Under Armour’s Underwhelming Earnings; Trump Tackles Big Pharma Prices; No Easy Riding for Harley These Days

Chink in the armor…

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Under Armour released its quarterly earnings and they were pretty disappointing. Besides the company’s poor performance, it also bummed out Wall Street with a dimmer outlook. Growth for the company had regularly surpassed a 20% rate. But alas, that rate has come to a screeching halt and Under Armor warned us that a more modest growth rate of maybe 12%, with revenues of $5.4 billion, should be expected for 2017. Analysts had been holding their collective breath for a $6.8 billion revenue figure. Oh well. Maybe in 2018. Shares of the athletic apparel company had already taken a 39% beating in the last year. But after unveiling its latest figures, they dropped even more.  CEO Kevin Plank blamed the ever growing nuisance – for him, anyway – of competition. He also admitted that maybe the company should have focused on offering more high-fashion apparel – which seems to be all the rage at the moment – instead of relying on its basics which didn’t perform as hoped. Plank also blamed the slew of retail bankruptcies of brick-and-mortar stores that carried Under Armour merchandise. Unlike Nike and Adidas, who have a lot of their own stores, Under Armour does not and the inability to get merchandise onto shelves definitely took a nasty bite out of the company’s earnings, especially since 85% of Under Armour’s revenue comes from North America. So those closures really hurt. Last but not least, major promotions that took place too early in the holiday season put a crimp in Under Armour’s numbers as well. Profit dipped to $105 million, adding 23 cents per share, when last year it pulled down almost $106 million taking in 25 cents per share. Revenue may have been up 12% to $1.31 billion, but estimates were pegged for $1.41 billion. By the way, in case you weren’t aware, Plank was among the group of business leaders who met with Trump earlier in the month and pledged to bring more jobs to the U.S.

Pill-tastic news…

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Trump held a special meeting today in the Oval Office with eight lucky guests hailing from the big pharmaceutical companies and pharmaceutical industry lobbying firms.  Among the eight attendees were representatives from Johnson & Johnson, Merck & Co. and Eli Lilly & Co, which happens to be based out of Vice President Mike Pence’s home state of Indiana.  Trump urged them to move manufacturing stateside and promised to ease regulations for them if they do. Just like with the auto industry, Trump wants to redo trade policies for this industry as well so that foreign countries pony up their fair share of drugs manufactured in the U.S. In true Trump fashion, the President remarked how foreign countries are “freeloading” on the U.S. because they put price limits on what their citizens can be charged for drugs. He also wants to streamline the approval process, boost production and get prices drastically lowered on drugs.  Shares of most of the companies represented at the meeting rallied today. In the meantime, we’re still waiting on Trump’s announcement for his FDA pick. But he promises that it’s someone “fantastic.” Of course it is.

Fast lane to nowhere…

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If you’ve ever thought about purchasing a Harley-Davidson motorcycle, but haven’t quite got around to buying one, now might just be the time. A surplus of 2016 models has got the iconic bike maker placing big discounts on its inventory, hoping to sell them off in order to bring in the new and improved 2017 models. Profit for Harley-Davidson came in at $47.2 million, which was actually 12% higher than last year’s $42.2 million. Too bad it all goes down from there. Sales in the U.S. were down almost 4%, but at least the rest of the world helped offset a bigger loss with a 2.3% increase in international sales. As for 2017, the company is expecting things will stay the same, as in flat. In fact, the company plans on shipping about 20% less than bikes than last year. The motorcycle industry, as a whole, has been experiencing a decline since May. Part of that has to with the fact that Harley’s dedicated fans are getting older and younger riders aren’t cropping up to fill that void. Hence, Harley-Davidson has a plan intended to draw in more potential bikers, or as Harley-Davidson CEO Matt Levatich calls it, “building riders.” With this initiative, he hopes he can attract a new, and highly diverse generation of Hog enthusiasts.

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Twitter’s Attempts to Tweet Out Terror; Wal-Mart Boffo Earnings; EPA Calls Out Harley-Davidson

Tweet this…

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Looks like ISIS is going to have to find itself a new social media platform as Twitter pats itself on the back today after announcing it suspended 235,000 terrorist-related accounts in the last six months. That figure was about double over the previous period and the social media company went to great lengths getting bigger teams to review reports of flagged content on the site on a round the-clock-basis. Better spam detection and language capabilities also helped with the endeavor as the amount of time between content getting flagged and shutting down that content has gone down. But the great effort only really came about after Twitter took a lot of heat for allowing terrorist-related content to gain a big foothold on ISIS’s preferred site. Even the director of the FBI said how “Twitter was a devil on their shoulder” back in 2015. ISIS could have given courses on how to optimize media engagement as the terror organization regularly used Twitter to spread propaganda, recruit fellow murderers, raise funds for their evil ways and publicize its horrific actions. But to be fair, Twitter does have a policy in place prohibiting the promotion of violence and terrorism.  In any case, while Twitter concedes there’s no real “magic algorithm,”  to finding and shutting down terrorist activities on its site, there has been a noticeable drop on Twitter of all things ISIS and other terror-related organizations.

