Apple sounds $ 6 billion holiday warning – Silicon Valley

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By Julia Horowitz | CNN Affairs

What will dominate this holiday shopping season: Huge demand, as shoppers use the accumulated savings to splurge, or supply chain issues resulting in empty shelves and out-of-stock gifts ?

Apple’s latest earnings report amplifies fears that production and shipping complications will steal the show.

What’s happening: America’s most valuable company said after markets shut down that Covid-19-related chip shortages and manufacturing disruptions reduced revenue by $ 6 billion in the last quarter.

Apple still posted quarterly revenue of $ 83.4 billion. But that’s slightly lower than Wall Street’s expectations. Shares are down 3.5% pre-market.

Amazon also missed analysts’ projections for sales and earnings. Its title is down 4.5% in pre-market.

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“The disruption of global supply chains and the inflation of the cost of materials such as steel and services such as trucking have also increased our operating costs,” said Brian Olsavsky, chief financial officer of Amazon.

The big picture: Even America’s biggest companies can’t dodge the impact of clogged ports, missing parts, and higher costs. This could weigh on the last quarter of the year, which is crucial for retailers.

Amazon CEO Andy Jassy has warned that the company’s mainstream business is expected to incur billions of dollars in additional costs during the current period. Apple also expects its supply chain costs to continue to rise.

“We estimate that the impact of supply constraints will be greater in the December quarter,” said Luca Maestri, CFO.

This week, the National Retail Federation said it believes vacation spending will break records this year, increasing between 8.5% and 10.5% from 2020.

“There is tremendous momentum as the holiday shopping season approaches,” said NRF President Matthew Shay. “Consumers are in a very favorable position at the start of the last few months of the year as incomes rise and household balance sheets have never been so strong.”

Retailers, he added, “are making significant investments in their supply chains and spending heavily to ensure they have products on their shelves to meet this period of exceptional consumer demand.”

But these additional investments could reduce profits, eclipsing the spending frenzy.

The timing: Executives are reminding customers not to procrastinate this year or they might not find what they’re looking for. They suspend promotions and sales prior to advance purchases where possible.

“There will be shelves in retail that will be more empty than you want when you do your Christmas shopping,” Puma CEO Bjorn Gulden said on a call with reporters this week.

Facebook changes its name to Meta

Facebook has been unable to keep its name out of the news as it battles a swarm of controversies over its handling of hate speech, disinformation, crime and child safety after a whistleblower leaked hundreds of internal documents.

It therefore changes its name. Naturally.

The latest: Founder and CEO Mark Zuckerberg said Thursday that Facebook’s new corporate name will be Meta, demoting its namesake service to a subsidiary, alongside Instagram and WhatsApp.

The move aims to highlight the social media giant’s pivot to the “metaverse” as it builds online social experiences that take advantage of augmented and virtual reality.

“Today we’re considered a social media company, but in our DNA we are a company that builds technologies to connect people,” Zuckerberg said. “And the metaverse is the next frontier, just like social media was when we started.”

They are serious: the company is changing its stock symbol. He plans to start trading under “MVRS” on December 1.

And the company is supporting the change in strategy with real money. He said earlier this week that it would take an operating profit of $ 10 billion this year to increase investment in metaverse products.

Investors are temporarily on board. Shares closed 1.5% higher on Thursday and rose another 1% in pre-market trading on Friday. (Shares of Meta Materials, an independent Nova Scotia-based company, also jumped.)

But the backbone of the company is not solving the PR crisis plaguing Facebook / Meta, which is prompting regulators to intervene.

Do you want to buy a house? Don’t wait, says this expert

The boiling housing market has many potential homeowners wondering if they should wait for prices to drop before buying a property.

But Barbara Corcoran, founder of real estate company Corcoran Group and star of “Shark Tank”, doesn’t think this is the best decision.

“I don’t think it’s wise to wait,” Corcoran said Thursday at CNN Business’s “Foreseeable Future” event. “Of course, if you can’t find a home, you have to wait. But to be part of your plan to wait for house prices to drop, I don’t envision that happening in the next few years. At least not for next year.

Home sales have cooled a bit recently compared to early 2021, but prices continue to climb as supply remains tight.

Still, holding out could cost more, Corcoran said. If US home price appreciation continues at a similar pace to last year, she noted, homebuyers will still pay 12% to 14% for the same home in 2022. Goldman Sachs recently predicted home prices would rise an additional 16% by the end. next year.

Having said that: don’t call it a bubble!

“We don’t really have a bubble,” Corcoran said. “What we have is an unusual market that has just gone crazy based on the individual demand of the people who want to live there.”

Following

Chevron, ExxonMobil, Colgate-Palmolive, Newell Brands, Phillips 66 and Royal Caribbean report results before US markets open.

Also today: The Federal Reserve’s preferred inflation measure arrives at 8:30 a.m. ET, along with U.S. personal income data for September.

Coming next week: World leaders meet in Glasgow for COP26 climate talks. Will companies be forced to do more to reduce emissions or increase disclosures?

The-CNN-Wire ™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.


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