Is Apple Stock A Buy After December-Quarter Earnings Miss?

guardianpub on February 13, 2023

Consumer electronics giant Apple (AAPL) has seen its sales lowered by supply constraints and weakening macroeconomic conditions, which have rocked Apple stock. Still, many investors might be wondering if AAPL stock is a buy right now.

Apple Stock News: iPhone 14 Sales

On Sept. 7, Apple introduced its third-generation 5G smartphones, the iPhone 14 series. It also debuted its Apple Watch Series 8 smartwatches and second-generation AirPods Pro wireless earbuds. Apple stock rose 0.9% on the news.

Analysts praised the innovative new devices but some worried that the premium products would be a tough sell in the current economic climate.

However, demand for the high-end iPhone 14 Pro models has been strong, while sales of the regular models have disappointed.

On Nov. 6, Apple warned that a Covid outbreak at a factory in China would limit the availability of iPhone 14 Pro and Pro Max handsets in the holiday season. The Foxconn-owned factory was “operating at significantly reduced capacity” because of Covid restrictions, Apple said. The factory later saw worker protests that turned violent, according to news reports.

On Feb. 2, Apple said the production disruptions significantly impacted its iPhone sales in the December quarter.

Apple Opportunities For Growth

With the iPhone business maturing, investors are wondering what the next big growth driver will be for Apple stock.

Recently, two businesses have given Apple’s sales and profits a boost: services and wearables.

In the December quarter, Apple’s services revenue rose 6% year over year to $20.77 billion. Meanwhile, its hardware sales declined 8% to $96.39 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.

In late October, Apple raised prices for the first time on its Apple Music and Apple TV+ services. It also hiked the price for its Apple One services bundle.

Meanwhile, Apple is facing antitrust scrutiny in the U.S., Europe and Asia for its App Store policies, including its 30% commission fee.

Apple Product Rumors Persist

Apple’s Wearables, Home and Accessories unit saw sales drop 8% to $13.5 billion in the December quarter amid product shortages. This unit includes wearables like the Apple Watch, AirPods wireless earbuds and Beats headphones. It also contains the Apple HomePod wireless speaker and other miscellaneous gadgets.

News leaks suggest that Apple will announce a headset for virtual reality and augmented reality in 2023. The computer headset could be a driver of Apple stock, analysts say.

Meanwhile, speculation continues that Apple is looking to make a self-driving electric car.

Apple Earnings: Miss and Guide Down

Late on Feb. 2, Apple missed Wall Street’s targets for its fiscal first quarter and guided lower for the current period. Still, Apple stock rose 2.4% in the next trading session.

Apple earned $1.88 a share on sales of $117.2 billion in its fiscal first quarter ended Dec. 31. Analysts polled by FactSet had expected earnings of $1.94 a share on sales of $121.4 billion. On a year-over-year basis, Apple earnings fell 10% while sales dropped 5%.

For the March quarter, Apple expects sales to decline about 5%, vs. Wall Street’s estimate for a drop of less than 1%.

In the December quarter, Apple’s iPhone revenue sank 8% to $65.8 billion. Wall Street was looking for $68 billion. Smartphones accounted for 56% of the company’s total sales in the period.

Meanwhile, Apple’s Mac computer sales tumbled 29% to $7.7 billion. However, Apple’s iPad business bucked the downtrend, growing 30% to $9.4 billion in the holiday quarter.

The company’s next earnings report won’t be until late April.

Apple Stock Retreats From Record High

In January 2022, Apple hit a market value of $3 trillion when its shares reached 182.86. It was the first company to reach a market capitalization of $3 trillion.

It notched a record high of 182.94 before pulling back. AAPL stock trended lower in the weeks that followed and it attempted to rally several times last year.

Apple’s Storied History

Apple has been an American success story several times over. First, it ignited the personal computer revolution in the 1970s with the Apple II. Then it reinvented the PC in the 1980s with the Macintosh.

Co-founder Steve Jobs returned to run Apple in 1997 and oversaw a winning streak of innovations that included the iMac, iPod, iTunes, iPhone, iPad and the App Store.

The biggest driver of Apple’s modern success is the iPhone. The game-changing smartphone, which debuted in 2007, sparked years of massive growth and created a loyal base of customers willing to buy Apple products and services.

Exclusive Apple Stock Ratings

After hitting its record high at the start of 2022, Apple stock pulled back as much as 32%.

AAPL stock has an IBD Relative Strength Rating of 37 out of 99. The Relative Strength Rating shows how a stock’s price performance stacks up against all other stocks over the last 52 weeks.

Apple stock has an IBD Composite Rating of 61 out of 99, according to the IBD Stock Checkup tool. IBD’s Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Also, Apple ranked No. 5 on IBD’s 2022 100 Best ESG Companies list. ESG is short for environmental, social and governance.

