All is not well at Tesla. On Thursday, its stock price fell to $166.99, its lowest since January, 2014. After Elon Musk silenced skeptics by delivering a new quarterly record and reaching the company's target of 50,000 EV sales in 2015, this drop may come as a shock to investors. But Tesla's share price may point to a failing in Musk's strategy – the much-hyped Model X.
When Musk launched the Model X last September, a lot of people lost their minds. The SUV had been anticipated for three years, so Tesla was careful to roll it out with as much fanfare as possible. Those falcon wing doors. That air filtration system. Each Model X feature was more fantastic than the last, and that's exactly where Tesla went wrong.
恭喜发财 Chinese New Year and Year of Monkey
Earnings: Hasbro, Yelp, 21st Century Fox, Loews, Diamond Offshore, Owens-Illionois, Owens and Minor
Earnings: Wendy's, Disney, First Data, Panera Bread, Western Union, Solar City, Wellcare Health, Regeneron, Viacom, Spirit Airlines, Coca-Cola, Sanofi
6 a.m.: NFIB survey
10 a.m.: Wholesale trade; JOLTs
1 p.m.: 3-year note auction
Earnings: Time Warner, Cisco Systems, Twitter, Whole Foods, Tesla Motors, Humana, Sealed Air, Owens Corning, Nissan, Pioneer Natural Resources, iRobot, Flowers Foods, Rayonier, Zynga
10 a.m.: Fed Chair Janet Yellen testifies before House Committee on Financial Services
1 p.m.: 10-year note auction
1:30 p.m.: San Francisco Fed John Williams on health and the economy
2 p.m.: Federal budget
Earnings: PepsiCo, Kellogg, Nokia, Molson Coors, Time Inc, Groupon, Pandora, Zillow, Teva Pharma, Borg Warner, Advance Auto Parts, CBS, KKR, FireEye, AIG, Activision Blizzard
8:30 a.m.: Initial claims
10 a.m.: Fed Chair Janet Yellen testifies before Senate Banking Committee
1 p.m.: 30-year bond auction
Earnings: Red Robin Gourmet Burgers, Calpine, Buckeye Partners, Interpublic, Ventas, Brookfield Asset Management
8:30 a.m.: Retail sales; import prices
10 a.m.: Consumer sentiment; business inventories; New York Fed President William Dudley speaks on household debt and credit
Sentiment: Strong Buy
What to watch next week 02/01 to 02/05
Earnings: Alphabet, Aetna, Ryanair, Sysco, Anadarko Petroleum, Cardinal Health, Mattel, Leggett and Platt, Rent-A-Center, Tesoro, Aflac, Cabot, Hain Celestial
8:30 a.m. Personal income
9:45 a.m. Manufacturing PMI
10 a.m. ISM manufacturing; construction spending
1 p.m. Fed Vice Chair Stanley Fischer at CFR, New York
2 p.m. Senior loan officer survey
Earnings: Exxon Mobil, BP, LVMH, UPS, Pfizer, UBS, Chipotle, Gilead Sciences, Archer Daniels Midland, Yahoo, Royal Carribbean, Nintendo, Michael Kors, Dow Chemical, Kimco Realty, Match Group, Equity Residential, IAC/Interactive, Church and Dwight, Sirius XM
Monthly vehicle sales
1 p.m. Kansas City Fed President Esther George on the economy
Earnings: General Motors, Comcast, GlaxoSmithKline, Merck, Mondelez, Alexion Pharma, Performance Food, Buffalo Wild Wings, Yum Brands, Shutterfly, GoPro, MetLife, Marathon Petroleum, Becton Dickinson, Humana, Southern Co, International Paper, ManpowerGroup, Timken, Take Two Interactive, Suncor, Boston Properties, CBOE
8:15 a.m. ADP employment
9:45 a.m. Services PMI
10 a.m. ISM nonmanufacturing
Earnings: Royal Dutch Shell, ConocoPhillips, Occidental Petroleum, Clorox, Credit Suisse, Cummins, Delphi Automotive, Ralph Lauren, Cigna, Statoil, AstraZeneca, LinkedIn, Tableau Software, Virtu Financial, Madison Square Garden, Netgear, Beazer Homes, Dunkin Brands, NY Times, News Corp, Lions Gate
8:30 a.m. Initial claims; productivity and costs
10 a.m. Factory orders
5 p.m. Cleveland Fed President Loretta Mester on economy, policy
Earnings: BNP Paribas, Nippon Telegraph, Estee Lauder, Toyota Motors, Tyson Foods, Moody's, Weyerhaeuser, Aon, CME Group, Ametek
8:30 a.m. Employment report; international trade
3 p.m. Consumer credit
Sentiment: Strong Buy
International Business Machines Corp. CEO Virginia Rometty is getting a $4.5 million performance bonus for 2015, despite the computer maker's ongoing financial struggles.
