Tag: financial results

The Fed isn’t about to back down from its inflation fight | CNN Business
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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

London
CNN Business
—

Twelve days from now, the Federal Reserve will meet again, and expectations for the central bank’s next moves are firming up. The consensus among investors: Persistently hot inflation means the Fed will need to continue with its string of aggressive interest rate hikes, which is unprecedented in the modern era.

What’s happening: Markets see a 99% probability that rates will rise by another three-quarters of a percentage point, reaching a range of 3.75% to 4%.

A hike of that magnitude is now “a given,” Quincy Krosby, chief global strategist for LPL Financial, told clients on Wednesday. “Concern is now focused on December, and whether the Fed is prepared to transition to smaller rate hikes.”

That’s up from a 60% probability one month ago. So what changed?

Inflation, mainly. The US Consumer Price Index rose 8.2% in the year to September after rising 8.3% annually in August. While CPI peaked at 9.1% in June, that reading was still uncomfortably elevated and higher than economists had expected.

The 6.6% annual uptick in shelter costs was of particular concern. It takes longer for housing expenses to come back down than some other categories, since renters tend to sign leases for 12-month periods. The monthly rise in core services costs (excluding energy) was the largest gain in three decades.

The data underscored the need for the Federal Reserve to stay tough — while a strong jobs report for September will deliver confidence the central bank can do so without causing undue harm to the US economy.

Fed officials have said as much. In an interview with Reuters on Friday, St. Louis Fed President James Bullard said inflation had become “pernicious,” which means that “frontloading” larger rate hikes is logical.

The market impact: The S&P 500 kicked off the week with a 3.8% rally before dropping 0.7% on Wednesday. It’s still plodding along in a bear market, about 23% below its January peak. So long as the Fed signals its intention to keep the pressure on, boosting the odds of a US recession, volatility is expected to persist.

Even relatively solid corporate earnings may not be sufficient to change the direction.

“So far, the results are decent, but they’re being compared to consensus estimates that have been persistently lowered since early summer,” noted strategists at Charles Schwab.

Tesla

(TSLA) posted a solid quarter of earnings and record revenue, but now says it will likely fall short of its target for a 50% growth in the number of cars it sells this year.

Quick rewind: As recently as July, the company said it was still aiming for a target of 50% growth from the 936,000 cars it delivered in 2021.

But with two quarters of disappointing deliveries caused by supply chain issues and Covid-related shutdowns in China, that goal has looked increasingly out of reach, my CNN Business colleague Chris Isidore reports.

CEO Elon Musk said that the electric carmaker is not struggling with demand.

“We expect to sell every car that we make, for as far in the future as we can see,” he said on a call with analysts on Wednesday.

Instead, the company said it would “just” miss its target due to complications with delivery of cars from its factories to customers at the end of the year.

Shares are down 5% in premarket trading on Thursday. They’ve dropped 37% year-to-date, compared to a 22.5% fall in the S&P 500.

“This quarter was not roses and rainbows,” said Dan Ives, tech analyst for Wedbush Securities. “Competition is increasing. There are some logistical challenges.”

America’s business leaders are becoming more pessimistic. The Conference Board recently reported a slide in its CEO confidence index, which it said had hit levels not seen “since the depths of the Great Recession.”

Of the 136 CEOs who were surveyed, 98% said they were preparing for a US recession over the next 12 to 18 months — and 99% said they were bracing for a recession in Europe.

Notably, the business community is not being quiet about its concerns.

Amazon founder Jeff Bezos tweeted Tuesday that “the probabilities in this economy tell you to batten down the hatches.”

He was responding to a clip of an interview with Goldman Sachs CEO David Solomon, who told CNBC that “it’s a time to be cautious.”

“You have to expect that there’s more volatility on the horizon now,” Solomon said. “That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”

American Airlines

(AAL), AT&T

(T), Dow, Nucor

(NUE) and Quest Diagnostics

(DGX) report results before US markets open. CSX

(CSX), Snap

(SNAP) and Whirlpool

(WHR) follow after the close.

Also today:
Initial US jobless claims for last week post at 8:30 a.m. ET.

Existing home sales for September follow at 10 a.m. ET.
Coming tomorrow: Earnings from American Express and Verizon.
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October 20, 2022
Stocks try for another rally as big banks report earnings | CNN Business

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Retail sales data shows consumers are growing cautious about spending amid biting inflation

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October 14, 2022
White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | CNN Business

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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

New York
CNN Business
—

September’s hotly anticipated jobs data ended up cooling markets on Friday. Stocks fell sharply as investors evaluated the report, which showed more jobs than expected were added to the US economy and indicated that more pain-inflicting interest rate hikes from the Federal Reserve lie ahead.

But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to fight persistent inflation may already be working, just not for everybody.

White-collar office workers appear to be feeling the brunt of the Fed’s actions: The financial and business sector saw a large decline in employment last month. Legal and advertising services also experienced drops. Service and construction workers, meanwhile, are still thriving.

