AT&T vs. U.S. Government. And President Trump; Turkeys: CBS and Dish Networks Can’t Work Things Out; Lowe’s and Behold! It’s Earnings Win

Trump’d up suit?

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Dontcha just love a good fight? Today’s nasty dispute is brought to us by the U.S. government and AT&T. Not sure who my money’s on yet. You see, the government isn’t down with AT&T’s proposed $85 billion vertical merger with Time Warner. So it went ahead and did the most “American” thing possible: It sued AT&T to block the merger. Knowing that the U.S. government was going to be pesky about the merger, AT&T did what any smart company would do: It pre-emptively retained counsel. And AT&T went for the big guns hiring Dan Petrocelli. You remember him, dontcha? Or maybe you’re just trying to forget? He’s the dude that very shrewdly defended President Trump over lawsuits relating to the infamous Trump University real estate seminars. Oh, the irony. Trump hates the very thought of the merger and that may have something to do with his feud with CNN, which, incidentally, is owned by Time Warner. Petrocelli, who seems to have forgotten all about his Trump days, is arguing that not only does this lawsuit not pose a threat to industry competition, but the merger actually has the potential to lower cable bills. However, I have a hard time believing a cable carrier would willingly lower bills. As for investors, they seem to be on Team AT&T and believe the telecommunications giant will emerge victorious, especially because the last time the government was successful against a vertical merger, Nixon was president. Yikes!

Whose the turkey now?

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OMG! It’s football season and Dish Networks did the unthinkable – to football fans, anyway – and dropped CBS in some markets. “Some markets” includes over 3 million customers in 18 cities who will be feeling the effects of tryptophan sans quality NFL time if a deal is not reached by kickoff time. As if blocking football games isn’t bad enough, some viewers will even be getting deprived of “The Big Bang Theory” which is just so not cool. The issue, of course, is fees. Because it always is. Dish isn’t happy about CBS’s demands for higher fees, especially since Dish viewership is down (note: Google streaming on-demand video). Dish also insists that viewers are watching less CBS and feels that CBS ought to show a little more restraint in its fee demands. CBS, on the other hand, is accusing Dish of punishing its viewers while Dish is calling foul on CBS for not extending its contract until negotiations end.  However why any of this matters is beyond me since, invariably, those fees, on which the two sides eventually agree, usually end up getting passed on to subscribers via their monthly bill anyway. Now subscribers have something to look forward to once those inconveniently-timed negotiations come to a close.

Hurricane win…

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Hurricanes suck. Except for home improvement retailers. Lowe’s would agree. The company just reported third-quarter earnings, much to the delight of Wall Street. As a result of Mother Nature’s very unappreciated wrath, sales at Lowe’s went up 5.7% to $16.8 billion, way more than the predicted 4.6% and $16.6 billion. $200 million of those sales came courtesy of Hurricanes Harvey and Irma that wreaked its proverbial havoc on a large swath of the country. But they helped the home improvement chain take in an $872 million profit that added $1.05 per share, which was three cents higher than analysts’ estimates.  That number was particularly impressive since last year at this time, Lowe’s took in $462 million, nearly half that amount.  But Lowe’s doesn’t owe all its quarterly success to natural disasters. The company also made a big push to cater to professional contractors. And with good reason. They spend more money. Sure DIY home improvement is Lowe’s theme, but the company was savvy enough to recognize an additional opportunity and the fact that the housing market is doing pretty awesome lately only sweetens the pot.  And even though Lowe’s shares dropped a smidge during trading this morning, it can’t be too distraught since the company’s shares are up about 15% for the year.

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Mylan CEO Using New Math; End for Land’s End CEO; Mousy Talk on Twitter

Miss-stated…

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Let’s give it up for Mylan CEO Heather Bresch for providing us with some fiscal humor today. In case you missed it, she told Congress last week that poor little Mylan only makes $50 on each EpiPen 2 pack for which it charges $600. But the darndest thing happened. It seems that, for some strange reason, when Mylan calculated its sales and profit figures to present to Congress, the pharmaceutical company applied a statutory U.S. tax rate of 37.5%. Which is so weird because Mylan re-domiciled in the Netherlands in order to pay less taxes. In fact, last year Mylan paid a rate of 7.4%. And that’s even weirder because at that rate, Mylan’s profits come in closer to $160 per pack. The company sells over 4 million packs a year. If that’s not a $240 million arithmetic discrepancy, then I don’t know what is. Several members of Congress had strong opinions on Ms. Bresch’s capacity for honesty and presumably, math.  Representative Buddy Carter (R-GA), who as luck would have it is also a pharmacist in real life, called Mylan’s creative pricing a “shell game.” Shares of Mylan dropped a smudge.  Oh well.

