Original link: https://www.latepost.com/news/dj_detail?id=1358
Global companies are not optimistic about the future, Google and Microsoft suffer first
Tech stocks have generally been battered over the past few months. The top five U.S. technology companies by market capitalization lost $840 billion in market value within six months, and they lost $2,516.6 billion since the beginning of the year. Markets fear they won’t be able to withstand another downturn.
Alphabet and Microsoft, which were the first to report third-quarter financial numbers, partially confirmed market concerns.
The world’s largest advertising agency and the world’s largest corporate services company each posted the lowest growth quarters in recent years. They have slowed revenue growth and double-digit year-over-year earnings declines, and executives have warned that business growth may slow further, and have begun to rein in capital spending and employee recruitment.
- Google’s parent company’s third-quarter revenue was $69 billion, and the 6% quarter-on-quarter growth rate was the slowest growth rate outside the financial crisis and the early days of the new crown pneumonia epidemic.
- Overall advertising revenue was US$54.5 billion, with growth slowing to 2.5%; Google advertising revenue decreased by 1.9% year-on-year.
- Cloud computing revenue was $6.87 billion (37% growth), but operating margin was lower than expected at 25%. Capital expenditure guidance of $7.28 billion was also below expectations.
- Net profit was US$13.91 billion, down 26.9% year-on-year. Net profit margin dropped to 20.13%, down 9 percentage points year-on-year.
- Microsoft’s third-quarter revenue was $50.1 billion, up 10.6% year-on-year, the lowest quarterly growth rate since June 2017.
- Intelligent cloud business revenue was $20.3 billion, of which Azure revenue increased 23% year-on-year, a marked slowdown from 40% in the previous quarter and 50% in the same period last year.
- Productivity and business process revenue was $16.5 billion, up 9.4% year over year. Office business and consumer revenue both grew 7% year over year. Overall growth was the slowest since 2017 outside the beginning of the COVID-19 pandemic.
- Personal computing revenue was $13.332 billion, almost flat year over year. But Windows OEM revenue fell 15% year over year.
Shares of Alphabet and Microsoft both fell nearly 8 percent after the earnings report.
People are accustomed to leading companies doubling down on R&D, hiring talented people, and even buying land and properties during economic downturns, so as to prepare adequately for a resurgence in demand, the so-called “investing in the future.” For a potential recession, the market is always worried that these giants will also panic and start cutting research and development, reining in spending or suspending other expansion plans.
The market increasingly uses technology companies as economic bellwethers. Microsoft’s Windows, Azure, Google’s advertising, and Amazon’s cloud computing are digital infrastructures that are inseparable from global business.
During the recession from 2008 to 2010, large tech companies such as Apple, Google, and Microsoft acquired new patents from more than 150 companies and thousands of bankrupt smaller companies. After that they got bigger. Wall Street believes this, even more so than entrepreneurs, that the world’s need for technology isn’t going away.
On the third-quarter earnings conference call, Microsoft lowered its Azure revenue growth rate, warned that weak computer demand would affect Windows business, and reminded the market that LinkedIn’s advertising revenue would be affected by the macroeconomic downturn. Microsoft will also control employee recruitment in the second half of the year, and the number of new jobs is expected to be the lowest in recent years.
Alphabet’s search (Google) and YouTube advertiser spending continued its downward trend since the second quarter and contracted more. That’s partly because of the high base generated by last year’s ultra-high growth, and partly because advertisers are worried about a recession. For example, YouTube has lost a group of brand advertisers who are willing to put in little conversion effect and usually can only accumulate “mind”.
“In these challenging times, advertisers are carefully evaluating the effectiveness of their budgets,” said CFO Ruth Porat. Of course this also includes Google itself. After recruiting more than 12,000 people in the third quarter, Google plans to reduce the number of recruits by half in the fourth quarter.
Similar pessimistic news can be heard or seen in industrial companies. SK Hynix, the world’s second-largest memory chip maker, has decided to halve its capital spending next year as its operating profit fell 60% in the third quarter. Not long ago, TSMC, the world’s largest chip maker, lowered its capital expenditure plan for the second time this year, with a drop of $8 billion. Several other leading companies in the semiconductor field, such as Micron and Intel, have cut capital expenditures.
This week, Texas Instruments (TI) said in its third-quarter report that the semiconductor downturn is spreading beyond PCs and mobile phones. More than 60% of their revenue comes from automobiles and industrial control chips, but orders for the latter are slowing down like consumer electronics, and only automobiles are still strong downstream demand.
Bezos, the founder of Amazon, who has hired a million employees, said last week when he retweeted the news that the CEO of Goldman Sachs warned that a recession is likely to be very likely, close the door and prepare. Having survived 2000 with more than $600 million in convertible bonds, he knows the power of recessions.
