Tag: sales and selling

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

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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
Apple’s sales fall for the third consecutive quarter | CNN Business

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

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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
iPhone sales in China shrink as US political tensions grow | CNN Business

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

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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
3M announces mass layoffs as manufacturing slows | CNN Business

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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
Walmart’s US chief marketing officer stepping down as retailer warns of tough year | CNN Business

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Walmart’s chief merchandising officer for its US operations is stepping down from the job as the retailer faces a tougher year ahead, an internal memo shared to US associates Friday said.

Charles Redfield, whose career at Walmart spanned 32 years, will transition on May 1 and remain in an advisory role. In a memo viewed by CNN Business, Walmart U.S. CEO John Furner said Redfield wants to spend more time with his family.

Redfield held his position at the retailer for a little more than a year, beginning in January 2022.

The leadership shakeup comes after America’s largest retailer warned it is facing a more challenging year ahead and will approach 2023 with caution.

Despite a strong holiday season, Walmart forecast slower sales and profit growth in February. Its strong holiday sales were fueled by groceries. Grocery prices rose 11.8% annually in December, pushing customers toward more affordable options.

However, sales were slower for traditional holiday products like toys, electronics and clothing – a sign that consumers are cutting back on discretionary spending.

Walmart did see an 8.3% sales increase during its latest quarter ended January 31 at US stores open for at least one year. More customers are buying its private label brands and more higher-income households are shopping at its stores, the company said.

“The consumer is still very pressured,” Walmart CFO John Rainey told CNBC. “And if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods. And so that’s why we take a pretty cautious outlook on the rest of the year.”

The retail industry in general is expected to face challenges this year after sluggish holiday sales.

Redfield is a Walmart veteran. He began his career as a Sam’s Club cashier while attending the University of Arkansas. He became assistant manager with Sam’s Club and worked his way up the ladder.

“There are merchants, and then there’s our Chief Merchandising Officer Charles Redfield,” CEO John Furner said in a memo viewed by CNN Business. “I could probably stop there and many associates across our businesses and the retail industry would know exactly what I mean.”

Redfield became CMO for Asda, Walmart’s UK subsidiary, in 2010. In 2012, he was named executive vice president of merchandising for Sam’s Club and named executive vice president of food for Walmart U.S. in 2015.

The Wall Street Journal first reported the departure.

Furner said the company will be announcing a new CMO soon.

This week, Walmart said it was selling its trendy menswear brand, Bonobos, at a steep loss, to management firm WHP Global and retailer Express Inc. for $75 million. Walmart acquired the brand in 2017 for $310 million.

In a note, Neil Saunders, managing director of consultancy GlobalData, wrote that discounted price for Bonobos “reflects the current weaker outlook across retail, but some is also the result of Walmart not having done much to develop the brand over the past six years.”

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April 15, 2023
Tesla sales again fall short of production | CNN Business

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Tesla reported a modest 4% rise in sales in the first quarter compared to the final three months of last year, despite a series of price cuts on its lower priced vehicles and talk by CEO Elon Musk about strong demand at those lower prices.

The first quarter also marked the fourth straight quarter that Tesla has produced more vehicles than it has delivered to customers. Some of that may be due to the ramp up in production at two new factories, one in Texas, the other in Germany, which opened last spring, and a lag between that increased production and sales.

Tesla said there was an increase in the number of its more expensive models, the Model S and Model X, in transit to Europe, the Middle East and Africa, as well as to the Asia Pacific region.

But it does mean that over the last 12 months Tesla has produced 78,000 more cars than it has sold, suggesting that talk of strong demand by Tesla executives may not be backed up by the numbers.

“Early this year, we had a price adjustment. After that, we actually generated a huge demand, more than we can produce, really,” said Tom Zhu, Tesla’s executive in charge of global production and sales. “And as Elon said, as long as you offer a product with value at affordable price, you don’t have to worry about demand.”

The company reported it completed sales of 422,875 vehicles in the quarter. That’s short of the forecast of 430,000 vehicles from analysts surveyed by Refinitiv. But Dan Ives, tech analyst for Wedbush Securities, said the consensus that Wall Street was looking for was deliveries of 421,500, which would mean a very narrow beat for Tesla.

Even Ives, a bull on Tesla stock, said the lower prices that Tesla got for cars in the quarter will mean tighter profit margins going forward. Tesla will report full first quarter financial results on April 19.

“The big question will be margins as cutting prices will have an impact on this front,” he said in a note to clients Sunday.

First quarter production was up only 0.2% from the final three months of 2022, despite it efforts to ramp up production in Germany and Texas.

Production and sales were up much more when compared to the first quarter of 2022, with production up 44% and deliveries up 36%. But even that suggests that Tesla is below the 50% annual growth target it has set for the company long term.

