Another day, another reversal in the stock market

Signs that the Federal Reserve could hold off on further interest rate hikes coupled with a booming jobs report sent stocks on Wall Street surging to close a volatile first trading week for the New Year.

After yesterday’s Apple-induced slide, and in the face of economic indicators that signaled a potential slowdown in global and domestic growth, the chairman of the Federal Reserve, Jerome Powell, said that the central bank would be “patient” when it comes to raising interest rates.

That news, coupled with a strong jobs report, sent stocks rocketing up. The Dow Jones Industrial Average climbed 746.9 points, or roughly 3.3 percent, while the Nasdaq shot up 4.3 percent, or 275.4 points.

It wasn’t just the Fed chairman’s observations about the potential for rate hikes in 2019 that had investors buying, but assurances about Powell’s job security in the face of increasing pressure from President Trump.

Speaking at a panel discussion of the American Economic Association alongside former Federal Reserve chairs Janet L. Yellen and Ben Bernanke, Powell said that he would not resign if asked by the president.

Immediately after Powell’s comments stocks began surging.

“With the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” Powell was quoted as saying in The Washington Post. “We’re always prepared to shift the stance of policy and to shift it significantly if necessary.”

HTC had a truly terrible 2018

If you think times are bad at Apple, spare a thought for HTC, the once king-of-the-hill phone maker that continues to struggle very badly.

The Taiwanese smartphone company, which offloaded a portion of its business to Google for $1.1 billion and is pivoting to VR, laid off yet more staff in 2018 and had its worst year of sales ever.

According to its own figures — and as noted by Bloomberg’s Tim Culpan — the company brought in just 23.74 billion TWD ($770 million) in revenue over the entire year. That’s the first time it has grossed less than $1 billion during a year as a public company.

That figure represents a massive 62 percent drop on HTC’s paltry revenue for 2017 — 62.12 billion TWD, around $2 billion — which was its poorest year since 2005. We don’t yet know the total loss for 2018, but its three previous quarterly reports combined amount to a total operating loss of 11.13 billion TWD, $361 million, with one more quarter to add.HTC’s 2018 total was so bad that it actually made more money during just one single month a few years ago. Its total revenue during May 2013, back when phones like the One M7, One Mini and One Max made it one of the best smartphone companies on the planet, came in at 29 billion TWD.

Those days of booming sales are, of course, long gone as these charts painfully illustrate.

The decision to sell a large chunk of the smartphone business to Google one year ago was the icing on the cake served at HTC’s smartphone wake. Yes, the company did announce the U12+ — with a squeezable side — in May and it is working on a blockchain phone that we kind of got a look at during our Shenzhen event last year, but these are peripheral plays that are tucked well away from where the mainstream players are dueling, a place where HTC used to be.Even VR, trumpeted as HTC’s great area of hope, is a long-term play.

The company doesn’t break down revenue — that’ll come later when it releases its next earnings report in February — so we don’t know how its Vive and other virtual reality plays are working out in terms of numbers. But the immediate future isn’t great.

Lucas Matney — TechCrunch’s resident virtual reality cyberpunk — noted just this week that 2019 is shaping up to be a very testing year for the entire VR and AR industry, HTC/Vive very much included.

“There are plenty of reasons to be long-term bullish on AR, but the time horizons some have espoused seems to be bogus and pitch decks organized around a near-term spike in phone-based or glasses-based users are going to have a tougher time being taken seriously in 2019,” Matney wrote.

If that proves true, HTC’s sickly sales may well contract further still.

In many ways, it’s hard to not feel sorry for the company. Pivots this brutal are usually carried out by private startups who can keep the contents of their books to themselves, rather than 22-year-old public companies that must file financial statements. Unfortunately for HTC, information like monthly sales, losses and other revealing data will continue to be public information, ensuring that this painful transition continues to play out with full public scrutiny.

Despite an incredible downturn in success, co-founder, president and CEO Cher Wang continues to run the business with no calls for a change in leadership. Wang keeps a low profile and has said little of her plans to turn things around. Maybe 2019 is a good year for being more forthcoming, especially if the losses continue to mount, as seems inevitable.

