ReportWire

Tag: iab-business accounting & finance

  • Apple is the only US tech giant to have avoided significant layoffs. Will it last? | CNN Business

    Apple is the only US tech giant to have avoided significant layoffs. Will it last? | CNN Business

    [ad_1]



    CNN
     — 

    In less than three months, four of the big five US tech companies have cut tens of thousands of employees combined, shattering myths about the industry’s seemingly unstoppable growth in the process.

    But there has been one notable exception: Apple.

    To date, Apple

    (AAPL)     has not announced any substantial cuts, thanks in part to slower headcount growth than some of its peers during the pandemic and continued demand for its core products. Some analysts think more modest cost cuts could be coming, however.

    The iPhone maker is set to report earnings results for the final three months of 2022 on Thursday after the bell. It is expected to post a rare year-over-year decline in revenue.

    While these expectations show the strain Apple’s business is under, Wedbush Securities’ Dan Ives said in a note this week that pent-up demand for upgrading iPhones remains strong. “Apple will likely cut some costs around the edges, but we do not expect mass layoffs from Cupertino this week,” Ives wrote.

    Tom Forte, a senior research analyst at DA Davison, agreed there will be staff reductions, but likely not as drastic as those at other large tech companies. “Apple will cut headcount,” he said in a recent interview on Bloomberg TV, but suggested the cuts would come through attrition or reductions at the retail level.

    “While they haven’t done so yet, like everyone else, they will adjust their headcount for the current level of demand,” he said.

    Fueled by a surge in demand for digital products earlier in the pandemic, Big Tech went on a massive hiring spree.

    Amazon

    (AMZN)     and Meta each doubled their headcount between the third quarter in 2019 and the third quarter 2022, according to data shared in the companies’ securities filings. Alphabet, meanwhile, grew its headcount 64% during that time, and Microsoft grew its staff by more than 50% over approximately the same period.

    Apple, by comparison, grew its headcount by a more modest 20%. As of September 2022, Apple said it had approximately 164,000 full-time employees.

    Many tech CEOs, with varying degrees of remorse, have blamed over-hiring in the early days of the pandemic for the mass layoffs now. As pandemic restrictions eased last year, the demand for digital services shifted back toward pre-pandemic levels. Inflation pinched consumer and business spending, and rising interest rates evaporated the easy money tech companies had tapped into. And one-by-one, amid the whiplash, household names in Silicon Valley began announcing widespread layoffs to adjust to the new environment.

    While Apple has not announced layoffs, its business has been strained in other ways. Like other Big Tech companies, it has faced threats of antitrust action in the United States and EU. Earlier this month, Apple also said CEO Tim Cook had agreed to a massive pay cut this year, following a shareholder vote on his compensation package after its stock fell about 27% in 2022.

    As consumer spending tightened, global smartphone shipments plunged 18% in the fourth quarter of 2022, according to market research firm Canalys. Apple’s business also faced supply chain hurdles linked to China’s Covid lockdowns and unrest that hit a key production site in Zhengzhou, China late last year.

    Still, Apple’s business is weathering the downturn better than some of its fellow tech giants. In its most-recent earnings report, the company reported sales grew 8% year-over-year and that the company hit a September quarter revenue record for iPhone.

    Thursday’s earnings results will show whether Apple can keep defying gravity.

    “Apple continues to innovate with high-quality, industry-leading products supported by a powerful digital platform,” analysts at Monness, Crespi and Hardt wrote in an investor note Tuesday. “However, regulatory headwinds persist and we believe the darkest days of this downturn are ahead of us.”

    [ad_2]

    Source link

  • Shell profits double to record $40 billion | CNN Business

    Shell profits double to record $40 billion | CNN Business

    [ad_1]


    Hong Kong/London
    CNN
     — 

    Shell made a record profit of almost $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

    Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double the $19.3 billion it posted in 2021 — driven by a strong performance in its gas trading business. The company’s stock was up 1.7% in London.

    The company reported $9.8 billion in profit in the fourth quarter. Just over 40% of Shell’s full-year earnings came from its integrated gas business, which includes liquified natural gas trading operations.

    Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.”

    The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

    ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron

    (CVX)     reported a record full-year profit of $36.5 billion.

    That has led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.

    Shell said it expected to pay an additional $2.3 billion in tax related to the EU windfall tax and the UK energy profits levy. The company paid $13 billion in tax globally in 2022.

    Shell

    (RDSA)     also announced another $4 billion share buyback program and confirmed it would lift its dividend per share by 15% for the fourth quarter.

    — This is a developing story and will be updated.

    [ad_2]

    Source link

  • Meta shares surge nearly 20% as Zuckerberg pledges to make 2023 a ‘year of efficiency’ | CNN Business

    Meta shares surge nearly 20% as Zuckerberg pledges to make 2023 a ‘year of efficiency’ | CNN Business

    [ad_1]


    New York
    CNN
     — 

    For years, Facebook and its CEO Mark Zuckerberg invested heavily in growth, including in areas like virtual reality with unproven potential. But after a brutal year in which the company lost more than $600 billion in market value, Zuckerberg has started speaking Wall Street’s language — and they are rewarding him for it.

    Facebook-parent Meta on Wednesday posted its third straight quarterly decline in revenue and a sharp drop in profit for the final three months of 2022, as it confronted broader economic uncertainty, heightened competition in the social media market and incurred significant charges from a recent round of layoffs.

    But the company nonetheless outperformed Wall Street analysts’ expectations for sales. Moreover, it pledged to focus on “efficiency,” lowered its forecast for capital expenditures in the year ahead and announced plans to boost its share repurchase plan by $40 billion. All of that helped send shares of Meta up nearly 20% in after hours trading Wednesday.

    “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said in a statement with the earnings results.

    Meta reported nearly $32.2 billion in revenue for the quarter, down 4% from the year prior but ahead of the $31.5 billion analysts had projected. The social media giant’s quarterly net income was just shy of $4.7 billion, down 55% from the same period in the prior year and below analysts’ expectations.

    Meta announced plans to lay off around 11,000 employees in November. The company also currently has a broad hiring freeze in place and plans to limit hiring throughout the year, Meta CFO Susan Li said on a call with analysts Wednesday.

    In its earnings report, Meta said it has cut its guidance for capital expenditures for 2023 down slightly to between $30 billion and $33 billion, citing plans for lower data center construction spending. It also added that “substantially all of our capital expenditures continue to support the Family of Apps,” a term that refers to Facebook, Instagram and WhatsApp, perhaps in an effort to reassure investors skeptical of its plan to center its business model around the future version of the internet it calls the metaverse.

    For the first quarter of 2023, Meta expects revenue between $26 and $28.5 billion, the upper end of which would represent an increase from the year-ago quarter and would break Meta’s streak of consecutive quarterly revenue declines. The guidance is somewhat better than Snapchat-parent Snap’s from earlier in the week, which said it expects first quarter revenue to fall between 2% and 10% compared to the previous year.

    Zuckerberg explained the focus on efficiency during the analyst call by acknowledging that for the first 18 years of the company’s history, its revenue grew sharply each year. “And then obviously that changed very dramatically in 2022, where our revenue was negative growth for the first time in the company’s history … and we don’t anticipate that’s going to continue but I don’t necessarily think it’s going to go back to the way it was before.”

    He added: “So I think this is a pretty rapid phase change there that I think just forced us to basically take a step back and say, okay, we can’t just treat everything like it’s hyper-growth,” although Zuckerberg said he thinks the shift in mindset “actually makes us better.”

    Meta’s user numbers also marked a bright spot from Wednesday’s report. Facebook now has 2 billion daily active users, and Meta’s family of apps grew its daily active people by 5% year-over-year to 2.96 billion, a welcome sign for the company following concerns about stagnant user growth last year.

    The company’s core advertising business fell just over 4% to nearly $31.3 billion, a “better-than-expected” result that “should refute concerns over the state of the digital advertising industry,” said Jesse Cohen, senior analyst at Investing.com. Li said that ad revenue growth from its top advertising verticals, online commerce and consumer packaged goods, remained negative during the December quarter but fell at a slower rate than in the previous quarter.

    Still, Meta’s average price per ad fell 22% year-over-year during the December quarter, and 16% overall in 2022, as the company grapples with Apple’s app tracking changes and increased competition from the likes of TikTok.

    The company also lost a total of more than $13.7 billion in its “Reality Labs” unit which houses its metaverse efforts. Fourth quarter Reality Labs revenue fell 17% to $727 million, due to lower sales of its Quest 2 headset, the company said.

    [ad_2]

    Source link

  • ExxonMobil earnings more than double to annual record | CNN Business

    ExxonMobil earnings more than double to annual record | CNN Business

    [ad_1]


    New York
    CNN Business
     — 

    ExxonMobil’s earnings slowed from a peak earlier in the year but the oil giant still reached a full-year record profit more than double what it reported a year ago.

