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FTC files appeal, again seeks to block Microsoft-Activision deal

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The Federal Trade Commission on Thursday asked an appeals court to temporarily block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. while it challenges a ruling earlier this week green-lighting the deal.

The FTC on Thursday asked U.S. District Judge Jacqueline Scott Corley to postpone her ruling — which she promptly denied — and also appealed to the Ninth U.S. Circuit Court of Appeals in San Francisco to pause the acquisition “to preserve the status quo” while the case is reviewed, claiming it is likely to succeed in its appeal.

According to the filing, the FTC claims the judge applied the wrong legal standard to its request for a preliminary injunction, and erred in a number of other matters.

The deal is set to close in the coming days, and letting it happen will “irreparably harm the public interest and the FTC,” regulators said.

Also see: GOP blasts FTC Chair Khan as a ‘bully’ after agency’s loss in Microsoft case

In a response filed with the court, Microsoft said the FTC “failed to carry its burden on independent, fact-based grounds” and “dragged its heels” before appealing.

“The court has already found that it would be inequitable” to order an injunction that could lead to “the potential scuttling of the merger,” Microsoft said, in asking for the FTC’s request to be denied.

The FTC has claimed the tie-up of a major videogame platform — Microsoft’s
MSFT,
+1.62%
Xbox — with a major videogame publisher — Activision
ATVI,
-0.51%
makes the wildly popular “Call of Duty,” among other titles — would be harmful to the videogame industry and consumers.

Microsoft has pledged to keep “Call of Duty” available to Sony’s
SONY,
+2.82%
PlayStation console for 10 years, and will make it available for Nintendo’s
7974,
-0.36%
Switch and some cloud-gaming platforms.

In her ruling clearing the deal Tuesday, Corley said the FTC did not show “this particular vertical merger in this specific industry may substantially lessen competition.”

Bloomberg News reported late Thursday that Microsoft and Activision are considering giving up some control of their cloud-gaming business in the U.K. to win approval of British regulators, who — if the U.S. appeals court does not act — are the final hurdle to the deal closing on time.

FTC Chair Lina Khan testified on Capitol Hill on Thursday, where Republican lawmakers assailed her actions and sharply criticized her agency’s court losses in trying to block the Microsoft-Activision deal and Meta’s
META,
+1.32%
acquisition of a virtual-reality gaming company earlier this year.

Read more: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

Also: FTC’s probe of OpenAI marks key moment in Khan’s push to rein in Big Tech

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July 13, 2023
FTC will appeal judge’s ruling clearing Microsoft-Activision deal

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The Federal Trade Commission late Wednesday filed notice that it will appeal a judge’s ruling this week that gave Microsoft Corp. the green light to proceed with its $69 billion acquisition of Activision Blizzard Inc.

In a filing with the Ninth Circuit Court of Appeals in San Francisco, the FTC is seeking to overturn U.S. District Judge Jacqueline Scott Corley’s ruling Tuesday, which said the deal would not hurt competition.

“The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers,” Brad Smith, Microsoft’s vice chair and president, said in a statement.” We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.”

The FTC has claimed the tie-up of a major videogame platform — Microsoft’s
MSFT,
+1.42%
Xbox — with a major videogame publisher — Activision
ATVI,
-1.09%
makes the wildly popular “Call of Duty,” among other titles — would be harmful to the videogame industry and consumers.

“The facts haven’t changed,” an Activision spokesperson said Wednesday. “We’re confident the U.S. will remain among the 39 countries where the merger can close. We look forward to reinforcing the strength of our case in court, again.”

Microsoft has pledged to keep “Call of Duty” available to Sony’s
SONY,
+1.78%
PlayStation console for 10 years, and will make it available for Nintendo’s
7974,
+1.63%
Switch and some cloud-gaming platforms.

The deal faces a July 18 deadline, and still must gain regulatory approval in the U.K.

Tuesday’s ruling was yet another antitrust setback for the FTC, which has failed to do much to rein in Big Tech, and one analyst told MarketWatch on Tuesday that the regulators need to do ” a much better job of picking their battles,”

Read more: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

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July 12, 2023
After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

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The U.S. Federal Trade Commission’s defeat as it sought to block Microsoft Corp.’s acquisition of videogame maker Activision Blizzard is yet another setback for an increasingly toothless regulator that needs to pick better battles with Big Tech.