AAPL Stock Technical Analysis

For the past 58 weeks, AAPL stock has been consolidating with buy point of 183.04, according to IBD MarketSmith charts. It ended the regular session Feb. 10 at 151.01.

In a positive sign, Apple stock has been trading above its 50-day moving average line, as well as its 200-day line. Also, its relative strength line has been rising lately as it outperforms the S&P 500 this year.

Apple stock has an IBD Accumulation/Distribution Rating of A-, indicating institutional buying of shares.

Source: finance. yahoo.com

Question for ChatGPT: Who Wins, Microsoft or Alphabet?

guardianpub on February 10, 2023

For the first time in memory, Google’s search dominance is facing a legitimate threat. Let’s see what that means.

In a news item that almost seems like science fiction, Alphabet (GOOGL) lost over $100 billion in market capitalization on Wednesday due to a technical error. The stock fell 8% when the company’s new AI chatbot, Bard, shared incorrect information.

Does Wednesday’s selloff create an opportunity? Let’s go to the charts to find out.

Just a week ago, Alphabet’s chart was looking good. The stock had broken out of a bullish cup and handle formation (curved lines), and closed above its 200-day moving average (red) for the first time since April of last year.

After Wednesday’s flop, Alphabet is back below that key moving average, hovering at the breakout point of the cup and handle. The stock sold off on nearly triple its normal volume (arrow), Alphabet’s highest turnover since February. This is an indication of heavy institutional selling, and a warning that the stock could move lower.

Alphabet has a bigger problem than getting the bugs out of Bard. According to Statista, as of December 2022, Google dominated online search with an 84.08% market share. Microsoft’s Bing had only 8.95%.

Now that Bing is integrating ChatGPT, Google has a lot to lose. The successor to Microsoft’s often-derided, now-retired Internet Explorer browser is now a legitimate threat to siphon market share, along with ad dollars, from Google.

Why have chatbots become so important, so quickly? Unlike a search engine, which simply pulls information from the internet, a chatbot provides personalized results. Chatbots could make search engines like Google obsolete.

For example, a search for poetry on Google provides over 1.3 billion links in less than a second. A chatbot, on the other hand, can be instructed to create poems with specific style, tone, and content.

There are reports that in late December, Google declared “code red” in response to the suddenly ubiquitous ChatGPT, a chatbot created by OpenAI. OpenAI is a privately-held, San Francisco-based company that was funded in part by Elon Musk.

Earlier this month, in response to the sudden popularity of ChatGPT, Microsoft (MSFT) announced it was integrating the chatbot into its search engine, Bing. That was followed by this week’s introduction of Google’s AI product, called Bard.

Why did these companies adapt AI technology so quickly? Both Microsoft and Alphabet were faced with a threat that could undermine their search engines. Quick action was needed. Fast action can create results, but it also leads to mistakes, like the one Bard made on Wednesday.

Bottom line: For the first time in memory, Google’s search dominance is facing a legitimate threat. The stock’s suddenly discounted price may appear to be an opportunity, but heavy institutional selling is a warning that Alphabet could move lower before it finds its footing.

Source: finance.yahoo.com

Gigapresses – the giant die casts reshaping car manufacturing

guardianpub on February 10, 2023

By replacing around 60 welded components with a single module, gigantic aluminium die casting machines made by the likes of Tesla supplier IDRA Group are helping carmakers to simplify manufacturing and cut costs by up to 40% in some areas.

Tesla has pioneered the use of massive casting machines, also known as gigapresses, to make large single pieces of vehicle underbodies, streamline production and reduce the work of even robots.

This has helped it become the most profitable battery electric vehicle (BEV) maker.

Critics say the process poses quality and flexibility risks, as a single flaw can compromise a whole module, and make fixing more difficult if something goes wrong.

But with the industry struggling to preserve profit margins amid surging raw materials prices, carmakers including Toyota, General Motors, Hyundai, Volvo Cars and Chinese electric vehicle startup Nio are turning to companies like IDRA for help.

“The basic idea was to provide a technology that could simplify the car production process,” IDRA general manager Riccardo Ferrario told Reuters in an interview at the company’s headquarters in Travagliato, northern Italy.

Battery packs currently make up 25%-40% of the total cost of BEVs.

“You need to make the rest cost less,” Ferrario said.

Automakers using aluminium casting machines claim they can reduce investments needed to build chassis – a vehicle’s second most expensive component after the engine – by 40%, and the average cost of their parts by 30%, Ferrario said.

“It’s a way to eventually make BEVs something for all pockets,” he said.

