possible below our 86 million forecast.”

    While Apple was the only Big Tech company to see its shares rally in the wake of its late-October earnings report, shares have struggled more since then. They logged their worst weekly performance since March 2020 last week.

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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

    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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  • Workers flee China’s biggest iPhone factory over Covid outbreak | CNN Business

    Workers flee China’s biggest iPhone factory over Covid outbreak | CNN Business

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    New Delhi
    CNN Business
     — 

    Foxconn, one of Apple’s largest suppliers, is wrestling with major disruption at its biggest iPhone assembly factory in China, as anxious workers reportedly flee the locked-down facility, according to social media videos.

    The Taiwanese company is racing to control a Covid outbreak at its campus in the central Chinese city of Zhengzhou.

    The exodus is putting a tremendous strain on Foxconn just before the key holiday shopping season begins and highlights how the country’s stringent zero-Covid policy is hurting international business.

    “[We] fully understand your eagerness to go back home,” Foxconn told its employees over the weekend, according to a post on Zhengzhou government’s official WeChat account.

    “For employees who voluntarily stay in the company’s factory area, the port government and the company will jointly ensure everyone’s…health and safety,” it added.

    Analysts said the chaos at Zhengzhou could jeopardize Apple and Foxconn’s output in the coming weeks. Ivan Lam, senior research analyst at Counterpoint, estimated that between 10% and 30% of iPhone 14 production could be affected in the near term if the situation did not stabilize.

    The Zhengzhou campus is the world’s biggest iPhone factory and typically accounts for as much as 85% of iPhone assembly capacity, according to Lam’s estimates.

    A Foxconn spokesperson told Chinese state media that the company is trying to boost production at other sites.

    “At present, because now is the peak production season… [there is] a large demand for workers,” a Foxconn spokesperson told Henan Daily on Monday, adding that the company was “also coordinating back-up production capacity at other sites.”

    Foxconn and Apple did not respond to a request for comment from CNN.

    Shares in Foxconn, also known as Hon Hai Precision Industry, fell 2.6% on Tuesday.

    Videos of many people leaving Zhengzhou on foot have gone viral on Chinese social media in recent days. The city, which has a population of more than 12 million, imposed sweeping lockdown measures earlier last month after identifying dozens of Covid-19 cases.

    State media has said that many Foxconn workers are among those walking miles to escape the city. Calling it a “helpless move for some employees,” a Foxconn manager told media outlet Yicai that workers are panicking over the spread of the virus at the factory and lack of access to official information.

    Foxconn said it was organizing vehicles for employees wishing to return home, according to a post on Zhengzhou government’s official WeChat account over the weekend.

    The company has also quadrupled daily bonuses for workers at the plant this month, it said in a post on its official WeChat account on Tuesday.

    While these disruptions will impact iPhone production in the near term, analysts say it may not dent Apple’s iPhone shipments in the key holiday season.

    “I think in one to two weeks, things will get back to normal, given the current status,” Lam said.

    “They still have a lot of alternative production sites,” he said, adding that Foxconn had already begun shifting production to other facilities in China, such as in the southern province of Guangdong. “Things are under control now.”

    And, as Beijing shows few signs of moving away from its rigid Covid policies, Apple has started to boost production in other countries, including India, to reduce its dependence on China.

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  • Facebook became Meta one year ago. Its metaverse dream feels as far away as ever | CNN Business

    Facebook became Meta one year ago. Its metaverse dream feels as far away as ever | CNN Business

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    CNN Business
     — 

    Even by Facebook’s standards, 2021 was a rough year.

    A series of damning reports based on leaks from a whistleblower raised uncomfortable questions about Facebook’s impact on society; the company continued reeling from concerns about the use of its platform to organize the January 6 Capitol riot; and privacy changes from Apple threatened its core advertising business. Meanwhile, young users were flocking to TikTok.

