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The AT&T store at Brickell City Centre is first in Florida to carry the Magic Leap One Creator Edition, Magic Leap's first product to go to market since the Plantation-based spatial computing company launched in 2011. The store at 701 S. Miami Ave. in downtown Miami's financial district is one of just 10 stores in the U.S. to stock the device as part of an exclusive agreement between Magic Leap and the telecommunications giant (NYSE: T). Five additional stores in the U.S., including locations in Los Angeles and San Diego, also recently added Magic Leap One to their inventories.
(Bloomberg) -- Netflix Inc. shocked investors by reporting a drop in U.S. customers and much slower growth overseas, raising fears that the streaming giant is losing momentum just as competitors prepare to pounce.The shares plunged as much as 12% to $320.30 in New York Thursday, tumbling toward the worst one-day drop in three years, after the company reported a loss of 130,000 customers in the U.S. Netflix blamed higher prices and a weak slate of TV shows. It signed up 2.8 million subscribers internationally in the period, roughly half what the company predicted.“Netflix has a difficult road ahead, with looming competition and the removal of popular content,” said EMarketer Inc. analyst Eric Haggstrom. But a stronger lineup of new shows in the current quarter could help attract former subscribers, he said.The quarter represents the biggest black eye for Netflix since 2011, when the company split its DVD-by-mail business from its streaming business. That move raised prices for its customers, and resulted in the loss of more than 800,000 subscribers in the U.S. The company had planned to call the DVD service Qwikster, but it backpedaled on the plan after investors and customers scoffed at the idea.Netflix said the miss is a one-time blip rather than a long-term problem. The second quarter has typically been its weakest time of year: The company missed its forecast during the period in three of the past four years.Netflix looks to add 7 million subscribers in the current quarter, thanks in part to the return of top shows “Stranger Things” and “Orange Is the New Black.”“Our position is excellent,” Chief Executive Officer Reed Hastings said during a videoconference call Wednesday. “We’re building amazing capacity for content. Our product has never been in better shape.”Several analysts agreed that the second-quarter disappointment should be only a temporary hiccup for Netflix. Investors should “aggressively buy the stock” on weakness, especially below $325 a share, Loop Capital said.Heavy SpendingFor now, the second-quarter shortfall is renewing investor concern about the company’s heavy program spending and low profitability. Netflix shelled out more than $3 billion on programming in the quarter and another $600 million to market its shows. The company spent $594 million more than it took in and will need to raise money to fund programming.Investors had been forgiving about the spending and the debt -- so long as customers grew at record rates. But the loss of subscribers in the U.S. was the first since the Qwikster debacle, and it suggests Netflix may be running into price resistance or the limits of the addressable domestic market. The company has forecast it can reach as much as 90 million customers in the U.S., compared with 60.1 million currently.Overseas SlowdownInternational results flagged too, with the company missing its own forecast of 4.7 million new subscribers. Europe, Latin America and Asia have been the primary drivers of Netflix’s customer acquisition in recent years, and growth must be sustained if the company is to justify its high valuation.Netflix is introducing a cheaper, mobile-only package in India to attract customers in a big market with price-sensitive customers.Analysts expect the company to have a blockbuster second half because of a heavy release schedule that includes a new season of “The Crown” and movies by directors Martin Scorsese and Michael Bay. Even after the slowdown last quarter, Netflix still thinks it can have its best year of customer growth in 2019.But competition is coming. Walt Disney Co. and Apple Inc. plan to introduce streaming services this year, while offerings from Comcast Corp. and AT&T Inc. arrive in 2020. Those services may not steal users from Netflix, but they will make future growth harder, according to Michael Pachter, an analyst with Wedbush Securities.Just a Preview?“We saw a preview of next year with this quarter,” Pachter said in an interview with Bloomberg Television. “Next year, they’ll have a couple quarters where they’ll lose subscribers.”Another challenge: Competitors are taking back rights to programs that have been popular on Netflix, including “Friends” and “The Office,” to use for their own services. That will force Netflix to rely even more on its original productions.Those efforts have largely been successful. Its shows just earned 117 nominations for the 2019 Emmy awards. But reruns of old shows still constitute the majority of viewing.The slowdown in users overshadowed the company’s quarterly financial results. Earnings for the second quarter fell to 60 cents a share, but beat analysts’ estimates of 56 cents. Sales grew 26% to $4.92 billion, compared with projections of $4.93 billion.The stock had been up 35% for the year at the close of regular trading, nearly double the gain of the S&P 500. The decline spread to related stocks such as Roku Inc., which makes set-top boxes that deliver the streaming service. Its shares fell as much as 2.5%.(Updates shares, headline, scope of decline)To contact the reporter on this story: Lucas Shaw in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, Rob GolumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
AT&T's (T) 5G capabilities and Microsoft's Azure cloud facilitate exceptional solutions for mutual customers, and are likely to shape the future of media and communications.