Apple losses trigger a plunge in US markets

Bad news from Apple and signs of slowing international and domestic growth sent stocks tumbling in Thursday trading on all of the major markets.

Investors erased some $75 billion in value from Apple alone… an amount known technically as a shit ton of money. But stocks were down broadly based on Apple’s news, with the Nasdaq falling 3 percent, or roughly 202.44 points, and the Dow Jones Industrial Average plummeting 660.02 points, or roughly 2.8 percent.

Apple halted trading of its stock yesterday afternoon to provide lower guidance for upcoming earnings.

Apple’s news from late yesterday that it would miss its earnings estimates by several billion dollars thanks to a collapse of sales in China was the trigger for a broad sell-off that erased gains from the last trading sessions before the New Year (which saw the biggest one-day gain in stocks in recent history).

Apple’s China woes could be attributed to any number of factors, D.A. Davidson senior analyst Tom Forte said. The weakening Chinese economy, patriotic fervor from Chinese consumers or the increasingly solid options available from domestic manufacturers could all be factors.

Sales were suffering in more regions than China, Forte noted. India, Russia, Brazil and Turkey also had slowing sales of new iPhone models, he said.

Investors have more than just weakness from Apple to be concerned about. Chinese manufacturing flipped from growth to contraction in December and analysts in the region expect that the pain will continue through at least the first half of the year.

“We expect a much worse slowdown in the first half, followed by a more serious and aggressive government easing/stimulus centred on deregulating the property market in big cities, and then we might see stabilisation and even a small rebound later this year,” Ting Lu, chief China economist at Nomura in Hong Kong, wrote in a report quoted by the Financial Times.

U.S. manufacturing isn’t doing much better, according to an industrial gauge published by The Institute for Supply Management. The institute’s index dropped to its lowest point in two years.

“There’s just so much uncertainty going on everywhere that businesses are just pausing,” Timothy Fiore, chairman of ISM’s manufacturing survey committee, told Bloomberg. “No matter where you look, you’ve got chaos everywhere. Businesses can’t operate in an environment of chaos. It’s a warning shot that we need to resolve some of these issues.”

The index remains above the threshold of a serious contraction in American industry, but the 5.2-point drop from the previous month in the manufacturing survey is the largest since the financial crisis, and was only exceeded one other time — following the September 11, 2001 terror attacks on the U.S.

Cryptocurrency chill causes mining speculator Nvidia’s stock to plunge

The cryptocurrency market is an exciting one, but it’s also unpredictable — and when things go south, they take related businesses with them. Nvidia, a hardware giant that has been riding the cryptocurrency wave, saw its stock price take a double-digit hit as it reported vanishing demand for GPUs specializing in crypto-mining.

It’s been a wild year in the GPU market as there were points when ordinary gamers, who have relied on Nvidia for years for the powerful cards used to play the latest games, found inventory scarce for the company’s latest generation of hardware.

The cards had been, and continued to be for some time, bought up by cryptocurrency mining operations, all striving to get a leg up on one another. Consumer-grade GPUs are excellent candidates for putting together low-cost, high-performance clusters that excel in solving the type of problems posed in the likes of Bitcoin mining. The cards were essentially paying for themselves due to the profitability of participating in the lucrative markets.

But those markets, which have been booming for much of the year, have cooled — not to say crashed — and consequently demand for GPUs has cooled as well, as Nvidia’s earnings statements show.

If Nvidia had seen the cryptocurrency boom for what it was at the time — an important but misleading flare in value — it likely would not have produced the estimated $57 million in excess inventory aimed at the miner market. Mid-range gaming GPU sales declined as well, though this seems to have been part of a larger trend.

It will take a couple of quarters to get through all that inventory, during which time of course it will have to be steeply discounted, since miners and gamers understand implicitly that improved versions are just around the corner and are unlikely to pay full price for hardware approaching even a minor degree of obsolescence. The misstep caused Nvidia’s price to drop more than 19 percent Thursday, and it has not rallied today.

“This is surely a setback and I wish we had seen it earlier,” said CEO Jensen Huang on a press call following the announcement of the results.

