The Long Term Investor

SO......on to the next one.

Google advertising revenue rises 69% from last year

https://www.cnbc.com/2021/07/27/alphabet-googl-earnings-q2-2021.html

(BOLD is my opinion OR what I consider important content)

Key Points

• Alphabet crushed Wall Street’s expectations as it saw dramatic advertising growth amid the pandemic bounce-back.
• YouTube revenue came in over $7 billion, up 83% from last year, drawing close to Netflix’s quarterly revenue, which was $7.34 billion.
• The stock rose more than 4% in after-hours trading.

Alphabet reported Q2 2021 earnings after the bell. The stock rose more than 4% on the strong numbers, which crushed analyst expectations.

Here are the results.

• Earnings per share (EPS): $27.26 vs $19.34 per share, according to Refinitiv estimates.
• Revenue: $61.88 billion vs $56.16 billion, according to Refinitiv estimates.
• YouTube advertising revenue: $7.00 billion vs $6.37 billion expected, according to StreetAccount estimates.
• Google Cloud revenue: $4.63 billion vs $4.40 billion expected, according to StreetAccount estimates.
• Traffic acquisition costs (TAC): $10.93 billion vs $9.74 billion expected, according to StreetAccount estimates.

Total Google ad revenue increased to $50.44 billion, up 69% from the year-ago quarter, which was hurt by the onset of the Covid pandemic.

YouTube revenue came in over $7 billion, up 83% from last year, drawing close to Netflix’s quarterly revenue, which was $7.34 billion

Google Cloud brought in $4.63 billion — up from $3.01 billion a year ago.

The cloud business had operating losses of $591 million, a dramatic improvement from last year’s loss of $1.43 billion. Google Cloud includes infrastructure and data analytics platforms, collaboration tools such as Google Docs and Sheets, and “other services for enterprise customers.”"

MY COMMENT

YES....yet another BIG BEAT....across all categories.

 

Ok.....NEXT.

Apple demolishes earnings expectations with iPhone sales surging nearly 50%

https://www.cnbc.com/2021/07/27/apple-aapl-earnings-q3-2021.html

(BOLD is my opinion OR what I consider important content)

Key Points

• Apple reported strong fiscal third-quarter earnings on Tuesday, demolishing Wall Street expectations.
• Every one of Apple’s major product lines grew over 12% on an annual basis.
• iPhone sales increased nearly 50% on an annual basis.

"Apple reported strong fiscal third-quarter earnings on Tuesday, demolishing Wall Street expectations. Every one of Apple’s major product lines grew over 12% on an annual basis.

Overall, Apple’s sales were up 36% from the June quarter last year. iPhone sales increased nearly 50% on an annual basis.

Apple stock was effectively flat in extended trading.

Here’s how Apple did versus Refinitiv estimates:

• EPS: $1.30 vs. $1.01 estimated
• Revenue: $81.41 billion vs. $73.30 billion estimated, up 36% year-over-year
• iPhone revenue: $39.57 billion vs. $34.01 billion estimated, up 49.78% year-over-year
• Services revenue: $17.48 billion vs. $16.33 billion estimated, up 33% year-over-year
• Other Products revenue: $8.76 billion vs. $7.80 billion estimated, up 40% year-over-year
• Mac revenue:$8.24 billion vs. $8.07 billion estimated, up 16% year-over-year
• iPad revenue: $7.37 billion $7.15 billion estimated, up 12% year-over-year
• Gross margin: 43.3% vs. 41.9% estimated

Apple did not provide formal guidance for the sixth quarter in a row and has not since the beginning of the Covid-19 pandemic.

Apple also had a strong quarter in its Greater China region, which includes Taiwan and Hong Kong in addition to the mainland. Apple reported $14.76 billion in sales in the region, up 58% from the same quarter last year, although it was an easy comparison given that China was in stages of lockdown during the quarter.

Americas sales were up nearly 33% year-over-year to $39.57 billion.

Apple’s quarter ending in June is typically one of its slowest of the year, but the company has benefitted from work-at-home and remote schooling trends that have boosted sales of its premium computers.