What’s happening: The US economy added 263,000 jobs in September, higher than analyst estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.

Leading the gain in jobs was the leisure and hospitality industry, which added 83,000 jobs in September — and employment in food services and drinking places made up 60,000 of those jobs alone. Manufacturing and construction also came in hot, adding 22,000 and 19,000 jobs, respectively.

The largest non-governmental losses in jobs came from the financial industry, which shed 8,000 between August and September. Large banks hire in cycles, extending offers to recent graduates in the early fall months. That makes this September’s drop particularly significant.

Business support services — such as telemarketing, accounting and administrative and clerical jobs — are also bleeding jobs. The sector lost 12,000 in September. Meanwhile, legal services lost 5,000 jobs, and advertising services also dropped 5,000 jobs.

What it means: The Federal Reserve’s hawkish policy appears to be cooling certain parts of the economy, but not others. Finance workers are likely beginning to worry as their industry depends on stock and lending markets which have been particularly hard hit by Fed actions.

Friday’s numbers indicate that we’re beginning to see that impact in the employment data.

What remains to be seen is whether the Fed can cool the economy just by loosening employment in white-collar industries or if these losses will trickle down to other industries, hurting lower-income workers.

Coming up: Earnings season begins in earnest this week with big banks like JPMorgan, Citigroup

(C), Morgan Stanley

(MS) and BlackRock

(BLK) reporting. Investors will be watching closely for any guidance on hiring and layoff plans.

Two key inflation indicators, PPI and CPI are also set to be released. Expect markets to react poorly if inflation comes in hot.

A panel of top US economists just released its economic outlook for the next year, and it’s not great.

The panel of 45 forecasters, led by the National Association for Business Economics (NABE), said they expected slower growth, higher inflation, higher interest rates, and weakening employment in both 2022 and 2023 than they previously expected.

Most of the worries come down to the Federal Reserve’s interest rate policy.

“More than three-quarters of respondents believe the odds are 50-50 or less that the economy will achieve a ‘soft landing’,” said NABE Vice President Julia Coronado. “More than half the panelists indicate that the greatest downside risk to the U.S. economic outlook is too much monetary tightness.”

NABE panelists downgraded their median forecast for real GDP for the fourth quarter of 2022 to a 0.1% increase, compared to a 1.8% increase in the May 2022 survey. The vast majority of respondents placed more than a 25% probability of a recession occurring in 2023, with the most likely start date in the first quarter.

The latest report comes as a growing number of economists are predicting that recession is imminent. Former US Treasury Secretary Larry Summers told CNN on Thursday that it’s “more likely than not” the US will enter a recession, calling it a consequence of the “excesses the economy has been through.”

Friday’s jobs report showed that the share of workers telecommuting or working from home because of the pandemic ticked lower — falling to just 5.2% in September from 6.5% in August.

Fully remote work in the United States, which many predicted would remain the norm long after the pandemic, appears to be edging away, especially as the job market loosens for white collar workers and employees have less leverage.

Last week, a KPMG survey of US-based CEOs found that two-thirds believed in-office work would be the norm within the next three years.

Still, it may not be enough to help an ailing commercial real estate market, where the outlook is dire. New York City office properties declined by nearly 45% in value in 2020 and are forecast to remain 39% below their pre-pandemic levels long-term as hybrid policies continue, according to a recent study from the National Bureau of Economic Research.

Looking forward: The Bureau of Labor Statistics has noted that while hybrid work may still be popular, Covid-19 is no longer fueling work from home trends. The October report will rephrase its telework questions to remove references to the pandemic.

Since May 2020, each jobs report has asked: “At any time in the last four weeks, did you telework or work at home for pay because of the Coronavirus pandemic?”

In May 2020, 35.4% answered yes.

Starting next month, the question will be revised. “At any time in the last week did you telework or work at home for pay?” it will ask, limiting the timeline and eliminating any reference to the pandemic.

The US bond market is closed for Columbus Day/Indigenous Peoples’ Day.

Coming later this week:

▸ Third quarter earnings season begins. Expect reports from big banks like JPMorgan Chase

(JPM), Wells Fargo

(WFC), Citigroup

(C), Morgan Stanley

(MS), PNC

(PNC) and US Bancorp

(USB) and consumer staples like Pepsi

(PEP), Walgreen

(WBA)s and Domino’s

(DMPZF).

▸ CPI and PPI, two closely watched measures of inflation in the US are also due to be released.

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October 10, 2022
Wages are the most important number to watch in the jobs report | CNN Business

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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.

New York
CNN Business
—

Investors, economists and members of the Federal Reserve will be poring over the September jobs report on Friday morning for clues about the health of the economy. But one figure may matter more than most…and it’s not the number of jobs added or the unemployment rate. It’s wage growth.

Inflation is not just a function of the price of oil and other commodities and production costs like manufacturing and shipping. How much workers take home in their paychecks is also a big part of the inflation picture.

When people have more money in their wallets (virtual or good old-fashioned leather ones), they tend to be more willing to spend it. That gives companies additional flexibility to raise prices.

