JPMorgan misses profit estimates as bond trading slumps

(Reuters) – JPMorgan Chase & Co (JPM.N) reported a lower-than-expected quarterly profit as weakness in bond trading due to spikes in market volatility at the end of the year more than offset gains from higher interest rates and loan growth.

Shares of the largest U.S. bank by assets fell 3 percent in early trading as the lender reported declines in revenue in three of its four main businesses in the fourth quarter.

Bond trading revenue fell 16 percent, as challenging market conditions hit credit and commodities trading.

JPMorgan said net income for the fourth quarter ended Dec. 31 rose to $7.07 billion, or $1.98 per share, from $4.23 billion, or $1.07 per share, a year ago, when it took a one-time charge due to the U.S. tax reform.

Analysts on average had expected earnings of $2.20 per share, according to IBES data from Refinitiv.

Revenue rose 4.1 percent to $26.80 billion, just shy of analysts’ average expectation of $26.83 billion.

Rival Citigroup Inc (C.N) reported a better-than-expected 14 percent rise in adjusted quarterly profit on Monday, mainly helped by cost cuts. Well Fargo & Co (WFC.N) is expected to report later in the day.

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BMW says group sales up 1.1 percent in 2018

BERLIN (Reuters) – BMW’s (BMWG.DE) group sales went up 1.1 percent worldwide in 2018 to 2,490,664 vehicles, the company said on Friday, adding that it expected a slight increase this year despite challenging market conditions.

BMW brand sales increased by 1.8 pct worldwide in 2018, to 2,125,026 vehicles, the company said, with December sales rising 1.3 percent.

The group’s December sales fell 0.7 percent compared with the previous year, affected by a 11.3 percent drop in the MINI brand sales.

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Samsung Elec says weak chip demand pushed Q4 profit well below market estimates

SEOUL (Reuters) – Samsung Electronics surprised the market on Tuesday with an estimated 29 percent drop in quarterly profit, blaming weak chip demand in a rare commentary issued to “ease confusion” among investors already fretting about a global tech slowdown.

The South Korean firm also said profit would remain subdued in the first quarter due to difficult conditions in memory chips, but that the market is likely to improve in the second half of the year as customers release new smartphones.

Weaker earnings at the world’s biggest maker of smartphones and semiconductors adds to worries for investors already on edge after Apple Inc last week took the rare move of cutting its quarterly sales forecast, citing poor iPhone sales in China.

China boasts the world’s biggest smartphone market, but a slowing economy, exacerbated by a trade war with the United States, has seen demand for gadgets drop across the tech sector. Growing support for domestic champions has also impacted foreign brands, with Samsung’s market share falling to 0.9 percent from a high of 18.2 percent in 2013.

Still, the South Korean firm’s chips power the handsets of most major makers, including Apple and China’s market leader Huawei Technologies Co Ltd [HWT.UL]. Its memory and processor chips account for over three-quarters of overall profit and about 38 percent of sales.

For October-December, Samsung estimated operating profit of 10.8 trillion won ($9.67 billion), missing the 13.2 trillion won average of 26 analyst estimates in an I/B/E/S Refinitiv poll. It also estimated an 11 percent fall in revenue at 59 trillion won.

Samsung routinely releases estimated earnings figures before posting detailed results and elaboration toward the end of the month. For the just-ended quarter, however, it issued its first commentary since late 2014, when mobile phone profit dropped.

It said weaker-than-expected demand from data center customers adjusting inventories drove down chip prices and hurt earnings in the face of rising macro uncertainty. It did not disclose the customers or elaborate on the macro uncertainty.

Data center demand – mostly from the United States – currently accounts for as much as nearly 30 percent of demand for Samsung’s DRAM chips compared with 5 percent five years ago, said analyst Kim Yang-jae at KTB Investment & Securities.

“Smaller investment from data centers, a really bad smartphone market in China, and impact from the U.S.-China trade war have all hit Samsung’s chip business,” Kim said.

On the whole, analysts expect Samsung’s profit to decline through 2019, with a slowing Chinese economy eroding demand.

“Second- and third-tier Chinese smartphone makers saw drastic drops in their sales, which also took a toll on chip demand,” said analyst Kim Young-woo analyst at SK Securities.

Prices for DRAM chips, which provide devices with temporary workspaces and allow them to multi-task, fell 10 percent in the fourth quarter, showed data from industry tracker DRAMeXchange. Prices of NAND flash memory chips, which hold data permanently, slipped 15 percent.

DRAMeXchange expects memory chip prices to fall 10 percent on an average in the first quarter of 2019.

