Tag: iab-sales

Microsoft, Google post strong quarterly sales growth as Big Tech continues its comeback | CNN Business

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CNN
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Big tech companies are continuing a turnaround from last year, as Alphabet, Microsoft and Snap kicked off earnings season with strong sales results for the quarter ended in September.

Google parent company Alphabet on Tuesday reported quarterly sales of $76.69 billion, up 11% from the same period in the prior year. The company also posted profits of $19.69 billion for the quarter.

Meanwhile, Microsoft posted 13% year-on-year sales growth to $56.5 billion, also beating expectations. Microsoft’s quarterly profits hit $22.3 billion, up 27% from the year-ago period.

Snapchat parent Snap on Tuesday reported a return to sales growth in the September quarter, after two consecutive quarters of declining sales. The company reported revenue of nearly $1.2 billion, an increase of 5% from the same period in the prior year and ahead of analysts’ projections. The company reported a net loss of $368 million.

The strong results come after Microsoft, Alphabet, Snap and other tech companies carried out mass layoffs and other cost cutting moves over the past year following a difficult 2022 when advertisers and other clients cut back on their spending due to concerns over the macroeconomic environment.

Despite beating Wall Street’s sales expectations, shares of both Alphabet (GOOGL) and Snap (SNAP) each dipped around 5% in after-hours trading following the reports, although Snap’s quickly regained some ground. Microsoft (MSFT) shares gained around 4% in after-hours trading.

“Q3 tech season has been quite strong thus far,” Tejas Dessai, research analyst at investment fund GlobalX said in a statement. “These numbers clearly defy concerns of near term economic weakness looming.”

Google’s advertising business generated quarterly revenue of $59.6 billion, up from $54.5 billion in the prior year. YouTube ads, meanwhile, garnered some $7.9 billion in revenue, up roughly 12% year-over-year.

YouTube Shorts, the company’s TikTok competitor, hit a milestone 70 billion daily views last quarter, Alphabet CEO Sundar Pichai said on a call with analysts Tuesday afternoon.

Google’s cloud business, however, reported revenue of $8.41 billion — missing analysts’ estimates.

Jesse Cohen, a senior analyst at Investing.com, attributed Alphabet’s after-hours stock fall to the “relatively weak performance in its Google cloud platform, which is at risk of falling further behind [Microsoft’s] Azure and [Amazon’s] AWS.” Still, despite taking a hit in 2022 amid a broader tech sector downturn, shares for Alphabet have climbed roughly 56% since the start of 2023, beating the tech-heavy Nasdaq index.

Google’s report comes as the tech giant is in the antitrust hot seat. US prosecutors officially opened a landmark antitrust trial against Google last month with sweeping allegations that the company engaged in anticompetitive behavior to maintain its dominance over search. (As the legal showdown rages on, Google has continued to deny allegations that it operated illegally.)

Google also confirmed last month plans to lay off hundreds of staffers in its recruiting division, as it continues cost cutting efforts in some areas. These more targeted layoffs came after Alphabet in January cut around 12,000 jobs — about 6% of its workforce.

Still, Google has signaled that it remains committed to investing heavily in generative artificial intelligence technology. Last month, Google rolled out a major expansion of its Bard AI chatbot tool.

“As we expand access to our new AI services, we continue to make meaningful investments in support of our AI efforts,” Pichai said on the call. “We remain committed to durably re-engineering our cost base in order to help create capacity for these investments, in support of long-term sustainable financial value.”

Microsoft’s recent investments in AI technology helped boost its sales in the September quarter, especially in its key cloud division. Sales from Microsoft’s “intelligent cloud” business — its biggest revenue driver — grew 19% from the year-ago quarter to $24.3 billion.

Revenue from the company’s “productivity and business processes” business, which includes LinkedIn and Office commercial and consumer products, also grew 13% year-over-year to $18.6 billion.

“Microsoft is firing on all cylinders and AI is clearly driving growth,” Cohen said in a research note following the company’s report. “The results indicated that artificial intelligence products are stimulating sales and already contributing to top and bottom-line growth.”

But economic jitters among consumers appear to still have some impact on the company’s bottom line. Devices revenue, which includes sales of laptops, tablets and Xbox consoles, decreased 22% year-over-year, despite a 3% sales increase in the overall “more personal computing” segment. Ongoing concerns about a potential economic slowdown could continue to weigh on the company as it heads into the crucial holiday device sales season.

The report is Microsoft’s first since the company closed its $69 billion acquisition of “Call of Duty” maker Activision Blizzard earlier this month. While the deal didn’t factor into this quarter’s results, it’s expected to supercharge the company’s gaming business.

“Microsoft now controls 30 game studios and some of the most well-known games across the industry,” Edward Jones analyst Logan Purk said in a research note earlier this month. “With a massive cloud network and now a compelling library of games, Microsoft has a leg up on peers” in gaming, he said.

Following the Activision takeover, “we’re looking forward to one of our strongest first-party holiday [game] lineups ever, including new titles like Call of Duty Modern Warfare 3,” CEO Satya Nadella said on an analyst call Tuesday. The company said it expects roughly $400 million of operating expenses in the fourth quarter to come as a result of the acquisition.

Snap said its sales growth was driven in part by its ongoing efforts to revamp its advertising technology, following changes to Apple’s app tracking policies that took a hit to the business models of Snapchat, Facebook and other platforms.

“We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success,” CEO Evan Spiegel said in a statement.

Snap also reported that it now has 406 million daily active users, up 12% compared to the year-ago quarter. And time spent watching Spotlight — Snapchat’s TikTok clone — grew 200% year-over-year, according to the company.

The company also recently announced that it had reached more than 5 million subscribers to its Snapchat+ subscription program, a key effort to diversify its revenue.

Snap said Tuesday that its chief operating officer, Jerry Hunter, plans to retire. Hunter, who spent seven years at the company, will step down from his role as of the end of the month, but will remain at the company until July 1, 2024, to support the transition.

The company noted that some advertisers temporarily paused their spending following the outbreak of the Israel-Hamas war. Because of the “unpredictable nature” of the war, Snap declined to provide formal guidance for the fourth quarter, but said its internal forecast assumes year-over-year quarterly revenue growth between 2% and 6%.

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October 24, 2023
Samsung flags 78% profit drop as chip demand remains weak | CNN Business

Hong Kong
CNN
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Samsung warned that operating profit in the third quarter likely plunged 78% as it continues to contend with lower than usual demand for consumer devices.

The South Korean tech giant released earnings estimates Wednesday, forecasting operating profit of about 2.4 trillion Korean won ($1.8 billion) for the three months ended September. That compares with 10.85 trillion won ($8 billion) in the same period last year.

Revenue was also projected to drop 12.7% from a year ago.

That continues a dreary run for the electronics maker, which has reported major losses in recent months as global economic uncertainty weighs on consumers around the world, leading many people to hold on to their cell phones and laptops longer.

According to Counterpoint Research, “2023 is on track to be the worst year for global smartphone shipments in 10 years,” with shipments forecast to decline 6% to fewer than 1.2 billion units.

In major markets like North America, “consumers are hesitant to upgrade their devices,” the firm noted in an August report.

Samsung has already been feeling the effects. The firm’s operating profit plummeted 95% in the first quarter, following a record loss in its semiconductor business. It saw similar results in the second quarter.

After a historic supply shortage during Covid, the global semiconductor industry is now seeing a glut in some areas that has driven losses for Samsung, the world’s largest memory chip and smartphone maker.

