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APRIL 20, 2023

AT&T EXPERIENCES DECLINES

AT&T’s earnings report for the first quarter showed a decline in revenue and earnings compared to the previous year. The most concerning news for investors was the slowdown in subscriber growth for post-paid phone plans, causing the company’s stock to decrease in premarket trading on Thursday. Although earnings of 60 cents per share slightly exceeded expectations, revenue fell just short of the predicted $30.2 billion at $30.1 billion.

IBM’S REPORT BRINGS MIXED RESULTS FOR REVENUE AND EARNINGS

IBM announced its first-quarter 2023 revenue of $14.25 billion, indicating a 4.4% increase from the prior year – below Wall Street’s projected revenue of $14.35 billion. Nonetheless, IBM reported that its earnings per share (EPS) surpassed expectations at $1.36 instead of $1.26.

Despite missing its revenue projection, IBM’s latest revenue forecast is aligned with analysts’ expectations, giving rise to cautious optimism for the unpredictable economy. The company expects modest growth in sales between 3-5% throughout 2023 and it has affirmed a free cash flow forecast of $10.5 billion.

TESLA MEETS EARNINGS EXPECTATIONS, BUT MUSK EXPRESSES CONCERN FOR THE FUTURE

Tesla’s quarterly results met Wall Street’s expectations, with automotive revenue increasing by 18% year-over-year. However, earnings declined by over 20%. This fall was blamed on several factors, particularly on higher material and logistics costs, lower revenue from environmental credits, and underutilization of new factories. CEO Elon Musk expressed concerns about economic uncertainty, saying he can see “stormy weather” ahead, and he indicated that the company will continue cutting prices to increase demand.

ECONOMIC UNCERTAINTY TRIGGERS GLOBAL EQUITIES DECLINE AND BOND MARKET SURGE

After New York Federal Reserve President John Williams warned of a potential deterioration in credit conditions caused by the March banking sector crisis, global equities declined and bonds experienced a surge. The announcement caused U.S. stock futures to drop, and it created a negative outlook among traders. Also, the recent release of Fed Beige Book survey highlighted a slowdown in the U.S. economy and a decrease in credit access, and it revealed that banks are tightening lending standards in some districts.

INVESTORS PUSH CONSUMER FIRMS TO RETHINK PRICE HIKES

Consumer goods companies including P&G, Unilever and Nestle, are being adviced to ease price increases of their products to avoid losing market share and hurting margin growth. These companies have been raising prices due to soaring costs of commodities, energy, and other factors worsened by the Ukraine war, which has led to a global cost-of-living crisis. Reports suggest that increasing prices has led to lost market share for some companies, declining sales volumes, and weak consumer demand. Therefore, to remain competitive and preserve margins, experts suggest that companies consider lowering prices while exploring alternative cost-cutting measures.


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