After several consecutive quarters of rapid growth and investment, global companies are changing from the passing lane to the normal driving lane, lowering expectations but not so pessimistic. Take Apple, Microsoft, Google, Amazon and Tesla as an example, the total market value today is still 72% more than at the end of 2019. (Gong Fangyi and Qiu Hao)
Coca-Cola is also raising prices, but you may not notice it
Coca-Cola delivered a third-quarter report that beat market expectations. During the period, revenue increased by 10% year-on-year to US$11.063 billion, and net profit was US$2.825 billion, a year-on-year increase of 14%. After raising its full-year outlook in the second quarter, Coca-Cola once again raised its full-year revenue growth forecast to 14% to 15%, about double the forecast at the beginning of the year.
The price increase helped Coca-Cola offset higher costs and make higher profits. Coca-Cola’s pricing and product mix in the Asia-Pacific region rose 4 percent in the third quarter. The European market, which saw the biggest price hikes, was up 19%, with organic revenue up 20% despite a 1% drop in box sales.
But the price increases are in ways you may not notice. It launched a 200ml mini pack in China, the second-selling item in Taobao’s official flag, and the price is about 2.75 yuan a can, which is only 60% of the 330ml standard pack. In Japan, the 500ml package is split into two sizes: 350ml and 700ml.
CEO James Quincey said at the earnings conference that inflation is holding back consumers’ purchasing power, and next year’s product innovation will focus more on packaging, launching smaller bottles and reducing the number of packs to keep prices stable. The latest packaging design has replaced the full-wrap plastic bag packaging with cardboard on top.
The Asia-Pacific region performed best in the third quarter, driven by the Chinese and Indian markets, with single-case sales up 9% year-on-year. Although the Chinese market data was not disclosed separately, at the earnings conference, James Quincey expressed his confidence in the Chinese market, believing that both business in China and bottling partners are resilient.
Supply chain and channels are still Coca-Cola’s most important bargaining chip in the Chinese market. In July this year, Coca-Cola spun off the production and operation of its still beverage business to two bottlers, COFCO and Swire. After the reorganization, the two bottlers can be responsible for the production and distribution of all Coca-Cola beverages in China. At present, Coca-Cola has 46 factories in China. (Intern Zeng Xing)
Ant Group has acquired another piece of land on the other side of the Alipay Building in Lujiazui, Shanghai
Ant currently has three headquarters and three centers in Shanghai, including the Alipay headquarters in Shanghai’s Lujiazui area (in 2019, it spent 2.262 billion US dollars), Hema headquarters, local life headquarters, as well as Ali Shanghai R&D Center, Ali New Retail Center, Ant Technology center.
This time, together with Yuyuan, a subsidiary of Fosun Group, purchased a commercial land located in the core area of Shanghai, including 16 parcels of land, covering an area of more than 100,000 square meters, at a price of 12.93 billion yuan.
- The site is located between Yu Garden and the Bund, next to the current headquarters of Fosun.
- After completion, Ant Group will acquire about 60,000 square meters of above-ground self-owned office properties.
- Yuyuan is a listed platform of Fosun Group’s main real estate, jewelry and catering.
If a city’s land dependence degree is calculated by dividing the land sales revenue by the general public budget revenue, the average dependence degree of Shanghai in the past five years is about 32.6%, ranking second to last in the country. In Shanghai last year, the figure was 42.8%. (Gong Fangyi and Qiu Hao )
Kanye was collectively terminated by the brand due to inappropriate remarks, and those who fry shoes may not care
On October 25, Adidas announced that it would terminate its cooperation with American rapper Kanye West and stop producing and selling the Yeezy product line. At present, the domestic official platform has removed Yeezy series products.
On the first day when the news came out, there were still a lot of Yeezy shoes on Dewu, and the transaction volume increased. A “speculator” told us that some styles and colors were stocked up, and Yeezy Boost 350 V2 Black’s gypsophila size rose by 400 yuan. This shoe has more than 100 orders in 5 hours on Dewu, and the transaction price is between 2,129 yuan and 3,799 yuan.
The termination stemmed from Kanye’s controversial comments on social media involving racial discrimination and anti-Semitism. Gap and Balenciaga have already terminated their contracts first. Adidas didn’t make a statement at first, and as the topic of boycotting the company on social media became more and more, the notice of termination of the contract also came. Kanye’s net worth fell from $1.9 billion to $400 million.
Adidas without Yeezy will suffer in the short term. Since its launch in 2015, the Yeezy collection has brought in nearly $2 billion a year, or about 10 percent of its revenue. Adidas also said in a statement that the move may bring losses of 250 million euros (about 1.8 billion yuan).