Cryptocurrency markets may never return to the feverish state of competition they existed in for much of 2018. An explosion of “alt coins” and Initial Coin Offerings baffled casual investors in the ecosystem, and scams were (and are) rife. This led to an overall skepticism in the systems as a class, and even sophisticated and proven ones like Ethereum have suffered major devaluation.

There’s no doubt that blockchain and token economies will be a major part of the financial future (among other things) but the feeding frenzy of 2018 seemed unsustainable from the start. Already many cryptocurrency systems are moving away from the arms race of “proof of work” to the more equitable “proof of stake.” That change alone could decimate computing requirements if adopted at large (although established systems like Bitcoin are too far along to change, outside ill-advised forks like Bitcoin Cash).

Don’t bother shedding a tear for Nvidia, though. The company is rolling high and the GPU market is strong. But it seems that it too, alongside millions of others, has suffered the consequences of speculating on cryptocurrency.

IAC reorg makes Vimeo and DotDash standalone segments, adds new acquisition Robokiller

IAC is changing the way its business is organized, the company reported during its Q3 2018 earnings on Wednesday. The company’s video platform Vimeo and DotDash (previously About.com) will become their own separate segments at IAC starting in Q4. That means they’ve reached the point their revenues can stand on their own.

The company beat on third quarter revenue expectations in the quarter with a revenue increase to $1.1 billion from $828.4 million a year ago, ahead of FactSet analyst expectations of $1.07 billion. However, net income was $145.8 million, or $1.49 a share, down from $179.6 million, or $1.79 a share, a year earlier. The drop was attributed to a tax benefit that it received in the year-ago period.

Vimeo’s revenue growth in the quarter increased 29 percent, and it grew its subscriber base by 10 percent to 932,000, IAC said.

“The business has the scale and potential to now stand on its own, and we want to begin to put a spotlight on it,” said IAC CEO Joey Levin, in a note to shareholders.

“Vimeo always has and always will obsessively, relentlessly cater to the needs of creators – not advertisers, not eyeballs, not our own platform, nor anything else. We’ve focused entirely on the creators and they have rewarded Vimeo with their loyalty. The numbers bear this out – Vimeo enjoys incredible retention, an average customer lifetime of nearly 5 years, customers that upgrade over time, and new subscribers that are attracted to fresh, premium offerings at increasingly higher price points,” he wrote.

Meanwhile, DotDash increased revenue by 35 percent to reach $30.1 million, with expanding profit margins in Q3.

The company will also begin splitting out mobile revenue from its legacy desktop business in Q4. IAC said its mobile business saw 158 percent revenue growth in the quarter to over $35 million, comprising 23 percent of its total revenue. The mobile business now counts over 2.5 million subscribers, IAC said.

After the changes to business segments in Q4, the remaining businesses in Publishing and Video will aggregate into a catch-all segment, named “Emerging & Other” which will include both early stage and mature businesses like BlueCrew, Ask Media Group, The Daily Beast, DROPOUT (College Humor’s subscription service), IAC Films and new incubation projects.

The group may “intermittently generate cash or consume cash,” but is more focused on the “next decade than the next quarter,” warned IAC. It noted it wouldn’t communicate much about the segment’s businesses going forward.

In addition, the company announced a new acquisition: East coast-based TelTech, the makers of an app called Robokiller, which blocks spam calls and telemarketers. This will join IAC’s Applications group.

Combined with Publishing (where DotDash, Ask.com, Investopedia, The Daily Beast, and others live) the two segments delivered over $50 million of Adjusted EBITDA in the quarter, nearly all of it cash flow.

Match Group, the parent company to Tinder, grew its average subscribers 23 percent to 8.1 million, driven by 61 percent growth in Tinder average subscribers to 4.1 million. Match had reported its own earnings ahead of IAC this week, where it also announced plans to focus Tinder on casual dating and invest more heavily in the relationship-focused app Hinge.

Match also announced a special $2 per share dividend, of which IAC said it has “no one thing or single use” in mind.

IAC said it’s now stockpiling cash and should have over $1.7 billion by year-end, excluding ANGI Homeservices (Angie’s List, HomeAdvisor, Handy – whose acquisition now completed – and others) and Match Group cash.

