Tag: Sales Figures

Microsoft stock slips as Azure growth slows and cloud sales miss projections

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Microsoft Corp. shares slipped in after-hours trading Tuesday despite an earnings beat, as the company’s cloud-computing revenue came in lower than expected and its core cloud product, Azure, grew at a slower rate than projections.

Microsoft’s
MSFT,
+1.38%
cloud-computing business has grown into the largest and most important business for the company, especially for investors who like Azure’s high margins and strong growth. There have been concerns about cloud growth as the U.S. faces its first possible recession since the technology became ubiquitous, and Azure’s growth in Tuesday’s report was the slowest Microsoft has reported in the past two years, while Microsoft’s cloud division was the only segment to come in lower than estimates.

The “Intelligent Cloud” segment reported first-quarter revenue of $20.3 billion, up from $16.96 billion a year ago but slightly lower than the average analyst estimate tracked by FactSet of $20.46 billion. Microsoft said that Azure grew by 35%, while analysts on average were expecting 36.5% growth, according to FactSet.

Opinion: The cloud boom is coming back to Earth, and that could be scary for tech stocks

That is a marked slowdown from Azure’s 40% growth rate in the previous quarter, as well as the 50% growth shown in the same quarter last year. Microsoft only reports percentage growth for its core cloud-computing product, even as main rivals Amazon.com Inc.
AMZN,
+0.65%
and Alphabet Inc.
GOOGL,
+1.91%
GOOG,
+1.90%
report revenue and profit margin for their cloud-computing products.

Overall, Microsoft
MSFT,
+1.38%
reported fiscal first-quarter earnings of $17.56 billion, or $2.35 a share, down from $2.71 a share in the same quarter a year ago, when Microsoft disclosed a 44 cent-per-share tax benefit. Revenue increased to $50.1 billion from $45.32 billion a year ago. Analysts on average were expecting earnings of $2.31 a share on sales of $49.66 billion, according to FactSet.

Microsoft shares fell between 1% and 2% in after-hours trading following the release of the results, after closing with a 1.4% increase at $250.66. Microsoft stock tends to react most strongly in after-hours trading following earnings reports after executives share their forecast for the current quarter in their conference call, which is scheduled to begin at 5:30 p.m. Eastern.

Microsoft has started to show some effects of a weakening macroeconomic climate, confirming layoffs of fewer than 1,000 employees earlier this month. Microsoft has suffered from the strengthening dollar, as well as a sharp downturn in personal-computer sales, which spiked during the pandemic but are now showing record regression.

For more: The pandemic PC boom is over, but its legacy will live on

Microsoft reported PC revenue of $13.3 billion for the quarter, roughly flat from $13.31 billion a year before and beating the average analyst estimate of $13.12 billion, according to FactSet. While PCs have long been what consumers largely know Microsoft for, their importance to the company’s financials has declined in recent years as cloud computing has grown in importance.

“Historically, Windows was a very large driver of Microsoft revenue and, given its strong margins, a disproportionate driver of earnings,” Bernstein analysts wrote in a preview of the report, while maintaining an “overweight” rating. “Over time other businesses, especially Microsoft’s commercial Cloud, have grown fast while the Windows business has grown quite slower, decreasing the relative impact of Windows.”

Microsoft’s other revenue segment, “Productivity and Business Processes,” reported revenue of $16.5 billion, up from $15.04 billion a year ago and higher than the average analyst estimate of $16.13 billion, according to FactSet. That segment includes Microsoft’s core cloud-software properties such as its Office suite of products — which is being officially renamed Microsoft 365 — as well as LinkedIn and some other properties.

Microsoft’s second-quarter guidance will be crucial to investors hoping that the tech giant can withstand any economic jolts headed its way and show stronger growth in cloud. Analysts on average were expecting overall second-quarter revenue of $56.16 billion and “Intelligent Cloud” sales of $21.82 billion heading into the print, according to FactSet, while some wrote that they would like to hear more from Microsoft executives about the picture for the full year.

“Our hope is that management provides a bit more color on full-year fiscal 2023 beyond just the double-digit revenue growth and operating margins being roughly flat commentary from last quarter,” MoffetNathanson analysts, who have a “market perform” rating and $282 price target on the stock, wrote in their preview. “We would expect headcount-related revenue streams like Office to see increasing headwinds in coming quarters, but volume businesses like Azure, which is tied to data, being more resilient.”

