DAILY MARKET REPORTS
- U.S. stocks slumped Thursday as fresh data and a bleaker outlook from the Bank of England renewed fears of a slowdown in global growth.
- Central bankers said the slowdown in global growth, as well as the uncertainty about the U.K.’s eventual trade relationship with the European Union, had hurt the U.K. economy in late 2018 and early 2019.
- Twitter shares fell 7.7% despite posting its first full year of profitability after the company said that it expects revenue in the current quarter to grow by a lower percentage from a year ago.
- Chipotle shares jumped 9% after the burrito maker reported a stronger-than-expected fourth-quarter profit late Wednesday.
US FINANCIAL MARKET
Chipotle’s fresh food campaign drives profit beat, shares surge
- Chipotle Mexican Grill topped Wall Street forecasts for quarterly earnings as aggressive marketing helped lure more diners and boost online orders, sending its shares up 10% in after-hours trading on Wednesday.
- Revenue overall rose 10.4% to $1.23 billion, and digital sales, which accounted for roughly 11% of total sales last year, rose 66% in the December quarter from the same period the year earlier.
- The company reported that sales at outlets open for at least 13 months jumped 6.1%, much better than Wall Street analysts’ average forecast of a 4.49% increase.
- Over all, Chipotle reported a fourth-quarter profit of $32 million, compared with a profit of $43.8 million for the same quarter a year earlier. Chipotle also announced that it would spend $100 million to buy back shares.
Twitter shares sink after weaker-than-expected revenue forecast
- Twitter said revenue in the first quarter would be weaker than expected while full-year operating costs would rise, sending shares down more than 7% in premarket trading.
- Overall revenue in the fourth quarter rose to $909 million, handily beating analysts’ estimate of $868.2 million.
- Monthly active users totaled 321 million in the fourth quarter, in line with analysts’ forecasts but down from 330 million a year earlier and 326 million in the third quarter.
- Twitter’s profit in the fourth quarter increased to $255.3 million, from $91.1 million a year earlier.
- Twitter said it expected total revenue of between $715 million and $775 million for the first quarter of 2019. The midpoint of that range was below analysts’ average estimate of $765 million.
T-Mobile results beat on higher subscriber additions
- T-Mobile reported quarterly revenue and profit that beat Wall Street estimates, as the wireless carrier added more than expected phone subscribers who pay a monthly bill.
- Revenue rose to $11.45 billion from $10.76 billion. Analysts were expecting revenue of $11.39 billion.
- T-Mobile said it added a net of about 1 million so-called postpaid phone subscribers in the fourth quarter compared with 891,000 additions a year earlier. Analysts were expecting 912,000 new subscribers, according to research firm FactSet.
- The company’s net income fell to $640 million from $2.71 billion a year earlier, when it recorded a big one-time tax related gain.
- The wireless carrier said it expects to add, without Sprint, 2.6 million to 3.6 million net new postpaid customers in 2019.
Coach owner Tapestry cuts forecast, shares drop 11%
- Tapestry blamed falling tourist spending and a slowing global economy for a cut in its full-year forecast on Thursday, as it reported disappointing holiday numbers and lower sales of Kate Spade handbags.
- Sales at Coach, whose handbags and accessories account for about 70% of the company’s business, rose about 2% in the quarter to $1.25 billion. However, sales at Kate Spade fell 1.6% to $428 million.
- Comparable-store sales at Coach rose 1% while comparable-store sales for Kate Spade fell 11%.
- Analysts were expecting them to increase 1.8% for Coach and fall 3.3% for Kate Spade.
- The company posted a profit of $254.8 million, compared with $63.2 million for the comparable quarter a year earlier.
- Tapestry also said it expects full-year revenue to rise at a low-to-mid-single-digit rate compared with an earlier prediction of mid-single-digits, and expects full-year earnings in a range of $2.55-$2.60 per share, down from its previous $2.75-$2.80.
Yum Brands profit misses as Pizza Hut promotions weigh
- Yum Brands missed estimates for quarterly profit, as the fast-food chain operator spent aggressively to revive sluggish traffic at Pizza Hut.
- Total revenue fell 1% to $1.56 billion, missing expectations of $1.59 billion.
- Strong sales at KFC and Taco Bell helped drive the company’s global comparable store sales up 3%, topping estimates of 2.48%.
- Worldwide same-store sales rose 6% at Taco Bell, easily topping expectations of a 4.35% increase.
- The company’s net income fell 23% to $334 million in the quarter, missing adjusted earnings per share by more than 50%.
GrubHub’s quarterly results miss estimates as expenses rise
- GrubHub’s fourth quarter results missed analysts’ estimates as the online food delivery company continues to increase spending on marketing and expansion activities to attract more people to its platforms.
- Revenue rose about 40% to $287.7 million, missing analysts estimate of $290.5 million.