Samsung also said a “stagnant and fiercely competitive smartphone market” pressured income and that the firm would continue to innovate its product line such as with foldable handsets and models capable of fifth-generation (5G) networking.

“If Apple’s not selling, then is it Samsung that’s selling well? It is not. The smartphone market is already saturated,” said senior analyst Greg Roh at Hyundai Motor Securities.

“Apple’s iPhones have not been selling well in China… That’s even worse for Samsung because that would drag its chip prices down,” Roh said, referring to Apple as a Samsung chip client.

Shares in Samsung opened 1.9 percent lower on Tuesday and were down 0.4 percent around midday versus a 0.2 percent fall in the benchmark Kospi index. The stock lost 24 percent last year amid a global tech selloff prompted by investor fears over the impact on supply chains of the Sino-U.S. trade war.

(For an interactive graphic on memory chip prices, click tmsnrt.rs/2GYDer8)

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FedEx sees global trade slowdown, says U.S. economy still 'solid'

(Reuters) – FedEx Corp (FDX.N) on Tuesday slashed its 2019 forecast after Europe’s economy weakened and the U.S. trade row exacerbated a slowdown in China, sending shares in the package delivery company tumbling more than 6 percent after the closing bell.

“Global trade has slowed in recent months and leading indicators point to ongoing deceleration,” said FedEx Chief Financial Officer Alan Graf.

FedEx, which is in the throes of a record-setting winter holiday shipping season, launched a new cost-cutting campaign after its Express revenues took a hit. On Dec. 7, FedEx announced that the CEO of its Express unit was retiring at year-end.

Executives noted a sharp UK slowdown due to Brexit uncertainty, Germany’s recent gross domestic product contraction, protests in France that threaten to spread to nearby countries and a cooling down in Asia.

FedEx is seen as a bellwether for the global economy and its results sparked concern that the United States may catch the “cold” affecting other regions, said Trip Miller, managing partner at Memphis-based Gullane Capital.

“This confirms a lot of market fears … and is probably why the (stock) market has been off so much,” said Miller.

Memphis, Tennessee-based FedEx cut its fiscal 2019 earnings forecast to $15.50 to $16.60 per share from $17.20 to $17.80 per share – before year-end mark-to-market retirement plan accounting adjustments and excluding TNT Express integration expenses.

FedEx Chief Executive Fred Smith said politics fueled much of the world’s economic turmoil and that policy changes can turn it around.

The tempered outlook landed as FedEx grapples with ongoing margin pressure at its Express and Ground units and speculation that Amazon.com Inc (AMZN.O) will attack its own mounting transportation costs with a competing delivery network – a concept CEO Smith described as “fantastical.”

Its new forecast assumes moderate U.S. domestic economic growth and no further weakening in international economic conditions, FedEx said.

The company moved quickly to reduce expenses and improve efficiency, even though executives said the U.S. economy “remained solid.”

FedEx is offering voluntary buyouts to certain employees, reducing international capacity at FedEx Express, limiting hiring and cutting discretionary spending. It is also reevaluating its capital spending plans and share buybacks.

Profit jumped almost 21 percent to $935 million, or $3.51 per share, for the second quarter ended Nov. 30. Revenue rose to $17.8 billion from $16.3 billion.

FedEx shares dropped 6.2 percent to $173.51 in extended trading while rival United Parcel Service Inc (UPS.N) fell 3.5 percent to $93.85.

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Adobe's quarterly revenue surges 23 percent

(Reuters) – Adobe Systems Inc on Thursday reported a 22.8 percent rise in quarterly revenue, helped by higher subscriptions for its flagship Creative Cloud suite of software that includes Photoshop.

The San Jose, California-based company’s net income rose to $678.2 million, or $1.37 per share, in the fourth quarter ended Nov. 30, from $501.5 million, or $1 per share, a year earlier.

Total revenue rose to $2.46 billion from $2.01 billion.

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Dell posts revenue jump ahead of voting on VMware offer

(Reuters) – Dell Technologies Inc (DVMT.N) reported a 15 percent rise in quarterly revenue on Thursday, as businesses were forced to upgrade their systems running on older Windows technology and on strong performance by software maker VMware.

The results come ahead of voting on the company’s offer to buy back shares tied to its 81 percent economic stake in VMware Inc (VMW.N), which would allow Dell a return to public markets without going through the rigors of a traditional initial public offer process.

Dell earlier this month sweetened its cash-and-stock offer to $23.9 billion, winning backing from shareholders including Carl Icahn, who had opposed the initial bid, as well as from Elliott Management and Canyon Partners.