According to consultancy Bain, “the semiconductor industry’s post-pandemic rebound boosted capacity to the extent that some foresee an oversupply.”

In a report last month, Bain suggested the trend was merely cyclical, attributing it to “normal” ups and downs in the industry.

Samsung has also told shareholders it anticipates a gradual comeback in global demand in the second half of the year.

This “should lead to an improvement in earnings driven by the component business,” it said in a July earnings statement.

“However, continued macroeconomic risks could prove to be a challenge,” the company cautioned.

Analysts believe a downturn in memory chips will also turn around, benefiting manufacturers like Samsung.

In a recent note to clients, Nomura analysts said they expected a recovery in the sector “to accelerate” through the rest of this year.

“The team expects memory prices to remain flat or slightly increase in [the third quarter], then show strong growth in [the fourth quarter],” the analysts wrote, maintaining a buy rating on Samsung’s stock.

The company’s shares climbed 3.5% in Seoul on Wednesday following its announcement.

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October 10, 2023
Dollar General shares tumble after it cuts forecasts, blaming a spending slump and theft | CNN Business

New York
CNN
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Dollar General slashed its sales and profit outlook for the year on Thursday, blaming headwinds including weaker consumer spending on non-essential purchases and increasing theft.

Dollar General shares tumbled nearly 17% in pre-market trading Thursday.

The discount store’s challenges are yet another sign of American consumers pulling back on shopping as inflation remains well above the Federal Reserve’s 2% target.

“One of the key reasons for this is because Dollar General’s core customers are feeling the acute pressure of the cost-of-living-crisis,” Neil Saunders, retail analyst and managing director at GlobalData, said in a report Thursday.

“This has been exacerbated by cuts in SNAP payments as temporary pandemic benefits came to an end. As a result, lower-income shoppers are cutting back on non-consumable and indulgent purchases from the chain in a bid to save money,” he said. “Unfortunately, this dynamic will not change any time soon as, if anything, finances will tighten over the second half of the year.”

The discount retailer now expects sales for the full year to rise between 1.3% to 3.3%, down from its previous forecast of a 3.5% to 5% increase. It expects full-year earnings to decline 22% to 34% from its previous estimate of a flat-to-8% decrease.

The retailer said its same-store sales (or sales at stores open at least a year) are expected to range from a decline of about 1% to an increase of 1% for the year, compared to its previous expectation of a 1% to 2%. increase.

For its second quarter, Dollar General logged a 1% drop in its same-store sales. It said weaker customer traffic to its stores hurt sales in the period, combined with budget-conscious shoppers pulling back on higher-priced discretionary purchases such as home items and clothing in favor of lower-priced everyday necessities.

The Consumer Price Index rose 3.2% for the year through July, adding pressure on shoppers looking for bargains.

In addition, food stamp recipients started to receive about $90 a month less in benefits, on average, starting in March, as a pandemic hunger relief program comes to an end nationwide three years after Congress approved it.

Meanwhile, close on the heels of Dick’s Sporting Goods sounding the alarm on store theft eating into its profit this year, Dollar General also flagged an increase in product theft, among other factors, hurting its profit.

The company said “an increase in expected inventory shrink for the second half of 2023” factored into its lower guidance. Shrink is an industry term encompassing inventory losses caused by external theft, including organized retail crime, employee theft, human errors, vendor fraud, damaged or mismarked items and other losses.

Retailers large and small say they are struggling to contain an escalation in store crimes — from petty shoplifting to organized sprees of large-scale theft that clear entire shelves of products. Target warned earlier this year that it was bracing to lose half a billion dollars because of rising theft. It reported a large number of incidents of shoplifting and organized retail crime in its stores nationwide.

At the same time, it’s not clear that store crime is growing significantly more serious. Within the industry, at least one major player has argued that the problem is being overhyped.

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August 31, 2023
Ex-Trump Org. executive testifies that Eric Trump led him to inflate values of some properties | CNN Politics

CNN
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The former controller of the Trump Organization says that Eric Trump directed him to make certain decisions that led to the inflated valuations of several Trump properties.

Jeff McConney, also a co-defendant of former President Donald Trump, Eric Trump and Donald Trump Jr., testified Friday as the first week of the civil fraud trial came to an end.

Internal Trump Org. spreadsheets shown in court Friday show notations by McConney that say Eric Trump directed McConney in phone conversations about certain property valuations that would later appear on the financial statements the judge in this case has ruled fraudulent.

McConney testified that in those phone calls that Eric Trump directed him to factor certain things into the calculations that ultimately led to what the New York attorney general says are inflated valuations of properties including Seven Springs and the Trump National Golf Club Westchester.

(Attorneys for Eric Trump have argued he was not aware that any phone conversations with McConney were used to formulate value assets in the financial statements for Trump properties.)

The testimony came at the end of a dramatic week in New York. The former president attended the trial for three days, turning the trial into a media circus. He was also issued a gag order after making false allegations about one of Judge Arthur Engoron’s clerks.

“I can tell you this trial, in all my 33 years, it’s chaos,” Trump attorney Christopher Kise said during a separate appeals court hearing Friday afternoon.

Allen Weisselberg, Trump’s long-time chief financial officer who served 5 months in prison for his role in a decade-long tax fraud scheme after making a plea deal, is expected to testify when the trial resumes Tuesday.

During his testimony McConney testified to the methodologies that he used to compute asset valuations like Mar-A-Lago which the attorney general’s office highlighted to the court as improper.

Under questioning by special counsel to the New York attorney general Andrew Amer, McConney said he calculated Mar-A-Lago’s valuation as though it could be sold as a private residence.

McConney testified that he did not know at the time that Trump had deeded away his right to develop the property beyond its use as a social club in 2005.

McConney also said that he and Weisselberg consciously agreed to calculate the value of apartments at Trump Park Avenue, without factoring in that the units were rent stabilized, which significantly lowers the real-estate value because they cannot be rented at market price.

The former controller said that he and Weisselberg increased the value of multiple Trump golf clubs by adding what they considered the value of Trump’s name on the properties, called a brand premium.

Amer produced the annual statements of financial condition that contained a note stating, “The goodwill attached to the Trump name has significant financial value that has not been reflected in the preparation of this financial statement.”

McConney confirmed he was aware that disclaimer was on the annual financial statements.

He also testified when valuing Trump’s Seven Springs development beginning in 2011, he included the value of seven homes not yet built at the property. He said he did this at the direction of Eric Trump, who oversaw the project.

Spreadsheets shown in court show McConney’s phone conversations detailing the methodology of the Seven Springs valuation.

McConney similarly included 71 unbuilt units as realized profits in the valuation for Trump’s Briarcliff, New York golf course. He did this on more than one financial statement even when the development approval of those units had been paused, he testified.

Amer also rehashed McConney’s testimony from the Trump Organization criminal tax fraud trial last year when the former controller said that he committed fraud at the behest of Weisselberg because he was afraid he’d lose his job.

Over defense objections, Amer reminded the judge that McConney admitted that he knew it was illegal to help Weisselberg commit fraud when he helped him not only cheat taxes but also cut a payroll check to Weisselberg’s wife so she could illegally receive social security benefits.

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August 2, 2023
LinkedIn is cutting more than 650 jobs | CNN Business

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CNN
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LinkedIn is laying off 668 people across its engineering, product, talent and finance teams as part of a broader restructuring, the social media platform announced Monday.