What bad retail landscape?

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It’s good to be Wal-Mart as the largest retailer in all the land posted better than expected results with revenue of $121 billion and a $3.8 billion profit for the second quarter, adding $1.21 per share. Analysts predicted shares would only gain $1.02. That profit was a very welcome 9% increase over last year’s $3.5 billion second quarter profit while the revenue figure beat projections by about $2 billion. If Macy’s Kohl’s and Target are left scratching their heads after their disappointing earnings, perhaps they should take a page or two from Wal-Mart’s playbook. The company made a major push in its e-commerce division, which always helps matters when you’re competing with the likes of Amazon.  Wal-Mart also increased its full year earnings outlook to $4.15- $4.35, up from $4.00 – $4.30. In addition to lower gas prices and warm weather, Wal-Mart brass attribute its great earnings to the boost they gave to employee wages which they think led to better customer experiences. Maybe it did. Maybe it didn’t. But there’s no denying the  company experienced stronger than expected sales growth.

Exhaust-ed…

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Look out VW. There’s a new emissions offender in town. This time the dubious distinction goes to iconic motorcycle maker, Harley-Davidson, who has to pay a $12 million penalty and another $3 million to fund a clean-air project.  The U.S. claims the company violated air pollution laws through its “super-tuner” devices.  These devices, while improving engine performance, also caused the exhaust levels for those engines to increase well beyond what they were allowed. Then there were some 12,682 bikes that were also found to be short of regulatory requirements. Even though Harley-Davidson graciously disagrees with the EPA’s findings, it settled if only to avoid a long-drawn out and very expensive legal battle. As part of the settlement, Harley-Davidson doesn’t even have to admit wrongdoing. After all, who likes to admit when they’re wrong, eh? In any case, the company will cease selling the devices by August 23 and will have to buy back and destroy the devices from the dealerships. Naturally, shares of Harley-Davidson did take an 8% hit following the news of its own emissions scandal, but they recovered relatively quickly. Sort of.

Chip Cards Get Moving; Netflix Growing Pains; Harley-Davidson Earnings Not Cruising

Feeling chipper…

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There are around 265 million Visa credit and debit chip cards floating around that have been providing some much needed security. Big merchants who upgraded their terminals for chip-enabled cards have noted an 18% decrease in fraudulent activity.  Five of the 25 biggest merchants who were not chip-enabled actually saw an 11% uptick in fraudulent activity. And while everyone is happy about the added security, both merchants and customers don’t care for the much longer transaction times. But now Visa finally finally made some improvements to its software with a “Quick Chip” upgrade. The new upgrade is expected to reduce wait times and shave off about 18 seconds from transactions times. Instead of dipping your card in the terminal and waiting a number of endless seconds until the terminal angrily beeps that you need to remove your card, you’ll dip it in and take it right out in two seconds. Wal-Mart also took cues from disgruntled customers and figured out a way to shave 11 seconds of their transaction times: by skipping the prompt that asks shoppers to confirm the transaction amount. Not sure how I feel about that one.  If you recall, merchants had to meet a deadline last October to upgrade their terminals. If fraudulent activity occurs, the merchant now has to pony up and banks are now OFF the hook.

Growing pains…

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Netflix is in 190 countries and can be accessed from just about everywhere. The company gleefully announced that it picked up 6.74 million new subscribers in its latest earnings report and its total subscriber-ship is hovering at 81.5 million paying viewers. The streaming video service has even managed to produce more original content than HBO  and figures that by the end of the year, it will have 600 hours of original programming under its belt. But that’s where the fun ends because today the stock fell 11%, experiencing its biggest same day drop in eight months, falling to $95.84. Investors are super-curious and worried about Netflix’s growth plans after giving the disappointing news about the amount of new subscribers it expects to gain…and lose. That’s right. Netflix expect some people to drop out and dare I say it…not lay their eyes on another episode of Orange is the New Black once subscription prices go up. Oh well. You win some, you lose some. The company is thinking it’ll add only about 2.5 million subscribers next quarter, and expects just 500,000 of them to be in the U.S. Then of course there’s all that competition from Hulu and Amazon. Because, after all, its not enough for Amazon to dominate e-commerce. More than eight brokerages decided that maybe now is a good time to announce that their target price for Netflix stock is going to get somewhat smaller, with the average price target coming in at $123. However, with all that bad news, Netflix still has big plans to surpass 100 million subscribers…by next year.

