Big Tech Misses By Benzinga

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Big Tech Misses

Good morning to all!

Remember, the bigger the drawdown, the bigger the bounce.

Price starting at 4 pm EST, 10/25/22; % YTD

MARKET UPDATE
Nasdaq -1.7%

  • Big Tech down to the careful guide

  • Validating most of the macro concern in the broader market

US 30 year mortgages hit 7%, highest since 2000

crude oil 86 +1%

  • Higher this morning on a slightly lower US dollar

  • 10:30 am Department of Energy oil inventory report

China

  • Wuhan has locked down one of its central districts following new Covid cases

  • 900,000 residents were told to stay at home

Google (NASDAQ: NASDAQ:)

  • Month-to-date +9%

  • Premarket -6%

  • 15% EBIT miss

  • Margins below expectations with high headcount addition of +12,700 (+24% y/y)

  • Google says headcount growth will be half of what it was in Q3 but it won’t be enough to offset declining revenues

  • Continued poor comps on Search and YouTube

  • Search proved robust +4% but YouTube missed out, down 2% y/y (FX was a factor)

  • Google Cloud beat +38% y/y

  • Repurchased for $15 billion

  • Consensus estimates are falling in the coming days

Microsoft (NASDAQ: NASDAQ:)

  • Month-to-date +7%

  • Premarket -6%

  • Posted its weakest quarterly sales growth in 5 years (FX was a big factor).

  • Azure is down for two consecutive quarters, growth +42% vs. guidance at 43%

  • Azure guidance below expectations, wary of new deal with SMBs (small and medium businesses)

  • FX headwind expected, weak PC/Windows and weak Advertising spend

  • Commercial bookings slow to +16%

  • Office 365 grew 17%, inline

  • Server Products up 4%

  • Windows fell 15% y/y on weak PC demand

  • CEO: Weak economy affecting PCs, Ad spend and LinkedIn

Texas Instruments (NASDAQ: NASDAQ:)

  • Month-to-season +5%

  • Premarket -5%

  • Guidance: Auto strong but personal electronics and industrial weaker in Q4

  • Guided down 12% q/q at midpoint, $4.6 billion vs. Street at $4.9 billion (management is typically conservative in its guidance)

  • Question on the call: will the auto market roll over? Yes, we’re just not sure when”

  • Free cash flow $1.98 billion, paid $1 billion in dividends and $$1 billion in buybacks

Visa (NYSE: NYSE:)

  • Month-to-date +9%

  • Premarket +2%

  • Q4/2022 EPS $1.93 vs street $1.86

  • Beat driven by higher profits reducing higher incentives

  • Total US payment volume has remained flat so far in October compared to September

  • Cross-border volumes in October so far have reached nearly 120% of 2019 levels

  • Guide for high single digit growth in fiscal 2023

  • During the quarter, 10.8 million shares were repurchased for $2.1 billion

  • The Board authorized a new $12 billion buyback

  • There is no guidance to 2023 but the road to 10% net income growth

  • The CEO spoke of a ‘high risk’ of global recession.

  • “The reality is that we know that there are some changes in consumer behavior that are happening but they are still spending the same amount of money and they are still paying in the same way, which is critical to us.’

Earnings Today

  • Spotify -5% (NYSE: SPOT), missed gross margins

  • Chubb (NYSE: NYSE: )

  • Thermo Fisher (NYSE: TMO)

  • Bristol-Myers Squibb (NYSE: NYSE: )

  • Automatic Data Processing (NASDAQ: ADP (NASDAQ:))

  • Boeing (NYSE: NYSE: )

  • Waste Management (NYSE: NYSE:)

  • General Dynamics (NYSE: NYSE:)

  • Boston Scientific (NYSE: NYSE: )

  • Roper (NYSE: ROP)

  • Hilton (NYSE: HLT)

  • Chipotle (NYSE: CMG)

Tonight

  • Meta (NASDAQ: META) 5 pm call, 14% implied transfer

  • ServiceNow (NYSE: NOW) 5 pm call, 8% implied move

  • Check Point (NASDAQ: CHKP) 8:30 am call, 5% implied move

  • Shopify (NYSE: SHOP) 8:30 am call, 9% implied move

CRYPTO UPDATE
Mastercard (NYSE:) and BitOasis (NYSE: MA)

  • Mastercard marches deeper into crypto

  • Partnership to launch crypto-linked payment cards in the Middle East and North Africa (MENA)

  • Expected launch in early 2023

  • Mastercard already has several similar partnerships

    • Nexo, Bitkub, Coinjar, Amber Group

(CRYPTO: BTC) price approaching the cost of production

  • Production cost ~$16,900

  • The price has reached the cost of production 3 times in the last 5 years

  • Rally every time

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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