    At a virtual reality event on October 28, 2021, CEO Mark Zuckerberg tried to turn the page. Zuckerberg announced that Facebook would change its name to Meta and go all in on building a future version of the internet called the “metaverse,” proving to all in the process that the company he launched in 2004 was more than just a social media business.

    One year and billions of dollars later, the so-called metaverse still feels years away, if it ever manifests at all. And the company formerly known as Facebook remains very much a social media business — one that is facing more financial pressure than when it announced the change.

    Meta’s Quest 2 consumer virtual-reality headset, released two years ago, is popular in its category but remains a niche product overall. Its newest headset, the much pricier $1,500 Quest Pro, is intended for enterprise customers and likely won’t move the needle with everyday consumers. And Meta’s flagship social VR app Horizon Worlds can feel like a ghost town (albeit a ghost town with laser tag).

    While some brands have since made measured bets on the metaverse, including by hiring “chief metaverse officers,” it’s not clear whether consumers actually want to work or play in it, or even know what the hard-to-define term means. The metaverse refers, generally, to a sort of virtual world that people can walk around in, as well as the idea of making the internet more ubiquitous and interconnected.

    Meanwhile, Meta’s core business is contracting as it confronts growing competition from TikTok and an advertising industry in retreat amid looming recession fears. The company this week reported its second-ever quarterly drop in revenue and saw profit cut in half from the prior year. It’s selling more ads but making less money on them, and user growth on its social media platforms is slowing. After hitting a $1 trillion market cap for the first time last summer, it’s now worth about a quarter of that, or less than Home Depot.

    “The business is not growing in 2022,” said Gil Luria, technology strategist at D.A. Davidson. “There is expectation that it will grow going forward, but that expectation may prove to be optimistic.”

    A bet that looked bold a year ago now looks borderline unhinged. Meta lost $9.4 billion in the first nine months of 2022 on its metaverse efforts and expects losses from the unit to “grow significantly year-over-year” in 2023. This has prompted even some of Meta’s supporters to urge it to rethink its strategy shift, and possibly slow it down. (It also prompted a tearful Jim Cramer, host of “Mad Money,” to apologize to viewers for trusting Meta’s management team and recommending that investors buy the stock.)

    “People are confused by what the metaverse even means. If the company were investing $1-2B per year into this project, then that confusion might not even be a problem. You would simply do R&D quietly and investors would focus on the core business,” Brad Gerstner, CEO of Altimeter Capital, a shareholder in Meta, wrote in an open letter to Zuckerberg this week. He urged Meta to “cap its metaverse investments to no more than $5B per year with more discrete targets and measures of success.”

    The current pace of spending, he added, “is super-sized and terrifying, even by Silicon Valley standards.”

    Meta did not respond to requests for comment on this story.

    Though the name change was just announced a year ago, the shift from Facebook to Meta has been years in the making. Zuckerberg has said in the past that it’s a long-term bet for the company — not an overnight transformation. It began with Facebook’s 2014 purchase of Oculus VR, and in the years since, the company has rolled out a series of headsets that are increasingly capable, affordable and portable.

    Meta’s latest headset, the Quest Pro, is its first effort at combining the immersiveness of VR with the real world. It can display text and fine details in VR, track your eyes and facial features to give you a sense of connection with other people in virtual spaces, and show you a view of the world around you in color while letting you interact with digital objects — all nods toward Meta’s goal of attracting more business users.

    It’s a far cry from the Oculus Rift headset available in 2016: That cost $599, but users also had to connect it to a powerful PC and use it with a sensor camera on a stand that tracked the headset. At first, that headset didn’t even come with tracked hand controllers; it initially shipped to customers with an Xbox controller and a small handheld remote.

    Although the headsets have improved dramatically, VR and AR are still nascent technologies searching for purpose and popularity. The VR headset market is still tiny compared to, say, an established gadget market like console video games. ABI Research expects 11.1 million VR headsets will ship out this year, about 70% of which it predicts will be Quest 2 headsets. That’s a drop from its estimate of 14.5 million headsets in 2021, of which Quest 2 headsets made up 85% of the total.

