Tag Archives: request

Apple Earnings Quality Better Due To GAAP-Only Reporting, Says UBS

Apple ( AAPL ), IBM, and Cisco Systems ( CSCO ) have higher earnings quality than some 3D printer makers, based on their GAAP vs. non-GAAP accounting, says UBS. Tech companies, and some others, typically report both non-GAAP  earnings — which exclude stock options grants to employees and often other items — and earnings under GAAP (generally accepted accounted principles), which include everything. Financial analysts typically provide non-GAAP estimates for quarterly results, and those numbers frequently get more play in quarterly earnings stories in the business press. “Non-tech investors sometimes recoil at the liberal non-GAAP reporting by tech companies and its acceptance by investors,” noted UBS analyst Steven Milunovich in the research report. Milunovich says a large difference between GAAP and non-GAAP earnings should be taken into account in assessing a stock’s price-to-earnings, or P/E, ratios. “Apple’s financial statements embody the same user-friendly nature as its products in only reporting GAAP numbers,” he wrote. Milunovich also said the GAAP to non-GAAP EPS difference for  IBM ( IBM ) is just “modest,” and is a “relatively conservative” 12% for Cisco. IBM is slated to report its Q1 earnings on April 18, and Apple on April 25. IBM stock fell 0.3% to 152.07 on the stock market today. Apple rose 1% to 111.12, closing just below Apple’s 200-day line after the stock topped that key level intraday for the first time in 2016. Milunovich is the second tech analyst in a week to take a close look at GAAP vs. non-GAAP earnings. Citigroup analyst Mark May last week slashed his price target on LinkedIn ( LNKD )  and also lowered its targets on shares of  Amazon.com ( AMZN ),  Alphabet ( GOOGL ),  Facebook ( FB ) and  Netflix ( NFLX ) in a report that examined the earnings dilution from stock compensation grants . Milunovich says restructuring charges also impact GAAP vs. non-GAAP accounting. The UBS analysts flagged the leading makers of 3D printers. He said that in 2015 “both Stratasys ( SSYS ) and 3D Systems ( DDD ) had large impairments, especially Stratasys’ write-off of MakerBot, creating the biggest gaps (in GAAP vs. non-GAAP accounting)” among the companies he looked at. Storage vendors including Nimble ( NMBL ), NetApp ( NTAP ) and EMC ( EMC ) also had relatively large differences in GAAP vs. non-GAAP earnings, he wrote.

