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Adobe beats Q1 targets but expects a Coronavirus caused hit in Q2

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Adobe News

Adobe Inc. (NASDAQ:ADBE), the marketing software and digital media maker from San Jose, California, announced its first fiscal quarter results late Thursday. The company managed to beat Wall Street’s targets, which is good news for the investors. On the other hand, the outlook does not look as bright. Even with the results above the expectations, the ADBE stock continued to drop in the extended trading, due to global situation and trends.

What to do during this negative market mode?

Suggestions by the expert analysts are to focus on the companies with strong investment plans. This situation may lead to some strategic and financial driven M&As, which will be perfect for companies with strong balance sheets like Adobe, Google (NASDAQ:GOOGL) Microsoft (NASDAQ:MSFT), International Business Machines Corporation (NYSE:IBM) and Oracle Corporation (NYSE:ORCL).

Q1 earnings results

The analysts expected Adobe to make earnings per share of $2.23 and sales of $3.04 billion. Adobe managed to beat those expectations and to achieve sales of $3.09 billion and adjusted earnings per share of $2.27 in Q1. If we compare year-over-year, Adobe’s sales went up 19%, while earnings grew more, 33%. The results might have been even better for 7 cents a share if there were no additional cancelation expenses for the company’s events like the annual Adobe Summit. An official announcement of the cancelation of the Adobe Summit in Las Vegas was made on March 2nd. The event was scheduled for March 29-April 2, and it will now be held as an online event. The Summit gathered more than 16,000 participants last year, and its focus is on technology related to customer experience management.

Q1 results were the third consequent quarter where Adobe delivered accelerating earnings growth in software-as-a-service provider and cloud computing.

Earnings Guidance for Q2

Adobe expects to make sales of $3.175 billion in its second fiscal quarter, which is lower than the analysts’ predictions of $3.22 billion. On the other hand, Adobe’s expectation regarding the adjusted earnings per share is $2.35, while the analysts predicted the lower value, $2.33 a share. In the second quarter of the previous year, Adobe achieved sales of $2.74 billion and earnings per share of $1.83.

Outlook

When you have a subscription-based business model like Adobe, revenues and earnings can be treated as quite predictable. Still, the Covid-19 is expected to make some sort of mark on its finances. Some financial defensive mechanisms may be to reduce marketing spending, defer bookings decisions or delay consulting services, but that may have an effect in the after periods. The subscription-based business model, which has proven again in Q1 to provide strong revenues, earnings, and cash flow, will be a good base for the company to cope with the uncertain period ahead.

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

BenzingaEditorial

Automotive Outlook – A Road to Hell?

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Ford News

The automotive industry was hit hard by COVID-19. Automakers were forced to shut down approximately  95% of plants across Europe and the US. In most cases, those measures were supposed to last only two weeks. Now it looks like factories will remain silent for much longer. Reopening dates are being postponed, while some auto producers like General Motors (NYSE: GM) decided not to give any reopening targets at all. Uncertainty is present everywhere these days.

Beating the invisible enemy

The COVID-19 is the new virus, an invisible enemy, that you cannot catch or hit back. The number of infected people is constantly increasing. The average growth rate is moving between 10% and 15% per day. According to the latest data, it can be said that the virus is not showing any signs of slowing down. It looks like COVID-19 has just started its horror show. So far, until the end of March that is, approximately 4.000 people died, but public health officials recently said that between 100.000 and 240.000 deaths can be expected until the end of this year. President Trump decided not to lift the restrictions as planned on Easter but to extend them. He warned that the US is facing “very, very painful two weeks” ahead.

Lockdowns are here to stay

Thus, it can be expected that lockdowns will continue. It is the only available option in the fight against the virus. China showed to the rest of the world that this strategy works. Yes, it is hurting everyone mentally, physically and financially, particularly the automotive industry. But it is an inevitable cost that we all must pay. For automakers, it means that there will be no production nor car sales any time soon and for much longer than they previously anticipated.

