TIME stocks

Apple’s Big Week Continues As Stock Price Hits a New High

An Apple Inc. logo is displayed on the company's iPhone 6 Plus during the sales launch of the iPhone 6 and iPhone 6 Plus on Sept. 19, 2014.
An Apple Inc. logo is displayed on the company's iPhone 6 Plus during the sales launch of the iPhone 6 and iPhone 6 Plus on Sept. 19, 2014. Bloomberg—Getty Images

Technology giant is on track to surpass its record close of $103.30

Shares of Apple passed their all-time high point during morning trading Wednesday, putting an exclamation point on an already strong week for the tech giant.

Apple gained steadily to start the day and eventually touched a high-water mark of $104.11 per share, wiping out the company’s previous all-time high of $103.74 from early September. (In June, the company announced a 7 to 1 stock split.) While Apple’s shares have come back down a bit more recently, they are still up about 1% on the day and they have gained almost 6% in value so far this week. The company’s market cap is around $607 billion.

The uptick in share price follows in the wake of Apple reporting strong earnings on Monday that included a 12% third-quarter sales bump and record profits thanks to better-than-expected iPhone sales. The company also launched its new mobile payments system, Apple Pay, on Monday and the much-hyped Apple Watch is set to hit customers’ wrists early next year.

Investors will surely be keeping their eyes on Apple’s stock throughout the day today. The company’s record closing high is $103.30.

Of course, even the all-time high price for Apple stock likely won’t be high enough for Carl Icahn. The activist investor sent an open letter to Apple CEO Tim Cook earlier this month asserting his belief that Apple’s shares should be worth more than $200 each and that the company should dramatically increase its share buyback program. Icahn owns almost a 1% stake in Apple.

This article originally appeared on Fortune.com

TIME Earnings

Yahoo’s Minuscule Growth Enough to Exceed Expectations

Yahoo! President and CEO Marissa Mayer delivers a keynote address at the 2014 International CES in Las Vegas, Nevada.
Yahoo! President and CEO Marissa Mayer delivers a keynote address at the 2014 International CES in Las Vegas, Nevada. Ethan Miller—Getty Images

The search giant had seen its revenue fall in four of the previous five quarters

Yahoo said Tuesday that third-quarter grew 1%. Here are the most important points from the company’s earnings report.

What you need to know: Yahoo beat Wall Street estimates with $1.15 billion in third-quarter revenue, up from $1.14 during the same quarter last year. Surprising analysts is always nice, but the Internet search giant should be especially happy about the revenue bump, even if it is just a 1% increase. Sales had declined in four of the previous five quarters, including a 3% year-over-year drop in this year’s second quarter.

Yahoo also reported earnings excluding certain costs (and a huge windfall from selling shares in the initial public offering of Chinese e-commerce giant Alibaba) of 52 cents per share, which trounced analyst predictions of 30 cents per share. The company’s profit jumped to $6.8 billion compared with the help of $6.3 billion in cash, after tax, that the company netted from selling a chunk of its Alibaba shares in September. In the year-ago quarter, Yahoo had reported a profit of $297 million.

Yahoo CEO Marissa Mayer described the quarter in a statement as solid.

“We achieved this revenue growth through strong growth in our new areas of investment – mobile, social, native and video – despite industry headwinds in some of our large, legacy businesses,” Mayer said.

Yahoo shares soared in after-hours trading, gaining almost 2.8% after finishing Tuesday trading up by 2.3% – one of many stocks on the tech-heavy Nasdaq composite to enjoy a strong day.

The big number: Yahoo said its third-quarter mobile revenue topped $200 million, the first time the company has revealed the amount of money it makes from showing ads on mobile devices. The company said gross mobile sales for the year will exceed $1.2 billion. Mayer said that Yahoo’s mobile investments – which include a $300 million acquisition of mobile analytics startup Flurry – have paid off for the company. In the current quarter, mobile revenue made up only around 17% of overall sales, far less than rivals like Facebook and Twitter.