IDRA, which was taken over by Chinese group LK Industries in 2008, has been developing gigapresses since 2016. Competitors of IDRA and LK include Buhler Group in Europe, Ube Corp. and Shibaura Machine in Japan, as well as Yizumi and Haitian in China.

GIGAPRESS 9,000

Metal and plastic die casting has been largely used in manufacturing, but its application to large aluminium underbodies in carmaking is relatively new.

The global aluminium die casting market was worth almost $73 billion last year and is projected to top $126 billion by 2032, according to an AlixPartners analysis based on Apollo Reports data.

Aluminium is prized for its light weight, and is also used for other car parts including engines. The average content of the metal in European produced cars rose 20% to 179 kilograms in the three years to 2019, and is expected to increase to almost 200 kilograms by 2025, a study commissioned by lobby group European Aluminium shows.

IDRA’s newest and biggest gigapress – the 9,000 – is the size of a small house and produces a clamping force of over 9,000 tons.

The company, which made 100 million euros ($108 million) in revenues in 2021, does not disclose its customers. But after it posted a video of the first Gigapress 9,000 ready for shipping, Tesla CEO Elon Musk said it was for his company’s new cybertruck.

Tesla already operates gigapresses in all its facilities, including in Gruenheide, near Berlin, where it says it can churn out a Model Y in 10 hours – about three times faster than electric cars built by competitors.

Ferrario said IDRA had contracts with three automakers and as many ‘Tier 1’ parts makers. South Korea’s Hyundai Motor is among them, sources familiar with the matter said.

Ralf Bechmann of manufacturing consultant EFESO said the benefits of die casting would push it “to be applied to an increasing number of new models of BEV vehicles, also by other manufacturers”.

Front and rear underbodies cast by gigapresses are now combined with battery packs to form a three-piece chassis for BEVs.

“I bet 80% of automakers will use gigapresses by 2035, at least for BEV cars based on new platforms,” Ferrario said. “But the real question is: will we need even bigger gigapresses?”

Yet not all automakers are convinced, and EFESO’s Bechmann cautioned that large module die casting required product design to be “super solid”.

“Fixing design flaws is much easier with a body made up of several small parts rather than a single module,” he said.

After initially considering die casting for its upcoming Trinity model, Volkswagen has backtracked, while BMW has never expressed an interest.

Ferrario said the auto industry tended to be conservative and that no one liked upending established processes, but he rejected idea that die casting posed a risk to jobs at carmakers, noting body-making was already highly automated.

“The real issue will be with businesses supplying those little parts replaced by our modules,” he said.

Source: finance.yahoo.com

Microsoft’s new Bing and Edge hands-on: Surprisingly well-integrated AI

guardianpub on February 8, 2023

The age of generative AI is upon us, and this week alone Google and Microsoft made major announcements around their respective products for the masses. While Google unveiled an “experimental conversational AI service” called Bard, Microsoft had a fuller slate of news to share at its event in Redmond, WA yesterday. Through a partnership with ChatGPT maker OpenAI, Microsoft is adding more advanced AI conversation models to power updates to Bing and Edge.

Bing improvements

In general, there are four new areas of change coming to Bing (and we’ll get to Edge later): Search, Answers, Chat and Create. The first update is the new search box. Instead of your typical long, one-line bar, there is now a box more similar to those on Twitter or Facebook that prompts you to ask Bing anything. The character limit is now 1,000. The idea is to make the process of looking for answers something more conversational — similar to Google’s approach for years now.

When you submit your query, results are now displayed a bit differently. On the left is a column with your typical “answers” just like how you see it on Bing now. On the right, however, is a box that explains how the system found those answers and also starts a chat. I initially thought this was similar to what Google does in its “About this search” panels, but I was wrong. This box is a home for the AI and fills up with text that appears in real time, complete with animation and a “Stop responding” button in case you don’t have the patience to see the AI’s explanation. In my time with the preview so far, these new features didn’t happen on my first few searches, but did appear subsequently.

Chat and create in Bing

The third and fourth parts are the more interesting updates. Chat, for example, is a new way you can get solutions to the problems you’re looking to solve. You can access the Chat page from the Bing results page by tapping the Chat button above the answers or by scrolling up (swiping down on touchscreens). When you’re there, you can continue the conversation about your ongoing search, or use the Broom icon next to the text input field to clean the slate.

This page is a more practical manifestation of the notion of an AI copilot — it’s basically ChatGPT or any other chat bot you may have interacted with while getting tech support from your bank or shopping website. But the results Bing’s Prometheus model has been able to return are definitely more impressive. The outputs it can return along with the inputs it can understand make it much more versatile and therefore more useful.

