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Amazon Loses Nike

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Amazon News

It’s still two months before former eBay’s boss John Donahoe takes charge of Nike’s (NYSE:NKE) boat, but significant alterations are already taking place. And one significant change is that Nike products will no longer be available on no other than eBay’s main competitor, the e-commerce giant Amazon (NASDAQ:AMZN). The e-commerce giant has had its fair share of ‘not-good’ news this year that are threatening the company’s growth, the one for which the company often sacrificed profits for.

Why

Nike offered only a vague explanation, saying it will focus on elevating its consumer experiences through more direct relationships. Obviously, the plus of being on Amazon is the platforms’ huge base of customers, but the minus being shared revenues. Amazon’s loyal (and Prime) members are often surprised if there is something they cannot find on the platform and this will be the case with Nike. But what can happen is that they opt for something else that is offered on the platform which could hurt Nike but the company didn’t rule out selling through other digital retailers. But in the long run, investing in a direct relationship with your customers can indeed become a strong asset. Only by capturing credit info, the company can then tailor marketing deals, special promotional and items more easily as it already has a registered base. So even though that in the short run, this decision could harm Nike’s revenues, if the company manages to deepen the relationship with its customers, it can improve both its top and bottom lines as this would also place the ‘more-than-just sneakers manufacturer’ in a better position to move more products at even higher prices. This is why enhancing the relationship with customers has great odds of becoming a win-win strategy.

Amazon is facing all kinds of pressure

Nike’s decision is only an additional headache for Amazon which is facing already quite a bit of pressure. To begin with the antitrust regulatory pressure from the EU and US, its employees forcing the company to a climate pledge and the most painful of all, losing the Pentagon $10 billion deal to Microsoft Corporation (NASDAQ:MSFT). Cloud business is at heart of Microsoft’s bright prospects as the company’s stock has literally undergone a renaissance with its CEO Satya Nadella. Due to privacy concerns raised by EU’s data protection authorities, Microsoft announced changes to commercial cloud contracts. But Amazon is not giving up that easily. Besides publishing an appeal on Microsoft’s win to BBC, quoting deficiencies, unmistakable bias and errors in the JEDI evaluation process, the e-commerce platform offered its users to listen to its free music service outside of Amazon Echo, including iPhones, Androids and Fire TV. This move has caused Spotify Technology (NYSE:SPOT)’s shares to drop 4.9% on Monday and it will surely impact its winning streak as the company outperformed third quarter earnings estimates and announced last month that the number of premium subscribers rose 26 million in the past year and reached 113 million at the end of September. But there’s also Apple (NASDAQ:AAPL) Music to be aware of as we need to wait and see will the company offer bundles of its music, news and TV offerings. And there’s TikTok’s owner Byte Dance who is also supposedly in negotiations with global music labels and its product could severely undercut both Apple and Spotify. So luckily for Amazon, its business models is well diversified- and what got it this far.

But it is pressured by its competitors, one of the main being Walmart Inc (NYSE:WMT) which also just introduced delivery perks to up the ante for its customers with Amazon’s new grocery chain that is slowly but surely taking shape. With its Fresh service being offered free-of-charge to its US Prime members, Amazon even made grocery shopping easier by combining AmazonFresh and WholeFoods market.

Outlook

Maybe Amazon is not a ‘smashing success story’ but the impressive size of its infrastructure makes up for its thin margins as the e-platform serves about half of US’ e-commerce market, according to eMarketer. Acquiring Whole Foods was clearly a jackpot but the question posed is whether the e-commerce giant is running out of ways to cost-effectively expand? The company’s shares are up more than 1800% over the past decade but if history has taught us anything, it is that nothing lasts forever. There is still room to grow, both vertically and horizontally, but it will no longer be as cheap nor easy. One day-shipping strategy entailed more costs than the resulting benefits as global shipping costs rose 46% with last quarter’s top line expanding 24%. AWS is also seeing a slowdown revenue growth as competitors are stepping up their game. There is no ‘alarm bell’ just yet, but starting with Nike, all these hints that are pointing in the same direction. There is definitely a concern on the radar for Amazon as its profit in the most recent quarter declined for the first time in the last two years for a reason.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

US Airlines Shaking Up Their Infrastructure

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Airlines News

Jet Blue Appoints Two Vice Presidents, United Airlines Announces CEO and American Airlines Introduce a Passport Scan Feature

Jet Blue (NASDAQ:JBLU) is once again the subject of a possible merger speculation and by no other than Delta Air Lines (NYSE:DAL) who invested quite a lot in earning a reputation for its smooth public relations strategy. This intrigue came out as both companies dropped out of an upcoming Buckingham Research conference next week. But the speculation has resulted in Jet Blue’s shares trading up 2.8% on December 4. The U.S.-based airline just also announced its new company’s vice president for labor relations as well as the vice president for enterprise information security. But a lot more is happening in that blue sky and to those airlines flying in that sky to be exact.