“Not only are our mobile products attracting praise and engagement from users and industry awards, they are generating meaningful revenue for Yahoo,” Mayer said.

Meanwhile, Yahoo’s display ad revenue – the equivalent on online billboard ads – dipped again, falling 5% year-over-year to $447 million in the third quarter. (Interestingly, Yahoo said in its earnings release that the number of ads sold in the third quarter increased about 24%, but that seems to have been offset by the fact that the price of each ad declined by an equal amount.) Search ads continue to grow for Yahoo, though, with third-quarter revenue in that sector rising 4% to $452 million.

What you might have missed: Yahoo plans to spend some of the more than $6 billion in cash it netted from the recent Alibaba IPO on one or more tech start-up acquisitions, according to The Wall Street Journal. Mayer is expected to discuss Yahoo’s plan for potential acquisitions as well as cost-cutting measures – a discussion that comes a few weeks after activist investor Starboard Value revealed it had taken a stake in Yahoo and pushed for Mayer to reduce costs and consider a combination with AOL.

This article originally appeared on Fortune.com

TIME Earnings

Coke Expands Its Cost-Cutting Program as Earnings Slide

Cans of Coca-Cola
Getty Images

The North America market remains a problem for the beverage giant and its top rival PepsiCo

Beverages giant Coca-Cola reported a 14% decline in third-quarter net income on Tuesday on a muted volume performance. Here’s what you need to know.

What you need to know: The North America market remains a problem for Coke and top rival PepsiCo, with both of the consumer-products behemoths reporting muted results for that market in the latest quarter, even as data shows Americans are spending more at grocery stores. Coke’s North America unit case volume was down 1% in the latest period, while Pepsi earlier this month reported flat revenue for the Americas beverages business.

Consumers are spending more on fresh produce, fresh grocery products and in the beverages aisle, favoring juices, flavored waters and other items that have fewer calories and less sugar than what Coke and Pepsi use in their products. Demand for carbonated soft drinks, the biggest category in the beverages business, has suffered a nearly decade-long slide. Coke on Tuesday said the “Share a Coke” campaign helped the company gain share in the sparkling beverage segment in North America, but volume still declined. Demand was also weaker for juices and sports drinks, though demand grew for tea, energy drinks and water.

Coke also didn’t post especially strong growth in any of the other markets it serves to help offset the North America weakness. Volume grew just 2% in Latin America and the Asia Pacific, and it feel 5% in Europe. The Eurasia and Africa region’s volume grew 5%.

The big number: 53 cents — that’s the adjusted profit Coke reported for the third quarter, and it matched the year-ago level and also what analysts had projected. The reported bottom line was dragged lower by $270 million in charges tied to a move to refranchise some bottling partners in North America.

Revenue totaled $11.98 billion, falling slightly short of the $12.12 billion projected by analysts. Citing some currency exchange fluctuations, Coke said it now expects profit for all of 2014 to be “below its long-term EPS growth targets.”

What you might have missed: Coke is targeting annualized savings of $3 billion per year by 2019. Coke issued a second press release Tuesday morning touting an “expanded productivity program” (typically, corporate lingo for cost-cutting) and a move to streamline its operations. While Chief Executive Muhtar Kent said Coke sees a challenging macroeconomic environment in 2015, the company’s plans to restructure its global supply chain, among other moves, will help the beverages company achieve a profit before tax target of 6% to 8%.

This article originally appeared on Fortune.com

TIME Fast Food

McDonald’s Lays Out Fix for Deepening Sales Decline

A McDonald's restaurant sign on March 12, 2013 in Mill Valley, California.
A McDonald's restaurant sign on March 12, 2013 in Mill Valley, California. Justin Sullivan—Getty Images

The solution? Focus on food quality, digital strategy

Another quarter, another terrible set of results from McDonald’s.

And the company thinks focusing on food quality and digital payments is the trick to shaking its longstanding doldrums.

