DAILY MARKET REPORTS
- U.S. stock indexes recovered from early losses after testing a key technical level.
- Data showed unemployment rate dropped to 3.9%, a 17-1/2-year low.
- Nonfarm payrolls increased by 164,000 jobs last month.
- Investors were also watchful of details coming in after China and the United States held talks in Beijing to settle trade differences.
- Apple rose 2.4%, helping the indexes shed earlier losses, after Buffett’s Berkshire Hathaway raised its stake in the iPhone maker.
- Pandora Media jumped 18.1% after the music streaming service provider reported a smaller-than-expected quarterly loss.
US FINANCIAL MARKET
Alibaba’s Profit Falls as E-Commerce Giant Ramps Up Investments
- Chinese e-commerce giant Alibaba Group said its profit fell 29% from a year ago, as it spent on acquisitions to expand overseas and into brick-and-mortar retail.
- Revenue for the quarter increased 61% from the year-earlier period, to 61.93 billion yuan ($12.6 billion).
- Alibaba’s fourth-quarter earnings of 7.56 billion yuan ($1.21 billion), was down from 10.65 billion yuan in the same quarter the previous year. That fell short of a forecast of 7.7 billion yuan by analysts.
- Among others, it invested $2 billion in Lazada in March, doubling down on the existing $2 billion it already put in.
Activision Blizzard Results Get Boost from In-Game Spending
- Activision Blizzard reported record first-quarter results Thursday, with revenue and profit rising by double–digit percentages thanks to increased in-game spending in key titles such as “Call of Duty: World War II” and “Candy Crush Saga.”
- While the company didn’t put out any major new releases during the quarter, it said revenue grew nearly 14% to $1.97 billion from a year earlier.
- The company posted a profit of $500 million, up from $426 million in the first quarter of 2017.
- The Call of Duty publisher raised its full-year outlook slightly and said it now expects revenue of $7.36 billion and profit of $1.79 a share.
CBS Tops Sales Views on Subscriber Growth
- CBS reported higher-than-expected sales in its latest period as the company added more subscribers across its pay-TV and direct-to-consumer channels.
- Revenue climbed 13% to $3.76 billion, topping analysts’ expectations of $3.64 billion in sales.
- CBS said affiliate and subscription revenue rose 16% during the quarter, due to higher retransmission revenue and growth in the company’s digital initiatives. Meanwhile, licensing revenue grew 18% from a year earlier and advertising revenue rose 8%.
- Overall for the quarter, the company swung to a profit of $511 million, from a loss of $252 million a year earlier.
Powered by subscriptions, Pandora Media losses beat estimates
- Despite intensifying competition from larger rivals, Pandora Media reported a smaller-than-expected quarterly loss on Thursday as the music streaming service provider benefited from higher subscription revenue and smaller declines in its advertising business than feared.
- Total revenue increased to $319.2 million from $316.0 million. Analysts on average had expected revenue of $304.3 million.
- The company said total subscription and other revenue surged 61.3% to $104.7 million, slightly above analysts’ estimate of $104.6 million, according to Thomson Reuters I/B/E/S.
- Pandora posted a loss of $132.3 million compared to $139.1 million in the year ago period.
Celgene tops estimates on higher demand for cancer drug Revlimid
- Celgene topped Wall Street estimates for quarterly profit and said it expects 2018 revenue at the high end of its forecast, driven by demand for blockbuster myeloma drug Revlimid as well as psoriasis treatment Otezla.
- Revenue rose 19.4% to $3.54 billion, topping estimates of $3.46 billion.
- Net income fell 9% to $846 million, topping estimates.
- Celgene now expects 2018 revenue at the high end of its $14.4 billion to $14.8 billion forecast.
Newell Finds Waddington Buyer and Puts More Brands Up for Sale
- Consumer-goods conglomerate Newell Brands found a buyer for its packaging business and will look to shed at least two more businesses as the maker of Graco strollers continues its far-reaching turnaround plan.