Ms. Rometty's total earnings for the year won't be clear until IBM discloses the value of certain equity grants, but her bonus was $900,000 more than the $3.6 million she earned last year. The IBM CEO's base pay for 2016 remains unchanged at $1.6 million, with $13.3 million in long-term incentive stock awards, the company said Thursday in a filing with the Securities and Exchange Commission.
Revenues at IBM have dropped for 15 straight quarters and the company has lowered profit expectations three times since late 2014. IBM shares declined more than 15% in 2015.
IBM has struggled as the company's core hardware, software, and services businesses have shrunk in the face of a changing climate in corporate IT. Since taking the helm in early 2012, Ms. Rometty has focused on next-generation businesses, such as data analytics and security. She has also moved IBM out of its low-margin Intel-based server business and paid Globalfoundries Inc. $1.5 billion to take over its money-losing semiconductor operations.
On a call with analysts last week, IBM CFO Martin Schroeter lowered the company's profit guidance for 2016, but said the company was "pleased with the progress that we made again this year in the transformation of our business."
To analysts and shareholders, however, IBM's slide cannot stop quickly enough. In a research note last week, Sanford Bernstein & Co. analyst Toni Sacconaghi noted, "the company's tone on its conference call was surprisingly (perhaps worrisomely) upbeat."
Last year, IBM awarded Rometty a $3.6 million bonus and a 6.7% raise in base compensation. That boosted her total compensation by 38.5% to $19.3 million, despite a 12.4% drop in shareholder return.
In 2013, Ms. Rometty and other senior managers at IBM chose to forego their annual bonus because of the company's poor performance.
Stalling revenue raises an existential question for Apple Inc.: Does the iPhone maker need to move down market to restart growth?
Apple rose to become the most profitable and valuable company in the world by selling consumer electronics at premium prices. The iPhone sold for an average $691 in the fourth quarter of 2015, roughly three times the $231 average selling price in 2015 of a phone using Alphabet Inc.'s Android operating system, according to researcher Statista.
But iPhone sales scarcely grew in the fourth quarter, and are projected to decline in the current quarter, for the first time since the phone was introduced in 2007. That prompted questions to Chief Executive Tim Cook from analysts on a conference call Tuesday about lowering prices.
Mr. Cook doesn't agree. "I don't see us deviating from that approach," he said. "We don't design to a certain price point. We design a great product and we make it priced at a great value."
The question will be in the spotlight soon. Apple is expected to unveil a new 4-inch iPhone in the first half of this year, according to people familiar with the matter. The new phone will be the same size as the iPhone 5S, and is expected to replace it, adding a faster processor and the capability to use Apple Pay, the company's wireless payment service.
The iPhone 5S, introduced in 2013, is now Apple's low-end model, starting at $450. It is $100 cheaper than the iPhone 6, which was introduced in 2014, $200 cheaper than last year's iPhone 6S, and $300 cheaper than the large-screen iPhone 6S Plus. However, at $450, it is still about twice as expensive as the average Android phone.
It isn't clear how Apple plans to price the new phone. An Apple spokeswoman declined to comment.
In the past, Apple has said used iPhones offer a lower-cost alternative for budget-conscious consumers. Apple doesn't get direct revenue from the sale of a used iPhone, but it benefits from an additional user who may spend on apps, movies or services.
The iPhone's price premium mattered less when telecom carriers subsidized the upfront cost of a new phone. However, as more carriers move away from subsidies, Apple's higher prices appear more stark.
Mark Moskowitz, a research analyst at Barclays, said the idea of lower prices is on the "top of everyone's mind" but cautioned against it. He said Apple faces tough comparisons to last year's booming sales of its first larger-screen models. But he said the iPhone franchise is extremely strong and the next version--the iPhone 7--is expected to arrive later this year.
Lowering prices may give the iPhone a "commodity feel," he said. "Psychologically, it's a tightrope."
Apple has long benefited from its strategy. It accounts for about 14% of the global smartphone market, according to Strategy Analytics, and yet gobbles up nearly all of the industry's profits. That is true in other Apple product categories, such as tablets and computers. In each, Apple has relatively low market share and an outsize portion of the industry's profits.
Even in emerging markets like China, Apple has thrived by sticking to the high-end of the market. The iPhone's hefty price tag helps it stand out from a fast-growing pack of low-cost smartphones and reinforces the view that it is higher quality.
Apple said it actually raised prices of certain products during the past quarter in some overseas markets to offset the impact of a strong dollar. Chief Financial Officer Luca Maestri said higher prices played a role in the company's forecast that revenue will decline.
"Inevitably over time, higher prices affect demand and so we're capturing that in our guidance," said Mr. Maestri.
