Amazon Misses on Earnings, Apple Beats but Trades Lower
Amazon AMZN put out Q1 earnings per share well below forecasts: $5.01 per share missed the $6.36 estimate by a mile. Revenues for the quarter came in at $75.45 billion, which surpassed expectations of $74.36 billion. North America revenue brought $46.1 billion, International had $19.1 billion and Amazon Web Services (AWS) posted $10.2 billion in revenues for the quarter, at a year-over-year growth rate of 33%.
This is a pretty standard-issue report for Amazon, who famously during its vast growth period cared not at all to meet or beat earnings estimates. This is the third quarter of the last four where Amazon has come up short on the bottom line. Revenue guidance for Q2 is in the range of $75-81 billion, as the “stay at home” aspect of the coronavirus pandemic has led to an increase of Amazon merchandise orders. Speaking of coronavirus, CEO Jeff Bezos said the company intends to spend $4 billion on COVID-19 expenses, including protections for their packing and delivery workforces, who deal directly with the risk of infection.
Shares fell more than 6% upon the earnings release, as analysts viewed the comparable cloud-based businesses of Microsoft and Google outperforming that of AWS in the quarter. Amazon shares had been up 12% year to date, and 50% over the past two years. Free cash flow is down for the trailing 12 months, as well. But as late-market traders buoy the stock a bit, it’s clear that the company stands to gain long-term, and today’s selling looks like little more than a minor correction. For more on AMZN's earnings, click here.
Apple AAPL shares were up immediately following its fiscal Q2 earnings release after Thursday’s close. Earnings of $2.55 per share easily zoomed past the $2.09 in the Zacks consensus, while $58.3 billion was well ahead of the $53.67 billion expected. Gross margin in the quarter came in at 38.4%, with iPhone sales down 7% in the quarter to 28.96 billion units, offset by a big upsurge in Services, to $13.35 billion. The company announced a $50 billion share buyback program and set its quarterly dividend up to 82 cents per share.
The company did not give guidance for fiscal Q3, but did take note of a steep fall-off in China iPhone sales in February, with sales coming back admirably in the months since. CEO Tim Cook says he’s optimistic about the pace of recovery from pandemic conditions in the U.S. during the coming months. Apple may also find itself with growing Mac and iPad sales in the coming quarters, as “work from home” initiatives continue.
Gilead Sciences GILD, the pharmaceutical company behind COVID-19 treatment hopeful remdesivir, topped expectations on both top and bottom lines: $1.68 per share outpaced expectations by a solid dime, while revenues of $5.55 billion beat the $5.41 billion consensus. The company reported $200 million in sales increases related to pandemic trends, mostly in the U.S., and this is before remdesivir is even on the market.
The company’s HIV franchise brought in $4.1 billion for the quarter, which was a little light of estimates. The company also put its guidance on hold, as it reportedly spends $50 million on expenses related to the manufacture and distribution on remdesivir. These costs “could be material” in future quarters, as the company insists on making the potential COVID-19 treatment “accessible and affordable.” For more on GILD's earnings, click here.
Amgen AMGN has also put out quarterly numbers, also beating consensus expectations. Earnings of $4.17 per share on $6.16 billion in revenues surpassed the $3.70 per share and $6.04 billion analysts were looking for. Product sales rose 12% in the quarter year over year, while the biotech major reaffirmed fiscal year guidance. For more on AMGN's earnings, click here.
Finally, Visa’s V fiscal Q2 numbers have also come out, with yet another beat on top and bottom lines. The credit card major reported $1.39 per share for a beat of 4 cents, while revenues of $5.85 billion swooped past expectations of $5.75 billion. A total of $35 billion in transactions were processed in the quarter. Visa has never missed an earnings estimate since the company’s IPO in 2008. The company refrained from giving forward guidance.
For more on V's earnings, click here.
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