Tiffany & Co. (NYSE: TIF) released its fiscal first-quarter financial results before the markets opened on Wednesday. The company posted $1.14 in earnings per share (EPS) on $1.03 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $0.83 in EPS on revenue of $958.17 million. In the same period of last year, the luxury retailer said it had EPS of $0.74 and $899.6 million in revenue.
During the quarter, worldwide net sales rose 15%. Combined with a higher operating margin and a lower effective tax rate, that resulted in a 53% increase in net earnings. Comparable sales also increased 10% in this time.
As for its segments, the company reported as follows:
Total net sales in the Americas increased 9% to $425 million and comparable sales rose 9%.
Total net sales in the Asia-Pacific segment rose 28% to $329 million and comparable sales rose 14%.
Total net sales in Japan rose 17% to $151 million and comparable sales rose 14%.
Total net sales in Europe increased 13% to $107 million and comparable sales rose 2%.
Looking ahead to the fiscal full year, Tiffany expects to see EPS in the range of $4.50 to $4.70, net sales increasing by a high-single-digit percentage, and comparable sales growth in the mid-to-high-single-digits as well. The consensus estimates are $4.42 in EPS on $4.4 billion in revenue for the full year.
CEO Alessandro Bogliolo commented:
We are very pleased with this start to the fiscal year, and we are particularly encouraged by the breadth of sales growth across most regions and all product categories. Most importantly, however, we remain focused on achieving sustainable growth in comparable sales, operating margin and earnings by pursuing and investing in the six strategic priorities we put forward in March: Amplifying an evolved brand message; Renewing our product offerings and enhancing in-store presentation; Delivering an exciting omnichannel customer experience; Strengthening our competitive position and leading in key markets; Cultivating a more efficient operating model; and Inspiring an aligned and agile organization to win.
Shares of Tiffany traded up more than 15% to $117.94 just after Wednesday’s opening bell. The consensus analyst price target was $111.78, and the prior 52-week trading range was $84.15 to $111.44
The two companies that captured the most global advertising dollars across all types of media last year were Alphabet Inc.’s (NASDAQ: GOOGL) Google and Facebook Inc. (NASDAQ: FB). Between the two, they have captured 64% of all growth in global advertising spending since 2012, the year that Facebook went public. (Google held its initial public offering in 2004.)
Google and Facebook snagged 20% of all media advertising spending in 2016, up from 11% in 2015. The distance between the two remains substantial, however. Google attracted $79.4 billion in advertising spend in 2016, about three times the $26.9 billion that went to Facebook. Comcast Corp. (NASDAQ: CMCSA), the top-ranked traditional media company, ranked third with $12.9 billion in ad revenues.
The data were reported on Tuesday by Zenith Media in its latest edition of “Top Thirty Global Media Owners.”
According to Zenith, “internet advertising has overtaken television to become the world’s largest advertising medium this year.” In addition to Google and Facebook, there are five other pure-play internet media owners in the top 30: Baidu Inc. (NASDAQ: BIDU) ranked fourth, Microsoft Corp. (NASDAQ: MSFT) ranked ninth, Yahoo! Inc. (NASDAQ: YHOO) ranked 13th, Verizon Communications Inc. (NYSE: VZ) ranked 21st and Twitter Inc. (NYSE: TWTR) ranked 30th.
Yahoo and Verizon, combined, would have ranked sixth in 2016, but a more interesting data point is Twitter’s growth. The short-form social media firm saw its ad revenues rise by 734% between 2012 and 2016, the most of any company on Zenith’s list.
Another report on digital media, released Sunday by media investment management firm Group M, expects spending on digital advertising to take 77 cents of every new advertising dollar in 2017. Excluding print advertising (which shows negative growth; i.e., losses) digital captured 72% of every new ad dollar and television took 21 cents. TV’s share is forecast to drop to 17% in 2017.
Group M points out that TV accounted for 42% of all ad spending in 2016 and is expected to account for 41% in 2017. Digital spending took about 33% of total spending in both years.
