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Microsoft Is All About Taking Risks While Apple is Playing It Safe

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An update meant to fix Windows Desktop Search has failed to resolve the problem for all of the affected users. Not so long ago, in August, Microsoft released an update to its Surface devices aimed at improving Wi-Fi and Bluetooth performance. Instead, the update prevented those devices from connecting to 5 GHz networks. But surprisingly, Microsoft is doing great despite these quite embarrassing bugs that are annoying its users a great deal.

Users have been cursing Microsoft for its inability to release a bug-free product. And they have been doing it loudly across Twitter (NYSE:TWTR) and other platforms for the whole world to hear. Yet, while Apple (NASDAQ:AAPL) has an innovation problem, Microsoft is still growing at quite a momentum. Share-wise, Microsoft is still on top with the current market capitalization of around $1.4 trillion. On the other hand, Apple just reclaimed its trillion-dollar company status in 2019 on Wednesday after the unveiling of its iPhones. But it is just a bit above the $1 trillion benchmark, $1.01 trillion to be precise. Apple shares have increased 40% this year. But besides rebranding with changes in pricing, there was no actual change in the user experience Apple is set to provide. It remains to be seen whether this shift in strategy is sufficient to make a positive impact on Apple’s financials.

Unlike Apple, Microsoft does seem well-positioned and its revenue sources are growing. Microsoft Azzure has seen 60% growth in each of the past four quarters. Its Dynamics 465 CRM Business is also growing over 40%. There is not the slightest doubt that Microsoft is at the centre of the AI revolution thanks to these two which seem to be right tools to power up its future and automation.

On the other hand, Apple now has semi-outdated yet overpriced products and therefore, its future sales largely depend on brand-affinity.
Microsoft has already made up its services business while Apple is still on the path of transformation. Moreover, Apple is still testing the waters with its Credit Card and TV+. And it has some strong competitors such as Netflix (NASDAQ:NFLX), Spotify (NYSE:SPOT) and let’s not forget, Amazon (NASDAQ:AMZN) and soon Disney (NYSE:DIS). And they are all far ahead when it comes to growth and their product portfolio.

Spotify just acquired a music production market place for artists, producers and musicians. It’s part of its efforts to build out services for artists so the company can diversify away from a business model that is based on paying music streaming rights to labels. Since its launch, the company paid $14.3 billion to obtain these rights. The deal is a signal that the company is going to continue investing in more behind-the-scenes services for artists and others in the music ecosystem. Diversifying will also take some pressure of the streaming business, but also hopefully decrease the loss the company is still operating at due to the weaknesses of its core business model.

Disney is also diving deeper into the subscription box game as it just launched the Disney Backstage Collection. The company’s package of delights is delivered every month and includes a variety of items for those adults who aren’t afraid to show their love for all things Disney, allowing the company to honor its long and iconic history. And Disney sure has abundant material to create the sensation of surprise and magic to its never-ending customer base.

Yet, it was Apple TV+’s low subscription price that caught the attention of investors. Netflix and Disney’s shares dropped upon this announcement. Netflix down over 2% around $288, while Disney lost more than 2% to $136. But Apple’s debut is bound to have far less cards up its sleeve during its debut than Netflix’s more than admirable portfolio. And luckily for Netflix, its shares were up 0.7% to $290.10 Wednesday morning, in line with gains in the NASDAQ Composite Index. It’ll take more than the news of the show staring Aquaman and GOT’s star Jason Momoa to disrupt its fortified position.

Apple is playing it safe, something Steve Jobs never did. Tim Cook is adjusting prices but simply selling products he knows Apple can sell. On the other side, Microsoft is still a dynamic risk taker with Satya Nadella challenging the status quo the moment he boarded the boat by switching from software licencing to the cloud business.

Apple will surely need a revolutionary invention to keep its position but Microsoft needs far less to stay on top. First and foremost, any fit for the top company needs to have an exemplary customer service. But Microsoft really needs to improve fast to break the trend of those embarrassing bugs and show its customers more respect. Maybe we’ll get an answer on its special event scheduled for October 2nd. Details are slim, but we do know that the fall event is going to be not only about devices and services, but also experiences, so it does sound promising. Amazon has also announced a hardware event on September 25th, and knowing Amazon and its track record, there will be plenty of surprises and novelties, as opposed to a simple and refreshed version of previous products that Apple has treated us with.