Performance – is Jet Blue an easy takeover mark?

The US-based company belonging to the services and airlines sector has a market cap of $5.52 billion. Its stock has risen 0.7 percent one month since its last earnings report in October. But it is underperforming the S&P 500 but let’s look a bit deeper for a clearer “blue” image. When excluding 4 cents from non-recurring items, the company’s latest earnings per share came in at 59 cents per share, managing to exceed Zach’s consensus estimates. But more importantly, quarterly earnings jumped 37.2 percent year-to-year due to low fuel costs. Average fuel cost per gallon and including fuel taxes decreased 11% year over year. And passenger revenues improved 3.3 percent year-over-year and they ultimately, accounted for 96.1% of the top line so it’s safe to say, they make the revenues. But despite the fact that even other revenues were up 21.6 percent, both revenue per available seat mile and passenger revenue per available seat mile dipped. Capacity, also measured per seat mile, and traffic measured in revenue passenger miles, also expanded. And total operating costs shrined 4.7 percent year over year despite increasing costs of an expanding workforce. The quarter ended with cash and cash equivalents amounting to $695 million which is more than $474 million from the end of 2018. Total debt decreased slightly from 2018’s $1, 670 million to $1,636 million. For the fourth quarter, the company is well on track to achieve its 2020 EPS target in the range of $2.5-$3. Meanwhile, Norwegian Air just appointed Jet Blue’s Marty St. George as its interim Chief Commercial Officer as part of a significant management ‘reshuffle’ in an effort to achieve profitability in the coming years so clearly Jet Blue has something worth tapping into. Its latest quarter did show a positive trend, but can it keep it up is the question.

Competitors

According to many analysts and industry experts, tough times are ahead for all US airlines. And all airlines in general, as even The Emirates Group predicted difficulties for its subsidiary airline whose net profit slumped 86% in the first half due to both higher fuel prices but also low-cost competitors, as revealed on November 20th. Operating costs of the largest airline in the Middle East increased 13 percent compared to last year with fuel expenses rising 42 percent mostly due to higher prices.

But United is doing more than ok

Meanwhile, United Airlines Holdings (NASDAQ:UAL) sealed its succession plan on Friday. Its next CEO will be its President Scott Kirby, an industry veteran who along with current CEO, Oscar Munoz, orchestrated the impressive turnaround for the company. Profits have grown and performance has improved, so all Kirby has to do is keep it up. The company’s shares have already 87% since Kirby became president of United, after leaving American Airlines Group Inc (NASDAQ:AAL) who just introduced passport chip scanning feature to its to the app on Wednesday. Using the technology behind cashless payment system like Apple’s (NASDAQ:AAPL) Apple Pay, it first airline to use near field communication (NFC) technology to securely transmit passport information. Although passport will still need to be shown when boarding, passengers will surely be grateful for the time-saving effect gained by eliminating the need of an American agent opening and scanning the passport at the airport.

Outlook

Everyone is clearly reshaping their management to ensure that the captain of the boat is brave and equipped to handle the complexity of such a mature and challenging market. With the two new appointments, Jet Blue has shown that it supports the vision of its crew members being its greatest differentiator and that its greatest focus is safety and security. But is this enough to differentiate the “Jet Blue experience”? Its latest earnings revealed positive trend, but the question is can Jet Blue persevere in this direction? Especially considering the competitive pressures from its peers and unfavorable winds ahead.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

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BenzingaEditorial

Johnson and Johnson Emerging Out of a Dark Place

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It seems that Johnson and Johnson (NYSE:JNJ) has finally started shaking off those heavy legal headwinds. Accusations of tainted baby powder was just the latest chapter in its long book of controversy. Although the complicated legal process can drag on for years, its stock has posted a 6% return in the first 11 months of 2019. Dow’s return was 22% return but the result highlights the company’s resiliency in the face of heavy negative sentiment and severe legal headwinds. And after it announced extensive tests showed no trace of asbestos that FDA claimed to find in October, its stock rose 1% on Wednesday.

No asbestos after all!

On December 3, as part of Johnson and Johnson’s latest effort to prove the safety of its products, more tests showed that the baby powder was free of asbestos. Therefore, the company concluded that the most probable cause of FDA’s report that led to a nationwide recall of 33,000 products in October was due to either a contaminated sample, analyst error or both. This was the first time the company recalled its famous baby powder for possible contamination with this known carcinogen, and also the first time US regulators announced such a finding in this product. But, this was only the latest blow as the company is facing more than 15,000 lawsuits that also target its opioids, medical devices and the antipsychotic Risperdal. Just in September, they were forced to pay $572 million after being found guilty of deceptive marketing relating to its opioid drugs. They even needed to pay $8 billion in damages to a consumer due to not warning that use of Risperdal could cause male breast growth. And let’s not forget patent concerns as it already lost US patent exclusivity to Remicade which was its once top-selling drug and its last US patent for Stelara which generated 6% of total revenue last year is about to expire in 2023. And there are many lawsuits on this front as well.