Last year’s June quarter was a company record for sales even despite lockdowns around the world, so Apple is growing even compared to a strong basis from a year ago.

Cook mentioned that the success was not just because of people upgrading their old iPhones, but also Android customers buying their first iPhone.

“We saw a very strong double digit increases in both upgraders and switchers during the quarter,” Cook said.

Apple’s quarter could have been even better if it had not grappled with supply shortages likely linked to the global chip shortage, which mostly affected its Mac and iPad sales.

“The shortage primarily affected Mac and iPad,” Apple CEO Tim Cook told CNBC’s Josh Lipton. “We had predicted the shortages to total $3 to $4 billion. But we were actually able to mitigate some of that, and we came in at the lower than the low end part of that range.”

Apple’s services business also shook off investor fears that its rate of growth could slow as more people go back to work and spend less on online services and apps. Services was up 33% year-over-year, an acceleration from last quarter’s 26.7% growth rate.

While Apple’s services business includes many products and Apple does not break down how it’s composed, Cook told CNBC that the company set records in music, video, cloud services, advertising and payments.

Apple now has 700 million paid subscribers, Cook said. However, that number includes anyone subscribed to an app through Apple’s App Store billing.

Cook also said that Apple pushed back its return to its campus headquarters from September to at least October because of the Covid-19 situation.

“I’ve been really pleased with what we’ve been able to accomplish in this fully remote mode,” Cook said.

Apple declared a dividend of $0.22 per share of stock. In a statement, Apple said that it spent $29 billion on shareholder return during the quarter. Apple CFO Luca Maestri told CNBC that the company has bought back almost $450 billion in stock in recent years. "

MY COMMENT

Same comment as the rest.....BLOW OUT earnings. So far this year.......ALL.......my companies have been DEMOLISHING earnings. I dont care about the short term DISRESPECT by the markets......as I say.....this is money in the bank.

 

God help us if one of the BIG GROWTH companies ever FAILS on earnings. If they drop on GREAT earnings....I can only imagine the market drop that will happen if they just meet or fail to meet earnings.

Zukodany.....yeah there is going to be ......MAJOR......change over in the small business world. Many of these business owners are older and will simply retire. I suspect that the business world will be very different in 10-20 years.....FAR LESS long term small businesses. I dont see the younger generations being willing to put in the work to maintain these family businesses. There is very different work ethic, expectations, entitlement, and thinking in some of the younger generation. I know some VERY successful business owners....that the kids dont have any interest in taking over the business....even though it is extremely successful.....and.....would provide them with a very high income.

 

"Wait till this happens in your town and you’ll be able to understand the magnitude of the problem. Or better yet, wait till all of those EXCELLENT businesses fold and then you’ll realize what we’re left here with… If America is all about preserving quality, heritage and culture it sure seems to be doing a shitty job at showing it on Main Street."

ABSOLUTELY and AMEN. Those old enough will remember what it used to be like. BUT.....after 10-20 years no one else will remember......and......they will just think what they are living with is......NORMAL......and just the way it is. That is the SAVING GRACE......no one will know any different.

 

SOME....odds and ends today.

Tesla just had a very good quarter. Wall Street is not impressed

https://www.cnn.com/2021/07/27/investing/tesla-stock-outlook/index.html

MY COMMENT

REAL.....long term investors know the TRUTH.....and dont care.

 

How dare you Zukodany......well......that is pretty funny.

 

I have looked at the SPAC INSANITY.......and....have been amazed that people would put money into a blank check.....totally opaque....investment vehicle. BUT......this is WAY WORSE than I ever imagined.

A SPAC Earnings Disaster Leaves Advent Facing $800 Million Loss

https://finance.yahoo.com/news/spac-earnings-disaster-leaves-advent-225723432.html

(BOLD is my opinion OR what I consider important content)

"(Bloomberg) -- It’s exactly what skeptics of the boom in special purpose acquisition companies have been warning about.