In a blog post, the social media site for professionals said it is making changes to its organizational structure and streamlining its decision making.

“Talent changes are a difficult, but necessary and regular part of managing our business,” the company said. Microsoft bought LinkedIn in 2016.

The company is dedicating many of its resources toward artificial intelligence. Recently, LinkedIn announced an AI-assisted candidate discovery for recruiters using the site. And in Microsoft’s most recent earnings report, LinkedIn reported its AI-powered collaborative articles are the fastest-growing traffic driver on the site.

LinkedIn already cut 716 positions in May and shut down its jobs app in mainland China. That decision was made amid shifts in customer behavior and slower revenue growth, CEO Ryan Roslansky said in a letter to employees.

In the wake of mass layoffs across the tech sector at the end of last year, LinkedIn enjoyed an uptick in users and “record engagement” among its 875 million members at the time, Microsoft CEO Satya Nadella told analysts in last October’s earnings call.

The company continues to grow financially. LinkedIn also announced in its most recent earnings report that it surpassed $15 billion in revenue for the first time during this fiscal year, and that its membership growth “accelerated” for the eighth quarter in a row.

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August 2, 2023
iPhone sales in China shrink as US political tensions grow | CNN Business

CNN
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Demand for Apple’s new iPhone 15 lineup is weaker in China than for last year’s models, according to analysts.

Sales for the iPhone 15 are down 4.5% in China compared to iPhone 14 sales in the first two weeks after its launch, according to Counterpoint Research. Separately, Bloomberg reported on Monday financial firm Jefferies said iPhone 15 sales dropped by a double-digit percentage following strong customer demand for Huawei’s new Mate 60 smartphone line.

Apple

(AAPL) shares fell 0.08% following the reports.

The reports come amid a floundering Chinese economy, a struggling housing market, and more competition among higher-end vendors in China, particularly from Chinese device manufacturer Huawei.

“We’re seeing a lot of nationalism right now as Chinese consumers who think they’ve been wronged by the US government and sanctions are gravitating toward the Mate 60 and that is edging into Apple volumes,” Jeff Fieldhack, research director at Counterpoint, told CNN.

At the same time, China remains very important to Apple as it is the largest market behind the US. Fieldhack said he doesn’t believe Huawei will surpass Apple right now in terms of smartphone sales but expects continued interest in the Mate 60 will continue to “eek” into Apple’s numbers.

“Apple made a lot of gains during its launch period last year, where it became number one in China,” he said. “Things looked strong but now, with the political tension and competition, that is a reason for concern.”

However, the Phone 15 lineup is up about 10% year-over-year in the US, according to Counterpoint. That’s strong growth for Apple considering sales fell for the third consecutive quarter in August, ahead of the iPhone 15 launch.

The latest iPhone 15 devices come with a slimmer design, a more-advanced main camera system and a customizable Action button, which gives the silence button additional controls, from starting a voice memo to writing a note. Perhaps the biggest change coming to the models is that they will now use a USB-C charging cord, ending an 11-year run with Apple’s proprietary Lightning charging cable.

This isn’t the first time the Mate 60 has made headlines since its late August launch. In September, the US government sought more information about the Mate 60 Pro’s 5G Kirin 9000s processor reportedly developed specifically for the manufacturer. Its debut shocked industry experts who questioned how the company could make such a chip following sweeping efforts by the United States to restrict China’s access to foreign chip technology because of perceived national security concerns.

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August 2, 2023
Michael Cohen to take stand in fraud trial of his former boss, Donald Trump | CNN Politics

CNN
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Michael Cohen was once one of Donald Trump’s most loyal allies.

But after going to jail for tax crimes and lying to Congress, Cohen, Trump’s former lawyer and “fixer,” became a star witness against his former boss, testifying before Congress about the hush-money payments he made to women claiming affairs with Trump and writing books highly critical of the former president.

Tuesday, Trump and Cohen are expected to be face to face in a New York courtroom as Cohen delivers testimony as part of the New York attorney general’s civil fraud case against the former president.

When Cohen takes the stand, he will face down a very angry Donald Trump. It’s the first time the two have been in the same room or even spoken in five years, according to multiple sources.

“It appears that I will be reunited with my old client @realDonaldTrump when I testify this Tuesday, October 24th at the @NewYorkStateAG civil fraud trial. See you there!” Cohen posted last week on the social media site Threads.

Cohen’s testimony is the latest high-profile moment in the civil fraud trial, in which New York Attorney General Letitia James is seeking to bar Trump from doing business in the state. While Trump has played only a passive role in the trial to date, he is expected to be called as a witness later on.

Michael Cohen reacts to testimony about Eric Trump

Trump voluntarily attended the civil trial’s opening days, and the former president returned last week, when Cohen was initially supposed to be called to testify, though Cohen’s appearance was delayed after he cited a medical issue.

Trump is also returning to the courtroom after he was fined $5,000 last week by Judge Arthur Engoron – and warned about possible imprisonment – for violating a gag order not to speak about any members of the court staff. Engoron fined Trump over a social media post attacking Engoron’s clerk that had not been removed from Trump’s campaign website.

Cohen is expected to testify about meetings with former Trump Organization Chief Financial Officer Allen Weisselberg and Trump regarding Trump’s financial statements and net worth. Cohen has claimed there were meetings with Weisselberg and Trump about Trump’s net worth before the financial statements were filed. Weisselberg testified earlier in the trial, “I don’t believe it ever happened, no.”

The attorney general’s office has said Cohen’s testimony before the House Oversight Committee in February 2019 – when Cohen alleged that officials at the Trump Organization inflated the value of its assets to secure loans and insurance and that they lowered the values for tax benefits – was the impetus for its investigation that led to the lawsuit against Trump.

Assistant Attorney General Colleen Faherty is expected to question Cohen on direct examination.

Cohen’s testimony is also a crucial part of the criminal case against Trump brought by Manhattan District Attorney Alvin Bragg, who charged Trump earlier this year with falsifying business records related to the hush-money payments.

Cohen testified before Congress in 2019 about Trump’s involvement in the hush-money scheme involving both former Playboy model Karen McDougal and adult-film star Stormy Daniels, who alleged having affairs with Trump (Trump has denied the affairs). Cohen even released a recording in which he and Trump can be heard discussing how they would buy the rights to McDougal’s story.

Tuesday’s testimony, however, is expected to focus not on the hush-money payments but on Trump’s financial statements. Before Cohen testifies, the first witness will be Bill Kelly, the general counsel of Mazars, Trump’s onetime accounting firm.

The trial is now in its fourth week. The attorney general’s office has called 12 witnesses to testify, including six current or former Trump Organization employees, two of whom are defendants in the case: Weisselberg and former Controller Jeff McConney.

Trump’s lawyers have cross-examined only about half the witnesses so far, opting to reserve their right to call them in the defense case. Engoron set aside more than three months for the trial, which could continue through late December.

An appraiser for Cushman & Wakefield testified last week that Trump’s son Eric Trump was closely involved in several appraisal consultations with the real estate firm for Trump assets Seven Springs and Trump National Golf Club in Briarcliff Manor, New York, that valued the properties substantially lower than the amounts that appeared on Trump’s financial statements in those years.

Eric Trump said in a deposition for the case that he didn’t remember being involved in any appraisals for Trump properties.