    The company earned adjusted income of $14 billion in the quarter, down from the record $18.7 billion it earned in the third quarter, but it was up from $8.8 billion in the fourth quarter of 2021. That was also better than the forecast from analysts surveyed by Refinitiv.

    The solid fourth quarter lifted full-year earnings to $59.1 billion from $23 billion in 2021, and well above the previous record net income of $45.2 billion it reported for 2008, the year that saw the record high for oil and US gasoline prices before the records set last year.

    The company was helped by soaring oil prices following Russia’s invasion of Ukraine nearly a year ago. But oil prices have been coming down from the peak reached in June, and are now down to pre-invasion levels.

    Oil companies such as ExxonMobil have faced criticism from the White House and some members of Congress for taking much of the profit and using it to repurchase shares and increase dividend, rather than increase production.

    CEO Darren Woods defended the company’s investments in production, saying the company’s North American refineries had their greatest output ever, and that it had its highest global refinery production since 2012.

    “Our results clearly benefited from a favorable market,” said Woods. “But, to take full advantage of the undersupplied market our work began years ago, well before the pandemic when we chose to invest counter-cyclically. We leaned in when others leaned out, bucking conventional wisdom. We continued with these investments through the pandemic and into today.”

    Still, the company returned $29.8 billion to shareholders during the year, with about half of it coming through dividends and half through share repurchases.

    That compares to $22.4 billion in spending on exploration and other capital spending. It also reported a $22.8 billion, or 336%, increase in cash on hand, ending the year with $29.6 billion in cash on its balance sheet. And it repaid $7 billion in debt.

    The full-year results come to an average of $1,874 of profit for every second during the course of the year. Since it takes about two minutes to pump 20 gallons of gas, that means that in the time it takes to fill a nearly empty tank of a full-size SUV or pickup, ExxonMobil earned about $225,000, on average.

    Shares of ExxonMobil were slightly lower in premarket trading initially after the report, perhaps on investor disappointment that no new share repurchase program was announced. But shares were slightly higher in morning trading after the open.

    [ad_2]

    Source link

  • Samsung profits sink to 8-year low as smartphone and PC demand drops | CNN Business

    Samsung profits sink to 8-year low as smartphone and PC demand drops | CNN Business

    [ad_1]


    Hong Kong
    CNN
     — 

    Samsung’s quarterly profits have plunged to their lowest level in eight years as customers snapped up fewer cell phones and laptops.

    The tech giant reported operating profit of 4.3 trillion Korean won ($3.5 billion) on Tuesday for the three months ended December, down 69% from a year ago. Revenue fell 8% to just under 70.5 trillion won ($57.3 billion), it said in a statement.

    It was the company’s weakest quarterly profit since the third quarter of 2014, when its smartphone business lost serious ground to competitors.

    “The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” Samsung noted in the statement.

    The dreary results were anticipated. Samsung

    (SSNLF)     had flagged the lackluster performance in a pre-earnings forecast earlier this month, with analysts citing falling memory chip prices and fewer orders of consumer devices.

    In a presentation to investors, the electronics maker confirmed that “mobile and PC demand was weak,” and its memory chip business had also suffered “as customers continued to adjust their inventories amid deepening uncertainties.”

    Samsung expects some of those problems to continue in the coming months due to global economic uncertainty, though it anticipates overall demand to start recovering in the second half of the year.

    Smartphone demand will likely slide again this quarter compared to the same period a year ago, “due to the economic slowdown in major regions,” it said.

    Samsung’s shares dropped 3% in Seoul on Tuesday.

    There were some bright spots. Samsung said it took in 302.2 trillion won ($245.7 billion) in revenue for the full year of 2022, up from 279.6 trillion won ($227.4 billion) in 2021, and a record high.

    Analysts have said, however, that they expect the company’s profits to drop again this quarter because of a continued decline in memory chip prices.

    [ad_2]

    Source link

  • Here’s why you should always wait for the earnings call | CNN Business

    Here’s why you should always wait for the earnings call | CNN Business

    [ad_1]

    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
     — 

    Investors are pretty bad at living in the moment. We’re currently in the thick of fourth quarter earnings reports, but traders don’t seem to care about how companies fared during the final months of 2022. They’re more focused on what’s going to happen in the future.

    Case-in-point: Earnings calls, where top execs pontificate about their economic outlook, have been moving markets more than earnings-per-share and revenue reports.

    What’s happening: The mantra on Wall Street has become, as Ritholtz Wealth Management CEO Josh Brown puts it, “ignore the numbers, wait for the call.”

    Microsoft reported great fourth quarter earnings last Tuesday that beat Wall Street’s expectations, but the stock dropped 4% the next day. That’s because CEO Satya Nadella got on an earnings call with investors and warned of a slowdown in the company’s cloud business and software sales. His negative outlook came just as the company announced it was letting go of 10,000 employees, further spooking investors. 

    Other tech companies are following suit — while things are fine for the time being, they’re reporting that the future is foggy.

    IBM stock sank 4.5% last Thursday even as the tech titan beat Wall Street’s Q4 expectations. The reason for the drop might be because Jim Kavanaugh, IBM’s finance chief, warned on the conference call that it would be wise to expect the company’s total 2023 revenue growth to be on the low end. IBM also announced layoffs – the company said it plans to cut around 3,900 jobs or 1.5% of its total workforce. 

    The economic environment is rapidly changing. CEOs on earnings calls are talking more about recession than inflation now, according to an analysis by Purpose Investments.

    Wall Street is also beginning to fear an economic downturn more than painful rate hikes and as a result investors are putting more weight on CEO and CFO forecasts.

    And they’re looking bleak. As of Friday, 19 companies in the S&P 500 had issued forward earnings-per-share guidance for the first quarter of 2023, according to FactSet data. Of these 19 companies, 17, or 89%, issued negative guidance. That’s well above the 5-year average of 59%.

    “My best guess is that cautious tones on conference calls will be the norm, not the exception,” wrote Brown in a recent post. These slowdowns have been partially factored into stock prices, he said, “but not necessarily in full.”

    The upside: Market reaction appears to go both ways. American Express missed on earnings last week but said that credit card spending was hitting new records and that the future looks bright. The stock shot up more than 10%. 

    Prices at the pump typically fall during the coldest months as wintry weather keeps Americans off the roads. But something unusual is happening this year, reports my colleague Matt Egan. Gas prices are rocketing higher.

    The national average for regular gas jumped to $3.51 a gallon on Friday and remained there through the weekend, according to AAA. Although that’s a far cry from the record of $5.02 a gallon last June, gas prices have increased by 12 cents in the past week and 41 cents in the past month.

    All told, the national average has climbed by more than 9% since the end of last year – the biggest increase to start a year since 2009, according to Bespoke Investment Group.

    Why are gas prices jumping? It’s not because of demand, which remains weak, even for this time of the year. Instead, the problem is supply.

    The extreme weather in much of the United States near the end of last year caused a series of outages at the refineries that produce the gasoline, jet fuel and diesel that keep the economy humming. US refineries are operating at just 86% of capacity, down from the mid-90% range at the start of December, according to Bespoke.

    Beyond the refinery problems, oil prices have crept higher, helping to drive prices at the pump northward. US oil prices have jumped about 16% since December partially due to expectations of higher worldwide demand as China relaxes its Covid-19 policies and also because oil markets are no longer receiving massive injections of emergency barrels from the Strategic Petroleum Reserve.

    What’s next: Expect more pain at the pump. Patrick De Haan, head of petroleum analysis at GasBuddy, worries the typical springtime jump in prices will be pulled forward.

    “Instead of $4 a gallon happening in May, it could happen as early as March,” De Haan told CNN. “There is more upside risk than downside risk.”

    A return of $4 gas would be painful to drivers and could dent consumer confidence. Moreover, pain at the pump would complicate the inflation picture as the Federal Reserve debates whether to slow its interest rate hiking campaign.

    Goldman Sachs had a rough time in 2022, and the investment bank’s CEO, David Solomon, is being punished for it. Well, kind of. 

    The investment banking giant said in a Securities and Exchange Commission filing Friday that Solomon received $25 million in annual compensation last year. While that is still a very large amount of money, it’s down nearly 30% from the $35 million that Solomon raked in during 2021, reports my colleague Paul R. La Monica. 

    Solomon’s $2 million annual salary is unchanged. But the company said that his “annual variable compensation,” paid in a mix of performance-based restricted stock units and cash, was well below 2021 levels.

    Goldman Sachs (GS) shares fell more than 10% in 2022. The company also  reported a 16% drop in revenue in the fourth quarter and profit plunge of 66% earlier this month, mainly due to the lack of merger activity and initial public offerings.

    Maybe Solomon can make that extra $10 million with payouts from his burgeoning DJ career. 

