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Gaming And Messaging Drive Up Tencent Q4 Revenue And Stock

Tencent Holdings showed the growing maturity of China’s love for all things Internet with a fourth-quarter earnings report containing strong growth in online games and social networking revenue. Tencent ( TCEHY ) said revenue surged 45% in local currency to $4.7 billion, beating the consensus estimate of $4.3 billion. Tencent shares, which trade over the counter in the U.S., rose 4% to 20.36 Thursday. The company’s primary stock listing is in Hong Kong, where it is the heaviest-weighted component of the 50-issue benchmark Hang Seng index, accounting for more than 10% of the index. Profit fell slightly short in Q4 as Tencent continues to aggressively invest in video content and mobile operations. Tencent reported earnings per share minus items of 12 cents, up 21% from a year earlier, though the result was a penny short of the consensus estimates as polled by Thomson Reuters. The company reported a net profit of $1.1 billion, up from $905 million a year earlier. “The overall results were pretty strong, with mobile gaming really exceeding expectations,” said Henry Guo, an analyst at ITG Investment Research. “One concern is the money Tencent is spending to acquire video content, but management believes they have the scale to mitigate the bottom-line pressure of content costs.” In 2015, Tencent made heavy investments to expand its library of exclusive premium videos. Tencent has an exclusive partnership with the National Basketball Association to broadcast NBA games in China. Tencent also has an agreement with Walt Disney ( DIS ) to be the exclusive online distributor of the first six “Star Wars” movies. The expanding video catalog led to a six-fold increase in video subscriptions year over year, as mobile daily video views nearly doubled over that time, the company said. Tencent is among China’s Internet leaders, along with e-commerce king Alibaba ( BABA ) and search leader Baidu ( BIDU ). Other China Internet leaders include e-commerce company JD.com ( JD ) and NetEase ( NTES ), which is the second-largest gaming company in China by revenue, after Tencent. Despite a slowing China economy, its Internet leaders have continued to show healthy growth. On Feb. 24 NetEase reported Q4 earnings that beat estimates. JD.com reported Q4 earnings on March 1 that showed strong revenue growth and a smaller-than-expected loss. JD is the largest online direct-sales company in China. A year ago, JD formed a strategic partnership with Tencent. Alibaba also beat estimates when it posted Q4 earnings on Jan. 28. Alibaba provides e-commerce platforms used by businesses and individuals to sell goods and services. Its sprawling business includes cloud computing and mobile payment services. Chinese online travel agency Ctrip ( CTRP ) had a different story. It reported Q4 revenue Wednesday that jumped 50% in local currency and beat views, but the company’s Q1 revenue guidance widely missed expectations. At Tencent, revenue from online games, its largest revenue source, rose 33% to $2.46 billion in Q4, primarily driven by growth from smartphone games through its WeChat and QQ mobile platforms. Monthly active users for its QQ messaging platform for mobile increased 5% year over year to 853 million. Monthly active users on its WeChat mobile messaging service rose 39% to 697 million. Both products serve as a strong distribution platform for Tencent games and digital content offerings. They also send massive volumes of traffic to Tencent’s social networking service, enabling a boost in online advertising. Online advertising revenue rose 118% year over year to $880 million. “Our connection strategy has really extended WeChat and mobile QQ from being social communication tools to becoming platforms for games, publishing, social advertising, premium content distribution and provisioning of other online services,” said Tencent President Chi Ping Lau in the conference call with analysts. Revenue from its social network and messaging services rose 37% to $1.1 billion. The increase was mainly driven by growth in subscription revenue, as well as higher revenue from virtual item sales.

FedEx Earnings Report Lights Fire Under Air Transport Group

The air freight transport industry group was Thursday’s top performer, thanks to a big move in FedEx ( FDX ), which reported better-than-expected earnings. The group is rated only No. 72 out of 197, as of Thursday’s IBD, but it is moving up quickly. It was rated No. 146 just six weeks ago. The rise of the air freight group should be considered a good sign for the global economy. If shippers are busy, the reasoning goes, then so are the manufacturers. And consumers are buying. FedEx, which reported after the close Wednesday, said lower fuel prices and a late surge in online buying helped boost earnings and revenue. The company posted adjusted Q3 earnings of $2.51 a share, a 24% increase from a year earlier, beating Wall Street’s consensus of $2.33. Revenue of $12.65 billion beat estimates of $12.26 billion. It marked the third straight quarter of earnings growth acceleration. The stock gapped higher, surging above its 200-day moving average in massive volume. The stock might be building the right side of a long, deep base. There are just five stocks in the industry group, where the need for a fleet of jets and trucks is a barrier to entry. United Parcel Service ( UPS ) was up sharply in sympathy with FedEx. It appears to be completing the right side of a base. UPS got a boost Feb. 2 when it reported Q4 earnings that beat the Street. It was a critical quarter for freight haulers, which have been criticized for slow deliveries during the holiday shopping season. UPS earned $1.57 a share, a 26% increase from a year earlier and better than the $1.42 consensus. Revenue was up just 1% from a year earlier. CEO David Abney said in the conference call after the report that the company was able to optimize available capacity during the weekend prior to Christmas and collaborate with shippers to tender shipments ahead of the original schedule. “This moved our peak day up to Dec. 21 and smoothed volume for the rest of the week, ensuring our customers’ packages reached their customers’ doorsteps before Christmas,” Abney told analysts. Another company in the group, Air Transport Services ( ATSG ), gapped up for a 16% gain March 9 when it announced earnings that were better than expected. But another press release from the company may have excited investors more. The company said it had agreed to operate a U.S. air network to help Amazon ( AMZN ) make deliveries. The company said it will lease 20 Boeing ( BA ) 767 freighter aircraft and provide gateway and logistical services. A fourth company in the industry group is Atlas Air Worldwide ( AAWW ), whose stock has been lagging and is still trading below its 200-day moving average. The stock also trades on the thin side, with just 316,000 shares changing hands on an average day. It’s earnings growth in the most recent quarter was just 3% above that of a year earlier and represents a serious deceleration of growth. Analysts expect a 75% decline in the next report. Revenue growth decline 3% in the past two reports.

Google Parent Alphabet To Sell Humanoid Robot Maker Boston Dynamics

Alphabet ( GOOGL ) has put military robotics company Boston Dynamics up for sale after failing to find a path to commercializing its technology in the near term, Bloomberg reported Thursday. Alphabet’s Google X unit bought Boston Dynamics in late 2013 as part of series of acquisitions in the robotics field. Boston Dynamics is best known for its “Terminator”-style Atlas bipedal robot and quadrupedal robots like BigDog and Cheetah. Videos of the robots in action have been hits on YouTube, generating tens of millions of views. Possible acquirers of Boston Dynamics include the Toyota Research Institute, a division of Toyota Motor ( TM ), and Amazon.com ( AMZN ), which makes robots for its fulfillment centers, Bloomberg said . Alphabet’s decision to put Boston Dynamics on the block could indicate a retreat from the robotics field, which was led by Google executive and Android co-founder Andy Rubin, who left the company in October 2014. Recently Alphabet has been focused on making sure that all of the umbrella corporation’s far-flung investments start generating real revenue. They decided that Boston Dynamics was unlikely to have marketable product in the next few years and opted to put the unit up for sale, Bloomberg said. RELATED: Americans Freaking Out About Robots Taking Jobs, But Not Their Jobs Next-Gen Robots Poised To Enter Industrial, Commercial Markets iRobot Sells Military Robot Division To Focus On Home Robots .