Amazon’s New Day Has a Rough Start | Sidnaz Blog

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The results create a bit more of a challenging setup for new CEO Andy Jassy.



Photo:

Patrick Fallon/Zuma Press

OK, so maybe

Jeff Bezos

isn’t quite going out on top.

The final quarter for

Amazon.com


AMZN -0.84%

under the direct management of its famous founder turned out to be a bit of a letdown. Revenue and operating income for the second quarter both fell shy of Wall Street’s estimates, as did the high end of the company’s revenue forecast for the current quarter. It was the first time the e-commerce titan missed the high end of its own sales projections in two years, according to data from FactSet.

Amazon’s


AMZN -0.84%

shares fell more than 7% following the results.

The company is still a juggernaut. Second-quarter revenue rose 27% to $113.1 billion, bringing trailing 12-month sales to more than $443 billion. That puts Amazon well on pace to overtake

Walmart

as the largest U.S. company by annual sales some time next year, while still growing at double-digit rates. Growth at the company’s crucial AWS cloud business also picked up, with revenue jumping 37% year over year compared with a 32% rise in the last quarter. That lines up with trends shown by cloud rivals

Microsoft

and Google earlier this week, suggesting that the market leader, AWS, is at least holding its ground.

But the boom in online sales Amazon enjoyed at the start of the pandemic created a challenging comparison for the most recent quarter. Thursday’s results confirmed the suspicions of some analysts that the company’s Prime Day sales event in late June underwhelmed. Amazon’s online stores segment saw revenue grow by only 16% to $53.2 billion in the second quarter, falling well short of analysts’ targets. Revenue growth from third-party and subscription services decelerated. Advertising revenue, reflected in the company’s “Other” segment, showed a strong jump of 87% year over year to $7.9 billion. But advertising still contributes only about 7% to Amazon’s total revenue.

The results create a bit more of a challenging setup for new CEO

Andy Jassy

as Amazon will face difficult comparisons for the rest of the year following its pandemic-fueled sales jump in 2020. But the bar seems low enough. The midpoint of the company’s revenue projection for the third quarter represents growth of 13% year over year. That would be Amazon’s slowest growth rate in 20 years, even with the pandemic picking back up and possibly driving more sales online.

Amazon’s new boss has plenty to do.

Write to Dan Gallagher at [email protected]

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Latest News Today – After Flipkart, Amazon Files Appeal At Supreme Court In

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After Flipkart, Amazon Files Appeal At Supreme Court In Antitrust Probe

Amazon has filed an appeal with Supreme Court against the antitrust probe on it

Amazon.com Inc on Wednesday filed an appeal with the Supreme Court against a Karnataka High Court’s order that allowed an antitrust probe against the US firm and Walmart’s Flipkart to continue, according to source and court listings.

The Karnataka High Court last week dismissed cases filed by Amazon and Flipkart which sought to quash the Competition Commission of India’s (CCI) 2020 investigation on accusations that the companies circumvent Indian law by creating complex business structures.

The companies have denied wrongdoing, but the High Court said “they should not feel shy in facing an inquiry”.

Details of Amazon’s plea were not immediately clear. The Supreme Court website showed the case listing of an appeal, without giving further details.

Flipkart had challenged the decision in the Supreme Court on Tuesday and has requested a restraint on the CCI after the watchdog asked 32 “sensitive” questions in mid-July, in what the firm called an “invasive” investigation.

The CCI investigation is the latest setback for Amazon and Flipkart, which are grappling with prospects of tougher e-commerce regulations and accusations from brick-and-mortar retailers that the companies circumvent Indian law by creating complex business structures.

The companies face several allegations in the case, including exclusive launches of mobile phones, promotion of select sellers on their websites and deep discounting practices that drive out competition.

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Space Race, Nasdaq, IBM, Nvidia: What to Watch When the Stock | Sidnaz Blog

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To the moon! Well, not quite, but into space at least today for

Jeff Bezos,

the billionaire baron of ecommerce. Also not going to the moon is

Amazon


AMZN -0.67%

stock, though it is 0.4% up premarket on Tuesday morning.

  • One reason for Mr. Bezos’s rocket ride is the more earthly goal of winning government contracts for the kind of less thrilling scientific projects the provide reliable revenue. His Blue Origin company is playing catch-up with Elon Musk’s SpaceX.
  • Mr. Musk’s electric vehicle maker

    Tesla,


    TSLA 0.31%

    is getting a bit of a boost Tuesday morning ahead of the open, rising 1% premarket. It is also gaining more attention on the message boards among day traders, according to Topstonks.com. The company reports earnings next Monday and tends to see its stock rise in the days ahead as investors start hoping for exciting announcements.