    There’s potential for these products, some technology experts say, including in the workplace, but in the near term its adoption by everyday users remains uncertain at best.

    “I’m not sure this is going to translate to end-user consumers any time soon,” said David Lindlbauer, an assistant professor at Carnegie Mellon University who leads the school’s Augmented Perception Lab. (Meta is sponsoring Lindlbauer’s research into developing advanced user interfaces for AR and VR.)

    For Zuckerberg, and Meta, that creates a unique challenge.

    Zuckerberg successfully pivoted Facebook’s operations once before from desktop to mobile devices shortly after taking the company public, a move that helped supercharge its advertising business and ensure its dominance for much of the next decade. But smartphones were already ubiquitous at that time; if anything Facebook was a bit late.

    Now, the company is trying to spearhead a new technology and hoping consumers will follow its lead.

    Meta has positioned the shift as a sort of existential imperative for the company. After Apple’s app tracking changes hurt Meta’s ability to target ads to its users, the company doesn’t want to rely on any outside hardware or app store in the future.

    A visitor to the 2022 Tokyo Game Show tests the Meta Quest 2 VR headset.

    But there’s a big difference between looking at a computer or smartphone display and wearing a headset. While Lindlbauer can imagine using a headset for perhaps an hour a day, alternating between immersive views in VR and digital imagery that mixes with the physical world, “I think we haven’t hit the sweet spot yet of something I want to wear all day,” he said.

    Meta is also facing an enormous challenge when it comes to showing off VR content that users like the looks of and want to use repeatedly. According to a recent report in The Wall Street Journal, internal documents show Horizon Worlds has fewer than 200,000 active monthly users, a rounding error for a company with 3.7 billion monthly active users across its various services. (A Meta spokesperson told the Journal that it’s “easy to be a cynic about the metaverse” but Meta thinks it is “the future of computing.”)

    “They’re starting with this idea that they want to build one big space like Horizon Worlds in which everybody’s just going to show up and start building stuff,” said Avi Bar-Zeev, founder of AR and VR consultancy RealityPrime and a former employee at Apple, Amazon and Microsoft, where he worked on the HoloLens VR headset. “There’s no virtual world that was ever successful building a canvas that people would just come and start painting.”

    Zuckerberg has personally received intense criticism for the way Meta envisions work and play interactions in virtual spaces after posting on Facebook an image of his blocky, cartoon-like avatar in Horizon Worlds — an image he later admitted was “pretty basic.”

    “As far as the quick-twitch, give-me-more public is concerned, the progress seen so far is a letdown,” said Janna Anderson, director of the Imagining the Internet Center at Elon University. “Meta is suffering tremendous ridicule in social media and in the overall public zeitgeist.”

    The Quest Pro’s face-tracking capabilities can help make avatars’ facial expressions look more realistic: Initially, users can access this tracking in Horizon Worlds and Horizon Workrooms, Meta said, as well as in several developers’ apps such as Painting VR and DJ app Tribe XR.

    But even with facial tracking, what users see when they pop in to Horizon Worlds — blocky, human-like avatars that exist only from the torso up, floating around a virtual plaza — will for now continue to contrast sharply with the image Zuckerberg portrayed during Meta’s Connect event on October 11 of his own full-body avatar.

    In the meantime, investors appear to be getting fed up with the investments in the metaverse at a time when the future of its core business is also deeply uncertain.

    “I think kind of summing up how investors are feeling right now is that there are just too many experimental bets versus proven bets on the core,” Jeffries analyst Brent Thill said on Meta’s earnings call this week.

    Zuckerberg, for his part, is defending the strategy shift. “I’d say that there’s a difference between something being experimental and not knowing how good it’s going to end up being,” he responded. Separately, he added: “I think people are going to look back decades from now and talk about the importance of the work that was done here.”

