Labor issues and a shortage of trucking equipment at the critical port complex in the Long Beach, California region threaten to disrupt shipments of holiday products to retailers.
Delays are running up to two or three weeks, according to port officials.
What to watch: Retailers potentially impacted by the port turmoil include Wal-Mart (NYSE:WMT), Macy's (NYSE:M), Kohl's (NYSE:KSS), J.C. Penney (NYSE:JCP), Ralph Lauren (NYSE:RL), American Eagles Outfitter (NYSE:AEO), Nordstrom (NYSE:JWN), and Carter's (NYSE:CRI).
"Investor pessimism doesn’t seem to dampen [Jeff] Bezos’s appetite for risk. Employees unsettled by Amazon’s (AMZN -8.2%) steadily depreciating stock price are probably the only thing that can force Bezos to slow down," writes BloombergBusinessweek's Brad Stone in the wake of Amazon's Q3 miss and soft guidance.
Stone, who wrote a popular book on Bezos and Amazon, notes declining employee stock grant values caused by investor angst over Amazon's losses could increase employee turnover, something management is unlikely to ignore. Thus, curbing spending (with the goal of boosting Amazon's shares) could go hand-in-hand with keeping needed employees happy.
How much could lower spending boost profits? In a much-discussed September post, Benedict Evans estimated Amazon's trailing free cash flow would be around $4B (rather than a current $1.08B) if its capex/sales ratio remained at 2009 levels.
Nonetheless, Evans defended Bezos' strategy: "Amazon has perhaps 1% of the US retail market by value ... Jeff Bezos’s view is pretty clear: keep investing, because to take profit out of the business would be to waste the opportunity ... The question to ask isn’t whether Amazon is some profitless ponzi scheme, but whether you believe Bezos can capture the future."
The sell-side was in a less forgiving mood today: Two downgrades arrived (from Cowen and Janney), as did a slew of target cuts. Notably, analysts often expressed more concerns about Amazon's top-line growth slowdown (particularly for media and international sales) than its bottom-line pressures.
Apple's (AAPL +0.1%) global iTunes music download sales have fallen 13%-14% since the beginning of 2014, the WSJ reports. The decline is similar to the 12% Y/Y drop in 1H14 U.S. music download sales reported by the RIAA.
The paper adds Apple, which dominates the paid music download market, is responding with plans to launch a revamped version of the Beats Music subscription service that's a part of iTunes. That meshes with September reports stating Apple is thinking of getting rid of the Beats Music brand.
While paid downloads are dropping, the RIAA estimates 1H14 U.S. subscription music revenue rose 23%. Re/code has reported Apple is trying to get music labels to agree to price cuts that would enable a $5/month service, arguing $60/year in revenue would still be enough to offset any download revenue lost due to a subscription sign-up.
Apple's iTunes/software/services revenue rose 8% Y/Y in FQ4 to $4.6B, thanks to a 36% increase in App Store revenue. The company didn't break out music revenue.
The current share prices of Time Warner Cable (TWC +2.1%) and Comcast (CMCSA +2.2%) indicate the market is rating the odds of an approved merger by the FCC and DOJ at 75%, according to commentary from media analyst Craig Moffett.
Earlier this week, Dish Networks joined some pay-TV peers in slamming the deal in communications with regulators.