On Tuesday morning, a federal judge denied the FTC’s injunction that was seeking to block the software giant’s proposed $69 billion acquisition of Activision
ATVI,
+10.02%,
best known for its hit videogame “Call of Duty.” The FTC argued that Microsoft
MSFT,
+0.19%
could withhold “Call of Duty” and other Activision games from rival console platforms such as Sony’s PlayStation, and keep the games on its Xbox only.

Microsoft, in a show of faith, committed in writing to keep “Call of Duty” on PlayStation on parity with Xbox for 10 years, agreed with Nintendo
7974,
+1.10%
to bring “Call of Duty” to Switch and entered into several pacts to bring Activision content to several cloud gaming services, U.S. District Court Judge Jacqueline Scott Corley noted in her decision.

“With these 10-year contracts that Microsoft made across the board with so many vendors, Nvidia
NVDA,
+0.53%,
Nintendo and others, 10 years is a really long time, in my opinion,” said Sarah Hindlian-Bowler, an analyst at Macquarie Equity Research, in an interview Tuesday. “It is long enough to cover the arrival and maturity of the cloud gaming market….She understands that 10 years is a very long long time to make a guarantee of this kind.”

Also read: Regulators face an antitrust dilemma after Meta launches Threads

Hindlian-Bowler said that she had been in the minority of Wall Street analysts in not believing the U.S. government would be able to block this deal.

“The assumption that this somehow decreases the market is going to prove to be wildly incorrect,” she said, adding that she does not believe that the U.K.’s Competition and Markets Authority will be able to block the deal either.

The latest upset at the FTC was also not too surprising to other Capitol Hill watchers, especially in the light of other high-profile setbacks by the agency and its once-heralded commissioner, Lina Khan. When she was sworn in as chair of the FTC in mid-2021, Khan was hailed as the sheriff who would rein in Big Tech.

“It’s hard to say I am surprised by the ruling because Khan has had a fairly unsuccessful track record,” said Owen Tedford, a senior research analyst at Beacon Policy Advisors. “The regulators are pushing the boundaries, deals that previously would have gone unchallenged have now gone challenged. And they are breaking precedent because Khan and company have expressed a dislike of settlements.”

The FTC’s attempts to sue Meta Platforms Inc.
META,
+1.42%
have had some defeats so far. In February, a California judge denied the FTC’s attempts to block Meta from buying a virtual-reality startup called Within Unlimited. The FTC’s suit to reverse Meta’s acquisitions of WhatsApp and Instagram, filed in 2021, is still plodding along.

Additionally, the FTC recently filed a suit against Amazon.com Inc.
AMZN,
+1.30%,
alleging that it is too difficult for consumers to cancel their Prime accounts, and the agency is reportedly also mulling another far-reaching suit against Amazon alleging that the e-commerce giant punishes merchants who do not use its logistics services. One analyst has already made a case that the FTC will lose that fight too.

“I think that the FTC is in need of some change, in need of some refreshing and in need of doing a much better job of picking their battles,” said Hindlian-Bowler. “This does feel toothless, a lot of the fights they are picking are toothless. And unfortunately, they are missing the real battle. They are missing TikTok, they are missing the real fights where we actually have national security at risk.”

In February, one of the Republican commissioners on the FTC resigned, and wrote an op-ed in the Wall Street Journal accusing Khan of disregarding the rule of law and due process.

Compared to the European Union, which has had far more success implementing regulation to rein in Big Tech, the U.S. is still much weaker. “The EU seems to be having somewhat more success, levying big fines, getting these companies to change,” said Beacon’s Tedford. “The EU has passed these bills, but the U.S., despite these efforts, has not gotten there and is not going to get there for the next two years.”

Money spent by Big Tech to lobby Congress in a huge part of the problem, whereas in Europe, “those lawmakers feel less beholden,” he added.

More than a century ago, President Teddy Roosevelt, known for his “speak softly and carry a big stick” foreign policy, also used his bully pulpit to bust industrial monopolies.

If Khan and her staff want to follow his lead and rein in Big Tech, they need to start picking their future battles more carefully — and carry bigger sticks.

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July 11, 2023
FTC Loses First Bid to Block Microsoft’s Acquisition of Activision Blizzard

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FTC Loses First Bid to Block Microsoft’s Acquisition of Activision Blizzard. The Focus Turns to U.K. Regulators.

