Investors are familiar with Amazon’s quarterly routine: posting huge sales numbers with little or no profit. But they are not shrugging off the loss this quarter.
Shares plunged more than 10% early Friday, extending their after-hours sell-off, after the tech giant reported a larger than expected loss. While sales rose 23%, the company recorded a loss of $126 million, which was even more than analysts had expected. It lost $7 million during the same quarter last year.
While CEO Jeff Bezos has always been more concerned about the long-term growth than immediate profit, investors have supported his ways. The share price rose by 40% in 2012 and by more than 50% in 2013.
But Amazon stock was already down 10% this year before the company posted second-quarter earnings after Thursday’s closing bell. It also landed in the middle of a heated fightwith Hachette, taking criticism for delaying the delivery of some of the publisher’s books.
In China, customers don’t order french fries—they’re shu tiao. In Turkey, they’re called patates and in Russia, you would ask for kartofel’ Fri.
Andy Puzder, the CEO of CKE Restaurants, the parent company of Hardee’s and Carl’s Jr., should know. His company is expanding rapidly abroad due to higher potential outside the U.S., which is hampered by what he sees as too much government regulation.
“It’s difficult to open in the U.S., but we love the U.S. and continue to fight the good fight to open restaurants and create jobs,” Puzder said. “It’s just that the government is making it hard for us to build those restaurants.”
Over the last three years, Hardee’s and Carl’s Jr. opened more restaurants internationally than in their own backyards—a first, he added. CKE now operates restaurants in 30 foreign countries.
On a percentage basis, the growth rate is striking. During this period, the company increased its restaurant count domestically by 2 percent. Meanwhile international locations jumped by 53 percent as CKE filled in “white space” or areas where it currently doesn’t have restaurants.
Easier to open in Siberia than California
“Under the current U.S. business climate, regulatory and tax restrictions tend to curb otherwise dynamic entrepreneurial energy,” Puzder said. “We’d love to see more growth in domestic markets. Unfortunately, it’s easier for our franchisees to open a restaurant in Siberia than in California.”
In the U.S., the company’s Hardee’s division is expanding in New York, New Jersey, Chicago and South Florida. Meanwhile, the Carl’s Jr. division is growing in Texas and the Seattle area.
It’s also “very close to a deal” in India, which Puzder said “would be an interesting country for us because they don’t eat burgers,” but would go for chicken sandwiches and veggie patties.
Challenges to U.S. expansion
Puzder named ethanol regulation, which has resulted in higher beef costs, a rising minimum wage and higher labor costs due to Obamacare as three obstacles that make doing business in the U.S. more difficult than in the past.
To help lessen the effect of these rising labor costs and to attract a tech-savvy generation, CKE is turning to technology and looking into options for mobile ordering as well as tablet ordering within its restaurants.
“I think it satisfies the needs of younger people. It also reduces your costs,” he said. “When they talk about raising the minimum wage or providing health care for employees over 30 hours, you’re really encouraging automation.”
U.S. manufacturing grew at a slightly slower pace in December, but hiring hit a 2½-year high and the volume of new orders soared to a level last seen in early 2010, an industry report showed on Thursday.
The Institute for Supply Management (ISM) said its index of national factory activity stood at 57.0 last month. That was in line with economists’ forecasts but a touch below November’s 2½-year high of 57.3. Readings above 50 indicate expansion.
Even so, December’s result was the second-highest reading of the year. The goods-producing sector contracted in May but its growth accelerated over the second half of 2013.
And the forward-looking new orders index, at 64.2, checked in at its highest level since April 2010, suggesting momentum in the sector could quicken in 2014. It stood at 63.6 in November.
The employment index rose to 56.9, its best showing since June 2011, from 56.5 in November.
A separate report showed that construction spending grew at the fastest rate in five years in November.
Apple introduces the new iPad Air at an event in Cupertino, California.
It’s the Tuesday night before the iPad Air goes on sale, and that means … here come the reviews. No surprise, it’s a hit. If there’s any “but” in the messages of this first wave of reviewers, it’s that shoppers should sheath their credit cards until the arrival of the Retina-screen iPad Mini, which will likely be the Air’s biggest threat this holiday season.
The gist is summed up by Walt Mossberg of The Wall Street Journal and AllThingsD.com, who praises the tablet for being thinner and lighter while getting faster and maintaining “industry-leading battery life.” Mossberg writes that he ran the tablet for more than 12 hours straight, and others also experienced 10 or more hours while running fairly aggressive video and wireless regimens.
This is good news for Apple, because one of the key criticisms of the season’s other major iOS launch, the iPhone 5S, is that its battery life is not as long as many of its competitors. With no performance issues to be concerned with, this new 9.7-inch iPad is simply a better option than the ones that came before it, for the same price.
The Week That Was: Apple unveils ‘iPad Air’
CNBC’s Tyler Mathisen looks back at the week’s top business and financial stories.