For example, you can tell it to create travel itineraries or meal plans with specific parameters and it’ll actually give you lists with what to do or make each day. The demos I saw included coming up with “3-day itinerary for Snoqualmie” or “vegetarian meal plan with chocolate included in the dessert” and each time Bing delivered the requested plans in plain, legible English that not only met the requirements but also cited its sources. It also didn’t take very long for the system to produce the results — we only had to wait between five and ten seconds on the demo Surface laptop. When the system is processing, you’ll also see the “Stop responding” button to give up waiting for results, just in case you’re running short on time.

I asked Bing to propose itineraries for a six day family trip to Los Angeles, which would have come in handy during my vacation last week. It took two attempts with different wording before I got the results I expected, but Bing got there. It suggested destinations and sights that my cousin also recommended, which is nice, though I have yet to closely scrutinize the program to see if it makes sense geographically and on timing.

I also used one of the suggested prompts in the preview to get Bing to create a 30-minute workout for me, focusing on arms and abs using no gym equipment and excluding situps. The resulting plan of several exercises, including three sets of 10 reps of dips, crunches and more all seemed sound. Bing pulled from various publications in generating this program and cited its sources as it churned out the words, meaning it was actually doing some work compiling instead of just regurgitating a single article.

Like other conversational assistants, Bing’s chat is capable of understanding context. In the demo, Saunders asked for spots to take photographs after first requesting a 3-day itinerary for Snoqualmie, and Bing replied with scenic locations in the same region. After my query about a 30-minute workout for abs and arms, I followed up with “how about an hour” and Bing was actually smart enough to follow up by telling me to add more exercises, suggested more things to do, as well as suggest I simply do the initial workout twice.

I did a lot of follow-up questions to other searches, and to list them all would take forever. Suffice to say that the conversations generally felt very natural and contextually rich, in a way that few other AI chatbots have achieved.

The Edge browser with an AI copilot built in

With the new Edge, a button on the top right will allow you to access the new Bing’s chat feature within your browser. But it goes beyond just answering your questions without having to leave the pages you’re browsing. Edge can help make sense of the sites you’re looking at and make research or multitasking much easier.

During its keynote yesterday, Microsoft showed how it was able to use Bing to summarize Gap Inc’s quarterly report and extract not only key takeaways but also financial highlights. When I opened the PDF from Gap’s investor relations page and asked Bing (in Edge) to give me the key takeaways, it told me about the company’s performance in digestible snippets. I then asked for “financial highlights” and the system gave me six bullet points listing the net sales, net loss, gross margin, operating loss, cash and cash equivalents and free cash flow. Each item listed the dollar amount as well as how that compared to last year’s performance.

What’s more impressive is that Edge can also find another company’s earnings report from this chat window, without having to open another tab, and compare the results. You can also then tell the browser to create a table analyzing the two companies side by side. The fact that this worked during my own testing of the new Edge left me very impressed, and I can already see myself using this to compare specs of new phones in future.

Finally, at least for this hands-on article today, I checked out the new Compose function, which you can use to come up with posts, emails or essays. I asked Bing to write an email for me to convince our video producer Brian Oh to come on this work trip to Microsoft in Seattle with me. There were several options to choose from for parameters like tone (funny, professional, casual, informational or enthusiastic), format (paragraph, email, blog post or ideas) and length (short, medium or long). At the bottom is a “Generate draft” button, which delivers the text in a box below it, under which is a button for you to “Add to site.” Clicking on that sends the generated words over to the website where your cursor is.

The resulting prose read like a human person wrote it, with proper grammar and punctuation (except in places where it would be more natural to ignore grammatical rules). I set the tone to “funny” and while some of the AI’s efforts at comedy were kind of cringe-worthy, it was fairly subtle. For example, at the end of a 4-paragraph letter extoling the virtues of Seattle and Microsoft, the system wrote “So, what do you say? Are you in or are you out? Please say yes, because I already booked your ticket and hotel room. Just kidding, I didn’t.”

That’s not my style but it’s definitely something a somewhat funny human might write. For anyone that’s ever played with ChatGPT, this will feel somewhat familiar. The integration into the browser, which allows for easy transferring of the AI-produced content into, say, emails and social media sites, makes things very convenient.

Source: finance.yahoo.com

Netflix says it ‘updated’ new password sharing policies that had users melting down

guardianpub on February 8, 2023

Netflix and chill (out), password sharers.

After intense backlash surrounding what appeared to be the first signs of the company’s upcoming password sharing crackdown, Netflix (NFLX) clarified no official announcements have been made outside of the current test countries.

“For a brief time last Tuesday, a help center article containing information that is only applicable to Chile, Costa Rica, and Peru, went live in other countries. We have since updated it,” a Netflix spokesperson told.

Last week’s updates appeared to show the company would require users to identify a “primary location” for all accounts that live within the same household. News which had users suggesting this would be a bridge too far, and threatening to leave the platform as a result.