- Newell’s first-quarter sales dropped 7.6% to $3.02 billion, primarily attributing the decline to business divestitures, disruption from Toys “R” Us Inc.’s bankruptcy and lower inventory levels of its writing products.
- It posted net income of $53.3 million, down from $638.5 million a year earlier.
- Newell has agreed to sell The Waddington Group, which makes disposable dinnerware and food containers for delis and restaurants, to Novolex Holdings for about $2.3 billion.
Nike CEO Apologizes for Corporate Culture That Excluded Some Staff
- The rare all-staff meeting at the sneaker giant’s headquarters follows weeks of turmoil, including the departures of several senior executives and internal complaints of inappropriate behavior.
- Chief Executive Mark Parker spoke in a crowded theater at the Tiger Woods Conference Center on the Beaverton, Ore., campus. The Nike veteran and CEO since 2006 apologized to those who felt excluded and felt like they didn’t have anyone to turn to about their situation.
Buffett’s Berkshire Hathaway bought 75 million more Apple shares in first quarter
- Berkshire Hathaway bought 75 million additional Apple shares in the first three months of the year, CEO Warren Buffett told CNBC on Thursday, aggressively ramping up its bets on the iPhone maker.
- Berkshire’s initial investment in Apple was small, suggesting it was made by one of Buffett’s investment deputies, but with the latest stake purchase, it has grown to a solid 240.3 million shares worth $42.5 billion.
T-Mobile adds to record M&A spree
- The $38bn financing backing the merger of T-Mobile US and Sprint is the latest high-profile M&A financing to hit the market, adding to a pipeline of deals that lenders expect will continue to grow.
- Lenders have extended about $679bn in loans backing global M&A deals so far this year, toppling the prior record of almost $542bn set for the same period in 2007 before the financial crisis.
- The $1.7trn of global mergers and acquisitions announced this year, a record for this period, tops just over $1trn during the same time a year ago, according to Thomson Reuters Deals Intelligence.
- Lower US corporate tax rates and ready US cash stockpiles to put to work overseas are among factors driving the push across international lines.
UTC gains EU antitrust approval to buy Rockwell Collins
- U.S. aerospace and industrial company United Technologies secured conditional EU approval on Friday for its $23 billion bid for avionics maker Rockwell Collins, the largest aerospace deal in history.
- The European Commission, which acts as the competition watchdog in the European Union, said UTC agreed to sell businesses making actuators, pilot controls, ice protection and oxygen systems.
- UTC, maker of Pratt & Whitney jet engines and various plane components, is hoping the deal will give it more leverage against plane makers negotiating price cuts. Its customers include Boeing, Airbus and Bombardier.
US ECONOMY & POLITIC
U.S. Jobless Rate Falls Below 4% For First Time Since Late 2000
- The U.S. economy steadily created jobs in April while the jobless rate fell to the lowest level since late 2000, suggesting available workers are becoming scarcer in a tightening labor market.
- Employers added 164,000 jobs in April, a pickup from March and more than enough to keep up with population growth, the Labor Department said Friday.
- The jobless rate, calculated from a separate survey of households, fell to 3.9% from 4.1% a month earlier, hitting the lowest rate since December 2000, toward the end of the tech boom.
- Hourly pay for private-sector workers rose, on average, 0.15% from a month earlier to $26.84 in April.
- That figure was 2.6% above the year ago level, a 12-month gain in line with the trend of recent years.
- Employers have added jobs every month since October 2010—a 91-month stretch that ranks as the longest period of unimpeded job growth on record.
China Tensions Chill U.S. Soybean, Pork Trade
- Since early April, when China announced tariffs on some U.S. agricultural goods and threatened to target others, Chinese importers have canceled purchases of corn and cut orders for pork while dramatically reducing new soybean purchases, according to U.S. Department of Agriculture data.
- The chill in agricultural trade is sending jitters through the U.S. Farm Belt, which for years has dispatched farmers on trade missions to cultivate the Chinese market.