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July 11, 2023
Activision’s Microsoft Saga Is Almost Over. It May Be Time to Sell the Stock.

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The fate of

Microsoft

$69 billion purchase of

Activision

Blizzard will finally be known in the coming weeks—and investors may want to consider taking profits on the videogame maker’s stock before then.

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June 30, 2023
Nike profit misses expectations, as ‘higher markdowns’ endure amid weaker demand

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Nike Inc. on Thursday reported fourth-quarter profit that came up short of Wall Street’s expectations, with price cuts weighing on results amid weaker demand for sneakers and clothing.

Nike
NKE,
+0.30%
reported fourth-quarter net income of $1.03 billion, or 66 cents a share, down from $1.44 billion, or 90 cents a share, in the same quarter last year. Revenue rose 5% to $12.83 billion, compared with $12.23 billion in the prior-year quarter.

Analysts polled by FactSet expected Nike to report adjusted earnings of 68 cents a share, on $12.58 billion in sales.

Nike said gross margins slipped 140 basis points to 43.6%, dragged by “higher product input costs and elevated freight and logistics costs, higher markdowns and continued unfavorable changes in net foreign currency exchange rates.”

Shares were up 0.3% after hours on Thursday.

Heading into the earnings, Wall Street had questions about Nike’s stockpiles of unsold shoes and clothing, and what it might take to clear them, as consumers still find themselves stretching their budgets to buy more essential goods like groceries.

Nike’s broader plans to sell more shoes and clothes directly — either through its own e-commerce platform or its own physical stores. But recent plans to start selling again in Macy’s Inc.
M,
+3.35%
and Designer Brands Inc.’s
DBI,
+4.01%
DSW shoe stores have raised questions over whether the athletic-gear maker is rethinking that strategy. Analysts were also focused on demand in China, whose re-opening from COVID-19 shutdowns remains in flux.

Shares of Nike have risen 9.6% over the past 12 months. By comparison, the S&P 500 Index
SPX,
+0.45%
has risen 15% over that period.

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June 29, 2023
Does Nike have too many sneakers? Its financial results could tell us whether shoes will get cheaper.

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Are stores getting more desperate to sell sneakers? Fourth-quarter results from Nike Inc. on Thursday will probably provide part of the answer.

Even as its some of its basketball shoes still put up double-digit sales gains — like those named after NBA icons LeBron James, Luka Doncic and Giannis Antetokounmpo — the athletic-gear maker, like its rivals, has faced weaker consumer demand overall. With customers forced to spend more money on necessities over the past year, they’ve had less to spend on new shoes.

In March, Nike
NKE,
+0.19%
executives said that the demand backdrop remained “promotional” — one in which anyone selling sneakers and clothing was cutting prices more aggressively to attract customers. But ahead of Thursday’s results, some analysts also wondered whether the stalling demand has forced bigger changes to the way management thinks about its broader turn away from retailers — a core piece of its sales strategy.

Nike over recent years has embarked on a plan to rely less on shoe retailers for sales and more on sales made directly to customers through its own stores and online. But recently, it decided to start selling clothing again at Macy’s
M,
+3.58%
and shoes again at DSW, the shoe-store chain run by Designer Brands Inc.
DBI,
+4.32%
— this after ending partnerships with both retailers over the past two years.

The return to traditional retail has raised questions about whether Nike is looking to more aggressively clear product it’s had trouble selling, and whether management is re-evaluating the company’s go-it-alone sales strategy overall.

“The big question on our minds heading into [Nike’s] quarter is what is going on with the [direct-to-consumer] pivot?” Quo Vadis analyst John Zolidis said in a note on Monday. “Reopening Macy’s and DSW seems odd in context of previous dismissive statements about undifferentiated retail.”

He continued: “Further, neither of these retailers has a customer that correlates strongly with [Nike’s] highest-value segments. The easiest explanation is that [Nike] overestimated the dollars it could recapture from closed wholesale accounts and now has too much inventory it needs to clear.”

What to expect

Earnings: Analysts polled by FactSet expect Nike to earn 68 cents a share, down from 90 cents in the same quarter a year ago. Contributors to Estimize — a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others — expect earnings per share of 75 cents.

Revenue: Analysts polled by FactSet expect $12.58 billion in sales for Nike. Forecasts from Estimize call for sales of $12.72 billion.