Shares of Tesla

(TSLA), which fell 65% in 2022 for its worst annual performance ever, closed Friday up 68% so far in 2023. Still that left shares off 41% from where they stood at the end of 2021.

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April 2, 2023
China says it ‘firmly opposes’ a potential forced sale of TikTok | CNN Business

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China said it would “firmly oppose” any forced sale of TikTok, in its first direct response to demands by the Biden administration that the app’s Chinese owners sell their share of the company or face a ban in its most important market.

The comments came as TikTok CEO Shou Chew testified in front of US lawmakers amid mounting scrutiny over the app’s ties to Beijing.

China’s commerce ministry said Thursday that a forced sale of TikTok would “seriously damage” global investors’ confidence in the United States.

“If the news [about a forced sale] is true, China will firmly oppose it,” Shu Jueting, a spokeswoman for the ministry, told a Thursday news conference in Beijing, adding that any potential deal would need approval from the Chinese government.

“The sale or divestiture of TikTok involves technology export, and administrative licensing procedures must be performed in accordance with Chinese laws and regulations,” she said.

“The Chinese government will make a decision in accordance with the law.”

Previously, Beijing didn’t weigh in directly on a potential forced sale. However, starting in 2020, it had signaled it wanted to protect Chinese technology by adding recommendation algorithms, which could include TikTok’s, to a list of technologies restricted for export.

On Thursday, Chew, in his first congressional hearing, sought to provide nuanced answers and tried to assuage lawmakers’ worries about the company and its parent, Beijing-based Bytedance.

But he was frequently interrupted and called evasive by lawmakers. After more than five hours of testimony, the lawmakers expressed deep skepticism about his company’s attempts to protect US user data and ease concerns about its ties to China.

That means there will likely be more calls by Washington to ban TikTok if the company does not spin itself off from its Chinese parent, analysts said.

The Chinese government may have veto power on the sale, according to Shu’s latest response and Beijing’s previous actions.

In December, Chinese officials proposed tightening the rules that govern the sale of content-based recommendation algorithms to foreign buyers.

TikTok’s algorithms, which keep users glued to the app, are believed to be key to its success. The algorithms give recommendations based on users’ behavior, thus pushing videos they actually like and want to watch.

Chinese regulators first added algorithms to the restricted list of technologies in August 2020, when the Trump administration threatened to ban TikTok unless it was sold.

Analysts and legal experts believe that Beijing may ultimately prefer for TikTok to leave the US market rather than surrender its algorithm.

See how TikTok compares to China’s heavily censored version, Douyin

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March 24, 2023
Pending home sales blew past expectations last month as buyers pounced on lower rates | CNN Business

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Pending home sales crushed expectations in January, when mortgage rates dropped from recent highs of more than 7% and home buyers jumped at the opportunity.

According to data released Monday from the National Association of Realtors, it was the largest monthly sales increase since June 2020.

The pending sales index, based on signed contracts to buy a home rather than the final sales that are accounted for in existing home sales, rose by 8.1% from December to January, beating economists’ predictions for a rise of 1%. January’s jump followed a downwardly revised 1.1% rise in December.

“Buyers responded to better affordability from falling mortgage rates in December and January,” said Lawrence Yun, chief economist at NAR.

But since then, mortgage rates have risen again, climbing almost half a percentage point since the beginning of February, according to Freddie Mac.

“Mortgage rates took a breath in December and January before resuming their climb in February, reaching 6.5%, the highest level of the new year,” said Hannah Jones, an economic data analyst at Realtor.com.

At the current mortgage rate, the monthly payment on a median-priced home is about 45% higher — or $630 more — than it was at the same time last year, she said. “Many buyers are still holding off, waiting to see if prices or rates give a bit before getting into the market.”

Last year’s persistent increase in both mortgage rates and home prices pushed many would-be home purchasers out of the market, said Jones. This resulted in a slowing of new homes in the building pipeline and fewer sellers listing their homes, which limited options for buyers still in the market.

“New listings were at the lowest level in the last six years in January as sellers stayed on the sidelines, waiting to see buyers return, before placing their homes for sale,” said Jones. “However, the first month of the year brought glimmers of hope as year-over-year declines in both existing and new home sales slowed, and buyer sentiment improved slightly.”

While home sales were down by 24.1% from the still-hot market of a year ago, activity appears to be bottoming out in the first quarter of this year, before incremental improvements will occur, Yun said.

“An annual gain in home sales will not occur until 2024,” said Yun. “Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price.”

All regions saw a month-to-month increase in pending home sales, with the Northeast up 6%, the Midwest up 7.9%, the South up 8.3% and the West up 10.1%.