Microsoft stock has declined 25.5% so far this year, as the S&P 500 index
SPX,
+1.63%
has dropped 20.3% and the Dow Jones Industrial Average
DJIA,
+1.07%
— which counts Microsoft as one of its 30 components — has declined 13.3%.

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October 25, 2022
Google ad sales take a hit and widely miss estimates, Alphabet stock drops 6%

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Alphabet Inc. is feeling the sting of a downturn in digital-ad spending. Google’s parent company reported just 6% sales growth year-over-year Tuesday and missed widely on its advertising revenue, pushing shares down in extended trading.

Alphabet
GOOGL,
+1.91%

GOOG,
+1.90%
reported net income of $13.9 billion, or $1.06 a share, in its fiscal third quarter, compared with net income of $1.40 a share in the same quarter a year ago. Total revenue improved a middling 6% to $69.1 billion from $61.88 billion a year ago, the slowest year-over-year growth since sales declined in June 2020, while revenue after removing traffic-acquisition costs was $57.3 billion, compared with $53.6 billion in the year-ago period.

Analysts surveyed by FactSet had estimated net income of $1.26 a share on ex-TAC revenue of $58.2 billion and overall revenue of $71 billion. Alphabet shares slipped more than 6% in after-hours trading immediately following the release of the results, after closing with a 2% increase at $104.48.

The results, which missed in several key product categories, further rattled investors, already spooked by poor quarterly results last week from Snap Inc.
SNAP,
+15.52%.
Facebook parent company Meta Platforms Inc.
META,
+6.01%
is scheduled to report its third-quarter results Wednesday.

Alphabet Chief Executive Sundar Pichai acknowledged the shortfall in ad revenue during a conference call with analysts. He vowed to take several measures, including a sharpened focus on products that improve search through artificial intelligence and to scale back hiring and other operating expenses.

“There is no question we are operating in an uncertain environment,” Alphabet Chief Business Officer Philipp Schindler said on the call, noting reductions in ad spending by financial services that deepened during the third quarter.

Google’s total advertising sales improved to $54.5 billion from $53.13 billion a year ago, but badly missed analysts’ average expectations for $56.58 billion. Search was $39.5 billion, compared with $37.93 billion last year. YouTube ad sales slipped to $7.07 billion from $7.21 billion a year ago.

“When Google stumbles, it’s a bad omen for digital advertising at large,” Insider Intelligence analyst Evelyn Mitchell said. “Not only did Google miss analyst expectations for topline revenue, YouTube ad revenues shrank for the first time since Google started reporting YouTube earnings separately in Q4 2019, due in large part to persistent competition in streaming and short video.”

Google’s Cloud revenue did climb to $6.9 billion from $4.99 billion; Google Cloud is believed to be third in cloud sales behind rivals Amazon.com Inc.
AMZN,
+0.65%
and Microsoft Corp.
MSFT,
+1.38%.

As is its customary practice, Alphabet did not disclose fourth-quarter guidance. But Alphabet Chief Financial Officer Ruth Porat cautioned during the analyst call that the company faces “tough comps” in the current fourth quarter. Last year, Alphabet raked in $75.3 billion in Q4 revenue.

Google’s stock has skidded 28% so far this year. The broader S&P 500 index
SPX,
+1.63%
is down 19% in 2022.

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October 25, 2022
Tesla Stock Could Rebound in 3 Months. Here’s What it Would Take.

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Elon Musk says that

Tesla

could someday be worth more than

Apple

and Saudi Aramco, combined. First, it needs to get through the next few months.

Before Tesla (ticker: TSLA) reported third-quarter earnings this past week, investors had been hoping they would allay concerns that had been growing since the company released second-quarter numbers three months earlier. They did no such thing. While earnings topped expectations, third-quarter deliveries, sales, and profit margins all fell short of Street projections. Tesla shares slumped 6.7% following the release, putting them down 22% since the end of September, their second-worst start to a quarter since the first few weeks of 2016.

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October 21, 2022
Snap stock plummets more than 25% as online advertising continues to struggle

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A bruising year for Snap Inc.’s shares worsened Thursday, as the stock plummeted more than 20% in after-hours trading as executives launched the company’s first major share-repurchase program amid revenue issues in a poor environment for online advertising.