The world’s largest restaurant chain by revenue reported on Monday that comparable sales last quarter fell 3.3% (worse than the 3% drop analysts expected, according to Consensus Matrix) and that profit fell 28%, with trouble in every single major market.

McDonald’s has been hit by a number of setbacks, ranging from Russia closing some of its restaurants, to a scandal engulfing one of its big meat suppliers in China last summer. At home, McDonald’s is dealing with aggressive competition, especially for breakfast offerings, lower income customers cutting down on eating out and menu additions that have annoyed guests by slowing service.

McDonald’s CEO Don Thompson said in a statement more bad news was coming: “The internal factors and external headwinds have proven more formidable than expected and will continue into the fourth quarter.” He added that U.S. comparable sales growth would likely be negative for the 12th straight month.

In the U.S., comparable sales for the quarter ended Sept. 30, comparable sales decreased 3.3% as fewer customers came in to eat and competitors ramped up their efforts. More alarmingly for McDonald’s, its operating profit for the region fell 10% as efforts to fix its ongoing, growing U.S. problems fell flat.

So Thompson said the company’s new U.S. president,Mike Andres, is flattening the unit’s organizational structure to make it nimbler and to let restaurants respond more quickly to local needs. He is also updating its marketing to emphasize food quality, and simplifying the menu to reduce wait times.

Comparable sales in Europe—McDonald’s biggest market—were weak, falling 1.4%, more than expected, as the ongoing crisis in Russia and Ukraine hurt sales. Over in Asia, a big hit to business in China and Japan results led comparable sales to fall 9.9%

Thompson has a big job ahead of him, so he laid out some broad principles and initiatives he hopes will fix McDonald’s globally. Those include investing in updating its image and service, along with new technology to update McDonald’s for today, make better use of tech to facilitate ordering, payment and mobile offers (it will accept Apple Pay) and in what sounds like a hint of potential job cuts, a review of the company structure to determine how much fat there is and whether money can be redeployed to its digital strategy.

“McDonald’s third quarter results reflect a significant decline versus a year ago,” Thompson, CEO since 2012, said. “By all measures our performance fell short of our expectations.”

This article originally appeared on Fortune.com

TIME Companies

Apple’s Growth Stays Strong in Latest Quarter

People walk past the Apple logo at the Apple Store at Grand Central Terminal in New York.
People walk past the Apple logo at the Apple Store at Grand Central Terminal in New York City Timothy A. Clary—AFP/Getty Images

Tech-giant reports beat analyst expectations with strong sales of iPhones and Mac computers. Sales of iPads fell, however

Apple on Monday reported a 12.7% bump in fourth-quarter profit, sending shares up nearly 1% in after-hours trading to just above the $100 mark. Here are the most important points from the tech giant’s latest earnings report.

What you need to know: Apple crushed analyst predictions by posting sales of $42.1 billion in the fourth quarter, which was more than a 12% increase over the same period last year. The company reported $8.5 billion in profits, or $1.43 per share, which is an improvement of $1 billion year-over-year. Fortune’s Philip Elmer-DeWitt recently polled a few dozen analysts for their Apple quarterly predictions and every last one said to expect a record quarter for the company, including average sales and earnings bumps of at least 7.1% and 11.9%, respectively.

In July, Apple’s revenues grew by 6%, but came in just below analysts’ expectations despite a 12.6% bump in Q3 iPhone sales.

The big number: Apple said it sold 39.3 million iPhones during the fourth quarter, which beat analysts’ estimates and represents an 11.6% increase over the 35.2 million sold during the same quarter last year. The fourth quarter included September’s unveiling of Apple’s new iPhone 6 and iPhone 6 Plus and the company said in a press release announcing the fourth-quarter results that strong iPhone and Mac sales helped drive a record month of September.

Mac sales jumped 25% year-over-year, to 5.5 million, while iPad sales declined for the third quarter in a row. Apple, which just revealed its new iPad Air 2 last week at a product-launch event, said Monday that its iPad sales were down more than 7%, to 12.3 million, in the fourth quarter.

