After one of the worst years in Wall Street history, investors have some serious questions about the company. Many of us may answer or avoid these questions when the holidays resume and the accompanying predictions months or years ahead.
Three big names will hit the stage one afternoon in a row during the busiest week of the holiday season so far.
Microsoft
Microsoft MSFT
With a market capitalization of $737 billion last year, it was the third-largest S&P 500 company and announced plans to lay off about 10,000 employees this month. Thanks to the phenomenal growth of its Azure cloud computing service, the former Wall Street darling Microsoft has been forced to cut its bills after spending wastefully in his early COVID days. We are facing cutbacks in corporate spending on other products. 19 Pandemic.
First take: Big Tech’s layoffs aren’t as big as they seem
When the company announced the job cuts, Chief Executive Satya Nadella acknowledged that customers were cutting back, saying, “We’ve seen customers accelerate their digital spending during the pandemic, so we’re , they see optimizing their digital spending to do more with less. Expect to hear about it when Microsoft’s results are released on Tuesday afternoon.
A Mizuho analyst wrote: “More specifically, we hear that the level of optimization is increasing, which is partially offset by many organizations prioritizing digital transformation.”
Since October: The cloud boom is at its most intense yet, and investors are losing billions of dollars
As cloud growth slows, expect Microsoft to point out the technology’s next big buzzword: Artificial Intelligence, especially ChatGPT, is something Microsoft will invest heavily in and build into its offerings. Chatbot product developed by OpenAI. DA Davidson analyst Gil Luria wrote this month that Microsoft’s investment in OpenAI will help build more AI technology, including his search engine Bing.
Tesla Inc.
Tesla TSLA
The electric car maker’s shares ended their worst year ever with their worst quarter and month ever. It has started cutting prices in the U.S. and is eligible for more sales tax incentives, hoping to reinvigorate demand, which could lead to questions about its previously fat profit margins. .
Details: Tesla investors await clues on 2023 demand, board action and downside risks
For Tesla, which reports its fourth-quarter results on Wednesday, the results provide more context for Cybertruck production, which is now set to begin mid-year, demand in China, competition, and the impact of price cuts. Offers. His Edmunds, a car information website, said on Thursday that interest in the car has soared after Tesla decided to cut prices by up to 20% in the U.S. and Europe.
While these cuts look likely to hurt profits, Deutsche Bank analyst Emmanuel Rosner called it a “bold, aggressive move that will ensure Tesla’s sales volume increases.” “It puts traditional competitors and EVs in big trouble, and demonstrates Tesla’s considerable pricing power and cost advantage.” A survey by Wedbush analysts found that “76% of Chinese EV consumers are considering buying a Tesla in his 2023.” But Bernstein analyst Toni Sacconaghi said Tesla needs more low-cost electric car products that may not ship until 2025.
Tesla earnings preview: price cuts in focus as stock trades near 2-year low
With Tesla’s stock price plummeting, some analysts have raised the possibility of a share buyback to spur investor interest, with CEO Elon Musk saying: It said such plans were discussed in the previous earnings call. Musk isn’t very friendly to many investors right now, but some on Wall Street are skeptical of the automaker’s needs after he sold a lot of Tesla stock last year following his acquisition of Twitter. Saying it distracted the mask. Mr. Musk’s tweet got him into trouble elsewhere: Last week, Mr. Musk said in his 2018 that he “under consideration’ He had taken Tesla private and set aside money to do so.
‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board
Intel
Intel’s INTC
For years, chipmakers have seen rivals like Advanced Micro Devices Inc. AMD
Nvidia Corp. NVDA
It challenges it in ways that were unthinkable in previous generations. The stock fell more than 43% last year as he planned to cut costs by $3 billion due to falling sales.
There is little hope of a big bounce when Intel reported Thursday afternoon. Personal computer sales are experiencing the biggest year-over-year decline ever recorded, and Intel’s new data center products meant to meet AMD’s challenges just hit the market this year. am.
Opinion: The PC boom and bust is already ‘in the record’, it’s not over yet
However, Intel CEO Pat Gelsinger has taken the opportunity to explain his vision for Intel’s long-term rebound. is important, but don’t lose hope for the future.