    [ad_2]

    Source link

  • Jobs report to give further clues about where economy is headed | CNN Business

    Jobs report to give further clues about where economy is headed | CNN Business

    [ad_1]

    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
     — 

    The Federal Reserve is going to raise interest rates again on Wednesday. But will it be another half-point hike or just a quarter-point increase? And what about the rest of the year?

    The Fed’s actions beyond this week’s meeting will depend primarily on whether inflation is truly slowing. Investors will get another clue when the January jobs report is released on Friday.

    Economists predict that 185,000 jobs were added last month, a slowdown from the gain of 223,000 jobs in December and 263,000 in November. A further deceleration in the labor market would likely please the Fed, as it would show that last year’s rate hikes are successfully taking some air out of the economy.

    The Fed knows it’s in a tough situation. Inflation pressures are partly fueled by wage gains for workers. In an environment where the unemployment rate is at a half-century low of 3.5%, employees have been able to command big increases in pay to keep up with rising prices of consumer goods and services.

    Along those lines, average hourly earnings, a measure of wages that is also part of the monthly jobs report, are expected to increase 4.3% year-over year. That’s down from 4.6% in December and 5.1% in November.

    As wage growth cools, so do price increases. The Fed’s favorite measure of inflation – the Personal Consumption Price Index or PCE – rose “just” 5% over the past 12 months through last December, compared to a 5.5% annual increase in November.

    That is still uncomfortably high, but the trend is moving in the right direction.

    The problem for the Fed, though, is that it may need to keep raising interest rates until there is further evidence that the labor market is cooling off enough to push the rate of inflation even lower.

    Several other job market indicators continue to show that the US economy is in no serious danger of a recession just yet. The number of people filing for weekly jobless claims dipped last week to 186,000, a nine-month low. Investors will get the latest weekly initial claims numbers on Thursday.

    The market will also be closely watching reports about private-sector job growth from payroll processor ADP and the Job Openings and Labor Turnover Survey (JOLTS) from the Department of Labor this week. The last JOLTS report showed that more jobs were available than expected in November.

    Still, some expect that wage growth should continue to fall, which should take pressure off the Fed somewhat.

    “Wage growth has been on a slowing trajectory, and we suspect that softer wage growth will be a trend in 2023 as jobs available contract,” said Tony Welch, chief investment officer at SignatureFD, a wealth management firm, in a report.

    Not everyone agrees with that assessment. Organized labor has been winning bigger pay increases lately in the transportation industry. And more workers at tech and retail giants have been unionizing as of late.

    “Workers will be loath to relinquish the bargaining power they perceive to have gained over the past year,” said Jason Vaillancourt, global macro strategist at Putnam, in a report.

    Vaillancourt also pointed out that many consumers are still flush with cash that they saved up during the early stages of the pandemic. That could mean that inflation isn’t going away anytime soon.

    And even though the pace of jobs gains may be slowing, it’s not as if economists are starting to predict monthly job losses like the US has had in previous recessions.

    “Combine a strong labor market with a still substantial reserve of excess savings, and you have all the components in place to keep the Fed up at night,” Vaillancourt said.

    So as long as hopes for an economic “soft landing” persist, the Fed will have to keep worrying that inflation is too high. That increases the chances the Fed could go too far with rate hikes and ultimately lead to a recession.

    Wall Street is clearly buying into the “soft landing” argument. Just look at how well tech stocks have done so far this year, despite a series of high-profile layoff announcements from top Silicon Valley companies in the past few months.

    The Nasdaq is up 11% so far in January, putting it on track for its best monthly performance since July.

    Some argue that more tech layoffs won’t be a problem. Investors seem to be (somewhat perversely) taking the view that companies cutting costs is a good thing for profits and that revenue likely won’t be impacted in a negative way because consumers are still spending.

    “A theme that can’t go unnoticed this month is how traders are rewarding firms for cutting jobs. With corporate layoffs making headlines each evening, you might think the consumer is strained. Maybe not so much. It turns out that demand is decent,” said Frank Newman, portfolio manager at Ally Invest, in a report.

    But a continuation of the Nasdaq’s surge may depend a lot on how well a quartet of tech leaders do when they report fourth quarter earnings next week: Facebook and Instagram owner Meta Platforms, Apple

    (AAPL)    , Google owner Alphabet

    (GOOGL)     and Amazon

    (AMZN)    .

    “A set of much weaker-than-expected reports from these firms could dent the market’s strong start to 2023,” said Daniel Berkowitz, senior investment officer for investment manager Prudent Management Associates, in a report.

    So far, tech earnings season is not off to an inspiring start, with Microsoft

    (MSFT)    , Intel

    (INTC)     and IBM

    (IBM)     all reporting weak results. But it’s important to note that that trio is part of the “old tech” guard while Apple, Amazon, Alphabet and Meta all have more rapidly growing businesses.

    Tesla

    (TSLA)     reported strong results last week, which could be a sign of good things to come from other more dynamic tech companies.

    Monday: IMF releases world outlook; earnings from Philips

    (PHG)    , GE Healthcare, Franklin Resources

    (BEN)    , SoFi, Ryanair

    (RYAAY)    , Whirlpool

    (WHR)     and Principal Financial

    (PFG)

    Tuesday: China official PMI; Europe GDP; US employment cost index; US consumer confidence; earnings from Exxon Mobil

    (XOM)    , Samsung

    (SSNLF)    , GM

    (GM)    , Phillips 66

    (PSX)    , Marathon Petroleum

    (MPC)    , UPS

    (UPS)    , Pfizer

    (PFE)    , Sysco

    (SYY)    , Caterpillar

    (CAT)    , UBS

    (UBS)    , McDonald’s

    (MCD)    , Spotify

    (SPOT)    , Mondelez

    (MDLZ)    , Amgen

    (AMGN)    , AMD

    (AMD)    , Electronic Arts

    (EA)    , Snap

    (SNAP)     and Match

    (MTCH)

    Wednesday: Fed meeting; US ADP private sector jobs; US JOLTS; China Caixin PMI; Europe inflation; earnings from AmerisourceBergen

    (ABC)    , Humana

    (HUM)    , T-Mobile

    (TMUS)    , Novartis

    (NVS)    , Altria

    (MO)    , Peloton

    (PTON)    , Meta Platforms, McKesson

    (MCK)    , MetLife

    (MET)     and AllState

    (ALL)

    Thursday: US weekly jobless claims; US productivity; BOE meeting; ECB meting; Germany trade data; earnings from Cardinal Health

    (CAH)    , ConocoPhillips

    (COP)    , Merck

    (MRK)    , Bristol-Myers

    (BMY)    , Honeywell

    (HON)    , Eli Lilly

    (LLY)    , Stanley Black & Decker

    (SWK)    , Hershey

    (HSY)    , Sirius XM

    (SIRI)    , Penn Entertainment

    (PENN)    , Ferrari

    (RACE)    , Harley-Davidso

    (HOG)    n, Apple, Amazon, Alphabet, Ford

    (F)    , Qualcomm

    (QCOM)    , Starbucks

    (SBUX)    , Gilead Sciences

    (GILD)    , Hartford Financial

    (HIG)    , Clorox

    (CLX)     and WWE

    (WWE)

    Friday: US jobs report; US ISM non-manufacturing (services) index; earnings from Cigna

    (CI)    , Sanofi

    (SNY)    , LyondellBasell

    (LYB)     and Regeneron

    (REGN)

    [ad_2]

    Source link

  • Chevron earnings soar to a record | CNN Business

    Chevron earnings soar to a record | CNN Business

    [ad_1]


    New York
    CNN
     — 

    Chevron reported a record full-year profit of $36.5 billion, buoyed by high oil prices.

    Adjusted earnings for the year more than doubled from the $15.6 billion Chevron earned in 2021 and up 36% from its previous record profit set in 2011.

    The oil company’s fourth-quarter earnings came in at $7.9 billion, up 61% from a year earlier but less than the record quarterly income of $11.4 billion it reported for the second quarter.

    The fourth quarter earnings per share of $4.09 fell short of the forecast of $4.38 a share from analysts surveyed by Refinitiv. But revenue in the quarter of $56.5 billion topped forecasts by nearly $2 billion and was up 17% from a year earlier.

    Full-year revenue of $246.3 billion was up 52% from 2021.

    Shares of Chevron

    (CVX)     were down slightly more than 1% in premarket trading.

    Ahead of Friday’s report Chevron, the nation’s second largest oil company, behind only ExxonMobil, had announced it was hiking its dividend by 6% along with a massive $75 billion share repurchase plan. The decision brought criticism from those who said oil companies should be investing their money in producing more oil and gasoline to increase supply and drive down prices for inflation-weary drivers.

    “For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it,” said Abdullah Hasan, assistant press secretary at the White House, in a tweet Wednesday evening after the share repurchase was announced.