What you might have missed: Apple’s strong fourth-quarter results came after the company’s mobile-payments system, Apple Pay, went live on Monday along with an update to its mobile operating system, now known as iOS 8.1. The launch came on the heels of Apple announcing it had signed up another 500 banks to support the Apple Pay platform. Apple Pay is expected to compete with PayPal and other online systems. The entire mobile-payments market had more than 11 million users last year and could grow to have more than 36 million users in 2016, according to eMarketer.

This article originally appeared on Fortune.com

TIME India

India’s Modi Exploits Oil Price Collapse to End Diesel Subsidies

India Fuel Reforms
A man fills diesel in a car at a fuel station in New Delhi, India, Oct. 19, 2014. India freed diesel prices from government control Sunday while raising natural gas tariffs in the biggest-yet reform by Prime Minister Narendra Modi's government, as it aims to boost the country's economy and overhaul its energy sector. Tsering Topgyal—AP

Move comes as victories in key state elections gives Modi’s government more freedom to make bold reforms

India’s government said it will stop fixing the price of diesel, in a move that will cut the bill for fuel subsidies and send a strong signal of its commitment to liberalize the economy and attract investment.

The move is one of the most radical to date by the government of Prime Minister Narendra Modi, and will mollify critics who say he has been too timid since taking power in Asia’s second-largest economy. It will also add substance to the barnstorming speeches he has made from Tokyo to Madison Square Gardens in recent weeks in an effort to drum up investment in his country.

“Henceforth—like petrol—the price of diesel will be linked to the market,” Finance Minister Arun Jaitley said after the cabinet approved the measure Saturday . “Whatever the cost involved, that is what consumer will have to pay.”

Two factors appeared to have influenced the timing of the move: firstly, the collapse in the price of crude oil to its lowest level in over three years means there will be no painful shock for the millions of consumers–most importantly, small-scale farmers–who depend on cheap fuel. Secondly, the politically bold move came as it became clear that Modi’s BJP party would win important regional elections in the states of Maharahstra and Haryana (home to the megacities of Mumbai and Delhi, respectively).

Indian commentators noted that the two elections had limited Modi’s freedom of action somewhat, but said that, with no more big votes due for a year, there is now a clear window to press ahead with the kind of reforms he promised. Under India’s constitution, central government has to share many powers with state government, so having his party in control of two of India’s most important state legislatures (albeit most likely in a coalition in Haryana) is an important advantage for Modi.

The diesel subsidy, which cost over $10 billion in the last fiscal year, had been one of the defining symbols of excessive government interference in the economy, discouraging both foreign and domestic investment in India’s fuel sector. That’s important because India is dependent on imported fuel, having few resources of its own. Energy security is one of Modi’s top priorities.

In the same vein, the government also raised the regulated price of natural gas at the weekend, hoping to encourage more interest in auctions for oil and gas exploration blocks that the government is aiming to hold.

Modi isn’t the only Asian leader who needs to wean his country off fuel subsidies. A similar challenge facesIndonesia’s new president Joko Widodo, who was finally sworn into office Monday after a contested election victory in the summer. Indonesia is lagging India in this area, as subsidies hold down prices not only for diesel but also for gasoline.

Widodo has the tougher challenge: unlike Modi, his opponents have majority control of parliament. And unlike India, gasoline prices are still fixed at below market levels, meaning that liberalization will hit middle-class urban voters.

TIME stocks

Stocks End Volatile Week With a Big Rebound, Dow Jumps 263 Points

Traders are seen reflected on an electronic display as they work on the floor of the New York Stock Exchange on October 17, 2014 in New York.
Traders are seen reflected on an electronic display as they work on the floor of the New York Stock Exchange on October 17, 2014 in New York. JEWEL SAMAD—AFP/Getty Images

Investors got a much-needed break from a week of upheaval as markets climbed on good economic reports and strong earnings

After all the upheavals in the stocks this week, the markets closed Friday up sharply to recover some of their recent losses.