Snap
SNAP,
-0.64%
executives revealed that revenue increased less than 6% year-over-year in the quarter — its slowest quarterly grow ever recorded — and said that the holiday season is shaping up similarly, with sales increasing 9% so far in the quarter. The social-media company, which laid off roughly 20% of its staff this summer in response to the issues, also declined to provide a full forecast for the important fourth quarter.

“Our revenue growth continued to decelerate in Q3 and continues to be impacted by a number of factors we have noted throughout the past year, including platform policy changes, macroeconomic headwinds, and increased competition,” executives said in a letter to shareholders, outlining the results. “We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures, and rising costs of capital.”

“Forward-looking revenue visibility remains incredibly challenging, and this is compounded by the fact that revenue in Q4 is typically disproportionately generated in the back half of the quarter, which further reduces our visibility,” executives explained about the lack of guidance in a letter to investors.

The board did approve a $500 million share repurchase, a first for the young company. In a news release, executives said that the move was meant “to opportunistically offset a portion of the dilution related to the issuance of restricted stock units to employees as part of the overall compensation program designed to foster an ownership culture.”

Snap’s results — the first among the major tech companies who rely heavily on digital advertising — likely portend even more turbulent times ahead for Alphabet Inc.’s
GOOGL,
+0.34%

GOOG,
+0.24%
Google, Facebook parent company Meta Platforms Inc.
META,
-1.28%,
Twitter Inc.
TWTR,
+1.18%,
Pinterest Inc.
PINS,
-0.30%
and others in the grip of inflation, a war in Ukraine, foreign-exchange worries and a widening recession.

Snap’s desultory news sent shares tumbling in extended trading for Pinterest (-8%), Trade Desk Inc.
TTD,
+2.26%
(-5), Meta (-4%) and Google (-3%).

Deteriorating macroeconomic conditions have left advertisers with little choice but to delay or cancel buys. At the same time, intensifying competition from the likes of TikTok and others has deepened headwinds.

“As a smaller player, Snap is more susceptible but no platform is immune,” Insider Intelligence analyst Jasmine Enberg told MarketWatch. “I expect more of the same results next week” when Google and Meta report, she added.

Snap reported a third-quarter net loss of $359.5 million, or 22 cents a share, compared with a loss of 5 cents a share a year ago. Analysts on average were expecting a loss of 24 cents a share.

Snap’s sales increased less than 6% to $1.13 billion, barely falling short of Street estimates of $1.14 billion. Daily active users rose 19% to 363 million. FactSet analysts had modeled 358.2 million.

Snap shares initially fell more than 20% in after-hours trading. They closed the regular trading session down 0.6% to $10.79. Shares of Snap have nosedived 77% this year, while the S&P 500 index
SPX,
-0.80%
is down 23%.

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October 20, 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
Nokia posts forecast-beating net profit

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Nokia Corp. on Thursday posted a forecast-beating third-quarter net profit as demand for mobile networks and network infrastructure remained strong and supply-chain constraints eased.

Nokia
NOK,
-1.94%

NOKIA,
-6.26%
said it still expects to deliver net sales growth in mobile networks on a constant-currency basis in 2022 after strong sales growth in North America during the quarter, while sales in Europe, Latin America and Greater China also grew.

Comparable net profit for the quarter rose to 550 million euros ($537.6 million) from EUR454 million a year earlier as sales rose 16% to EUR6.24 billion, it said.

Analysts polled by FactSet had expected comparable net profit of EUR510 million on sales of EUR6.05 billion.

On a reported basis, Nokia posted a net profit of EUR427 million from EUR342 million a year earlier.

Nokia lifted full-year sales guidance to between EUR23.9 billion and EUR25.1 billion from EUR23.5 billion and EUR24.7 billion, adjusted for currency. It still sees the full-year comparable operating margin at 11%-13.5%.

“While risks around timing of outstanding deals in Nokia Technologies remain, assuming these close we continue tracking towards the high-end of our net sales guidance for 2022 and towards the mid-point of our operating margin guidance,” Chief Executive Pekka Lundmark said.

Write to Dominic Chopping at dominic.chopping@wsj.com

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October 20, 2022
Nokia posts forecast-beating net profit

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Nokia Corp. on Thursday posted a forecast-beating third-quarter net profit as demand for mobile networks and network infrastructure remained strong and supply-chain constraints eased.

Nokia
NOK,
-1.94%

NOKIA,
-5.29%
said it still expects to deliver net sales growth in mobile networks on a constant-currency basis in 2022 after strong sales growth in North America during the quarter, while sales in Europe, Latin America and Greater China also grew.