Users would then need sign into the home Wi-Fi of the primary location at least once every 31 days to ensure their device is not blocked. Temporary codes would need to be used for traveling members, which would only remain valid for seven consecutive days

Netflix said it would use information such as IP addresses, device IDs, and account activity to determine whether a device signed into the account is connected to the primary location.

In a recent survey, investment firm Jefferies highlighted concerns surrounding the company’s crackdown on password sharing, particularly among the account freeloaders Netflix hopes to convert.

According to lead analyst Andrew Uerkwitz, about 62% of the 380 Netflix password borrowers surveyed said they would stop using Netflix once the crackdown takes effect.

Only 10% of those polled said they would move to create their own account for $9.99 a month, hinting password borrowers don’t see enough value in the platform. The survey also suggested competitors could greatly benefit from Netflix’s crackdown.

Some 35% of respondents said they can replace Netflix with another service, while another 31% added they don’t enjoy the content enough to justify paying for it.

When asked which platforms users would use more frequently if they eliminated Netflix, the top streaming alternatives included Amazon Prime Video (42%), Hulu (35%), and Disney+ (26%).

In its quarterly letter to shareholders published last month, Netflix said it would be intensifying its push to combat password sharing in Q1, although the streamer did not provide details on when exactly that would occur and what countries would be impacted.

“Later in Q1, we expect to start rolling out paid sharing more broadly. Today’s widespread account sharing (100M+ households) undermines our long term ability to invest in and improve Netflix, as well as build our business,” the company wrote.

Netflix’s password crackdown, coupled with its recently launched ad-supported tier, have been looked at as meaningful profitability drivers, especially as competition within the streaming space escalates: “As always, our north stars remain pleasing our members and building even greater profitability over time.”

Netflix reported subscriber net additions of 7.66 million in Q4, above company guidance for 4.5 million amid a slew of high-profile and record-breaking content releases, including “Glass Onion,” “Troll,” “All Quiet on the Western Front,” “My Name is Vendetta,” and “Wednesday.”

“The bottom line is there’s a massive amount of password sharing, particularly among affluent people,” told Jason Helfstein, head of internet research at Oppenheimer.

“We do think a good chunk of [Netflix] subscribers will probably pay more to keep certain members of their household, or let’s say their children who no longer live with them, on their plan,” he continued.

Helfstein, who described the crackdown as a “net positive” in the long term, added Netflix, “would not be doing this if they thought they would end up in a worse revenue situation.”

“This is a company that historically has prided itself on customer service, above all,” Helfstein said.

“The reality is people have taken advantage of it. Sharing your Netflix account with 20 other people is probably not what the company had in mind, [but] if people are reasonable and share this with five, six people in their family? I think it’s going to work out.”

Source: finance.yahoo.com

Institutional Traders Shifting Attention from Blockchain to AI: JP Morgan

guardianpub on February 6, 2023

More than half of the institutional traders surveyed by global financial services giant JP Morgan said that artificial intelligence and machine learning will be the most influential technology in shaping the future of trading over the next three years—cited four times more often than blockchain and distributed ledger technology.

JP Morgan’s e-Trading Edit report is now in its seventh year, the latest report drawn from a January survey of 835 institutional traders in 60 global markets. The annual assessment of trader sentiment spans several asset classes and is intended to reveal “upcoming trends and the most hotly debated topics.”

The tumultuous bear market in crypto—coupled with the recent consumer and commercial hype over accessible AI technology like ChatGPT—seems to have shifted the outlook of financial industry professionals. Last year, blockchain and distributed ledger technology tied for second with AI and machine learning with 25 percent of respondents declaring them key to the future. Mobile trading applications came in first, with 29 percent.

Now, AI dwarfs every other major category of technology, its 53% citation rate far and away ahead of API integration (14%) and blockchain (12%). The top 2022 technology, mobile apps, fell to 7%, along with quantum computing and natural language processing.

Why Is Crypto Twitter Obsessed with ChatGPT?

Tackling crypto specifically, JP Morgan found that 72% of traders “have no plans to trade crypto [or] digital coins,” with 14% predicting they plan to trade within five years.

Even so, respondents clearly felt that other players were bullish on the space.

“Crypto and digital coins, commodities, and credit are predicted to have the biggest increases in electronic trading volumes over the next year,” the report notes, with participants predicting 64 percent of their activity will be in the crypto space by 2024.

While the survey found traders were unanimous in their belief that electronic trading will continue to grow, they also expected rough weather ahead. When asked which potential developments will have the greatest impact on the markets in 2023, the top answers were recession risk (30%), inflation (26%), and geopolitical conflict (19%).