(Bloomberg Opinion) -- The TV-network giants went through ratings hell. It’s time for Netflix’s own version of that. After the market closed on Wednesday, Netflix Inc. reported that it lost 126,000 U.S. streaming customers during the second quarter, which appears to be the first time it’s ever done so. Global membership growth was also well short of management’s own expectations, with 2.7 million net sign-ups versus an anticipated 5 million. The company blamed its uninspiring results on subscription price increases and a less-enticing mix of movies and TV series. While it signaled that “more typical growth” and better content is in store, shares of Netflix sold off 12%, erasing $17 billion from its market value. This marks a turning point in how investors view the future of Netflix vis-a-vis its biggest emerging threats, Walt Disney Co. and AT&T Inc. In recent years, the popularity of Netflix has been a chief reason for the accelerated drop in cable subscriptions and viewers tuning out traditional live TV. As investors were entranced by the video-streaming app’s rapid growth and awarded the company an absurdly rich valuation, companies such as Disney and Time Warner (now called WarnerMedia, a unit of AT&T) were punished by shareholders for their audience shrinkage.Those media giants’ audiences are still shrinking (see next chart), and their businesses still rely on TV commercials and cable fees to drive profit. But they have managed to change the narrative so that more attention is paid to their own streaming opportunities. Nov. 12 is the launch date for Disney+, which Disney plans to bundle with ESPN+ and Hulu for fans who want all three services. Shortly thereafter, AT&T’s WarnerMedia will introduce HBO Max, a souped-up version of the HBO app that will contain Turner network programs and Warner Bros. films. Given the relatively low price of Disney+ at $6.99 a month and the quality of Disney and HBO/Warner content, both products have the potential to lure a considerable number of streamers away from Netflix.(1)This means Netflix investors will become even more obsessed with its quarterly subscriber count. They’ll also want more real data as far as how many people are watching Netflix’s costly originals – much in the way investors have picked apart the traditional media companies’ Nielsen viewership ratings. By now you’ve heard that “Friends” is moving to AT&T’s HBO Max next year, and that Comcast Corp.’s NBCUniversal is reclaiming “The Office” in 2021. Those are the most-watched shows on Netflix, so their expiration dates create a sense of foreboding.As my colleague Shira Ovide alluded to Wednesday, Netflix may be drifting too far from what it made it so attractive in the first place: being a constant bazaar of binge-able video entertainment. By blaming its own content slate for last quarter’s weak showing, Netflix is saying that it’s not all that different from HBO, which is dependent on a select few hit programs and goes through lulls when there aren’t new episodes. I’ve written that Netflix has the benefit of already being the “base” streaming service for many people, but that could change if Netflix becomes less of a one-stop shop and other services seem to offer more bang for your buck. Disney+ launch day is just four months away. And the closer we get to D-Day, the more skittish Netflix shareholders will be. Cable-network operators know all too well what that’s like. (1) Apple TV+ is also coming later this year to challenge Netflix.To contact the author of this story: Tara Lachapelle at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering deals, Berkshire Hathaway Inc., media and telecommunications. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Ericsson (ERIC) second-quarter 2019 earnings miss by a penny, while AT&T (T) collaborates with IBM to facilitate diverse businesses to harness edge connections and edge computing capabilities.