Stock price: Nike’s stock is only up 1.3% over the past 12 months. Shares got hit in September, after company executives warned of further price-cutting from rivals due to weaker demand. The stock rebounded later but gave up some gains in May. The stock was up 2% on Monday.

What analysts are saying

Nike in March said demand for product sold at full pricing remained solid. Still, sneaker chain Foot Locker Inc.
FL,
+2.09%
recently cut its outlook. Lots of Vans shoes are running at a discount, one analyst said last month, as the skater-centric brand competes with casual fare from the likes of Adidas
ADS,
+0.61%
and others.

Other analysts were also wondering about Nike’s return to Macy’s and DSW. But not everyone believed the move was a sign of deeper problems.

“Investors are worried that this is a reversal in Nike’s shift from wholesale to [direct-to-consumer], but we don’t think the strategy is broken,” BofA analyst Lorraine Hutchinson said in a research note on Wednesday. “We expect to hear an explanation of these moves on the [conference] call rather than an about-face on its focus on reducing undifferentiated wholesale.”

Still, the company faced concerns about sales abroad. Zolidis also said markets were increasingly worried about growth in China, whose recovery from pandemic lockdowns has stumbled.

“Our recent conversations with companies in China suggest that trends are mixed,” Zolidis said. “The consumer is more value oriented, and job uncertainty is higher.”

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June 29, 2023
Logitech’s stock hit by reports its $30 game controller was used to steer missing sub near Titanic

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U.S.-listed shares of Logitech International SA, a Swiss maker of computer peripherals and software, were down about 3.6% Monday, amid reports that one of the company’s gamepads was being used to steer the submersible that went missing while taking five people down to the wreck of the Titanic.

Logitech’s $30 F710 gamepad was the controller of the OceanGate submarine vessel that is the subject of a massive sea-and-air search, according to a segment on the “CBS News Sunday Morning Show” by reporter David Pogue that aired last November.

In the segment, OceanGate Chief Executive Stockton Rush, one of the five people currently onboard the submersible, showed Pogue the game controller that he said “runs the whole thing,” causing the reporter to burst out laughing.

Pogue later describes the “MacGyver jerry-riggedness” of the whole thing, which included off-the-shelf components such as lights from Camper World and construction pipes as ballast. Rush explained that other parts of the vessel were made in cooperation with Boeing, NASA and the University of Washington.

As The Verge pointed out, game controllers are used in other instances to control submarine periscopes, including by the U.S. Navy and Elon Musk’s The Boring Company.

On Monday, Pogue tweeted that during his report which was filmed last summer, the submersible got lost for a period — while he was on the surface.

In that instance, the vessel still had contact with the surface. This time, there are no communications, although a Canadian military surveillance aircraft detected underwater noises early Wednesday, as the Associated Press reported.

A statement from the U.S. Coast Guard did not elaborate on what rescuers believed the noises could be, though it offered a glimmer of hope for those lost aboard the Titan. Estimates suggested as little as a day’s worth of oxygen could be left if the vessel is still functioning.

Also on the vessel with Rush are a British adventurer, two members of a Pakistani business family and a Titanic expert.

Authorities reported the carbon-fiber vessel overdue Sunday night, setting off the search in waters about 435 miles (700 kilometers) off the coast of of St. John’s.

The submersible had a four-day oxygen supply when it was put to sea around 6 a.m. Sunday, according to David Concannon, an adviser to OceanGate Expeditions, which oversaw the mission.

Questions remain about how teams could reach the lost submersible, which could be as deep as about 12,500 feet (3,800 meters) below the surface near the watery tomb of the historic ocean liner. Newly uncovered allegations also suggested there had been significant warnings made about the vessel’s safety prior to its disappearance.

Read: Missing Titanic submersible: Here’s what we know so far

Logitech’s stock
LOGI,
-2.69%
is down about 18% in the month to date.

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June 21, 2023
Judge temporarily blocks Microsoft’s $69 billion purchase of Activision

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A federal judge late Tuesday approved a request by the Federal Trade Commission to temporarily block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc.

U.S. District Judge Edward Davila in San Francisco issued a temporary restraining order in order to “maintain the status quo,” and set a evidentiary hearing to be held June 22-23 on whether a preliminary injunction should be issued.

The deal was set to be finalized as soon as this Friday. Tuesday’s order said the deal may not close until at least five days after the court’s preliminary injunction ruling.