The e-Trading Edit report is only the latest of several studies and reports that JP Morgan has released in the past month relating to cryptocurrency and digital assets. Last week, the firm predicted “significant challenges” for Bitcoin and Ethereum and noted that Solana, Terra, and tokens were gaining traction in the world of decentralized finance (DeFi) and non-fungible tokens (NFTs).

JP Morgan also looked at the prospects for leading crypto exchange Coinbase last month, saying the upcoming Shanghai update for Ethereum “could usher in a new era of staking” for the firm.

Source: finance.yahoo.com

Alphabet disappoints on sales as ad business slips after pandemic run-up

guardianpub on February 3, 2023

Alphabet Inc on Thursday posted fourth-quarter profit and sales short of Wall Street expectations as Google’s advertising clients pulled back spending from a period of pandemic-led excess.

Executives of the search and advertising giant adopted a subdued tone on a call with investors, promising an extended period of belt-tightening, particularly on hiring, real estate costs and experimental projects that can take years to reach fruition.

Shares of Alphabet were down nearly 5% in after-hours trading, after losing about 40% of their value in 2022.

“We are committed to investing responsibly with great discipline and defining areas where we can operate more cost- effectively,” Chief Executive Sundar Pichai told analysts on a call to discuss the company’s results. That echoed comments from Meta Platforms Inc boss Mark Zuckerberg the previous day on cost efficiencies.

Shares of other tech companies Apple Inc and Amazon.com Inc also fell after they posted disappointing results on Thursday, wiping off gains after Facebook parent Meta on Wednesday boosted tech shares with news on cost cuts and a large buyback.

Gone was some of the exuberance of the pandemic when consumers flocked to the internet amid lockdowns and heightened interest in e-commerce and touchless deliveries.

Alphabet’s chief financial officer, Ruth Porat, promised a more measured approach for 2023 and a focus on “delivering sustainable financial value,” not necessarily a hallmark of Silicon Valley firms. “We’re focused on revenue upside as well as durable changes to the expense base.”

Advertisers, who contribute the bulk of Alphabet’s sales, have cut their budgets as rising inflation and interest rates fueled concern over consumer spending.

Pichai pointed to advertisers’ more modest spending and the impact of foreign exchange rates abroad as drags on Alphabet’s overall results.

He said artificial intelligence (AI) software will be an important focus for the company and that it plans to make its LaMDA chatbot software publicly available in the coming weeks.

LID ON COSTS

Mountain View, California-based Alphabet decided to cut 12,000 jobs last month, representing about 6% of its overall workforce, and said it was doubling down on AI. Across the company, Alphabet will “meaningfully” slow its pace of hiring this year, said Porat.

Alphabet, long a leader in AI, is facing competition from Microsoft Corp, which is reportedly looking to boost its stake in ChatGPT – a promising chatbot that answers queries with human-like responses.

“Despite being seen as one of the most insulated companies in the advertising space relative to peers, Alphabet’s poor quarter is the latest sign that worsening fundamentals and a tough macroeconomic environment are prompting advertisers to cut back on spending,” said Jesse Cohen, senior analyst at Investing.com.

Net income fell to $13.62 billion, or $1.05 per share, from $20.64 billion, or $1.53 per share, a year earlier. That was the sharpest decline for Alphabet in four quarters.

Adjusted profit of $1.05 per share fell short of an expected $1.18 per share, according to Refinitiv.

Revenue from Google advertising, which includes Search and YouTube, fell 3.6% to $59.04 billion. Total revenue rose 1% to $76.05 billion, its slowest growth ever barring a small decline in the second quarter of 2020. Analysts were expecting $76.53 billion.

Google is the world’s largest digital ad platform by market share, making it uniquely susceptible to fluctuations in online marketing spending. Its YouTube division has faced a surge in rival platforms, particularly TikTok, whose endless scroll of short video is drawing younger users away.

Alphabet’s Porat said the company’s total capital expenses this year will be in line with last year. As more of its employees work remotely and it consolidates staff, Alphabet expects to pare back its real estate expenses, which Porat said would result in a charge of roughly a half-billion dollars in this year’s first three months.

Revenue from YouTube ads, one of Alphabet’s most consistent money-makers, fell nearly 8% to $7.96 billion, well below the estimate of $8.25 billion, according to FactSet.

Cloud was a bright spot, however, with revenue growing 32% to $7.32 billion, but at its slowest pace since the company began disclosing the segment’s revenue numbers.

But there may be more pain ahead for Alphabet. Late last month, the Justice Department and eight states sued Google over what they said were anticompetitive practices in its digital ad sales. The company is facing multiple lawsuits, which, if successful, could cause it to be broken up.

Source: finance.yahoo.com

Fed’s interest-rate hikes make T-bills an attractive, safer investment

guardianpub on February 2, 2023

A short-term saver? Say thanks to the Federal Reserve.