“An extra bump occurred in the West region because of lower home prices, while gains in the South were due to stronger job growth in that region,” Yun said.

Home prices are dropping fastest in areas where prices ran up the most in the frenzied market of the past few years.

But overall, the number of home sales are expected to drop this year, according to NAR’s forecast.

NAR anticipates the economy will continue to add jobs throughout this year and next, with the 30-year fixed mortgage rate steadily dropping to an average of 6.1% in 2023 and 5.4% in 2024.

Even with an improving interest rate environment and job gains, Yun still expects annual existing-home sales to drop about 11% this year from last year, before jumping up about 18% in 2024. NAR projects new-home sales will fall about 4% this year compared with last year before surging nearly 20% in 2024.

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February 27, 2023
Dow drops more than 500 points as retail earnings disappoint | CNN Business

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US stocks dropped on Tuesday afternoon after fourth-quarter earnings and forecasts from mega-retailers like Walmart and Home Depot raised concerns about the strength of demand from the US consumer.

The Dow was down about 500 points, or 1.5%, on Tuesday afternoon. The S&P 500 fell by 1.6% and the Nasdaq Composite was 1.8% lower.

Walmart

(WMT) topped revenue expectations, but shares of the stock fell nearly 2% in morning trading after the retailer lowered its outlook for the year ahead. Walmart

(WMT)’s CFO said that he was worried about inflation and its impact on the US consumer.

“The consumer is still very pressured, and if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods,” Walmart CFO John Rainey said during the earnings call. “And so that’s why we take a pretty cautious outlook on the rest of the year.”

Shares of the stock had recovered by the early afternoon and were up by about 0.6%.

Home Depot

(HD) reported record earnings for the fiscal year that ended in January, and boosted both hourly wage and the stock dividend. But the fourth quarter painted a different picture, as the company missed revenue expectations for the first time since 2019, before the pandemic.

The company also lowered its outlook for the year ahead as executives struck a more cautious tone about recession and inflation forecasts on the call that followed earnings.

Shares of the stock fell by nearly 6% on Tuesday as the housing market weakens – US existing home sales dropped to their lowest level in more than 12 years in January.

“After a year of defying gravity, the slowing economy and pressures on consumers have finally caught up with Home Depot,” said Neil Saunders, managing director of GlobalData. “For most of 2022, the number of existing homes sold has been in decline. However, the pace of decline accelerated in December with the volume of completed sales down by a sharp 36.3%.”

Target, Best Buy, Macy’s and Gap will report later this month.

Investors, meanwhile, are gearing up for a week full of important economic data. Minutes from the Federal Reserve’s last meeting are coming on Wednesday, a second revision of GDP will be released on Thursday and Friday brings January’s Personal Consumption Expenditures – the Fed’s preferred inflation gauge.

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February 21, 2023
In a market that’s gone mad, investors can embrace these dependable stocks | CNN Business

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

New York
CNN
—

Many people don’t have the time or inclination to do deep research on stocks.

It’s often easier to buy an exchange-traded fund that owns a basket of the top blue chips, like Apple

(AAPL), Microsoft

(MSFT) and Amazon

(AMZN). Other investors like to bet on themes and memes instead of poring over a company’s financial statements and regulatory filings. Hence the recent craze for momentum stocks like GameStop

(GME) and AMC

(AMC).

But for old-fashioned investors with a little gray in their hair (and veteran business journalists like yours truly) there are other ways to find winning stocks for the long haul.

I’ve been running stock screens using market data software, first from FactSet and now from Refinitiv, on and off during the more than 20 years I’ve worked at CNN Business. (It was CNNMoney when I first started.)

I’ve typically done this stock picking feature in early to mid February as a Stocks We Love type of story, pegging it to Valentine’s Day. (Here’s the first one I did in 2002!) So they’ve often been littered with cheesy references to how romantic it is to find a reliable company you can count on for a long-term relationship.

Well, investing trends have changed a bit in the past two decades. Some would argue that active investing (actually choosing individual companies) is no longer in vogue thanks to the rise of passively run index funds.

And to be fair, the experts are right, mostly. Investors usually are better off owning an index ETF. If the goal is saving for retirement in particular, a diversified mix of companies is safer than trying the riskier strategy of identifying individual winners and losers.

But you know what they say about not being able to teach an old dog new tricks? I still believe there’s value in looking for quality stocks at bargain prices. Legendary investors like Warren Buffett and Peter Lynch of Fidelity fame would likely agree.

With that in mind, I ran one final stock screen for this Valentine’s Day. Like my past screens, I tried to find companies with strong fundamentals (solid sales and earnings growth), low levels of debt and high returns on equity. And perhaps most importantly, I screened for companies trading at a reasonable price based on their estimated earnings.

