High Tech Companies Report Low Earnings; Trouble In E-Cig Paradise For Altria

The Water Coolest

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THE HEADLINES

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LOW TECH

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The stock market rallied 400 points yesterday … a day when Amazon, Alphabet, and Snap reported earnings. That must mean tech stocks crushed estimates … right?

Well, not exactly. Amazon, Alphabet, and Snap’s stocks all dropped after-hours on Thursday after the Street had the chance to kick the tires on big tech’s earnings.

Amazon announced that its holiday revenue forecast will be adjusted downward. Bezos and Co. set expectations lower, to between $66.5B and $72.5B, down from $73.8B. Escalating expenses for Amazon warehouse workers has also raised some concern among investors. Thanks, Bernie Sanders.

Alphabet meanwhile announced a whiff on sales estimates. A top line of $27.2B came in $100M below expectations for the quarter. The miss is attributed to Google’s cost-per-click falling and paying higher fees to partners that distribute its search engine.

Despite revenue climbing to $298M, up from $208M over the same period last year, Snap’s stock plummeted close to its all-time low. The good news is that Evan Spiegel has finally figured out how to monetize a user base of pre-teens who really, really like the dog Snap filter. The bad news is that its user base dropped by 2M, continuing a worrisome trend.

Water Cooler Talking Point: “If I can’t count on tech stocks rising and never coming down then I don’t know what to believe in anymore.”

 

UP IN VAPE

Brace yourself for this: Altria has taken the high road. The maker of your favorite late night party dart, the Marb Red, is reeling in its e-cigarette offerings amid pressure from the FDA.

Altria won’t completely extinguish its e-cigarette portfolio, but it does plan to pull refills of its MarkTen and Green Smoke brands from shelves and discontinue its “pod” business until the FDA provides more guidance. It will also limit vape flavors to tobacco, mint or menthol. You know, the flavors only real Marlboro Men smoke. 

For what it’s worth, the decision won’t be particularly damaging to Joe Camel’s least favorite brand of tobacco. Altria holds only a 5.6% share of the e-cig market. JUUL Labs controls roughly a 75% market share.

The FDA recently called the use of e-cigarettes an epidemic among teens and warned sellers of the flavored nicotine products that their products may be banned if it is proven that they are being marketed to those under 18. The Administration has yet to make any decisions.

The news came as Altria reported a 1.6% increase in Q3 revenue vs. the same period last year, but noted that sales are down 1.2% over the first nine months of 2018. Those damn kids and their truth movement.

Water Cooler Talking Point: “NCAA college hoops programs being labeled ‘victims’ and Altria acting like a Boy Scout in the same week. What a time to be alive.”

 


IN OTHER NEWS

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  • Anheuser-Busch shares fell more than ten percent yesterday after investors learned that the beer maker would cut its dividend in half and sales that dropped in the third quarter. AB attributed the dividend cut to the 2016 acquisition of SABMiller, which came with a heavy debt burden. The Browns winning probably didn’t help either.

 

  • Connecting People … to the unemployment line. Nokia plans to cut thousands of jobs to prepare for the shift to 5G. These cuts will help lower costs and boost profitability as a part of a transition from sh*tty phone maker to a wireless-equipment provider.

 

  • Now your ultra-conservative aunt will never be too far from her Fox and Friends. Fox News has announced a November 27th launch date for its $5.99 per month streaming service. The service will be ad-free.

 

  • Facebook was fined $645k for its Cambridge Analytica faux pas by the UK’s privacy watchdog. The amount, which represents just 1% of Facebook’s daily profit, is the maximum penalty allowed under the country’s old privacy laws. But if FB had been subject to the European Union’s new GDPR privacy law, under which a company can be fined for up to 4% of its annual revenue, that penalty could have ballooned to $1.6B.

 

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