  • In the wider markets, U.S. stock futures are trending higher ahead of the open following Monday’s broad selloff. S&P 500 futures are up 0.5%, while Dow futures are up 0.6%. Nasdaq-100 futures are up 0.4%
  • Nasdaq the company, not the index, is itself rising premarket, up 1%, after The Wall Street Journal’s exclusive that it will spin out its Private Market for shares in start-ups that trade among some investors before an initial public offering. The business will go into a standalone joint venture company and get investment from three Wall Street banks and SVB Financial Group, a tech specialist bank.
  • Nvidia


    NVDA 15.18%

    is up 0.8% on large volumes following a 15% rise Monday. The shares are up nearly 80% over the past year, putting the chip maker into the top 10 list of U.S. public companies. It also executed its four-for-one stock split overnight, which has given some investors more ways to trade the stock-performance.

  • International Business Machines


    IBM -0.71%

    is up 3.4% ahead of the open on Tuesday after turning in decent second-quarter numbers Monday after the close. The computing group’s efforts to refocus on cloud-based computing and spin off its old-fashioned IT services business is winning fans among investors. At the same time, it has benefitted from companies beginning to invest again as the economy reopens.

IBM reported earnings on Monday..



Photo:

sergio perez/Reuters

Chart of the Day
  • Stocks, commodities and other financial markets took a stumble Monday on growing concerns about the strength of the post-Covid-19 global recovery.

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Facebook, Alphabet Keep Rising; Apple, Netflix Fade | Sidnaz Blog

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Big tech stocks are going their own ways in 2021.

It is a far cry from last year, when the so-called FAANG stocks took a commanding role in a market driven by the coronavirus pandemic.

This year, as the economy strengthens and vaccinations diminish the pandemic in the U.S., that synchronized march has broken down. Investors have broadened their sights beyond the familiar names whose technology businesses thrived as many Americans switched to working, shopping and socializing at home. With a re-energized economy creating opportunity across industries, money managers have options, as well as renewed scrutiny for stocks whose lofty valuations and widespread popularity could limit further upside.

While Alphabet Class A and Facebook shares are up 37% and 21%, respectively, other members of the group have weighed on the market. Amazon shares are up 7.1% in 2021, lagging behind the 11% rise in the benchmark S&P 500. Apple and Netflix have fared even worse, down 1.7% and 7.4% for the year.

Among the hundreds of S&P 500 stocks outpacing Apple—the U.S. benchmark’s largest company by market value—are many that were hit hard by the pandemic. Cruise company

Carnival Corp.


CCL -0.84%

is up 30% for the year, and

American Airlines Group Inc.

has risen 41%. Other big gainers include almost every member of the energy sector.

Technology stocks that lagged in 2020 are also on the move this year.

Cisco Systems Inc.


CSCO -2.00%

is up 16% so far, and

Intel Corp.


INTC -2.64%

has posted a 12% gain.

“A rising tide is lifting all boats right now,” said

Jim Golan,

co-manager of the William Blair Large Cap Growth Fund. “Just investing in the top four or five big-cap companies probably won’t do it this year.”

Investors this week will scrutinize earnings from delivery giant

FedEx Corp.

, sneaker titan

Nike Inc.

and Olive Garden operator

Darden Restaurants Inc.


DRI -1.37%

for insights into consumer behavior.

With a healthier economy improving prospects for many stocks, investors have less reason to snap up ones that look expensive. That is particularly the case as a spurt of inflation focuses investors on the question of when the Federal Reserve will begin lifting interest rates from current, rock-bottom levels.

An Amazon warehouse. The e-commerce giant helped power the S&P 500 to a 16% gain for 2020.



Photo:

mike segar/Reuters

Fed officials last Wednesday indicated they anticipate raising rates by late 2023, sooner than previously expected. When rates rise, commonly used models show the far-off cash flows factored into many technology stock’s price tags are less valuable.

In recent months, investors haven’t been willing to pay as much for the profits of some of the megacap tech names with the richest valuations. Analyst estimates for Amazon’s per-share profit over the ensuing 12 months rose more than 40% from the end of December through last week, according to FactSet. But since Amazon’s share price rose only 7.1%, the stock’s forward price/earnings multiple contracted from nearly 73 times to about 55 times.