The acquisition has raised antitrust concerns that Microsoft
MSFT,
+0.74%,
with its Xbox gaming console, could withhold hit Activision Blizzard
ATVI,
+1.17%
videogame franchises such as “Call of Duty” and “Overwatch” from competing console platforms.

On Monday, the FTC filed for a restraining order and injunction to block the deal, arguing “a preliminary injunction is necessary to maintain the status quo and prevent interim harm to competition.”

“This loss of competition would likely result in significant harm to consumers in multiple markets at a pivotal time for the industry,” the FTC said in its filing Monday.

In a statement Tuesday evening, a Microsoft spokesperson said: “Accelerating the legal process in the U.S will ultimately bring more choice and competition to the gaming market. A temporary restraining order makes sense until we can receive a decision from the court, which is moving swiftly.”

While EU regulators approved the deal in May, British regulators have tentatively scheduled appeal hearings after saying in April they would prohibit the purchase.

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June 13, 2023
Berkshire Bought Capital One, Unloaded 2 Banks

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Berkshire Hathaway Sold U.S. Bancorp, Bank of New York Stock. Here’s What It Bought.

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May 15, 2023
Walmart, Alibaba, Target, and More Stocks to Watch This Week

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Walmart, Alibaba, Target, and More Stocks to Watch This Week

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May 14, 2023
Why the U.K. is blocking Microsoft’s deal for Activision and what comes next

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A U.K. regulator made the surprising decision Wednesday to block Microsoft Corp.’s deal for Activision Blizzard Inc. in a further sign of resistance to the power of Big Tech.

The U.K.’s Competition and Markets Authority announced Wednesday that it would prohibit the $69 billion deal as the merger could hurt competition in the nascent market for cloud gaming. The decision comes after the agency said in late March that it no longer thought the deal would threaten console gaming, which is a vastly larger and more established…

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April 26, 2023

10 dividend stocks yielding at least 4.5% that are rated ‘buy’ by most analysts

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During a period of high interest rates, it might be more difficult to impress investors with dividend stocks. But the stocks can have an important advantage over the long term. The dividend payouts can increase over the years, helping to push share prices higher over time.

When considering stocks for dividend income, yield shouldn’t be the only thing you consider. If a stock’s price has tumbled because investors are worried about the company’s business prospects, the dividend yield might be very high. A double-digit yield might mean investors expect to see a cut to the dividend soon.

There are many ways to look at companies’ expected ability to maintain or raise their dividend payouts. But one can also take a simple approach to begin researching stock choices.

At the moment, you can get a bank CD with a yield of close to 5% pretty easily. Here’s a look at current yields for CDs and U.S. Treasury securities and an approach for laddering them not only to protect your cash but to hedge against interest-rate risk.

For investors who would rather aim for long-term growth to go along with dividend income, or take a relatively conservative approach to growth while reinvesting dividends, a screen of stocks in the S&P 500
SPX,
+0.33%
produces only 10 stocks with dividend yields of 4.5% or higher with majority “buy” or equivalent ratings among analysts polled by FactSet. Here they are, sorted by dividend yield:

Company	Ticker	Dividend Yield	Expected payout increase through 2025	Share “buy” ratings	April 16 price	Consensus price target	implied 12-month upside potential
Comerica Inc.	CMA, +4.00%	6.56%	10%	58%	$43.30	$60.53	40%
Citizens Financial Group Inc.	CFG, +4.19%	5.77%	12%	74%	$29.10	$39.29	35%
Healthpeak Properties Inc.	PEAK, +2.33%	5.71%	9%	60%	$21.01	$27.69	32%
Hasbro Inc.	HAS, +1.28%	5.34%	8%	69%	$52.40	$69.27	32%
Philip Morris International Inc.	PM, +0.46%	5.11%	11%	67%	$99.48	$113.56	14%
Realty Income Corp.	O, +1.30%	5.04%	7%	56%	$60.77	$70.00	15%
Fifth Third Bancorp	FITB, +3.33%	4.99%	3%	72%	$26.44	$34.55	31%
VICI Properties Inc.	VICI, +1.58%	4.82%	12%	95%	$32.35	$37.73	17%
Organon & Co.	OGN, +1.01%	4.71%	5%	55%	$23.80	$31.89	34%
Iron Mountain Inc.	IRM, +0.82%	4.69%	15%	78%	$52.76	$56.00	6%
Source: FactSet

Click on the ticker for more about each company.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

The dividend yields for this group of 10 companies are based on current annual regular payout rates, with all paying quarterly except for Realty Income Corp.
O,
+1.30%,
which pays monthly.

