Amazon.com followed Facebook’s lead, as the e-commerce giant easily surpassed first quarter estimates. For the period, Amazon recorded revenue of $29.13bn, up from $22.72bn a year ago and higher than expectations of $27.98bn. In addition, the group, which is famous for reporting losses, recorded its fourth straight quarter of earnings. Earnings came in at $1.07 per share, up from a loss of $0.12 a year ago and sharply higher than estimates of 58 cents per share. The company gained more than 10% in after-hours trading, but still remains around 11% lower for the year-to-date.
Facebook surged more than 9% in after-hours trading on Wednesday after the group crushed estimates in its first quarter results. For the period, Facebook reported earnings of 77 cents per share, sharply higher than expectations of an increase to 62 cents per share. In addition, revenue came in at $5.38bn, compared to estimates of $5.26bn. This can be mainly attributed to the 57% year-on-year increase in Facebook’s advertising revenue to $5.2bn, while the monthly active users metric came in at 1.65bn, exceeding expectations of 1.63bn. Lastly, the group proposed the creation of new class C shares, whereby shareholders would get two class C shares for each class A or B shares they owned.
The JSE All Share Index ended slightly higher on Monday, despite the recovery in industrials being offset by a heavy decline in resource-based stocks. By the end of the session, the industrials had gained 0.90%, boosted by a 2.49% increase in British American Tobacco and a 1.38% jump in SABMiller. General Retailers once again performed well with the index up 1.33%, as Massmart added 2.39%. The resources featured among the main decliners, with the index down 2.59%, with Anglo American and BHP Billiton shedding 4.88% and 4.22% respectively. Meanwhile, the gold index lost 2.08%, as Sibanye fell 4.23%. Lastly, the JSE All Share added 0.11% by the close of trade, while the Top 40 gained 0.17%.
After an extremely busy day last Thursday, in which Steinhoff released no less than three SENS announcements, Steinhoff released yet another SENS on Friday relating to its indirect acquisition of Darty shares. In it, the group advised shareholders that Steinhoff Finance Holdings GmbH, a wholly-owned subsidiary of Steinhoff International Holdings N.V. has acquired a further 4,814,061 shares in Darty at a price of 160 pence. As a result, a total of 108,020,038 Darty shares are now held by the group, representing 20.4% of the entire issued share capital of Darty. Remember the group had formerly acquired just over 100 million shares from Majedie Asset Management Limited, Schroder Investment Management Limited, Standard Life Investments and UBS Asset Management at 138 pence, a full 15% lower. Let’s see if FNAC counters the present offer. If Steinhoff decides not to take control of the company, it could still bank a tidy trading profit.
Google’s parent company, Alphabet, fell sharply during after-hours trade on Thursday, following reports that the group’s results for the first quarter missed analysts’ expectations. For the period, the company reported revenue of $20.26bn, marginally lower than expectations of $20.37bn. In addition, adjusted earnings came in at $7.50 per share, a 16% increase on the previous period, but lower than estimates of a jump to $7.97. The lower-than-expected results can be partially attributed to the group’s “other income” line, which was affected by losses in foreign currency exchange and equity investments. Alphabet’s A-class shares have gained more than 43% over the past year, confirming itself as one of Wall Street’s darlings.
Coca-Cola ended 4.79% lower yesterday, with sales falling for the fourth straight quarter due to the stronger dollar. Sales in Europe declined by 1%, while Latin American and Asia Pacific saw sales fall by 12.2% and 4% respectively. Overall, Coca-Cola reported a 4% drop in net operating revenue to $10.28bn, while organic revenue, which excludes the effect of currency translations, increased by 2%. On the upside, Coca-Cola reported earnings of 45 cents per share, marginally higher than expectations of 44 cents per share. Earlier this week, PepsiCo also reported a drop in sales, but like Coca-Cola, saw earnings come in higher-than-expected.
Brent crude oil fell sharply this morning, after major oil producers failed to reach a deal to cap production on Sunday. Saudi Arabia indicated any deal was impossible without Iranian participation, but Iran sees any production freeze as “ridiculous” considering the recent end to their sanctions. The Iranian oil minister indicated any Iranian production curtailment would amount to self imposed sanctions. Iran’s refusal to reduce production, and the disunity within Opec, sets the stage for the global oil glut to continue. In response to the news, Brent crude fell as much as 7%, before recovering some of its losses. Brent is currently trading 4.34% lower, as it moved to $41.23 per barrel. In contrast, spot gold traded marginally higher this morning, up 0.05% at $1,234.61/oz, after receiving a boost from the resulting turmoil in Asian markets.
Yesterday saw Bank of America, the second largest US bank by assets, report an 18% decline in earnings. However, despite the decline, earnings came in higher than expected, which resulted in a 2.54% increase in its share price. Earnings for the quarter fell to 21 cents per share, marginally higher than expectations of 20 cents per share. In addition, revenue came in at $20.9bn, down from $21.42bn a year ago, but once again better than expectations of a drop to $20.3bn. During the first quarter of 2016, BAC’s share price fell by 20%, with the entire US banking sector affected by concerns of a global slowdown and uncertainty about the pace of future US interest rate hikes.
Comair added 3.27% to settle at R3.16 yesterday, despite receiving a 48-hour strike notice. The notice was given to the company by the United Association of South Africa (UASA), whose members are looking for an increase in wages. This comes after UASA, which has a 58% membership in the airport unit, declared a deadlock in wage negotiations in January. According to the airline, the union is seeking a 35% increase over 3 years, while Comair is only offering a 22.5% increase over the same period. Lastly, CEO Erik Venter has assured customers back-up teams are in place, stating British Airways and Kulula.com will not be affected by the strike.
Alcoa ended 3.95% higher during Monday’s normal session, but erased all of its gains and more in after-hours trade, following the release of its first quarter results. The world’s third largest producer of Aluminium reported revenue of $4.95bn, down from $5.82bn a year ago and lower than expectations of a decline to $5.14bn. However, the group did manage to report earnings of 7 cents per share, sharply higher than expectations of 2 cents per share. Lastly, Alcoa’s shares have fallen by more than 25% over the last 12 months, while the group is still expected to split into two separate public companies later this year.