 

Despite a strong Q3 earnings report, Square’s Q4 forecast disappoints investors

Despite a strong third-quarter earnings report, Square’s forecast for the final quarter of this year gave investors pause, sending its share price down 6 percent in after hours trading before it gradually climbed up again.

Square’s adjusted revenue grew 68 percent year-over-year to $431 million, beating expectations from analysts polled by Refinitiv (formerly the financial and risk arm of Thomson Reuters), who had forecast $413.9 million. It also reported 13 cents in adjusted earnings per share, better than the 11 cents analysts expected.

Total third-quarter revenue was $882.1 million, a 51 percent increase from the same period last year, and Square also marked its first quarterly profit of $20 million, compared to a loss of $16 million last year. In an earnings call, CFO Sarah Friar said this was due largely to Square’s investment in Eventbrite, which held its IPO in October.

Despite beating analysts’ expectations for its third quarter and also raising its adjusted core earnings forecast for 2018 to between $250 million and $255 million, up from $240 million to $250 million, Square’s forecast for the fourth quarter missed expectations. The company expects adjusted earnings of 12 cents to 13 cents a share, lower than the 15 cents forecast by analysts polled by Refinitiv.

Investors were also worried about Square’s transaction-based revenue, which grew 29% to $655 million during the third quarter, compared to 31 percent last year, because even slightly slower growth may signal that competitors like Clover are gaining more traction. Square reported, however, that the important segment of gross payment volume (GPV) it processes from “large sellers,” or merchants who do more than $125,000 a year in GPV, grew to 52 percent, up from 48 percent a year ago.

Friars said in Square’s earnings call that this is because Square has made it easier for large retailers to integrate Square’s platform into their operations, as well as the recent launches of Square Terminal, its credit card machine, and Square Installments, which enables merchants to allow customers to make monthly payments.

Friar, who oversaw Square’s IPO in November 2015 and has served as its CFO since 2012, announced last month that she will leave the company to become the CEO of Nextdoor. CEO and founder Jack Dorsey said that the search for a new CFO is his “number one focus at the company” and will be led by independent director David Viniar and board member Roelof Botha.

Tinder now has 4.1M paying users, expects $800M in revenue this year

Facebook Dating is no challenger to Tinder-owner Match Group (NASDAQ: MTCH), which posted third-quarter earnings per share of 44 cents on Tuesday.

The company, which owns several brands of internet dating services, including Tinder, Hinge, Ok Cupid and PlentyOfFish, surpassed analyst’s forecasted revenue of $437 million, reporting Q3 revenue of $444 million, a 29 percent increase year-over-year.

Match says it expects to bring in a total of $1.72 billion in annual revenue.

Despite positive earnings, the company’s 4Q outlook failed to satisfy Wall Street. Match said it expects between $440 and $450 million in revenue in Q4, falling short of the $454.5 million analyst estimate. Shares of Match sank 10 percent in after-hours trading as a result.

Year-to-date, Match’s stock is up roughly 60 percent.

Tinder, the location-based mobile dating application, continues to be Match’s growth engine, responsible for roughly half its paid users and half its projected annual revenue. Match’s total number of paid subscribers came in at 8.1 million, up from 7.7 million in Q2 and a 23 percent increase YoY. Much of that growth comes from Tinder Gold, Tinder’s premium subscription tier that lets users see who’s already liked them without doing any swiping. Overall Tinder’s paying user base is up to 4.1 million from 3.8 million the previous quarter.

Tinder is expected to bring in $800 million in revenue in 2018.

Hinge, another app-based dating service acquired by Match in June, is on its way up. Match says it’s seen a 5x increase in downloads since it first invested.

Match also announced that it would, for the first time, issue a special cash dividend of $2.00 per share on Match Group common stock and Class B common stock, to be paid out on Dec. 19.

Match continues to be on the prowl for strategic M&A opportunities, said its chief executive officer Mandy Ginsberg in a statement

“[We] have the financial flexibility to acquire companies when we find innovative products with long-term potential,” she said.