- GrubHub reported a net loss of $5.2 million in the fourth quarter, compared to a profit of $53.5 million a year earlier.
Cheap crude helps Marathon quarterly margins, throughput
- Marathon Petroleum posted a 56% jump in the number of barrels of crude it processed per day during the fourth quarter and the refiner’s margins rose, helped by access to cheap oil from Canada and its purchase of rival Andeavor.
- Total revenue rose to $32.54 billion from $21.24 billion a year earlier as crude oil throughput rose to about 3 million barrels per day from 1.84 million barrels last year, helped by its acquisition of Andeavor.
- Net income fell to $951 million in the fourth quarter, from $2.02 billion a year earlier when the company recorded a $1.5 billion gain related to the U.S. tax overhaul.
Tyson Foods quarterly sales miss estimates on lower pork sales
- Tyson Foods missed estimates for first-quarter revenue on Thursday, as the largest U.S. meat processor was hit by lower average prices of pork, denting its sales.
- Sales fell 0.3% to $10.19 billion. Analysts on average had expected revenue of $10.38 billion.
- Sales in the company’s pork business fell 8.1%, as prices fell on average 4.6% compared to last year.
- China’s retaliatory tariffs of more than 60% on pork have resulted in oversupplies of hogs in the United States as fewer producers ship them for Chinese consumption.
- Net income fell to $551 million in the quarter, from $1.63 billion a year earlier, when it received a one-time tax benefit.
Kellogg posts fourth-quarter loss, hit by higher costs, strong dollar
- Kellogg reported a fourth-quarter loss on Thursday as it suffered the effects of a strong dollar and the costs of an ongoing restructuring and preparations for Brexit.
- Kellogg said sales rose 4.1% to $3.32 billion in the quarter, helped by acquisitions, including its 2017 purchase of RXBAR.
- The company said currency translation hurt sales by 3%.
- Net loss was $84 million, compared with a profit of $417 million a year earlier.
ArcelorMittal sees small steel demand rise, shares slip on margin concerns
- ArcelorMittal, the world’s largest steelmaker, forecast on Thursday a moderate expansion in global steel demand in 2019 after a healthy market drove its 2018 earnings to their highest in a decade.
- But its shares slid 3%, as analysts said a fall in steel prices and tighter margins had yet to feed into figures for the company that is battling global overcapacity and is facing the risk of an economic slowdown
- Revenue increased mildly to $18.3 billion compared to $17.7 billion, as a rise in steel prices from last year offset a decline in shipments.
- Net income slightly increased to $1.2 billion from $1.03 billion in the same period a year ago.
- The company said it expected demand to grow by 0.5 to 1% this year after rising 2.8% in 2018.
GoPro tops revenue estimates, posts first profit in five quarters
- GoPro reported its first profit in five quarters and topped Wall Street estimates for revenue, as it cut costs and saw strong demand for the latest action cameras from its flagship HERO line.
- Revenue surged 13% to $377 million, exceeding analysts’ average estimate of $374.2 million.
- The company reported a net income of $32 million in the quarter, compared with a net loss of $55.9 million a year earlier.
- The company also projected revenue of between $510 million and $550 million for the first half of 2019.
Tinder growth powers Match earnings beat, shares soar
- Match Group beat Wall Street estimates for fourth-quarter revenue and profit on Wednesday as its popular dating app, Tinder, attracted more subscribers, sending its shares up as much as 12% in extended trading.
- Total revenue rose 20.7% to $457.34 million, beating estimates of about $448.5 million, as the company earned 58 cents per user on average, 3 cents more than last year as more users shifted to its premium services.
- Tinder added 233,000 average subscribers in the quarter, bringing its total average subscriber count to 4.3 million, or 1.2 million more than a year earlier, while overall subscribers at Match rose to 8.2 million.
- Net income was $115.5 million for the quarter, compared with a loss of $9 million a year earlier.
FireEye forecasts surprise loss, shares fall
- FireEye forecast a surprise loss for the current-quarter after edging past earnings estimate for the last three months of 2018, sending the cybersecurity firm’s shares down 7% in extended trading.
- Total revenue rose 5.7% to $217.5 million, beating analysts’ average estimate of $216.8 million.
- FireEye posted a loss of $48.4 million, down from a loss of $70.4 million in the same period a year ago and ahead of estimates on an adjusted per share basis.
- The company forecast adjusted net loss of 2 cents to 4 cents per share and revenue in a range of $208 million to $212 million for the current quarter, compared to an expected profit of 1 cent per share and revenue of $211.3 million.
Zynga bookings beat estimates as turnaround takes hold
- Zynga forecast quarterly bookings above analysts’ estimates after beating expectations for the fourth quarter, suggesting that the game developer was benefiting from its mobile push.