These two oil and natural gas producers would have passed the above screen based on their most recent dividend payments and analysts’ sentiment, however, they pay a combined fixed-plus-variable dividend every quarter, with the fixed portion relatively low:

Shares of Pioneer Natural Resources Co.
PXD,
-0.77%
closed at $230 on April 14. Among analysts polled by FactSet, 59% rate the stock a “buy” or the equivalent, and the consensus price target is $257.42. The company pays a fixed quarterly dividend of $1.10 a share, which would make for a dividend yield of only 1.91%. However, the most recent variable quarterly dividend was $4.48 a share, for a combined quarterly dividend of $5.58, which would translate to an annualized dividend yield of 9.70%. The consensus estimate for dividends in 2025 is $4.63 — the analysts are only estimating the fixed portion of the dividend. Pioneer has held preliminary merger discussions with Exxon Corp.
XOM,
-1.16%,
according to a Wall Street Journal report.
Devon Energy Corp.’s
DVN,
-0.72%
stock closed at $55.70 on April 14. The shares are rated “buy” or the equivalent by 55% of analysts and the consensus price target is $67.66. The fixed portion of Devon’s quarterly dividend is 20 cents a share, for an annualized dividend yield of 1.44%. The variable portion of the most recent quarterly dividend was 69 cents a share. The total payout of 89 cents would make for an annual dividend yield of 6.39%. Analysts expect the fixed portion of annual dividends to total $3.61 in 2025, according to FactSet.

Don’t miss: Buffett is buying in Japan. This overseas value-stock fund is also making bets there. Is it a good way to diversify?

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April 17, 2023

EA laying off 6% of staff in cost-cutting push for videogame publisher

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Electronic Arts Inc. on Wednesday announced intentions to slash 6% of its workforce as the videogame publisher looks to cut costs.

“As we drive greater focus across our portfolio, we are moving away from projects that do not contribute to our strategy, reviewing our real estate footprint, and restructuring some of our teams,” Chief Executive Andrew Wilson said in a note to employees that was also shared publicly.

Wilson…

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March 29, 2023
Lululemon, Intel, Carnival, Micron, Walgreens, and More Stocks to Watch This Week

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Data on the U.S. consumer and housing market, plus several notable earnings reports, will be this week’s highlights. Barring any surprises, federal financial regulators’ Congressional testimony will be the main event on the banking front.

On Wednesday, Fed Vice Chair for Supervision Michael Barr and Federal Deposit Insurance Corp. Chairman Martin Gruenberg are scheduled to testify before the House Financial Services Committee. They’ll discuss the collapses of Silicon Valley Bank and Signature Bank and efforts to maintain confidence in the U.S. banking system.

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March 26, 2023
Nike stock rallies after another earnings beat

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Shares of Nike Inc. rallied after hours on Tuesday after the athletic-gear giant reported third-quarter results that topped expectations.

The maker of sneakers and sports apparel reported third-quarter net income of $1.24 billion, or 79 cents a share, compared with $1.4 billion, or 87 cents a share, in the same quarter a year ago. Revenue increased 14% to $12.39 billion, compared with $10.87 billion in the prior-year quarter.

Analysts polled by FactSet expected earnings per share of 56 cents, on sales of $11.48 billion.

Nike’s
NKE,
+3.64%
gross margin fell 330 basis points to 43.4%. Inventories stood at $8.9 billion, up 16%, amid “higher product input costs and elevated freight costs.”

For Nike’s fourth quarter, FactSet estimates called for earnings per share of 81 cents, on revenue of $12.55 billion. For the full year, those analysts expected earnings of $3.15 a share, on sales of $50.11 billion.

Shares rose 3.5% after hours. The stock also jumped after Nike’s last earnings report, in December, which also topped estimates.

Nike reported earnings after it cut prices in an effort to clear clothing and other items from its warehouses, following supply-chain hiccups that led to an excess of off-season goods and rising prices for basics. Those higher prices made customers less interested in dropping money on a new pair of sneakers.

However, Jefferies analyst Randal Konik, in a research note last week, suggested that rival Adidas AG’s struggles could become Nike’s gains, as Adidas
ADDYY,
+0.41%
finds itself stuck with a bunch of Kanye West-branded shoes. West’s antisemitic remarks last year led to the termination of a collaboration between the two.