Average hourly wages rose 5.2% over the past 12 months according to the August jobs report. That’s down from a 2022 peak growth rate of 5.6% in March.

So how aggressively will the Fed need to raise rates going forward? A lot will depend on whether wage growth continues to slow.

Companies can’t raise prices as much if workers are making less or they risk big destruction in demand.

The problem is that wage growth above 5% is still historically high. Before the pandemic, wages typically rose just 3% year-over-year. But labor shortages, due to Covid-19 and people dropping out of the workforce, shifted power from employers to employees when it came to worker pay.

That’s another reason why companies have continued to raise prices: To offset rising costs.

The government reported Friday that its preferred inflation metric, personal consumption expenditures (PCE), rose 6.2% from a year ago in August. That was lower than July’s reading.

But the so-called core PCE figure, which excludes food and energy prices, rose 4.9% through August, up from a 4.7% increase in July.

What’s more, the Fed typically is looking for just a 2% growth rate in the headline PCE number as a sign of price stability. That’s not going to happen anytime soon. In fact, the Fed’s latest forecasts suggest that the central bank thinks PCE will rise 5.4% this year, up from projections of 5.2% in June.

“I don’t see anything in the near-term to give the Fed tons of comfort that inflation is on the trajectory to 2%,” said David Petrosinelli, senior trader with InspireX. “Wages will remain elevated and that will keep the Fed in a pickle.”

But there’s another concern. Wages, while still rising, are not actually keeping pace with the increase in consumer prices. You don’t need to be a math genius to realize that 5.2% is less than 6.2%.

“Wages are a real pain point. People are paying more but not making more,” said Marta Norton, chief investment officer of the Americas with Morningstar Investment Management. With that in mind, Norton said there is a “higher probability of stagflation.”

Stagflation is the nasty economic combination of stagnant growth and persistent inflation.

Retail sales have held up relatively well despite inflation pressures, but Norton warns that can’t last forever. American shoppers would eventually reach their breaking point and just start buying essentials. A slowdown in consumption will inevitably lead to lower prices…but also slower economic growth.

“Inflation is its own cure. Consumers have the power to spend or not spend,” she said.

The third quarter is mercifully over. It’s been another doozy for the market. September in particular was bleak. It was the worst month for the Dow since the start of the pandemic in March 2020.

But even though we’re seemingly in a bear market for everything as bonds, gold and bitcoin have all tumbled this year as well, there are some hopeful signs for the next few months.

The fourth quarter is typically a festive time on Wall Street. Investors tend to buy stocks in anticipation of robust consumer shopping during the holidays. Businesses typically spend more as well to flush out those yearly budgets. And major companies also often give rosy guidance in October about earnings expectations for the coming year.

“October has been a turnaround month—a ‘bear killer’ if you will,” said Jeff Hirsch, editor-in-chief of the Stock Trader’s Almanac, in a recent blog post.

Hirsch added that a dozen bear markets since World War II have ended in the month of October. And of those twelve, seven market bottoms happened during midterm election years.

Traders will definitely be keeping close tabs on Washington this fall to see if Republicans gain control of the House. That could lead to more gridlock in DC, which investors tend to like.

Whether or not Corporate America and investors are going to be so bullish this October is up for debate given the concerns about inflation, interest rates and the global economy. After all, October is also famous for huge crashes, most recently in 2008 but also in 1987 and, of course, 1929.

So stocks definitely could take another turn for the worse. But experts are hopeful that the end of the bear market is in sight.

“We’re nearer to a bottom,” said Christopher Wolfe, chief investment officer of First Republic Private Wealth Management. “A lot of quality companies are on sale. It’s a time to be patient and reposition.”

Monday: US ISM manufacturing; China stock markets closed all week

Tuesday: US job openings and labor turnover (JOLTS); Japan inflation; Australia interest rate decision

Wednesday: US ADP private sector jobs; US ISM services; OPEC+ meeting

Thursday: US weekly jobless claims; earnings from ConAgra

(CAG), Constellation Brands

(STZ), McCormick

(MKC) and Levi Strauss

(LEVI)

Friday: US jobs report; Germany industrial production; earnings from Tilray

(TLRY)

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October 2, 2022
Nikola to pause truck production after posting bigger quarterly loss | CNN Business

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CNN
—

Nikola Corp on Tuesday reported a bigger quarterly loss and said it would pause production to streamline the assembly line at its Coolidge, Arizona factory amid sluggish demand for its battery-powered trucks.

Investors have focused at cash reserves at Nikola and other EV makers amid fears that slowing sales could push the companies to pursue more share sales to raise funds.

“At the end of May, we plan to pause truck production as we convert the line to accommodate both hydrogen fuel cell and battery electric trucks on the same line and will resume production in July with the first saleable hydrogen fuel cell trucks,” Nikola said.

Earlier in the day, Fisker Inc cut its full-year production target as the electric-vehicle startup seeks to keep a leash on expenses and reported a smaller first-quarter loss.