So why not buy it? For starters, you may not “need” one, as Damon Darlin — filling in as guest reviewer in the New York Times’ State of the Art column, recently vacated by David Pogue — points out. “Even though I love shiny new objects, I really can’t tell you to replace your old iPad,” he writes. “The improvements on the new one are incremental, not revolutionary.”
Mossberg, too, writes that it’s not a “radical rethinking of what a tablet can be,” while Ed Baig at USA Today writes that the “iPad Air breaks no major ground.”
But the real reason you may not soon become a proud owner of a $500 iPad Air is because, in your quest for the perfect tablet for you, there are lots of other options that must be entertained, including that scrumptious-looking iPad Mini.
Before we get to that, there’s also the Android and Windows competition to consider. Mossberg sings the praises of the famous magnetic keyboard accessory for Microsoft’s Surface tablets, for instance, as well as the stylus that Samsung includes with its tablets and larger phones. Darlin points out the entertainment value of the cheaper Amazon Kindle Fire HDX tablets, while Baig praises those tablets’ time-limiting parental controls. Darlin and Engadget’s Brad Molen wish the screen were easier to read outside — a perennial annoyance.
Though several reviewers brought up competition such as the Samsung Galaxy Note 10.1 and the Kindle Fire HDX, only Engadget noted that the iPad Air’s screen pixel density — the actual number of pixels per inch — is far lower than those of its competitors. It’s the same screen as the past two generations, and when viewed next to those other tablets, it’s not as sharp. And that’s not all: “Heck, as soon as the Retina iPad Mini launches, the Air won’t even be the sharpest tablet in Apple’s lineup, let alone anywhere else,” writes Molen.
Yes, that’s just one reason the new iPad Mini plays the lurking villain in tonight’s play. You can see it hiding around every corner: “If all you want to do on a tablet is read books or watch movies, the smaller screen is excellent, and you can save $100,” writes Darlin. “I expect some consumers to be lured by the Mini’s even smaller stature,” writes Baig.
There will be an audience for that larger tablet. Darlin, who uses an iPad for work, writes that he needs that bigger screen in his day-to-day life. But Apple fans with cash will have it rough this fall. “We don’t envy the decision you have to make,” writes Molen, “but it’s hard to go wrong with the Air if you’re in need of as much screen space as possible.”
Roger Yu, USA TODAY 6:07 p.m. EDT October 21, 2013
Netflix, the video streaming service provider, said Monday that its net income more than quadrupled as its membership topped 40 million worldwide.
Its net income rose 315% to $31.8 million for the quarter that ended Sept. 30. Earnings per share of 52 cents beat analysts’ average estimate of 49 cents.
Revenue rose 22% to $1.1 billion
Shares jumped almost 10% in after-hours trading. Netflix rose $21.49, or 6.4%, to close regular trading at $354.99.
As more cable TV customers cancel their subscriptions, Netflix has enlarged its library of titles by funding and producing original programs. Its shows, particularly, Orange is the New Black and House of Cards, have been well-received by critics and viewers. The strategy and the accompanying social-media buzz have helped redefine Netflix as more than just another streaming service provider.
Michael Pachter, an equity analyst Wedbush Securities, noted that the stock’s surging price indicates investors seem unconcerned about the gap between net income and cash flow. The gap, which totaled $85 million for the first nine months of 2013, stems from Netflix’s heavy investment in producing original content, he says.
“That suggests to me that their earnings growth will be a lot less dramatic than the share price suggests,” Pachter said.
Including customers who canceled its service, Netflix added 1.3 million new U.S. customers during the quarter, an 11% jump from a year ago, bringing the domestic membership total to 31 million.
“While our original series get most of the headlines, a bigger percentage of overall Netflix viewing is generated by our exclusive complete season-after series,” wrote Netflix CEO Reed Hastings in a letter to shareholders.
During the quarter, Netflix released the just-ended seasons of some popular TV shows, including The New Girl, The Walking Dead, Scandal, Breaking Bad, Revolution and Pretty Little Liars.
With more customers signing up for the streaming service in the Nordic nations, the Netherlands and Latin America, Netflix’s net additions of international members rose by 1.4 million. “We plan to launch in new markets next year,” Hastings wrote. “Our success this year in increasing international net additions to nearly the level of our domestic net additions shows substantial momentum.”
Despite other big names in video streaming, including Amazon and Apple, Netflix views its primary competition as HBO. Netflix plans to double its investment in original content next year.
This quarter, Netflix will launch its first animated original series with DreamWorks Animation, and the partnership will continue next year with several other series.
Meanwhile, Orange is the New Black will end the year as its most watched original series ever, and House of Cards became the first TV series to win a major prime-time Emmy without ever airing on a broadcast network or cable channel, Hastings said.
While Netflix is often seen as a direct substitute for cable TV, the company could be eyeing opportunities in the pay-TV business. In the U.K., Netflix partnered with Virgin Media to offer Netflix as an option in the cable company’s set-top box.
“We are open to more of these integrations with cable set-tops around the world,” Hastings wrote. “But given the fragmented technology footprints, we think it will be many years before cable set-top boxes match Internet set-top boxes for Netflix streaming volume.”