- Mobile contributed nearly 93% to Zynga’s bookings of $267 million, well above analysts’ estimates of $259.3 million.
- Zynga’s average daily active users were 22 million, up 4% from a year earlier.
- The company reported a profit of $0.6 million in the quarter, compared with $12.9 million a year earlier.
- The company said it expects first-quarter bookings of $325 million, while analysts were expecting $301.4 million.
MetLife misses revenue estimates on weak Asia, EMEA underwriting
- U.S. life insurer MetLife missed analysts’ estimate for fourth-quarter revenue on Wednesday, hit by weaker underwriting fees in its Asia and Europe, the Middle East and Africa (EMEA) markets.
- Total revenue fell 1% to $15.66 billion, missing analysts’ average estimate of $15.93 billion, according to IBES data from Refinitiv.
- Net income fell to $2 billion from $2.3 billion, slightly ahead of expectations on a per share basis.
BB&T to Buy SunTrust in Largest Bank Deal Since the Financial Crisis
- BB&T has struck a deal to buy SunTrust Banks, combining two regional banking powerhouses to create the sixth-largest U.S. retail bank and ending a decadelong drought in big bank mergers.
- The all-stock deal, the largest U.S. bank merger since the financial crisis, values the combined company at $66 billion.
- The merged bank will have about $442 billion in assets, the firms said.
- The deal marks a return to deal-making for big U.S. banks. A tougher regulatory environment following the crisis kept banks on the sidelines of recent merger booms, but the Trump administration has eased some of the rules that discouraged deals.
New Black Boxes Offer Ability to Send Real-Time Data from Plane Crashes
- Honeywell is introducing a new line of aircraft cockpit and flight-data recorders that offer more data-storage capacity and the ability, for the first time, to use satellites to retrieve accident information in real time.
- Without satellite data-streaming, investigators so far have had to find and physically recover black boxes—sometimes from miles underwater or remote mountain peaks—before being able to access data.
- Honeywell’s technology is expected to be available next year for installation on newly built airliners and large business jets, as well as for retrofits on older models.
- Honeywell’s recorders are designed to match the size and cost of its existing devices.
Germany to restrict Facebook’s data gathering activities
- Facebook has been ordered to curb its data collection practices in Germany after a landmark ruling on Thursday that the world’s largest social network abused its market dominance to gather information about users without their consent.
- Germany, where privacy concerns run deep, is in the forefront of a global backlash against Facebook, fueled by last year’s Cambridge Analytica scandal in which tens of millions of Facebook profiles were harvested without their users’ consent.
- The country’s antitrust watchdog objected in particular to how Facebook pools data on people from third-party apps and its online tracking of people who aren’t even members through Facebook ‘like’ or ‘share’ buttons.
California utility PG&E vows more power shutdowns to prevent wildfire
- California utility PG&E plans to increase the controversial practice of shutting off the power to communities at risk of wildfire when dangerous conditions such as high winds and dry heat are present.
- In a report to state regulators PG&E said it would also remove 375,000 trees near electricity lines, trim vegetation over 2,500 square miles (6,475 square km) and conduct thousands of inspections to prevent its equipment from sparking wildfires.
- The utility said it would increase nearly tenfold its efforts to turn off the power to communities threatened by wildfire, increasing the number of households and businesses potentially affected by fire-prevention blackouts in 2019 to 5.4 million.
US ECONOMY & POLITICS
U.S. Jobless Claims Declined Last Week
- The number of Americans filing applications for new unemployment benefits fell sharply last week but remained higher than before the partial government shutdown that ended Jan. 25.
- Initial jobless claims, a proxy for layoffs, declined by 19,000 to a seasonally adjusted 234,000 in the week ended Feb. 2.
- That was higher than the 225,000 median estimate in a Wall Street Journal survey of economists.
- Thursday’s report showed the number of claims workers made for longer than a week decreased by 42,000 to 1,736,000 in the week ended Jan. 26. The figure, also known as continuing claims, is reported with a one-week lag.
CFPB Unveils Plan to Revise Obama-Era Payday Loan Regulation
- The Trump administration said Wednesday it will overhaul an Obama-era payday loan regulation, unveiling a proposal to remove a lending requirement that would have made it difficult for companies to offer high-cost consumer loans.
- The announcement follows years of lobbying by payday and auto-title lenders to block the Obama payday-lending rule.
- The industries have said the regulation would wipe out their business by imposing onerous requirements to determine up front the likelihood customers can repay the loan.
- Consumer advocates have said they likely will seek legal action to block the changes. Democratic lawmakers also have criticized the administration’s intent to revise the rule.
Virginia Leadership in Crisis as Attorney General Apologizes for Using Blackface
- The turmoil surrounding Virginia’s top Democrats deepened Wednesday, as the state’s attorney general admitted to wearing blackface at a college party and its lieutenant governor responded to new details about an allegation of sexual assault.