“The athletic footwear space is highly fragmented, and we believe that NKE will likely continue to benefit as Adidas regroups,” he said in a note.

Konik said that Jefferies’ own data suggested that holiday-season interest in sneakers was still strong, despite inflation. And he said trends in China were getting better, as that nation’s economy reopens.

Foot Locker Inc.
FL,
+7.07%
on Monday said that it had “revitalized” its relationship with Nike — to focus on data-sharing and sneaker culture — after Nike began focusing on selling products online and through its own retail stores. And after weaker sales of Nike products in the past, Foot Locker Chief Executive Mary Dillon said the new arrangement with Nike would return both to growth in 2024.

Shares of Nike are down 4.4% over the past 12 months. By comparison, the S&P 500 Index
SPX,
+1.30%
is down 10.4% over that period.

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March 21, 2023
Under Armour stock jumps toward 9-month high after big profit beat, strong shoe sales

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Shares of Under Armour Inc. sprinted higher Wednesday toward a nine-month high, after the athletic apparel and gear seller reported a big beat in fiscal third quarter profit and raised its full-year outlook.

Net income for the quarter to Dec. 31 rose to $121.6 million, or 27 cents a share, from $109.7 million, or 23 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of 16 cents was well above the FactSet consensus of 9 cents.

Revenue grew 3.4% to $1.58 billion, above the FactSet consensus of $1.55 billion, as a 25% jump in footwear revenue offset 2% declines in apparel and accessories revenue. Meanwhile, a 2% decline in North America revenue was offset by a 14% increase in international revenue.

The Class C shares
UA,
+0.09%
shot up 6.8% in premarket trading, which puts them on track to open at the highest price seen during regular-sessions hours since May 5, 2022. The Class A shares
UAA,
-0.08%
jumped 6.9%.

Gross margin contracted by 6.5 percentage points, due primarily to higher promotions, sales mix impacts and the negative impact of currency fluctuations.

For fiscal 2023, the company raised its adjusted EPS guidance range to 52 cents to 56 cents from 44 cents to 48 cents, but kept its revenue growth guidance at a low single-digit percentage range. The FactSet consensus for EPS was 46 cents, and the FactSet revenue consensus of $5.86 billion implied 2.7% growth.

The Class C shares have soared 53.5% over the past three months through Tuesday, while the S&P 500
SPX,
+1.29%
has gained 8.8%.

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February 8, 2023
Barron’s Stock Picks Had a Good Week. Tesla and Generac Outperformed.

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Tesla shares surged 22% in the past week, making it one of the top performers in a portfolio of stocks recommended by Barron’s.

Eric Thayer/Bloomberg

A portfolio of stocks picked by Barron’s has enjoyed a rally in the past week, as the market anticipates the end of the Federal Reserve’s interest rate hikes. A buoyant performance from the auto industry also juiced the portfolio.

The entire stock market has enjoyed a gain in the past week. The S&P 500 is up about 3% in that span, including a pop in the last couple of days. Wednesday, the Fed announced a small interest rate hike, but markets interpreted Chairman Jerome Powell’s comments to mean that the end of rate increases is coming soon.

The rally has helped the average stock in the Barron’s portfolio post a 3.8% gain in the past week. The measure differs from a value-weighted index like the S&P 500, where stocks with bigger market capitalizations have bigger effects on the index.

Almost three quarters of 86 stocks in the Barron’s portfolio are up in the past week, with some of the winners posting mammoth gains. Top performers include
Generac
(GNRC),
PoolCorp
(POOL) and
Olaplex
(OLPX), which gained 15%, 14% and 19%, respectively in the past week.

Some stocks posted even larger gains.

Tesla
(TSLA) gained 22% since last Thursday’s close. In its fourth quarter of 2022 reported on Jan. 25, sales of $24.3 billion beat expectations for $24 billion, while earnings per share of $1.19 came in above estimates of $1.12. Wall Street is confident that, even with the company lowering prices as consumers feel the pain of higher rates, Tesla can keep boosting sales and profit growth. Analysts expect vehicle deliveries to grow 40% from a year earlier to almost 1.85 million in 2023, better than the 31% growth seen in the reported quarter.

“The key debates from here will be on whether vehicle deliveries can reaccelerate (we expect that they will especially starting in 2Q23),” writes
Goldman Sachs
analyst Mark Delaney.