Nikola’s net loss widened to $169.09 million in the quarter, from $152.94 million a year earlier.

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April 12, 2021
Lyft stock plunges nearly 15% on weaker than expected revenue forecast | CNN Business

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CNN
—

Lyft may have a bumpy road ahead to recovery.

The ride-hailing company reported revenue of $1 billion for the quarter ending in March, marking a 14% year-over-year increase and beating Wall Street estimate’s. But the company forecast weaker-than-expected revenue for the current quarter, which was enough to jitter investors.

Shares of Lyft plunged nearly 15% in after-hours trading Thursday following the earnings results.

The latest earnings report comes on the heels of Lyft shaking up its the C-suite and announcing plans to cut 26% of its employees as it fights for market share and profitability.

David Risher, who previously worked at Amazon and Microsoft, recently took over as CEO of Lyft and the company’s two co-founders stepped down from their management positions at the company. Risher has been a member of the Lyft board since 2021.

On a conference call with analysts on Thursday to discuss the results, Risher said Lyft is currently at “an inflection point” as people return to pre-pandemic social habits.

“I am very aware of our current levels of growth and profitability are not acceptable,” Risher said on the call, his first as CEO. “I am committed to growing Lyft into a large, durable, profitable business, that our riders, drivers and shareholders love, and I look forward to keeping you informed on our progress.”

Compared to its chief rival Uber, Lyft has so far struggled to bounce back from the pandemic’s hit to its business. While Uber diversified its business beyond ride-hailing by delivering meals and grocery items during the health crises, Lyft never did. Uber also was able to attract drivers back to the platform better than Lyft as pandemic restrictions eased in the U.S.

Earlier this week, Uber said in its quarterly earnings report that revenue was up 29%, as demand for its rideshare and delivery services held firm despite lingering recession fears.

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April 12, 2021
AI chip boom sends Nvidia’s stock surging after whopper of a quarter | CNN Business

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New York
CNN
—

The AI boom is here, and Nvidia is reaping all the benefits.

Shares of Nvidia

(NVDA) exploded 28% higher Thursday after reporting earnings and sales that surged well above Wall Street’s already lofty expectations. That was enough to make investors temporarily forget about America’s dangerous debt ceiling standoff, sending the broader stock market higher — even after credit rating agency Fitch warned late Wednesday that America could soon lose its sterling AAA debt rating.

Nvidia makes chips that power generative AI, a type of artificial intelligence that can create new content, such as text and images, in response to user prompts. That’s the kind of AI underlying ChatGPT, Google’s Bard, Dall-E and many of the other new AI technologies.

“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said Jensen Huang, Nvidia’s CEO, in a statement. “A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”

Huang said Nvidia is increasing supply of its entire suite of data center products to meet “surging demand” for them.

Last quarter, Nvidia’s profit surged 26% to $2 billion, and sales rose 19% to $7.2 billion, each easily surpassing Wall Street analysts’ forecasts. Nvidia’s outlook for the current quarter was also significantly — about 50% — higher than analysts’ predictions.

Nvidia’s stock is up nearly 110% this year.

“There is not one better indicator around underlying AI demand going on … than the foundational Nvidia story,” said Dan Ives, analyst at Wedbush. “We view Nvidia at the core hearts and lungs of the AI revolution.”

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April 12, 2021
Apple is now worth $3 trillion, boosted by the Nasdaq’s best start in 40 years | CNN Business

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New York
CNN
—

Apple’s stock ended trading Friday valued at $3 trillion, the only company ever to reach that milestone. It has been riding a Big Tech stock wave that has given the Nasdaq its best first half gain in 40 years.

Shares of Apple rose more than 2% Friday at a record $193.97. With 15.7 billion shares outstanding, that stock price pushed Apple to its historic market value.

Apple has been here once before: On January 3, 2022, Apple hit the $3 trillion mark during intraday trading, but it failed to close there.

The company’s stock closed Thursday at a record high share price for the third-straight day, but it merely budged 0.2% higher. Apple easily surpassed the $190.73 level it needed to break $3 trillion at Friday’s market open.

The sky-high valuation for the tech giant comes on the heels of its risky launch of the Apple Vision Pro earlier this month and a stronger-than-expected quarterly earnings report in May – even though sales and profit slumped.

The Vision Pro, which will go on sale next year, impressed tech journalists who got an early preview of the augmented reality device. But it is entering a nascent market with little mainstream consumer adoption. Apple plans to charge a hefty $3,499 for its headset, which currently has limited apps and experiences, and requires users to stay tethered to a battery pack the size of an iPhone.

Apple’s

(AAPL) stock has skyrocketed 49% this year, boosted by a broader surge in Big Tech stocks as investors have jumped onto the AI bandwagon. Nvidia

(NVDA) leads the S&P 500 with a 190% jump this year, followed by Meta

(META) at 138%.

The Nasdaq grew by 31.7% in the first half of the year, notching its largest first half percentage gain since 1983.