Position

This is the world’s largest healthcare company. But the question is: is it eroding? While its brand has remained strong through it all, it is dropping in popularity and consequently, value, due to all this reputational damage.

Bayer (OTC:BAYRY) is also facing its legal battle but at least it managed to buy more time. The company reached an agreement to postpone lawsuits over the alleged cancer-causing effects of its glyphosate-based weed killers, giving more time for talks seeking a settlement.
The Cincinnati-based maker of consumer goods, Procter& Gamble (NYSE:PG) decided to commercialize the research on packaging for liquid products through an Innventure portfolio company called AeroFlexx. Their revolutionary package solution is at least 50% less plastic, enhances the consumer experience and reduces shipping costs as it’s easier to move along the supply chain. Overall, it has great odds of boosting P&G’s revenue.

Unilever (NYSE:UL) just hired its new CMO, 13 months after it got its new CEO. The CMO title went to Conny Braams, a not-so-well-known operational hero that use to run its middle-Europe segment. By not going for a ‘brand-building’ name, the company has put a clear emphasis on wanting to build its complex operational effectiveness. Like others, it is being squeezed by discount retailers and venture capitalists who offer both cheap products and premium innovations and these are not easy to compete with. And let’s not forget Colgate Palmolive (NYSE:CL) which is generating significantly more profit after accounting for expenses comparing to its market peers, yet it is a somewhat riskier investment.
due to not investing in short-term assets in an optimal way. So, a somewhat mixed picture showing both strengths and weaknesses. As of the whole sector.

Outlook

The bottom line is that despite the reputational damage due to an endless flow of legal proceedings, the stock is not showing any signs of technical damage. This surely raises the odds of breaking out in the coming months as the company continues to stabilize as all that legal dust settles. Investors have a reason to worry considering all those eroding factors. But considering the weight of those headwinds, it has always found a way to pull through whereas other companies facing similar challenges have seen their stock plunge. One thing is for sure: the more than 130-years old healthcare conglomerate deserves a medal for stock resiliency, or to be more precise, for its successful diversification across healthcare.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

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BenzingaEditorial

3M Stock Buzz Despite the Harmful Trade War

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Industrial conglomerate which brought the world Post-It-Notes, 3M (NYSE:MMM) is suffering due to consequences of the trade war between US and China. Besides scotch-tapes, the company also has a drug delivery business and makes pretty much everything, automotive adhesives and touchscreen displays included. And it is also known to regularly buy and sell businesses as part of its strategy. And according to Bloomberg, the newest sale that the company is exploring is of its drug delivery unit. Consequently, shares rose about 4% to $171.01 during the morning trade on Friday.

Divestiture strategy

The St. Paul, Minnesota-based company had its biggest-ever deal by buying a bandage maker this year for $4.4 billion. Last year, it sold a communications business for about $900 million. Its CEO, Mike Roman, spoke on Thursday and although he did not name a business segment in particular, he clearly emphasized that if there is a better ‘natural’ owner out there, the company’s management will divert that asset as part of its strategy to create value for shareholders. What would be strange, however, is that the company would consider selling part of its very bright segment, healthcare. In its latest quarter, total sales of this segment rose 4.7 percent.

Headwinds

On October 24th, third quarter revenue fell below analyst estimates as sales amounted to $8.0 billion, which is a year-on-year drop of 2 percent. The company has cut its full-year profit forecast as many other US corporations who are suffering from the consequences of the intensifying trade war. Its organic local currency sales declined 1.3 percent. But its acquisitions, net of divestitures, increased sales by 0.6 percent.
Due to its diversified business model, this conglomerate belongs to two sectors, the industrial goods and diversified machinery. But, the landscape of both industries is filled with fierce competitors. And its market capitalization of $94.99 billion is not enough to make it invincible. There’s General Electric (NYSE:GE) with historical ties to no other than Thomas Edison, Danaher Corporation (NYSE:DHR) but also many others. And 3M’s transportation and electronics segment sales fell 4.4 percent in the latest quarter. Meanwhile, despite not generating as much profit after accounting for expenses as its peers nor doing such a good job of managing its assets, GE’s stock rose 2.87 percent on Friday, December 6th. Although Wall Street has somewhat mixed reviews, it is overall also a stock with reasonable ROI potential.

Outlook

Back in the good old days, this was the one company that didn’t have a “Pepsi to its Coca Cola”. By all means, it defied being pigeonholed. But a lot has changed since it was founded in 1902 and after its many innovations that became parts of our everyday lives. Until 2016, it managed to outperformed the market for three consecutive years. But, it is not immune to a weakening macroeconomy that now remains a challenge. And 3M needs to continue improving its operational effectiveness, managing costs, reducing inventory levels but moreover, it needs new innovations to generate strong growth and premium returns.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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