The Market Ticker
Commentary on The Capital Markets- Category [Earnings]
2015-11-04 15:23 by Karl Denninger
in Earnings , 172 references


Facebook popped on earnings, but is currently selling at a P/E over 100.

The claim is continued forward 30%+ revenue and nobody gives a damn about earnings.

The problem is that the consumer is falling apart and now there is evidence that business spending is slowing too.  Whole Foods is collapsing; the simple reality is that Whole Paycheck doesn't sound good at all when your paycheck doesn't go as far as it used to, and Kroger sells food for less.  But even that doesn't really help when WalMart can't manage to get out of its own way!

Finally, Fireeye is getting hammered as well and while they're not important standing on their own there are plenty of indications of slowing spending in the business world in the general sense.

Want to keep buying into this?  Go right ahead.

Netflix was on fire today too but here's the problem -- in the last few days there have been more and more announcements from other over-the-top content providers none of whom will license anything to Netflix when their per-user price is going to be at or above Netflix's!

Want to see the new Star Trek series?  It won't be on Netflix.

How many of these services will people buy?  Not all of them -- that much is for certain.

What amazes me is that nobody's paying attention to the collapse of both the consumer and industrial spending sectors going on right under your noses, while a handful of "tech" companies are going to deliver increasing sales and earnings when the end-user can no longer buy anything.

Yeah, that'll work out well.

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Starbucks is the latest to get hit on earnings; EPS was on estimates but it looks like the market was expecting a beat.

Global same-store sales up 8%, but the market obviously wanted better.

China and Asia/Pac down to 6% from almost 10%.  Guidance is also light.

The market doesn't like it, much as it didn't like Buffalo Wild Wings yesterday.

But the consumer space is out in front and everyone's just fine.

Uh huh..... sure they are... just like GoPro, right?

PS: The local Starbucks around here has been damned quiet the last few times I've been there.....


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Legere is pumping himself (yeah, pretty much) on TV with Cramer right now.

He's certainly not pumping his stock price; on the back of a miss in both top and bottom line the stock is down more than 6% after being halted for a while as the earnings announcement was made.

Here's reality for Legere: It's easy to add customers when you sell at a loss, but the company still has an inferior network and of late their "promos" have been focused on grabbing family accounts while effectively discriminating against single people.

For example T-Mobile is "Happy" to sell a four person family four lines for $120/month, or $30/line (there was a limited-time promo where it was $100 or $25/each!) including 10Gb of data, unlimited talk and text but John thinks a single person should pay more than double that amount of money for half the data allocation!  ($70 for 5Gb of data.)

So yes, he gained customers but didn't hit numbers on either the top or bottom line -- when it comes to being a single person you're far better off going to one of the MVNOs such as Straight Talk and paying ~$45 for the same thing T-Mobile wants $70 for!

Oh, and you can have AT&T's or Verizon's superior coverage while doing it too.

This is probably why the company missed; the only customers he gained were the ones paying him $25 or $30 instead of $70 and he thought that's all the street would care about.

Yes, I might be interested in moving back to T-Mobile for $30/month on that deal; it would be a good deal even with the weaker network.

But at $70?  Not a prayer in Hell.

And there's only one of me.

I still want to know how the company defends this sort of pricing structure in a world that has a Clayton Act in it -- or even just a world where something thought of as "fundamental fairness" might be present.

I'd really love to hear an analyst or Cramer ask Legere that, but you know it won't happen.

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