The attorneys are scheduled to argue at a hearing Friday morning whether Ivanka Trump, the former president’s daughter, can be forced to testify at trial even though an appellate court dismissed her as a defendant because the claims against her were too old.

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August 2, 2023
Apple’s sales fall for the third consecutive quarter | CNN Business

CNN
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Apple said Thursday that its revenue slipped 1% to $81.8 billion for its quarter ending July 1, marking the third consecutive year-over-year drop in quarterly revenue for the world’s most valuable company.

There were some bright spots, however. The company said its services revenue reached a new all-time high of $21.2 billion. The services business — which includes Apple Music and Apple TV+ — is an increasingly important revenue driver for Apple.

Moreover, Apple’s results narrowly beat Wall Street’s estimates for revenue and profit.

iPhone revenue came in at $39.7 billion for the quarter, marking an approximately 2% year-over-year decline. Mac revenue was $6.8 billion for the quarter, a 7% drop, and iPad revenue was down nearly 20%. (The new iPad Air launched in the same quarter last year.)

Shares of Apple ticked down by more than 1% in after-hours trading Thursday. But the stock has climbed some 50% from the start of the year.

In a statement accompanying the earnings results, CEO Tim Cook touted the rosy services figure and strong performance in emerging markets.

“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” Cook said.

On a call with analysts Thursday, Cook added, “We continue to face an uneven macroeconomic environment, including nearly four percentage points of foreign exchange headwinds.”

“Looking ahead, we’ll continue to manage for the long term, always pushing the limits of what’s possible and always putting the customer at the center of everything we do,” Cook said.

Apple’s June quarter is typically the slowest of the year for the tech giant, which usually unveils new iPhone models in September. Customers often hold out on upgrading until the new models are released. The quarter also ends before back-to-school shopping and the lucrative December holidays.

The latest earnings report also comes as PC and smartphone sales slump, after an initial surge seen in the early days of the pandemic. Global PC shipments fell 16.6% last quarter, according to preliminary data from Gartner released last month. Worldwide smartphone shipments, meanwhile, dropped 7.8% last quarter compared to the same period the previous year, according to separate preliminary data from market research firm IDC last week.

“Like other major tech companies, even Apple is suffering from the negative impact of a worsening macro backdrop and ongoing supply chain woes, though it has done a better job of navigating through the challenging environment,” Jesse Cohen, senior analyst at Investing.com, said in a note Thursday evening. “Investors appear to be reacting to the slight miss in iPhone sales, but I wouldn’t read too much into it as many consumers are holding out until the next iPhone release.”

Looking forward, Apple’s CFO Luca Maestri said on the call that the company expects its quarter ending in September year-over-year revenue performance “to be similar to the June quarter,” assuming macroeconomic outlook doesn’t worsen.

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August 2, 2023
The big bottleneck for AI: a shortage of powerful chips | CNN Business

CNN
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The crushing demand for AI has also revealed the limits of the global supply chain for powerful chips used to develop and field AI models.

The continuing chip crunch has affected businesses large and small, including some of the AI industry’s leading platforms and may not meaningfully improve for at least a year or more, according to industry analysts.

The latest sign of a potentially extended shortage in AI chips came in Microsoft’s annual report recently. The report identifies, for the first time, the availability of graphics processing units (GPUs) as a possible risk factor for investors.

GPUs are a critical type of hardware that helps run the countless calculations involved in training and deploying artificial intelligence algorithms.

“We continue to identify and evaluate opportunities to expand our datacenter locations and increase our server capacity to meet the evolving needs of our customers, particularly given the growing demand for AI services,” Microsoft wrote. “Our datacenters depend on the availability of permitted and buildable land, predictable energy, networking supplies, and servers, including graphics processing units (‘GPUs’) and other components.”

Microsoft’s nod to GPUs highlights how access to computing power serves as a critical bottleneck for AI. The issue directly affects companies that are building AI tools and products, and indirectly affects businesses and end-users who hope to apply the technology for their own purposes.

OpenAI CEO Sam Altman, testifying before the US Senate in May, suggested that the company’s chatbot tool was struggling to keep up with the number of requests users were throwing at it.

“We’re so short on GPUs, the less people that use the tool, the better,” Altman said. An OpenAI spokesperson later told CNN the company is committed to ensuring enough capacity for users.

The problem may sound reminiscent of the pandemic-era shortages in popular consumer electronics that saw gaming enthusiasts paying substantially inflated prices for game consoles and PC graphics cards. At the time, manufacturing delays, a lack of labor, disruptions to global shipping and persistent competing demand from cryptocurrency miners contributed to the scarce supply of GPUs, spurring a cottage industry of deal-tracking tech to help ordinary consumers find what they needed.

But the current shortage is much different in kind, industry experts say. Instead of a disruption to supplies of consumer-focused GPUs, the ongoing shortage reflects the sudden, exploding demand for ultra high-end GPUs meant for advanced work such as the training and use of AI models.

Production of those GPUs is at capacity, but the rush of demand has overwhelmed what few sources of supply there are.

There is a “huge sucking sound” coming from businesses representing the unrivaled demand for AI, said Raj Joshi, a senior vice president at Moody’s Investors Service who tracks the chips industry.

“Nobody could’ve modeled how fast or how much this demand is going to increase,” Joshi said. “I don’t think the industry was ready for this kind of surge in demand.”

One company in particular stands to benefit massively from the AI surge: Nvidia, the trillion-dollar chipmaker that according to industry estimates controls 84% of the market for discrete GPUs. In a research note published in May, Joshi estimated that Nvidia would experience “unparalleled” revenue growth in the coming quarters, with revenue from its data center business outstripping that of rivals Intel and AMD combined.

In its May earnings call, Nvidia said it had “procured substantially higher supply for the second half of the year” to meet the rising demand for AI chips. The company declined to comment on Tuesday, citing its latest pre-earnings quiet period.

AMD, meanwhile, said Tuesday it expects to unveil its answer to Nvidia’s AI GPUs closer to the end of the year.

“There’s very strong customer interest across the board in our AI solutions,” said AMD CEO Lisa Su on the company’s earnings call. “There is a lot more to do, but I would say the progress that we’ve made has been significant.”

Compounding the issue is that GPU-makers themselves cannot get enough of a key input from their own suppliers, said Sid Sheth, founder and CEO of AI startup d-Matrix. The technology, known as a silicon interposer, works by marrying standalone computing chips with high-bandwidth memory chips and is necessary for completing GPUs.

The Biden administration has made increasing US chip manufacturing capacity a priority; the passage of the CHIPS Act last year is set to provide billions in funding for the domestic chip industry and for chip research and development. But those investments are aimed at a broad swath of chip technologies and not specifically targeted at boosting GPU production.

The chip shortage is expected to ease as more manufacturing comes online and as competitors to Nvidia also expand their offerings. But that could take as long as two to three years, some industry experts say.

In the meantime, the shortage could force companies to find creative ways around the problem. Companies that can’t get their hands on enough chips are now having to be more efficient, said Sheth.

“Necessity is the mother of invention, right?” Sheth said. “So now that people don’t have access to unlimited amounts of computing power, they are finding resourceful ways of using whatever they have in a much smarter way.”

That could include, for example, using smaller AI models that may be easier and less computationally intensive to train than a massive model, or developing new ways of doing computation that don’t rely as heavily on traditional CPUs and GPUs, Sheth said.

“Net-net, this is going to be a blessing in disguise,” he added.