This screen wound up identifying 33 companies that could make sense as a buy-and-hold investment. All of them generated double-digit sales growth annually over the past five years and they are all expected to report profit growth of at least 10% a year for the next few years.

Some of the more prominent companies on the list? IT services/consulting giant Accenture

(ACN) made the cut. So did software leader Adobe

(ADBE), semiconductor manufacturer Analog Devices

(ADI), chip equipment juggernaut Applied Materials

(AMAT) and Venmo owner PayPal

(PYPL).

That’s a fair amount of exposure to the tech sector. But several other non-techs made my list too.

Auto insurer Progressive

(PGR) (hi Flo!), health insurer Humana

(HUM), cosmetics retailer Ulta Beauty

(ULTA), UGG boots and Hoka sneakers maker Deckers Outdoor

(DECK) and trucker JB Hunt

(JBHT) met my criteria.

As did financial services firm Raymond James

(RJF), perhaps most famous for having its name on the Tampa Bay Buccaneers stadium Tom Brady briefly called home.

None of these stocks are likely to be moonshots that will surge because of comments that someone makes on Reddit. But they might offer a little more in the way of security and dependability. And after all, isn’t that what we all want from a long-term partner on Valentine’s Day?

The broader market has continued to rally, in large part due to hopes that inflation pressures (and more Federal Reserve rate hikes) will soon be things of the past. But consumers are still skittish when it comes to buying more costly items.

Meat processing giant Tyson Foods

(TSN) reported disappointing results last week, largely due to a pullback in consumer demand for pricier beef. Luxury apparel retailer Capri Holdings

(CPRI), which owns the Versace, Jimmy Choo and Michael Kors brands, also posted lousy numbers.

But shoppers still seem to be spending on more affordable goods. Pepsi

(PEP) reported sales and earnings last week that topped Wall Street’s targets. Fast food giant Yum! Brands

(YUM), the owner of Taco Bell, KFC and Pizza Hut, issued solid results too.

That could bode well for several leading consumer companies that are on tap to report earnings this week, including Pepsi competitor Coca-Cola

(KO) as well as Restaurant Brands

(QSR), the parent company of Burger King, Popeyes, Tim Horton and Firehouse Subs.

Kraft Heinz

(KHC), restaurant owner Bloomin’ Brands

(BLMN), Sam Adams brewer Boston Beer

(SAM) and food delivery service DoorDash are also scheduled to release their latest results this week.

The restaurant stocks in particular could do well.

“Consumers continue to trade goods for services,” said Jharonne Martis, director of consumer research for Refinitiv, in a report. Martis noted that the restaurant and broader leisure sector has continued to outperform other consumer-related industries this year.

Inflation is obviously still a concern for big consumer brands. Companies have to deal with the challenge of trying to pass on higher costs to customers without driving them away.

That could become less of a problem though.

The US government will report both its Consumer Price Index and Producer Price Index for January this week and economists are hoping for a further slowdown in year-over-year prices. Consumer prices rose 6.5% over the past 12 months through December, down from a 7.1% pace in November.

“There are positive signs. Inflation has passed the peak so there is a little bit of a respite,” said Kathryn Kaminski. chief research strategist with AlphaSimplex.

Higher prices were a problem for retailers during the holidays. Retail sales fell 1.1% in December from November, according to figures from the US government, following a 0.6% drop in November.

But retail sales are expected to bounce back as inflation becomes less of an issue. Economists are forecasting a 0.9% increase in retail sales for January when those numbers come out later this week.

Monday: Earnings from TreeHouse Foods

(THS), Avis Budget

(CAR), FirstEnergy

(FE), IAC

(IAC) and Palantir

Tuesday: US CPI; Japan GDP; UK employment report; earnings from Coca-Cola, Asahi Group, Marriott

(MAR). Cleveland-Cliffs

(CLF), Restaurant Brands, Suncor Energy

(SU), Airbnb, Herbalife

(HLF), GoDaddy

(GDDY) and TripAdvisor

(TRIP)

Wednesday: US retail sales; UK inflation; weekly crude oil inventories; annual meeting of Charlie Munger’s Daily Journal Co

(DJCO); earnings from Kraft Heinz, Lithia Motors

(LAD), Sunoco

(SUN), Sonic Automotive

(SAH), Ryder

(R), Barrick Gold

(GOLD), Biogen

(BIIB), Owens Corning

(OC), Krispy Kreme, Cisco

(CSCO), AIG

(AIG), Shopify

(SHOP) and Boston Beer

Thursday: US PPI; US weekly jobless claims: US housing starts and building permits; China housing prices; earnings from US Foods

(USFD), Lenovo

(LNVGF), Nestle

(NSRGF), Paramount Global, Southern

(SO), Hasbro

(HAS), Hyatt

(H), Bloomin’ Brands, WeWork, Applied Materials

(AMAT), DoorDash, DraftKings and Redfin

(RDFN)

Friday: Earnings from Deere

(DE), AutoNation

(AN), Sands China

(SCHYF) and AMC Networks

(AMCX)

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February 12, 2023
Retail sales continued to fall in December as shoppers battled inflation | CNN Business

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Minneapolis
CNN
—

It was a ho-hum end to 2022 for spending in America.