Not-so-easy rider…

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Harley-Davidson (HD) bikes might carry major street creed but its earnings tell a whole different story. The legendary motorcycle company just posted its earnings and well…they just weren’t as impressive as the product themselves. HD took in a $250.5 million profit, picking up $1.36 per share, but this time last year the company earned way more, topping out closer to $270 million and adding $1.27 per share. Analysts, by the way, only expected $1.29 per share to be added. That 7.2% year-over-year decrease had Wall Street scratching its head. At least revenue was up 4.8% to $1.75 billion from last year’s $1.67 billion. But while increased revenue is a good thing, HD’s .5% sales decrease in the United States is most definitely not. The company sold only 35,326 bikes in the United States and lost some market share to competitors, especially Polaris’ Indian Motorcycles. Apparently, Harleys have failed to attract younger consumers (read: milllenials). However, globally, Harley Davidson fared much better, selling 57,458 bikes, and expects to sell a total of between 269,000 and 274,000 bikes for the year – which is more than what was initially expected. Harley-Davidson graciously explained that “retail sales trends have significantly improved.” Which seems to be true, at least for Polaris, who has taken a big bite out of Harley-Davidson’s market share.

Harley’s Rough Ride on Wall Street; Madoff Victims Pay Day; Amazon Wants You. Really.

Rough riding…

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Image courtesy of sritangphoto/FreeDigitalPhotos.net

Harley-Davidson is no match for Wall Street as the all-American bike gets whipped by yet another rough quarter.  With sales down 2.5% in the U.S. and another 1% worldwide, Harley-Davidson brass have made a brutal decision to cut a bunch of jobs and ship out 11,000 less bikes next year. Instead, the company will dish out $70 million to increase its 2016 marketing budget. The company is hoping (and presumably praying) that it can increase product and brand awareness. And get people to buy more bike, of course. But how is it even possible that a brand as iconic as Harley would need to do such a thing? While there’s no disputing that there’s nothing like a Harley, the company is facing increased competition from European and Asian bike makers, like Ducati, Royal Enfield and Triumph. Those companies are putting out some fierce machines, and in some cases, for a lot less money than a “hog.” The proof is that in the first nine months of the year, the number of registered bikes has surged 6.6%. Net income for Harley-Davidson came in at $140.3 million, a 6.5% decrease over last year’s $150 million. Harley added 69 cent per share when analysts predicted 78 cents instead. In fact, shares fell the most that they have in six years.  But that isn’t stopping Harley-Davidson from plans to open up 200 more dealerships abroad.

Lost and found…

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Image courtesy of bplanet/FreeDigitalPhotos.net

It’s been seven years since Bernie Madoff’s evil Ponzi scheme unraveled. But today, more than 1,200 of his victims (there were way more than that) can sort of rejoice and look forward to recouping at least some of their lost funds. Irving Picard, the trustee who has been hard at working recouping money on behalf of the victims of the largest Ponzi scheme in U.S. history, has managed to release $1.5 billion from legal reserves. Victims who invested up to $1,161,000 can expect to get back about $1 million. Those who unfortunately invested more can expect to recoup 61 cents on the dollar.  Much of this money is coming from the widow of Madoff’s deceased alleged co-conspirator Jeffery Picower.  She agreed to turn over $7.2 billion of her late husband’s ill-gotten stash. Of course, some of that cash, approximately $1 billion, will also go towards covering all those enormous legal fees of the law firm handling this case. U.S officials have so far recovered about $11 billion from the $17 billion that was lost. As for Bernie Madoff, he’s hitting year 7 of a 150 year prison sentence.

Hire cause…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

If you’re looking to score some extra cash this holiday season then don’t let the New York Times get in your way and  dissuade you from applying for a job at Amazon. I bet Amazon is hoping the NYT doesn’t dissuade you either since the company is looking to hire 25,000 full-time employees and 100,000 part-time employees for the holiday season. While the company has always hired more people for this time of year, this time the digits are pretty epic in that they’ve never been this high. It should be duly noted that plenty of people who had been hired specifically for the holiday season were subsequently kept on as permanent employees.  The jobs will be primarily in the sorting and fulfillment facilities across the country.  But Amazon’s not the only game in town as Target, Wal-Mart, Macy’s, Kohl’s and a slew of other companies are also looking to amp up their workforces this holiday season. Just be sure not to ask Bo Olsen for a reference.