The company has reportedly attempted to acquire Tinder-competitor Bumble on more than one occasion, though the nasty legal battle playing out between the dating powerhouses makes that combination unlikely. Most recently, Bumble said it was dropping its $400 million lawsuit against Match, which had claimed Match fraudulently obtained trade secrets during acquisition talks. Bumble may refile that suit at the state level.

Dallas-based Match is owned by IAC, which will itself report earnings tomorrow after the closing bell.

Apple beats on Q4 earnings thanks to price hikes, stock still falls 7% after hours

Despite a beat on its Q4 quarterly earnings, Apple shares still managed to take a beating Thursday.

Shares are down 7 percent in after-hours trading after the company released its Q4 quarterly earnings report, detailing $62.90 billion in revenue beating analyst expectations of $61.57 billion, with earnings per share hitting $2.91 beating an expected $2.78 EPS. The results represent a 20 percent year-over-year growth in revenues at the company.

The reason for the after-hours drop? Apple forecasted weaker than expected earnings for the holiday quarter. While analysts were expecting revenue guidance to hit $93 billion, Apple forecasts between $89 billion and $93 billion with a midpoint of $91 billion according to Reuters.

Apple shipped 46.89 million iPhones this quarter, with unit sales staying flat but revenue jumping 29 percent, a result of Apple’s strategy this past year to hike prices of their most high-end devices. The average price of each unit was $793 versus $618 a year ago.

The company shipped 9.7 million iPads (a 6 percent decrease YoY with a 15 percent revenue decrease) and 5.3 million Macs (a 2 percent decrease YoY). Revenue on “Other Products,” which includes Apple Watch, Apple TV, HomePod, AirPods and Beats headphones, climbed 31 percent.

The company surprisingly announced on its investor call that in subsequent quarters it would stop breaking out unit sales of iPhone, iPad and Mac and would only report revenues. They will also be renaming “Other Products” to “Wearables, Home and Other Accessories.”

Beyond wrenching more money from users with hardware upgrades, Apple has continued the trend of pulling more revenue from user services like Apple Music, Apple Care and iCloud. The company reported that its Services division reached “an all-time-high of $10 billion in revenue” (well, actually $9.98 billion), climbing 17 percent year-over-year. That’s a slowdown in growth rates from last quarter where Services revenue climbed 31 percent year-over-year, though Apple notes this quarter’s numbers included a one-time accounting adjustment of $640 million.

Among the big geographical segments there was pretty unified growth in revenues. The Americas region jumped 19 percent, Europe popped 18 percent and Greater China went up 16 percent year over year. Apple saw more substantial growth in Japan (34 percent).

It’s been a rough past few weeks for the Nasdaq; tech stocks have been floundering, though Apple has weathered the storm far better than most on the heels of several new hardware announcements. Earlier this week, the company introduced new models of the iPad Pro, MacBook Air and Mac Mini at an event in New York. This comes on the heels of the release of three new iPhone models and a redesign of the Apple Watch.

Over the past several months, the company has been bumping the prices of its newest devices, promoting a broader spread between their older releases and newest devices. The iPhone XS Max starts at $1,099, the Apple Watch Series 4 starts at $399, the new iPad Pro starts at $799 and the new MacBook Air starts at $1,199.

The original version of the article has been updated to correct Apple’s revenue and analyst forecasts

As stock rises on a slim earnings beat, eBay tells analysts to focus on payments and ads

Despite increasing competition from traditional retailers like Walmart and Target, which have invested heavily in e-commerce, and the whupping it’s routinely taking from Amazon among pure e-commerce companies, eBay the 20-year-old lumbering Pez dispenser of an e-tailer, keeps plugging along.

Now, as it manages to eke out another earnings win by matching analysts’ expectations, the company is telling the bankers that watch it to look to advertising and payments for its future growth.

The company met analysts’ estimates of revenue totaling $2.65 billion, up from $2.41 billion in the year-ago period. That amounts to adjusted earnings of 56 cents per share, up from 48 cents per share in the year-ago period and beating analyst estimates of 54 cents per share. Profits for the company hit $720 million for the quarter.