US retail sales continued their fall in December, dropping by 1.1% as inflation remained high, the Commerce Department reported Wednesday.

That’s the largest monthly decline since December 2021, and practically every category (except for building materials, groceries and sporting goods) saw sales drop from the prior month.

Economists had expected sales to fall by just 0.8% for the month, according to Refinitiv. The November number was revised down to -1%.

All in all, the final retail sales report for 2022 shows a muted finish to a holiday season that crept even further into October versus the traditional late-November and December.

October was the last strong retail sales month of 2022, as discounting and slowing inflation prompted consumers to shop more then, said Kayla Bruun, economic analyst at Morning Consult.

“I think the hope was that this was going to lead to a little bit more momentum heading into the holiday season,” she said. “But really, it turned out to be more of just an early bump that actually took away from some of the spending that otherwise might have happened in November and December.”

The Commerce Department’s retail sales data is not adjusted for inflation, which reached a 40-year high in June before falling during the second half of 2022, hitting 6.5% for the 12-month period ending in December, according to the latest Consumer Price Index reading released last week.

Wholesale price growth is also cooling significantly: The Producer Price Index for December measured 6.2%, according to Bureau of Labor Statistics data released Wednesday.

During the November and December holiday season, retail sales grew 5.3% over 2021 to $936.3 billion, the National Retail Federation reported Wednesday.

The holiday total, which is not adjusted for inflation and excludes sales at auto dealerships, gas stations and restaurants, falls short of the trade association’s projections of 6% to 8% holiday sales growth.

“We knew it could be touch-and-go for final holiday sales given early shopping in October that likely pulled some sales forward plus price pressures and cold, stormy weather,” said Jack Kleinhenz, NRF’s chief economist, in a statement. “The pace of spending was choppy, and consumers may have pulled back more than we had hoped, but these numbers show that they navigated a challenging, inflation-driven environment reasonably well. The bottom line is that consumers are still engaged and shopping despite everything happening around them.”

Consumer spending has remained robust despite inflation, rising interest rates and recession fears. However, some economic data suggests that activity may be losing some steam and that Americans are running out of dry powder.

“I think the consumers has gotten very active in managing their household budget and what they’re willing to spend on,” said Matt Kramer, KPMG’s national sector leader for consumer and retail. “They’re spending more time looking for the deals and being thoughtful about when they make purchases.”

That’s seen in the monthly sales declines in categories like motor vehicles, which were down 1.2% from November; furniture, down 2.5%; and electronics, down 1.1%, according to Wednesday’s report.

“Certainly on those large purchases, financed purchases where interest rates play in, the consumers are pushing those decisions out and extending their buying cycles around the larger categories,” he said.

The next few months are traditionally the slowest for retailers, but headwinds like credit card debt and stubborn inflation may exacerbate that, said Ted Rossman, senior industry analyst for Bankrate.

“A further slowdown in purchasing appears likely, at least in the near-term,” Rossman said in a statement.

Discretionary spending is usually the first to go, with people typically cutting back on travel, eating out and other expenditures, said Amanda Belarmino, assistant professor of hospitality at the University of Nevada Las Vegas.

However, the post-pandemic pent-up demand that fueled strong services spending in 2022 is still going strong. Spending on food services and drinking places was up 12.1% in December from the year before.

“What we’ve seen in restaurants, tourism, hospitality is completely contrary to what we normally see in an economic slowdown,” Belarmino said. “We have seen consumers continue to make that spending. But where you’re seeing those slowdowns are things like people canceling their streaming services, canceling their Peloton, canceling their home services. So it seems that consumers are making those trade-offs.”

However, shifts in tipping activity could be harbinger of shifts to come.

“The average tip rate in the US had gone up to about 18% to 20%, and there are some indicators that’s going to be falling back down toward the 15% range,” Belarmino said. “It’s not a huge thing, but it’s a way for consumers to save money.”

How spending activity holds up in the service industries will be a critical indicator in the coming months, Morning Consult’s Bruun said, adding that a strong labor market should help to prevent a dramatic collapse in spending.

