Posts by Aaron Pressman
Amazon's (AMZN) stock price is shooting up on Friday to an all-time high, gaining 15% and adding over $25 billion to the company's market cap. While most of the headlines about Amazon's first-quarter earnings focused on the company's first revelations of revenue at its cloud unit, known as Amazon Web Services, the real reason for the stock's surge has much more to do with another, unrelated factor. The real shocker in Thursday night's Amazon earnings report was the company's guidance about its second quarter profitability. Last year, Amazon reported a $15 million loss in operating income for the second quarter and analysts expected about the same for this year -- and at a time that's typically weak for retailers. But on Thursday, Amazon said it would report operating income of $100 million to $650 million excluding stock compensation for this year's second quarter, much more than analysts anticipated. Canaccord Genuity analyst Michael Graham called it "the most optimistic margin guidance in recent memory." And that gets investors excited because every few years, Amazon eases up a bit on its invest-everything-for-growth strategy and demonstrates just how profitable it can be. After the new second-quarter forecast, investors seem to believe 2015 will be a "show me the money" kind of year.
Google (GOOGL) executives must be pretty tired of hearing analysts and reporters fret over the search giant's mobile advertising strategy. For a total change of pace on Thursday, they actually shed some light on the dynamics underlying the company's advertising business at a level of detail usually kept secret. For quarter after quarter, the amount of money Google reports receiving for each click on one of its ads, so-called cost-per-click, has been falling. In the first quarter, cost-per-click, or CPC dropped 7% overall, including a 13% decline on Google-owned websites. The overall CPC had declined 3% the prior quarter, and as much as 11% in one quarter since the beginning of 2013. Google's revenue has continued to grow only because the number of clicks has grown fast enough to outpace the decline in dollars brought in per click.
Ruth Porat, former CFO of Morgan Stanley (MS), will take over the job and represent Google on next quarter's conference call.
Jeff Bezos decided after nine years it was finally time to disclose the financial results of his pioneering cloud business, Amazon Web Services.
And so, along with its first quarter results, Amazon (AMZN) disclosed that the AWS unit had revenue of $1.6 billion, up 50% from last year, and operating income of $265 million, up a more modest 8% amid growing competition from Microsoft (MSFT), Google (GOOGL) and others. “Amazon Web Services is a $5 billion business and still growing fast — in fact it’s accelerating,” Bezos crowed, referring to the unit's annualized run rate, in a statement accompanying the release. Amazon shares jumped as much as 7% in volatile trading after the results came out on Thursday afternoon. That comes on top of gains of 26% so far this year, as investors are again excited about growth opportunities for the e-commerce giant.
Aaron Pressman at Yahoo Finance 3 days ago
As growth in the wireless phone business slows, AT&T (T) is rebooting its vast chain of retail stores to put more emphasis on other offerings, from wearables and tablets to video, connected car and home security services. The second-largest U.S. wireless company plans to open a series of larger flagship stores with dedicated areas for each segment along with a modernizing revamp of many of its current 2,000 outlets, Yahoo Finance has learned. “When you've got 120 million wireless customers, and they do like coming to see us, we want to show them all the things they can do to enhance their lives and enhance their service with us,” Glenn Lurie, AT&T’s chief executive of its mobility business, said in an interview at one of the first new flagships, which opened in Boston this month. “We want to be one of the best retailers in the world, period, not one of the best retailers in the wireless space,” Lurie says. “We want to be one of the best retailers anywhere.” In some ways, it’s an odd moment for AT&T to be doubling down on bricks-and-mortar retailing. After all, the changes to shopping behavior brought on by the smartphones AT&T sells have buried tech-oriented retail chains from Circuit City to RadioShack. Nationwide, retailers announced almost 5,500 store closures last year, up from fewer than 2,600 in 2013, according to a report last month from the Fung Business Intelligence Center. But AT&T and its wireless peers aren’t just selling low-margin tech gadgets. They’re also selling the much more profitable services needed to make those gadgets indispensible to consumers. “AT&T is very different than RadioShack,” says long-time retailing consultant Howard Davidowitz. “They’re selling you a contract, they’re selling you services. The store is the only chance they have to get the customer alone.” A new model store The new 9,000-square-foot, two-level store in Boston’s Back Bay neighborhood, only the second AT&T flagship opened so far, is a model for where the company plans to go. Sunlight streams in through two-story windows over large wooden display tables. Some are laden with the latest smartphones from Apple (AAPL) and Samsung, while others showcase smartwatches, fitness bands, tablets and music accessories. At a table topped by a red, white and gold electric guitar are a dozen different wireless speakers, ranging from a $49 Ion Party model to a $500 Harmon Kardon Onyx. Most of the gadgets are live and working, so customers can play with a device and get a feel for it before buying. Toward the back, amid comfy black and orange couches, is an area dedicated to showcasing AT&T’s "Digital Life" service, a home security and automation program. Customers can experience how they could unlock a front door or control lighting from an AT&T smartphone app. On the second floor, up a wooden staircase, are more private seating areas for wooing business customers.
Aaron Pressman at Yahoo Finance 3 days ago
The service will cost $20 per month for unlimited talk and texting plus $10 per gigabyte of data used. That's slightly less than the standard monthly pricing at T-Mobile (TMUS) or Sprint (S), but in line with discount plans offered by Walmart (WMT) and others. And the carriers offer cheaper plans for big data hogs than Fi does.