“We expect the transaction to close in this calendar year, with the projected close date and first day of trading for the Class C common stock on the NYSE under the ticker symbol ‘DELL’ on December 28,” Dell’s head of investor relations Robert Williams said on a conference call with analysts.

The offer is scheduled to be voted on Dec.11.

Dell reported an 11 percent jump in revenue from its Client Solutions Group, which includes products such as desktop PCs, notebooks and tablets, and branded peripherals, for the third quarter ended Nov. 2.

The gain was largely due to businesses looking to replace their older machines following Microsoft Corp’s (MSFT.O) decision to stop all support for its Windows 7 operating system early in 2020.

“The market has reached a state of stabilization so far this year, primarily driven by strong commercial demand driven by Windows 10 upgrades, being linked to end of Windows 7 support,” said Ishan Dutt, an analyst with research firm Canalys.

Dell held 17 percent of the global PC market share year-to-date, behind HP Inc’s (HPQ.N) 23 percent and Lenovo Group Ltd’s (0992.HK) 21 percent share, according to data from Canalys.

HP Inc on Thursday reported an 11 percent rise in revenue in its personal systems business, which also topped analysts’ estimates.

On the call, Dell executives said the company has successfully navigated the current list of tariffs.

“Where we have incurred in higher cost with tariffs, we can pass that through to end users,” Chief Operating Officer Jeffrey Clarke said.

For fiscal year ending 2019, the company expects total adjusted revenue in the range of $90.5 billion and $92 billion. The company had reported adjusted revenue of $79.9 billion for the fiscal year ended Feb.2, 2018.

Total revenue rose 15 percent to $22.48 billion in the quarter, while net loss attributable widened to $876 million.

VMware posted robust results, beating on both profit and revenue estimates on strong demand for its software to boost cloud computing efficiency.

The company’s shares, up about 30 percent this year, rose nearly 8 percent to $174.65 after the bell.

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Dell posts revenue jump ahead of voting on VMware offer

(Reuters) – Dell Technologies Inc (DVMT.N) reported a 15 percent rise in quarterly revenue on Thursday, as businesses were forced to upgrade their systems running on older Windows technology, as well as strong performance in software maker VMware Inc.

The results come ahead of voting on the company’s offer to buy back shares tied to its 81 percent economic stake in software maker VMware (VMW.N), which would allow a return to public markets without going through the rigors of a traditional initial public offer process.

Dell earlier this month sweetened its cash-and-stock offer to $23.9 billion, winning backing from shareholders including Carl Icahn, who had opposed the initial bid, as well as from Elliott Management and Canyon Partners.

The higher offer is scheduled to be voted on Dec.11.

“Assuming the transaction closes following the stockholder vote, this will simplify Dell’s capital structure and increase alignment with VMware while maintaining VMware’s independence,” VMware Chief Executive Patrick Gelsinger said on a post-earnings conference call with analysts.

Dell reported an 11 percent jump in revenue from its Client Solutions Group, which includes products such as desktop PCs, notebooks and tablets, and branded peripherals, for the third quarter ended Nov. 2.

The gain was largely due to businesses looking to replace their older systems following Microsoft Corp’s (MSFT.O) decision to stop all support for its Windows 7 operating system early in 2020.

“The market has reached a state of stabilization so far this year, primarily driven by strong commercial demand driven by Windows 10 upgrades, being linked to end of Windows 7 support,” said Ishan Dutt, an analyst at research firm Canalys.

Dell held 17 percent of the global PC market share year-to-date, behind HP Inc’s (HPQ.N) 23 percent and Lenovo Group Ltd’s (0992.HK) 21 percent share, according to data from Canalys.

Total revenue rose 15 percent to $22.48 billion.

However, net loss attributable to Dell Technologies widened to $876 million, from $846 million a year earlier.

Loss per share remained unchanged at $1.84 per share.

VMware posted robust results, beating on both profit and revenue estimates on strong demand for its software to boost cloud computing efficiency.

The company’s shares, up nearly 30 percent this year, rose 2 percent to $165 after the bell.

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Tiffany sales to Chinese tourists disappoint, shares fall sharply

(Reuters) – Tiffany & Co’s (TIF.N) on Wednesday reported quarterly sales that missed estimates as Chinese tourists spent less than expected at the jeweler’s stores in the United States and Hong Kong, a shortfall that sent the company’s shares down as much 13 percent.

Investors were also disappointed by the 181-year-old company’s failure to raise its full-year profit outlook ahead of the holiday season and by growth of same-store sales at a slower pace than expected.