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  • Microsoft earnings hit by personal computing slowdown | CNN Business

    Microsoft earnings hit by personal computing slowdown | CNN Business

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    CNN Business
     — 

    Microsoft posted a double-digit profit decline in the three-month period ending in September as the company confronted a slowdown in the personal computing industry and a broader economic downturn.

    The tech giant on Tuesday reported net income of $17.6 billion for the quarter, a decrease of 14% from the year prior. Microsoft

    (MSFT)
    ’s revenue, meanwhile, grew a modest 11% to $50.1 billion. Both results were better than analysts had expected.

    Microsoft’s Azure cloud services unit saw revenue increase by 35% from the prior year, but the growth was slower than some analysts had hoped for a division that has been one of the company’s biggest bright spots in recent years.

    Other parts of Microsoft’s business declined. Microsoft said revenue from its Windows OEM operations fell 15% from the year prior, which comes as demand for personal computers has fallen sharply on the heels of a pandemic-fueled boom. Consulting firm Gartner reported earlier this month that worldwide PC shipments declined 19.5% in the third quarter of 2022, compared to the same period last year. This marks the steepest market decline since Gartner began tracking the PC market in the mid-1990s.

    Microsoft also said revenue from Xbox content and services declined by 3%. The company reportedly recently laid off employees in its Xbox division, among other parts of the company, as it — like many other tech companies right now — looks to cut costs.

    Shares of Microsoft fell 2% in after-hours trading Tuesday following the earnings report.

    Microsoft’s stock has fallen more than 25% since the beginning of the year, amid a broader market downturn as rising inflation, geopolitical uncertainty from the war in Ukraine and more macroeconomic headwinds continue to wreak havoc on the tech industry.

    “In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way,” Satya Nadella, CEO of Microsoft, said in a statement Tuesday announcing the quarterly earnings.

    Haris Anwar, senior analyst at Investing.com, called Microsoft’s earnings report a “mixed bag” in a commentary after the results were released on Tuesday.

    “It shows that Microsoft is weathering the economic storm better than other technology players and its diversified business model is playing a big role in doing so,” Anwar said. But he added that the slowing cloud computing growth was cause for concern.

    “If this growth deceleration continues, it could harm an investment case in the company’s stock which is considered a safe-haven amid the market turmoil, with these concerns reflected in the company’s shares being down in extended trading,” Anwar said.

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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 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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  • Best mesh Wi-Fi routers of 2022 | CNN Underscored

    Best mesh Wi-Fi routers of 2022 | CNN Underscored

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    With more and more devices in our homes — phones, tablets, TVs, computers, game consoles, smart appliances and more — demanding Wi-Fi bandwidth, a reliable, speedy network is more important than ever. And if your home has a challenging layout, or you live in an older building with impenetrable walls, a single router might not cut it, leaving you with poor connectivity or dropouts. The answer is a mesh system, which in place of a single router uses multiple miniature units you can place throughout your home to effectively eliminate dead zones and improve wireless internet speeds.

    After months of testing mesh routers to find the best of the best, we found one that rises to the top.

    Best mesh Wi-Fi router

    Eero continues to master making Wi-Fi easier and better for the masses with a streamlined setup, wide-ranging coverage, high speeds and affordability combined with easy-to-manage parental controls, ad blocking, and network security.

    EERO

    The Eero 6+ mesh Wi-Fi system is our new top pick for the best mesh Wi-Fi system, replacing the very similar Eero 6. The two systems are similar, with the 6+ gaining critical features such as more bandwidth, which improved the overall experience in our testing. On top of new capabilities, the Eero 6+ is currently priced lower than the Eero 6 (which remains on the market for now), at $194 for a three-pack, compared to $199 for an Eero 6 router and two extenders.

    As was the case with the earlier version, initial setup of the Eero 6+ is streamlined, with the iPhone or Android app making the process easy enough for even the non-tech savvy to upgrade from a traditional Wi-Fi router to a mesh system with multiple access points.