Crisis is only getting momentum

Because the crisis is getting momentum, analysts are now giving new forecasts and warning us not only about an upcoming recession but something even worse – economic depression in the automotive industry. Investors are worried, as they are starting to realize that unemployment rates could skyrocket and that factories may remain closed for the next two months or even longer. Even after the crisis is over, it is hard to avoid the upcoming economic downturn. People will probably try to postpone some bigger purchases until they are convinced that the situation is back to normal.

The question on everyone’s minds is: “Where is all this going?”. And we are all hoping that the answer is not: “ Down the road to nowhere.”

What do analysts expect?

Average expectations are that Detroit’s Big 3 automakers will all show sales declines in the first quarter of 2020. It is expected that General Motors , Ford (NYSE: F) and Fiat Chrysler (NYSE: FCAU) auto sales will drop somewhere near 6%, 16%, and 10% respectively compared to last year’s results.

And what about the whole year forecast?

Well those numbers are even worse. JP Morgan Chase & Co. analysts predict that approximately 10.3 million automobiles could be sold in 2020 and that is 40% down compared to last year. If this ends up being the case, sales would be even lower than in 2009, when only 10.4 million vehicles were sold. Just remember, it was the year when General Motors and Chrysler filed for bankruptcy. But, if the crisis continues, those forecasts can be even worse. In that case, sales may go even down – and that means literally down, 6 to 7 million vehicles to be exact. Best of all is that many analysts are relying on the last quarter when they expect a bounce-back. But what if the virus strikes again, like the second wave China is so scared of? This fear is making the country have to close up again just shortly after lifting its restrictions. This all seems like a road or even highway to hell, doesn’t it?

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

Don’t Worry European Automotive Industry – The Government and Banks Have Got Your Back!

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Automotive industry Stocks Coronavirus

European automakers have shut down their factories due to the COVID-19 outbreak. All key industry players, like Volkswagen AG (OTC: VWAGY), Peugeot S.A. (OTC: PUGOY), Renault SA (OTC: RNLSY) and other industry peers decided to lockdown plants in order to protect the health of their workers. The virus has already caused a lot of damage to the European automotive industry. And the situation is only becoming more severe so help is more than needed.

Liquidity concerns

World’s biggest auto producer Volkswagen recently announced it is burning approximately 2.2 billion USD per week. This is approximately 40% of its last year’s average weekly revenues. The longer the crisis lasts, the bigger the losses will be. Volkswagen’s chief financial officer said recently that passenger car sales are expected to drop approximately 40% in March.  Considering the not-so-optimistic outlook by the World Health Organization, what will happen as this health crisis continues? How big will those cash drains be? It is hard to imagine the consequences at this point.

Driving without cash fuel?

The automotive industry is a classic example of a highly capital intensive and cyclical industry. Fixed costs are relatively high compared to other industries. Thus, capacity utilization is one of the key performance indicators. But in these times, when plants stand still, losses are growing every day. Liquidity issues are currently avoided thanks to previously formed cash reserves and available credit lines. But liquidity concerns are only getting amplified in CFO’s minds. Bank managers as well as investors are only getting more worried and afraid too. They are quite reluctant to lend money or invest in loss-making companies. It is not surprising that share prices and credit ratings are falling like a rock. Everyone is wondering how will the automotive industry continue to drive without any “cash fuel”?

It’s time for central and investment banks as well as the government to jump in. And they did just that as European Central Bank (ECB), European Investment Bank (EIB) and European Commission (EC) announced that they are ready to support the automotive industry and protect their employees.

The financial injection is coming – ECB

ECB has launched a 750 billion EUR Pandemic Emergency Purchase Programme (PEPP). Asset purchases will last until the end of 2020. ECB will inject money into the European financial system and it will increase its liquidity. Corporate bonds are also eligible for purchasing. And it is a chance for all reputable carmakers to secure funding until the situation settles down. According to ECB President, Christine Lagarde, ECB will be even willing to increase this monetary package should this be considered necessary.