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August 2, 2023
Illinois passes a law that requires parents to compensate child influencers | CNN Business

CNN
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When 16-year-old Shreya Nallamothu from Normal, Illinois, scrolled through social media platforms to pass time during the pandemic, she became increasingly frustrated with the number of children she saw featured in family vlogs.

She recalled the many home videos her parents filmed of herself and her sister over the years: taking their first steps, going to school and other “embarrassing stuff.”

“I’m so glad those videos stayed in the family,” she said. “It made me realize family vlogging is putting very private and intimate moments onto the internet.”

She said reminders and lectures from her parents about how everything is permanent online intensified her reaction to the videos she saw of kid influencers. “The fact that these kids are either too young to grasp that or weren’t given the chance to grasp that is really sad.”

Nallamothu wrote a letter last year to her state senator, Democrat Dave Koehler, urging him to consider legislation to protect young influencers. Last week, her home state became the first to pass a law that establishes safeguards for minors who are featured in online videos – and how they’re compensated.

Illinois Gov. J. B. Pritzker on Friday signed a bill, inspired by Nallamothu’s letter, amending the state’s Child Labor Law that will allow teenagers over the age of 18 to take legal action against their parents if they were featured in monetized social media videos and not properly compensated, similar to the rights held by child actors.

Starting July 1 2024, parents in Illinois will be required to put aside 50% of earnings for a piece of content into a blocked trust fund for the child, based on the percentage of time they’re featured in the video. For example, if a child is in 50% of a video, they should receive 25% of the funds; if they’re in 100%, they are required to get 50% of the earnings. However, this only applies in scenarios during which the child appears on the screen for more than 30% of the vlogs in a 12-month period.

“We understand that parents should receive compensation too because they have equity in this, but we don’t want to forget about the child,” Koehler told CNN.

Many YouTube parent vloggers or social media influencers post multiple videos each month or weekly, sharing intimate details about their lives, ranging from family financial troubles and the birth of a new baby to opening new toys or going through a child’s phone or report card. Although children are predominantly featured in these monetized videos, parents have had no legal obligation to give them any portion of the earnings.

Meanwhile, kid influencer accounts, which can at times earn $20,000 or more for sponsored posts, are typically run by parents and not often set up in the child’s name due to age restrictions on social media platforms.

“We often see with emerging technology and trends that legislation is always a reaction to that,” Koehler said. “But we know with the explosion of social media that parents are using it to monetize kids being on videos. If money is being made and nothing is set up for the children, it’s the same thing as a child actor.”

The new law is modeled off of the 1936 Jackie Coogan’s Law, the Hollywood silent actor discovered by Charlie Chaplin whose parents swindled him out of his earnings. That California law required parents to set aside a portion of 15% of child earnings in a blocked trust account that the child actor could access after the age of 18.

Although similar bills have been proposed in California and Washington, Jessica Maddox — an assistant professor at The University of Alabama who studies the social media influencer community — said she’s hopeful other states will follow in Illinois’ footsteps.

“Even though Illinois is the first state to pass such a law, this legislation is a long time coming,” Maddox said. “Social media labor and careers are becoming increasingly common and viable forms of income, and it’s important that the law catches up with technology to ensure minors aren’t being exploited.”

Maddox said it also breathes new life into the long-simmering debate over what is appropriate for parents to document online and whether a child can really consent to participating.

“I’ve seen organic conversations start to emerge between individuals who had been featured heavily in their parents’ social media content but are now of age to tell their stories and admit that had they really understood what was going on, they would have never consented for their lives to be broadcast for everyone.”

Chris McCarty — the 19-year-old founder of Quit Clicking Kids, an advocacy and education site to combat the monetization of children on social media, who is helping to develop child influencer legislation in Washington State — believes that as the kids featured in family vlogs grow up and share their stories, there will be an increase in public pressure to provide more privacy protections.

“When children are slightly older, often the narratives get increasingly personal; for example. detailing trouble with bullies, first periods, doctor’s visits, and mental health issues,” McCarty said. “A lot of consumers assume that children working in a family vlog and child actors have the same experiences. This is not the case. As difficult as it is to be a child actor, child actors are still playing a part rather than having their intimate personal details shared for entertainment and monetary purposes.”

Nallamothu agrees that the next step is for legislation to evolve over time to include more regulations around consent.

“I know this bill isn’t going to be perfect off the bat but I don’t want perfection to get in the way of progress because regulations have only started coming up,” she said. “I’m glad it’s getting there.”

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August 2, 2023
Nvidia’s quarterly sales double on the back of AI boom | CNN Business

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CNN
—

The artificial intelligence boom continues to fuel a blockbuster year for chipmaker Nvidia.

Nvidia’s stock jumped as much as 9% in after-hours trading Wednesday after the Santa Clara, California-based company posted year-over-year sales growth of 101%, to $13.5 billion for the three months ended in July.

The results were even stronger than the $11.2 billion in revenue that Wall Street analysts expected. The company’s non-GAAP adjusted profits grew a stunning 429% from the same period in the prior year to $2.70 per share, also beating analysts’ expectations. GAAP stands for generally accepted accounting principles.

Nvidia’s stock has climbed by just over 220% since the start of this year amid a surge in the popularity of and demand for artificial intelligence technology. The American chipmaker produces processors that power generative AI, technology that can create text, images and other media — and which forms the foundation of buzzy new services such as ChatGPT.

“A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” Nvidia CEO Jensen Huang said in a statement, adding that the company is working with “Leading enterprise IT system and software providers … to bring NVIDIA AI to every industry.”

“The race is on to adopt generative AI,” he said.

Huang had said following the company’s May earnings report that the firm was ramping up its supply to meet “surging demand.”

“Nvidia’s hardware has become indispensable to the AI-driven economy,” Insider Intelligence senior analyst Jacob Bourne said in emailed commentary. “The pressing question is whether Nvidia can consistently exceed the now-higher expectations.”

This story is developing and will be updated.

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August 2, 2023
T-Mobile to lay off 5,000 employees | CNN Business

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CNN
—

T-Mobile on Thursday announced it plans to lay off 5,000 employees, or around 7% of its total staff, over the next five weeks.

The reductions will largely affect corporate and back-office jobs that are “primarily duplicative” to other roles and will reduce the company’s middle management layers, CEO Mike Sievert said in a letter to employees Thursday. The company also plans to reduce its spending on “external workers and resources,” but its retail and “consumer care” staff who work directly with customers will not be affected, he said.

“What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago,” Sievert said.

T-Mobile’s cuts comes after months of mass layoff announcements at a range of other technology companies — including Microsoft and Meta — as firms grapple with an uncertain economic environment.

In its most recent quarterly earnings report last month, T-Mobile reported sales down 2.5% year-over-year and net customer additions fell slightly from the same period in the prior year, although it posted record low customer churn and profit growth. T-Mobile’s stock has fallen more than 7% since last August. Shares were trading down around 1% following its layoff announcement.

In Thursday’s letter, Sievert said that in the three years since closing T-Mobile’s acquisition of rival carrier Sprint, it has been working to streamline the combined businesses and accelerate the build-out of its high-speed internet business. However, he suggested it was important for the company to now narrow its focus.

“It is clear that doing everything we are doing and just doing it faster is not enough to deliver on these changing customer expectations going forward,” he said. “Today’s changes are all about getting us efficiently focused on a finite set of winning strategies.”