    You’ll need access to your internet service provider’s modem in order to connect one of the Eero access points directly to it. Unlike the Eero 6 which had a dedicated base station meant to serve as the router access point, the 6+ units are interchangeable and you can use any of them as your main access point.

    The app will walk you through giving your wireless network a name, adding any additional Eero access points, and starting your 30-day free trial of Eero Plus, the company’s subscription service that adds additional features to the Eero offering, such as ad blocking, advanced security, content filtering (including parental controls) and access to the password managing app 1Password, VPN service Encrypt.me, antivirus software Malwarebytes, and a DDNS service as a means to access your home network from anywhere.

    Formerly Eero Secure+, an Eero Plus subscription costs $9.99 a month or $99.99 a year after your trial expires. There’s no longer a basic tier without apps as there was in earlier versions, and there have been some understandable complaints about this from users. Still, for $100 a year, you’re gaining access to plenty of handy features on your home Wi-Fi network, in addition to apps that collectively cost more than the Eero Plus subscription. For comparison, TP-Link’s Deco HomeCare Pro subscription is bit better deal at $55 a year for similar features, without any third-party app access. To get the same level of functionality from Netgear, you need two different subscriptions (parental controls and security features) for its Orbi systems, totaling $170 a year. But all things considered, $99.99 a year for Eero Plus isn’t the worst deal in the mesh networking landscape.

    With an active subscription, you’ll have the ability to block certain websites, apps or services for specific user profiles. For instance, you can create a profile for your kids’ devices and set time limits, and schedules for bedtime or dinner to pause internet access, and track data usage.

    Also part of Eero Plus is the option to block ads as you browse the internet. The ad-blocking feature isn’t quite as good as running a homemade PiHole server, but it does a good job at blocking a lot of ads, in turn speeding up website load times and preventing tracking.

    As for security features, which are also part of the subscription, you can turn on Advanced Security to allow Eero to prevent anyone on your network from accessing harmful sites that may contain viruses or be phishing attempts.

    The software experience is a big part of any mesh Wi-Fi system’s story, but not the entire story. For the Eero 6+, you’re getting a kit with powerful hardware that’s sure to provide fast internet access to your home and the devices inside it for years to come. The Eero 6 had a top speed of 500Mbps. The Eero 6+ doubles that to 1Gbps. Of course, your internet service provider will need to provide that type of speed to your home in order for you to see those speeds in real-world use.

    Over the course of a few weeks, we tested a three-pack of the Eero 6+, one unit in the basement of a ranch-style home. A second unit was placed upstairs on the opposite end of the house, with the third unit in a detached garage.

    During testing, we consistently saw speeds around 700 Mbps on our smartphones using the Speedtest.net app. The speed results would drop the further away we got from an access point, but that’s to be expected.

    Often times there would be two to three gaming PCs connected and actively playing games — think Fortnite, Roblox, and Call of Duty — while Netflix or Hulu were streaming 4K content on a TV.

    Outside of having to adjust a Wi-Fi antenna that had been moved on a gaming PC, there weren’t any instances of lagging while gaming or buffering while streaming content, even when everyone was connected and active, including countless smart home connected devices such as Ring cameras, smart locks, a video doorbell, light switches and random light bulbs.

    Alternatively, you can use the Ethernet ports to connect a gadget that’s near the access point to boost its Wi-Fi connectivity. So, if you have an older PC that lacks Wi-Fi 6 capabilities, you can connect the PC to the Ethernet port on the back of the Eero 6+ and it’s now getting faster internet without having to upgrade any components on the PC. `

    You can get the Eero 6+ in three different configurations. A single pack is $139, a two-pack is $155 (normally $239) and a three-pack is $194, marked down from its typical price of $299.

    The core features remain the same, regardless if you have a single access point or three. You get dual-band 802.11ax Wi-Fi 6, which translates to multiple radios inside the access points to carry your data transitions back and forth at higher speeds. On the back of each Eero 6+ unit, you’ll find two Ethernet ports, which allow you to connect a secondary unit to Ethernet (if your house is wired for it) as a hardwired system, which can help boost performance.