    Chevron said Friday its investments in operations increased by more than 75% from 2021, and annual US production increased to the equivalent of 1.2 million barrels of oil a day.

    The amount it spent on capital spending and exploration in 2022 was $12.3 billion, up 43% compared with $8.6 billion spent in 2021, but only slightly more than the $11 billion it spent on dividends or the $11.3 billion on share repurchases during the year.

    The record profit came primarily from the soaring oil prices during the year, not its increased production.

    Chevron and other major oil companies all benefited from the spike in oil and gasoline prices during 2022, in the wake of Russia’s invasion of Ukraine. While Russia, one of the world’s leading oil exporters, sent relatively little oil to the United States, sanctions placed on Russia following the invasion roiled global commodity prices which set the price of oil.

    Futures for a barrel of Brent crude oil, the global benchmark, hit a record of $123.58 close in early June, up more than 50% from six months earlier ahead of the war, and the average price of a gallon of regular gas in the United States broke the $5 mark a week later to reach a record $5.03.

    But oil and gas prices have fallen substantially since then. Brent closed Thursday at $87.47, slightly below the year-earlier level, while the average price of a gallon of regular gas stands at $3.51 a gallon, only slightly higher from the $3.35 average of a year ago.

    But prices have started to rise once again, partly because Covid lockdown rules in China have been lifted. Traders believe that’s a bullish sign for global demand for oil and gasoline. Refinery problems caused by winter weather are also pushing prices higher.

    The average US price of a gallon of regular gasoline is up nearly 12 cents in just the last week and up 41 cents, or 13%, in the last month. Brent oil is up 12% in the last three weeks.

    [ad_2]

    Source link

  • Southwest posts quarterly loss and warns more losses are ahead after service meltdown | CNN Business

    Southwest posts quarterly loss and warns more losses are ahead after service meltdown | CNN Business

    [ad_1]


    New York
    CNN
     — 

    Southwest Airlines reported a loss for the fourth quarter because of the company’s service meltdown over the holiday travel season, and it warned the costs from those problems will result in another loss in the first quarter.

    The airline was forced to cancel more than 16,700 flights between December 21 and 29, roughly half its schedule during that period. Thursday, Southwest said the meltdown cost the airline about $800 million, resulting in an adjusted net loss in the quarter of $226 million. Still, it managed to report an adjusted annual profit of $723 million, a turnaround from $1.3 billion it lost in 2021.

    It said it expects another loss in the first quarter due to the continued impact and costs associated with meltdown. The first quarter is typically the slowest and least profitable period for US air travel. However, Southwest said it is encouraged by strong bookings for March.

    Southwest

    (LUV)    ’s quarterly loss of 38 cents a share was far worse than Wall Street analysts’ forecast. Shares of Southwest

    (LUV)     lost 3% because of that miss and especially its sour outlook.

    The airline said it expected a first quarter loss because of an increase in passengers canceling reservations and a lower level of bookings for January and February, which the airline said “are assumed to be associated with the operational disruptions in December.” Those lost bookings in the current quarter are expected to cost it between $300 million to $350 million.

    To repair customer relations, Southwest has given affected passengers 25,000 bonus points in frequent flier accounts, as well as travel vouchers. And in addition to refunding fares for canceled flights, it is reimbursing those passengers who bought tickets on other airlines or incurred other unexpected travel costs.

    Even with the meltdown, which cost Southwest $410 million in lost revenue when it had to refund tickets to passengers on canceled flights, it still reported record fourth quarter sales of $6.2 billion, up 7% from the same quarter of 2019, just before the pandemic.

    Southwest brought in that record revenue even though the number of seats it was able to fly in the quarter was down 6% from the same period of 2019, before the pandemic, when adjusted for miles flown. But the strong demand meant that Southwest passengers paid 10.6% more for every mile they flew than they were paying in late 2019.

    A massive winter storm started the service problems, but Southwest had a much tougher time recovering from the weather than other airlines because of an antiquated crew scheduling system that was quickly overwhelmed, leaving the airline unable to get the staffing it needed to locations to fly flights. Nearly half of its schedule was canceled during the December 20 to 29 period. Some days, as much as 75% of its scheduled flights were grounded.

    The airline said that it is “conducting a third-party review of the December events and … reexamining the priority of technology and other investments planned in 2023.”

    Southwest has traditionally been the most profitable US airline by a large margin. Many of its rivals were in and out of bankruptcy in recent decades due to losses brought on by recessions and events like the 9/11 attack, but Southwest had put together a string of 47 consecutive profitable years before the pandemic. In 2020, Southwest and all other airlines to reported a loss.

    All other airlines lost money again in 2021, excluding special items such as financial support from the federal government, and most airlines reported another quarterly loss in the first three months of 2022 as the surge in Covid cases caused by the Omicron variant limited demand for travel.

    But demand to fly had been very strong starting with the Spring Break travel season, and air fares soared as passengers paid top dollar to take long-delayed trips. Southwest and most other US airlines reported profits in the second and third quarters, and most have either reported profitable fourth quarters or are forecast to do so – as Southwest had been before the meltdown.

    [ad_2]

    Source link

  • Microsoft quarterly profit falls 12% but cloud computing business shows strength | CNN Business

    Microsoft quarterly profit falls 12% but cloud computing business shows strength | CNN Business

    [ad_1]



    CNN
     — 

    Microsoft on Tuesday posted weaker-than-expected revenue and a double-digit percentage drop in profit for the final three months of last year amid broader economic uncertainty and reduced demand for personal computers and software.

    The tech giant reported revenue of $52.7 billion for the quarter, a modest 2% increase from the year prior but slightly less than analysts had expected. It reported net income of $16.4 billion, a 12% decline from the year prior.

    The earnings results come at a turbulent moment for Microsoft, and the tech industry as a whole. Microsoft said last week that it plans to lay off 10,000 employees as part of broader cost-cutting measures. In his explanation of the cuts, CEO Satya Nadella pointed to changing demand for digital services years into the pandemic as well as looming recession fears.

    Demand for personal computers, and the Microsoft operating systems that power them, has pulled back after experiencing a boom early in the pandemic. Consulting firm Gartner said earlier this month that worldwide PC shipments fell more than 28% in the fourth quarter of 2022 compared to the same period the prior year. This marked the largest quarterly shipment decline since Gartner began tracking the PC market in the mid-90s.

    On Tuesday, Microsoft reported revenue declines from its Windows OEM operations and from its Xbox content and services lines. Microsoft also said it would incur $800 million in severance expenses from the layoffs announced this month, as well as charges from “changes to our hardware portfolio, and costs related to lease consolidation activities.”

    But the earnings report had some bright spots. Revenue from its cloud computing division, a key area of focus for Microsoft in recent years, increased 22% from the prior year. An analyst at Evercore described the results as “a sigh of relief.”

    Shares of Microsoft rose 4% in after-hours trading Tuesday on the news.

    “The next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform,” CEO Satya Nadella said in a statement accompanying the results. “We are committed to helping our customers use our platforms and tools to do more with less today and innovate for the future in the new era of AI.”

    Earlier this week, Microsoft confirmed it is making a “multibillion dollar” investment into OpenAI, the company behind the viral AI-powered chatbot tool ChatGPT. The deepening partnership between the two companies – Microsoft was an early investor in OpenAI – could help catapult Microsoft as an AI leader and pave the way for the company to incorporate elements of ChatGPT into some of its hallmark applications, such as Outlook and Word.

    In his memo to staffers announcing the job cuts, Nadella said the company will continue to invest in “strategic areas for our future” and pointed to advances in AI as “the next major wave” of computing.

    [ad_2]

    Source link

  • Forget inflation, it’s all about earnings | CNN Business

    Forget inflation, it’s all about earnings | CNN Business

    [ad_1]


    New York
    CNN
     — 

    To everything there is a season and now is the time for earnings.

    Over the past few weeks investors have been squarely focused on inflation and Fed policy, but now market reactions are getting bigger for earnings (especially the misses) and smaller for economic data.

    What’s happening: “We expect earnings to take the center stage going forward,” wrote Bank of America strategists Savita Subramanian and Ohsung Kwon in a note on Friday. They noted that over the last three quarters, S&P 500 reactions to earnings beats and misses have soared higher and have now surpassed the one-day market reaction to both CPI inflation and Fed policy meeting decisions.

    Companies that missed on both sales and earnings-per-share during the last quarter underperformed the S&P 500 by nearly six percentage points on average the next day, the largest reaction to earnings misses on record.

    Shares of Disney sank 13.16% last November — their lowest level in more than two years — when they missed earnings estimates. Meta shares plummeted 24% after showing a drop in third-quarter revenue in October, the company’s second consecutive quarterly revenue decline. And shares of Palantir closed down more than 11% in November after it missed estimates only slightly.

    “We see this as a narrative shift in the market from the Fed and inflation to earnings: reactions to earnings have been increasing, while reactions to inflation data and FOMC meetings have been getting smaller,” wrote Subramanian and Kwon.