Comparable net profit for the quarter rose to 550 million euros ($537.6 million) from EUR454 million a year earlier as sales rose 16% to EUR6.24 billion, it said.

Analysts polled by FactSet had expected comparable net profit of EUR510 million on sales of EUR6.05 billion.

On a reported basis, Nokia posted a net profit of EUR427 million from EUR342 million a year earlier.

Nokia lifted full-year sales guidance to between EUR23.9 billion and EUR25.1 billion from EUR23.5 billion and EUR24.7 billion, adjusted for currency. It still sees the full-year comparable operating margin at 11%-13.5%.

“While risks around timing of outstanding deals in Nokia Technologies remain, assuming these close we continue tracking towards the high-end of our net sales guidance for 2022 and towards the mid-point of our operating margin guidance,” Chief Executive Pekka Lundmark said.

Write to Dominic Chopping at dominic.chopping@wsj.com

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October 20, 2022
IBM stock rallies on third-quarter results, upbeat forecast

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Shares of International Business Machines Corp. rallied in extended trading Wednesday, after the tech software, consulting and infrastructure giant reported third-quarter results that beat expectations and offered up a more upbeat full-year sales forecast.

IBM
IBM,
-0.35%
reported earnings as Wall Street tries to gauge the impact of a tough foreign-exchange environment, and the state of business spending on tech services amid worries over a downturn. But the company saw gains in hybrid cloud services, products like open-source software platform Red Hat, its consulting services and its zSystems servers and software.

“Globally, clients view technology as an opportunity to enhance their business, which is evident in the results across our portfolio,” Chief Executive Arvind Krishna said in a statement. He added that he now expects full-year sales growth “above our mid-single-digit model.”

That’s a bit more optimistic than the forecast he gave over the summer, when IBM reported second-quarter results. Krishna, at that time, said he continued “to expect full-year revenue growth at the high end of our mid-single-digit model.”

Wall Street expects IBM’s full-year sales to come in at $59.667 billion, according to FactSet. Analysts expect 2022 earnings per share of $9.28. IBM also said it continued to expect around $10 billion in consolidated free cash flow for the year.

For the third quarter, the company reported a net loss of $3.2 billion, or $3.54 per share, compared with a $1.1 billion profit, or $1.25 per share, in the year-earlier period. On an adjusted basis, IBM earned $1.81 per share.

Sales came in at $14.1 billion, compared with $13.3 billion a year ago.

Analysts polled by FactSet expected adjusted earnings per share of $1.79, on revenue of $13.517 billion.

Revenue in the company’s software segment grew 7.5%. Consulting revenue rose 5.4%, while the company’s infrastructure segment jumped 14.8%.

Shares gained 4.8% after hours on Wednesday.

Prior to the results, analysts had zeroed in on the impact of the strong dollar and what Morgan Stanley, in a recent note, described as “continued wage pressure in consulting.” IBM has also been trying to lean more into cloud and AI technology, unloading some businesses in an effort to narrow its focus.

Last year, in a move toward that goal, IBM spun off its infrastructure services business into Kyndryl Holdings
KD,
-2.85%.
But afterward, some analysts raised questions about IBM’s ability to grow sales and compete in the cloud-services industry. Francisco Partners, an investment firm, this year also acquired health-care data and analytics assets that were part of IBM’s Watson Health segment.

In January, IBM declined to provide an earnings-per-share forecast. The company also changed how it organizes its business segments at the beginning of this year.

But during the spring, Krishna said he saw “demand staying strong” even if economic growth flattens or enters into a brief recession, with the decision to halt business in Russia, following its invasion of Ukraine, the only drag on results.

IBM stock is down 8% year to date. By comparison, the S&P 500 Index
SPX,
-0.67%
is down 22%.

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October 19, 2022
Retail sales flat in September as inflation takes a bite

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NEW YORK — The pace of sales at U.S. retailers was unchanged in September from August as rising prices for rent and food chipped away at money available for other things.

Retail sales were flat last month, down from a revised. 0.4% growth in August, the Commerce Department reported Friday. Retail sales fell 0.4% in July.

Excluding sales of automobiles and at gas stations, retail sales rose 0.3%. Excluding gas sales, spending was up 0.1%

While the report showed the resilience of the American consumer, the figures are not adjusted for inflation unlike many other government reports. In fact, sales at grocery stores rose 0.4%, helped by rising prices in food.