    The Eero 6+ is very much a set-it-and-forget-it system. Once turned on and devices started connecting to them, there wasn’t a whole lot of management or worry on our part. We could get as granular as we wanted within the Eero app about usage, setting up profiles and what to block, or we could just let the network run and forget about having to manage a thing.

    We crafted our testing pool based on current Wi-Fi standards, top-rated mesh routers and our own expertise with products on the market. We then designed testing categories that would make for a fair comparison across all routers.

    Once each router arrived, we began our analysis by examining everything from the packaging and labeling of the hardware to the included instructions. We also paid close attention to what interface we had to use for setup, determining if it was a web page to visit, a desktop app or a purely mobile experience. When it came to placing the router, we noted if the onboarding process helped by suggesting where the router and each node should be placed and tested the connection strength afterward.

    After we set up the network, we took a look at the included features. For instance, are parental controls available out of the box, or did we need to sign up for a monthly plan? What type of security protocols and protections were in place from the get-go?

    We then conducted a number of speed tests and benchmarks to test connectivity in a quantitative format. After those benchmarks, we measured the performance in a qualitative manner with our everyday workflows on a plethora of devices. We also stress-tested with more than 100 devices on the network at any given time. In the realm of smart home, we looked at what extra connectivity was included inside the router.

    Without a doubt, the ZenWiFi AX (XT8) is the most advanced mesh networking system we tested in our first round. And Asus has taken the kitchen sink approach here — it’s a tri-band system with a single lane for 2.4 GHz and two lanes for 5 GHz. You can opt to broadcast a single network, combining all three bands, or split them up if you want to decide which network a device connects to. Additionally, the XT8 offers a built-in VPN that will keep your coffee shop Wi-Fi sessions safe and allow you to access your home network. It also works with Amazon’s Alexa platform, or you can create automations with the website If This Then That (IFTTT).

    The XT8 will block malicious sites, allows for parental controls and will even let you designate which device or content types should be prioritized across your home network. Each access point supports an external hard drive for network access, which, if combined with VPN features, will put your files at your fingertips no matter where you are.

    Our lone complaint about the XT8 has nothing to do with performance but rather the overall interface for managing the network. There are so many options; this system is clearly designed for someone who is comfortable with managing a network, and even then it’s still somewhat intimidating.

    Asus sells the XT8 in two-packs for $449, making it the most expensive setup we tested.

    In terms of its feature set, the Eero, originally known as the “all-new Eero” (in 2019), is pretty similar to the Eero 6. It has a slightly bulkier design, lacks the Zigbee antenna for easy smart home connectivity and, most importantly, is missing Wi-Fi 6 support. At only $80 more for a three-pack, it makes sense to spend the extra for the latest-generation router.

    Eero 6 and two extenders

    With its foolproof setup process, nearly unrivaled speeds and coverage areas, Eero 6 was our favorite mesh system before the introduction of the Eero 6+, which we recommend at this point (the systems will set you back the same amount, so there’s no reason to sacrifice the bandwidth gains you’ll get from the newer version. If prices drop on the old version and your needs are modest, it could be worth a look.

    The Eero Pro 6 is the step-up model from the Eero 6, now supplanted by the newer Eero Pro 6E (which is a better deal, and provides better performance). Aside from a shorter and wider design, it has a few other pro features. Notably, this supports gigabit speeds (aka 1,000 Mbps) on upload and download in a mesh configuration. If you’re paying for those speeds, like with Fios Gigabit, it makes sense to pay the extra and opt for the Pro 6.

    It also has a bit more room for devices to connect with a tri-band setup. That means it has a three-lane highway versus a two-lane setup on a dual-band router. In total, the Eero Pro 6 features a single 2.4 GHz band and two 5 GHz bands. It’s a noticeable difference if you have more than 100 data-heavy devices connected all at once.