“That has been the component of consumer spending that’s been driving growth,” she said. “And it’s going to need to, going forward, because we’ve really seen that goods demand has been tapped out to a large extent.”

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January 18, 2023
Bonds are back, but for how long? | CNN Business

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

New York
CNN
—

Stocks soared on Friday to their best day in more than a month. The Dow gained 700 points and the S&P 500 and Nasdaq rose by 2.3% and 2.6% respectively, as traders bet that a slowdown in wage growth could mean that inflation may finally be cooling off.

But the big turnaround story during the short first week of the year isn’t just about equities, it’s also about bonds.

What’s happening: US Treasuries recorded their worst year in history in 2022, but investors are suddenly reversing course. They now appear quite optimistic about the bond market.

Last year’s bond massacre came as the Fed raised short-term interest rates at the fastest speed in about four decades, lifting the Fed funds rate to its highest level in over a decade. Bonds are particularly sensitive to those increases — as rates are hiked, the price of existing bonds falls as investors prefer the new debt that will soon be issued with those higher interest payouts.

But now investors are betting that those rate increases are mostly over and that inflationary pressures are on a downswing.

Treasuries just notched their strongest start to a year since 2001, back when investors eagerly purchased government debt under the (correct) assumption that then-Fed chair Alan Greenspan was about to slash interest rates. This time around, investors are scooping up bonds as they anticipate the pace of Fed interest rate hikes will soon ease.

That’s great news for Treasuries. Core bonds, or US investment grade debt, tend to perform well during Fed rate hike pauses. Since 1984, core bonds have been able to generate average 6-month and 1-year returns of 8% and 13%, respectively, after the Fed stopped raising rates, according to data from LPL Financial.

That anticipation could be seen at the end of last week. Treasuries tumbled following strong private jobs data earlier in the week but quickly rebounded when US payroll data showed that wage growth was weakening.

The gains are in sync with economists’ positive outlooks for falling yields and rising bond prices in 2023.

The other side: The problem is that there’s no guarantee that interest rates will actually come down, and investors could find themselves blindsided if they don’t.

“The potential for rates to go high and stay higher for longer would hit bond markets hard, especially considering weaker economies would likely force governments to borrow more,” said Chris Varrone, managing director at Strategas, a Baird Company.

Former Treasury Secretary Larry Summers issued a warning on Friday to bond investors who assume that inflation is easing and a new era of low interest rates is upon us.

“I suspect tumult” for bonds in 2023, Summers said on Bloomberg Television. “This is going to be remembered as a ‘V’ year when we recognized that we were headed into a different kind of financial era, with different kinds of interest-rate patterns.”

Persistently high inflation may have put a damper on holiday shopping.

Macy’s chair and CEO Jeff Gennette said Friday that lulls during the non-peak weeks of the fourth quarter “were deeper than anticipated” and that consumers will continue to feel pressured into 2023, reports my colleague Ramishah Maruf.

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 forecast range of $8.16 billion to $8.4 billion. It reported Q4 sales of $8.67 billion in 2021.

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.

China’s heavy-handed crackdown on tech giants is coming to an end and the country’s economic growth is expected to be back on track soon, according to a top central bank official, my colleague Laura He reports.

The crackdown on fintech operations of more than a dozen internet companies is “basically” over, said Guo Shuqing, the Communist Party boss at the People’s Bank of China, in an interview with state-run Xinhua news agency on Saturday.

“Next, we’ll promote healthy development of internet platforms,” said Guo, who is also chairman of China’s Banking and Insurance Regulatory Commission. “We’ll encourage them to come out strong in leading economic growth, creating more jobs, and competing globally.”

His remarks came on the same day Chinese billionaire Jack Ma gave up control of Ant Group after the fintech giant’s shareholders agreed to restructure the company.

Chinese tech stocks listed on US exchanges have already enjoyed a dream start to 2023.

The Nasdaq Golden Dragon China Index — a popular index tracking Chinese firms listed in the United States — soared 13% in the first two trading days of 2023. That was the index’s best yearly start on record, according to data compiled by Refinitiv dating back to 2003.

US-listed shares of Chinese e-commerce firms Alibaba

(BABA), JD.com

(JD), and Pinduoduo

(PDD) added $53 billion to their combined market value last Wednesday alone.

The sweeping regulatory crackdown since late 2020 had driven investors away. In 2021 and 2022, the Nasdaq Golden Dragon China Index plummeted 46% and 25% respectively.

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January 9, 2023
Macy’s says its holiday sales will be lower, citing inflation pressures | CNN Business

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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.

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January 7, 2023
Tesla’s shares plunge further on weaker than expected sales | CNN Business

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CNN
—

Tesla shares plunged more than 11% in early trading Tuesday, as weaker than expected global sales caused the company’s massive slide in its share price that began last year to continue.

