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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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BenzingaEditorial

Recovering from COVID-19 – Tech Companies Know How!

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HP News

When the year started, no one saw this COVID-19 chaos coming so no one had the slightest clue that markets and stocks would go the way they did. Especially since 2020 started with many promising movements in the tech department! Alphabet Inc. (NASDAQ:GOOG) had a nice run until February 19th, starting the year at price $1,337, and growing to more than $1,526. And then it started going down, all the way to $1,098 as of April 3rd. Similar goes for Amazon.com, Inc. (NASDAQ:AMZN). The stock started the year valued at around $1,848, and it pushed to $2,170, again until February 19th.

Then the COVID-19 roller coaster began!

Amazon’s stock finished at $1,906 as of April 3rd. But this is not bad at all! Its main cloud competitor, Microsoft Corporation (NASDAQ:MSFT)’s stock started the year at a price around $158, and pushed to $188 per share during the period from February 10th to February 19th. And as of March 31st, the price per share settled at around $158, almost the same as the opening price in January. This is also not bad considering the rest of the economy. Even more, Microsoft’s plan to pay out a dividend of 51 cents per share looks doable. This decision has been confirmed by the board of directors as the dividend should be paid out in June 2020. And this will only push Microsoft’s stock higher.

Microsoft cloud solutions vs other solutions

Microsoft’s CEO, Satya Nadella was appointed to the job in 2014. Considering his previous position was being the executive VP of Microsoft’s cloud and enterprise group, his appointment was a clear commitment to Microsoft’s strategy of launching further into the cloud. Besides the cloud, Microsoft’s strength lies within cloud applications, and this is proven to be helping Microsoft’s stock right now. But to be clear, this ”cloud-based” strategy requested much more capital spending, $1 billion every quarter to be exact. And total capital spending for the whole company was just under $2 billion in 2010. So, this was a big decision to say the least!

By doing other software companies’ online business, Microsoft managed to step in Amazon’s backyard. And if we look at Amazon’s stock right now, even during this period, it is clear this was a good path to choose.

Communication and collaboration platforms

Microsoft’s collaboration platform, Teams, is being heavily used during the COVID-19-induced “home office environment”. The increase in use was so high, that Microsoft had to constantly work on expanding the capacity of the platform. On the other hand, everyone started talking about conference solutions from Zoom Video Communications, Inc. (NASDAQ:ZM). Even with some security issues, Zoom has become the choice of many for doing business at home, offering a free basic plan with up to 40 minutes in group “calls”. Many even say that Zoom has managed to outperform Microsoft Teams.

Tech stock seems to be recovering

No matter the current stock price, most tech stocks have found a way to recover from coronavirus. All companies that are supporting millions of people so that they can work from their homes are helping both the economy to stay alive but also themselves by keeping their core business strong. Cloud solutions and e-commerce are the essential players in this scenario. As for other tech companies that did not manage to switch to offering cloud and e-commerce solutions, they are less likely to recover at the same pace as these companies did. And they did quite a good job as some might even exit this unforeseen health crisis even better-off than they were  before it all started.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. 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 Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Is Shale About to Fail Due to Oil Wars?

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Canadian Oil

During March, we had the opportunity to witness an interesting development when it comes to the statements by President Trump. Initially, when oil prices plunged at the beginning of March, the president stated that this presents good news for the consumers. Moreover, Trump stated that low oil prices are due to the biggest tax cuts in US history. However, last Wednesday, everybody started getting nervous as these “incredible” prices started aiming for the 17-year lowest oil price record. These are quite the bad news for the already turbulent industry.

For corporations, things are going South

Whiting Petroleum Corporation (NYSE: WLL), a big shale oil producer in North Dakota, has filed for bankruptcy protection. The oil Industry has taken the greatest hit possibly since the Great Depression, hammered by both COVID-19 pandemic and the price war between Saudi Arabia and Russia which resulted in their pump-at-will policy.

The United States Between Oil Gambit of Russia and Saudi Arabia – Package of Salvation

Meanwhile, President Trump met oil executives on Friday, including U.S. oil giants, such as ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), Occidental Petroleum (NYSE: OXY) and Continental Resources (NYSE: CLR). The subject of the meeting was to grant access to government programs, aimed to help the companies deal with the hit of the coronavirus pandemic. The U.S. oil industry is highly diversified, with more than 6,000 oil companies, from small oil drillers from North Dakota to Texas, to oil giants such as ExxonMobil and Chevron. Mr. Sommers, CEO of the American Petroleum Institute, said that since oil companies are operating in a market economy, no restrictions on production should be imposed. However, he greeted the opportunity for small oil companies to get access to Small Business Administration loans, while larger companies should be entitled to the gigantic $2 trillion package that was enacted last week. These measures should ensure liquidity that the oil sector needs  to survive the epic plunge in demand.