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Earnings

Toyota’s News: Redesigned Corolla, New Investments and Partnerships

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Toyota Stock Market News

Toyota Motor Corporation (NYSE: TM) is managing something other automakers only dream of. The company is honouring its values while achieving sustainable growth for over a decade. The dependable Japanese giant continues to deliver on its promises as it prepares for an electric future.

A new sturdy yet sporty Corolla

On September 17th, the company announced a completely redesigned Corolla that now goes beyond just being a practical buying decision. The newly evolved Corolla has a sporty design, offering pleasurable driving and advanced safety equipment. Being built on Toyota New Global Architecture (TNGA), Corolla is ready to evolve to meet customers’ needs, according to Yasushi Ueda, chief engineer in charge of development.

Since its debut in 1966, this car is nothing less than adored by consumers all over the world and now, it will have its first hybrid version available to U.S. customers.

Hybrid strategy is actually paying off

Just like Honda Motor Co. (NYSE:HMC) with its 2020 CR-V Hybrid, Toyota is using its hybrid technology to position itself for future growth and transition to an all-electric future, despite the fact these energy saving vehicles do not qualify for government subsidies. But, this strategy is paying off as hybrid demand skyrocketed and the company proudly revealed in February that Lexus reached its 10 millionth vehicle sales milestone since its launch, with its 2018 sales performance achieving several ‘best-ever records’. And it is thanks to these figures that the Chinese government is also starting to see the potential of such vehicles so things can only get even better for Toyota. As the saying goes, persistence is the key to success and these two companies have been quite brave in sticking to HEVs.

New Investment – $391 Million Goes to Texas’ San Antonio Plant

This will be Toyota’s first expansion in nine years at the plant that produces its Tundra and Tacoma pickup trucks. It is the part of the company’s strategy to invest $13 billion in its U.S. operations over the period of five years, ending in 2021.

Future Investment – $243.29 million to Produce New Vehicle in Sao Paulo

Toyota is also about to get an even stronger presence in Brazil as it will hire 300 new employees at the Sorocaba Plant to start the production of a new vehicle.

Partnership

And let’s not forget the ground-breaking partnership of Japan’s leading automakers that was revealed in August as Toyota and Suzuki Motor Co. (OTC: SZKMF) announced they will collaborate on developing autonomous car technology. This deal is cementing the bond that the two automakers kicked-off in 2016. They might seem like an odd couple as Suzuki is a everything but a big player, yet its strong presence in India is only one of the things that will greatly benefit Toyota. Although Suzuki admitted defeat on the world’s biggest playgrounds, China and the U.S., it cracked the code for emerging markets. And this is exactly where future global sales growth is expected to come from.

Inventing a car that will run forever?

According to Bloomberg, Toyota aims to go far further than electric by teaming up with Sharp Corporation (OTC:SHCAY) and Japanese governmental organization NEDO that encourages the development of innovative technologies. Considering that Toyota is a company that has even used the economic crisis and recession to only come out stronger, it’s not unlikely that it is set to out do the impossible by mixing the most efficient batteries with solar panels. The company’s strong financial performance and track record show that if anyone can do it, it’s Toyota Motor Co.

 

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Nike Exceeds Wall Street Expectations With Q1 Earnings for FY2020

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Direct-to-consumer sales and digital momentum strategies did the trick for Nike

When Nike (NYSE:NKE) released its better-than-expected first quarter of the fiscal 2020 results late Tuesday. Naturally shares jumped more than 5% to reach $91.80. The reported revenue increased 7.2% year comparing to last year, achieving $10.7 billion, greater than the expected $10.44 billion. Net income soared more than 28%, making adjusted earnings per share $0.86, also smashing expectations of $0.70 per share.

Nike managed to achieve a turnaround

The biggest contributor to total sales was Nike’s North American segment that increased 4% comparing to last year. But China sales also continue to grow and by double digit percentages: 22% to be exact, topping $1.68 billion. Overall, these are fantastic news for investors. Especially since the company’s rare earnings miss for the final quarter of the previous fiscal year. The company attributed this to increased marketing costs and a higher tax rate. But highly anticipated new product launches and solid results for continuing lines, along with efforts to draw new customers to the Nike SNKRS app, did their magic.