Turmoil at Toshiba; Harleys Need Some Revvin’; Citibank Gets Busted

What’s cooking?

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Image courtesy of jesadaphorn/FreeDigitalPhotos.net

Toshiba. It’s the computer with the great price tag but dude, it’s no Dell. Or Mac. Or HP. Or…well, you get the picture. What you may or may not have realized is that Toshiba is also involved in nuclear energy technology, except that after the 2011 Fukushima disaster, all 48 of its reactors are now offline. But now the company has a brand new disaster on its corporate hands as its CEO, Hisao Tanaka, and several of his subordinates unceremoniously resigned after it was discovered that there had been some major book cooking at the Japanese company. It seems that, during a seven year period, profits were inflated over 152 billion yen ($1.2 billion) all in the name of a challenge initiative that had company leaders setting unrealistic expectations in just about every single business area of the company, from chips to PC’s.  Instead of trying to engage in meaningful discussion that the goals were absurd and unattainable, employees just faked numbers. Which worked for a few years. Sort of. An independent investigation was launched to figure out the hows and whys. In the meantime, shares of Toshiba actually (and finally) went up on the news that members of its top brass were stepping down. At a press conference, Tanaka made a long bow meant to convey shame and remorse. Here in the United States we just settle for a perp walk and a costly, drawn out trial.

Not hog-ging the market…

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Image courtesy of debspoons/FreeDigitalPhotos.net

Motorcycle maker Harley-Davidson Inc. came out with its earnings and they were nothing to get revved up about. The strong dollar totally messed with the bike maker’s figures and ultimately resulted in a smaller profit. But it wasn’t just the strong dollar that hurt sales. Foreign competitors decided to cut prices on their offerings, amping up the competition, and leaving Harley-Davidson to make fewer bikes. But 88,931 people did get themselves a new hog to ride, though it’s not as many as last year’s 90,218. No worries, however, as the company still  managed to beat analysts estimates by a bright, shiny nickel. The iconic cycle company pulled down a profit of close to $300 million adding $1.44 per share. Unfortunately that’s a 15% hit from last year’s second quarter profit of $354.2 million and $1.62 per share.

Now you’ve really done it…

Image courtesy of  Sura Nualpradid/FreeDigitalPhotos.net

Image courtesy of Sura Nualpradid/FreeDigitalPhotos.net

Citibank was behaving badly and now it has to pay $700 million in “consumer relief” to all the innocent credit card users who were duped by the bank’s deceptive and illegal practices. So how exactly did Citibank mislead its unsuspecting 7 million consumers? Well, for one, Citibank marketed products but conveniently neglected to mention or clearly articulate their costs.  As for those fraud-alert services, well there wasn’t much alerting when it came to “fraudulent purchases.” Instead, the service only alerted customers to when changes occurred in their files by credit reporting firms.  Then there were times when Citibank signed up folks for products and services for which they didn’t explicitly request, not to mention enrolling them in programs and then charging them for services for which they were not even eligible. How does that even work?

William Shatner Wants $30 Billion for Water; Harley-Davidson’s Wall Street Hits and Misses; Under Armour Needs to Bulk Up Projections

Rain rain don’t go away…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Leave it to Star Trek legend William Shatner to take California’s drought emergency straight to Kickstarter. The 84 year old actor and Priceline shiller wants people to beam him up some cash – $30 billion’s worth, to be exact – so that a  four foot above ground pipeline can be built from Seattle to Nevada’s Lake Mead. The fact that Seattle doesn’t have a surplus of water to really be giving out to California, which is in its fourth year of drought, doesn’t seem to bother Shatner much. I’m guessing he didn’t ask officials in Seattle their thoughts on the idea. California Governor Jerry Brown has already issued a drought emergency and apparently there is about a year’s supply of water left. Mr. Shatner isn’t entirely convinced himself that he can even raise the $30 billion needed to build the pipeline but he is hoping to raise awareness on the issue. “If I don’t make 30 billion, I’ll give the money to a politician who says, ‘I’ll build it.’ I don’t think that last part is the best idea Mr. Shatner has ever had, but its sure to get a few people talking.