Trump’s Attempt at Shuttle Diplomacy

Alongside with domestic oil producers’ meetings, President Trump posted on Twitter to be acting as an intermediary by speaking to President of Russia, Vladimir V. Putin and the Saudi crown prince Mohammed bin Salman, saying they have agreed on a compromise. Trump has called for oil production cuts in an effort to bolster already shaken oil prices. Oil prices surged 20% that day from $21.92 to $26.42 per barrel and currently are holding at $29 per barrel, which presents an almost 50% increase compared to last week. But the problem is that Dmitri S. Peskov, President Putin’s spokesman has denied any contact between President Putin and Saudi crown prince took place as well as any sort of agreement. So we will need to wait and see what is the actual deal and in which way will it be put into practice.

So, is the shale industry about to fail?

On the other hand, the shale oil industry is even more vulnerable due to the high production costs and the United States being the largest shale oil producer. The fact is that oil price below $50 per barrel is dangerous for the shale oil industry, and at this moment, there are no indications that things will get better anytime soon.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. 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 Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Retail – It’s Really Bad, but For Some Less Than Others

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Foot Locker News

The Financial Times has reported that closures due to the coronavirus outbreak have been nothing less than the last drop for this already troubled industry. On top of which, the recently passed $2.2 trillion stimulus bill does not look encouraging for retail that was already feeling the crunch before all this chaos, just ask Macy’s Inc (NYSE:M) or Nordstrom Inc (NYSE:JWN) whose shares even lost 59.6% in only a month after its latest earnings report.

Is there any hope for a rebound?

A large part of the retail industry that is not involved in selling groceries, toilet paper or disinfectant has very little cash coming in. Labor costs are usually a retailer’s biggest expense and instant measures will relate to this business segment. Many jobs will be lost as Macy’s already announced that the cuts would affect most of their 125,000 workers, while Gap is planning to furlough nearly 80,000 store employees. Similar actions are expected by other name-brand chains whose products are considered nonessential. In addition, not only the sales personnel will be impacted but also the back-office forces. Nordstrom announced that they would furlough a portion of corporate employees on April 5 for six weeks. Cutting mainly part-time, nonunion workers may be the easiest cost-savings move for retailers. And by granting this sort of absence to employees instead of laying them off, they could potentially speed up their return to normal once things restart. So there is at least a small glimpse of hope for a rebound.

Target

Target (NYSE: TGT) is the neighbourhood superstore for many in the U.S., and that’s where many are turning to get their essential goods during the COVID-19 shut-down. But while sales of necessities are soaring, sales of higher margin goods are slowing down, which is putting significant pressure on the earnings potential. Turnover growth of 20% on a year-over-year basis in March forced the company to hire additional employees in order to ensure a high level of service to the customers. But a growth of 50%  in essential products also means it is also becoming more challenging to sustain a high level of service. So, despite a short-term expected decrease in margins, higher turnover and commitment to customers should be of great advantage in the long-run because they will result in a loyal customer base.

Amazon

Amazon.com Inc (NASDAQ:AMZN) is another company which needs to hire additional employees in order to satisfy a surging demand. In March, Amazon announced it plans to hire 100,000 warehouse and delivery workers. Having in mind that a lot of workers are not interested to put themselves at risk by being in close contact with others, Amazon decided to raise wages by 2 dollars per hour until the end of April. Still, there are a lot of workers who are complaining about the healthy precautions taken and believe the company isn’t doing enough to protect its employees. Although the company assures that all necessary measures have been undertaken, employee relations have never been one of Amazon’s strengths. It seems that the mistreatment of employees is only catching up with the e-commerce giant amid the COVID-19 drama.

Nike is optimistic

According to the latest earning reports, Nike Inc.’s (NYSE:NKE) revenues increased to $10.1 billion in the third quarter, which is 5 percent on a reported basis and 7 percent on a currency-neutral basis, driven by 13 percent currency-neutral growth in NIKE Direct with digital sales growth of 36 percent. Digital sales in Greater China increased more than 30 percent while retail sales were impacted by temporary store closures related to COVID-19. Currently, nearly 80 percent of stores have reopened their doors in Greater China with recorded revenue growth in double digits. On the other hand, since March 16th, all Nike-owned stores outside of China, Japan and Korea were closed also to help curb the spread of COVID-19 but Nike is optimistic for a reason as its latest digital sales have almost reached holiday levels and digital does represent 20 percent of its overall business.

Is the positive trend sustainable? 2021 at least has a shot at being brighter…

It is obvious that this crisis will be a major catalyst for the retail industry which is already in trouble due to the development of e-commerce and change in consumer behaviour. Another huge problem relates to landlords who are not willing to support retailers as they insist on paying rents because they also have obligations. This is only an additional dumbbell for the already troubled industry to carry. Consequently, many retailers might not be able to survive this unforeseen health crisis. But there are some who are managing to do well despite it all. However, the question is whether this positive trend can be sustained since traffic at Walmart In (NYSE:WMT), Costco Wholesale Corporation (NASDAQ:COST) and even Target has fallen for the first time since the outbreak as a consequence of stockpiling so not all is that bright. But there is always the silver lining. As economic activity resumes and people go back to shopping, traveling and dining out, 2021 could have very easy EPS and other performance results. But this will only be the case if we don’t see another round of economic shutdowns as Asian nations now fear the second coronavirus wave while Europe and the US are still struggling with the first wave.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. 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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