Tiffany shares were down 11.8 percent at $92.58 in mid-day trade.

Chief Executive Alessandro Bogliolo tried to reassure investors that while spending outside of China was down, sales in the country were robust.

“We can speculate on the reasons for the tourist spend down outside of China but the reality is that the Tiffany brand is appealing to Chinese customers as evidenced by the continued strong sales growth in mainland China in the quarter,” he said on an investor call.

Some of the increase in demand in mainland China could be attributed to Tiffany lowering prices in the country after the Chinese government cut tariffs on luxury goods, he said.

Bogliolo said Tiffany was shifting more inventory to mainland China, where customers are spending more than abroad.

“When it comes to tourism, what we do is try to follow the customers while they spend … We are increasing our inventory in China because demand there has grown,” Bogliolo said.

“Declining Chinese tourist spending is concerning and may be reflective of strained relations with the U.S.,” said research firm Retail Metrics founder Ken Perkins, referring to the U.S.-China trade dispute. “China’s growth has been slowing so to see strong spending on the mainland is encouraging.”

Tiffany forecast full-year profit between $4.65 and $4.80 per share. Analysts on average had estimated $4.83 per share.

The unchanged outlook, among other things, reflected Tiffany’s planned increases in marketing expenditure to entice younger shoppers into its stores and expenses related to the renovation of its flagship store in New York, the company said.

The jeweler has refreshed its collections with more affordable items such as pendants and earrings to appeal to millennials who have been gravitating to lower-priced competitors such as Denmark’s Pandora A/S (PNDORA.CO) and Signet Jewelers (SIG.N).

Bogliolo said the company has also invested in marketing to reach Chinese customers and tourists specifically.

“Of course if there are less Chinese tourists traveling, we divert our media from traveling locations – airports etc – more to domestic media, typically digital,” he said, citing the recent launch of its platinum and diamond collection Paper Flowers in China.

The New York-based company’s net income fell to $94.9 million, or 77 cents per share, in its fiscal third quarter, ended Oct. 31, from $100.2 million, or 80 cents per share, a year earlier.

Total revenue rose 3.7 percent to $1.01 billion.

Analysts on average expected earnings of 77 cents per share on revenue of $1.05 billion.

The company’s comparable-store sales, excluding the impact of currency changes, rose 3 percent, while analysts on average were expecting a rise of 5.3 percent, according to IBES data from Refinitiv.

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Republican wins racially charged U.S. Senate race in Mississippi

(Reuters) – Republican Cindy Hyde-Smith won a U.S. Senate special election runoff in Mississippi on Tuesday, the Associated Press projected, defeating a black challenger after a campaign that recalled the state’s history of racist violence.

Hyde-Smith, a white former state lawmaker who was appointed to the Senate in April, overcame a controversy over her comment on public hangings to defeat Democrat Mike Espy in the last contest of the 2018 election cycle.

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Brexit chill and insurance scandal hit UK bank CYBG

(Reuters) – British bank CYBG (CYBGC.L) said it would take another 150 million pound ($193 million) charge related to an industry-wide scandal over mis-sold insurance policies, helping to send its shares down as much as 10 percent on Tuesday.

The company, which became Britain’s sixth largest bank following its purchase of rival Virgin Money, also said short-term prospects in its key lending markets – homeowners and small businesses – were subdued due to uncertainty over Brexit.

Shares in the owner of Clydsedale Bank and Yorkshire Bank fell to their lowest since June 2016, when Britain voted to leave the European Union. The stock has lost well over a quarter of its value since the start of 2018.

The bank reported a statutory loss before tax of 164 million pounds ($211 million) for the year ended Sept. 30, including a 352 million pound charge related to the mis-selling of payment protection insurance (PPI).

Britain’s banks have together had to pay out billions of pounds in compensation in the country’s costliest-ever consumer scandal after regulators determined they had sold expensive PPI products to people who sometimes didn’t need them.

Investec analysts said the extra 150 million pound provision was larger than expected.

CYBG also said Brexit uncertainty had hit confidence among small and medium-sized enterprises (SMEs).

“We took a position in 2016 that Brexit would lead to lower economic growth environment. I think you are seeing some of that. We are seeing inertia in SMEs and their investment profiles,” Chief Executive David Duffy told reporters on a call.

CYBG forecast its net interest margin – the difference between what banks earn from loans and pay for deposits – would fall to 160-170 basis points (bps) in its new financial year from 178 bps in the one just ended.

At 1020 GMT, CYBG shares were down 9.7 percent at 224.4 pence, the biggest fall on the UK mid-cap index .FTMC.

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