    So we can expect some serious volatility over the next few weeks as companies report their fourth quarter corporate earnings.

    Bank of America’s predictive analytics team analyzed earnings transcripts to calculate sentiment scores and found that corporate sentiment remained flat in the third quarter, well off its highs, which points to a potential earnings decline ahead.

    Similarly, companies’ references to of better business conditions (specific usage of the words “better” or “stronger” vs. “worse” or “weaker”) remained well below the historical average, and mentions of optimism dropped to the lowest level since the first quarter of 2020.

    So far, swings have been to the downside. S&P 500 fourth-quarter earnings-per-share estimates have dropped by about 7% since October. Early earnings reports from some of the largest financial institutions point to a bleak quarter.

    Bad news ahead: The estimated earnings decline for the S&P 500 in the fourth quarter of 2022 is -3.9%, according to a FactSet analysis. If that is indeed the actual drop, it will mark the first earnings decline reported by the index since the third quarter of 2020.

    Over the past few weeks, reported FactSet, earnings expectations for the first and second quarters of 2023 switched from year-over-year growth to year-over-year declines.

    The latest: JPMorgan beat estimates for fourth-quarter revenue but also increased the amount of money for expected defaults on loans. The bank added a $2.3 billion provision for credit losses in the quarter, a 49% increase from the third quarter.

    The move was driven by a “modest deterioration in the Firm’s macroeconomic outlook, now reflecting a mild recession in the central case,” said the report. On a subsequent call, JPMorgan CFO Jeremy Barnum told reporters that the bank expects a recession to hit by the fourth-quarter of 2023.

    Bank of America

    (BAC)     also beat earnings expectations but CEO Brian Moynihan said Friday that the bank is preparing for rising unemployment and a recession in 2023. “Our baseline scenario contemplates a mild recession,” he said. The bank added a $1.1 billion provision for credit losses, a sharp change from last year when that number was negative.

    What’s next: Hold on to your hats. During the upcoming week, 26 S&P 500 companies are scheduled to report results for the fourth quarter.

    Apple CEO Tim Cook has responded to angry shareholders by recommending that the company cut his pay this year, reports my colleague Anna Cooban.

    Cook was granted $99.4 million in total compensation last year. The vast majority of his 2022 compensation — about 75% — was tied up in company shares, with half of that dependent on share price performance.

    But shareholders voted against Cook’s pay package after Apple’s stock fell nearly 27% last year. The vote is nonbinding, but the board’s compensation committee said Cook himself requested the reduction.

    “The compensation committee balanced shareholder feedback, Apple’s exceptional performance, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received,” the company said in its annual proxy statement released Thursday.

    But don’t cry for Tim Cook just yet. This year, the executive’s share award target is $40 million. About $30 million, or three-quarters, of that is linked to share price performance. The tech boss, who has headed up Apple

    (AAPL)     since 2011, is estimated to have a personal wealth of $1.7 billion, according to Forbes.

    The bottom line: Apple’s share price, like other tech companies, plunged last year as coronavirus lockdowns shuttered some of its factories in China. Supply chain bottlenecks and fears that a global economic slowdown would crimp demand also dragged down its stock.

    Angry investors believe that the person at the helm of the company should also see a drop in pay.

    [ad_2]

    Source link

  • Bank earnings fail to impress investors as recession worries rise | CNN Business

    Bank earnings fail to impress investors as recession worries rise | CNN Business

    [ad_1]


    New York
    CNN
     — 

    JPMorgan Chase, Bank of America, Citigroup and asset management giant BlackRock posted results that topped Wall Street’s forecasts Friday, but investors were nonetheless a little disappointed at first.

    Trading was choppy, with most bank stocks falling at the open before rebounding. Shares of JPMorgan Chase

    (JPM)     were up about 2.5% in late afternoon trading while BofA

    (BAC)     was up 2%. Wells Fargo

    (WFC)    , which reported earnings that missed Wall Street’s targets, reversed earlier losses and was up 3%. Citi

    (C)     was up 2% while BlackRock

    (BLK)     was flat.

    “The earnings were solid, but the market is concerned with recession fears,” said John Curran, managing director and head of North American bank coverage at MUFG.

    Investors might have been concerned by the downbeat tone of the big banks. Executives are clearly still worried about inflation and the threat of a recession this year following several big interest rate hikes by the Federal Reserve.

    JPMorgan Chase CEO Jamie Dimon said in the bank’s earnings statement that although the economy is still strong and that consumers and businesses are spending and healthy, “we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher.”

    The bank added in the earnings release that it now expects a “mild recession” as a base economic case. CFO Jeremy Barnum added during a conference call with reporters that in addition to the slowdown that has already started in its home lending unit, it is starting to see “headwinds” in auto lending.

    Meanwhile, BofA CEO Brian Moynihan noted that this is “an increasingly slowing economic environment” and Wells Fargo CEO Charlie Scharf said “we are carefully watching the impact of higher rates on our customers.” Wells Fargo recently announced plans to pull back on its massive mortgage business.

    Banks are clearly worried about a looming recession, and Wall Street has taken notice.

    Moody’s Investors Service analyst Peter Nerby noted in a report that “credit provisions are rising” at JPMorgan Chase and that Citi “built capital and reserves in anticipation of a slowdown in core markets.”

    The Fed’s rate hikes aren’t helping either.

    “Higher than expected interest rates pose a significant risk to the outlook for credit quality, loan growth and net interest margins,” said David Wagner, a portfolio manager at Aptus Capital Advisors, in an email.

    Concerns about the economy were one reason why stocks plunged in 2022, suffering their worst year since 2008. As a result of the Wall Street slump, there was a major slowdown in merger activity and initial public offerings.

    That hurt the investment banking businesses for the top banks. JPMorgan Chase and Citi each said that advisory fees plummeted nearly 60% in the quarter.

    Goldman Sachs

    (GS)     and Morgan Stanley

    (MS)     will give more color about the health of Wall Street next Tuesday when they both report their fourth quarter results.

    Goldman Sachs, which has aggressively built up a consumer banking unit over the past few years, has struggled to make money in that division. Goldman Sachs disclosed in a regulatory filing Friday that it has lost more than $3 billion in its consumer business since 2020.

    There were some signs of optimism though. BlackRock, which owns the massive iShares family of exchange-traded funds, reported a rebound in assets under management from the third quarter to the fourth quarter as stocks soared in October and November.

    “The current environment offers incredible opportunities for long-term investors,” said BlackRock CEO Larry Fink in the earnings release.

    [ad_2]

    Source link

  • Samsung estimates quarterly profit sank to 8-year low on demand slump | CNN Business

    Samsung estimates quarterly profit sank to 8-year low on demand slump | CNN Business

    [ad_1]


    Seoul
    Reuters
     — 

    Samsung Electronics flagged on Friday its quarterly profit tumbled to an eight-year low as a weakening global economy hammered memory chip prices and curbed demand for electronic devices.

    Profits at the world’s largest memory chip, smartphone and TV maker are expected to shrink again in the current quarter, analysts said, after Samsung announced its October-December operating profit likely fell 69% to 4.3 trillion won ($3.37 billion) from 13.87 trillion won a year earlier.

    It was Samsung

    (SSNLF)    ’s smallest quarterly profit since the third quarter of 2014 and fell short of a 5.9 trillion won Refinitiv SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate.

    “All of Samsung’s businesses had a hard time, but chips and mobile especially,” said Lee Min-hee, analyst at BNK Investment & Securities.

    Quarterly revenue likely fell 9% from the same period a year earlier to 70 trillion won, Samsung said in a short preliminary earnings release. Asia’s fourth-biggest listed company by market value is due to release detailed earnings later this month.

    Rising global interest rates and cost of living have dampened demand for smartphones and other devices that Samsung makes and also for the semiconductors it supplies to rivals including Apple

    (AAPL)    .

    “For the memory business, the decline in fourth-quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances,” Samsung said in the statement.

    Its mobile business’ profit declined in the fourth quarter as smartphone sales and revenue decreased due to weak demand resulting from prolonged macroeconomic issues, Samsung added.

    “Memory chip prices fell in the mid-20% during the quarter, and high-end phones such as foldable didn’t sell as well,” said BNK Investment’s Lee.

    Three analysts said they expected Samsung’s profits to dive again in the current quarter, with a likely operating loss for the chips business as a glut drives a further drop in memory chip prices.

    Samsung shares rose 0.3% in Friday morning trade, underperforming a 0.6% rise in the wider market. Shares of rival memory chip maker SK Hynix rose 1%.

    “The reason shares are rising despite the poor earnings result is… investors are hoping Samsung will need to reduce production, like Micron or SK Hynix said they would, which would help the memory industry overall,” said Eo Kyu-jin, an analyst at DB Financial Investment.