T-Mobile plans to notify employees who will be laid off by the end of September. The company estimates it will incur a pre-tax charge of $450 million in the September quarter related to the reductions, according to a Thursday securities filing.

Affected employees will receive “competitive severance packages” based on tenure, as well as accelerated stock vesting, access to career transition services and other benefits, Sievert told employees. He added that the company is not planning additional, widespread employee reductions in the foreseeable future.

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August 2, 2023
Elon Musk blames the ADL for 60% ad sales decline at X, threatens to sue | CNN Business

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CNN
—

X owner Elon Musk is threatening to sue the Anti-Defamation League for defamation, claiming that the nonprofit organization’s statements about rising hate speech on the social media platform have torpedoed X’s advertising revenue.

In a post on X, formerly known as Twitter, Musk said US advertising revenue is “still down 60%, primarily due to pressure on advertisers by @ADL (that’s what advertisers tell us), so they almost succeeded in killing X/Twitter!”

Musk also claimed that since he took over the platform in October 2022, the ADL “has been trying to kill this platform by falsely accusing it & me of being anti-Semitic.”

“To clear our platform’s name on the matter of anti-Semitism, it looks like we have no choice but to file a defamation lawsuit against the Anti-Defamation League … oh the irony!” he said.

The ADL said as a matter of policy it does not comment on legal threats. But the organization noted it recently met with X leadership, including CEO Linda Yaccarino, who Musk hired to help revive ad revenue. Yaccarino thanked ADL CEO Jonathan Greenblatt following the meeting last week, saying in a post on X, “A strong and productive partnership is built on good intentions and candor.”

Meanwhile, Musk, the platform’s owner, has recently liked and engaged with a series of posts criticizing the organization.

A #BanTheADL campaign has spread on X, and the ADL accused Musk of “lifting” the campaign.

“ADL is unsurprised yet undeterred that antisemites, white supremacists, conspiracy theorists and other trolls have launched a coordinated attack on our organization. This type of thing is nothing new,” an ADL spokesperson said.

The ADL and other similar organizations, including the Center for Countering Digital Hate, have found that the volume of hate speech on the website has grown dramatically under Musk’s stewardship.

In one instance, the CCDH found the daily use of the n-word under Musk is triple the 2022 average and the use of slurs against gay men and trans persons are up 58% and 62%, respectively. The ADL said in a separate report that its data shows “both an increase in antisemitic content on the platform and a decrease in the moderation of antisemitic posts.”

Musk called the reports in May by the two watchdog groups “utterly false,” claiming that “hate speech impressions,” or the number of times a tweet containing hate speech has been viewed, “continue to decline” since his early days of owning the company when the platform saw a spike in hate speech designed to test Musk’s tolerance.

Still, two brands last month paused their ad spending on X after their advertisements ran alongside an account promoting Nazism. X suspended the account after the issue was flagged and said ad impressions on the page were minimal.

Last month, Musk sued the CCDH, accusing the nonprofit group of deliberately trying to drive advertisers away from the platform by publishing reports critical of the platform’s response to hateful content.

It specifically claims CCDH violated the platform’s terms of service, and federal hacking laws, by scraping data from the company’s platform and by encouraging an unnamed individual to improperly collect information about Twitter that it had provided to a third-party brand monitoring provider.

In response, CCDH’s CEO Imran Ahmed previously told CNN that much of the lawsuit, particularly its claim about the unnamed individual, “sounds a bit like a conspiracy theory to me.”

“The truth is that he’s [Elon Musk] been casting around for a reason to blame us for his own failings as a CEO,” Ahmed said, “because we all know that when he took over, he put up the bat signal to racists and misogynists, to homophobes, to antisemites, saying ‘Twitter is now a free-speech platform.’ … And now he’s surprised when people are able to quantify that there has been a resulting increase in hate and disinformation.”

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August 2, 2023
Bud Light sales keep slipping. But it remains America’s top-selling beer | CNN Business

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CNN
—

Roughly two months after Bud Light endured a self-induced injury that torpedoed sales, the brand continues to lose ground to its competition. But there are signs the worst might be over.

Sales for the week leading into Memorial Day weekend fell 23.9% from the same period a year ago. That constitutes a slight improvement compared to the week prior when sales were 25.7% lower than a year earlier. That could indicate that the “bottom has been hit and we are seeing a turn-around in performance,” according to Bump Williams, an alcohol industry expert.

For the past several weeks, Bud Light sales declines have hovered around 25% weekly because of customer revolt following an Instagram partnership with transgender influencer Dylan Mulvaney. A single can bearing her face was given to her for a post, but some right-wing media attacked the brand, and some social media posts spewed transphobic comments.

Anheuser-Busch’s tepid statement about the controversy also angered some LGBTQ+ groups.

In response, Anheuser-Busch

(BUD) said it was bolstering marketing on Bud Light and would offer rebates to customers. Last weekend, the company offered $15 back on 15-packs of beer, leading to cases priced as low as $1.50 in some states, which Williams said contributed to part of its minor turnaround.

Still, Bud Light remains the top-selling beer in America, according to NIQ data provided to CNN by Williams. NIQ measures sales at convenience, liquor and grocery stores across the United States. Bud Light has made up 35.1% of domestic beer sales this year (through May 27), according to NIQ. That easily beats No. 2 Coors Light, which controls 21.6% of the market.

Although Bud Light’s share of the domestic beer market has slipped considerably over the past couple months, it remains in the lead. In the week ended May 27, Bud Light controlled 28.8% of the market, compared to Coors Light, which made up 25.6% of overall sales, NIQ reported.

The biggest beneficiaries of Bud Light’s slipping sales continue to be MolsonCoors’ Miller Light and Coors Light, with sales up a whopping 26% and 23% respectively, according to NIQ. Beer Business Daily reported Monday that some distributors are reporting shortages, but a company spokesperson told CNN that its supply is strong for the summer.

Another bright spot is Modelo, distributed by Constellation Brands

(STZ). Sales of its Modelo Especial and its recently launched low-carb beer Modelo Oro are strong, with sales up 9.5% and its share of the total beer category surpassing Bud Light last week, Williams said. He added that it’s “not a surprise” because of a halo effect from Cinco de Mayo and heavy advertising supporting its Oro launch.

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June 6, 2023
Lachlan Murdoch: No change in strategy at Fox News | CNN Business

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CNN
—

Despite a turbulent and expensive few weeks, Fox News isn’t changing course.

Fox Corp. CEO Lachlan Murdoch said there will be no change in strategy at the company’s top rated cable news network, despite the firing of its top rated anchor Tucker Carlson and a massive $787.5 million settlement to Dominion Voting Systems that resulted in the company swinging to a loss in the just completed period.

“There is no change to our programming strategy at Fox News,” Murdoch said in response to an analyst who asked about Carlson’s ouster during the investor call Tuesday to discuss its financial results.

Murdoch described Fox News as “obviously a successful” and suggested Carlson’s firing was a tweaking of its strategy, not a departure from it.

“As always, we are adjusting our programming and lineup and that is what we continue to do,” Murdoch said.

His comments came after the company reported a $50 million net loss for the just completed quarter, compared to $290 million in profit a year earlier.

The reason was a $719 million charge including the cost of the Dominion settlement, other legal settlements related to its news division and other legal costs, including attorney fees, which was partly offset by equity earnings of it affiliates and a change in the market value of some of its investments.