EIB also jumped in

European Investment Bank (EIB), the lending arm of the European Union, also decided to help. It will finance companies with approximately 40 billion EUR. The money will be used for working capital and overall liquidity maintenance financing. Fiat Chrysler (NYSE: FCAU) already made some arrangements with EIB last week when a new 3.5 billion EUR credit facility was agreed. Most Fiat Chrysler factories around the globe are currently locked down. This kind of strong support is now more than needed. It does not only fortify the company’s cash position, but it also sends a clear “don’t be afraid” message to the financial market, investors and creditors.

EC even went a step ahead

Finally, the European Commission (EC) also announced that it will relax existing rules that limit EU member states to financially support their companies. Now, national governments can use the arsenal of available financial weapons like direct grants, tax advantages and various advance payments to boost liquidity and the overall economy.  But that is not all. EC also came up with an “Escape clause” activation proposal that will allow member states to forget the budgetary constraints which the EU normally imposes. Overall, the EU is determined not to let COVID-19 win.

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

Solar Is Emerging As the Best Bet

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Solar Technology Companies

The renewable energy sector is one of the rare bright spots with a potential to recover in a global economy which has been put to a virtual standstill by the COVID-19 pandemics. Even in troubled Spain that is on absolute lockdown with its citizens not being able to leave their homes in an effort to stop the outbreak , the solar industry is expecting a rebound. Solar energy is expected to be among the first sectors that will pick up the pace after the crisis.

As for the US, the outbreak has emptied out workplaces across the US, the solar industry is making a case to  be exempt from mandatory shutdowns. As for Australia, its citizens are stocking up on renewable energy storage in response to the pandemic. So no matter where you are, solar technology seems to be the right pick despite the fact there is no guarantee during this unprecedented crisis the world is facing.

Working from home

The imposed measure of social distancing has crushed the already troubled airline industry. And it also has the potential to slow down even the shining solar industry. While certain aspects of this development can take place online as people are asked to work from home, project construction cannot be done this way. For now, the industry is carrying on with what tasks it can by being behind a laptop but delays are inevitable.

Some were hit less than others

First Solar, Inc.’s (NASDAQ:FSLR) has been heavily hit by CVODI-19 like its peers as it fell 37.5 % this year. And that is even worse than the S&P 500 drop of 21.3%. But First Solar can weather this storm thanks to a net cash balance of $1.8 billion. Also the company is planning to keep manufacturing going unless the government imposes more severe restrictions so it is not entirely unimaginable that the company’s results fall close to the projected tree. And although cash cannot cure all the wounds of the crisis, a strong balance sheet is surely an advantage over its competitors to amortise short-term blows at least.

Some were lucky- or smart enough to protect their supply chains

Franchise Holdings International (OTC:FNHI) got the best of solar but also some other worlds through its investment Worksport. By planning to launch the world’s first solar tonneau covers for pickup trucks, it has not only made solar technology affordable but it possibly helped the struggling automotive industry move forward to the next era as its TerraVis technology will transform any pickup truck you have in mind. Besides harvesting solar energy, Worksport is also promising a fast 30-min charge. Its rich portfolio of intellectual property and the fact it only shortly paused its factories during the outbreak amortized the COVID-19 blows and the company’s supply chain even managed to remain intact. Saved by the Sun it is! And there is Tesla (NASDAQ:TSLA) who is never behind as it’s about to make solar power a common feature on electric cars starting with its Cybertruck. After that launch, the flamboyant Musk even announced that Tesla’s new pickup truck will have a solar accessory on the roof that will add 15 miles of range per day.

Growth of renewables can’t be stopped even by COVID-19

Solar stock will surely be a haven for investors during these hard times. As the US government also considers how to aid airlines, as well as oil and gas, renewables are hoping for a place on that list and the solar industry surely hopes it can successfully lobby for sector-specific relief by being irreplaceable to the economy. It surely is to the future of anyone living on Earth.

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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