Netflix (NFLX) adds 2.7 million subscribers in the second quarter of 2019, much less than management's expectation of 5 million.
Early on Wednesday, Microsoft (MSFT) signed a multiyear deal to offer cloud-computing services to AT&T; (T). The deal is a major win for Microsoft.
As approval for T-Mobile US Inc.’s deal with Sprint Corp. looms over the wireless industry, fellow carrier AT&T Inc. will show of the impact of its own mega-deal when the company reports second-quarter results next Wednesday after the closing bell.
Netflix Hits Growth Wall Apparently, there aren’t an infinite number of people in the world who want to subscribe to Netflix (NASDAQ:NFLX). The streaming giant passed the 150 million subscriber mark, but missed forecasts for new memberships, adding only 2.7 million new subscribers last quarter. It was only about half of what analysts were expecting. […]The post Market Morning: Netflix Hits Wall, Instagram Hides Likes, Iran Smolders Over Trump appeared first on Market Exclusive.
(Bloomberg) -- International Business Machines Corp. shares slipped after executives were tight-lipped about the company’s $34 billion Red Hat acquisition and how it will help growth in cloud computing.The deal closed last week and IBM reported quarterly results on Wednesday. Analysts tuned into a conference call to glean fresh details on the impact of adding Red Hat’s open-source software to IBM’s current offerings. But Chief Financial Officer Jim Kavanaugh declined to answer any questions on Red Hat, saying the company will share an updated financial forecast at its annual investor briefing on Aug. 2.“Everyone is looking forward to this investor update," Edward Jones analyst Logan Purk said. “It’s paramount that IBM really nails that."Second-quarter revenue fell 4.2 percent to $19.2 billion, slightly beating the average analyst estimate. It was the fourth consecutive quarter of revenue declines for the Armonk, New York-based company. The shares declined 1.5% in extended trading.After lagging in the cloud market for more than a decade, IBM is pegging its future to a hybrid cloud strategy that will allow it to offer services on both private and rival public clouds. Chief Executive Officer Ginni Rometty paid a rich premium for Red Hat in order to help the 108-year-old company catch up with cloud market leaders Amazon.com Inc. and Microsoft Corp. The deal officially closed last week, so Red Hat’s contribution hasn’t shown up in IBM’s quarterly financial reports yet.Rometty has touted the Red Hat deal, which was announced in October, as a “game changer” for IBM, claiming it will reset the entire cloud landscape. IBM has estimated only 20% of enterprise applications have made the shift to cloud so far and Rometty believes the company is in prime position to conquer the remaining market.This quarter’s results are significant because they represent the last clean read of IBM’s trajectory before the integration of Red Hat, Sanford C. Bernstein analysts Toni Sacconaghi and Corry Wang wrote in a note before the results were released.Revenue in the global technology services unit, which includes cloud infrastructure and technology support, was $6.8 billion, down 6.7%, from a year earlier. The division shrank by the same amount in the previous quarter.The drop was the result of IBM ending some unprofitable businesses, Kavanaugh said. "We will see improvements of those numbers as we get into the second half," he added. Technology services is IBM’s biggest business unit, pulling in almost 40% of total sales.Earnings excluding some costs were $3.17 a share in the three months ending June 30, higher than the $3.08 average Wall Street estimate. For the full fiscal year, IBM stuck to a forecast of at least $13.90 a share.Big Blue has reported shrinking revenue growth since 2012. There was a modest and temporary reprieve in early 2018, but the slight uptick in sales stemmed from its legacy mainframe computers, rather than newer technologies like artificial intelligence, and cloud computing. In the second quarter, IBM reported revenue growth of 3.2% in cloud and cognitive solutions, stronger than in the previous quarter.IBM’s lackluster sales are due to a cannibalization of its legacy technology and data centers, Wedbush Securities Inc. analyst Moshe Katri said in an interview before the