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beats Street

Ford beats Wall Street earnings expectations after coronavirus shuttered factories – CNBC

Visitor walk past a Ford Escape Titanium at the Shanghai Auto Show in Shanghai on April 17, 2019.

Greg Baker| AFP | Getty Images

Ford Motor performed far better than Wall Street expected during the second quarter, even beating its own expectations as the coronavirus caused rolling shutdowns of its plants across the globe.

The company was profitable, reported less operational losses than expected and has already started repaying against credit lines it drew down earlier this year to manage through the coronavirus pandemic.

Here’s how Ford performed versus what Wall Street expected, based on average analysts’ estimates compiled by Refinitive.

  • Adjusted EPS: A loss of 35 cents per share versus a loss of $1.17 per share expected.
  • Automotive revenue: $16.6 billion versus $15.95 billion expected.

Shares of Ford jumped more than 4% in post-market trading after releasing its earnings Thursday evening. The stock closed at $6.74, down 2.6%.

Ford reported an adjusted pretax loss of $1.9 billion – more than $3 billion better than expected. 

Ford CFO Tim Stone warned investors in April that the company expected to lose more than $5 billion, on an adjusted pretax basis, during the second quarter as the pandemic shuttered factories and severely hampered auto sales.

Quicker recovery

A faster-than-expected recovery in sales, including favorable pricing and better mix, as well as “operational execution” contributed to the company’s second-quarter performance, Stone told reporters Thursday.

Ford expects an adjusted pretax profit of between $500 million and $1.5 billion in the third quarter as long as economic conditions remain favorable without production disruptions, Stone said.

The company managed to report a net profit of $1.1 billion during the second quarter, including a $3.5 billion gain on a previous investment in autonomous vehicle startup Argo AI.

An Argo-modified Ford autonomous vehicle parked in Manhattan on Friday, July 12, 2019.

Paul Eisenstein | CNBC

Cash burn

Ford burned through $5.3 billion during the second quarter, up from $2.2 billion during the first quarter — numbers that are being closely tracked by Wall Street. The automaker said it ended the second quarter with automotive liquidity of $39.8 billion.

Investors are also watching for any guidance on when Ford might pay down its debt and for updates to an $11 billion restructuring plan led by Ford CEO and President Jim Hackett.

“They’ve got a ton of cash. They’re certainly not going to run out of money this year,” Morningstar analyst David Whiston told CNBC ahead of Ford’s earnings release. “Ford’s problem, as they’ve said in their own words, they’re not physically fit.”

General Motors, which reported its second-quarter earnings Wednesday, said it lost $536 million on an adjusted basis, which was better than Wall Street expected.  On an unadjusted basis, the company lost $806 million and it burned through $7.8 billion in cash during the quarter.

Both Ford and GM roughly doubled their automotive debt to $30 billion during the first quarter to help bolster their balance sheets and get through the Covid crisis.

GM said Wednesday it expects to repay a $16 billion revolving credit line it drew down in March by the end of the year.

Ford said Thursday it has already repaid $7.7 billion against revolving credit lines, and also extended $4.8 billion of its three-year revolving credit lines. 

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beats Biden

Biden Beats Trump In Campaign Fundraising As Race Tightens – NPR

Joe Biden has an advantage over President Trump in fundraising according to the numbers the campaigns released for the month of June. Biden and the Democratic Party raised $141 million, against the $131 Trump and Republicans brought in.

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Joe Biden has an advantage over President Trump in fundraising according to the numbers the campaigns released for the month of June. Biden and the Democratic Party raised $141 million, against the $131 Trump and Republicans brought in.

AP

A little more than four months before Election Day, the Trump and Biden campaigns each announced massive fundraising totals as the former vice president’s effort to unseat President Trump gains momentum.

Despite a pandemic and the subsequent economic free fall, President Trump’s reelection campaign and the Republican National Committee announced Wednesday evening they had raised $266 million for the three months ending June 30, including $131 million in June alone.

A few hours later, Biden’s campaign and the Democratic National Committee announced that they had eclipsed Trump’s totals, bringing in $282 million during the last quarter and $141 million in June. It’s the second month in a row that Biden has outraised Trump’s campaign.

2src2src Electoral Map Ratings: Biden Has An Edge Over Trump, With 5 Months To Go

It’s highly unusual for a challenger’s campaign to raise more money than an incumbent president’s campaign.

“It’s clear that voters are looking for steady leadership, experience, empathy, compassion, and character — and they’ll find all of these qualities in Vice President Joe Biden,” wrote Biden campaign manager Jen O’Malley Dillon in an email to supporters.

While Biden has conducted frequent fundraisers with high-dollar donors, Biden’s campaign touted its success growing its list of small donors and said the average online donation last month was just $34.

Hundreds Of Former Bush Officials Unite To Endorse Joe Biden

The Biden campaign did not announce how much cash it holds as it enters the summer and fall campaign season. Full numbers will be available no later than July 20.

Trump’s campaign was quick to tout its $295 million bank account.

“The Trump campaign’s monumental June fundraising haul proves that people are voting with their wallets and that enthusiasm behind President Trump’s re-election is only growing,” said Trump campaign manager Brad Parscale in a statement.

Biden’s fundraising surge comes as national and state polls show the president increasingly lagging behind the former vice president due to the Trump administration’s response to the pandemic and protests against racial injustice.