Barron’s recommended Tesla stock on Jan. 6, arguing that the the worst of the company’s challenges—including delivery growth—are behind it. The stock is up 67% since then.

Lithia Motors
(LAD), a $7 billion by market capitalization auto dealer, has seen its stock rise 23% in the past week. It reports fourth-quarter earnings Feb 15, but the stock has risen as the picture for auto sales has improved. Tesla’s quarterly performance helped, but so did General Motors‘ (GM). The automating giant reported better-than-expected sales and EPS and said on its earnings call that 2023 will be a “strong year,” one in which analysts expect sales growth.

Barron’s recommended Lithia Motors in April 2022, arguing that the stock was cheap and that production constraints that held sales back would soon be a thing of the past. Since then, the stock is up about 4%.

Lucid Group
(LCID), a $20 billion electric vehicle and battery maker, is up 39% since last Thursday. Earnings are Feb. 22, but strong auto trends already have helped. Lucid, too, is expected to lower prices and aggressively grow deliveries. The stock got a pop late in January on speculation that Saudi Arabia’s Public Investment Fund could buy the rest of the company. The fund recently invested $1.5 billion and holds just over 60% of the company.

Unfortunately, Barron’s recommended shorting the stock in November, and it is up 17% since then.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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February 3, 2023
Hasbro plans to lay off 15% of workforce and warns of holiday-season loss

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Hasbro Inc. late Thursday said it plans to lay off about 15% of its workforce and warned Wall Street to brace for a quarterly loss and a drop in revenue after a disappointing holiday season.

Hasbro
HAS,
-0.50%
reported preliminary losses between $1 a share and 93 cents a share for its fourth quarter, and an adjusted loss of between $1.29 a share and $1.31 a share in the period.

That runs counter to FactSet consensus of an adjusted profit of $1.52 a share for the quarter.

The maker of My Little Pony, Baby Alive and other toy brands also reported preliminary fourth-quarter revenue of about $1.68 billion, down 17% year-over-year. That compares with FactSet consensus for revenue of $1.92 billion for the quarter.

Hasbro stock fell more than 8% in the extended session after ending the regular trading day down 0.5%.

Hasbro’s “consumer-products business underperformed in the fourth quarter against the backdrop of a challenging holiday consumer environment,” despite “strong growth” for digital gaming and other areas of the company, Chief Executive Chris Cocks said in a statement.

Several retailers have posted lower-than-expected fourth-quarter sales as concerns about the economy simmer. Layoffs have also been widespread, with International Business Machines Corp.
IBM,
-4.48%
and SAP
SAP,
-1.77%
among the latest announcing cuts.

The global job cuts will start in the next few weeks, Hasbro said. The toy maker employed 6,640 people worldwide as of December 2021, according to its most recent annual filing with securities regulators.

Hasbro said that the layoffs and “ongoing systems and supply-chain investments” will keep the company on track to hit its goal of between $250 million and $300 million in cost savings by the end of 2025.

Until then, however, 2022 and “particularly” the fourth quarter were a “a challenging moment for Hasbro,” the company said.

Earlier this month, analysts at BMO said they expected Hasbro’s holiday-season sales were likely among “the weakest in the North American toy industry.”

Hasbro’s stock has fallen about 29% in the last 12 months, compared with a decline of around 7% for the S&P 500 index
SPX,
+1.10%.

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January 26, 2023
Cheap? Maybe. But These Stocks Have Been Dead Money for Decades

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Cheesecake Factory appears to be “running the same play,” wrote J.P. Morgan analyst John Ivankoe in a recent restaurant industry outlook. I don’t think he meant it as a compliment—the stock, he noted, trades where it did in 2004, adjusted for splits.

Why the long stall-out? My first thought was that maybe hitting the mall for a hypercaloric sit-down meal off a menu the size of a Gutenberg Bible has fallen out of favor over the years. But no: Sales have bounced back and then some from the Covid pandemic, with plenty of takeout business and dessert orders. The average

Cheesecake Factory

(ticker: CAKE) restaurant does more than $10 million in yearly sales, or twice as much as an Olive Garden.

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December 23, 2022

Tag: travel goods

What to expect

What analysts are saying

Tesla shares surged 22% in the past week, making it one of the top performers in a portfolio of stocks recommended by Barron’s.