Vattene!

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After less than two years on the job, Lands’ End CEO Federica Marchionni is out effective immediately. The now-ex CEO, who held posts at Dolce and Gabbana and Ferrari, just couldn’t seem to bring a luxurious vibe to a very middle America brand. Go figure. To be fair, the Wisconsin-based company is giving her credit for helping Lands’ End sow the seeds towards becoming a global lifestyle brand.  Which is incredibly heart-warming.  She probably didn’t help her cause when she interviewed Gloria Steinem for the company’s Spring catalog. At first she ticked off the anti-abortionists just for featuring the iconic yet controversial figure. After all, the company does sell a lot of uniforms to Catholic schools.  I’m pretty sure there’s a joke in there, but I’m not inclined to look for it. Then she managed to tick off the pro-choicers when she apologized to the anti-abortion activists for writing about Steinem in the first place. You can’t win, I tell you.  In the end, however, it did all come down to money, and Ms. Marchionni didn’t really make any for the company. Lands’ End sales were down 7% last year while shares were down 33% for the year. To add insult to fiscal injury, shares are down again today 11%, perhaps because the company now finds itself looking for its third CEO in just over two years.

Tweet tweet, squeak squeak…

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Could Twitter be going to the rodents? That might not be such a bad thing if word on the street – Wall Street, that is – is true.  Rumor has it that Disney is making a play for the social media company along with Google and Salesforce. Shares have been going up on the news since Friday and those shares need all the help they can get as Twitter continues its struggle to increase revenue. But the House of Mouse rumblings seem to have the most traction with talk that the company is currently working on a potential bid for Twitter. Interestingly enough, Twitter CEO Jack Dorsey sits on the Disney board so an acquisition isn’t so far-fetched. And since Disney’s biggest biz, cable television, has been losing ground to online streaming services, Disney Chief Bob Iger has been investing heavily in tech, thereby making a Twitter acquisition a very logical move. Twitter itself is looking to evolve into a bona fide media company, already offering live streaming NFL Thursday Night Football and the Presidential debates that air tonight. That focus will fit in nicely at Disney. Twitter’s hoping an acquisition deal will put the company’s value at a meaty $30 billion.  And who doesn’t like the sound of $30 billion?

Sweet Beat for Mondelez; Coca Cola’s Earnings Still Have Some Fizz Left; Twitter Needs a Growth Spurt

Ore-oh well…

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Last time Mondelez came up on this blog, it was because it made a $26 billion offer to buy Hershey Co. That deal would have created the biggest confection company. Ever. Except that Hershey Co. rejected the offer. In any case, the company still managed to beat estimates, cranking out earnings with a few ups and downs. Ultimately, Mondelez pulled down a profit of $464 million with 29 cents added per share. Unfortunately, the company also reported that sales fell a whopping 18% to just $6.3 billion. Some of those falling sales are being blamed on the strong U.S. dollar and that’s especially troublesome for Mondelez since most of its revenue is generated outside of the U.S. If you recall, Mondelez makes some of our country’s most beloved snacks including Oreos, Ritz Crackers and Trident gum. But Mondelez really would have liked to add Hershey Co. to its collection since 90% of Hershey’s revenue comes from the U.S. and the deal would have significantly increased Mondelez’s much-needed U.S. exposure. Instead, Mondelez CEO Irene Rosenfeld is going to attempt to trim $3 billion in expenses. The company also plans to bring its Milka brand of chocolate to China, a market where Hershey has struggled to make a dent and, in fact, lost money on the endeavor.