    Samsung had said in October that it did not expect much change to its 2023 investments. Analysts said that Samsung has a history of not announcing production cuts in memory chips, but could organically adjust investment by delaying bringing in equipment or through other ways.

    [ad_2]

    Source link

  • LinkedIn is having a moment thanks to a wave of layoffs | CNN Business

    LinkedIn is having a moment thanks to a wave of layoffs | CNN Business

    [ad_1]


    New York
    CNN
     — 

    In a normal year at this time, a typical LinkedIn feed might be full of posts about year-end reflections on leadership and professional goals and suggested lifehacks for the year ahead — possibly with a few posts from CMOs offering tips on brand strategy, for good measure.

    Those posts are still there. But mixed in are many others about job hunts, offers of support for laid off friends and colleagues, and advice for coping with career hurdles in an uncertain economic environment.

    Some LinkedIn users affected by recent layoffs have formed groups on the site aimed at providing assistance, coordinating around signing exit paperwork and aiding with connections for new jobs. One LinkedIn group of employees affected by the November layoffs at Facebook-parent Meta, for example, now has more than 200 members. Even bosses who are doing the laying off have turned to LinkedIn to explain themselves and seek support or advice, as one marketing CEO did in a post alongside a tearful selfie last year (to mixed results).

    If the first year of the pandemic was marked by widespread layoffs in lower paying retail and services jobs, the past few months have been defined by something different: the prospect of a white-collar recession. Even as the overall job market remains strong, there has been a wave of recent layoffs in the tech and media industries — which just so happen to make up a core part of LinkedIn’s user base. Suddenly, the normally staid professional network has become both a vital lifeline for recently laid off workers and a surprisingly lively social platform.

    The LinkedIn mobile app was downloaded an estimated 58.4 million times worldwide in 2022 across the Google Play and Apple app stores, up 10% from the prior year, according to research firm Sensor Tower.

    The number of posts on LinkedIn mentioning “open to work” were up 22% during November compared to the same period in the prior year, according to data provided by the company. LinkedIn says it also saw a steady increase in the rate of users adding connections last year compared to the year prior, a sign that users were more active on the platform.

    The uptick in use appears to have been good for LinkedIn’s business. The platform posted 17% year-over-year revenue growth in the three months ended in September, according to parent company Microsoft’s most recent earnings report. Microsoft CEO Satya Nadella told analysts in the October earnings call that LinkedIn was seeing “record engagement” among its 875 million members, with growth accelerating especially in international markets.

    Some of LinkedIn’s momentum may predate the wave of layoffs. “There’s been an uptick in [LinkedIn use] since the pandemic,” said Jennifer Grygiel, an associate professor and social media expert at Syracuse University. “You had to do social distancing and we were quarantining and people were working remotely so there was a shift in real-life networking possibilities.”

    LinkedIn rose to the occasion — and now it may be rising to another one.

    Even apart from the layoffs, the social media landscape has been through a volatile year. Facebook and Instagram have been criticized by users for racing to turn their services into TikTok. TikTok has been criticized over concerns that user data could end up in the hands of the Chinese government. And after Elon Musk’s takeover of Twitter late last year, the platform has been criticized for morphing into a possible haven for its most incendiary users.

    But LinkedIn remains, as ever, LinkedIn — and at this moment, with fears of a looming recession and career concerns top of mind, LinkedIn may be just what the digital world needs.

    Grygiel said many people working in media or academia are likely now looking for somewhere to build and engage in professional communities other than Twitter. And while upstart Twitter alternatives like Mastodon have experienced a surge in growth, they still don’t have the same sort of network effect that comes with a legacy platform’s broad user base.

    LinkedIn in recent years has leaned into courting influencers who regularly post content to the site, potentially giving users more reasons to visit. And the platform has been growing its “learning” section, which provides video courses taught by various industry experts and which the company says experienced a 17% increase in hours spent as of November compared to the year prior. But lately it appears users have more than enough reason to use LinkedIn amid a wave of thousands of layoffs.

    Perhaps the clearest and most public examples of LinkedIn’s new centrality came from rival social networks like Twitter.

    In the wake of Twitter’s November mass layoffs — in which half the company was terminated, followed by additional firings and exits — many former and remaining employees took to LinkedIn, rather than the platform they had built, to seek support, community and new opportunities.

    One group of Twitter employees created a spreadsheet of laid-off workers from the company alongside recruiters hiring for other firms, and used LinkedIn to help facilitate sign-ups. Another pair of former Twitter employees set up a system to connect job hunters with recruitment professionals open to volunteering to provide free resume review and interview prep services, which they promoted through LinkedIn.

    “We completely understand how the job-hunting process can be scary and overwhelming … While we can’t guarantee where your next opportunity will be or when it will come, we can offer guidance, so you will be ready for that opportunity when it arrives,” Darnell Gilet, a former Twitter senior technical recruiter who helped coordinate the effort, said in a LinkedIn post.

    Gilet, who was affected by the mass layoffs at Twitter in November following Elon Musk’s takeover, told CNN last month that around 28 different recruiters and talent acquisition professionals had agreed to participate in the system, and that he himself had spoken to nearly two dozen job seekers since shortly after he was laid off to offer advice and support. He said LinkedIn seemed like the obvious place to promote the service.

    “Chaos creates opportunity for somebody, right?” Gilet said. “People are getting laid off and you have this recession that’s looming, the ideal place … that would have the greatest growth opportunity from that would be a platform that’s focused on careers like LinkedIn. So it makes perfect sense.”

    [ad_2]

    Source link

  • Macy’s says its holiday sales will be lower, citing inflation pressures | CNN Business

    Macy’s says its holiday sales will be lower, citing inflation pressures | CNN Business

    [ad_1]


    New York
    CNN
     — 

    Turns out inflation may have put a damper on the holidays.

    Macy’s chair and CEO Jeff Gennette said lulls during the non-peak holiday weeks “were deeper than anticipated” and that consumers will continue to feel pressured into 2023, in a Q4 update Friday.

    Macy’s said Friday its net sales from the holiday quarter will likely be at the low-end to mid-point of its previously issued range of $8.16 billion to $8.4 billion. The retailer said its adjusted diluted earnings per share are expected to be between $1.47 to $1.67.

    In last year’s fourth quarter results, Macy’s earned $8.67 billion, above analysts’ forecasts, and had an adjusted earnings per share of $2.45.

    Total end-of-quarter inventories are on track to fall slightly below last year and down mid-teens relative to 2019.

    Gennette said its Black Friday and Cyber Monday sales met expectations and the week leading up to and following Christmas beat them.

    “Overall, our occasion apparel and gift-giving business were strengths, and inventory composition and price points aligned with customers’ needs,” Gennette said, noting that its high-end Bloomingdale’s stores and cosmetics line Bluemercury continued to outperform forecasts.

    Macy’s warning may provide an early clue to investors wondering if high inflation has hampered shopping demand during the holidays.

    Americans spent more this season to keep up with high prices. US retail sales increased 7.6% during the period between November 1 to December 24 compared to the same time last year, according to the Mastercard Spending Pulse. US retail sales were lower than expected in November, falling 0.6% during the month, which was the weakest performance in nearly a year.

    Gennette warned that consumer sentiment is unlikely to change with the new year.

    “Based on current macro-economic indicators and our proprietary credit card data, we believe the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly,” the Macy’s CEO said.

    The company expects to report full results for the fourth quarter and fiscal year 2022 in early March 2023.

    [ad_2]

    Source link

  • Justice Department sues pharmaceutical company for allegedly failing to report suspicious opioid sales | CNN Politics

    Justice Department sues pharmaceutical company for allegedly failing to report suspicious opioid sales | CNN Politics

    [ad_1]


    Washington
    CNN
     — 

    The Justice Department on Thursday alleged that the AmerisourceBergen Corporation, one of the country’s largest pharmaceutical distributors, and two of its subsidiaries failed to report hundreds of thousands of suspicious prescription opioid orders to pharmacies across the country.

    The lawsuit, which spans several states, alleges that AmerisourceBergen disregarded its legal obligation to report orders of controlled substances to the Drug Enforcement Agency for nearly a decade. The company ignored “red flags” that pharmacies in West Virginia, New Jersey, Colorado and Florida were diverting opioids into illegal drug markets, the suit says.

    “The Department of Justice is committed to holding accountable those who fueled the opioid crisis by flouting the law,” Associate Attorney General Vanita Gupta said in a statement Thursday.

    “Companies distributing opioids are required to report suspicious orders to federal law enforcement. Our complaint alleges that AmerisourceBergen – which sold billions of units of prescription opioids over the past decade – repeatedly failed to comply with that requirement,” she added.

    If AmerisourceBergen is found liable at trial, the company faces billions of dollars in financial penalties, the Justice Department said.