results were released. While the company has made significant strides toward new technologies like cloud computing, these services are capital and labor light, Katri said. “It’s time to grow that business and make it really count for overall top-line growth,” he said.The future of IBM is hybrid cloud, said Ian Campbell, chief executive officer of Nucleus Research. “But the biggest challenge is they are very late to the cloud party,” he said. Amazon Web Services and Microsoft Azure have dominated the public cloud space for years and IBM, once a tech titan, is considered small-fry in comparison. “Cloud is the make or break for IBM, but nobody even knows they’re there," Campbell said.On Tuesday, IBM announced that AT&T Inc. would be shifting its internal software applications to the IBM cloud in a multi-year agreement. This is mutually beneficial for both companies, Campbell said. “But it feels like two B-list celebrities announcing an engagement in the hopes of becoming an A-lister,” he added. “This is not going to move the needle."To contact the reporter on this story: Olivia Carville in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Molly Schuetz, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(NFLX) just saw its first decline in paid U.S. subscribers since 2011. During the quarter, its paid subscriber base in the U.S. went from 60.2 million to 60.1 million. The slight drop in Netflix’s U.S. subscriber base, combined with fewer-than expected international adds in the second quarter, sent the company’s stock (ticker: NFLX) tumbling 12% in after-hours trading Wednesday.
The telecommunications and media company has struck a deal with Microsoft that aims to bolster both firms, according to a statement on its website. The deal also seeks to strengthen AT&T’s effort to become a “public cloud first” company by migrating most non-network workloads to the public cloud by 2024.
LOS ANGELES, July 17 (Reuters) - "Gossip Girl," the show that became a youth culture phenomenon with its trend-setting fashion and chronicling of the romantic lives of elite New York teens, is on its way back to television, this time in a new series for upcoming streaming service HBO Max. HBO Max, owned by WarnerMedia, said on Tuesday it had ordered a new, 10-episode series that will be set eight years after "Gossip Girl" ended its original run in 2012, and will follow a new generation of private school kids. There was no word on casting or whether any of the original stars, including Blake Lively, Penn Badgely, Chace Crawford and Leighton Meester, will return.
(Bloomberg) -- Netflix Inc.’s earnings should help answer a key question for the streaming giant: whether customers are willing to pay more in an increasingly competitive market.After boosting prices in markets around the world, the company will deliver its second-quarter results on Wednesday afternoon. Analysts don’t expect much growth at home -- they’re predicting a mere 309,240 subscriber additions in the U.S. on average -- but the hope is that the increases and more users overseas will let Netflix sustain the expansion investors have come to expect.“Recent price increases in multiple countries should result in revenue acceleration starting this quarter,” Citigroup Inc. analyst Mark May said in a research note.Wall Street is projecting revenue of $4.93 billion for the period, up 26%. Analysts also will be closely watching the growth in average revenue per user, international profitability, domestic streaming contribution margins and user engagement.Netflix is the dominant paid video streaming service, but it has reason to shore up its position right now. Walt Disney Co., AT&T Inc.’s WarnerMedia and Comcast Corp.’s NBCUniversal are all racing to deliver their own online services, ushering in a new era of intense competition.Against that backdrop, Netflix is building its presence overseas. The company is expected to report the addition of 4.75 million subscribers internationally in the second quarter, according to analyst data compiled by Bloomberg.Shares in the company have risen 36% this year, nearly double the gain of the S&P 500. But it’s still unclear how many customers globally are willing to pay for its product. Greg Peters, the company’s chief product officer, has hinted at the need for a lower-priced subscription