For instance, T-Mobile charges $70 for 5 GB of data, which would be the same as Fi, but $80 for a truly unlimited plan. So if you use 7 GB or more regularly, T-Mobile is cheaper.
The Fi service will also work over Wi-Fi links if cellular coverage isn't available.
Aaron Pressman at Yahoo Finance 5 days ago
It's not quite a turn around yet, but IBM (IBM) CEO Ginni Rometty finally had some decent results to crow about in the first quarter, or maybe more like adjusted decent results. At first glance, it was another down quarter for Big Blue, its 12th-consecutive quarter of declining revenue. Sales on continuing operations of $19.6 billion were down 12% from last year and missed analysts' forecasts of $19.7 billion, according to FactSet Research Systems. But, excluding businesses IBM is divesting and adjusting for an 8% drop due to foreign currency moves, the company's sales were actually flat from a year ago. And after almost three years of falling sales, even adjusted flat sales are an improvement.
" W e had a strong start to the year," Rometty said in statement, though for the second quarter in a row she skipped the company's call with analysts. "Our strategic imperatives growth rate accelerated, demonstrating the power of our offerings in these new opportunities and contributing to improved revenue performance."
Aaron Pressman at Yahoo Finance 10 days ago
Yahoo (YHOO) is getting more flexibility to run its search business under a modified deal with Microsoft (MSFT) announced on Thursday. Under the new agreement, Yahoo will gain the ability to work with other partners in search and also take greater control of ad sales on its own web sites. Shares of Microsoft and Yahoo, the parent of Yahoo Finance, were nearly unchanged after the deal was announced. Back in 2009, Yahoo signed a 10-year deal to let Microsoft's Bing provide search results for its customers on desktop PCs in return for giving Microsoft 12% of the advertising revenue generated. Even though the deal runs for five more years, Yahoo CEO Marissa Mayer has chafed under the terms, as Microsoft's search technology has lagged behind Google's (GOOGL) in its ability to monetize search advertising. With Yahoo's display advertising revenue plummeting, Mayer has been looking to increase revenue from search ads, particularly on mobile phones, which aren't covered by the Microsoft deal. Last year, she beat out Google, her former employer, to be the default search engine in the Netscape browser. Mayer has also said she plans to try to win the default position on Apple's (AAPL) iPhone away from Google, as well. “This renewed agreement opens up significant opportunities in our partnership that I’m very excited to explore," Mayer said in a statement. Microsoft CEO Satya Nadella sounded a little less excited. Microsoft will "look forward to building on what we’ve already accomplished together," Nadella said, touting the Yahoo partnership as "one example of the diverse partnerships we’ll continue to cultivate." Analysts said the new flexibility could help Yahoo in several positive, though modest, ways. Yahoo could now partner with other search providers, some of whom might be able to bring in more dollars per ad than Microsoft's Bing, Nomura analyst Anthony DiClemente said in a research note. "The news is a modest positive for Yahoo’s search business, given new flexibility to pursue additional monetization partners," he wrote. The deal also changed the way ad sales responsibilities will be split. Under the new deal, Yahoo gained the right to sell all kinds of ads for searches on its sites, giving Microsoft the same right on its sites. Previously, Yahoo sold ads to major advertisers, so-called premium clients, on all the sites combined, while Microsoft handled automated sales to smaller advertisers. "This will allow Yahoo better ability to serve all advertisers on its search platform, whereas previously, Yahoo was exclusive for premium advertisers on search only," DiClemente noted.
Aaron Pressman at Yahoo Finance 11 days ago
The amount of venture capital startup companies are raising from hedge funds, mutual funds and others beyond the traditional venture capital community is skyrocketing, fueling fears of another tech bubble.
While venture capitalists poured $11.3 billion into startups in the first quarter, up only 11% from a year ago, non-traditional funds invested $6.4 billion, a 167% increase, according to a report on Tuesday from CB Insights, which tracks the market. Two years ago, the outsiders contributed less than $1 billion. Hedge funds and mutual funds have been getting more involved in venture capital investing as fast-growing startups stay private longer. Some also blame the Federal Reserve's low interest rate policy, which may be prompting funds to take more risk to achieve acceptable returns.
Aaron Pressman at Yahoo Finance 13 days ago
Hedge fund Jana Partners' move to pressure Qualcomm (QCOM) into a break-up, disclosed by the Wall Street Journal on Monday, marks the latest step-up in the activist shareholder war on aging tech companies. Expect further escalation across the tech sector. San Diego-based chip maker Qualcomm looks like an obvious target for Jana, with its stock down 11% over the past year despite a cash hoard of nearly $18 billion and cash flow from operations of over $2.4 billion in the fourth quarter of 2014. Jana, which owns $2 billion worth of Qualcomm shares, says the company should spin off its semiconductor unit from its patent licensing business, cut costs, buy back more stock and generally follow the entire activist shareholder playbook. The same could be said about many of the older and now slower-growing tech stocks. Intel (INTC) had a fine 2014 but its shares have dropped 12% this year as the PC market slows. Shares of Cisco Systems (CSCO) and Oracle (ORCL) have done better, but the companies still may look like slower-moving, cash-heavy targets to activists. Hewlett-Packard (HPQ) and eBay (EBAY), Meg Whitman's current and former spots as CEO, have already agreed to splits.