ATI Physical Therapy Inc., in its earnings debut as a public company following a merger with a blank-check firm, revised its revenue projections sharply lower and disclosed larger-than-expected staff turnover. But the surprises went far beyond that.

“The release also lacked a share count, a balance sheet, a cash flow statement or, for that matter, a good defense for why the company’s original guidance (which was officially maintained up until yesterday) ever made sense,” Michael Petusky at Barrington Research wrote in a report. “We are shocked by what has unfolded at ATI.”

ATI’s shares closed Tuesday at $3.82, down 54% over the span of two days and ranking it among the worst-performing companies to have gone public via a SPAC, according to data compiled by Bloomberg. Before its earnings, the Bolingbrook, Illinois-based rehabilitation services company had five buy ratings and zero calls to sell with an average price target of $13, Bloomberg data show.

By day’s end, at least five law firms from coast-to-coast had published press releases urging investors who had lost money to contact them for their securities fraud investigations.

SPACs, which sell shares to raise money and hunt takeovers, can offer private companies a path to markets without the rigorous scrutiny of a traditional initial public offering. That’s prompted a chorus of warnings from financial professionals in recent months that the flood of new SPACs were creating conditions for deals with unsustainable valuations and questionable disclosures. While most mergers have so far held up, steep declines like ATI’s underscore the risks and may force sponsors to do more thorough diligence.

Private equity firm Advent International owns about 62.9% of ATI, according to filings, and is now facing a paper loss of about $800 million. It agreed in February to take ATI public through a merger with Fortress Value Acquisition Corp. II, a SPAC sponsored by Fortress Credit, an arm of Fortress Investment Group LLC.

Spokespeople for Advent and Fortress declined to comment.

Fortress itself is facing paper losses of about $54 million, including the $9 million in invested capital it injected to form the SPAC, according to people with knowledge of the matter. It was among participants in the private investment in public equity, or PIPE, that supported the transaction.

It has had success with other SPAC transactions, including MP Materials Corp., a rare earths producer which closed Tuesday at $36.04.

“Companies that go public via a SPAC tend not to have the stable, predictable business models than those that would go public via a traditional initial public offering,” said Greg Martin, a managing director at Rainmaker Securities, which facilitates secondary transactions for private companies. “Investors may begin to have less faith in companies that go public via a SPAC, and the quality of the SPAC sponsor is going to become increasingly important.”

Most SPACs raise capital at $10, a price that’s often used as a benchmark. Lordstown Motors Corp., the electric vehicle maker that tumbled after cutting full-year production expectations, closed Tuesday at $6.59. Hycroft Mining Holding Corp. has fallen to $2.27, Waitr Holdings Inc. has slipped to $1.59 and Ucommune International Ltd. ended Tuesday at $1.22.

ATI’s SPAC transaction gave the combined entity a market capitalization of $2.075 billion as of June 17, a figure that more than halved to $792 million as of Tuesday’s close. The company operates about 900 physical therapy clinics across 25 U.S. states."

MY COMMENT

NOPE......there will NOT be a SPAC in my future......and.....I dont need a magic eight-ball to confirm that.

 

If you really want to get WAY DOWN in the weeds of the MSFT earnings....this is the article for you. It is long. It has ALL the information that came out in the actual conference call. In spite of the headline....the overall message of the article is very positive.

Microsoft Tops Estimates; Azure Growth Trend Spooks Investors

https://finance.yahoo.com/news/microsoft-sales-profit-gain-shares-204634173.html

(BOLD is my opinion OR what I consider important content)

"(Bloomberg) -- Microsoft Corp. reported sales and profit that exceeded analysts’ estimates for a 10th straight quarter, sending shares higher after some investors were initially spooked by signs of slowing growth in the software giant’s Azure cloud-computing business.

Sales in the fourth quarter, which ended June 30, climbed 21% to $46.2 billion, the Redmond, Washington-based company said Tuesday in a statement. That compared with the $44.3 billion average estimate of analysts polled by Bloomberg. Net income rose to $16.5 billion, or $2.17 a share, while analysts had predicted $1.92.