- Chinese buyers ordered about 255,000 metric tons of U.S. soybeans during the week ended April 5, according to the USDA, but new sales over the rest of the month came to about 11,000 metric tons, a sharp decline.
U.S. Wants $200 Billion Cut in China Trade Imbalance by End of 2020
- The U.S. handed China a lengthy list of demands on trade as part of this week’s talks, from cutting the trade imbalance by $200 billion to halting Chinese government support for advanced technologies—requests Beijing called “unfair.”
- The wide-ranging demands from the U.S. also sought a slashing of tariffs on imports of American products and a promise from Beijing it wouldn’t retaliate against U.S. penalties and trade restrictions.
- To address the unbalanced trade relationship, the U.S. document offered an eight-point plan to Beijing and called for China to change its policies within a year or two. It also said the U.S. was ready to negotiate on the proposals.
- The U.S. also demanded that China immediately stop providing subsidies and other assistance for advanced technologies outlined in the government’s Made in China 2025 plan.
China, U.S. reach some deals in trade row but Beijing says differences still relatively big
- Top officials from China and the United States reached a consensus on some aspects of the countries’ trade row, but disagreements over other issues remain “relatively big”, China said on Friday.
- A statement from the nation’s state-run Xinhua news agency at the end of the talks gave little indication that there had been agreements on the biggest issues, stressing instead that there had been exchanges of opinion.
- In one specific sign of progress, U.S. negotiators agreed to bring up with U.S. President Donald Trump the question of a ban on U.S. companies selling goods and software to Chinese telecommunication equipment maker ZTE after representations from the Chinese side.
- The trade discussions had been “candid, efficient and constructive,” Xinhua said, but gave almost no details on what the officials had agreed. The Americans have yet to give their account of the talks.
EUROPE & WORLD
BNP Paribas first-quarter profit falls on back of trading weakness in Europe
- BNP Paribas, France’s biggest bank, reported a 17% decline in quarterly net profit, in line with expectations, as a weaker dollar and sluggish fixed income trading impacted investment banking revenues.
- Revenues fell 4.4% to 10.8 billion euros, compared to 11.04 billion expected by analysts.
- Revenues at its corporate and institutional bank were also down 9.8%.
- First-quarter net income fell to 1.57 billion euros ($1.9 billion), in line with analysts’ estimates of 1.55 billion euros.
SocGen CEO says confident in targets despite weak start to year
- SocGen’s chief executive said he was confident of meeting the bank’s long-term goals and was working to resolve litigation issues and deliver resilient profits, after a weak start to 2018 hit the shares.
- SocGen’s quarterly revenue came in weaker than expected, falling 2.8% to 6.29 billion euros, compared to 6.48 billion expected by analysts.
- Its corporate and investment bank was a weak spot with revenue down 13.4% and net income falling 56.9%, impacted by a “strong negative forex effect”.
- SocGen reported a 14% rise in first-quarter net income to 850 million euros, that came above analysts’ estimates of 821 million euros.
HSBC CEO Off to Rocky Start as $2 Billion Share Buyback Disappoints
- HSBC Holdings’ new Chief Executive John Flint got off to a rocky start after costs spiked in the first quarter and a planned $2 billion share buyback fell short of analyst expectations.
- Operating costs in the first three months rose 13%, or 8% after one-off provisions, outpacing a 3% adjusted revenue rise to $13.71 billion from $12.99 billion a year ago.
- Net profit was $3.09 billion, slightly down from $3.13 billion in first-quarter 2017.
- The bank on Friday said it would buy back another $2 billion in shares, adding to buybacks last year. The announcement disappointed some analysts though since HSBC said it was likely to be the only one this year.
TODAY in HISTORY
- Al Capone, was jailed for tax evasion. (1932)
- Four Kent State University students were shot down by National Guard members during an anti-Vietnam War demonstration. (1970)
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