Spending on digital media already has overtaken TV spending in 10 countries, with another five forecast to join their ranks in 2017. Digital spending exceeds TV spending in Australia, Canada, China, Denmark, Finland, New Zealand, Norway, Sweden, The Netherlands and the United Kingdom. Forecast to be added to the list in 2017 are France, Germany, Hong Kong, Ireland and Taiwan.
A notable issue that may affect both Google and Facebook is the amount of advertising spending lost to fraud, invalid traffic and unacceptable (to advertisers) content. Google, especially, has been targeted for placing automated (programmatic) advertising next to YouTube content that includes hate speech and other offensive material. Some advertisers have boycotted YouTube in an effort to get the site to police itself better. Facebook also has taken some hits, most recently related to the video showing a murder.
Neither Google/YouTube nor Facebook is likely to suffer a massive withdrawal of ad spending due to their enormous reach and low prices for ad placements. However, both will have to expend more effort and dollars into cleaning up their act, seeking to persuade advertisers that they are doing more to combat offensive content and advertising.
MAY NEWSLETTER 5
Q1 FINANCIAL RESULTS EXPLODES
GOAL IS SMOOTH
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Intel Corp. (NASDAQ: INTC) released its most recent earnings report after markets closed on Thursday. The chip manufacturing giant had $0.66 in earnings per share (EPS) and $14.8 billion in revenue, compared to Thomson Reuters consensus estimates which called for $0.65 in EPS and $14.81 billion in revenue. Last year’s first quarter had $0.54 in EPS and $13.8 billion in revenue.
In terms of the outlook for the second quarter, Intel expects to see revenues around $14.4 billion, give or take $500 million, and EPS in the range of $0.63 to $0.73. The consensus estimates for the coming quarter are calling for $0.64 in EPS and $14.34 billion in revenue.
The company reported its business segment revenues as:
Client Computing Group revenue increased 6% to $8.0 billion.
Data Center Group revenue was up 6% to $4.2 billion.
Internet of Things Group revenue jumped 11% to $721 million.
Non-Volatile Memory Solutions Group revenue increased 55% to $866 million.
Intel Security Group revenue of $534 million, down 1%.
Programmable Solutions Group revenue was up 18% to $425 million.
During the first quarter, Intel also generated about $3.9 billion in cash from operations, paid dividends of $1.2 billion, and used $1.2 billion to repurchase 35 million shares of stock. The board of directors also has approved a $10 billion increase to Intel’s share buyback program, which brings the amount currently available for future buybacks to approximately $15 billion.
Brian Krzanich, Intel’s CEO, commented:
The first quarter was another record quarter, coming off a record 2016. We continued to grow our company, shipped our disruptive new Optane memory technology, and positioned Intel to lead in new areas like artificial intelligence and autonomous driving. The ASP strength we saw across nearly every segment of the business demonstrates continued demand for high-performance computing, which will only increase with the explosion of data.
Shares of Intel closed Thursday up 1.4% at $37.43. The stock has a 52-week trading range of $29.50 to $38.45 and a consensus analyst price target of $39.97. After earnings were released the stock was initially down 3.5% at $36.13 in the after-hours session
TWITTER THE TURN AROUND HAS STARTED
PROBLEMS AT INTEL
AT&T Inc. (NYSE: T) argued against selling assets to close its deal to buy Time Warner Inc. (NYSE: TWX) According to Reuters:
AT&T told a federal judge late Thursday it should reject any request by the U.S. Justice Department to force it to divest its DirecTV unit or Turner networks as art of approving its proposed $85.4 billion acquisition of Time Warner Inc
The publication of the closing briefs from both sides brings to end the trial over a deal which took on broader political significance immediately after it was announced in October 2016.
The United States wants a large cut in its trade imbalance with China. According to The Wall Street Journal:
The U.S. handed China a lengthy list of demands on trade, ranging from immediately cutting a trade imbalance by $100 billion a year to halting all Chinese government support for advanced technologies, according to a document sent to Beijing before talks this week.