One benefit of the Fed’s interest-rate hikes aimed at wresting control over inflation is that savers looking for a safe investment for a year or less can now get the best yields in ages from Treasury bills, or T-bills.

Savings rates have jumped from just about zero to more than 4% in the past 12 months on these short-term securities issued by the federal government. On Jan. 24, a one-year T-bill was yielding 4.7%, up from a rate of 0.57% a year ago. A six-month T-bill was at 4.82% on Jan. 23, compared with 0.36% last January, and the three-month T-bill was yielding 4.58%, up from 0.13%.

And as long as the Fed keeps interest rates high — which seems likely after Wednesday’s quarter-point hike — investing short-term money in T-bills has a certain drama-free appeal with modest returns.

While this is not a get rich quick scheme, “T-bills currently offer savers better yield than most online savings accounts and short-term [certificates of deposit],” told Ken Tumin, a senior industry analyst at LendingTree and founder of DepositAccounts.com.

What are T-bills

reasury bills — like i Bonds and Treasury inflation-protected securities, or TIPS — are issued by and backed by the U.S. government. I bonds, for example, pay interest for up to 30 years. T-bills are the ticket for people looking for short-term savings of up to a year.

Additionally, savers can reap tax savings on T-bills, which are exempt from state and local income tax.

“That can make a 4.6% yield equivalent to a 5% yield for a CD in a state with an income tax,” Tumin said.

How T-bills works

T-bills are sold at a discount to their face value; when the bill matures, your interest is the difference between what you paid and the T-bill’s face value. For example, if you bought a $1,000, one-year T-bill at a rate of 4%, you would shell out $960 upfront and receive $1,000 at the end of the year.

You must buy on auction dates, which occur weekly for all maturities, except the one-year T-bill, which is set for every four weeks. Most individual investors make a noncompetitive bid, which means you land the average yield set at auction. (Emergency funds might be best held in high-yield savings accounts.)

Want to sell before the maturity date? That can be “a bit of a hassle,” told Tricia Rosen, a financial planner and founder of Access Financial Plannin.

When you buy through TreasuryDirect — the government’s website — you must hold new Treasury marketable securities for at least 45 calendar days before transferring or selling them (even if it’s a four-week security). Interest is paid when the security reaches maturity.

You won’t pay a penalty or fee if you want to hop out early like you would if you withdrew from a CD early. However, you could possibly lose money, if the sale price of the T-bill is lower than the original purchase price, which you are guaranteed at maturity.

“For individual investors, Treasury bills may be better suited as a way to diversify your portfolio rather than a replacement for your emergency savings,” said Greg McBride, senior vice president and chief financial analyst at Bankrate.com. “If you had an unplanned expense and needed to sell prior to maturity, you wouldn’t be able to sell it on TreasuryDirect but would first have to transfer it to a bank, broker, or dealer.”

Where to purchase T-bills

You can buy newly issued Treasuries in terms ranging from four weeks to 52 weeks through your bank or brokerage, which may charge a commission. Or, you can buy them online for a minimum of $100 through the government’s TreasuryDirect program, with no commission.

Large firms, however, such as Charles Schwab, Fidelity, and Vanguard, do not charge a fee when you buy a T-bill. That said, the minimum order for a new-issue Treasury is typically $1,000 in face value when you purchase it via a brokerage. And if you want to purchase T-bills for individual retirement accounts (IRA) accounts, you must go through a broker. For those nearing retirement, these can be a smart place to set aside cash without the worry of what’s going to happen with the stock market.

“T-bills are paying a slightly higher rate than other short-term investments, and the Treasury Direct website is easier to navigate than it was a few months ago before they revamped it,” Rosen said. “So it’s a good idea for someone who is in a high tax state.”

Source: finance.yahoo.com

Car buyers face ‘inhibiting factors’ for EV adoption: Mazda USA CEO

guardianpub on February 2, 2023

Japanese automaker Mazda (7261.T) has a small, yet cult-like following here in the U.S. While fans of Mazda enjoy the driver-focused characteristics and sporty handling, there is one one area that the company is lagging: electrification.

Though the brand had a strong Q4 in North America—sales jumped around 40% versus a year ago—Mazda saw its overall sales dip around 12% for the year compared to 2021, partly because of supply chain issues. Mazda sold around 295,000 cars in North America last year, highlighting its small brand status in a region where GM (GM) sold nearly 10 times as many cars.

It’s why investing big time into fully electric vehicles has been so hard for Mazda, because of the billions of dollars needed for new platforms. It’s also why Mazda is leaning hard into its hybrid options, like it’s all new flagship SUV, the CX-90.