    Lauren Esposito, a spokesperson for AmerisourceBergen, countered on Thursday in a statement that said the Justice Department’s complaint rested on “five pharmacies that were cherry picked out of the tens of thousands of pharmacies that use AmerisourceBergen as their wholesale distributor, while ignoring the absence of action from former administrators at the Drug Enforcement Administration – the DOJ’s own agency.”

    She added: “With the vast quantity of information that AmerisourceBergen shared directly with the DEA with regards to these five pharmacies, the DEA still did not feel the need to take swift action itself – in fact, AmerisourceBergen terminated relationships with four of them before DEA ever took any enforcement action while two of the five pharmacies maintain their DEA controlled substance registration to this day.”

    Yet AmerisourceBergen was allegedly aware that in two of the pharmacies, drugs it distributed were likely being sold in parking lots for cash, the Justice Department said. In another pharmacy, the company was allegedly warned that patients likely suffering from addiction were receiving opioids, including some people who later died of a drug overdose.

    The Justice Department also noted in its lawsuit that AmerisourceBergen’s reporting systems for suspicious opioid orders were deeply inadequate, and that the company intentionally changed its reporting systems to reduce the number of orders flagged as suspicious amid the opioid epidemic.

    Even when orders were flagged as suspicious, AmerisourceBergen often didn’t report those orders to the DEA, according to the complaint.

    Opioids are involved in the vast majority of drug overdose deaths, though synthetic opioids – particularly fentanyl – have played an outsized role. Synthetic opioids – excluding methadone – were involved in more than 72,000 overdose deaths in 2021, about two-thirds of all overdose deaths that year and more than triple the number from five years earlier.

    [ad_2]

    Source link

  • Housing slump likely to continue but some see hopeful signs ahead | CNN Business

    Housing slump likely to continue but some see hopeful signs ahead | CNN Business

    [ad_1]

    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
     — 

    Mortgage rates have ticked down recently, but are still up dramatically from a year ago thanks to the surge in long-term bond yields as the Federal Reserve hiked interest rates.

    While that’s already had a negative impact on the housing market, we’ll get more details this week about how much worse the damage has become.

    A long list of housing data is on tap. On Tuesday the US Census Bureau will report housing starts and building permits figures for November, followed by Friday’s release of new home sales data for the same month. In between that will be the November existing home sales numbers from the National Association of Realtors on Wednesday, as well as weekly data on mortgage rates and applications on Thursday.

    For the past few months, existing and new home sales have been steadily declining because of the spike in rates and the fact that home prices remain stubbornly high for first-time buyers. Housing starts and building permits have been choppier on a month-to-month basis, but those figures are both down from a year ago.

    Still, there are some promising signs that the worst could soon be over. Shares of Lennar

    (LEN)    , one of the largest homebuilders in the US, rallied after reporting earnings last week. Revenue topped forecasts and the company’s guidance for the number of homes it expected to deliver next year was a little higher than analysts’ estimates as well.

    Lennar investors “may be looking ahead to 2023, perhaps crossing the valley from recession to potential recovery,” according to CFRA Research analyst Kenneth Leon.

    Others in the industry are cautiously optimistic as well.

    According to data from Amherst Group, an investment firm that buys single-family homes to rent out, it’s important to put the recent slide in prices in context.

    Amherst said home prices are still up about 40% from pre-pandemic levels. So even a further drop of about 15% would merely bring them to mid-2021 levels. In other words, this isn’t like the mid-2000s real estate bubble bursting.

    It’s also worth noting that the job market is still strong and wages are growing. What’s more, many consumers still have decent levels of excess savings thanks to pandemic era government stimulus.

    That all amounts to a few good reasons why the housing market could avoid a severe and prolonged slump.

    “The U.S. housing market is still supported by a tight labor market, the lock-in effect of low fixed mortgage rates for existing homeowners, tight mortgage underwriting, low leverage in the mortgage sector, and low housing supply,” said Brandywine fixed-income analyst Tracy Chen in a report this month.

    “We believe we can avoid a severe housing downturn like the one in the Global Financial Crisis,” Chen added.

    Others point out that even though housing sales may remain weak due to high home prices and still elevated mortgage rates, the good news is that most existing homeowners are still paying their monthly mortgage on time.

    Again, that’s a stark contrast from 2008 when many people with subprime loans or borrowers with poor credit histories were unable to keep up with their mortgage payments.

    “Housing is not bringing down the economy. Yes, the housing market has been impacted. But mortgage delinquencies are still low,” said Gene Goldman, chief investment officer at Cetera Investment Management.

    There aren’t a ton of companies reporting their latest earnings this week. But the few that are could give more clues about the financial health of consumers and the state of corporate spending.

    Cereal giant General Mills

    (GIS)     will release earnings on Tuesday. Analysts are expecting a slight increase in both sales and profit. Consumers may be growing increasingly wary about inflation and the broader economy, but they’re still eating their Wheaties. Shares of General Mills

    (GIS)     have soared nearly 30% this year.

    Analysts are less optimistic about the outlooks for sneaker king and Dow component Nike

    (NKE)    , used car retailer CarMax

    (KMX)     and memory chip maker Micron

    (MU)    , whose semiconductors are used in devices ranging from cell phones and computers to cars.

    Earnings are expected to decline for these three companies. They won’t be the only leaders of Corporate America to report weak results.

    According to data from FactSet, fourth-quarter earnings for S&P 500 companies are expected to decline 2.8% from a year ago. Analysts have been busy cutting their forecasts too. John Butters, senior earnings analyst at FactSet, noted in a report that fourth-quarter profits were expected to rise 3.7% as recently as September 30.

    Investors are also going to be paying very close attention to what companies say in their earnings reports about their outlooks for 2023. Analysts currently are anticipating earnings growth of 5.3% for 2023. That could be too optimistic… especially if companies start cutting their own forecasts due to worries about the broader economy.

    “Odds of a recession are pretty high,” said Vincent Reinhart, chief economist and macro strategist at Dreyfus & Mellon. “That will have a knock-on effect for corporate earnings. Higher rates and weaker earnings suggest more pain for stocks.”

    Monday: Germany Ifo business climate index

    Tuesday: US housing starts and building permits; China sets loan prime rate; Bank of Japan interest rate decision; earnings from General Mills, Nike, FedEx

    (FDX)     and Blackberry

    (BB)

    Wednesday: US existing home sales; Germany consumer confidence; earnings from Rite Aid

    (RAD)    , Carnival

    (CCL)    , Cintas

    (CTAS)    , Toro

    (TTC)     and Micron

    Thursday: US weekly jobless claims; US Q3 GDP (third estimate); earnings from CarMax

    (KMX)     and Paychex

    Friday: US personal income and spending; US PCE inflation; US new home sales; US durable goods orders; US U. of Michigan consumer sentiment; Japan inflation; UK markets close early

    [ad_2]

    Source link

  • The Grinch comes for retailers | CNN Business

    The Grinch comes for retailers | CNN Business

    [ad_1]

    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
     — 

    Weaker-than-expected retail sales in November pummeled market sentiment on Thursday and raised the odds that the Federal Reserve’s inflation-fighting interest rate hikes would push the economy into recession.

    What’s happening: US retail sales, which measure the total amount of money that stores make from selling goods to customers, fell 0.6% in November, the weakest performance in nearly a year. The drop concerned economists who had expected monthly sales to shrink by just 0.1%. It’s also a sharp reversal from October’s sales increase of 1.3%.

    That’s a bad sign for the economy. Just last month Bank of America CEO Brian Moynihan told CNN that the continued strength of the US consumer is nearly single-handedly staving off recession. Consumer spending is a major driver of the economy, and the last two months of the year can account for about 20% of total retail sales — even more for some retailers, according to National Retail Federation data.

    Market mania: The weak report means that spending faltered just as the holiday season started, a critical time for retailers to ramp up profits and get rid of excess inventory. Investors weren’t too happy about that.

    Shares of Costco

    (COST)     closed Thursday 4.1% lower, Target

    (CBDY)     fell by 3.2%, Macy’s

    (M)     dropped 3.5% and Abercrombie & Fitch

    (ANF)     was down 6.2%.

    The entire sector took a blow — the VanEck Retail ETF, with Amazon

    (AMZN)    , Home Depot

    (HD)     and Walmart

    (WMT)    as its top three holdings, fell by 2.2%. The SPDR S&P Retail ETF, which follows all S&P retail stocks, was down 2.9%.

    Weak sales are likely to continue, say analysts, and if they do, then retailers’ bottom lines and fourth-quarter earnings will suffer.

    “The headwinds of the past year are catching up to consumers and forcing them to be more conservative in their holiday shopping this winter,” warned Morgan Stanley economist Ellen Zentner in a note.

    The Fed factor: November’s report could indicate that consumers are feeling the double-punch of sky-high inflation and painful interest rate hikes from the central bank. This retail sales data adds to recessionary concerns, as it suggests that consumers may be becoming more cautious with their spending.