The earnings statement didn’t mention Dominion Voting Systems, although it does refer to charges related to legal settlement costs at Fox News Media. On the company’s call with investors Murdoch referred to the settlement with Dominion as in the best interest of the company and its shareholders, given rulings by the Delaware court that he said limited its defense. He said going to trial could have led to two to three years of appeals.

“We’re proud of our Fox News team, the exceptional quality of their journalism and their stewardship of the Fox News brand,” he said. “So as we look ahead, we are confident in the strength of the Fox brands and the strength of our balance sheet.”

And he again defended the company’s post-election coverage of the false conspiracy theories made against Dominion, even though internal communications among Fox anchors made public during the discovery process showed many of them didn’t believe the claims being made.

“We always acted as a news organization reporting on the newsworthy events of the day,” Murdoch told investors Tuesday. “Now we have been and remain confident in the merits of our position that the first amendment protects a news organization’s reporting and allegations being made by a sitting president of the United States. However, the Delaware court severely limited our defenses and trial through pre-trial rulings.”

Fox did not have to apologize or admit wrongdoing as part of the settlement in Dominion’s defamation suit against it, although its statement did say it acknowledged “the Court’s rulings finding certain claims about Dominion to be false.”

Fox still faces a lawsuit from another voting machine manufacturer, Smartmatic, which is seeking $2.7 billion in damages. Murdoch told investors that case is “fundamentally different” from the Dominion case and that Fox will have greater defenses available to it than in the Delaware court hearing the Dominion case. He predicted that case won’t go to trial until 2025.

The Dominion settlement was reached on April 18, but it was still reported in Fox’s fiscal third quarter, which concluded March 31. Excluding the legal costs and other special items reported Tuesday, it was a pretty good financial quarter for Fox.

It reported adjusted earnings of $494 million, or 94 cents a share, up from $459 million a year earlier. That was better than the 87 cents a share forecast by analysts surveyed by Refinitiv. The company was helped by the profits and revenue gain it received from airing this year’s Super Bowl.

Revenue at the company rose 18% to $4.1 billion, slightly higher than analysts’ forecasts. Most of that gain was due to a 43% surge in advertising revenue, helped greatly by $650 million in Super Bowl ads. Fox did not broadcast the Super Bowl in 2022.

Fox had plenty of money available to pay the settlement. It said it had $4.1 billion in cash and cash equivalent on hand as of March 30, about three weeks before the settlement was reached. It also announced it repurchased $1.8 billion of its shares in the nine months ending March 31, as part of a $7 billion share repurchase plan. So far, Fox has repurchased $4.4 billion worth of shares as part of its plan.

Murdoch said Fox is better positioned than many other media companies to ride out the delays and lost revenue that could take place from a prolonged strike by the Writers Guild of America. Some programming, such as late night shows, have already gone dark due to the strike that started last week, and production on other shows has been halted.

But Murdoch said the fact that Fox has more of its revenue and profit coming from sports and news, which are not affected by the strike, puts it in a better position.

“Our healthy balance of scripted and unscripted content on the network puts us in a tremendous position,” he said.

The hit from the settlement was well known by investors ahead of the report. But even with the better than expected results, Fox

(FOX) shares were up only about 1% in trading at the market open following the report.

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May 9, 2023
Apple posts second consecutive quarterly revenue decline | CNN Business

CNN
—

Apple on Thursday reported that its revenue fell 3% to $94.8 billion for the first three months of the year as consumers scale back spending on smartphones and computers amid looming recession fears.

The company’s revenue was slightly better than what Wall Street had expected, but it nonetheless represented the second consecutive quarterly revenue decline for the iPhone maker.

Apple attempted to appease investors by announcing up to $90 billion in share buybacks. Shares of Apple were largely flat in after-hours trading Thursday following teh results.

Despite the continued revenue decline, there were bright spots in the report.

Apple CEO Tim Cook said Apple hit a “a March quarter record for iPhone despite the challenging macroeconomic environment” and that the installed base of active devices reached an all-time high.

Apple’s latest quarterly earnings report comes amid a sharp decline in PC and smartphone sales globally after a surge earlier in the pandemic.

Worldwide PC shipments declined 30% in the first quarter of 2023 compared to the year prior, according to data from Gartner. Global smartphone shipments plunged 14.6% last quarter, according to separate data from market intelligence firm IDC.

Apple’s report on Thursday caps off a closely-watched earnings season for Silicon Valley amid broader economic jitters. All five Big Tech companies beat Wall Street’s estimates, but the numbers paint a stark picture of the industry at this moment.

Apple and its peers once enjoyed seemingly limitless growth. Now these business are struggling to grow sales and profits – or posting declines.

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May 4, 2023
Ford cuts price of the Mustang Mach-E again | CNN Business

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CNN
—

Ford is once again cutting the price of its electric SUV, the Mustang Mach-E, as it ramps up its price war with Tesla.

Tesla, the leader in EV sales by a large margin, has cut prices six times so far this year. Its price cuts have eaten into its industry-leading profit margins and added pressure to its stock price.

Ford’s price cuts for the Mach-E come to $3,000 to $4,000 for most models, or about 6%. It’ll put the sticker price at between $43,000 and $60,000. It also said it would increase production of the Mach-E in the second half of this year.

Ford cut the price of the Mach-E in January but it has not announced price cuts for its other electric vehicles, including the F-150 Lightning pickup. Tesla has yet to deliver its first electric pickup, due out later this year.

Tesla’s profit margins have been falling, because it sells only EVs. But Ford still gets the overwhelming majority of its sales from its profitable sales of gasoline powered cars and trucks. So it was able to report improved results even with the EV price cuts announced earlier.

And on Tuesday, Ford stuck with the full-year earnings guidance it issued in March despite the new price cut. Even with the EV losses, Ford confirmed its earlier guidance that it expects to earn between $9 billion and $11 billion on an adjusted basis this year. The EV sales at Ford are still a fraction of its overall sales and pricing changes don’t move the profit needle the way it does at Tesla.

Ford is still losing money on its EV sales. It said Tuesday it expects to lose about $3 billion before taxes, interest and depreciation from its electric vehicle division during the year, but that’s the same guidance it gave when it met with investors in March and broke out the results for that segment for the first time. It lost $722 million on that basis from EVs in the first quarter.

Overall, Ford’s profit for the first quarter was much better than expected. It earned $2.5 billion, or 63 cents a share, up nearly $1 billion from what it earned on that basis a year ago. That was far better than the 41 cents a share earnings forecast by analysts surveyed by Refinitiv.

Sales grew 20% to $41.5 billion, fueling the stronger than expected results. While revenue from the EV segment fell 27%, that segment only had sales of $700 million, a fraction of its overall revenue. Overall, the number of EVs Ford sold fell 32% to 12,000, despite the lower pricing for the Mustang Mach E. Tesla sales have increased after it lowered prices.

Ford sold 1.1 million total vehicles in the quarter, up 9%.

Shares of Ford

(F) fell 2% in after hours trading, despite the strong results and unchanged earnings guidance.

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May 2, 2023
Big banks are bidding for troubled First Republic as FDIC deadline looms | CNN Business

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CNN
—

Federal regulators are holding an auction for ailing regional bank First Republic, a person familiar with the matter tells CNN.

Final bids are due for First Republic Bank at 4 p.m. ET on Sunday, the source said.

The Federal Deposit Insurance Corporation, the independent government agency that insures deposits for bank customers, is running the auction.

Neither First Republic nor the FDIC were immediately available for comment.