Tesla reported record 2022 sales of 1.3 million vehicles, up 40% from the 2021 total, but well below the 50% growth target the company set early in the year. While it had already warned it would miss that aggressive full-year target, its fourth quarter sales of 405,278 cars was far weaker than feared. It represented growth of only 31% from a year earlier, and was well below the median estimate of 431,000 according to analysts polled by Refinitiv.

The company’s shares ended 2022 down 65% for the year, greatly cutting into Musk’s net worth and knocking him out of his position as the world’s richest person. It was the worst year ever for Tesla shares, which gained 743% in 2020 and another 50% in 2021.

The drop in sales came despite the company’s two price cuts in December for US buyers who completed their purchase by year end. The fact that global sales were well short of the 439,000 cars it built in the period raised new concerns about weakening demand for Tesla cars in the face of numerous headwinds. These include higher interest rates, increased EV competition from established automakers along with upstart EV makers, and backlash against Tesla CEO Elon Musk since his controversial takeover of Twitter early in the quarter.

“Demand overall is starting to crack a bit for Tesla and the company will need to adjust and cut prices more especially in China, which remains the key to the growth story,” said Dan Ives, tech analyst for Wedbush Securities. “The Cinderella ride is over for Tesla.”

– CNN’s David Goldman contributed to this report

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January 3, 2023
Justice Department sues pharmaceutical company for allegedly failing to report suspicious opioid sales | CNN Politics

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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.

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December 30, 2022
Gap launches its store on Amazon | CNN Business

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CNNBusiness
—

Gap announced Thursday that it has officially launched its store on Amazon.

While shoppers were able to buy Gap merchandise on Amazon previously through third-party sellers, the new partnership with Amazon Fashion marks the first time that Gap itself is selling its products on the online marketplace.

The items, available for purchase beginning today on Amazon US and Amazon Canada, include the basics that Gap is known for — hoodies, T-shirts, denim, socks, underwear and sleepwear for adults, kids and infants.

Gap

(GPS) Inc. said its Amazon store will also include Baby Gap

(GPS)-branded items such as nursery furniture, strollers, bassinets and cribs.

None of the Gap items are exclusive to Amazon

(AMZN), however, and will also be available for purchase in Gap stores and on Gap.com. Amazon

(AMZN) said items from Gap’s store will be included for Prime delivery.

Gap shares were up over 7% in late afternoon trading Thursday.

“Collaborating with Amazon Fashion provides us a new channel to deliver Gap’s modern American essentials to even more customers in the US and Canada,” Mark Breitbard, CEO of Global Gap Brand, said in a statement.

Teaming up with Amazon could help Gap expand its market reach in the US and Canada, and comes at a pivotal moment for the company. Gap Inc. has suffered a string of setbacks recently as it struggles to boost sales.

In October, the company pulled all Yeezy Gap merchandise from its stores and shut down YeezyGap.com. The company has had a change in leadership amid slumping sales and has suffered from inventory and merchandising problems at its better-performing Old Navy division.

“Gap is facing slowing footfall at its own stores and has struggled to grow sales for years. It will hope that making some of its range available on Amazon will help grow exposure and sales — especially among the family demographic,” said Neil Saunders, retail analyst and managing director of Globaldata Retail.

He added, “this is a win for Amazon as it brings a big brand name on to its site and helps boost its credentials in fashion and apparel.”

But there are risks for Gap, as the new partnership with Amazon could reduce the chain’s direct sales even further and make it overly reliant on an outside distributor, Saunders said.

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November 10, 2022
Amazon stock falls 14% on light holiday quarter sales forecast | CNN Business

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CNN Business
—

Amazon

(AMZN) stock fell some 14% in after-hours trading Thursday after the company forecast its holiday quarter sales would be lighter than analysts had expected.

The e-commerce giant said it expects revenue for the final three months of the year to be between $140 billion to $148 billion, significantly below the $155 billion analysts surveyed by Refinitiv had expected. The weaker forecast comes as rising inflation and looming recession fears weigh on consumer purchasing decisions.

Amazon reported revenue of $127.1 billion for its third-quarter, a 15% increase from the prior year but just missing Wall Street estimates.

“There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets,” Amazon CEO Andy Jassy said in a statement accompanying the earnings release.

The company reported its Amazon Web Services segment sales increased 27% year-over-year to $20.5 billion – representing a slower pace of growth for a closely-watched business unit than Wall Street had expected.

But Amazon’s cloud computing division continues to be a strong profit driver for the company. Amazon posted a $2.9 billion profit for the three-month period, much improved from the prior quarter when it posted $2 billion net loss largely due to its investment in electric vehicle maker Rivian.