Trump Vows To Veto Defense Bill If It Removes Confederate Names From Military Bases

While Trump’s campaign claimed earlier this year it would try to flip several states won by Democrats in the past, its spending shows that it is focused entirely on holding onto states that Trump won in 2016, including some that appeared safe for the president until recently.

The ad buying firm Medium Buying said on Tuesday that the Trump campaign had reserved nearly $100 million worth of ad time this fall in Arizona, Florida, North Carolina, Ohio, Pennsylvania and Wisconsin. The campaign is also buying ads in Georgia, Michigan and Iowa. Trump won all of those states in 2016, some by comfortable margins.

UPDATE: We have tracked more than $94M in future TV ad bookings from the Trump campaign in AZ, FL, NC, OH, PA and WI. For 9/8-11/3

— Medium Buying (@MediumBuying) June 30, 2020

The most recent analysis of the Electoral College battleground from NPR showed that neither candidate appears to have the 270 electoral votes needed to win the presidency in hand, but Biden was closer with at least one state Trump previously won — Michigan — leaning his way, while the president has failed to make progress in states that Democrat Hillary Clinton won in 2016.

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Amazon beats

Amazon Q1 beats on net sales of $75.5B but posts net income of $2.5B, down $1B on a year ago – TechCrunch

Amazon has been one of the biggest names synonymous with how the consumer masses are experiencing life under lockdown: its site lets you buy anything from soup to nuts, from books to baking pans for all your sourdough; and via its streaming services, it gives you many ways to stay entertained. But it can also be a source of major frustration when you find yourself unable to book slots for deliveries, or are facing an army of sellers trying to price gouge you for hot items like masks or toilet paper.

Today, the company reported first quarter earnings that bore out the first of these in spades, but at a cost to profitability as it works to serve a public under a whole new set of challenging conditions.

The company reported net sales of $75.5 billion, up 26% on a year ago, a huge boost on the $59.7 billion it made in net sales in the first quarter a year ago. Indeed, $41 billion of the sum was attributable to product sales and $33 billion to services (which includes AWS, but also streaming and other non-physical goods).

But earnings per share took a hit, with basic EPS at $5.09 and diluted EPS at $5.01, and net income declining down to $2.535 billion versus $3.561 billion a year ago.

Operating income was also down, to $4 billion versus operating income of $4.4 billion in the same quarter a year ago.

Analysts on average were expecting EPS of $6.25 on revenues of $73.61 billion in sales. It was a repeat of the pattern we saw from eBay’s earnings yesterday, albeit on a much, much bigger scale.

On top of all this, the company provided guidance that indicated that it could swing into an operating loss in Q2. It said it expected net sales of between $75.0 billion and $81.0 billion, or to grow between 18% and 28% compared with second quarter 2019 (but largely flat with this quarter). But operating income is expected to be between negative $1.5 billion and $1.5 billion, versus $3.1 billion a year ago. “This guidance assumes approximately $4.0 billion of costs related to COVID-19,” the company said. 

The results sent Amazon’s stock up nearly 5% in after-hours trading.

Jeff Bezos, Amazon’s colourful founder and CEO, acknowledged the challenges even the mighty Amazon is facing, but also reiterated, similar to Q2 guidance, that the company plans to double down on spending to face up to serving people during the COVID-19 pandemic, whatever it might bring. It’s a long statement (in what is a very, very wordy press release overall):

From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced. We are inspired by all the essential workers we see doing their jobs — nurses and doctors, grocery store cashiers, police officers, and our own extraordinary frontline employees. The service we provide has never been more critical, and the people doing the frontline work — our employees and all the contractors throughout our supply chain — are counting on us to keep them safe as they do that work. We’re not going to let them down. Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money. If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small. Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities. There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees. I’m confident that our long-term oriented shareowners will understand and embrace our approach, and that in fact they would expect no less.

Of note: Amazon Web Services accounted for $10.2 billion in sales, up 33% on the same quarter a year ago. North America accounted for about $44 billion of the company’s net sales, versus $19 billion for the international segment.

And while services are not quite yet overtaking product sales, the company is seeing its services revenues are growing much faster, at 33% versus 22%. Services include not just video streaming, but grocery delivery and other non-physical paid products that Amazon provides.

At a time when we’ve seen tens of thousands of people laid off across the technology sector, Amazon has been one of the few companies to hire, specifically to staff up with 100,000 extra workers across warehouses and its logistics network to meet surging demand from buyers. That has not always been smooth sailing however, with accusations of poor and potentially health-threatening working conditions.

This has been a thorny issue for the company, so it’s no surprise that in its earnings report, it prominently reminded investors that it has made “over 150 significant process changes in our operations network and Whole Foods Market stores to help teams stay healthy — and we conduct daily audits of the measures we’ve put into place.”

It also noted that it has procured 100 million face masks (presumably not on Amazon itself, where economical ones have been very hard to find) and are requiring that they be worn by all associates, drivers and support staff in our operations network. “We purchased more than 1,000 thermal cameras and 31,000 thermometers, which we are using to conduct mandatory daily temperature checks for employees and support staff throughout our operations sites and Whole Foods Market stores,” it noted.

Those thermal cameras have also, however, been a point of contention: Reuters this week reported that those cameras were sourced from Dahua, a Chinese company currently blacklisted by the U.S. government.

More to come.

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