Apple’s Earnings Miss Target / NASDAQ Futures Decline

hank

AAPL - A tech giant. Favorite target of many short sellers. WB holds a bunch.

STORY (Apple)

Some additional after market news: (Excerpted & edited for brevity)

”Amazon (AMZN) -The online giant's net sales $149.20 billion for the fourth quarter came in above analyst expectations of $145.8 billion. Its adjusted earnings of 3 cents per share came in below estimates of 17 cents. Amazon's AWS cloud unit net sales came in at $21.38 billion, a growth of more than 20% compared to the same period in 2022. Operating income came in at $2.74 billion, beating analyst expectations of $2.51 billion.

“Alphabet (GOOGL, GOOG) - Shares of Google parent Alphabet are trading 6% lower in after hours. The tech giant reported fourth quarter sales, excluding partner payouts, of $63.1 billion versus analyst expectations of $63.2 billion. Advertising revenue fell by 4% while YouTube revenue dropped 8%, reflecting a challenging ad environment amid a slowing economy.

“Apple (AAPL) - Shares fell about 4% in after hours after the tech giant's quarterly revenue of $117.15 billion declined by 5% year-over-year, missing analyst expectations of $121.14. iPhone sales dropped 8% year-over-year to $65.8 billion, missing estimates of $68.3 billion. The company's earnings per share of $1.88 vs also came in below expectations of $2.10.”

Source: Excerpted from Yahoo Finance

In late night trading, NASDAQ futures were down more than 200 points or about -1.6%. S&P futures showing smaller losses. (For context, the NASDAQ gained 384 points on Thursday.)

hank

Wouldn’t ya know? Apple’s up nearly 3% today (with NASDAQ down 1.5%). One of the few things I watch that’s up today.

Strange day. Broad based selloff - equities and bonds. Gold’s off more than $50 to around $1860 - one of the biggest one-day dollar losses I can recall. Miners are off around 4.5% - but some are holding up much better.

LewisBraham

It’s the rosy employment numbers. Investors don’t like it when too many people have jobs. It’s a sad disconnect between Wall Street and Main Street.

Mark

Well ok then, let's fire or layoff a bunch of Wall Street types.

Sven

It was very strange yesterday when Meta reported good earning and stock went up considerably as the rest of NASDAQ. In the meanwhile, Meta laid off 11,000 (13%) of their employees and will buy back $40 billion of their stock. It is all about keeping up its stock price. Other big tech including Google, Microsoft and Amazon are having sizable layoff too. As in the past, the layoff comes in waves and spreads from one sector to another.

Only Apple of the FAANG stocks did not have a layoff, but their earning reporting is disappointing. Any insights on why this did not seem to matter to the market?

LewisBraham

Wall Street likes layoffs, particularly Meta's: https://nytimes.com/2023/02/02/business/dealbook/meta-cost-cuts-investors.html

MikeM

Thanks @hank. I did add a smidgin to gold, IAU, and Amazon today. Just a little, but it's satisfying to "think" I'm adding low.

Observant1

Sven said:

[snip]
In the meanwhile, Meta laid off 11,000 (13%) of their employees and will buy back $40 billion of their stock. It is all about keeping up its stock price. Other big tech including Google, Microsoft and Amazon are having sizable layoff too. As in the past, the layoff comes in waves and spreads from one sector to another.
[snip]

Some big tech companies hired many new employees after the pandemic.
Even after recent layoffs, their workforce is still larger than before.

Sven

Both stocks and bonds are down today, just as everything looked rosy on Thursday.

The employment figure spook the market. The nonfarm payrolls to rise by 187,000 in January and the unemployment rate ticked down to 3.4%. This suggests another rate hike in next FOMC meeting,

PRESSmUP

@Sven ....another rate hike is not the surprise. Such a healthy jobs number means that the Fed will continue forward, smashing the hopes of those who somehow, in some way, felt that a pivot was imminent.

What I personally don't understand....inflation over the last six months or so is minor. I don't understand why the Fed feels the need to drive the unemployment numbers up.

hank

Most hedges fell apart today. Some consumers staples did well. Watched a gold & silver miner I’d sold a few weeks ago off & on - but didn’t bite. It’s only down a couple % since I sold it. Some predominately gold oriented mining funds lost over 4% today.

PBS NewsHour today featured the jobs issue. Focused on the (record) low participation rate among 25-54 year-old males, Some it seems are content to move in with Ma & Pa, not work, and wait to inherit the home / savings when they die. Whatever the reason - the labor shortage is pretty apparent in the state with waiting lists (sometimes several weeks) for auto repairs and curtailed hours at eating places.

Sven

@PRESSmUP, you are spot on with respect to rate hike. Interest rate may stay high until the end of 2023. The probability of a recession is increasing while the next question is how bad can the recession be. The Fed is in a tough spot now just as they see slowing inflation signs but the Friday’s strong employment number indicates otherwise.

@hank, We are glad to see our grown kids to live independently while pursuing their careers. Additionally, don’t forget that 3-4 millions experienced workers retired during the pandemic plus the more restrictive immigration contributed to the labor situation as fewer qualified workers are available today.

LewisBraham

https://commondreams.org/news/tech-layoffs-wall-street

https://twitter.com/petergyang/status/1617334412148109312

https://barrons.com/amp/articles/fedex-stock-layoffs-ratings-upgrades-51675344138

Some Google employees didn't realize they were laid off until they arrived at the office and found that their access badges were deactivated.

Observant1

LewisBraham said:

Some Google employees didn't realize they were laid off until they arrived at the office and found that their access badges were deactivated.

This is terrible!
Maybe Google isn't such a good place to work as some claim?

sma3

The money Google spends on their employees is mind boggling. My son's best friend works there.

2 or 3 free high end meals a day, multiple services, allowed to work anywhere in the world

A few years ago the average bonus was $80,000. Probably not this year.

MrRuffles

Sven said:

Only Apple of the FAANG stocks did not have a layoff, but their earning reporting is disappointing. Any insights on why this did not seem to matter to the market?

One of the reasons Apple didn’t have a layoff is because they didn’t massively over hire in the first place. A lot of the tech companies literally hired people in order to keep them from working for other tech companies. Apple, for the most part, only hired the personnel it needed so it didn’t have to resort to massive layoffs.

hank

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