Posts by Aaron Pressman
Facebook (FB) revealed stronger-than-expected second-quarter profits and sales after the close on Wednesday, but it wasn't enough to impress investors and the firm's shares fell slightly in extended trading.
The world's biggest social network said it earned adjusted profits of 50 cents a share, up 16% from a year ago and topping Wall Street analysts' average estimate by three cents. Sales, meanwhile, grew 39% to $4.04 billion, also exceeding estimates of $3.99 billion.
But the bet looks to be paying off, as Facebook's average monthly active users climbed 13% year-over-year to 1.49 billion and daily active users jumped 17% to 968 million. While many of its competitors are struggling with the shift from desktop computers to mobile phones, Facebook increased its daily mobile user base by 29% to 844 million.
CFO hits stock
It's been a breakout for the technology sector so far in this second-quarter earnings reporting season. The problem is just as many stocks are breaking out with disappointments as positive surprises. Instead of typical stock moves of one or two percent, tech companies have been lighting up the market with huge swings. Google (GOOGL) jumped 16%, equal to $65 billion in market cap, the day after its report, Amazon (AMZN) gained 10% and Netflix (NFLX) rose 18%.
Motorola introduced an upgraded line of smartphones on Tuesday but the real news wasn't the hardware. More significantly, Motorola made clear it plans to bring its low-price, direct sales business model that has worked so well in Brazil to the U.S. market. The new three-phone lineup starts with a flagship device, dubbed the Moto X Style, with a 5.7-inch screen and all the requisite bells and whistles of leading phones from Apple (AAPL), Samsung Electronics (005930.KS) and LG. That phone will sell online for $400. But it's the bottom of the new lineup, the low-end $180 Moto G, that may have the most impact. Prior versions of the G have topped the sales charts in Brazil over the past few years. The phone defines "good enough" with a 5-inch screen that would have been among the best on the market in 2012 or 2013, a decent camera and the same Google (GOOGL) Android operating system that runs on all the high-end models. This year's model is also waterproof, protecting the phone from spills, rainstorms and even a short dunk in the pool. In Brazil, consumers snapped up the Moto G via online sales to connect to inexpensive service plans. Motorola is hoping the same strategy will work with U.S. consumers and plans a big web sales push for the unlocked phone, which can then be used on almost any carrier, including cheaper prepaid services. "It is the ultimate democratization," Jeff Miller, Motorola vice president and head of North American phone sales, says in an interview. "It puts choice in the hands of the consumer and allows them to switch carrier to carrier if they choose." It's not a pure-play strategy. The higher-end Moto X Style will also be available online. And along with the major online push, a few U.S. carriers including Sprint (S) and U.S. Cellular (USM) will carry the Moto G, Miller says.
Aaron Pressman at Yahoo Finance 3 days ago
T-Mobile (TMUS) offered good news for its customers who are also big fans of Apple (AAPL) with the latest twists in its "Uncarrier" campaign on Tuesday. The mobile carrier announced that customers will be able to listen to Apple's new music service without the streaming songs counting against their monthly data allowance. That makes Apple Music among the best known of the nearly three dozen streaming services in T-Mobile's "Music Freedom" program, which already include Spotify, Pandora (P) and Google Music (GOOGL). And customers participating in T-Mobile's frequent phone upgrade plan, Jump on Demand, got a guarantee that they'll be able to switch from a current iPhone to a new phone Apple releases later this year without increasing their monthly payment. T-Mobile last month revamped the Jump on Demand program, adding a $15-per-month option to buy an iPhone, about half what other carriers typically charge. A customer who ordered an iPhone 6 under the $15 plan will be able to trade it in for a newer model from Apple without any activation fee or other additional charges, T-Mobile said. CEO John Legere has made catering to iPhone lovers a top priority since he took over in 2012 and brought T-Mobile out of a tailspin following its failed merger with larger rival AT&T (T). Lately, Legere has increased the frequency of new offers in his Uncarrier campaign to shake up the mobile market, three weeks ago slashing the cost of calling to and from Canada and Mexico, for example. He started back in March 2013 by eliminating the two-year contracts that the industry had used to lock in customers.
Aaron Pressman at Yahoo Finance 7 days ago
Apple (AAPL) CEO Tim Cook, an industrial engineering major in college, has worked in the computer industry for his entire career, including long stints at Compaq and IBM. But this week, Cook put on another hat, offering extensive economic commentary on the Chinese stock market and the fate of the country's growing middle class. To gauge how he did, we asked a handful of China experts to evaluate Cook's comments, which come as Apple is enjoying incredible growth in China.
Apple reported sales there of $13.2 billion last quarter, up 112% from a year ago, and operating profit of $5.1 billion, up 147% from a year ago. Fully 50% of all of Apple's revenue growth and 61% of the increase in operating income came from China in the company's current fiscal year, which started last October. And it's not just luck -- Cook has been adding stores in China at a furious pace while also adding features, such as gold-colored devices and larger-screened phones, that Chinese consumers crave.
What Cook missed
Aaron Pressman at Yahoo Finance 8 days ago
Update : On Friday morning, Amazon shares are trading up 22% to an all-time high of $588.
Amazon (AMZN) shares zoomed higher in extended trading on Thursday after the online retailer posted second-quarter results that widely beat Wall Street's expectations.