Digital momentum is key

Digital movement is transforming and amplifying everything Nike does and in Q1, Nike Digital grew 42% on a currency neutral basis. This growth is driven by enhanced digital services and the international expansion of its app ecosystem. Moreover, The Nike app and SNKRS app are now both live in over 20 countries, with more expansion coming throughout the year.

There are literally no weak spots for investors

Arguably, there are no weak spots for prudent investors to dig in as far as this quarter’s report is concerned. The company is literally firing on all cylinders. The company’s management attributes these results to “the depth and balance of the company’s complete offense, building on the strengths of its foundational business drivers and capitalizing on the untapped dimensions of its portfolio”. Management has also dismissed any concerns that US-China trade conflicts could harm its operations, disclosing no impact has been seen up to date.

Nike showed it can even handle the increased tariffs

Earlier this year Nike joined over 200 other footwear companies urging President Trump not to increase tariffs on footwear imported from China, calling the move “catastrophic for our consumers, our companies, and the American economy as a whole.” But while those tariffs are certainly catastrophic for small players, Nike seems more than capable of mitigating the consequences of this added expense.

Poor macroeconomic conditions are only masking Nike’s true power

The company made it clear that its figures would have been even stronger had it not been for macroeconomic challenges which are manifesting through tariffs and foreign-exchange rates. They implied that the weakening economic climate is essentially masking Nike’s true strength. And in addition to children, women are also a big opportunity for the company that Nike will continue exploiting. This is why Nike expects better-than-planned growth in its higher-margin NIKE Direct channels and international segments and consequently, its full-year gross margin. One thing is for sure: Nike has turned itself into so much more than a ‘sneaker-company’.

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Market

Apple Will Be Making Its MacBook Pros in the US

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With a newly granted “federal product exclusion,” enabling it to import some Mac Pro parts without paying tariffs, Apple (NASDAQ: AAPL) will be able to save enough money to make US assembly worthwhile. The company announced on Monday that it will manufacture the new version of its Mac Pro desktop computer in Austin, Texas. It’s also a big political win for Apple, since President Trump has for years called on the company to make more products in the US. Tim Cook clearly made a compelling case during his meetings with President Trump. Apple described the decision to keep Mac Pro production in Austin as part of its “commitment to US economic growth.”

Macroeconomic climate is not favourable

The September figures around the world are simply awful. The uncertainty brought on by intensifying trade wars, the outlook for the car industry and Brexit are paralyzing investors, with September seeing some of the worst performance since the financial crisis in 2009, leading many to worry about whether yet another crisis is upon us. On a brighter note, Apple’s stock went up 0.2% after Bloomberg reported that ten of its 15 requests for an exemption from tariffs on imports from China had been approved.

New investments

Apple previously disclosed plans to spend $350 billion in the U.S. by 2023, a figure that includes new and existing investments. Its Apple TV+ is set to launch on November 1, with stars like Oprah Winfrey bringing her famed book club streaming show to the company’s subscription service. Among documentaries that will be released, there will even be a multi-series about mental health, featuring no other than Prince Harry himself. Apple’s subscription service will cost only $4.99 a month and will be available in 100 countries and regions at launch. Also, customers who buy a new Apple device will also get a free year of Apple TV+.

Competitors

Netflix (NASDAQ: NFLX) is still the leader when it comes to U.S. streaming, along with Amazon Prime (NASDAQ:AMZN), AT&T’s HBO (NYSE: T) and upcoming Disney+ (NYSE:DIS), it is certain that competition will be intense. Netflix’s stock has been dropping since July, which was the first time the number of subscribers fell. Moreover, Netflix’s stock price has now officially wiped out any gains it’s made over the year so far and both Disney and Apple have a shot at beating Netflix at its own game.

Apple is still facing impending import duties and innovation difficulties

Let’s not forget that the company still faces import duties scheduled for Dec. 15 that could affect nearly all of its major products including iPhones, iPads, MacBooks and Apple Watches. And more importantly, it is thought by many as facing an innovation problem so it heavily relies on customer loyalty that will continue driving its sales. We’ll just have to wait for November 1st launch of Apple TV+ to see the impact of Apple’s new streaming subscription service.

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