Earnings this week
Expectations for the full fourth quarter earnings season remain low as consumers are weighed down by rising prices and interest rates and waning hopes of relief from the holiday shopping season. But even with the bar low, the company’s fourth quarter results so far have been worse than historical standards, with FactSet senior earnings analyst John Butters writing on Friday: strong start. ”
So far, 11% of S&P 500 companies have reported fourth-quarter results, and about a third of earnings report better-than-expected results, Butters reports. This is below the 10-year average of 73%.
Still, Wall Street generally expects high profit margins from companies in the S&P 500. This is because previous price increases, which have helped businesses offset their own costs and test the limits of consumer demand, have been mixed with recent cost cuts.
93 companies in the S&P 500 Index SPX,
12 out of 30 Dow Jones Industrial Averages are DJIA
The component is set to report quarterly results.
Please mark your calendar!Here’s MarketWatch’s complete earnings calendar for the week
Among the highlights: General Electric Co. GE
GE HealthCare Technologies will report on Tuesday for the first time since splitting GEHC.
jobs. 3M Corporation MMM
The company, which makes post-it notes, duct tape, air filters, adhesives and coatings, reported on Tuesday after it said in October that the cost of raw materials, a big driver of inflation, was showing signs of easing. .
A number of rail operators shipping those goods also reported during the week as demand for the goods fell amid recession fears. Union Pacific Corporation UNP,
The line shipped across the western half of the United States, reported Tuesday, CSX Corp. CSX,
We’ll report back on Wednesday, which covers most of the East. Norfolk Southern Corporation NSC
will report on Wednesday.
Telecommunications giant Verizon Communications Inc. VZ,
AT&T Inc.
and Comcast CMCSA
Report Tuesday, Wednesday and Thursday respectively. The results there give a clearer picture of Apple Inc.’s state of demand for his AAPL.
The iPhone, whose premium models have suffered from production stagnation, and broadband, which has been in high demand when more people are at home due to the pandemic.
phone on calendar
Southwest, after meltdown: Southwest Airlines Co. LUV,
Thursday’s report provides management with more answers after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays.
Read more: Southwest Airlines headed for reputation recovery after holiday season meltdown
After resuming dividend payments shortly before the turmoil, the implosion has raised questions about the airline’s investments in proprietary technology and the airline’s ability to cope with a post-lockdown travel recovery. The breakdown highlights a bigger problem with the airline industry’s staffing shortages after the wave of departures in 2020, as airlines try to rearrange flight schedules to meet stagnant travel demand.
United Airlines Holdings CEO Scott Kirby (UAL),
said on the company’s earnings call last week that it feels the industry’s goal of expanding flight range this year and beyond is “totally unachievable”. , said it was destined to face problems. He said manufacturers have suffered delays in making jets, engines and other parts, and airlines have grown beyond their technological infrastructure.
Read more: United Airlines profitable despite ‘worst’ winter storm
“Both us airlines and the FAA have lost experienced employees and most have not invested in the future,” he said. “This means the system cannot handle today’s volumes, much less the expected growth.”
American Airlines Group Inc. AAL,
Alaska Air Group Inc. ALK
JetBlue Airways JBLU
Along with Southwest, they are also expected to report results on Thursday morning.
Numbers to watch
Visa, Mastercard, Consumer Spend: A resurgence in travel and entertainment and rising prices are helping to support consumer spending.However, as Visa Inc. V,
Mastercard Inc. Massachusetts,
American Express AXP
Capital One Financial Corporation COF
As it prepares to report, its financial industry counterparts are nervous and are taking more steps to protect themselves from repercussions from consumers struggling to pay their bills. .
Credit card issuer Capital One will report results on Tuesday, card payment network providers Visa and Mastercard will report results on Thursday, and Amex will report on Friday morning. They report after the shares of Discover Financial Services DFS.
The company, which also offers credit cards and loans, took a hit last week after it secured more funds to cover its deteriorating credit and reported a higher net credit loss rate.
Major banks such as JPMorgan Chase & Company JPM,
We also keep more funds in reserve to prevent credit losses.
