Earnings roundup: Facebook profits rise 61 percent in quarter

Earnings roundup: Facebook profits rise 61 percent in quarter

January 30th, 2019 by The Associated Press in Business Around the Region

Facebook reported robust earnings and revenue that handily surpassed Wall Street expectations for the final quarter of 2018 despite heavy spending on safety and security.

Facebook said Wednesday that it earned $6.9 billion, or $2.38 per share, in the October-December period. That's up 61 percent from $4.3 billion, or $1.44 per share, a year earlier. Analysts polled by FactSet had expected $2.18 per share.

Revenue increased 30 percent to $16.9 billion, beating expectations of $16.4 billion. Facebook's stock almost 12 percent in after hours trading to roughly $168.

The social network has been plagued by privacy scandals and the threat of regulation, but those haven't appreciably slowed its expansion. Its user base, for instance, also grew to 2.32 billion monthly users, up 9 percent from a year earlier — also higher than analyst expectations.

On Wednesday, Facebook's stock closed up 6 percent at $150. 42 and added 12 percent to $162.82 after hours. That's still far from the record high of $217.50 that it hit in late July, the day before the historic plunge last year.


Anthem profits up from drug business

The Blue Cross-Blue Shield insurer Anthem topped fourth-quarter earnings expectations and unveiled a better-than-expected 2019 forecast, helped by an early start for its prescription drug coverage business.

Shares of the nation's second-largest health insurer soared after Anthem said Wednesday that it will start moving customers into its new business in this year's second quarter, several months ahead of schedule.

The insurer has said that it expects to gain annual savings of more than $4 billion by running its own pharmacy benefit management operation, which it calls IngenioRx.

Wednesday's announcement means the company will start accumulating savings faster than expected, Jefferies analyst David Windley said in a research note.

Pharmacy benefit managers, or PBMs, run prescription drug plans for employers and government agencies among other clients. They use their large purchasing power to negotiate prices and shape formularies or lists of covered drugs.

Anthem had sold its PBM business to Express Scripts in 2009 and then had that company run prescription benefits for its customers. But the relationship between Anthem and Express Scripts soured, and the insurer said in 2017 that it would create its own operation.


Microsoft cloud drives up income

Microsoft's ongoing growth as a provider of cloud computing services helped drive its fiscal second-quarter net income of $8.42 billion, an improvement after a loss in the same period a year earlier.

The Redmond, Washington-based company said Wednesday it had profit of $1.08 per share. Earnings, adjusted for pretax expenses, were $1.10 per share. Shares dipped almost 1.5 percent in after-hours trading.

Revenue from the company's flagship Azure cloud computing platform grew 76 percent. But the company saw a 5 percent revenue hit in Windows software supplied to other PC manufacturers. It attributed the decline in part to a short supply of Intel chips late last year.

Microsoft's results topped Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of $1.09 per share.

The software maker posted revenue of $32.47 billion in the period, which also topped Street forecasts. Twelve analysts surveyed by Zacks expected $32.45 billion.


Boeing revenues set new record

Boeing, flying high on strong demand for airliners and military planes, faces a difficult decision over whether to develop a new plane to fill in a gap in its lineup.

Boeing CEO Dennis Muilenburg says the plane could replace less fuel-efficient bigger planes and let airlines launch new midrange routes. It would be bigger than Boeing's workhorse 737 but smaller than the 787, the company's newest airliner, which first landed in airline fleets in 2011.

Muilenburg said Wednesday there is demand for the plane, but Boeing needs to make sure of "the business case" for the jet before making a multi-billion-dollar commitment to build it.

On another subject, Muilenburg said Boeing's short-term prospects in China are uncertain, partly because of the U.S. trade dispute with China. Boeing remains bullish on the long-term potential for the Chinese market, he said.

The comments came as Boeing reported that its 2018 revenue topped $100 billion — a first for the century-old aircraft maker. The company posted fourth-quarter earnings and sales above Wall Street expectations and offered an upbeat forecast for 2019.


Tesla posts gains but misses estimate

Tesla eked out a small fourth-quarter profit to close 2018, but fell short of Wall Street estimates. Now it faces the difficult task of sustaining profits while facing a major debt payment amid slowing demand for pricier versions of its electric vehicles.

Palo Alto, California-based Tesla posted net income of $139.48 million, or 78 cents per share, from October through December. It reported two straight quarterly net profits for the first time since going public in 2010.

Excluding one-time items, Tesla made $2 per share, but analysts polled by FactSet expected $2.20.

For the full year, the company lost $976.09 million, or $5.72 per share. Without one-time items, the loss was $1.33 per share, better than estimates of $1.24.

Fourth-quarter revenue more than doubled from a year ago to $7.23 million, beating estimates of $7.12 billion. The company said its cash position improved by $1.45 million during the quarter despite repaying $230 million in convertible notes.

The quarterly profit was less than half of the $311.5 million the company earned in the third quarter.

Tesla wrote in a note to investors that it expects to deliver 360,000 to 400,000 vehicles this year, a growth rate of 45 percent to 65 percent compared with 2018.