Microsoft’s market value now tops $2 trillion, and the high-flying shares have led investors to expect results to outdistance projections by a wide margin. After years of investments to make Azure a strong No. 2 in cloud services behind Amazon.com Inc., investors no longer question Chief Executive Officer Satya Nadella’s corporate transformation, but some become skittish at any indication that momentum is fading. Microsoft’s sales and margin forecasts on a conference call reassured investors about its prospects, and shares gained 1.2% in extended trading after first dropping about 2.5% following the report.

“People are not happy if Azure decelerates -- they’re worried the good days are over,” said Mark Moerdler, an analyst at Sanford C. Bernstein. “People seem to worry Azure will never be as big as Amazon.” Moerdler had previously written that he thinks concerns about both Azure growth and margins were overblown.

Azure’s sales increase of 51% in the period disappointed some investors because it was partially fueled by currency fluctuations -- the number drops to 45% without that boost, representing a slowdown from the prior period. Azure revenue had gained 50% from a year earlier for the two prior quarters, not taking into account currency fluctuations. In constant currency, Azure posted a 46% sales gain in the March quarter.

On the company’s call with analysts, Chief Financial Officer Amy Hood said that Azure growth rates, including currency impacts, should “remain relatively stable.” Her fiscal first-quarter forecasts for the company’s two biggest units -- Intelligent Cloud and Productivity -- exceeded the estimates of analysts polled by Bloomberg.

Before the earnings release, Microsoft shares had declined to $286.54 in regular New York trading Tuesday. The stock rose 15% in the fiscal fourth quarter, compared with an 8.2% gain for the S&P 500 Index, reflecting investor ebullience about growth prospects for Azure, Office, artificial intelligence and gaming. The recent period marked the second quarter in a row that initial analysts’ notes highlighted Microsoft’s better-than-expected performance in sales and profit, while shareholders were less pleased with specific details.

Hood hailed the Azure performance as better than she had forecast and said demand remains strong across all of Microsoft’s cloud businesses, including Azure, Office and Dynamics software services.

“Forty-five percent was both better than we expected and driven by consumption growth, which is very good,” Hood said in an interview. “Demand is healthy. The overall execution was better than I expected.”

Commercial cloud sales in the fiscal third quarter rose 36% to $19.5 billion, Microsoft said. Gross margin, or the percentage of sales left after subtracting production costs, in that business widened 4 percentage points to 70%, the company said in a slide posted on its website. Total company gross margins have been benefiting from an accounting change that’s related to current and future server and network equipment, and this may be the last quarter where that leads to an improved margin, according to Bloomberg Intelligence analyst Anurag Rana.

“This year has been great because of the accounting change, but that particular boost is hiding the fact that gross margin is being hurt by the faster-growing Azure business,” Rana said before the results.

Hood may have assuaged concerns about profitability on the conference call by noting that excluding the impact of the accounting change, margins will be wider in the current fiscal year.

In the Productivity unit, mostly made up of Office software, fourth-quarter sales were $14.7 billion, compared with an average analysts’ estimate of $14 billion. LinkedIn, which Microsoft acquired in 2016, became the third business in three years to top $10 billion in annual revenue, Hood said, and Teams, the Microsoft product that competes with Slack Technologies Inc., reached 250 million monthly active users, a huge jump from the 145 million the company reported in April.

Sales of Intelligent Cloud products, made up of Azure and server software, rose to $17.4 billion, above analysts’ expectations for revenue of $16.4 billion.

In the More Personal Computing unit, which includes products like Windows, Surface and Xbox, sales were $14.1 billion. Analysts had expected $13.9 billion. Sales of Windows software sold to PC manufacturers declined 3%, a drop that reflects the surge in laptop buying in the same quarter a year earlier, when Covid-19 lockdowns were forcing many workers to do their jobs remotely.

Overall gaming revenue jumped 11% in the recent period, Microsoft said, with Xbox hardware sales more than doubling. A global semiconductor shortage has constrained sales of Xbox consoles following the release of a new machine late last year, and growth in video-game and gaming services fell 4% in the quarter compared with the pandemic-boosted year-ago period.