Evidence that the Fed’s fight to cool the economy may be taking hold can also be seen, particularly with big-ticket items. Sales at auto dealers fell 0.4% last month, and shoppers continued to pull back on appliances, electronics and furniture, all categories that did well during the early part of the pandemic. Business at consumer electronics and appliance stores fell 0.8%.

Sales at clothing stores rose 0.5%, while business at department stores rose 1.3% That indicates a solid back-to-school season but adjusted for inflation, spending was modest, analysts said. Business at restaurants rose 0.5%, while online sales ticked up at the same pace.

Neil Saunders, managing director of GlobalData Retail said the report was “representative of an economy that is tightening and of a shopper that is becoming more discerning and cautious about what they buy.”

Consumer spending accounts for nearly 70% of U.S. economic activity and Americans have remained mostly resilient even with inflation near four-decade highs. Yet surging prices for everything from mortgages to rent have upped the anxiety level. Overall spending has slowed and shifted increasingly toward necessities like food, while spending on electronics, furniture, new clothes and other non-necessities has faded.

“Even if people are employed and on paper look reasonably comfortable they are not feeling comfortable, and they are very concerned about what’s to come next,” said Joel Rampoldt, a managing director in the retail practice at AlixPartners.

Inflation in the United States accelerated in September, with the cost of housing and other necessities putting more pressure on households, eliminating pay gains and almost guaranteeing that the Federal Reserve will keep raising interest rates aggressively.

Consumer prices, excluding volatile food and energy costs, jumped 6.6% in September from a year ago — the fastest such pace in four decades. And on a month-to-month basis, core prices surged 0.6% for a second straight time, defying expectations for a slowdown and signaling that the Fed’s multiple rate hikes have yet to ease inflation pressures. Core prices typically provide a better picture of underlying price trends.

Overall prices rose 8.2% in September compared with a year earlier, down slightly from August, the government said Thursday in its monthly inflation report.

It is a crucial period for retailers as they prepare for the holiday shopping season, which accounts on average for 20% of the industry’s annual sales. Inflation is already changing shopper habits, causing them to trade down to cheaper stores like Walmart and dollar stores and within aisles, switching to cheaper brands.

Walmart and Target are among others that are pushing deals earlier while others are offering new financing for customers.

Conn’s HomePlus, a Texas furniture and mattress chain that caters to households at the lower end of the economic scale, launched a new layaway program that caters to the 20% to 25% of the chain’s applicants not eligible to qualify for other financing.

“(Shoppers’) ability to spend on discretionary is more limited than it was before, ” said CEO Chandra Holt. Sales on things like deluxe coffee makers other consumer electronics have faded, she said. .

A slew of holiday forecasts from various research and consulting firms point to a sales slowdown from last year, but adjusted for inflation, retailers could actually see a decline. AlixPartners predicts holiday sales to be up anywhere from 4% to 7% from last year, which was up 16%, according to its calculations. The National Retail Federation, the nation’s largest retail trade group, hasn’t released its holiday forecast.

Janet Barnes, a 42-year-old College Park, Maryland resident, says she’s trading down and going to cheaper stores for groceries as prices spike. Instead of Wegmans or Whole Foods, she now heads to the discount chain Lidl and said she saves about 40% in groceries. Thrift stores have replaced Nordstrom, she said.

“We are creatures of habit, said Barnes. “But it is not a bad deal to see what else is going on — and test something else.”

—————-

Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

AP Economics Writer Chris Rugaber in Washington contributed to this report.

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October 14, 2022
Amazon’s holiday sales event sees lower sales, group says

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NEW YORK — Amazon said Thursday its Prime members ordered more than 100 million items during a sales event this week that analysts are expecting to be a bellwether for the holiday shopping season.

As expected, the Seattle-based e-commerce company did not share sales figures. Still, some third-party estimates offer clues on how consumers spent during the two-day discount event that ran on Tuesday and Wednesday.

According to the data group Numerator, which tracked roughly 44,670 orders during the sale, the average order size clocked in at $46.68, $13 less than what it was during Amazon’s Prime Day sales event in July. Inflation also had an impact – 26% of shoppers passed on a deal because it wasn’t a necessity, Numerator said.

Major retailers have been offering more holiday discounts this year and doing it much earlier than usual, aiming to offload excess goods and offer cash-strapped Americans better deals amid high inflation.

