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| Here's your daily business briefing. - 💼 IBM shares surged nearly 13%, driven by an impressive revenue outlook and high demand for its AI services.
- 📺 Deep Dive: Spectrum ships Xumo, enabling new customers to stream live TV with popular services like Netflix, Disney+, and Max.
- 💻 Intel shares plunged 13% in New York as its Q1 projections for sales and profit fell well below Wall Street estimates.
- 👗 Stitch Fix and Spotify partnered for Style Tune Ups, providing personalized outfit suggestions and curated playlists.
- 📉 Humana's stock plummeted due to a full-year earnings guidance nearly half of Wall Street's expectations.
- ✂️ Levi Strauss plans to cut 10% to 15% of its global corporate workforce in the year's first half.
Do you like the longer introduction? Please let me know at shriram@inside.com. Thanks for reading! Shriram
p/Shriram | |
| 1 | | IBM's ($IBM) shares rose almost 13%, reaching an over 10-year peak, driven by an optimistic revenue forecast. The robust demand for IBM's AI services, notably from its generative AI business, contributed to the favorable outcome. More: - The American multinational technology corporation's generative AI division saw a twofold increase in orders in the fourth quarter, which helped to support the company's projected 4%-6% revenue growth in 2024.
- A sizable percentage of IBM's bookings for AI are made up of consulting firms and software companies like SAP SE in Germany.
- The market value of IBM increased by around $20B when its shares hit a high of $196.89, the highest level since June 2013.
- A minimum of eight analysts on Wall Street increased their price targets for IBM's stock, including those from Bank of America, JPMorgan, Jefferies, and Evercore.
- Currently, at 17 times its subsequent 12-month expected earnings, IBM's stock exceeds its two-year historical average of 14 times, whereas peers trade at about 20 times, according to LSEG data.
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What the numbers say: The share of U.S. TV households with at least one connected TV device has increased from 60% in 2015 to 92% in 2023. Charter Communications' Spectrum introduces the Xumo device to new customers, offering seamless streaming with live TV and popular services like Netflix and Disney+. Xumo aims to be a comprehensive streaming hub, taking a share of subscriptions and ads revenue. Relevance: Charter and Comcast aim to simplify the user experience and retain customers by re-aggregating streaming services through Xumo. Positioned as a neutral intermediary, Xumo offers diverse streaming services to tap into the growing market, serving as a solution for declining cable TV subscriptions and providing a revenue boost through streaming services. More data: Xumo competes with streaming giants like Roku, Amazon, Google, and Apple, which currently dominate the market. By utilizing their billing relationships, cable companies serve as intermediaries in bundling streaming services, addressing challenges in the crowded streaming landscape and adapting to consumers' preferences for bundled solutions. | | | |
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| 3 | | Intel's ($INTC) shares saw their most significant intraday decline since July 2020, falling 13% to $43.35 due to a disappointing first-quarter forecast. The outlook for sales and profit raised concerns about the success of CEO Gelsinger's turnaround efforts, with sales predicted between $12.2B and $13.2B and profit expected at $0.13 a share, excluding certain items, compared to the projected $0.34. More: - In Q4, earnings reached $0.54 per share on $15.4B in sales, exceeding analysts' estimated profit of $0.44 and revenue of $15.2B.
- Data center sales at $4B missed the $4.08B projection, while Client Computing, Intel's PC chip business, recorded sales of $8.84B, exceeding the estimated $8.42B.
- In the server market, Intel faces rising competition from AMD's powerful chips as major players like Amazon's AWS and Microsoft design their own processors, challenging Intel's dominance.
- Intel's entry into chip manufacturing for external clients has secured $10B in "lifetime deal value" orders, underscoring the importance of securing more significant deals, according to CEO Gelsinger.
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| 4 | | Stitch Fix and Spotify ($SPOT) joined hands for "Style Tune Ups," providing tailored fashion suggestions and playlists based on users' responses to style-related queries on Spotify. This interactive experience lets users share their results with a Stitch Fix stylist, adding a personalized touch to their upcoming box. More: - According to Stitch Fix's 2024 Style Forecast, over 50% of its customer base is inclined to "dress the part" when they go to see their favorite musicians perform live.
- Starting on Feb. 1, the firm will launch Tune Up Styling Sessions, enabling clients to schedule virtual consultations to curate looks for live music events.
- Incorporating stylistic choices and music fits with Stitch Fix's mission to provide clients with more individualized experiences.
- Recent employment losses at Stitch Fix follow a 17.8% year-over-year fall in Q1 net revenues to $364.8M, along with other changes like C-suite shuffles and layoffs.
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| 5 | | Humana's ($HUM) stock tumbled as the health insurer's full-year 2024 earnings guidance fell well below Wall Street expectations. The business noted rising medical expenses impacting the insurance market, primarily due to elderly patients visiting hospitals for postponed treatments like hip and joint replacements. More: - Humana's projected 2024 earnings of $16 per share, significantly below the expected $29.10, reflect Wall Street's concerns about declining health insurance profits amid rising medical costs.
- Humana shares fell 10% on Thursday, with other health insurance stocks like UnitedHealth ($UNH), CVS Health ($CVS), Cigna ($CI), and Centene ($CNC) also declining.
- Humana's Q4 revenue of $26.46B beat estimates, but the company posted a loss of $591M, or $4.42 per share, compared to a loss of $71M, or $0.12 per share, in the same period last year.
- It reported a fourth-quarter medical benefit ratio of 90.7%, beating analysts' expected 89.7%, indicating the percentage of payout on claims compared with premiums, as per LSEG.
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| 6 | | Levi Strauss ($LEVI) intends to undergo a restructuring, aiming to reduce its global corporate workforce by a minimum of 10%, potentially impacting up to 15% of corporate employees in the year's first half. In its fiscal fourth-quarter earnings report, the company exceeded expectations with adjusted earnings per share of $0.44, while revenue slightly fell short at $1.64B compared to the expected $1.66B. More: - The reorganization is projected to incur between $110M and $120M in charges during the first quarter.
- Net revenue for the company's other brand division decreased by 11%.
- Levi's predicts a weaker-than-expected fiscal year, with revenue growth of 1% to 3% as opposed to the projected 4.7%.
- Estimates for full-year earnings are $1.15 to $1.25 per share, which is less than the $1.33 per share that was anticipated.
- Following comparable actions by Macy's and Wayfair, the reorganization occurs amid a wave of early-year layoffs in the retail sector.
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- GM and Honda have initiated hydrogen fuel cell system production through their 50-50 joint venture at an $85M facility in suburban Detroit, signaling a move toward alternative zero-emission solutions beyond electric vehicles.
- Blackstone reported a 4% rise in Q4 distributable earnings, driven by asset monetization across real estate, credit, and hedge funds.
- Dubai's latest $1B tower, branded by Mercedes, reflects the city's strong real estate market, anticipating an up to 18% price increase this year as it continues to be a hotspot for the super-rich.
- Forward Air is set to complete its acquisition of Omni at a lower cost, with Omni shareholders receiving $20M in cash and 35% of common equity.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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