In the case of Netflix, expectations for forward earnings have risen while its share price has fallen. That has compressed the stock’s price/earnings ratio from almost 60 at the end of 2020 to about 43 last week.

Apple has seen its valuation fall since the start of the year, as projected earnings increased while its share price is nearly unchanged. It traded last week at about 25 times expected earnings—down from more than 32 times on Dec. 31.

After owning Apple shares for years,

David Bahnsen,

chief investment officer of wealth-management firm The Bahnsen Group, said he sold them late last year because he thought they were too rich.

For much of 2020, a badly constricted economy pushed investors toward stocks—like the FAANG names—whose businesses were less affected and whose future growth became even more alluring with the drop in interest rates. The Russell 1000 Growth Index advanced 37% for the year, while the Russell 1000 Value Index eked out a 0.1% gain—the largest annual performance gap between the two style benchmarks in FactSet data going back to 1979.

Big tech stocks were among the leaders of that rally. Apple shares climbed 81% in 2020—last August becoming the first U.S. public company to surpass $2 trillion in market value—while Amazon rose 76% and Netflix gained 67%. Facebook added 33% for the year, and Alphabet 31%.

“Philosophically if you’re buying those very large-cap stocks—let’s say a trillion dollars and above—you’re doing so not because you think you’ve found some undiscovered gem,” said

Kevin Landis,

who manages the Firsthand Technology Opportunities Fund. “You’re doing it more as an expression of a tech thesis, that people are going to be rotating to tech.”

That rotation began to unwind in November with news that a Covid-19 vaccine was emerging. Value stocks, which trade at low multiples of book value and tend to be more sensitive to the health of the economy, began a monthslong rally. In March, value stocks were beating growth stocks by the widest margin in two decades, although the gains have eroded recently.

Among big tech stocks, Alphabet and Facebook have served as a kind of reopening play, reporting a surge in advertising. Facebook’s profit in its latest quarter nearly doubled from a year earlier, while Alphabet’s earnings more than doubled.

“They’ve had this huge resurgence in online advertising and that’s really been driving the stocks,” said

Daniel Morgan,

senior portfolio manager at Synovus Trust Co. “All these businesses are reopening, coming back on, the economy’s accelerating. Where do they go to promote themselves? A lot of them go to Facebook.”

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Netflix, by contrast, disappointed investors when it reported that its subscriber growth had slowed as the economy reopened. The streaming giant got a boost from the pandemic as many consumers were forced or chose to stay home, and it ended 2020 with more than 200 million subscribers.

Those fundamentals matter more now for investors, who seem less inclined to view the market in the same broad terms as they did last year.

“These just are different companies that for a long time were highly correlated because they were popular, they were performing well,” Mr. Bahnsen said. “There really was never an investment logic to a streaming company that was first to market trading in tandem with a social media company.”

Write to Karen Langley at [email protected]

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Snowflake Sees Sun a Long Way Out | Sidnaz Blog

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Snowflake went public on the New York Stock Exchange last September.



Photo:

brendan mcdermid/Reuters

For all the criticism about Wall Street’s short-term focus, sometimes investors do manage to think in the very long term.

Take

Snowflake


SNOW 1.74%

: Since going public in September, the provider of cloud-based data analytics tools has managed an epic valuation. Even with a 13% drop since the start of the year, Snowflake trades at around 57 times forward sales—the richest multiple in the richly valued cloud sector. At the stock’s peak in December, Snowflake commanded a market value of just over $110 billion. That was on par with

IBM,

an admittedly struggling tech giant still generating more than 100 times Snowflake’s annual revenue.

Investors therefore clearly expect that Snowflake can scale up significantly in the coming years. And years it will take, even with the triple-digit growth the company has been managing so far. Hence, Snowflake used its first analyst meeting on Thursday to give a very long-term view. The company projects it will hit $10 billion in product revenue in its 2029 fiscal year. That will require averaging a little over 40% growth annually over the next eight fiscal years, which

David Hynes

of Canaccord says would make Snowflake “the fastest ever software company to reach that level of scale.”

It also was already baked into the numbers. The few analysts willing to project that far had already reached a consensus of $10.9 billion in product revenue for fiscal 2029, according to Visible Alpha. The company’s projection of reaching operating margins of only about 10% on an adjusted basis by that time also was deemed a bit of a letdown—though some analysts believe the company was likely being overly conservative. Snowflake’s share price still slipped more than 3% Friday, though it gained back some of that ground Monday morning.

