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Thursday afternoon wraps up what has been a sober earnings season for the big tech giants.
The industry’s fortunes began to change last year after several years of profitable growth thanks to strong demand for tech equipment and services during the pandemic. We have dealt with increased competition and reduced demand.
Alphabet, Amazon and Apple are due to report earnings after Thursday’s bell, and we’ll scrutinize the results with all eyes to see how these challenges impacted the crucial December quarter. It will be.
Wall Street doesn’t seem to have high hopes.
What to expect: Apple is expected to record its first quarterly revenue decline since 2019. This is a decrease of 2% compared to the same period last year. Alphabet’s sales are likely to remain flat from last year, while Amazon’s sales are expected to grow just under 6% year-over-year. Earnings for all three companies are expected to decline from the same period last year, with Amazon suffering the steepest decline with his 40.6% decline.
Thursday’s report could be another sign that the tech giant is no longer as immune to economic change as it has been in years past. “Apple has proven more resilient than its big tech peers in the last quarter, but this quarter’s results will be tough,” Joshua Warner, a market analyst at investment firm StoneX, said in a statement earlier this week. It could be,” he said. Most of Amazon’s businesses “are finding it harder to grow in these tougher economic times, and Amazon has already warned that the holiday shopping season will deliver the slowest revenue growth on record. ing.
Alphabet, Amazon, and Apple follow Microsoft, Snap, and Meta, which were reported earlier this month. Microsoft posted lower-than-expected earnings and his 12% decline in earnings from the same period last year. Still, revenue from Microsoft’s main cloud computing division is up 22% year-over-year, providing investors with some good news. Snap has posted a significant net loss in the last three months of 2022 after stagnating revenue growth.
Meta had three consecutive quarters of declining revenues and significantly lower profits. Still, the company beat analysts’ expectations for revenue and delighted Wall Street with its promise to focus on “efficiency” rather than heavy investment. The company said it would lower its capital spending forecast for the next year, raise its share buyback plan by $40 billion, and announced that Facebook had reached the milestone of 2 billion daily active users.
But perhaps even more important than the December quarter’s results is the guidance companies are providing on whether the challenges of 2022 could carry into the new year.
There are already signs that their plight is far from over.
Shares of Snap plunged more than 14% on Wednesday. The company said so far its first-quarter sales were down about 7% year-on-year, and its earnings for the first three months of 2023 are expected to be down 2% to 10% year-on-year. Predicted.
Meta’s outlook was somewhat brighter — the social media giant said it expects first-quarter revenue to be between $26 billion and $28.5 billion.
Many big tech companies such as Microsoft, Google, Meta and Amazon have announced plans to lay off tens of thousands of employees in recent months. (So far Apple is the only major exception to this trend). Thursday’s report gives Amazon and Alphabet shareholders a glimpse at how quickly the tech giant will realize these cost-saving benefits and whether they will be enough to weather the uncertain period ahead. must.
“Don’t fight the Fed” may be meaningless at this point.
The Federal Reserve unanimously approved a quarter-point rate hike on Wednesday. This is his eighth consecutive rate hike. At a subsequent press conference, Fed Chairman Jerome Powell stressed that the Fed could do more to keep inflation in check and that rate hikes were likely to continue. Powell also said a rate cut is highly unlikely before the end of the year.
We had some good news. The Fed has slowed its pace of rate hikes, and policymakers have revealed some progress in their bitter fight against inflation. Still, rate hikes are usually bad news for traders because they eat into corporate profits.
Still, investors largely welcomed the Fed’s latest move on Wednesday. The Dow was up almost 10 points, essentially unchanged. The S&P 500 is up 1.1% for him and the Nasdaq Composite is up 2% for him.
It fell short of analysts’ expectations.
In a report shortly after the Fed’s announcement, Seema Shah, chief global strategist at Principal Asset Management, said: “The Fed has put a reality check on the market and reiterates that inflation has slowed but there is still a long way to go. He said. “The recent easing in financial conditions threatens to undermine much of their good work and raises fears that inflation will spike again later this year if the Fed fails to control market expectations.”
In fact, the market may have provided the Fed with a reality check.
what happened: The Federal Reserve was initially seen as sending a hawkish message by announcing that “continued increases” in interest rates were still appropriate. A press conference followed, and a sharp divergence between what the Fed thought and what Wall Street thought. Despite Powell’s message, traders still expect him to raise rates one more time.
EY-Parthenon chief economist Gregory Dako wrote in a note Wednesday afternoon that the easing in financial conditions today was “certainly not what the Fed was aiming for.” “I expect the cacophony of Fed speech over the next few weeks is meant to reorient the Fed’s message. ‘s tango will continue.”
Queen Bey is back. It’s official: Beyoncé’s Renaissance tour is underway.
But Beyhive members are gearing up for a difficult time to get tickets, especially following the failed ticket rollout by ticketmasters for Taylor Swift’s Eras tour, says my colleague Danielle. Wiener-Bronner reports.
Beyonce announced her tour on Wednesday, and Ticketmaster soon followed up with a blog post detailing how to get tickets for her show.
Those who want access to the North American leg of the tour will need to register as a Verified Fan, the post explains.
“Demand for this tour is expected to be high,” Page said. “If there is more demand than available tickets, a lottery-style selection process will determine which registered and verified Fans will receive a unique access code and will be placed on a waiting list. ‘, the company said, adding that access codes are not. Guarantee your ticket.
A word of warning: In mid-November, Ticketmaster’s site was overloaded as fans tried to buy advance tickets for Taylor Swift’s upcoming tour. Demand was so high that Ticketmaster eventually canceled general ticket sales. Swift was furious, calling the debacle “unbearable for me.”
The debacle prompted a hearing by the U.S. Senate Judiciary Committee designed to investigate the lack of competition in the ticketing industry. The hearing gave committee members and others an opportunity to showcase the power of Ticketmaster within the industry.
Ticket King: More than a decade ago, Ticketmaster merged with Live Nation, but according to court filings challenging the merger in 2010, Ticketmaster held more than 80% of the major venues. According to Joe Berchtold, his CFO who spoke about the business on NPR, Ticketmaster disputes this market share estimate, saying at best he’s a little over 30% of the concert market. .
Today, it effectively prevents fans and artists from buying and selling tickets through competitors, and has been widely criticized for holding too much power in the field.