This year’s stock market success for Apple comes in sharp contrast to 2022. At the start of 2023, Apple’s market cap fell below $2 trillion in trading for the first time since early 2021.

Wall Street ended the first half of 2023 on a positive note as the tech rally led markets to close higher for both the month and second quarter of the year.

The S&P 500 gained 6.5% in June, its best monthly performance since January. It also notched its third consecutive quarter of growth, up 8.3% in the second quarter. The S&P 500 is about 15.9% higher so far this year, its best half since 2019.

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April 12, 2021
Nvidia says US curbs on AI chip sales to China would cause ‘permanent loss of opportunities’ | CNN Business

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Hong Kong
CNN
—

Nvidia warned Wednesday that if the United States imposes new restrictions on the export of AI chips to China, it would result in a “permanent loss of opportunities” for US industry.

The company’s chief financial officer, Colette Kress, said she didn’t anticipate any “immediate material impact” but tighter curbs would impact earnings in the future.

US officials plan to tighten export curbs announced in October to restrict the sale of some artificial-intelligence chips to China, according to multiple media reports, including the Wall Street Journal and Financial Times. Washington has ramped up efforts to cut China off from key technologies that can support its military.

The US Department of Commerce has not replied to a CNN request for comment.

The rules, as reported, could make it harder for companies like Nvidia

(NVDA) to sell advanced chips to China. Fueled by a boom in demand for its AI chips, the company briefly hit a market capitalization of $1 trillion in late May.

“We are aware of reports that the US Department of Commerce is considering further controls that may restrict exports of our A800 and H800 products to China,” Kress told an investment conference.

“Over the long-term, restrictions prohibiting the sale of our datacenter GPUs to China, if implemented, would result in a permanent loss of opportunities for US industry to compete and lead in one of the world’s largest markets and impact on our future business and financial results,” she said.

GPUs refer to graphics processing units, which are chips or electronic circuits capable of rendering graphics for display on electronic devices.

“Given the strength of demand for our products worldwide, we do not anticipate that such additional restrictions, if adopted, would have an immediate material impact on our financial results. We do not anticipate any immediate material impact on our financial results,” Kress added.

Last October, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license.

The new move is aimed in part at Nvidia’s A800 chip, which the US-based company created following the introduction of last year’s curbs in order to continue to sell to China, Bloomberg reported.

China is a key market for Nvidia. Revenues from mainland China and Hong Kong accounted for 22% of the company’s revenue last year, according to its financial statements.

On Wednesday, shares of Nvidia slumped as much as 3.2%, before recouping some of the losses. It ended down 1.8%. Chinese AI stocks suffered much heavier losses.

Inspur Electronic Information Industry fell by 10%, the maximum allowed, on Wednesday in Shenzhen. It dropped again by 5.3% on Thursday. Chengdu Information Technology of Chinese Academy of Sciences slid 12% on Wednesday. Baidu

(BIDU), which is developing a rival to ChatGPT, sank 4.4% on Thursday in Hong Kong.

“The US could ruin China’s AI party,” Jefferies analyst said in a research note. Local chipsets do not have Nvidia’s GPU ecosystem, thus every update may require reworking, resulting in lower efficiency and higher costs.

The Biden administration’s chip curbs would be “much more effective” in limiting China’s advances in military power driven by AI than rules restricting US investment in China’s tech sector, the analysts added.

China has strongly criticized US restrictions on tech exports, saying earlier this year that it “firmly opposes” such measures.

In May, Beijing banned Chinese operators of critical information infrastructure from buying products from Micron Technology

(MU), in apparent retaliation against sanctions imposed by Washington and its allies on the country’s chip sector.

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April 12, 2021
How Uber left Lyft in the dust | CNN Business

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CNN
—

For years, Lyft positioned itself as the “nice guy” in the ride-hailing industry. It let rival Uber do most of the dirty work fighting regulators and the taxi industry to create a path for a new crop of companies to offer rides to customers through an app.

In the process, Lyft cultivated a feel-good brand – but Uber dominated the market. For a brief moment in 2017, however, it looked like the balance of power might shift, as Uber was rocked by a seemingly endless series of PR crises that culminated with its founder and CEO Travis Kalanick stepping down.

Six years later, however, Lyft’s position is arguably more precarious than it has ever been. Uber now has 74% of the US rideshare market, up from 62% in 2020, according to market research firm YipitData, while Lyft’s market share slipped to 26% from 38% during that same period. Meanwhile, Lyft stock has plunged nearly 90% since it went public in 2019.

In a nod to those challenges, Lyft announced Monday that its two cofounders, Logan Green and John Zimmer, would step back from their management roles and the company would bring in Amazon veteran and Lyft board member David Risher to take the helm of Lyft as CEO.

In its announcement, Lyft framed the leadership change as a straightforward succession plan. “All founders eventually find the right moment to step back and the right leaders to take their company forward,” Green said in a statement. “As a member of the board, he knows both the challenges and opportunities ahead.”