    $699 $419 at Amazon

    Eero’s Pro 6E system has all of the bells and whistles as our top pick the Eero 6+ such as Eero Plus, parental controls, easy setup and an easy-to-use

    What makes the Pro 6E so special, and more expensive, is that it supports the latest connectivity standard Wi-Fi 6E, which increases overall throughput and speeds and the number of devices your network can handle at the same time. More specifically, the Eero Pro 6E can support up to 2.3Gbps, over 100 devices and covers 2,000 square feet per access point.

    Google’s Nest Wi-Fi mesh networking system used to be the gold standard of mesh systems: It’s incredibly simple to set up and manage, with everything done directly in the Google Home app. You can bundle devices into groups and set access schedules, or pause Wi-Fi access on demand through the app or by telling Google Assistant.

    You can also use those same groups to block access to inappropriate websites. From the initial setup process to more advanced controls, using Nest Wi-Fi is very easy and meant for those who aren’t all that tech-savvy. It’s truly a set-it-and-forget-it mesh networking system.

    Each Nest Wi-Fi access point acts as a Google Home device, meaning you can use the wake phrase of “OK/Hey Google” to ask questions and control your smart home devices.

    The Velop MX4200 is Linksys’ original Wi-Fi 6 mesh networking system, with useful features such as supporting network hard drives, support for up to 2,404 Mbps on Wi-Fi 6 and three gigabit LAN ports on each access point.

    You can tell the system to prioritize a device if you need to ensure you don’t break up during a video call, for example, or if you want to be certain your gaming session is getting all the bandwidth it needs. You can also set up basic parental controls, like pausing internet access on a specific device, setting a schedule or blocking specific websites.

    The Linksys Atlas Max 6E hits all of the marks for a Wi-Fi 6E system — a wide 9,000 square foot coverage area, support for over 195 devices at the same time, and speeds up to 8.4 Mpbs. Our testing showed the system can indeed put out impressive speeds (though we don’t have the capabilities to test its full potential), and coverage was slightly above average. Although, we did have to adjust our normal testing placement to bring two of the access points closer together, which isn’t something we have to often do. Furthermore, the app for controlling the system doesn’t provide an option to group devices for parental controls, for instance, if your kids are like ours, they have multiple devices and having to manually adjust individual devices all the time gets tiresome.

    Plume’s $159 SuperPods with Wi-Fi 6 are incredibly easy to set up and start getting better Wi-Fi coverage throughout your home. You could opt to use a single SuperPod as a traditional router or pair it with additional pods for a full mesh system. Either way, Plume’s $99 per year HomePass subscription service takes care of optimizing the network, blocking malware and ads, and gives you access to parental controls. In addition to managing your network for you, HomePass also doubles as a home security system; the Pods have built-in motion sensors that can alert you if something or someone is moving in your home — and it’ll even include the name of the room where the movement has been detected. It’s really cool and all of this aims to let you forget about your network setup.

    In our test setup, we used five SuperPods to cover a two-story home and a detached office. Each Pod also features two Ethernet ports, which is handy if you prefer a hardwired connection, say for a smart TV or computer or gaming console.

    One potential downside to Plume’s offering is that without the yearly HomePass subscription, the pods won’t include many of the advanced features such as guest modes, content filets and parental controls. For this reason, for most people, we’d recommend our top pick of the Eero 6 whether you want to use it as a traditional router or in a mesh setup. But if you don’t mind paying extra for a reliable mesh Wi-Fi network with some added smarts, then the Plume SuperPods are worth looking at.

    The Netgear Orbi AX600 supports the current Wi-Fi 6 standards and features some smart home connectivity. But you’re paying a lot of money for the AX600: $999 for a two-pack.

    For that price, it’s a tri-band experience and 6 Gbps-capable router (which translates to 6,000 Mbps in total). But you’ll need a really fast connection from your service provider to deliver that. Given this router’s high price point, you’re much better off opting for an Eero 6E system.