Component shortages are also hurting PC and Surface availability, Hood said. Surface sales dropped 20% in the quarter. Hood expects some impact from chip and part shortages to persist into the new fiscal year, which began July 1."

MY COMMENT

This company represents an amazing story of management success. The current management took a stagnant company and turned it into a market monster. I am confident that this company will remain a long term holding in my Portfolio Model for a long time.

 

I TOTALLY agree......and .....I will go one step further......it is STILL difficult.....as in IMPOSSIBLE.....for anyone to predict the position of the market.

 

Someone the other day asked if there were certain stocks that posters avoid. I will add to my answer an entire category of stocks......EMERGING MARKETS.......and.....FOREIGN companies.

Emerging markets.....to me just a total waste of time. I have no interest in investing in third world countries or companies in those countries. Over my investing lifetime I have seen decades of time where people push this STUFF.....with the usual result that the returns NEVER happen. The SAME countries that were "emerging" 45 years ago when I first started to invest are STILL "emerging". It just NEVER seems to happen.

Same for foreign companies. For me personally.....absolutely NO interest in International investing. This has been one of those constant......diversification.....arguments for my entire investing life. To me just a waste of money and potential for BEST return on my money.

My primary reasoning.......business and companies in this country.....the USA......lead the world in nearly EVERY business category. The SP500 is TOTALLY dominant in world business. This is not due to being born and living in the USA.....it is OBVIOUS LOGIC. If the vast majority of successful companies were in France, or Canada, or Africa, or whatever.....that is where I would invest. BUT.....they are not. The vast majority of successful, dominant, safe and profitable, companies are from the USA.....so that is how I invest.

 

As a continuation of the above.

Submerging Emerging Markets

https://howardlindzon.com/submerging-emerging-markets/

(BOLD is my opinion OR what I consider important content)

"What a mess for those that are focused on emerging markets.

This one chart speaks volumes:



This emerging market ETF is 35 percent China and 15 percent Taiwan but most other emerging markets are weak as well.

As JC pointed out on the charts, this is the lower closes for the index relative to the S&P ever. And that was before the beating Chinese stocks took yesterday.

Here is another chart that offers some context on the relative performance.

I have no idea how this does NOT spill over to US Stocks but I am willing to listen and hoping I a wrong.

The financial media and ‘professionals’ love to make fun of crypto and ‘defi’ and ‘shitcoins’ but right now all that fancy Alibaba structure is just a ‘shitcoin’ itself.

There will be no next time for me buying anything Chinese (financial). Dumplings still rule.

I’m now hungry."

MY COMMENT

How or why ANYONE could be surprised by what is happening to Chinese companies right now is beyond me. They do not try in the slightest to hide how the country operates or what they are.....the worlds most brutal communist dictatorship. Besides that....little issue......they also happen to have no real financial controls or transparency and are totally untrustworthy. What could possibly go wrong. ACTUALLY.....the headlines are FULL of what can go wrong....right now.

 

I was glad to see the strength in bitcoin this morning. I really dont care about it since I dont invest in Crypto....but...many people do and I believe STABILITY in Crypto is important.....for individual investors and for the economy in general. Not to mention the psychological impact of constant BOOM and BUST of a widely held asset.

 

I have been IGNORING the big event today.....the FED. I dont think it is....."big"....because they are going to do anything. I think the odds of them actually changing anything or doing anything are ZERO. It is big because the financial media is obsessive about the FED.......and........makes it into a big issue by their constant focus on the FED and total refusal to accept their comments that they are not going to do anything near term. It is obliviously a media hot topic....a button they can push to stir people up any time they want to get some clicks.

Anyone with half a brain knows that the FED is going to have to.......end their asset purchases.......some time over the next year. They are also going to have to start to.......raise interest rates.......some time over the next year to a year and a half. NOT a shocking prediction.....or.....potential impact on the markets or investors. SIMPLY a return to NORMAL.......actually....a WELCOME return to normal.