Tesla Falls Late On Shortages, Sales; Model 3 Reservations Pass 276,000

Loading the player…   Tesla Motors ( TSLA ) stock fell more than 2% after the close in the stock market today , as the company gave a Q1 deliveries count and mentioned Model X parts shortages. That highlights Tesla’s  task ahead as the electric car maker tries to ramp up production dramatically to deliver its new Model 3 starting in late 2017. “Tesla Q1 deliveries consisted of 12,420 Model S vehicles and 2,400 Model X vehicles,” Tesla spokeswoman Alexis Georgeson  said in an emailed statement after the market close. “Q1 deliveries were almost 50% more than Q1 last year and Tesla remains on track to deliver 80,000 to 90,000 new vehicles in 2016.” Tesla said the Q1 delivery count was impacted by “severe Model X supplier parts shortages in January and February that lasted much longer than initially expected.” Production rates improved once the issues were solved, the company said. “The root causes of the parts shortages were: Tesla’s hubris in adding far too much new technology to the Model X in version 1, insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house,” Georgeson’s email said. “The parts in question were only half a dozen out of more than 8,000 unique parts, nonetheless missing even one part means a car cannot be delivered. Tesla is addressing all three root causes to ensure that these mistakes are not repeated with the Model 3 launch.” Model 3 Reservations Rack Up, With Challenge Ahead Tesla stock closed up 4% Monday at 246.99, compounding Friday’s gain as reservations for its new Model 3 electric car soared far beyond views. CEO Elon Musk tallied 276,000 reservations by the beginning of Sunday and said he’d give another update Wednesday. The pre-order period opened Thursday ahead of a Thursday-night reveal event. Musk said in Twitter posts that  he’s definitely going to have to rethink production planning. Tesla had expected only one quarter to one half of the 115,000 reservations that came in before anyone even got to see what the car looked like. The refundable reservations are $1,000 each and worth $11.6 billion dollars in revenue if everybody were to go through with a purchase. “While there was clearly a lot of excitement and optimism around both the car and the company, roughly one-third of the respondents we talked to sounded undecided on whether they would actually purchase when the option came up in two years,” Pacific Crest Securities analyst Brad Erickson said in a research note written Friday and distributed late Sunday. The focus now is on how all the numbers — and Tesla stock — will play out. The company has just effectively crowdfunded more than a quarter billion dollars from reservations. That’s more than it raised in its IPO. The 276,000 reservations worldwide also tops the number of electric and plug-in hybrid vehicles sold around the U.S. in the last two years by the entire auto industry. And it’s more than the 245,000 BMW passenger cars sold in the U.S. last year. Tesla delivered almost 51,000 electric vehicles — its Model S sedan and Model X crossover — last year worldwide. Tesla Stock Analysis Going into Monday, Tesla stock was just below where it started 2016. It closed Friday at 237.59 after hitting its highest point since early October. The stock isn’t highly rated by IBD now, factoring in its history of losses and earnings, stock performance and other factors. The Model 3 is the electric car meant for the entry-level luxury mass market, priced at $35,000 for the base model before any tax credits. Musk expects the average purchase price with add-ons to be $42,000. The car is seen as a challenger to BMW’s 3 Series and similarly priced models from Daimler ’s ( DDAIF ) Mercedes-Benz, Volkswagen ’s ( VLKAY ) Audi and Toyota ’s ( TM ) Lexus, as well as electrics like General Motors ’ ( GM ) Chevrolet Bolt EV. Among the many things analysts and investors will be deconstructing is how much content from Tesla’s tech partners Nvidia ( NVDA ) and Mobileye ( MBLY ) go into the Model 3. Nvidia chips power the entertainment console in Tesla’s current vehicles. Mobileye is a maker of camera-based advanced driver assistance systems, and its technology is used by Tesla in conjunction with Autopilot self-driving car features. Mobileye stock rose 3.2% Monday, while Nvidia was down fractionally. Nvidia  gets a top 99 Composite Rating from IBD and Mobileye a 70. RELATED: Tesla Model 3 Reservations Hit 276,000 By Sunday

New Amazon Payments Unit Ups Ante Vs. Rivals PayPal, Square

Mighty e-commerce firm Amazon.com ( AMZN ) is launching its payments service on several platforms that cater to small and midsize businesses, the company said Monday. Called the Global Partner Program , the new business will allow firms that build e-tail storefronts on the platforms Amazon is partnering with to integrate the “Pay With Amazon” feature. Pay With Amazon aims to reduce any friction when checking out online. By logging in with Amazon, shoppers don’t have to enter a 16-digit credit card number and other billing details. Rival payments firms such as  PayPal ( PYPL ) have been working on reducing friction at checkout for years. Partners in Amazon’s Global Partner Program include Japan-based FutureShop, France-based PrestaShop and Canada-based  Shopify ( SHOP ). Amazon stock fell nearly 1%, to 593.19, on the stock market today . The company has an IBD Composite Rating of 77, where 99 is the highest. Amazon stock is forming a cup base, with a buy point of 696.54, after touching a seven-month low of 474 in early February. The new payments program “could help Amazon reach a much larger audience of merchants,” Colin Sebastian, an analyst with Robert W. Baird, told IBD via email. “However, I believe there are still channel conflicts that may exist with allowing Amazon to see transaction data. In fact, Shopify and others already have relationships with payment platforms such as PayPal and Stripe. As such, it may still be an uphill battle for Amazon payments to gain a lot more traction with merchants. “That said, Amazon does have a lot of customers who may wish to use Amazon payments, and the plus side for merchants would be higher transaction volumes.” Wedbush analyst Gil Luria says Amazon has struggled for years to make headway in the payments business against firms such as PayPal. Apple ( AAPL ) and Google, a unit of Alphabet ( GOOGL ), also have entered the payments sector with digital wallet technologies that revolve around use of cellphones for payments transactions. The Amazon announcement is hot on the heels of similar moves by PayPal and  Square ( SQ ). On Wednesday,  Square said it planned to add Web checkout capabilities to its payment processing product — a direct challenge to much larger competitor PayPal, which has more than 13 million merchants vs. Square’s 2 million. Also Wednesday, PayPal’s Braintree unit — which boasts that it processes payments for startups such as Airbnb, Jet.com and Uber — announced that it was partnering with several all-in-one e-commerce platforms, such as BigCommerce.