But Adidas also cut off Kanye’s negative influence and long-standing contradictions. In the termination statement, Adidas emphasized that it is the “sole owner of all design copyrights of existing products and new and old colors.” The Yeezy shoe design is the intellectual property of Adidas, and Adidas may launch it in its own name in the future. (Intern Zeng Xing)
OTHER NEWS
The ChiNext Index led the gains throughout the day, with a net purchase of RMB 3.4 billion by northbound funds.
Today, the Shanghai Index, Shenzhen Component Index, and ChiNext Index closed up 0.78%, 1.68%, and 2.52%, respectively. Northbound funds bought a net 3.433 billion yuan throughout the day; Hang Seng Index closed up 1%, and southbound funds bought a net 5.06 billion Hong Kong dollars; China Probable ETF KWEB opened up more than 5%.
Ask the world to learn about Tesla’s price reduction, and the final payment will be reduced by 8,000 yuan.
After Tesla’s high-profile price cut, Wenjie became the first new energy brand to follow up. “Waidian Finance” learned from a Wenjie salesperson that since October 24, consumers who buy Wenjie’s M5 and M7 hybrid models can enjoy a discount of 8,000 yuan when paying the balance. At present, the prices of Tesla Model 3 and Model Y entry models have dropped to 265,900 yuan and 289,000 yuan respectively (after subsidies), while the new pure electric version M5 released by Wenjie in September starts at 288,600 yuan, and Not included in this offer. Soochow Securities believes that Tesla’s price cut may start a new wave of industry price cuts.
Due to new EU regulations, the iPhone will change the Type-C interface.
Greg Joswiak, Apple’s senior vice president of worldwide marketing, said that Apple will comply with the EU’s new rules on a unified charging standard, but he did not specify when the iPhone will change the interface. Since the new rules take effect in 2024, analysts mostly believe that Apple will replace the current Lightning port in the iPhone 15, which goes on sale next fall. Apple has previously been at a standoff with the EU on this issue for years, and after abandoning Lightning, Apple may have to suffer some losses in licensing fees for exclusive accessories.
The rise in raw material prices, power and production restrictions, and reductions in subsidies combined, the net profit of Taoli Bread in the third quarter fell by 33% year-on-year.
Taoli Bread’s revenue in the third quarter increased by 5.67% year-on-year to 18.22 yuan, and its net profit was 132 million yuan, down 33.88% year-on-year. The decline in profit was mainly affected by the epidemic and high temperature power cuts in some regions, and the return rate, discount rate and terminal distribution service fees all increased, and the increase in the price of some raw materials resulted in a year-on-year decline in gross profit margin. In addition, reduced government subsidies and investment losses also affected profits. Since 2021, Taoli has increased revenue but not profit for 7 consecutive quarters.
The price of pigs has risen, and Wen’s shares made 4.2 billion yuan in the third quarter.
Wen’s net profit in the third quarter was 4.2 billion yuan, an increase of 1655% from the second quarter. According to the September sales data disclosed by the company, the selling prices of its main products of live pigs and broilers have increased significantly compared with the end of the second quarter. Benefiting from the rise in pig prices, the third quarter reports of many pig companies have been significantly repaired. For example, Muyuan shares, which have lost four consecutive quarters, will earn close to 100 million per day in the third quarter of this year. However, many A-share breeding stocks, including Zhengbang Technology, Muyuan Shares, and Wen’s Shares, fell sharply today. Some market analysts believe that most pig stocks in the current cycle of rising benefits have been realized with the release of financial reports.
Those who hoped that the Cambrian would lose a little less were disappointed again.
According to the financial report, the Cambrian recorded a net loss of 322 million yuan in the third quarter, which was further expanded from the loss of 237 million yuan in the same period last year. Since 2017, the cumulative loss has exceeded 4 billion yuan. The agency once predicted that the Cambrian will lose 942 million yuan this year. Now it seems that the company has “completed its goal” one quarter ahead of schedule. Cambrian said in its semi-annual report that it has not yet made a profit mainly because the complex computing chips it designs require a large amount of R&D investment. The speed of burning money is so fast that Cambrian released a fixed increase announcement last month, and plans to raise 2.65 billion yuan.
Bubble Mart’s overseas revenue doubled in the third quarter, but the scale is still small.
In the third quarter, Bubble Mart’s Chinese market revenue fell by 10%-15% year-on-year, while overseas revenue increased by 115%-120% year-on-year, and the overall decline was 5%-10%. Closing stores in conjunction with epidemic prevention and control affected offline revenue, but Tmall and JD flagship store revenue also fell by 35%-40% and 20%-25% year-on-year, respectively. Bubble Mart did not announce the specific figures and composition of revenue in the third quarter. For reference, the revenue in the first half of the year was 2.378 billion yuan, of which overseas revenue accounted for 6.6%.
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