“So CX-90 launches with our most powerful engine ever in both gasoline mild hybrid and also plug-in hybrid forms – so the platform has only electrified powertrains,” says Mazda North America president & CEO Jeff Guyton in an intervie. “It really represents a big step forward in terms of the premium-ness of the Mazda brand, and we’re bringing that together with a premium experience in our new retail evolution showrooms across the country.”

The CX-90 is a big three-row, premium SUV, and as Guyton mentions, will only have “electrified” powertrains. In a country like the US where EV is growing every year, the question is this: why wasn’t the CX-90 given a fully-electric powertrain?

Guyton says it’s because Mazda’s customers haven’t been asking for that—yet.

“What we see happening right now is that customers are obviously quite interested in the journey of electrification, but there are also inhibiting factors because the customer experience for electric is, let’s say, it has growing pains right now,” Guyton says. “Whether you’re talking about charging, or cold weather, or hot weather, or electricity in California in the summertime, and so forth.”

Mazda currently has only one EV for sale in America, the midsize MX-30 EV which has a paltry 100 mile range, and is only sold in limited quantities in California. Mazda says a hybrid range-extending version of this car is coming out later this year, with the company’s first true EVs slated for 2025-2027 timeframe.

It’s all part of the company’s $10.6 billion investment into EV’s, which does sound like a decent sum of money, but pales in comparison with what giants like GM, Ford (F), and Volkswagen (Vow3.DE) are spending.

Guyton says the company’s plan to delay its EV rollout, and devote funding to hybrid powertrains, is the right answer for the current environment.

“I think there’s a lot of demand, there’s a lot of interest [in EVs], but the technology and the scenery around it in terms of charging and so forth is not really mature yet,” he says. “So we think that the customer experience right now suffers a bit, and that our formula can provide something more timely.”

Speaking of timely: Mazda investors will be hoping Guyton and the management team in Japan are right and haven’t waited too long to begin its EV transformation.

Source: finance.yahoo.com

Snap earnings: Stock plunges following Q4 results

guardianpub on February 1, 2023

Snap (SNAP) reported its Q4 2022 earnings on Jan. 31, meeting analysts’ expectations on revenue and user growth, but clocking a net loss and weak guidance for this year’s Q1.

Here are the key numbers that emerged from Snap’s report, as compared with Wall Street’s estimates:

Q4 Revenue: $1.3 billion actual versus $1.31 billion expected

Adjusted Earnings Per Share (EPS): 14 cents versus 11 cents expected

Daily Active Users (DAUs): 375 million versus 374.7 million expected

The company also reported a net loss of $288 million, a stark comparison to the net income of $23 million that Snap reported this time last year.

Looking ahead, Snap’s Q1 2023 revenue guidance suggests a decline “between -10% to -2% year-over-year.” However, that’s an internal forecast and the company declined to provide an official one for the third straight quarter. The Los Angeles-based company added that it expects to see its DAUs grow to between 382 million and 384 million in Q1 2023.

“We continue to face significant headwinds as we look to accelerate revenue growth, and we are making progress driving improved return on investment for advertisers and innovating to deepen the engagement of our community,” CEO Evan Spiegel said in a statement.

Snap stock plunged in after-hours trading by about 13%.

Snap’s 2022 ends with struggles that have dogged the company all year

Today’s results mark the end of a long 2022 for Snap. Even in a rough year for Big Tech as a whole, Snap’s year stood out as uniquely tough. The company’s shares tumbled around 80% throughout 2022, as it was rattled by slowed digital advertising, high inflation, and fast-growing competition from TikTok.

In August, Snap laid off 20% of its workforce, a move that affected 1,300 employees. The cuts were high-profile and included the axing its drone camera Pixy and Snap Originals, the exclusive short shows the company made with celebrities and influencers. Snap also shuffled its executive team around at the time.

The stakes were high for Snap today, as Wall Street’s grown increasingly skeptical of the company’s prospects. To that end, Snap has seen a number of downgrades recently, including from Citizens-owned JMP Securities and Jefferies.

Snap remains in the throes of the advertising slowdown and, if the company’s investor letter is anything to go by, they don’t expect that to let up anytime soon. Right now, advertising is Snap’s business. In Q4 2021, Snap said in SEC filings that “for the years ended December 31, 2021, 2020, and 2019, advertising revenue accounted for approximately 99%, 99%, and 98% of total revenue, respectively.”

Moving forward, look for Snap to tout and attempt to build efficiency in its advertising business.

“While we continued to face significant headwinds to our revenue growth in the quarter, we are optimistic about the improvements we are making to our direct response advertising platform and the early progress we have made improving return on advertising spend (ROAS) for our advertising partners,” Snap’s investor letter reads. “We believe that improving returns on advertising investments will enable us to continue to increase our share of wallet in this highly competitive environment.”

Source: finance.yahoo.com