Shares of First Republic

(FRC) plunged from $122.50 on March 1 to around $3 a share as of Friday on expectations that the FDIC would step in by end of day and take control of the San Francisco-based bank, its deposits and assets. But that never happened.

The FDIC had already done so with two other similar sized banks just last month — Silicon Valley Bank and Signature Bank — when runs on those banks by their customers left the lenders unable to cover customers’ demands for withdrawals.

The Wall Street Journal previously reported that JPMorgan Chase and PNC Financial are among the big banks bidding on First Republic in a potential deal that would follow an FDIC seizure of the troubled regional bank.

PNC declined to comment. JPMorgan did not respond to requests for comment.

“We are engaged in discussions with multiple parties about our strategic options while continuing to serve our clients,” First Republic said in a statement Friday night.

If there is a buyer for First Republic, the FDIC would likely be stuck with some money-losing assets, as was the case after it found buyers for the viable portions of SVB and Signature after it took control of those banks.

A kind of shotgun marriage, arranged by regulators who didn’t want a significant bank to end up in the hands of the FDIC before it was sold, occurred several times during the financial crisis of 2008 that sparked the Great Recession. Notably, JPMorgan bought Bear Stearns for a fraction of its earlier value in March of 2008, and then in September bought savings and loan Washington Mutual, soon after Bank of America bought Merrill Lynch.

The failure of Washington Mutual in 2008 was the nation’s largest bank failure ever. First Republic, which is bigger than either SVB or Signature Bank, would be the second largest.

Soon after collapses of SVB and Signature in March, First Republic received a $30 billion lifeline in the form of deposits from a collection of the nation’s largest banks, including JPMorgan Chase

(JPM), Bank of America

(BAC), Wells Fargo

(WFC), Citigroup

(C) and Truist

(TFC), which came together after Treasury Secretary Janet Yellen intervened.

The banks agreed to take the risk and work together to keep First Republic flush with the cash in the hopes it would provide confidence in the nation’s suddenly battered banking system. The banks and federal regulators all wanted to reduce the chance that customers of other banks would suddenly start withdrawing their cash.

But while the cash allowed First Republic to make it through the last six weeks, its quarterly financial report Monday evening, with the disclosure of massive withdrawals by the end of March, spurred new concerns about its long-term viability.

The financial report showed depositors had withdrawn about 41% of their money from the bank during the first quarter. Most of the withdrawals were from accounts with more than $250,000 in them, meaning those excess funds were not insured by the FDIC.

Uninsured deposits at the bank fell by $100 billion during the course of the first quarter, a period during which total net deposits fell by $102 billion, not including the infusion of deposits from other banks.

The uninsured deposits stood at 68% of its total deposits as of December 31, but only 27% of its non-bank deposits as of March 31.

In its earnings statement, the bank said insured deposits declined moderately during the quarter and have remained stable from the end of last month through April 21.

Banks never have all the cash on hand to cover all deposits. They instead take in deposits and use the cash to make loans or investments, such as purchasing US Treasuries. So when customers lose confidence in a bank and rush to withdrawal their money, what is known as a “run on the bank,” it can cause even an otherwise profitable bank to fail.

First Republic’s latest earnings report showed it was still profitable in the first quarter — its net income was $269 million, down 33% from a year earlier. But it was the news on the loss of deposits that worried investors and, eventually, regulators.

While some of those who had more than $250,000 in their First Republic accounts were likely wealthy individuals, most were likely businesses that often need that much cash just to cover daily operating costs. A company with 100 employees can easily need more than $250,000 just to cover a biweekly payroll.

First Republic’s annual report said that as of December 31, 63% of its total deposits were from business clients, with the rest from consumers.

First Republic started operations in 1985 with a single San Francisco branch. It is known for catering to wealthy clients in coastal states.

It has 82 branches listed on its website, spread across eight states, in high-income communities such as Beverly Hills, Brentwood, Santa Monica and Napa Valley, California; in addition to San Francisco, Los Angeles and Silicon Valley. Outside of California, branches are in other high-income communities such as Palm Beach, Florida; Greenwich, Connecticut; Bellevue, Washington; and Jackson, Wyoming.

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April 30, 2023
3M announces mass layoffs as manufacturing slows | CNN Business

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CNN
—

3M announced significant layoffs Tuesday as part of yet another major restructuring plan as the manufacturing sector prepares for a possible recession and slumping demand for goods.

The manufacturing behemoth behind some consumer brands, including Post-It Notes and Scotch Tape, said it would lay off 6,000 staff around the world. Those cuts are in addition to the 2,500 manufacturing roles 3M eliminated in January. 3M also announced several mass layoffs in 2019 and 2020, but total headcount has been up and down over the past several years.

The company said it anticipates it will save up to $900 million a year before taxes after the layoffs are complete. 3M argued that the cuts are “intended to make 3M stronger, leaner and more focused” by simplifying its supply chain and reducing layers of management.

“These actions are expected to meaningfully reduce costs and drive long-term improvement in margins and cash flow while enabling a more efficient and effective structure for driving long-term growth,” 3M said in a statement.

3M also announced several management changes as it reported earnings and sales that fell from the previous year. Sales slumped 9% to $8 billion, while net income attributable to the company tumbled 25% to under $1 billion in the quarter.

The company said it would prioritize products that customers are increasingly demanding, including climate tech, sustainable packaging and automated industrial products, among other emerging technologies. 3M also reaffirmed its previous outlook for 2023, anticipating sales would fall by as much as 6% this year.

3M said the supply chain problems that doomed the sector for years in the wake of the pandemic have largely eased. That means backlogged orders have been shipped, and the company (and its peers) no longer need as much staff to handle the workload.

Meanwhile, demand for manufactured goods has fallen in recent months. Consumers have been spending less on stuff and more on experiences lately, and businesses are gearing up for an anticipated recession.

3M rival Dow also announced thousands of layoffs at the beginning of the year.

Shares of 3M

(MMM) rose slightly in premarket trading.

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April 25, 2023
NBCUniversal CEO stepping down over ‘inappropriate relationship’ | CNN Business

New York
CNN
—

NBCUniversal CEO Jeff Shell is leaving the company after an outside investigation “into a complaint of inappropriate conduct,” its parent company Comcast announced Sunday.

Shell will depart effective immediately in the wake of an investigation led by an outside counsel.

“Today is my last day as CEO of NBCUniversal. I had an inappropriate relationship with a woman in the company, which I deeply regret,” Shell said in a statement. “I’m truly sorry I let my Comcast and NBCUniversal colleagues down, they are the most talented people in the business and the opportunity to work with them the last 19 years has been a privilege.”

The brief statement did not specify who the woman was or include any other details about the investigation. CNN has reached out to Comcast and NBCUniversal.

Shell had been named CEO in January 2020 after leading content creation, programming and distribution for NBCUniversal Film and Entertainment.

Shell had expressed confidence in NBC’s streaming service, Peacock, which surpassed 20 million paid subscribers at the end of 2022 and “nearly tripled” its revenue to $2.1 billion, according to its fourth quarter earnings report, which ended at the end of 2022. Its adjusted earnings loss, however, was wider.

“There’s no question the whole television landscape is changing,” Shell said in an interview on CNBC “Squawk on the Street” last October. “If you have the right content, and you offer a broad distribution platform, your consumers are going to find you and that’s what we’re doing with Peacock.”

Comcast is set to report its first quarter earnings on Thursday.

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April 23, 2023