The acceleration of growth at Amazon comes just as competition is increasing. Wal-Mart has said it plans to spend billions of dollars to try and catch Amazon, Macy's (M) is bolstering rapid delivery service and upstart Jet.com opened for business this week with a $100 million marketing campaign.
Earnings reports have been a boon to Amazon shareholders this year. Amazon shares closed up 14% in January after it reported better than-expected-results for the fourth quarter of 2014 and captured another 14% gain in April after reporting surprisingly good first quarter results.
Apple (AAPL) posted fiscal third-quarter profits and sales that topped analysts' estimates, but the iPhone-maker's current-quarter revenue outlook disappointed investors. The world's biggest technology company said it earned $1.85 a share, beating estimates by four cents, for the three months ended June 27. Sales of $49.6 billion, up 33% from a year earlier, also topped views of $49.4 billion. However, Apple's current-quarter revenue outlook of $49 billion to $51 billion, came in on the low end of the FactSet Research Systems consensus of $50.9 billion. Apple said it sold 47.5 million iPhones during the quarter, essentially matching estimates. Meanwhile, Cupertino, Calif-based Apple disclosed iPad sales of 10.9 million units, and Mac sales of 4.8 million units, both coming in close to Wall Street forecasts.
Apple shares, which had gained 19% so far this year, tumbled some 7% in extended action.
The Internet offers personalized news, personalized playlists and, now, personalized prices. That's the promise of the new online shopping destination Jet.com, which opens to the public on Tuesday. Dreamed up by former Wall Streeter Marc Lore and backed by $225 million from investors, Jet offers millions of items for sale at its web site, from toilet paper to laptops, just like competitors Amazon (AMZN) and Walmart (WMT). But Lore promises Jet will sell its merchandise at prices 10% or more below those competitors to consumers who pay a $50 annual membership fee, bringing the warehouse club model online. While competitors focus on faster shipping, media offerings and better service, Jet is focusing on lower prices. "There are certainly people out there willing to pay a premium for higher service," Lore says. "The greater opportunity is for people wanting to save money." And shopping at Jet is nothing like shopping at any other e-commerce portal. At Jet, each choice a consumer makes instantly changes the prices of thousands of other items. Place one item in the Jet app's shopping cart -- say, a bottle of Tide detergent -- and the prices of all sorts of other items start tumbling in an animated display reminiscent of a Vegas slot machine. Jet's prices start low, Lore says, because the company is making all its profit from the annual membership fees, not from the usual mark-up on every item for sale. And the added savings in the real-time price cuts come from encouraging consumers to buy items that can be shipped together, a little bonus for improving the retailer's logistical efficiency. Customers can also save by choosing to pay with a debit card instead of a credit card or by agreeing to forgo the right to return -- both choices, again, lowering costs for the retailer. It's all enabled by software that's very different from the programs underlying other big retail sites. Written by former Wall Street and hedge fund programmers, Jet's site runs more like a vast stock exchange than a digital shopping mall. To reset prices on a customer-by-customer basis in real time can require processing billions of transactions at a time. The core programming engine can make billions of calculations per second "continually trying to find the best permutations of offers for the consumer," says chief technology officer Mike Hanrahan. It's analogous in some ways to programs that seek to match buy and sell orders among thousands of traders in bond and stock markets. The number of calculations would quickly overwhelm a standard e-commerce platform and generates even more volume than some of the most complex real-time trading systems on Wall Street, which deal with thousands of securities, not millions of items for sale, he says.
"The Three Amigos"? "The Good, the Bad and the Ugly"? What movie title will be the operative metaphor later today after Apple (AAPL), Microsoft (MSFT) and Yahoo (YHOO) report earnings? Ahead of the news, investors clearly view Apple on the upswing, Microsoft wavering between success and failure and Yahoo, which owns Yahoo Finance, still in a "prove you can dance" mode. That's largely a reflection of how well each company has made the transition to the increasingly mobile and cloud-based tech markets over the past few years. The three high-profile reports follow some fireworks in the tech sector last week. Shares of Netflix (NFLX) jumped 18% to an all-time high after the leading online video service added more than 3 million new subscribers in the second quarter. And Google (GOOGL) tacked on an astounding $65 billion in market value after it showed greater discipline around expenses and beat analyst expectations for both profit and sales.
Aaron Pressman at Yahoo Finance 11 days ago
IBM's (IBM) on-again, off-again recovery effort slipped into reverse after the company posted mixed second-quarter results. IBM's shares, previously up 8% this year, lost 5% in late trading. The Armonk, NY-based tech behemoth revealed adjusted profits of $3.84 a share, beating expectations of $3.79 a share. Revenues, meanwhile, came in at $20.8 billion, trailing estimates of $20.9 billion. That represented a 14% drop from last year, the 13th-consecutive quarterly decline for sales at IBM; though excluding divested business units and the weakening of the dollar, sales would have been down only 1%, IBM said. All of IBM's major units posted a decline in revenue. But IBM said cloud revenue, which has been touted as a major future line of business for the firm, jumped more than 70% adjusting for currency and divested businesses. Cloud revenue over the past 12 months totaled $8.7 billion, or about 10% of the company's total revenue over that period, CFO Martin Schroeter said on a call with analysts.
"We've said from the beginning that this will take some time," the CFO said.