The news sent shares up over 4 percent in trading after the market closed on Tuesday.

But more interesting than the the tepid results was its outlook for the future. Right now, eBay is at a crossroads as it tries to get a new group of users to forget about its past as a marketplace for used goods and resellers — and as a more pure e-commerce company.

“This quarter we continued to make foundational investments to improve the long-term competitiveness of our marketplace while setting the stage for significant growth opportunities,” said CEO Devin Wenig in a statement. “We will continue to innovate the customer experience while executing our growth initiatives in Payments and Advertising to position eBay for future success.”

The fact is, eBay is growing. It saw the number of active buyers across the platform increase by 4 percent, and has 177 million global active buyers. While that number is dwarfed by Amazon’s over 300 million global buyers (as of 2017), it’s one of the largest retailers in the U.S. The company’s StubHub business saw revenues of $291 million, up 7 percent from the year-ago period and sales of $1.2 billion. Its classified payments also grew.

As eBay looks ahead, payments and advertising are going to receive a bulk of the company’s internal investment dollars as it tries to complete the rollout of a new payment experience in the wake of its divorce from PayPal and its embrace of Adyen, Apple Pay, and the technology-based financial services company, Square.

The company has already processed $38 million in payments and through the partnership with Apple Pay has grown that payment method to 12 percent on the platform. Advertising on eBay has seen 400,000 sellers promote over 160 million listings.

“We continue to grow the inventory on the marketplace,” Schenkel. “Just recently we rolled out a direct from brand and direct from authorized resellers… Brands want choice and they want to sell on a marketplace with 177 million users that doesn’t compete with them.”

The company will also continue to have an aggressive investment and mergers and acquisitions strategy, the executives said. Especially since the company found its earnings buoyed by the $1 billion it brought in from the sale of its stake in Flipkart, href="https://techcrunch.com/2018/05/09/walmart-confirms-16b-flipkart-investment-giving-it-77-in-indias-e-commerce-leader/"> when it was bought by Walmart for $16 billion.

What’s somewhat interesting is that there are new companies in the retail space that are making a mint doing things that eBay once dominated. Vinted and DePop are both used-clothing e-tailers that have enviable cache and significant revenues, while LetGo and OfferUp are also raiding used goods to turn trash into treasure.

A quick trip to eBay’s homepage shows that the company has all but consigned its collectible past to the trash heap. Given the death and dissolution of so many of its peers from the first generation of internet giants, it’s worth keeping an eye on eBay if only to see how the 20-something company approaches middle age as an independent entity.

“We have a unique situation. [The] eBay brand is very well recognized and not as well understood. We’re seeing this; that new buyers are responding really well to the changes that we made in the last few years and we need more of them and part of that is messaging our brand,” said Wenig on the earnings call with investment analysts.

Sony posts $2.1B profit as PlayStation sales keep on growing

Sony’s PlayStation business continues to come on leaps and bounds after a 27 percent increase in gaming revenue helped the company record a $2.1 billion profit in Q2.

The PlayStation division is Sony’s top performer and once again that was the case, carding $4.9 billion in sales during the quarter with an operating profit of $800 million for the division, that’s up around 65 percent year-on-year. That caused Sony’s operating profit to jump by 59 percent as revenue rose six percent to $19.6 billion.

Outside of gaming, Sony saw big gains in sales within financial services, its second-biggest revenue generator which jumped 27 percent, and semiconductors, up 11 percent, although losses for its troubled mobile unit widened to reach $265 million for the quarter while mobile revenue declined by 32 percent year-on-year.

The Sony is so bullish about the rest of the year that it has raised its full-year operating profit forecast to 870 billion JPY, that’s $7.7 billion and an increase of about 30 percent to the original target.

That’s partly down to the strong performance of its PlayStation but also the impact of its $2.3 billion buyout of EMI Music Publishing, as pointed out by Bloomberg. Sony previously held a 39.8 percent share in the venture but the deal — which just got the regulatory green light in Europe — will see the value’s of original stake increase while adding additional revenue from the business. Tellingly, those EMI gains represent 55 percent of the additional revenue Sony is forecasting to hit this financial year.