    “Households are increasingly relying on their savings to sustain their spending, and many families are resorting to credit to offset the burden of high prices. These trends are unsustainable, and the current credit splurge is a true risk, especially for families at the lower end of the income spectrum,” said Gregory Daco and Lydia Boussour, economists at EY Parthenon.

    While American bank accounts are still fairly robust, they’re beginning to dwindle. In the third quarter of 2022, credit card balances jumped 15% year over year. That’s the largest annual jump since the New York Fed began keeping track of the data in 2004.

    “Against this backdrop, we expect consumers will rein in their spending further in coming months,” said Daco and Boussour. “Real consumer spending should see modest growth in the final quarter of the year, but we expect it will barely grow in 2023.”

    Bottom line: If Bank of America’s Moynihan was right, the US economy is in trouble.

    US mortgage rates came in lower once again this week, marking the fifth consecutive drop in a row.

    The 30-year fixed-rate mortgage averaged 6.31% in the week ending December 15, down from 6.33% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.12%, reports my colleague Anna Bahney.

    That’s a sharp reversal from the upward trend in rates we’ve seen for most of 2022. Those increases were spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. But mortgage rates have tumbled in the last several weeks, following data that showed inflation may have finally reached its peak.

    The Fed announced on Wednesday that it will continue to raise interest rates — albeit by a smaller amount than it has been.

    “Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s chief economist.

    “The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand,” he added. “The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high.”

    American regulators have been granted unprecedented access to the full audits of Chinese companies like Alibaba

    (BABA)     and JD.com

    (JD)     after threatening to kick the tech giants off US stock exchanges if they did not receive the data.

    The announcement marks a major breakthrough in a yearslong standoff over how Chinese companies listed on Wall Street should be regulated. It will come as a huge relief for these firms and investors who have invested billions of dollars in them, reports my colleague Laura He.

    “For the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them,” Erica Williams, chair of the Public Company Accounting Oversight Board, said in a statement Thursday, adding that such access was “historic and unprecedented.”

    More than 100 Chinese companies had been identified by the US securities regulator as facing delisting in 2024 if they did not hand over the audits of their financial statements.

    On Friday, China’s securities regulator said it’s looking forward to working with US officials to continue promoting future audit supervision of companies listed in the United States.

    There are more than 260 Chinese companies listed on US stock exchanges, with a combined market capitalization of more than $770 billion, according to recent calculations posted by the US-China Economic and Security Review Commission.

    [ad_2]

    Source link

  • The Fed will raise rates again. But it’s playing with fire | CNN Business

    The Fed will raise rates again. But it’s playing with fire | CNN Business

    [ad_1]

    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
     — 

    The Federal Reserve is all but guaranteed to announce Wednesday that it will once again raise interest rates. But investors are hopeful it will be a smaller increase than the last four hikes.

    Traders are betting on just a half-point increase. Federal funds futures on the Chicago Mercantile Exchange show an 80% probability of a half-point hike.

    The Fed bumped up rates by three-quarters of a percentage point in the past four meetings (June, July, September and November). That followed two smaller rate hikes earlier this year. The central bank’s key short-term interest rate, which sat at zero at the beginning of the year, is now at a range of 3.75% to 4%.

    The hope is that inflation pressures are finally starting to abate enough that the Fed can pivot — Fed-speak for a series of smaller rate hikes -— to avoid crashing the economy into a recession.

    But it may not be that simple. The government reported Friday that a key measure of wholesale prices, the Producer Price Index, rose 7.4% over the past 12 months through November. That was a bit higher than the expected rate of 7.2% but a marked slowdown from the 8% increase through October.

    The more widely watched Consumer Price Index data for November comes out Tuesday, just a day before the Fed announcement. CPI rose 7.7% year-over-year through October.

    As long as inflation remains a problem, the Fed is going to have to tread cautiously.

    “Inflation has probably peaked but it may not come down as quickly as people want it to,” said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research.

    Jones still thinks the Fed will raise rates by only half a point this week and may look to hike them just a quarter point in early 2023. But she conceded that the Fed is now sort of “making it up as they go along.”

    The other problem: The Fed’s rate hikes this year have had limited impact on the economy so far. Yes, mortgage rates have spiked and that has severely hurt demand for housing, but the job market remains strong. Wages are growing, and consumers are still spending. That can’t last indefinitely.

    “The cumulative impact of higher rates are just beginning. Hence, the Fed has to step down its pace a bit,” Jones said.

    So investors are going to need to pay attention not to just what the Fed says in its policy statement about rates and what Powell talks about in his press conference. The Fed also will release its latest projections for gross domestic product growth, the job market and consumer prices Wednesday.

    In September, the Fed’s consensus forecasts called for GDP growth of 1.2% in 2023, an unemployment rate of 4.4% and an increase in personal consumption expenditures, the Fed’s preferred measure or inflation, of 2.8%. It seems likely that the Fed will cut its GDP target and raise its expectations for the jobless rate and consumer prices.

    The likelihood of an economic downturn is increasing, and the Fed’s projections may reflect that. But the Fed is not expected to start cutting interest rates until 2024 at the earliest, so it may be too late for the central bank to prevent a recession.

    “A pivot or pause is not a cure-all for this market,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “Rate cuts may be too late. Recession risks are still relatively high.”

    The US economy isn’t in a recession yet. But are American shoppers tapped out? We’ll get a better sense of that Thursday after the government reports retail sales figures for November.

    Economists are actually forecasting a small dip of 0.1% in retail sales from October. But it’s important to put that number in context. Retail sales surged 1.3% from September and 8.3% over the past 12 months.

    So it’s possible consumers were simply getting a head start on holiday shopping. Inflation has an effect on the numbers too, since retail sales have been impacted (positively) by the fact that people have to spend more money for stuff.

    One market strategist also pointed out that as long as price increases continue to slow, consumers will feel more confident as well.

    “Everybody has been talking about inflation this year. Going forward, it will be more about disinflation in 2023 or 2024,” said Arnaud Cosserat, CEO of Comgest Global Investors.

    What does that mean for investors? Cosserat said people should be looking for quality consumer companies that still have pricing power and can maintain their profit margins. Two stocks that his firm owns that he said fit that bill: Luxury goods maker Hermes

    (HESAF)     and cosmetics giant L’Oreal

    (LRLCF)    .

    Monday: UK monthly GDP; earnings from Oracle

    (ORCL)

    Tuesday: US Consumer Price Index; Germany economic sentiment

    Wednesday: Fed meeting; EU industrial production; UK inflation; earnings from Lennar

    (LEN)     and Trip.com

    (TCOM)

    Thursday: US retail sales; US weekly jobless claims; ECB and Bank of England rate decisions; earnings from Jabil

    (JBL)

    Friday: Eurozone PMI; UK retail sales; earnings from Accenture

    (ACN)    , Darden Restaurants

    (DRI)     and Winnebago

    (WGO)

    [ad_2]

    Source link

  • Salesforce Co-CEO Bret Taylor steps down, leaving Marc Benioff alone at the top | CNN Business

    Salesforce Co-CEO Bret Taylor steps down, leaving Marc Benioff alone at the top | CNN Business

    [ad_1]


    New York
    CNN Business
     — 

    Enterprise tech giant Salesforce said Wednesday that its co-CEO and Vice Chair Bret Taylor will step down from his roles. Salesforce co-founder Marc Benioff, who had been co-CEO alongside Taylor, will continue running the company and serving as board chair, the company said in a news release.

    Taylor had worked at Salesforce

    (CRM)     for six years, most recently as president and COO before being elevated to co-CEO last November. He will officially exit his position on January 31, 2023. Benioff, in a statement, called Taylor’s decision to step down “bittersweet.”

    “After a lot of reflection, I’ve decided to return to my entrepreneurial roots,” Taylor said in a statement. “Salesforce has never been more relevant to customers, and with its best-in-class management team and the company executing on all cylinders, now is the right time for me to step away.”

    Prior to Salesforce, Taylor founded and led collaboration platform Quip, which Salesforce acquired for $750 million in 2016. Taylor also worked as chief technology officer at Facebook during the company’s IPO.

    Taylor’s move comes at a rocky time for Salesforce, whose shares have fallen around 40% since the start of this year amid the economic downturn. The announcement coincided with Salesforce’s third quarter earnings report, in which the company said it expected fourth quarter revenue at the low-end of analysts’ expectations.

    Salesforce’s stock fell more than 6% in after-hours trading following the earnings and leadership change announcements.

    Taylor also had a busy year outside Salesforce. As the former chair of Twitter’s board of directors, he was in charge of leading the company through Elon Musk’s tumultuous takeover deal and litigation. Musk officially closed his $44-billion deal to buy the company last month and quickly dissolved the board of directors.

    [ad_2]

    Source link