Few disagree that Snowflake has a large opportunity ahead. The company’s data-warehousing software is in hot demand by enterprises looking to speed up their business analytics abilities. And the fact that it works across all the major cloud platforms helps in a world where more companies are electing not to go all in on just one.

Still, Snowflake has less visibility into its future results than many other cloud software providers. The company generates revenue as customers use its service, as opposed to subscriptions that are collected up front. But no analyst seems to think Snowflake will have trouble hitting its long-term goal.

Karl Keirstead

of

UBS

notes that

Amazon’s

AWS cloud business and

Microsoft’s

Azure were both generating 70% growth rates when at the $10 billion a year mark. If Snowflake manages that, those paying up for the shares now will be getting a bargain. They just need patience to find out.

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GameStop Doesn’t Have a Blank Check After All | Sidnaz Blog

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GameStop’s stock price slid as much as 12% after hours Wednesday following the company’s results.



Photo:

nick zieminski/Reuters

Apparently, even meme-stock investors have their limits.

GameStop’s


GME 0.85%

fiscal first-quarter results reported Wednesday afternoon were encouraging in many respects. Revenue grew for the first time in three years, surging 25% year over year to almost $1.3 billion for the quarter ended May 1. That came thanks mostly to strong sales of the new PlayStation and Xbox consoles that—while still sharply limited in supply due to the global chip production shortage—drove a 37% increase in GameStop’s hardware sales to about $704 million for the quarter. The company has also been able to boost its cash reserves and reduce its debt, due to selling nearly $552 million of its shares during the quarter.

But like fellow meme-stock champion

AMC Entertainment,

GameStop seems to have discovered that individual investor love isn’t a blank check. The company said Wednesday it intends to file papers to sell up to five million shares, after selling 3.5 million shares in April.

GameStop’s stock price slid as much as 12% after hours Wednesday following the company’s results and a truncated conference call that again took no questions. AMC’s stock has fallen 21% since it announced its latest stock sale last week.

But even with such a sharp after-hours drop, GameStop’s shares remain up an absurd 1,300% from the start of the year. Which means the company will need all the help it can get to justify investors’ bets that it can renovate a videogame retail chain for an age when most games are sold digitally. The latest results also laid out starkly what a challenge that will be.

Game software, once GameStop’s largest business, fell 5% year over year during the quarter to about $398 million. This wasn’t an industrywide problem; NPD’s data shows that sales of videogame content across digital and physical channels in the U.S. rose 14% during the comparable three-month period ending in April.

Strong demand for gaming products such as the newest consoles are keeping GameStop in the game for now. But the company’s long-term revival can’t depend on machines that are updated once every seven or eight years. And GameStop is still in the staffing-up phase of whatever its plan is. The company formally installed Chewy co-founder

Ryan Cohen

to the chairman slot following a successful shareholder vote on Wednesday. It also names a new chief executive and chief financial officer—both from executive roles at

Amazon.com.


AMZN 0.52%

Mr. Cohen told shareholders Wednesday that GameStop’s turnaround will take time. He also said the company was trying to do something in retail that no one else has done before. GameStop investors seem inclined to give the company time—but not at any price.

Write to Dan Gallagher at [email protected]

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Amazon Deal for MGM Marks Long-Awaited Win for Some Hedge Funds | Sidnaz Blog

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Amazon.com agreed to buy MGM for about $8.5 billion, including about $2 billion in debt.



Photo:

Eric Thayer/Bloomberg News

Anchorage Capital Group, MGM Holdings Inc.’s largest shareholder, has made about $2 billion in paper profits with

Amazon.com Inc.’s


AMZN 1.04%

agreement to purchase the famed Hollywood studio behind James Bond.

Anchorage is among a group of hedge funds that has been waiting a decade or more for a sale or public offering of the studio on the strength of its content library. They were rewarded with the deal by Amazon to buy MGM for about $8.5 billion, including about $2 billion in debt.

New York hedge fund Anchorage began telling investors about its paper profit Wednesday. Anchorage invested less than $500 million in 2010, making for an IRR, a return metric that takes into account the length of an investment, of about 16%.

