Over the next three days, investors will be bombarded with June quarter earnings reports from the sector’s biggest and most important companies.
(ticker: MSFT) and
(GOOGL) will announce the results. On Wednesday,
(META) gets attention, but we also get results
(Shop), among others. Speed picks up with Thursday’s results
Each of these companies has specific story lines, but it’s only about a quarter when it comes to real focus on the big picture. Some key issues to monitor over the next few days:
How bad is the online advertising environment? last week,
( SNAP ) Shares plunged nearly 40% in one day after Snapchat’s parent simply posted Terrible June quarter results, while declining to provide any guidance for the September quarter. Those results raised new concerns About the state of online advertising. There are actually three separate but intertwined issues here. Apple’s crackdown on sharing information about the sites and apps visited by iPhone users makes targeting more difficult. Also, advertising budgets shrink in economic downturns – and digital advertising is no exception. Three, competition for advertising dollars is increasing, especially from TikTok, but also from Amazon and Apple, both of which have small but growing advertising arms. Note that not every ad-driven online business is affected to the same extent: the consensus on the street is that meta-display ads can be more vulnerable than Google search advertising.
Is the cloud cost-effective? The three largest public clouds include Microsoft Azure, Google Cloud, and Amazon Web Services. Until recently, the thought on the street was that as companies in the midst of “digital transformations” shift more of their IT budgets to the cloud, these businesses would suffer any kind of decline. But there’s a risk here as the economy slows down — as cloud customers can reduce their spending — or at least reduce cost growth. Among other things, these cloud companies offer social networks, streaming video platforms and e-commerce services, all of which have seen their businesses slow. Any serious missteps in this area, especially by Azure and AWS, will not go down well with investors.
What is the outlook for e-commerce? Shopify’s results on Wednesday may deliver An initial view That’s how bad Amazon’s e-commerce division fared in the June quarter. The good news is that expectations are low — Amazon will almost certainly show year-over-year revenue declines from its online store. It’s hard to compare to last year’s very strong environment for online retail. Retailers—online and off—will be looking for clues about the state of consumer demand amid fears of higher interest rates, rising inflation and recession.
The almighty dollar: One of the reasons most Street estimates look so high in the June quarter is the greenback’s massive appreciation against other world currencies. Many firms are predicting a headwind for the currency in the 2-to-4 percentage point range, but the impact on the dollar will be much higher for many.
International Business Machines
), for example, projected a 3-to-4 point currency drag and reported a 6 percentage point win. A flip slide that gets less attention is that European companies are getting the biggest currency gain as revenues earned in dollars translate into more euros. For most companies, “constant currency” earnings exceed the GAAP result; The opposite is true for European companies
(SAP), which received 8 percentage point increase For earnings for the June quarter.
How bad is PC and smartphone demand? Latest data from market research firms like IDC and the like
(MU), recommends sales of both PCs and smartphones has softened significantly, and for some reason. Consumers were loaded onto new devices during the pandemic, and there is no need to replace it at this point. Concerns about recession, inflation and a slightly tighter job market are fueling consumer anxiety and a more conservative approach to purchases. We’ll get new data from Microsoft, Intel, Qualcomm and Apple and peripherals.
(LOGI), which announces results early Tuesday.
What about enterprise IT needs? Both IBM and SAP said demand is generally strong, although there are headwinds and issues, including business withdrawals from the Russia market and ongoing currency issues. There should be some updates on this front from Microsoft’s results on Tuesday, with more data to follow from Wednesday.
(now). Shares of the cloud-based software provider recently sold off when CEO Bill McDermott appeared on CNBC and warned that it would take longer to close deals in Europe.
Some other things to look for:
) Announce a deal? The maker of ATMs and point-of-sale terminals is considering strategic alternatives and is scheduled to announce the results on Wednesday. An announcement is expected soon; Company can go private.
Will Meta reduce costs? One way for CEO Mark Zuckerberg to revive interest in the company he founded is to scale back his aggressive spending plans for MetaWare. It seems like the right time to focus on core business.
Will Amazon CEO Andy Jassy appear on the company’s earnings call?? CEOs of
IBM, Microsoft, Apple, Meta, Intel and Alphabet all participate in quarterly earnings calls. But former Amazon CEO Jeff Bezos avoided his company’s calls, and so far, new CEO Andy Jassy is following the same pattern. This will be a good quarter for him to come out.
Eric J. Write to Savitz at [email protected]