Apple shares crater as sales miss expectations. Apple (AAPL) shares were -9% premarket and taking Nasdaq futures with them (see below) after the company's FQ1 revenue missed Street forecasts for the third consecutive quarter despite climbing 18% to $54.51B. And although iPhone sales jumped 29% to 47.8M, the figure was below predictions of 50M. Net profit was flat at $13.07B due to higher manufacturing costs as gross margins slid, while EPS came in at $13.81 and easily beat consensus. The long-term problem for Apple, it seems, is where it goes from here.
Chinese PMI rises to two-year high. China's January HSBC Flash PMI increased to 51.9 from 51.5 in December, representing the 5th consecutive rise for the index and taking it to its highest level in two years. "Despite still-tepid external demand," HSBC says, "the domestic-driven restocking process is likely to add steam to China's ongoing recovery."
Surprise profit sends Netflix soaring. Netflix's (NFLX) shares surged 37% premarket after the company made a surprising Q4 net profit of $8M, or $0.13 a share, vs $35M last year. Revenue grew 12.6% to $945M and also beat expectations, while Netflix added 2.05M subscribers in the U.S. to give it 27.2M, smashing previous guidance. Looking ahead, the firm sees its domestic streaming subscribers reaching as high as 29.2M in Q1 with international subs possibly hitting 7.3M.
Top Stock News
Nokia swings to profit but suspends dividend. Nokia (NOK) swung to a Q4 operating profit of €439M from a loss of €954M last year as revenue dropped 20% to €8.04B. As already flagged, Lumia sales increased to 4.4M from 2.9M in Q3, while overall unit volume rose 4% on quarter to 79.6M. Nokia proposed paying no dividend for the first time in at least 20 years. It's not a great surprise given that the company's been slashing costs; one might ask, what took them so long? Shares were -3% premarket.
Microsoft's stagnation seen continuing. Microsoft (MSFT), Starbucks (SBUX) and AT&T (T) are among the biggest companies due to report earnings after the bell today. Microsoft's FQ2 EPS is expected to slip to $0.75 from $0.78 but revenue is forecast to rise 3.1% to $21.53B; Starbucks's FQ1 EPS is seen climbing to $0.57 from $0.50 and its revenue 11.7% to $3.84B; and AT&T's Q4 EPS is predicted to increase to $0.46 from $0.42, although revenue is forecast to decline 0.9% to $32.22B.
FDA won't appeal off-label marketing ruling. The FDA won't appeal a decision to overturn the conviction of a salesman who was found guilty of marketing narcolepsy drug Xyrem for treating drowsiness and chronic fatigue, two conditions for which the medicine wasn't approved. A court quashed the conviction because it said FDA regulations violated free speech in a decision that could have wide ramifications for the agency's ability to regulate off-label drug marketing.
Top Economic & Other News
Eurozone PMI improves. Flash eurozone manufacturing PMI climbed to a 10-month high of 47.5 in January from 46.1 in December, with the situation in Germany improving but that in France remaining miserable. The data "suggest that the eurozone economic downturn has eased," says Markit. "Forward-looking indicators...suggest that the rate of decline will continue to slow in the coming months, and a return to growth looks to be on the cards" in H1.
Spanish unemployment hits record. Spanish 10-year bond yields may be only just above 5%, but the crisis in the real economy continued unabated in Q4, with unemployment rising to a record 26.02% from 25.01% in Q3. The number of people out of work reached 6M, or a third of the eurozone's jobless citizens. It was even worse for those under 25 as youth unemployment hit 60%.
Union membership drops to lowest rate in almost a century. Union membership last year fell to its lowest rate since 1916, dropping to 11.3% of the workforce from 11.8% in 2011, a BLS report shows. The number of members fell 400,000 to 14.3M even as overall employment increased 2.4M. The reasons for the decline include new laws that reduced the power of unions in Wisconsin, Indiana and other states, and the growth of the service sector, where organized labor has a small presence.
Japanese trade deficit climbs to record. Japan's trade deficit almost tripled last year to ¥6.93T ($78.27B), reflecting the country's problems as it grapples with the strong yen and difficult global economic conditions. In December, exports fell a greater-than-expected 5.8%, outpacing expectations for a 4.7% dip, as shipments to China slipped again and even U.S.-bound exports shrank. Imports rose 1.9%.
In Asia, Japan +1.3% to 10621. Hong Kong -0.1% to 23599. China -0.8% to 2303. India -0.5% to 19924.
In Europe, at midday, London +0.2%. Paris flat. Frankfurt -0.2%.
Futures at 7:00: Dow flat. S&P -0.2%. Nasdaq -1.4%. Crude +0.3% to $95.48. Gold -0.5% to $1677.80.
Today's economic calendar:
8:30 Initial Jobless Claims
9:00 PMI Manufacturing Index Flash
9:45 Bloomberg Consumer Comfort Index
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: ABC, ALK, ARG, AVT, BAX, BMY, BPOP, CELG, CY, DOV, EQT, ESI, ETN, FCS, GWW, JNS, JVA, KCG, KEY, LMT, LUV, MKC, MMM, MWW, NMM, NOK, ORI, PCP, QSII, RTN, RYN, SWK, TZOO, UAL, UNP, XRX
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