- If Mr. Northam, Lt. Gov. Justin Fairfax and Attorney General Mark Herring can’t continue to serve, the next person in succession for the governorship would be the speaker of the state’s House of Delegates, who is Kirk Cox, a Republican.
- The scandals threaten to weaken the Democratic Party ahead of elections in November that will decide which party controls the state’s General Assembly.
- The party that wins will play a commanding role in the redrawing of congressional districts after the 2020 census.
- Virginia figured as one of the main congressional battlegrounds in last year’s midterm elections. Democrats flipped three House seats to take control of seven of the state’s 11 congressional districts.
At least four pharma CEOs to testify at Senate drug pricing hearing
- Drugmakers Pfizer Inc, Bristol-Myers Squibb Co and Sanofi SA said on Wednesday that their chief executives plan to testify at a Senate hearing on rising prescription drug prices later this month.
- They join Merck & Co CEO Ken Frazier, who said on Tuesday that he would testify at the Feb. 26 hearing.
- Johnson & Johnson said on Wednesday that Jennifer Taubert, its head of global pharmaceuticals, would represent the healthcare conglomerate at the hearing.
- Congress has been targeting the pharmaceutical industry over the rising cost of prescription drugs for U.S. consumers, particularly since Democrats took over the House of Representatives in January.
EUROPE & WORLD
Eurozone Economic Forecasts Slashed
- Eurozone economic growth will slow significantly this year, the European Union said Thursday, as the currency union faces weakening global trade and the increasing risk of a chaotic Brexit.
- The EU forecasts gross domestic product in the 19-member eurozone will grow by 1.3% in 2019 instead of the 1.9% that was forecast in November. The economy is expected to expand by 1.6% next year, down from 1.7% previously expected.
- The EU forecasts that Italy’s economy, which slipped into recession at the end of 2018, will grow at the slowest pace in the currency union at just 0.2% this year.
- Meanwhile, Germany is struggling to repeat the export-driven growth of 2014-2017, with the EU slashing its 2019 growth forecast to 1.1% from 1.8%.
Total eyes more output growth in 2019 after profit jump
- French energy major Total is eyeing further strong growth in oil and gas production in 2019 after record output in 2018 enabled it to post a 28% jump in full-year earnings.
- The company said output reached an all-time high of 2.8 million barrels of oil equivalent per day in 2018 thanks to the start-up of various operations and increased production in liquefied natural gas (LNG) and deep sea projects.
- The company reported a rise in full-year profit to $13.6 billion, following on from strong results from other oil majors, while its cash flow was at around $26 billion, up 18% compared with the previous year.
- Total said production is expected to rise by 9% to reach over 3 million barrels of oil equivalent per day in 2019.
France’s Sanofi targets growth from new drugs after stronger quarter
- French drugmaker Sanofi pledged further increases in full-year profit helped by new drug launches and its reorganization efforts.
- Sanofi’s fourth-quarter business net income was up 4.3% at constant exchange rates to 1.36 billion euros, while revenue rose 3.9% to 9 billion.
- Analysts had on average been expecting a business net income of 1.32 billion euros on sales of 8.9 billion.
- Sales at Genzyme surged 37.4%. Revenue at the diabetes and cardiovascular unit, however, fell 11.3%.
- It forecast an increase of 3-5% in 2019 earnings per share as it posted slightly higher-than-expected quarterly earnings, powered once again by its rare diseases Genzyme unit.
EU, U.K. Agree to Fresh Talks to Break Brexit Deadlock
- European Union leaders agreed to resume negotiations with British Prime Minister Theresa May to try to break the deadlock over Brexit but again rebuffed the U.K.’s request to reopen the legally binding withdrawal agreement.
- In a joint statement after she met European Commission President Jean-Claude Juncker, the two sides said talks would continue and the two leaders would meet again before the end of February.
Inspectors of Vale Dam in Brazil Issued Warning Before Collapse
- Inspectors of a Brazilian mining-waste dam whose collapse last month killed at least 150 people had warned its owner that faulty water drainage and monitoring systems represented a potential risk of failure, according to a safety report reviewed by The Wall Street Journal.
- The report, provided to the mine’s owner Vale SA months before the disaster, found that flaws in monitoring crucial water concentrations and drainage made it difficult for the company to fully assess the dam’s stability.
Italy denies it will ban Huawei, ZTE from its 5G plans
- Italy has denied a report it will ban China’s Huawei Technologies and ZTE from playing a role in building its fifth-generation mobile phone network.
- Earlier on Thursday Italian daily La Stampa cited senior government sources as saying Rome was ready to use special powers to terminate contracts involving the Chinese operators.
TODAY in HISTORY
- The 11th Amendment to the Constitution was ratified. (1795)
- The Beatles arrived in the U.S. for the first time. (1964)
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