The deal took the return of Anchorage’s flagship hedge fund from 8% to 18% this year, said a person briefed on Anchorage’s performance. Anchorage co-founder

Kevin Ulrich

chairs MGM’s board and had been negotiating with Amazon.

The $6.5 billion equity value of the deal is around what MGM’s then-chief executive,

Gary Barber,

was discussing with

Apple Inc.

in early deal talks for the studio in 2018. Those talks were cut short when MGM’s board ousted Mr. Barber for having the unsanctioned talks. Some MGM shareholders said Wednesday it was possible those talks could have resulted in a similar deal, years earlier, had they continued.

Still, longtime MGM investors on Wednesday, and even newer shareholders, can claim strong returns on the deal if they realize their profits.

Write to Juliet Chung at [email protected]

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Discovery Faces Harsh Reality With WarnerMedia | Sidnaz Blog

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Bobby Flay and Giada De Laurentiis in ‘Bobby and Giada in Italy’ on Discovery+.



Photo:

Discovery Inc.

Even show-business marriages have longer honeymoon periods than this.

Last Monday’s announcement of a mega-media combination of

Discovery Inc.


DISCB -1.26%

with the WarnerMedia business of

AT&T


T -0.87%

initially thrilled the investors of both companies. Discovery’s share price opened the day up 10% on the prospect of the niche cable-content provider suddenly becoming one of the largest Hollywood players. Meanwhile, AT&T’s share price jumped nearly 4% on the notion that the telecommunications giant could focus better on its core business without having to also pour capital into a media venture that was never popular with its own investors anyway.

The warm feelings didn’t last. Both stocks soon turned south and closed in the red that day. And Discovery kept falling—losing nearly 12% by the end of the week. The potential merits of the deal haven’t changed, but the risks have grown clearer. The complicated transaction will result in a much bigger and much more indebted Discovery, run by its current management but majority owned by AT&T shareholders. And the combined company faces a rapidly changing media landscape with a growing list of competitors. For example, last week brought several reports that

Amazon.com


AMZN 1.31%

was in takeover discussions with MGM Holdings. The Wall Street Journal reported Monday that the deal could be announced this week.

Discovery’s stock had already been on a wild ride due to its part in the Archegos Capital selloff earlier this year. The pending merger will add some fresh drama. Both Discovery and AT&T have to preserve the value of the WarnerMedia business during a highly uncertain period while awaiting regulatory approvals, which could take a year or more. The New York Times reported that WarnerMedia Chief Executive Officer Jason Kilar already has hired a legal team to negotiate his departure.

Doug Creutz

of Cowen noted in a report last week that Twentieth Century Fox saw “pretty serious degradation in performance” while Disney was working to complete its acquisition of the studio in 2019. “We’re not sure that the announcement of $3B in synergies will be well-received by WarnerMedia employees, either, particularly having just survived a synergy-driven purge associated with the AT&T acquisition,” he wrote.

How to integrate the two operations is also a major question hanging over the deal. As the home for the old Warner Bros. studio along with HBO and the Turner media properties, WarnerMedia specializes in broad offerings designed for mass appeal. Discovery has made its name with more niche offerings such as Animal Planet, TLC and the recently acquired Food Network and HGTV. An investor poll by Bernstein Research found a large split on whether the company should combine the HBO Max and Discovery+ services into one offering. Investors in the poll were also the “least confident” in the combined company’s ability to achieve the stated goal of $15 billion in direct-to-consumer revenue by 2023.

In a note to clients Monday, MoffettNathanson analysts wrote that Discovery has “a nice call option on transforming HBO Max into a global juggernaut that trades at a deep discount to Netflix and Disney.” But the firm still downgraded the stock to a “neutral“ rating, noting that the reward was “outweighed by near-term risks ahead of the deal closing.”

Discovery’s most hair-raising reality show might be the one the company has now cast itself in.

Write to Dan Gallagher at [email protected]

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Bank of America to Raise U.S. Minimum Hourly Wage to $25 by 2025 | Sidnaz Blog

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In March 2020, Bank of America Corp. raised its minimum hourly wage to $20, a year ahead of plan.



Photo:

David Paul Morris/Bloomberg News

Bank of America Corp.

on Tuesday said it plans to raise its hourly minimum wage to $25 by 2025, putting it on track to surpass its big-bank peers during a time of worker shortages across the country.

The Charlotte, N.C., banking giant also said it is requiring all of its U.S. vendors to pay employees who are dedicated to the bank at least $15 an hour.