For now, Apple seems focused on expanding revenue by other means. It wants to attach services to its base of iPhone users. For example, Apple said it has 10 million subscribers paying for its streaming music service. At $10 a month, Apple created a $1 billion-a-year business that didn't exist a year earlier.
It is also looking to shorten the time between new iPhone purchases. Apple introduced the iPhone upgrade program in September that effectively turns the iPhone into a subscription service for customers who want a new phone every year.
Earnings: MCD, KMB, DHI, BXS, GGG, HAL, STLD, ZION
Tuesday — First day of FOMC meeting
Earnings: AAPL, T, PG, COH, 3M, DD, JNJ, LMT, GLW, COF, FCX, DHR, SYK, VMW, XF, PH, Siemens, ETH, JNS, AKS, PII
9 a.m. S&P/Case-Shiller home prices; FHFA home prices
9:45 a.m. Market Services PMI
10 a.m. Consumer confidence
1 p.m. Two-year note auction
Earnings: BA, FB, EBAY, NVS, UTX, ANTM, STJ, GD, NSC, STT, FCAU, EMC, LPL, BAH, PYPL, QCOM, TSCO, VRTX, DFS, VAR, TXN, JNPR, MUR
10 a.m. New home sales
1 p.m. Five-year note auction
2 p.m. FOMC statement
Earnings: AMZN, MSFT, CAT, CELG, F, BX, V, HSY, NASDAQ OMX, UA, AMGN, BMY, BABA, EA, AN, JBLU, OSK, EMN, NOC, PHM, DB, DEO, JCI, HOG, BRBW, FLEX
8:30 a.m. Initial claims
8:30 a.m. Durable goods
10 a.m. Pending home sales; housing vacancies
1 p.m. Seven-year note auction
Earnings: CVX, MA, AAL, SNE, XRX, STX, HON, CL, APD, TYC, AOS, SPG, ALV, NWL
8:30 a.m. Real GDP Q4; international trade; employment cost index
9:45 a.m. Chicago PMI
10 a.m. Consumer sentiment
3:30 p.m. San Francisco Fed President John Williams on panel
Sentiment: Strong Buy
U.S. markets closed for the Martin Luther King holiday
Earnings: Bank of America, Morgan Stanley, Unilever, UnitedHealth, Charles Schwab, Comerica, IBM, Netflix, Linear Tech
10 a.m.: Housing market index
4 p.m.: Treasury international capital
Earnings: Goldman Sachs, F5 Networks, ASML Holdings, Northern Trust, TD Ameritrade, SLM, Texas Capital Bancshares, Raymond James, Commerce Bancshares, Xilinx
7 a.m.: Mortgage applications
8:30 a.m.: CPI
8:30 a.m.: Housing starts
Earnings: American Express, Travelers, Fifth Third, ETrade, Starbucks, Intuitive Surgical, Union Pacific, Verizon, Bank of NY Mellon, Alaska Air, Southwest Air, JB Hunt, KeyCorp, Canadian Pacific Railway, Schlumberger, People's United Financial
8:30 a.m.: Jobless claims
8:30 a.m.: Philadelphia Fed business outlook survey
10:30 a.m.: Natural gas inventories
11:00 a.m.: Oil inventories
4:30 p.m.: Fed balance sheet, monetary supply
Earnings: General Electric, Kansas City Southern, SunTrust, Legg Mason, Synchrony Financial, SAP
8:30 a.m.: Chicago Fed national activity index
9:45 a.m.: Manufacturing PMI
10 a.m.: Existing home sales
1 p.m.: Oil rig count
Sentiment: Strong Buy
Earnings: Alcoa, A. Schulman, Apollo Education
12:40 p.m.: Atlanta Fed President Dennis Lockhart
7:50 p.m.: Dallas Fed President Robert Kaplan
Earnings: CSX, Progress Software
5:30 a.m.: Fed Vice Chairman Stan Fischer on policy and rates
6 a.m.: NFIB survey
10 a.m.: JOLTs
1 p.m.: $24 billion three-year note auction
3:15 p.m.: Richmond Fed President Jeffrey Lacker
Earnings: Infosys, Supervalu
8 a.m.: Boston Fed President Eric Rosengren
12:30 p.m.: Chicago Fed President Charles Evans
1 p.m.: $21 billion 10-year note auction
2 p.m.: Federal budget, Beige book
Earnings: JPMorgan Chase, Intel, First Republic Bank, Shaw Comm
8:15 a.m.: St. Louis Fed President James Bullard
8:30 a.m.: Initial claims, import prices
1 p.m.: $13 billion 30-year bond auction
Earnings: BlackRock, Citigroup, US Bancorp, Wells Fargo, PNC Financial Services, Fastenal
8:30 a.m.: Retail sales, PPI, Empire state survey
9 a.m.: New York Fed President William Dudley
9:15 a.m.: Industrial production
10 a.m.: Consumer sentiment, business inventories
Sentiment: Strong Buy