For Lyft, the current challenges are immense. While Uber diversified its business beyond ride-hailing by delivering meals and grocery items, Lyft never did. That arguably hurt the company earlier in the pandemic when fewer customers were traveling but more were ordering items online. Late last year, Lyft said it was cutting 13% of its staff, or 700 employees, as part of a major effort to cut costs.

At the same time, Lyft now faces an Uber that is run by a seasoned executive, Expedia veteran Dara Khosrowshahi, who immediately got to work straightening up the company’s business and image. Under Khosrowshahi, Uber doubled down on growing its meal delivery business, while working to cut costs elsewhere, including by selling off more experimental efforts like its self-driving car unit.

In its most recent earnings report last month, Uber said that it had its “strongest quarter ever,” reporting a 49% year-over-year increase in revenue. Lyft’s latest earnings report, meanwhile, was unusually disappointing for Wall Street.

One tech analyst, Dan Ives of Wedbush Securities, said Lyft’s conference call to discuss the results “was a Top 3 worst call we have ever heard” as its “management is trying to play darts blindfolded.” He slammed the earnings outlook offered on the call as a “debacle for the ages.”

With Risher as the new CEO, Lyft is clearly hoping for a turnaround. Risher was the 37th employee of Amazon – a company that has long been the model for the on-demand industry – and he went on to become the e-commerce giant’s first head of product and head of US retail. In its statement announcing Risher as the new CEO, Lyft pointed to his legacy at Amazon: “In tribute to Mr. Risher’s contributions, Jeff Bezos added a permanent thank-you to the Amazon website, where it can still be seen  today.”

Tom White, a senior research analyst at D.A. Davidson, wrote in a note this week that the new CEO “could signal an increased willingness to broaden the strategic aperture at  LYFT a bit as it relates to areas like product strategy (delivery), partnerships, or other novel ways to create value.”

Nicholas Cauley, an analyst at research firm Third Bridge, wrote that Lyft “still has many levers it can pull to regain market share.” He added: “There are still improvements to be made and a leadership change is a positive catalyst for turning the ship around.”

But in an interview with CNN’s Julia Chatterley on Wednesday, Risher seemed to dash hopes that Lyft would borrow from Uber’s playbook and branch into other delivery categories.

Risher told CNN he wants to make sure Lyft focuses on providing a great ride-hailing service and “not get distracted by delivering pizzas or packages or all sorts of other things that other companies are doing.”

“I don’t really want to get in the same car that, you know, just delivered the tuna sandwich,” he added. “And if you talk to drivers, they say, ‘Gosh, I don’t make as much in food delivery and it’s more frustrating. I get tickets when I’m double parked in front of the restaurant and so forth.’ So, you know, I think that, that Uber has its challenges too. I really do.”

Risher also said “it’s not our focus” to pursue a sale of the company.

While the market initially seemed to welcome Risher’s appointment, the slight uptick in Lyft stock after the news came out was quickly wiped out a day later once Risher started talking about his plans for the company.

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April 12, 2021
TSMC says skilled worker shortage delays start of Arizona chip production | CNN Business

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Shares of Taiwan Semiconductor Manufacturing Co slumped more than 3% Friday after the world’s largest contract chipmaker flagged a 10% drop in 2023 sales and said production due to start next year at its first plant in Arizona would be delayed.

On Thursday, TSMC

(TSM) reported a 23% fall in second-quarter net profit — its first year–on-year drop in quarterly profit since 2019 — as global economic woes take a toll on demand for chips used in everything from cars to cellphones.

“While the company’s declining revenue and profit were disappointing, its long-term growth prospects remain encouraging,” said Brady Wang, associate director at Counterpoint Research. “Despite facing macroeconomic headwinds, TSMC’s long-term outlook remains robust, supported by mega trends like 5G and high-performance computing.”

As TSMC steps up its global expansion, the company said production at its first plant in Arizona will be delayed until 2025 due to a shortage of specialist workers.

“While we are working to improve the situation, including sending experienced technicians from Taiwan to train the local skilled workers for a short period of time, we expect the production schedule of N4 process technology to be pushed out to 2025,” TSMC chairman Mark Liu said Thursday.

TSMC’s total investment in the US project amounts to $40 billion.

The company said its position as the largest manufacturer of artificial intelligence chips and high demand for AI have not offset broader end-market weakness as the global economy recovers more slowly than it had expected.

“The short-term frenzy about the AI demand definitely cannot extrapolate for the long term. Neither can we predict the near future — meaning next year — how the sudden demand will continue or flatten out,” Liu said.

Still, the company’s earnings of 181.8 billion Taiwan dollars ($5.85 billion) for the quarter ending in June beat forecasts.

“We see TSMC well-positioned for a strong growth outlook in 2024,” Goldman Sachs said in a research note. “We believe the US expansion delay is also well-expected by investors.”

Other analysts, too, were upbeat on TSMC, thanks in part to strong demand for AI, which currently accounts for around 6% of the company’s revenue.