The Dow Jones Industrial Average broke a six-day losing streak by finishing up more than 263 points, or 1.6%, to 16,380. The Nasdaq composite was up 41 points, or 1%, to 4,258 while the S&P 500 was up 24 points, or 1.3%, to 1,887. However, even with Friday’s gains, the S&P 500 was down more than 1% for the week, handing the index its fourth straight week of losses, it’s longest such streak since 2011.

A handful of reports showing U.S. economic growth helped to fuel the rebound. A Commerce Department report showed that U.S. home construction grew by 8.6% from August to September while another report showed that U.S. consumer had hit its highest point since July 2007.

Investors were also reassured by positive earnings on Friday from bellwether companies like General Electric and Morgan Stanley. GE’s shares were up 2.8% on strong quarterly results while Morgan Stanley gained 2.4%.

Every company in the Dow 30 was up for the day, led by a 3.3% bump for UnitedHealth Group.

European stocks also showed improvement to end the week with London’s FTSE 100 rising by 1.9% and Germany’s DAX getting a 3.1% boost.

However, despite Friday’s gains, the three major indices all remain down for the week after several days of losses. October has been a rough month for the U.S. markets, which have been hit hard by continuing concerns about economic growth slowing down in Europe and Asia along with fears of the growing global Ebola epidemic. Investors in the U.S. have also shown ongoing concern over the Federal Reserve’s plans to eventually raise interest rates sometime next year.

On Wednesday, for example, the market underwent multiple wild swings throughout trading – during which the Dow fell almost 460 points in one point before recovering somewhat to finish down by just over 170 points.

So far this month, the Dow Jones has dropped by nearly 4% while the S&P 500 has fallen 4.3% and the Nasdaq is down more than 5%.

This article originally appeared on Fortune.com

TIME People

Fed’s Yellen Says She’s Concerned by Rising Economic Inequality

U.S. Federal Reserve Chair Janet Yellen speaks at the Federal Reserve Bank of Boston Economic Conference on Inequality of Economic Opportunity in Boston on Oct. 17, 2014.
U.S. Federal Reserve Chair Janet Yellen speaks at the Federal Reserve Bank of Boston Economic Conference on Inequality of Economic Opportunity in Boston on Oct. 17, 2014. Brian Snyder—Reuters

In a speech, Fed chief says Americans should ask whether it is compatible with their values

Federal Reserve Chair Janet Yellen said on Friday the growth of economic inequality in the United States “greatly” concerns her, and suggested in a detailed speech on the politically charged issue that Americans should ask whether it was compatible with their values.

“The extent of and continuing increase in inequality in the United States greatly concern me,” Yellen told a conference on inequality at the Boston branch of the central bank.

“It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” she told economists, professors and community workers.

“I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

The speech, heavy on data compiled by the Fed and by other sources, continued Yellen’s focus on the trials of America’s unemployed and underemployed.

With global financial markets rebounding from days of frenzied selling, Yellen did not comment on the volatility or on monetary policy.

Income disparity between the richest Americans and the rest has risen in the wake of the 2007-2009 recession. An extensive Fed study published last month suggests wealth and income is concentrated not just within the top 1 percent, as some analyses have suggested, but actually among a slightly broader slice of the ultra-rich: the top 3 percent.

Yellen, who raised concerns about inequality well before taking the Fed’s reins earlier this year, acknowledged that a rebound in house prices over the last two years has restored much wealth to those at the bottom.

But she cited several troubling contributors to a lack of equality of opportunity, including the expensive cost of higher education faced by the young.

In another threat to economic opportunity, she said a slowdown in business formation may depress productivity.

The speech comes after a report found that the top 113 earners among staff at the Fed’s Washington headquarters make an average of $246,506 per year, excluding bonuses and other benefits — more than Yellen and nearly double the normal top government rate.

Meanwhile, the Fed was center stage this week in a volatile market selloff not seen in years.

Global stocks jumped on Friday, following a U.S. rebound on Thursday when St. Louis Fed President James Bullard said the central bank should keep buying bonds longer than planned.