The second-largest U.S. lender joins companies including

Amazon.com Inc.

and

McDonald’s Corp.

in saying it will raise pay to attract workers as the economy reopens more fully. Average hourly earnings for private-sector employees rose by 21 cents to $30.17 last month, according to a recent Labor Department report.

JPMorgan Chase

& Co., the largest U.S. lender, in January raised its minimum hourly base pay to between $16 and $20, depending on the local cost of living.

Wells Fargo

& Co. last year raised its pay to between $15 and $20 an hour, also depending on geography. And

Citigroup Inc.

raised its base pay to $15 an hour in 2019, though a spokeswoman said its average for hourly U.S. workers is $23.89.

In March 2020, Bank of America raised its minimum hourly wage to $20, a year ahead of plan, after boosting it to $17 an hour in 2019. The bank said it has more than doubled its minimum hourly pay since 2010.

President Biden campaigned on a pledge to raise the federal minimum wage to $15 an hour, but a February push by Democrats to include the increase in the $1.9 trillion Covid-19 relief package was unsuccessful.

Biden has identified raising the minimum wage as a key goal of his administration, but economists and lawmakers disagree on the potential impact. WSJ asked two economists and a minimum-wage worker what the costs and benefits of a $15 minimum wage might be. Photo: Bill Clark/Congressional Quarterly/Zuma Press (Video from 3/2/21)

Mr. Biden in late April signed an executive order requiring that federal contractors pay a $15-an-hour minimum wage.

Write to Colin Kellaher at [email protected] and Ben Eisen at [email protected]

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AT&T Needed to Dial Back Media Dreams | Sidnaz Blog

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A scene from the Warner Bros. Pictures movie ‘Wonder Woman 1984’.



Photo:

Clay Enos/Warner Bros/Everett Collection

AT&T’s


T 1.07%

time as a media giant was fun while it lasted. Well, not for its investors.

The deal the telecommunications giant announced with

Discovery Inc.


DISCB 9.67%

Monday morning begins the process of unwinding Ma Bell’s expensive foray into the world of big media. Under the terms announced, AT&T’s WarnerMedia unit will combine with Discovery to create a new stand-alone media titan expected to generate annual revenue of about $52 billion by 2023. It also will create a more focused—and less indebted—AT&T. Net debt is expected to fall by $43 billion once the deal closes sometime in mid-2022.

Much of those borrowings came from the company’s $81 billion acquisition of Time Warner, which closed barely three years ago. The relatively abrupt about-face can be chalked up to a rapidly changing media landscape in which investors have heavily incentivized Hollywood’s content giants to pour capital into streaming. That created some unique pressures for AT&T, which also has a capital intensive wireless and fiber optic business to run along with a generous dividend to maintain. Investors never warmed to the company’s big media aspirations; AT&T’s stock has badly trailed the broader market since the company announced the Time Warner deal in late 2016. The shares rose 2% Monday morning.

Discovery, meanwhile, has earned some kudos on Wall Street for its efforts to build a more focused streaming offering. Discovery+ launched in the U.S. in January, and

Robert Fishman

of MoffettNathanson estimates the service is already on pace to reach 11 million domestic subscribers by the end of the year. Still—at just under $11 billion in trailing 12-month revenue—Discovery ranks below many other media outlets in scale, including

Fox Corp.

,

ViacomCBS

and

Walt Disney

in terms of scale.

The move isn’t quite a cash out for AT&T. Citigroup analysts noted Monday that the structure of the deal as a tax-free spin limits the amount of cash and deleveraging for AT&T, which said Monday it has “resized” its annual dividend payout ratio to about 40% to 43% of anticipated free cash flow, down from its last-stated goal of a little over 50% of free cash flow. AT&T adds that it will reach its target ratio of 2.5 times net debt to adjusted earnings before interest, taxes, depreciation and amortization by the end of 2023—a year earlier than planned.

The move should still create a cleaner story for AT&T going forward. The company was never going to land the sort of multiples investors have lavished on other media giants diving head first into streaming. And its pressing need to invest in expensive technology like 5G to keep its network business competitive made this a bad time to also keep up with the billions being poured into new streaming content by everyone from Disney to

Netflix

to

Apple Inc.

to

Amazon.com.

For a company that seemingly has been in permanent deal mode since the late ‘90s, unwinding its largest acquisition to date may finally convince Ma Bell to stick to her knitting.

Write to Dan Gallagher at [email protected]

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