“We expect a solid 2024-onward outlook on the back of its leading position in AI chip manufacturing,” Citi Research analysts said in a note.

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April 12, 2021
Samsung to cut chip production after posting lowest profit in 14 years | CNN Business

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Seoul
Reuters
—

Samsung Electronics said on Friday it would make a “meaningful” cut to chip production after flagging a worse-than-expected 96% plunge in quarterly operating profit, as a sharp downturn in the global semiconductor market worsens.

Shares in the world’s largest memory chip and TV maker rose 3% in early trading, while rival SK Hynix shares surged 5% as investors welcomed plans to cut production to help preserve pricing power.

Samsung

(SSNLF) estimated its operating profit fell to 600 billion won ($455.5 million) in January-March, from 14.12 trillion won a year earlier, in a short preliminary earnings statement. It was the lowest profit for any quarter in 14 years.

“Memory demand dropped sharply … due to the macroeconomic situation and slowing customer purchasing sentiment, as many customers continue to adjust their inventories for financial purposes,” it said in the statement.

“We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured,” it added, in a reference to those with sufficient inventories.

The production cut signal is unusually strong for Samsung, which previously said it would make small adjustments like pauses for refurbishing production lines but not a full-blown cut.

It did not disclose the size of the planned cut.

The first-quarter profit fell short of a 873 billion won Refinitiv SmartEstimate, weighted toward analysts who are more consistently accurate. Multiple estimates were revised down earlier this week.

It was the lowest since a 590 billion won profit in the first quarter of 2009, according to company data.

With consumer demand for tech devices sluggish due to rising inflation, semiconductor buyers including data center operators and smartphone and personal computer makers are refraining from new chip purchases and using up inventories.

Analysts estimated the chip division sustained quarterly losses of more than 4 trillion won ($3.03 billion) as memory chip prices fell and its inventory values were slashed.

This would be the chip business’ first quarterly loss since the first quarter of 2009, a major divergence for what is normally a cash cow that generates about half of Samsung’s profits in better years.

Revenue likely fell 19% from the same period a year earlier to 63 trillion won, Samsung said.

The company is due to release detailed earnings, including divisional breakdowns, later this month.

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April 12, 2021
Uber’s post-pandemic growth is slowing | CNN Business

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New York
CNN
—

Uber has reported that its revenue ticked up 14% last quarter, marking a slower pace of growth than recent quarters when sales surged as riders returned to pre-pandemic habits.

The company on Tuesday reported revenue of $9.2 billion for the quarter ending in June, a 14% increase from the same period last year, just missing Wall Street’s estimates. The number of trips customers took were up 22% in the quarter.

The company reported its first-ever unadjusted operating profit of $326 million. It also posted record quarterly free cash flow of $1.1 billion.

“For most of our history, ‘profitable’ wasn’t the first thing that came up when you ask someone about Uber,” CEO Dara Khosrowshahi said on a call with analysts Tuesday morning. “But we knew they were wrong about Uber, as did many of our investors who backed us over the years.”

Uber also said gross bookings (the amount paid by customers) surged 16% year over year to $33.6 billion. Trips during the quarter grew 22% to 2.3 billion, or approximately 25 million trips per day on average.

On the call, the chief executive touted “a new all-time high of $15.1 billion in total earnings for drivers and couriers on the platform” that was seen last quarter.

Uber also announced Tuesday that Chief Financial Officer Nelson Chai will leave the company next January, and a search for his replacement is underway.

“Nelson has been a huge part of Uber’s transformation over the past five years,” Khosrowshahi said on the analysts’ call. “I know that I speak for the entire company that we’re grateful for everything he’s done to establish such a strong foundation for a path forward.”

Shares for Uber climbed by some 4% in pre-market trading Tuesday morning as the company offered rosy guidance. Uber stock has roughly doubled since the start of the year.

In a note Tuesday morning, William Blair analyst Ralph Schackart touted how the strong results this past quarter were “driven by continued execution, robust engagement, and record audience levels using the platform.”

“Uber continues to drive incremental profitability, demonstrating its ability to efficiently run the broader business and drive positive results,” Schackart added.

Uber has so far navigated its pandemic recovery far better than its chief rival, Lyft. Lyft is set to report quarterly earnings next week on Tuesday.

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April 12, 2021
Meta stock jumps after company reports first revenue growth in nearly a year | CNN Business

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New York
CNN
—

Facebook-parent Meta on Wednesday reported that it grew sales by 3% during the first three months of the year, reversing a trend of three consecutive quarters of revenue declines and far exceeding Wall Street analysts’ expectations.

Meta shares jumped as much as 12% in after-hours trading following the report, continuing the company’s strong trajectory since Zuckerberg announced that 2023 would be a “year of efficiency.”

Another bright spot: user growth was relatively strong compared to recent quarters. The number of monthly active people on Meta’s family of apps grew 5% from the prior year to more than 3.8 billion and Facebook daily active users increased 4% to more than 2 billion.