Fizzle out…

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Speaking of things sweet and highly caloric, Coca Cola also reported earnings with lower than expected quarterly revenue. This time China and Latin America are the culprits. Well, partly anyway. Apparently, consumer tastes in China are switching gears from soda to more healthful choices, especially premium water. And who doesn’t like their water premium, right? Latin America is making problems for Coca Cola all because of high levels of inflation in some regions there. On the bright side, revenue in North America picked up by 2%. Too bad that’s about the only place it picked up. And it’s not just Coca Cola that’s feeling the health burn. PepsiCo is also struggling to get consumers to re-embrace it’s fizzier offerings. Coca Cola’s net income came in at $3.45 billion, up 11% from last year’s $3.12 billion.  The beverage company took in $11.5 billion in revenue with 60 cents added per share. Analysts expected $11.6 billion in revenue but 58 cents per share. However, last year at this time, Coca Cola raked in $12.16 billion, a bummer no matter how you slice it. But Coca Cola’s CEO Muhtar Kent isn’t worried and feels that his beloved soda drinkers are still out there. They’re just not drinking as much as he would like them too. The fact is, the total volume of soda consumption in the U.S. declined by 1.5% in 2015, and by .9% in 2014. Which means Mr. Kent better figure out a way to get more soda drinkers or get his current ones to kick back some more.

Grow-tesque…

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On the heels of yet another celeb controversy on its site, this time over the cyber-abuse of Ghostbusters actress, Leslie Jones, Twitter announced its latest earnings.  And no, the results did not help lift the waning spirits of investors. Apparently CEO and Co-Founder Jack Dorsey has yet to pull the rabbit out of the hat as growth was so slow it was practically backwards at a paltry 1%. Revenue came in at $602 million, which was just 20% higher than last year at this time. At least shares picked 13 cents a pop, even though analysts predicted shares would only gain a dime. Expectations, however, were for $608 million in revenue, so nobody was particularly impressed by the three cent beat. Not shockingly, the stock took a nasty fall on the news, diving as much as 14% at one point during the day, and losing as much as $1.7 billion of its market value. That leaves its current market value at $11 billion, despite its $18 billion valuation. But we’re supposed to get excited for Twitter because its got some big plans for video that its hoping will actually reverse its negative fiscal tide. Videos are Twitter’s number one ad format and so it made deals with the NFL, NBA, NHL and MLB. Of course deals with the DNC and RNC are also in place since U.S. politics has turned into a veritable sporting event. But even with all that entertainment on the platform, it’s not crazy to hope for a miracle for the one-time Wall Street darling.

Zynga Zinger, Supreme Cyber Smackdown and Fannie Mae is Back on Top

Game over?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Zynga took a nasty little hit to its second quarter earnings by barely breaking even. And that’s being generous. While Wall Street was hoping to see revenue of $157 million, the San Francisco-based gaming company, currently notable for “Farmville,” took in $153 million in revenue with a $.07 per share loss. Ah! But what is a mere $.07 in the grand scheme of things, you might be wondering? Well that grand scheme adds up to a $62.5 million loss. Last year at this time the company’s loss was but a mere $15.8 million. However, there is hope on the mobile horizon, or so Zynga feels, as “Farmville 2: Country Escape” has become an Editor’s Choice in the Apple App store – a very significant barometer of what makes a game successful. Then there are those handy licensing deals with the NFL and Tiger Woods, among others, that Zynga is counting on to turn those earnings in the up direction.

E-commerce competition!

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Image courtesy of cooldesign/FreeDigitalPhotos.net

It’s about to get a whole lot nastier – but luckily, not for consumers – in cyberspace thanks to the nifty new alliance that was forged between Barnes & Noble and Google. Yes. I did write Google – well Google Shopping Express, to be more precise. The two companies have teamed up to provide a little competition to Amazon. But that’s not in the official statement, of course. The partnership, which should give a much needed boost to the bookseller, will provide same-day delivery in certain areas, just like rival Amazon. After all the trouble Amazon caused for book publisher Hachette, this new deal probably couldn’t have come at a better time as consumers are feeling a little less affectionate towards the e-commerce giant. Google Shopping Express has already teamed up with major retailers like Target and Costco. By the way, you can subscribe to Google Shopping Express free for the first six months, with a subscription fee to be determined at the end of that time. Or you could just plunk down $4.99 per order. Happy shopping!

Pay it backwards…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fannie Mae, who once upon a time had to hit up taxpayers to the tune of $116 billion at the height of the financial crisis is about to have paid us all back in full. Sort of. The mortgage lending company just reported its tenth straight profitable quarter – $3.7 billion in profits, in fact.  And a check for that amount is in the mail…to the US Treasury. After the Treasury cashes that out, Fannie Mae can take a breather as it will have more than fully repaid its debt. And while that $3.7 billion profit might seem impressive, that figure is actually a 63% decrease over the same period last year, where Fannie Mae pulled in over $10 billion in profit.  Incidentally, Fannie Mae earned $84 billion in 2013. Not bad for a year’s work, huh?