The latest results comes at a precarious time for the e-commerce giant. Amazon initially saw its business boom during the pandemic, as more consumers relied on online shopping. This year, however, the company is confronting a shift back to in-person shopping as well as a souring economic outlook has hampered consumers’ demand.

Jesse Cohen, a senior analyst at Investing.com, said Amazon’s earnings report “proves it’s not immune to the challenges facing the tech industry at large as it struggles in the face of worsening macroeconomic headwinds, such as soaring inflation and worries about a possible recession.”

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October 30, 2022
Tech earnings are coming and they probably won’t be pretty | CNN Business

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New York
CNN Business
—

After months of layoffs, hiring freezes and other cost-cutting measures, big tech companies are set to provide the most detailed look yet at just how bad things have gotten for their businesses amid fears of a looming recession.

Snapchat’s parent company, which tanked much of the tech sector in May with a warning about a worsening economy, is set to report third-quarter earnings on Thursday. Apple

(AAPL), Amazon

(AMZN), Facebook

(FB)-parent Meta, Microsoft

(MSFT), Twitter

(TWTR) and Google-parent Alphabet

(GOOGL) will each report earnings results the following week.

“People probably should be bracing themselves for these results,” said Scott Kessler, technology global sector lead at research firm Third Bridge Group.

For years, the giants of Silicon Valley seemed almost immune to swings in the global economy. Even amid a pandemic, a trade war and other geopolitical uncertainty, the biggest names in tech only seemed to grow bigger and richer. But like other sectors in recent months, they have faced a variety of new challenges.

Rampant inflation is eating away at consumers’ paychecks and reducing their ability to spend freely on tech products and services. Increased costs and recession fears have cut down on demand for online advertising and enterprise tech services. And other macroeconomic issues such as continued supply chain snarls and higher interest rates are stunting growth, analysts say.

To make matters worse, tech companies must also confront the growing strength of the US dollar, which is currently trading at its highest level in two decades. That can mean sales made overseas are not worth as much, according to Angelo Zino, senior industry analyst at CFRA Research. A stronger US dollar may also make hardware products from companies like Apple less affordable for foreign consumers, which, as Zino points out, is problematic given “most of these companies are generating more than half their revenue outside the United States.”

In a striking shift, most of the big tech companies are now expected to report slowing profit and revenue growth, or even year-over-year declines, for the three months ending in September, according to analyst estimates.

Amazon

(AMZN), which is projected to be in the best shape, is expected to post essentially flat sales from the year prior. Meta’s revenue is projected to fall 5% year-over-year, marking the company’s second consecutive quarterly revenue decline. Net income at Meta, Amazon

(AMZN), Google and Snap is also expected to be down from the year prior.

These dour projections come after many tech businesses were already showing signs of weakness in the prior quarter. Meta in July posted its first year-over-year quarterly revenue decline since going public in 2012 in large part due to decreased demand in the online advertising market that fuels its core business. Twitter

(TWTR), Snap, Google, Apple and Microsoft all also reported that shrinking ad budgets had taken some toll on their June quarter earnings.

“We compare investor negative sentiment on tech today to what we have seen only 2 other times in our decades of covering tech stocks: 2008 and 2001,” Wedbush analyst Dan Ives said in a note to investors this week, referring to two prior recessionary periods.

Many of the issues currently weighing on tech companies are unlikely to let up anytime soon, which is why industry watchers will be paying close attention to the guidance these companies offer for the rest of 2022.

“More than anything, people really want a good understanding about what to expect” from the final three months of this year, which has “historically been the most important quarter for these companies,” Kessler said. Investors will likely want to know, for example, whether the online ad market has begun to stabilize ahead of the crucial holiday season.

Negative results or future outlook could lead to increased pressure on tech firms to focus on their core businesses and cut back on big bets that aren’t expected to quickly product returns. Some of that is already underway.

In recent weeks, Google announced it would shut down its gaming service Stadia, Amazon said it would stop testing a home delivery robot and Meta shut down its newsletter product, Bulletin.

Meta may be in a uniquely difficult position. Last October, Facebook rebranded as Meta and ramped up investments to build a future version of the internet called the metaverse, which isn’t expected to be fully realized for years, if ever. But the Wall Street Journal reported last month the company was quietly reducing staff — and some analysts expect more cuts to come.

“I do think you’ll see them announce cost cuts. I think they’ll reduce the workforce,” Zino said. “Meta is really boxed in a corner here. Their core business is in an environment where they’re not going to see much growth at all … and they don’t have any major revenue center outside of advertising.”

What a difference a year makes.

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October 20, 2022