Amazon’s discount event this week was the first time the company offered major sales to its Prime members twice in one year. Walmart has also been offering sales this week and has expanded its window for gift returns to between Oct. 1 and Jan. 31, compared with last year’s return window of Nov. 1 to Jan. 24. Meanwhile, Target began offering holiday deals last week during a two-day discount event. The company declined to share its revenue from those sales.

According to Salesforce, which analyzes online shopping data, the average online discount rate on Tuesday and Wednesday was roughly 21%, the deepest discount rate since the beginning of the pandemic outside of Cyber Week, the time between Thanksgiving and Cyber Monday.

But despite the deep discounts, consumers are still generally paying more than they did in the past two years due to high inflation. The average online selling price on Tuesday and Wednesday, for example, was up 8% compared to last year, and 17% compared to 2020, Salesforce said.

Online spending in November and December is expected to hit $209.7 billion, a 2.5% jump from 2021, according to Adobe Analytics. That’s sluggish growth compared to last year’s gain of 8.6%.

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October 13, 2022
Philips warns of 5% fall in like-for-like sales due to supply-chain woes

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Royal Philips NV said Wednesday that its performance for the third quarter was hurt by stronger-than-anticipated supply-chain challenges, and adopted a more pessimistic view on its sales through the end of the year.

The Dutch health-technology company
PHIA,
-8.01%

PHG,
-0.80%
said that it expects to record a 1.3 billion euro ($1.26 billion) impairment charge in the period. The company said that this is an impairment of goodwill of Philips Respironics, its sleep and respiratory care business, and that it is due to revisions to the business’s financial forecast.

This compares with adjusted Ebita of EUR512 million, or 12.3% of sales, a year earlier.

Analysts had seen the metric at EUR336 million, according to a consensus estimate provided by the company.

Philips expects to book a EUR1.3 billion impairment charge on its sleep and respiratory care business after revising its financial forecast for the unit, it said.

Group comparable sales for the quarter fell around 5%.

For the last quarter of the year, Philips now expects a mid-single-digit decline in comparable sales, it said.

In late July, Philips had guided for 6%-9% growth in comparable sales over the second half of the year.

“Philips still expects a better second half of the year, compared to the first half of 2022. However, the company sees prolonged supply chain disruptions and a worsening macro-environment,” it said.

The company said it expects adjusted Ebita margin to be in the range of a high single to double digit for the last quarter of the year.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com and Cristina Roca at cristina.roca@wsj.com

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October 11, 2022
AMD stock drops as $1 billion shortfall blamed on even weaker-than-expected PC sales

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Advanced Micro Devices Inc. shares fell in the extended session Thursday after the chip maker cut its already conservative forecast because a drop in PC sales after two years of pandemic-driven sales appears worse than feared.

AMD
AMD,
-0.13%
shares fell as much as 4% after hours, following a 0.1% decline in the regular session to close at $67.85.

Late Thursday, the company forecast third-quarter revenue of about $5.6 billion with adjusted gross margin of 50%.

“The PC market weakened significantly in the quarter,” said Lisa Su, AMD’s chair and chief executive, in a statement. “While our product portfolio remains very strong, macroeconomic conditions drove lower-than-expected PC demand and a significant inventory correction across the PC supply chain.”

AMD expects a 40% drop in client sales to about $1 billion, compared with Wall Street’s consensus estimate of $2.04 billion.

In early August, AMD held firm on its revenue forecast of $26 billion to $26.6 billion for the year, and forecast third-quarter revenue of $6.5 billion to $6.9 billion, which at the time fell below the Wall Street consensus, and gross margins of 54%.

Analysts polled by FactSet currently forecast third-quarter revenue of $6.71 billion, and annual sales of $26.13 billion. AMD is scheduled to report quarterly earnings on Nov. 1.

“The gross-margin shortfall to expectations was primarily due to lower revenue driven by lower client processor unit shipments and average selling price,” AMD said. “In addition, the third-quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing and related reserves in the graphics and client businesses.”

Last week, after Micron Technology Inc.
MU,
-0.20%
reported an “unprecedented” oversupply problem, analysts debated whether this supply glut was worse than the one in 2019 that the industry has tried to avoid this time around, following two-years of COVID-19-related demand and supply-chain difficulties.

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October 6, 2022
AI chip boom sends Nvidia’s stock surging after whopper of a quarter | CNN Business

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New York
CNN
—

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

Shares of Nvidia

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

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

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

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

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

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

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

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April 12, 2021