tier for users with less disposable income.Read more: The ‘Stranger Things’ hunt for a billion-dollar franchiseSunTrust analyst Matthew Thornton views investor sentiment as neutral-to-cautious heading into earnings, particularly with the stock down as much as 1.2% intraday. But Netflix’s June content slate should lift some spirits as the bank has seen increased web searches for original series like “When They See Us” and “Black Mirror,” Thornton told clients in a note.Things should get more interesting for Netflix in the second half. On the plus side, the Los Gatos, California-based company will get a boost from new seasons of “Stranger Things” and “Orange Is the New Black.” Earlier this month, “Stranger Things” got off to a record start, with 40 million household accounts watching in the first four days of the new season.But Disney’s highly anticipated $6.99-a-month streaming service, called Disney+, arrives in November. Though no one is expecting a large-scale defection from Netflix to Disney+, it should shake up the industry.What Bloomberg Intelligence Says:The price increases should accelerate 2Q average revenue per unit and revenue gains, even as operating margin isn’t expected to improve until 2H with a 13% target for the full year.-- Geetha Ranganathan, senior media analyst-- Click here for the researchJust the Numbers2Q streaming paid net change estimate +5.06 million (Bloomberg MODL data)2Q U.S. streaming paid net change estimate +309,240 2Q international streaming paid net change estimate +4.75 million2Q revenue est. $4.93 billion (range $4.73 billion to $4.98 billion) 2Q GAAP EPS est. 56c (range 52c to 65c)3Q revenue estimate $5.23 billion (range $4.89 billion to $5.52 billion)3Q GAAP EPS estimate $1.03 (range 63c to $1.39)Data32 buys, nine holds, four sells; average price target $398.57 Shares rose after six of prior 12 earnings announcements GAAP EPS beat estimates in nine of past 12 quarters To see deep estimates in this story NFLX US Equity MODLTimingEarnings release expected 4 p.m. (New York time) July 17Conference call website; also follow along on our live blog(Adds SunTrust commentary in eighth paragraph, updates share move and estimates.)\--With assistance from Karen Lin.To contact the reporter on this story: Kamaron Leach in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Nick Turner, Rob GolumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
From a capital appreciation standpoint, Exxon Mobil (NYSE:XOM) stock has been a disappointment. Over the last decade, the XOM stock price has gained 12.5%. During that period, Exxon Mobil stock has badly lagged the S&P 500, which has returned a sizzling 223%.Source: Shutterstock But for investors focused on income, XOM actually hasn't been a terrible play. Exxon Mobil's dividends have more than doubled from a total of $1.66 per share in 2009 to what should be $3.48 in 2019. Investors' total return from Exxon Mobil stock has averaged 4.3% per year. * 8 Penny Stocks That Have Fallen From Grace That's still disappointing, since the S&P 500 has returned almost 15% annually, including dividends. But it's not terrible in an environment in which U.S. Treasuries have yielded less than 3% most of the time.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWe're still in that environment, with the 10-year Treasury yielding just 2.1%.It's true that buying a stock just for its yield can be very dangerous, as previous income darlings like General Electric (NYSE:GE), Kraft Heinz (NASDAQ:KHC), and Anheuser-Busch InBev (NYSE:BUD) all have cut their dividends recently.But Exxon Mobil doesn't have the debt problem those companies did (and still do) have. And while XOM stock has exposure to crude oil prices, it also uses a hedge to protect its profits. As a result, XOM stock price probably won't fall below $70 for long. And that makes XOM stock, currently at $75.50, an interesting play for income-focused investors in general and value-oriented, income-focused investors in particular. Why $70 Is a Key Level for XOM Stock PriceXOM hiked its quarterly dividend to $0.87 in May. That, in turn, suggests that investors are receiving $3.48 per share of XOM stock annually. And so, if the XOM stock price reaches $69.60, the stock would offer a yield of exactly 5%.It's difficult to see Exxon Mobil stock consistently