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BenzingaEditorial

Salesforce Might Have Quite a Few Surprises Up Its Sleeve

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Sales Force News

Salesforce.com Inc (NYSE:CRM) is set to report its third quarter financial results for the fiscal 2020 after the closing bell on Tuesday, December 3. There are solid fundamental indicators but its stock has struggled to keep up with the market. Its shares did go upward 18% this year but on the other side, they lagged behind the software industry which exhibited a 41% increase. But it seems that Salesforce has more than a few value-adding surprises up its sleeve which is why it expects to double its revenues by 2024.

Dreamforce Investor Day 2019

At this year’s conference, Salesforce CEO Marc Benioff stood in front of a screen that displayed major tech industry players around Salesforce: Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon.com Inc’s AWS (NASDAQ:AMZN), Google (NASDAQ:GOOG), International Business Machines Corporation (NYSE:IBM), Hewlett Packard Enterprises Company (NYSE:HPE), Cisco Systems Inc (NASDAQ:CSCO), Dell (NYSE:DELL) and Alibaba Group Limited (NYSE:BABA). Benioff explained that Salesforce goal not to create boundaries but to work in a community as it partnered with all the major companies. And Salesforce is showing it can be unifying centre between and across all these technologies!

Competitors

Salesforce has already played the multi-cloud game. Last week, it announced that its Marketing Cloud will make use of Microsoft’s Azure. This was quite a surprise considering the two companies are fierce CRM competitors! In July, the company made a deal with Alibaba to extend its services in China. Back in 2017, also at Dreamforce Investor Day, the company announced a partnership with Google Cloud, as it named as its preferred cloud provider for international expansion. Back in 2016, it made Amazon Web Services as its preferred infrastructure vendor but the 4th year contract is nearing its end date, so the company is playing it safe to be in the multi-cloud business regardless of its renewal. And it developed Trailhead Go for Apple’s iPhones and iPads, so it’s pretty much everywhere.

Fiscal year results

This year the company is expected to generate $17 billion in revenue for its whole fiscal year. Moreover, it expects its revenue to be in the range of $34 billion and $35 billion by 2024, which is an impressive growth rate of about 20% annually. But management announced that the acquisition of MuleSoft was finally starting to come together. But the consequence of all those acquisitions is that after accounting for expenses, the company not generating as much profit, compared to its market peers. But the last time the CRM provider issued quarter earnings was in August with $0.66 EPS, beating the Zacks’ consensus estimate of $0.09, net margin of 6.45%, a return on equity of 7.26%, with revenue amounting to $4 billion, also exceeding analysts’ expectations of $3.96 billion.

The company is pushing its Customer 360 as a platform that is able to bring all the clouds together as this is what customers want: a simple solution which can bear it all. Customer 360 promises to be ‘a single source of truth’ for customer data, no matter where the data resides, and that is no easy task.

Outlook

The projections that Salesforce shared were definitely encouraging. The 26% and 25% revenue growth rates in fiscal 2019 and 2018, respectively, are a proof of the company’s ability to deliver on its new target. But to drive this revenue growth, the company has made a series of acquisitions that weighted on its margins. The company also has stakes in other companies like Dropbox (NASDAQ:DBX) through which it expanded its reach in the tech industry. So overall, it is no surprise that analyst estimates are in line with Salesforce’s new 2024 predictions.

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.

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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.

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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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