The U.S.-China trade relationship is “significantly imbalanced,” said the document, which was reviewed by The Wall Street Journal. It noted that U.S. investment and sales of services into China remain “severely constrained” and added that China’s industrial policies “pose significant economic and security concerns” to the U.S.
Twitter Inc. (NYSE: TWTR) told people to change their passwords. According to The Wall Street Journal:
Twitter Inc on Thursday said it found a bug in how it stored user passwords that could have left them visible to people in its internal computer system.
Twitter urged its users to change their passwords, but said an investigation showed no indication of a breach.
The former head of Volkswagen was charged in the United States over the diesel cheating scandal. According to Bloomberg:
Volkswagen AG’s former Chief Executive Officer Martin Winterkorn was charged in the U.S. in a deepening probe into the German automaker’s cheating on diesel emissions testing.
Winterkorn, who stepped down from his role as CEO days after the scandal became public, is accused of conspiring to defraud the U.S. and violate the Clean Air Act. The March 14 indictment was unsealed by a Michigan federal court on Thursday.
Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK-B) has bought more shares in Apple Inc. (NASDAQ: AAPL) According to Bloomberg:
Berkshire Hathaway Inc. bought an additional 75 million shares of Apple Inc., bolstering its stake and backing the iPhone maker’s ability to generate profits, CNBC reported, citing Chairman Warren Buffett.
The stock purchase adds to the almost 170 million shares that Berkshire Hathaway already owns and would see it overtake State Street Corp. to become Apple’s third-largest investor, according to data compiled by Bloomberg. The Cupertino, California-based company was already Buffett’s biggest shareholding.
Xerox Corp. (NYSE: XRX) reversed course and said its CEO would stay after a battle that cost him his job. According to CNBC:
Xerox Corp said on Thursday its current board and management team, which included Chief Executive Jeff Jacobson, will stay, after a settlement agreement it had reached with dissenting shareholders to oust them expired.
Xerox had said on Tuesday its CEO and most of its board will step down to settle a lawsuit by activist shareholders Carl Icahn and Darwin Deason, handing over to new management which will reconsider a controversial deal with Japan’s Fujifilm Holdings.
When Twitter Inc. (NYSE: TWTR) reported its first-quarter financial results on Wednesday, overall, investors were very pleased as it might be implying that Twitter is finally turning itself around. Over the course of this week the stock actually gained 13% on the earnings, which puts the stock just barely in positive territory on the year so far.24/7 Wall St. has included some highlights from the earnings report, as well as what a few analysts are saying after the fact.Twitter posted $0.11 in earnings per share (EPS) and $548.3 million in revenue. The consensus estimates from Thomson Reuters had called for $0.01 in EPS and revenue of $511.91 million. The same period of last year reportedly had EPS of $0.15 and $594.52 in revenue.
Average monthly active users were pegged at 328 million for the quarter, up 6% year over year and compared with 319 million sequentially. Average daily active usage grew 14% from last year, an acceleration from 11% in the fourth quarter, 7% in the third quarter, 5% in the second quarter and 3% in the first quarter of 2016.In terms of the outlook for the second quarter, the company expects to see adjusted EBITDA in the range of $95 million to $115 million, with the adjusted EBITDA margin between 21% and 21.5%. The consensus estimates call for $0.01 in EPS and $511.91 million in revenue for the coming quarter.
Here’s what analysts had to say after the report:
Canaccord Genuity reiterated its Hold rating but raised its price target to $15 from $14.
BTIG Research reiterated a Buy rating.
Goldman Sachs reiterated a Buy rating with a $20 price target.
Instinet reiterated a Neutral rating and raised its price target to $14 from $13.
JMP Securities reiterated a Market Perform rating.
BMO Capital Markets reiterated a Market Perform rating with a $17 price target.
Jefferies reiterated a Buy rating with a $20 price target.
Wedbush reiterated a Neutral rating and raised its price target to $14 from $13.
Wells Fargo reiterated a Hold rating.
Shares of Twitter were last trading down 0.5% at $16.53, with a consensus analyst price target of $14.05 and a 52-week trading range of $13.73 to $25.25.