yielding more than 5% for a few reasons. First, that type of yield is noticeable and usually not offered by relatively safe stocks. Of the Dow Jones Industrial Average stocks, only Dow (NYSE:DOW) and IBM (NYSE:IBM) offer higher yields. Both companies have real challenges (Dow is facing cyclical pressure and IBM has long-running growth problems).In the S&P 500, there are 35 components with higher yields. All have warts, among them AT&T (NYSE:T) and its debt load and Altria (NYSE:MO) which is facing concerns about long-term demand for its products.The second reason is that, historically, XOM stock has hardly ever yielded 5%. Its yield peaked at 5.5% during the 1987 market crash and touched 5% a few times through the early 1990s.But that was a very dark time in the crude oil markets, which had crashed after their early 1980s boom. Meanwhile, interest rates were much, much higher; investors could get 7% to 9% yields from10-year Treasuries.Without that alternative, a 5% yield from XOM stock is going to look very attractive. Indeed, in late May, as XOM and other oil stocks sold off, XOM stock bottomed just above $70. A bounce in crude prices helped, but it's likely that at least some investors saw the yield nearing 5% and pounced. Exxon Mobil Stock Is Safer Than It AppearsOf course, the question is whether Exxon Mobil stock really is safe. A 5% yield - or even a 4% yield - is attractive in this market. But what happens when crude prices plunge?The answer is that XOM's earnings will decline, but in a mostly manageable fashion. As I've written before, Exxon Mobil's "downstream'" operations - notably in refining - and its chemicals business provide an internal hedge. That's why XOM stock actually is a poor play on oil prices. But it's also why XOM stock didn't fall that far when the shale bust hit in 2016 - and why the company was relatively unscathed during the fourth quarter of 2018, which was disastrous for many oil and gas companies.If oil prices rise, XOM's upstream business will thrive and its downstream business will take a hit. When oil prices fall, the reverse is (usually) true. Despite this hedge, the XOM stock price is boosted by higher crude prices, as seen in 2014 when XOM stock hit an all-time high. But even amid a plunge in prices two years later, Exxon Mobil's dividend continued to rise,.XOM stock isn't risk-free. But Exxon's earnings easily cover the current dividend of XOM stock. The odds of XOM executing a GE-style dividend cut are slim, even with crude and natural gas prices relatively low. And this is an environment where, as I noted just last week, investors usually have to stretch for yield. If XOM is yielding 5% and 10-year Treasuries have a 2.1% yield, many investors are going to buy XOM stock. The TradeFor income investors, then, XOM looks reasonably attractive at $75.50. Its valuation is reasonable, at 14.4 times analysts' average forward earnings estimate. And XOM still looks poised to deliver further growth, as its CEO, Darren Wood, last year set a target of doubling the company's earnings by 2025.For traders, there's an intriguing option trade to be made as well. A bull put spread at $70 (selling the $70 put and buying a lower-priced put for protection) can offer double-digit returns or better, depending on the expiration date. That's essentially a bet that the XOM stock price won't be under $70 at expiration, which seems a nice bet to make at the moment.But there are some risks facing XOM stock at the moment. The U.S. presidential election could pressure XOM stock if a "green" Democrat was to win or even starts to gain momentum. A plunge in oil prices is another risk: Exxon Mobil does have hedges, but XOM stock still fell when crude collapsed in 2016.But there's risk everywhere when the market is at all-time highs, particularly for income investors. Getting a 4%+ yield from Exxon Mobil stock is one of the better risk-reward options out there at the moment. And that's precisely the point: investors aren't going to let a yield above 4% last for long. XOM stock isn't going to be the biggest gainer in the market over the next six months or the next three years. But, at the right price, it's an attractive dividend play.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Why $70 Looks Like a Floor for Exxon Stock appeared first on InvestorPlace.