Looking at you, four-eyes
- U.S. markets: The Nasdaq had enough of its five-day losing streak, surging on strong earnings reports. As for individual stocks, Facebook (+9.06%), Chipotle (+24.50%) and AMD (+13.70) were all big winners.
- U.S. economy: Today, the Department of Commerce releases its Q1 GDP report.
- Earnings today: ExxonMobil, Chevron, Sanofi.
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Snap Releases Another Spectacle
- Taking pictures and sending them to your phone is a lot more seamless. Plus, they're waterproof.
- They're selling online for $150-$20 more than v1.
But we need answers: When the first version of anything tanks so badly, why would you make a second one?
Speculating on the Spectacles' spectacular failure
Once upon a time (late 2016), you could find hip millennials rocking Snap's Spectacles in a splashy marketing campaign. Then came an army of Snapbots: Minion-looking Spectacle vending machines that seemed to drop out of the sky.
But as quickly as they came, the Snapbots disappeared. And the rest of the public had to wait five months to get their own Spectacles. During the wait, the fad died as quickly as it started-less than 50% of buyers used Spectacles a month after purchasing them.
In the end: Snap only sold 220,000 pairs, and it suffered a $40 million inventory write-down after overestimating demand.
So why is Snap trying again?/
Because the sunglasses are key to Spiegel's master plan. In his crystal ball, humans will connect with the world around them not through a phone, but through augmented reality.
The only problem is, hardware solutions (like Google Glass) haven't caught on. So while some companies like Magic Leap are going all-in integrating hardware and software, Snap is working on perfecting the software (with World Lenses and Snappables), while easing consumers into wearing the tech. And if a few products flop along the way, that's the cost of being an innovator...
Spiegel said it best: "We decouple them [hardware and software] so that they're all allowed to develop on their own until they come together...Over the next decade or so, the way that these pieces fit together will probably be what defines our company."
Wow. Amazon. Just Wow.
Jeff Bezos treats Wall Street estimates the way LeBron treats defenders: with complete disregard.
Amazon (up 6% after hours) posterized expectations. And at this point, what more is there to say? How does a company this big keep growing at this pace?
We'll let the numbers do the talking:
- Net income grew 63% to $1.6 billion. Mark that down as two straight quarters with over $1 billion in profit.
- Revenue was $51.04 billion, up 43%.
- Yes e-commerce is huge, but cloud unit AWS is the business to keep your eyes on. It's driving Amazon's bottom line with $1.4 billion in net income.
- And here's some more news: the annual cost of a Prime membership is getting bumped to $119 on May 11.
That's enough Amazon for one day. How about other tech giants?
- Microsoft showed Bezos he's not the only one with his head in the clouds. Azure, Microsoft's cloud business, grew 93% as it takes the torch from Windows following a big reorg.
- Intel shares jumped 8% after hours on strong growth in its data-centric business (think Internet of Things, data centers, and AI processing).
Deutsche's U.S. Adventure Isn't Going Well
After a 20-year struggle to compete with Wall Street heavyweights, Germany's largest lender, Deutsche Bank, is scaling back its presence in the U.S. Turns out, home field advantage is also a thing in finance.
Let's survey the damage
- Quarterly profit declined 79%, while sales and trading revenue dropped 17% (the five largest U.S. banks averaged a 10% increase).
- It fired 300 U.S. investment bankers and will lay off another 100 in the next few days (Reuters).
- Deutsche also plans to cut its total U.S. workforce (10,300 employees) by more than 10% in 2018 (Bloomberg).
Enjoying the new gig, Christian Sewing? After only two weeks in the CEO chair, Sewing is making drastic moves to refocus the bank on its core European client base.
Zoom out: Deutsche arrived stateside with the swagger of the Beatles, acquiring Bankers Trust for $10.1 billion in 1998. But $17 billion in legal fees later, it might be time to cut its losses.
FOOD & BEVERAGE
Dunkin' Needs to Nix the Dough to Make More Dough
How was Dunkin's Q1? Stale, just like its donuts.
Earnings did top expectations with net income reaching $50 million, but same-store sales fell 0.5%. It also didn't help when Enron short-seller Jim Chanos said he's going lean on the Boston Kreme.
But there's more at stake here: While America might run on Dunkin' (-0.31%), no one runs on donuts. The brand is frantically replacing its namesake product with healthier breakfast options and coffee. Starbucks and McDonald's have set the bar as your primary AM destinations.
So how does Dunkin' reach that bar?
Check out its three-year plan, announced this February. It includes opening 1,000 new locations (with an emphasis on drive-thru), growing same-store sales up to 3%, and promoting beverages over food.
Jim Chanos says good luck: "We've been short these things [franchises] for about a year." And while valuations keep going up, "At some point, that has to come to an end."
WHAT ELSE IS BREWING
- MoviePass's one-ticket-per-day model will likely never be coming back. Who called that? Literally everyone.
- Subway will be closing 500 stores in the U.S. while opening 1,000 internationally.
- GoPro (+1.65%) CEO Nick Woodman was the highest paid CEO in the U.S. in 2014. His new salary after the company's horrible performance? $1 (FT).
- The Labor Department is now looking into Wells Fargo's 401k rollover practices (WSJ).
What's better than a list on a Friday?
Raise your hand if you're going to see the new Avengers movie this weekend. That's one, two, three...okay looks like all of you. Chalk up another W for the Marvel Cinematic Universe (MCU).
And we're not surprised. Like the MCU, many movies belong to big happy film families, known as "franchises." Think Fast and Furious, Saw, and yes, even Paul Blart.
So which have been the most successful? Here are the top 10 franchises by domestic box office revenue (Box Office Mojo), followed by the No. 1 grossing movie in each franchise. (Numbers in millions.)
- Marvel Cinematic Universe: $5,957 - Black Panther
- Star Wars: $4,007 - Star Wars: The Force Awakens
- "J.K. Rowling's Wizarding World" (aka Harry Potter): $2,626 - Harry Potter and the Deathly Hallows Part 2
- Batman: $2,408 - The Dark Knight
- "Disney Live Action Reimaginings": $2,169 - Beauty and the Beast
- James Bond: $2,113 - Skyfall
- X-Men: $2,044 - Deadpool
- Spider-Man: $1,913 - Spider-Man
- "Middle Earth" (aka Lord of the Rings and The Hobbit): $1,847 - Return of the King
- DC Extended Universe: $1,588 - Wonder Woman
"Remind me again why we're naked?"
"I'm not naked..."
"Oh right, me neither."
WHAT THE CREW IS READING
Shoe Dog by Phil Knight-How did Phil Knight, founder of Nike, build one of the world's largest brands? Sweat, tears, and a lot of luck. Phil's gripping story takes you from his fresh-faced, post-college days (when he wanted to give up everything and travel the world), to those sleepless nights wondering how he was going to sell Nike inventory and pay off his next loan. If you read one book about what it takes to build a company, Shoe Dog is it.
The book pairs well with Sports Internet, an awesome daily sports newsletter that we all read before getting to the office.
GUESS THE COMPANY
Market Cap: $83 billion
Target audience: High income, on-the-go spenders. Socially and health conscious consumers.
Last seen: Containing the backlash from a controversial situation at one of its locations.
(Answer located at bottom of newsletter)
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Guess The Company