There Was A Lot of Hoot This Week…
A lot happened this week, we’re here to help you make sense of it. The weekly Owler Business News Summary:
Rushing to the Rescue
As the first cases of Ebola were reported in NYC and Mali this week, drug manufacturers GlaxoSmithKline (GSK) and Johnson & Johnson (JNJ) are racing to produce a vaccine. J&J announced it may have a vaccine ready for broad distribution by May 2015, ahead of GSK, which has already developed a medicine but is unsure how much it will be able to produce by 2015. J&J is also already providing vaccine administration education on the ground in West Africa and took out a large investment in its Bulgarian counterpart that has developed a different vaccine for the disease. The J&J PR team is saying they will take on whatever kind of risk in order to fight the disease, and that it is not focused on what its competition is doing.
When it Rains, It Pours
Unfortunately, Amazon (AMZN) doesn’t seem to have Lil’ Wayne’s luck when it comes to making it rain. This week, Amazon posted disappointing profits for the 3rd quarter. The company reported a $437M loss, a figure that ballooned from Q3 2013’s reported loss of $41M. Unsurprisingly, one of the major factors contributing to the loss is the Amazon Fire smartphone. The company was forced to write off $170M, due in large part to excess inventory that it was unable to sell. Despite a 20% jump in quarterly revenue to $20.58B, the market punished Amazon and its stock tumbled ~12% this week. Adding insult to injury, several liberal columnists across the US lampooned Amazon this week for its supposed strong-arming of the book industry. The uproar followed news that Amazon and Simon & Schuster, a major publishing company, finally reached an agreement about how the publishing company would vend books on Amazon’s site. Paul Krugman’s column catapulted the debate to the national stage, with many other columnists following suit, adding their voices to the conversation.
Wanna Bankroll My ApplePay?
Apple (APPL) posted record Q3 profits, injecting some sparkle into an otherwise grisly week on the stock market. The iPhone 6 has reportedly shown double the adoption rate of the iPhone 5, meaning sales topped 39M at the end of Q3, or 2M more than projected. This week ApplePay launched, too. At first look, analysts were pleased with the app and with the few hiccups encountered in the roll out.
Fast food company McDonald’s (MCD) and soft-drink company Coca-Cola (KO) experienced poor sales over Q3. McDonalds reported earnings down 30% from last quarter. Analysts attribute the dip (not the kind for chicken nuggets) to rising labor costs, expansive menus, a scare about poor meat quality in China, and increased competition from – dare we admit it – more ‘sophisticated’ brands like Chipotle (CMG). Coke reported soft earnings a year after CEO Muhtar Kent pledged to show improved returns. What’s likely the biggest drag on sales? It’s no secret sauce – just an altering view among consumers that both brands are simply unhealthy.
All Giants Must Fall
IBM released earnings so dismal this week that it may fall out of the S&P top 20 firms by market capitalization. IBM (IBM), while fluctuating in and out of the top 10 since ‘92, is now teetering on the edge of the top 20. This is the 10th consecutive cycle that IBM’s earnings have underwhelmed. Despite exiting low margin sectors of its business, namely through selling Lenovo Group (0992), and expanding into cloud services, growth in IBM’s core computing business continues to slump. This week Microsoft announced a partnership with IBM to make it easier for users to transition between platforms. It’s unclear how strong such a partnership could be, as aging athletes seldom make a strong comebacks.
Top Community Insights From This Week
Follow the companies mentioned in this blog post on Owler:
GlaxoSmithKline | Johnson & Johnson | Amazon | Simon & Schuster | Apple | McDonald’s | Coca-Cola | Chipotle | IBM | Lenovo | Symantec | Twitter | Google