(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.
Infosys Ltd, India’s second-biggest software services company, is expected to report a rise in first-quarter net profit, but earnings are expected to grow at a slower pace than in the year-earlier quarter, according to Thomson Reuters StarMine. A move to digital projects has been helping India’s IT service providers, but technology spending across the world is falling and a jittery economic environment in Europe could cost Infosys and rivals in the coming quarters. Many IT companies and research firm Gartner have said the industry would not return to double-digit growth anytime soon, making new-age projects involving technology such as cloud computing more important.
Burrito chain Chipotle Mexican Grill Inc is expected to report second-quarter sales slightly above the average analyst’s estimate, according to Thomson Reuters StarMine. The company expects lower sales this year after it fired a pork supplier for not giving its pigs outdoor access. Chipotle has started importing pork from United Kingdom-based Karro Food to supply most of its Florida restaurants. The restaurant chain, which had temporarily stopped serving its popular carnitas, is bringing its popular pork dish back to some select stores across the United states. Analysts believe that the return for carnitas will drive traffic in the coming quarters.
Omnicom Group Inc is expected to report a second-quarter profit above analysts’ estimates, according to Thomson Reuters StarMine. Omnicom, which owns agencies such as BBDO Worldwide, TBWA Worldwide and Goodby, and Silverstein & Partner, has been looking to buy digital and social media companies to help fend off growing competition from Facebook Inc, Twitter Inc and Google Inc. Omnicom is also expected to be affected by a large number of account being under review as advertisers seek to cut costs. Investors will be look at the impact of a strong dollar on the company’s results.
Intuitive surgical Inc will report lower-than-expected second-quarter profit and revenue, according to Thomson Reuters StarMine data, as the company experiences weakness in its Instrument & Accessory business unit. The instrument and accessory unit provides assistance in surgery and urological procedures. Sales of Da Vinci Surgical Systems are also expected to take a hit. The company gets significant revenue from each procedure using the Da Vinci systems, which is a robotic platform that assists in performing minimally invasive surgeries.
Printer maker Lexmark International Inc is expected to report second-quarter profit slightly below estimates, according to Thomson Reuters StarMine data. The company had guided down its second-quarter and full-year revenue expectations. Analysts anticipate currency pressure to have affected operating profit and expect to see cost reductions to offset the same. For 2015, analysts also expect revenue from hardware and supplies segment to drag.
Wearable camera maker GoPro Inc is seen posting a second-quarter revenue slightly above Wall Street’s expectations, according to Thomson Reuters StarMine data. GoPro, which gets over half its revenue from overseas markets, is expected to benefit from strong demand for its flagship Hero4 action cameras. Expansion into markets like China is likely to boost GoPro’s earnings this quarter as well. Investors will be looking for management commentary on the company’s plans for the remainder of 2015.
Canadian Pacific Railway Ltd reports its financial results for the second quarter. Weak coal and grain shipments have weighed on some of its U.S. peers, and several analysts have said the company may reduce its full-year earnings forecast. Although thanks to the efficiency gains, analysts expect earnings to rise to C$2.46 a share from C$2.11 a year earlier.
LIVECHAT: The importance of Greece in Europe with Brown Brothers Harriman Strategist Marc Chandler Europe may have dodged a bullet by avoiding Grexit, but the question of what another bailout of the union's weakest link will cost Europe in the long-run has yet to be answered. Brown Brothers Harriman Currency Strategist Marc Chandler returns to the Global Markets Forum to talk on Greece, the euro, China and all things foreign exchange. (0930/1330) Also, from Singapore is Woon Khien Chia of Nikko Asset Management joins to solve the mystery of the recent rout in Chinese equities that has sent ripples across the globe and haphazard efforts by authorities have only made things more complex. (0230/0630) To join the conversations, click bit.ly/1kTxdKD (Compiled by Nivedita Balu; Editing by Joyjeet Das)