Not so hog wild…

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Image courtesy of dan/FreeDigitalPhotos.net

Profits for iconic Hog maker, Harley Davidson, are up thanks to a somewhat reduced tax rate. So why the sad faces on Wall Street over the price of its shares? Because those very shares took a 6% hit today over revenue that fell 3.4% to $1.51 billion, down from $1.57 billion a year ago. The bike makers also revised forecasts that have less bikers getting on those legendary two-wheeled machines. Harley-Davidson initially expected to deliver between 282,000 – 287,000 Hogs this year. But now that range is looking closer to 276,000 – 281,000 orders. Some of that, of course, can be attributed to that annoyingly strong U.S. dollar that seems to be sucking the fun from just about every company’s earnings these days. But Harley-Davidson has also had to deal with competitors  – hard to believe that anyone can compete with a Harley – who have been offering better discounts and totally messing with the motorcycle company’s earnings. The good news is that the motorcycle brand still took in $270 million and $1.27 per share, even though analysts only expected $1.24 per share. Can someone please get those analysts on a Harley? A year ago the Hogs pulled in about $265 million at $1.21 per share.

Dude, what gives?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Under Armour came out with earnings today and informed those that matter that it hit its revenue targets and raised its outlook. The Maryland-based athletic company even has PGA Masters Winner Jordan Spieth shilling for it. Under Armour also pulled in 5 cents per share on revenues of $805 million when analysts only called for $802.5 million. The apparel division grew 21% while the footwear division grew 41%. So why are investors still not satisfied with the athletic apparel company’s earnings? Here’s where things get dicey. Even though Under Armour raised its outlook for revenues from $3.76 billion to $3.78 billion, investors, analysts and others who throw large sums of money at the company expected higher projections of $3.82 billion in revenues. That $.o4 billion difference put a damper on the morning for many investors. Hence the stock took a bit of a hit this morning. Nothing major, just a few percentage points, but enough to put several Wall Street-ers in a bit of a snit.

At Netflix Green is the New Black, Mucho Verde at Chipotle and Harleys Not Hogging the Market

I’ll subscribe to that…

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Image courtesy of cooldesign/FreeDigitalPhotos.net

As if the popularity behind Orange is the New Black and House of Cards weren’t good enough, things at Netflix just keep getting better. The video streaming company surpassed the 50 million subscriber mark and released second quarter earnings with revenues hitting $1.34 billion. That figure was in fact an almost 37% increase over last year’s number.  So whose watching Netflix? Sure Americans are but the California-based comoany has pretty much doubled its international streaming. Net income for the company was $71 million, which is more than double the $29 million in net income it pulled in a year ago. Earnings per share came in at $1.15. In case you’re wondering just how much higher Netflix can go, just watch when it invades a bunch of European countries including Germany, France and Switzerland.

Ole Chipotle…

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Image courtesy of Serge Bertasius Photography/FreeDigitalPhotos.net

Things are looking mucho grande at Chipotle Mexican Grill (CMG) as the food chain just released its mucho bueno earnings. As you may have heard, the company sets out to use higher quality ingredients than some other fast-food chains.  As you also may have heard, those ingredients tend to cost a bit more – and they keep going up. So like any other company would explicably do, it raised its prices in April to offset the price increase of those higher quality ingredients. But, because millennials – and regular people too (but especially millennials) –  appreciate all the thought and effort that goes into preparing that higher quality food, they still preferred to dine at Chipotle, which helped the company beat analysts predictions hard core. Revenue was up 29% to $1.1 billion and the stock hit an all time high. Their catering division (yes they do that too) also brought in some nice cash thanks to May and June and the numerous events that take place during that time. Be on the lookout for more Chipotles to open their doors as close to 200 of them are in the works.

Dude, where’s my hog?

Image courtesy of sritangphoto/FreeDigitalPhotos.net

Image courtesy of sritangphoto/FreeDigitalPhotos.net

Harley-Davidson – a name that evokes adventure, American ruggedness, and earnings too. Indeed, the biggest US producer of arguably the most iconic vehicle on two wheels regularly churns out a profit – $354 million this year with net income up 30%. Unfortunately the company’s profit has been declining for a couple of years now. And even though revenue was up 12%, the company will be putting out 9,000 fewer hogs this year. Apparently (potential) riders are eagerly awaiting the arrival of the new Street models and have been not so eager to buy other models. That and a particularly nasty winter – yes, even those rugged Harley riders were not immune from Mother Nature’s wrath – have got the legendary company rethinking its numbers. So get out there and get yourself on a hog!