“We had a good quarter and our community continues to grow,” Zuckerberg said in a statement Wednesday. “We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long term vision.”

But Meta has a long hill to climb.

The company also reported that profits declined by nearly a quarter compared to the same period in the prior year to $5.7 billion. Price per advertisement — an indicator of the health of the company’s core digital ad business — also decreased by 17% from the year prior.

Meta has been in the midst of a massive restructuring, as it attempts to recover from a perfect storm of heightened competition, lingering recession fears resulting in fewer ad dollars and a multibillion dollar effort to build a future version of the internet it calls the metaverse. Meta said in November it would eliminate 11,000 jobs, the single largest round of cuts in its history. And in March, Zuckerberg announced Meta would lay off another 10,000 employees. All told, the cuts will shrink Meta’s workforce by a quarter.

Meta took a hit of more than $1 billion related to the restructuring in the March quarter, and said it will realize additional charges of around $500 million related to 2023 layoffs by the end of the year.

Zuckerberg said on a call with analysts Wednesday that when Meta started its “efficiency work” late last year, “our business wasn’t performing as well as I wanted, but now we’re increasingly doing this work from a position of strength.”

The company said it expects revenue to grow again in the current quarter compared to the prior year. And it slightly lowered its expectations for full-year expenses, potentially buoying investor optimism.

“The year of efficiency is off to a stronger than expected start for Meta,” Insider Intelligence principal analyst Debra Aho Williamson said in a statement. But she added that the company “can’t afford to sit still in this environment.”

Like other tech companies, Meta has recently read investor cues and taken to playing up its focus on artificial intelligence rather than the metaverse. The shift comes as Meta contends with the popularity of AI tools from tech firms like Microsoft and OpenAI.

In his statement with the results Wednesday, Zuckerberg said: “Our AI work is driving good results across our apps and business.” He added in the call that the company’s AI work includes efforts to build AI chat experiences in WhatsApp and Messenger, as well as visual creation tools for posts on Facebook and Instagram and advertisements.

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April 12, 2021
Golden Entertainment’s revenue reaches $257.7M in Q3; The Strat renovations expected to drive future growth | Yogonet International
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Golden Entertainment, the operator of Las Vegas’ The Strat Hotel, reported its financial results for the third quarter ended September 30, 2023. Although revenue for the three-month period was down, the company reported improved performance in its Nevada Casino Resorts segment, driven by increased occupancy and its recent completion of room and pool renovations at The Strat.

The Las Vegas-based gaming and hospitality firm reported a total revenue of $257.7 million and a net income of $241.2 million for the third quarter. The overall revenue experienced a decline of approximately 7.6% compared to the previous year.

It also reported an Adjusted EBITDA of $53.2 million in Q3 of 2023, compared to $61.1 million in the third quarter of 2022. Declines in revenues and Adjusted EBITDA were primarily due to the exclusion of full-quarter results for the Rocky Gap Casino Resort and the Montana distributed gaming business that were sold during the third quarter.

Specifically at The Strat, revenue was up by 8% with completed room renovations and a new neighbor down the street, the Fontainebleau, which the company expects to bring more foot traffic to its flagship resort. The completion of most of the room renovations is fueling high expectations, along with the January debut of the $70 million Atomic Golf attraction.

“We feel that the property is now well-positioned to capitalize on the high-traffic events like F1 and Super Bowl coming to Vegas over the coming quarters and beyond,” said Charles Protell, President and Chief Financial Officer of Golden Entertainment.

During an earnings call with investors, Blake Sartini, Chairman and Chief Executive Officer of Golden Entertainment, said the company’s Nevada Locals Casinos segment maintained a strong performance. Meanwhile, tavern revenue was “flat” during the summer months, when business is typically slower. However, Golden reports that the last eight taverns it has opened are generating a return on investment of 25%.

The company expects to complete the purchase of four more taverns by the end of the year, and two more early next year. It’s also exploring sites for future tavern development.
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Blake Sartini
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In September, the firm completed the sale of its Montana-distributed gaming business to J&J Ventures Gaming for an aggregate cash consideration of approximately $109 million and is “on track” to complete the sale of its Nevada-distributed gaming business at the end of the year.

“The completion of these transactions significantly strengthens our balance sheet, enables the return of capital to shareholders, and provides financial flexibility to enhance shareholder value,” Sartini explained.

As of September 30, the company’s total principal amount of debt outstanding was $738.7 million, consisting primarily of $399 million in outstanding term loan borrowings and $335.5 million of senior unsecured notes.

As of that same date, the company also had cash and cash equivalents of $295.9 million. There continue to be no outstanding borrowings under the company’s $240 million revolving credit facility.

In addition to The Start, Golden Entertainment owns two more Las Vegas casinos, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder. Golden also owns Laughlin properties Aquarius Casino and Resort and Edgewater Casino and Resort, along with three casinos in Pahrump: Pahrump Nugget, Gold Town Casino, and Lakeside Casino and RV Park.
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December 31, 1969