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Thursday October 6, 2022
BlackBerry Releases Quarterly Report
BlackBerry Limited (BB) released its second quarter report on Tuesday, September 27. The software company's stock fell 3% following the release of the report.
Revenue fell to $168 million for the quarter in line with analysts' estimates. This was down 4% from $175 million at the same time last year.
"This was a solid second quarter for BlackBerry, where we delivered both revenue in line with, and EPS ahead of, expectations," said CEO of BlackBerry, John Chen. "Our IoT business continues to gain market share, and design-phase revenue remained at near-record levels. A major design win in the quarter was with Volkswagen, who chose QNX for their new VW.OS, to be deployed across all Volkswagen group brands."
The company reported net loss of $54 million or $0.09 per adjusted share for the quarter. This was an improvement from a net loss of $144 million or $0.25 per adjusted share during the same quarter last year.
BlackBerry reported an operating loss of $47 million, a 67% improvement from an operating loss of $144 million one year ago. The company saw a 28% increase to $51 million in IoT (Internet of Things) revenue, from $40 million. The IoT includes QNX software for automotive customers and is now embedded in over 215 million vehicles. The company's cybersecurity revenue segment was down 8% to $111 million in revenue from $120 million last year. Despite cybersecurity billing increasing 15% in the quarter, the company expects cybersecurity revenue to stay flat due to competition.
BlackBerry (BB) shares ended the week at $4.75, down 5.57% for the week.
Cintas Releases Earnings
Cintas Corporation (CTAS), a uniform rental and cleaning supply company, released its first quarter earnings on Wednesday, September 28. The company's stock rose 3% following the release of the report.
Revenue for the first quarter reached $2.17 billion, up 14% from revenue of $1.90 billion reported during the same quarter last year. This surpassed analysts' expected revenue by more than 4%.
"We are pleased with our fiscal 2023 first quarter financial results," said Cintas' CEO Todd Schneider. "These financial results are the product of the continued focus of our employee-partners on providing businesses with the image, safety, cleanliness and compliance needed to help our customers get Ready for the Workday ®."
Cintas reported quarterly net income of $351.69 million or $3.39 per adjusted share. This was up from $331.18 million or $3.11 per adjusted share during the same quarter last year. Analysts surveyed expected earnings of $3.15 per share.
Cintas reported 12.6% growth for the quarter in the Uniform Rental and Facility Services segment reaching $1.7 billion, from $1.5 billion. Growth was driven by a mix of increased volume and price increases. Organic revenue growth in First Aid and Safety Services was $234.2 million compared to $199.1 million the prior year, an increase of 15.8%. Operating results were negatively affected, however, by a 30-basis point raise in energy expenses compared to last year's first quarter. Cintas paid quarterly cash dividends to shareholders reaching an aggregate of $97.7 million and completed stock buybacks of $210.8 million of Cintas common stock.
Cintas (CTAS) shares closed at $388.19, down .04% for the week.
Bed Bath & Beyond Reports Earnings
Bed Bath & Beyond (BBBY) announced quarterly earnings on Thursday, September 29. The home goods retailer's stock dropped 7% following release of the report.
Revenue for the second quarter reached $1.44 billion. This was down 28% from $1.99 billion reported during the same quarter last year and below the $1.47 billion in revenue that analysts expected.
"We have worked quickly to deploy strategic and financial changes swiftly to increase cash through business growth and lowering our cost structure by approximately $250 million in the second half of fiscal 2022 or an expected $500 million on an annualized basis," said Bed Bath & Beyond Interim CEO Sue Gove. "We are confident that our current liquidity will enable the necessary changes we are implementing. We are more focused than ever on demonstrating improvement in the coming quarters. Regaining market share and enhancing liquidity are our top priorities."
Bed Bath & Beyond reported a quarterly net loss of $366 million or $4.59 per adjusted share. During the same quarter last year, the company had a net loss of $73 million or $0.72 per adjusted share.
Comparable sales declined 28% in stores and 22% online in the second quarter. Bed Bath and Beyond's buybuy Baby segment also posted a high-teens percentage drop in comparable sales for the quarter. The company's loyalty program, Welcome Rewards, gained more than 1.3 million members since the end of August, reaching 6.4 million members since it launched in the second quarter. Based on a pause in new stores and remodels and the planned closure of more than 150 stores, the company anticipates breakeven operating cash flow by the end of fiscal 2022.
Bed Bath & Beyond (BBBY) shares ended the week at $6.09, down 9.38%.
The Dow started the week at 29,590 and closed at 28,725.51 on 9/30. The S&P 500 started the week at 3,693 and closed at 3,640.47. The NASDAQ started the week at 10,868 and closed at 10,737.51.
Treasury Yields Remained Flat After Mid-Week Rise
U.S. Treasury yields stayed flat after a brief mid-week rise among expectations that the Federal Reserve will continue to increase interest rates. The benchmark 10-year Treasury note yield started the week of 9/26 at 3.78% and topped 4% on Wednesday, the highest level since October 2008, before declining by the end of the week.
On Monday, Federal Reserve members gave key speeches indicating a willingness to continue with current tightening of monetary policy. On Tuesday, yields rose and erased earlier declines as investors digested the remarks.
"I do anticipate that accomplishing price stability will require slower employment growth and a somewhat higher unemployment rate," said President of the Federal Reserve Bank of Boston, Susan Collins. "And I take very seriously that unemployment is painful and that its costs have been disproportionately concentrated among groups that have traditionally been marginalized. Hence it is no surprise that, as monetary policy moves to a restrictive stance to transition the economy to more sustainable labor market conditions, there is apprehension about the possibility of a significant downturn. I do believe the goal of a more modest slowdown, while challenging, is achievable."
The benchmark 10-year Treasury note yield opened the week of September 26 at 3.69% and traded as high as 4.01% on Wednesday. The 30-year Treasury bond opened the week of at 3.61% and traded as high as 3.90% on Wednesday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased 16,000 to 193,000 for the week ending September 24, reaching a five-month low. Continuing unemployment claims fell by 29,000 to 1.35 million.
"The recent decline in layoffs flies in the face of the Fed's efforts to soften up labor market conditions and knock inflation back down toward its 2% target," said Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors. "The capital markets have heard the Fed, and investors are feeling the pain. But the jobs market? For now at least, it's not listening."
The 10-year Treasury note yield finished the week of 9/30 at 3.802%, while the 30-year Treasury note yield finished the week at 3.78%.
Mortgage Rates Continue to Rise
Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, September 29. Mortgage rates continued to increase for the sixth consecutive week.
This week, the 30-year fixed rate mortgage averaged 6.70%, up from last week's average of 6.29%. Last year at this time, the 30-year fixed rate mortgage averaged 3.01%.
The 15-year fixed rate mortgage averaged 5.96% this week, up from 5.44% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.28%.
"The uncertainty and volatility in financial markets is heavily impacting mortgage rates," said Freddie Mac's Chief Economist, Sam Khater. "Our survey indicates that the range of weekly rate quotes for the 30-year fixed-rate mortgage has more than doubled over the last year. This means that for the typical mortgage amount, a borrower who locked-in at the higher end of the range would pay several hundred dollars more than a borrower who locked-in at the lower end of the range. The large dispersion in rates means it has become even more important for homebuyers to shop around with different lenders."
Based on published national averages, the savings rate was 0.17% as of 9/29. The one-year CD averaged 0.60%.
Published September 30, 2022