    $199.99 at B&H Photo Video

    The entry-level Orbi AX1200 from Netgear is a bare-bones mesh system that features a neat geometric design pattern on small square routers. Like the Eero 6, it’s a dual-band system that can cover 4,500 square feet of space, slightly less than what our top pick can deliver. In our testing, it was about 50 Mbps to 75 Mbps behind the other routers we tested, and it doesn’t feature Wi-Fi 6 support.

    Like the Eero and SmartThings Wi-Fi, there’s a companion Orbi app that hides a majority of security and parental control features behind a monthly plan. Netgear has partnered with Circle for parental controls here. The combination of subscriptions ends up being pricier than Eero’s, so given the balance of price and performance we’d recommended going with that system instead.

    The biggest — and really, only — problem we have with the Netgear Orbi AXW11000 is its price. At $1,500, you’d better be really sure you have to have this system. That said, its specification sheet does begin to explain its high price tag. The AXW11000 supports up to 10.8Gbps speeds, 9,000 square feet of coverage, and 200 devices on the same network. On top of that, the Orbi app isn’t as intuitive as Eero’s for common tasks like parental controls. And more advanced tasks require you to use a dedicated admin portal via your web browser.

    That said, this system is fast and powerful and definitely something we’d urge you to consider if it wasn’t so expensive, or if you have the budget and need for its ultra-high performance.

    Samsung’s SmartThings Wi-Fi launched in late 2018 and hasn’t received a hardware update since. The real highlight of the SmartThings Wi-Fi system, outside of its mesh networking capabilities with support of up to 32 different hubs (yes, you read that right, 32) is that it doubles as a smart home hub for the SmartThings platform.

    That means you can use it to connect to and control any product or service that works with SmartThings, such as the recently added Nest product line, along with countless other accessories and devices. SmartThings Wi-Fi has support for Zigbee and Z-Wave protocols, allowing compatible devices to connect directly to the hub, adding to its feature set.

    As for its Wi-Fi capabilities, you get free access to the Plume app, which provides access to more advanced Wi-Fi controls and mesh networking features. But despite the capabilities of Plume’s networking features, it’s also a drawback of SmartThings Wi-Fi because you’re forced to use two different applications to manage your home network, with each one offering different settings.

    We hope that Samsung updates SmartThings Wi-Fi with modern features and connection speeds, because its smart home features and platform are some of the best for a mesh networking system.

    On paper, the TP-Link Deco XE75 checks all of the boxes. It supports Wi-Fi 6E, up to 200 devices, 7,200 square feet and speeds of up to 5,400mbps. But we struggled with interference issues, which often lead to troubleshooting in the Deco app for network interference — of which, there was a lot — and that’s not something we experienced with other systems we tested in the same environment. When the Deco XE75 was working properly, the speeds were slightly lower than the Eero 6+, and the parental controls felt well thought out and streamlined for anyone to put to use.

    The Deco X55 is an affordable Wi-Fi 6 mesh system, with a three-pack priced at $219. For that, you get three access points with coverage of 6,500 total square feet, a max speed of 2,400Mbps, and the same Deco app for parental controls and managing your network. However, the X55 was also impacted by interference issues in our testing. Again, that’s not something we experienced with other systems that we tested. When it was working, speeds weren’t as impressive as the competition. This is not a system we’d recommend — it’s better to step up to the Eero 6+, especially when its available at a comparable price.

    A three-pack of Vilo’s mesh Wi-Fi system is priced incredibly low at $80 and does a good job of covering your space in Wi-Fi. It’s a system designed for basic internet use and streaming, and not for a household with multiple online gamers or 4K streams. The Vilo app is basic and frustrating at times, but once your system is set up, you shouldn’t have to spend too much time using the app. If you need a bare-bones network and don’t want to spend a ton, Vilo surely gets the job done.

    Read more from CNN Underscored’s hands-on testing:

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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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  • 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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  • 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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