Eric Rosengren, head of the Boston Fed, said on Friday however that recent market turbulence and signs of global economic weakness haven’t yet dimmed U.S. economic forecasts and won’t likely change the Fed’s policy path unless they do.

This article originally appeared on Fortune.com

TIME Markets

European Stocks Tumble as Market Rollercoaster Ride Continues

Dow Jones Industrial Average Drops Over 200 Points
An information board on the floor of the New York Stock Exchange shows stocks dropping on Oct. 1, 2014 in New York City. Andrew Burton—Getty Images

‘Dead-cat bounce’ fails to hold, despite better-than-expected data from China

European stock markets turned lower again after a bright opening, as the prospect of deflation in the Eurozone returned to center stage.

Consumer prices rose only 0.3% in the year to September, Eurostat said, reinforcing fears that neither the European Central Bank nor Eurozone governments are doing enough to stop the 18-country currency union from falling into a deflationary spiral.

The figures instantly wiped out the gains of a “dead-cat bounce” at the market opening, which followed the general rout on Wall Street Wednesday.

U.S. stocks were down sharply again Thursday morning, but were lately working off their early losses.

In what was a roller-coaster ride for the U.S. markets on Wednesday, the Dow Jones index fell over 300 points at the open, and then recovered, only to dip about 460 points at one point in afternoon trading, finally closing down more than 173 points, or 1.1%.

By mid-morning in Europe, the U.K.’s FTSE 100 and Germany’s DAX were both down 2.0%, while yields on ‘safe haven’ government bonds such as Germany plummeted to new all-time lows. Oil prices also stayed close to three-year lows at just over $80 a barrel.

Data out of China earlier had given a modest degree of encouragement, suggesting that the world’s second-largest economy isn’t about to fall off a cliff. But it didn’t take long for fear to reassert itself at the expense of greed.

Analysts at Bank 0f America Merrill Lynch said in a note to clients that the markets have started to price in another recession and/or “a financial event” such as the collapse of a major market player. They said that markets were only likely to stop panicking “when policymakers start panicking.”

The day had started with the modest hope that there could be some progress in de-escalating the Ukraine crisis when Russian President Vladimir Putin meets his Ukrainian counterpart Petro Poroshenko at a summit meeting in Milan, Italy later in the day. Putin is also due to meet German Chancellor Angela Merkel and other European leaders there.

In a sign that investors may be starting again to bet on the Eurozone breaking up, bond yields have risen far more sharply in those countries where the combination of high debt and low growth is most acute–particularly Greece (and, to a lesser extent, Portugal and Italy).

Greece’s 10-year borrowing costs have risen by a shocking 2.43 percentage points since the end of last week, as markets signal they’ll refuse to finance a government that wants to dispense with the safety net of Eurozone and International Monetary Fund funding.

The tone in Asian markets earlier Thursday had been equally rough, with the Japanese Nikkei falling over 2% to a six-month low in the pull of Wall Street. Tokyo’s mood was still clouded by data on Wednesday showing that industrial output had fallen nearly 2% in August, adding to fears that a big rise in the country’s sales tax in May had after all been too much for the economy to withstand.

However, figures from China later underlined that the economy is only slowing moderately, rather than facing a “hard landing”.

Figures released by the People’s Bank of China showed that new loans by the official banking sector rose to 857 billion yuan ($140 billion) from 702 billion yuan in August, comfortably beating consensus forecasts of 750 billion.

However, there was no euphoria, as other elements of the PBoC’s figures were less reassuring. Foreign reserves fell, suggesting that capital has been leaving the country amid falling investment by foreign companies.

Moreover, aggregate financing–a measure of lending that takes in the vast ‘shadow banking’ system which has more exposure the country’s shaky real estate sector–stayed at historically low levels. Analysts at ANZ said that, overall, the figures suggest “shadow banking activities have been diminishing amid property weakness, and the genuine demand for credits still remains soft.”

This article originally appeared on Fortune.com

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