What to Watch in the Day Ahead - Tuesday, July 21
(The Day Ahead is an email and PDF publication that includes the day's major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT)
Apple Inc is expected to report third-quarter revenue and profit above estimates, according to Thomson Reuters StarMine, helped by strong sales of its flagship phone. Investors and analysts will be looking for data on how the Apple Watch performed, after a report in the previous week by research firm Slice Intelligence showed that sales of the Apple Watch, the first product launched under CEO Tim Cook's reign, have dropped since its launch in April. Apple sold 61.2 million iPhones in the second quarter.
Microsoft Corp, the world's largest software company, is expected to post a dip in fiscal fourth-quarter revenue as sales of its operating system slide with PC buyers waiting for the release of Windows 10 in late July. The Dow company has been ramping up efforts to arrest falling sales in its core Windows business and has been shifting focus to cloud-related offerings such as its online Office 365 suite of applications. A strong dollar is also expected to weigh on Microsoft's results. Early in July, Microsoft announced a second round of massive job cuts since Satya Nadella took over as chief executive in February 2014. These layoffs are expected to reduce operating expenses by more than $1 billion on an annualized basis, according to some analysts. The job cuts, primarily in its phone business, will result in a restructuring charge of about $750-$850 million in the quarter.
Dow component Verizon Communications Inc will report second-quarter earnings as it gears up to launch its online video service and make a push into mobile video and targeted advertising to unlock new revenue streams. Investors will keep an eye out for its capital expenditure range amidst intense competition in the wireless industry and for details on how its $4.4 billion purchase of AOL Inc in June will impact its bottom line.
United Technologies Corp, which has twice this year trimmed its 2015 profit outlook, reports second-quarter earnings. The diversified industrial conglomerate last month signaled weak order trends for its Otis elevator business, and said its UTAS aircraft components and systems unit would not hit sales growth targets in the commercial after-market business. The company said proceeds from the Sikorsky sale to Lockheed Martin would fund more share buybacks to offset the earnings impact from the departure of the unit.
Online search and advertising company Yahoo Inc is expected to report second-quarter earnings slightly above analysts' average estimate, according to Thomson Reuters StarMine. Yahoo has been struggling to revive revenue growth with acquisitions and product revamps as its once-hot Web portal and email service have lagged those of rivals such as Google and Facebook. All eyes will be on the future of its stake in Yahoo Japan and whether a possible change in U.S. tax regulations would affect Yahoo's planned spinoff of its stake in Alibaba Group.
Travelers Companies Inc posts second-quarter results, expected to be in line with analysts' estimate, according to Thomson Reuters StarMine data. The property and casualty insurer missed estimates last quarter, as low interest rates and a drop in value of its energy investments squeezed the company's net investment income. Its investment income has been falling for the past few years as the Federal Reserve has kept interest rates at historical low levels since the financial crisis. The steep fall in oil prices since June last year has also hit the company's investments in the energy industry made through private equity funds.
Oilfield services provider Baker Hughes Inc, which is in the process of being acquired by Halliburton Co, is expected to report a loss in the second quarter as E&P companies scale back capital spending due to depressed oil prices. The company had warned in April it expects rig count to drop 30 percent sequentially this quarter. However, the focus this time will be on the pending takeover by Halliburton. The deal, which was expected to close in the second half of the year, is now expected to be concluded on Dec.1 as the U.S. Department of Justice has extended the review of the deal.
Bank of New York Mellon Corp, one of the world's largest custody banks, reports second-quarter earnings as CEO Gerald Hassell is under pressure from activist hedge funds to cut costs, including what one investor calls a "bloated" work force. Continued...