Cloud stocks Okta and Cloudera surge on better-than-expected quarterly results

Todd McKinnon

Anjali Sundaram | CNBC
Todd McKinnon

Cloud stocks continue to be a bright spot on the Nasdaq as two more surged on earnings beats.

Okta shares spiked 10.4 percent on Thursday after the cloud software company reported a narrower loss than analysts’ expected and raised its revenue guidance for the year. Cloudera, a machine learning and analytics platform for the cloud, finished the day up 12.3 percent after reporting a 25 percent revenue increase compared to last year, at $118.2 million.

Okta’s stock ended the day at $66.95, bringing its gains for the year to 161 percent. Since going public in April 2017, Okta has been one of the best performers among a growing number of cloud-based software providers that are almost all outperforming the broader market. Cloudera, on the other hand, is still down more than 21 percent for the year.

Okta’s earnings report follows better-than-expected results last week from cloud companies Salesforce and Workday. Okta, which sells identity management software, also said it was cash flow positive for the first time.

Okta lost 4 cents per share in the quarter, excluding some items, compared to the 11-cent average analyst estimate, according to Refinitiv. Revenue climbed 58 percent to $105.6 million, also topping estimates and the company’s own guidance.

For the full year of fiscal 2019, Okta said it now expects revenue of $391 million to $392 million, an increase over its prior expectation for sales for $372 million to $375 million.

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Indian IT firm Infosys continues push into US

Vivek Prakash | Bloomberg | Getty Images

Add Infosys to a growing list of foreign companies continuing to invest in U.S. jobs amid growing calls from the U.S. administration for tougher immigration policies.

Infosys on Wednesday opened a large technology hub in Hartford, Connecticut, where it plans to employ 1,000 Americans by 2022.

This is Infosys’ third hub in the U.S., following openings in Indiana and North Carolina over the last year. The plan is to open two more hubs in Arizona and Texas.

President Ravi Kumar told CNBC that Infosys has made 7,000 new hires across the U.S. with plans to reach 10,000 by the end of 2019.

“We are creating new talent that does not exist in the market,” Kumar said to CNBC by phone.

Infosys is not disclosing how much it is investing in its new innovation centers, but it said it is putting as much as $20,000 into training each undergraduate and new hire in technology skills.

“Hiring here [in the U.S.] and training here has been the magic formula,” said Kumar.

Infosys’ expansion comes as corporate executives are dealing with a shortage of highly skilled talent in the U.S. that has pushed major firms to look overseas.

The announcement also coincides with the U.S. administration’s tougher stance on immigration. In the past two years, Indian IT/outsourcing firms such as Infosys have been criticized by immigration hawks in Washington for taking advantage of the H-1B visa program.

Data from 2016 shows that Indians accounted for over 70 percent of H-1B visas.

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Fiat Chrysler plans to open factory in Detroit to build new three-row, Jeep Grand Cherokee: Sources

Fiat Chrysler Automobiles assembly workers build 2019 Ram pickup trucks at the FCA Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018. 

Rebecca Cook | Reuters
Fiat Chrysler Automobiles assembly workers build 2019 Ram pickup trucks at the FCA Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.

Fiat Chrysler, riding a wave of strong truck and SUV sales, is planning to build a new final assembly plant in Detroit even as other American automakers scale back operations in the U.S., according to people familiar with the plan.

The assembly plant, an old Mack II Engine Plant that closed in 2012, will build a new three-row, Jeep Grand Cherokee SUV starting in 2020 as the automaker moves to keep up with strong demand for utility vehicles, the people said. A spokesperson for Fiat Chrysler would not comment on the report, nor confirm the automaker’s plans.

The move comes as the industry faces pressure from President Donald Trump to keep manufacturing jobs in the U.S. and stands in stark contrast to the recent decision by General Motors to stop production and idle five plants in North America including four in the United States.

Daimler CEO arrives at White House for auto meeting

Daimler CEO arrives at White House for auto meeting   11:43 AM ET Tue, 4 Dec 2018 | 02:01

GM has come under fire after announcing last week that it plans to cut 14,000 jobs in the U.S. and Canada, citing a weakening economy, the escalating trade war and a desire to reposition itself as a smaller, more nimble company. Ford is also scaling back, saying last week that it planned to cut a shift at two of its U.S. plants in an attempt to avoid more onerous layoffs.

Detroit will lose two GM facilities altogether. Both were performing well under capacity and contributing to a dismal capacity utilization rate of just 76 percent across the United States, far below Fiat Chrysler’s rate of 90 percent.

Fiat Chrysler’s plants are running at close to capacity due to continued strong demand for trucks and SUV’s. Overall, Fiat Chrysler’s sales in the U.S. are up 8 percent this year, easily outpacing the industry less than one percent according to the market research firm Autodata.

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Gunmaker American Outdoor Brands jumps more than 13% after earnings beat

 

A visitor holding a revolver by US manufacturer Smith & Wesson (S&W) at the IWA OutdoorClassics trade show for hunting, shooting sports, equipment for outdoor activities and for civilian and official security applications.

Daniel Karmann | picture alliance | Getty Images
A visitor holding a revolver by US manufacturer Smith & Wesson (S&W) at the IWA OutdoorClassics trade show for hunting, shooting sports, equipment for outdoor activities and for civilian and official security applications.

American Outdoor Brands surged after the company reported second-quarter earnings and revenue that beat analyst expectations on Thursday.

Here’s how the company did compared with Wall Street estimates:

  • EPS: 20 cents vs. 14 cents forecast by Refinitiv
  • Revenue: $161.7 million vs. $154.1 million forecast by Refinitiv

In the year-ago quarter, the firearm maker posted adjusted earnings of 11 cents a share on revenue of $148.4 million.

Formerly known as Smith & Wesson, shares of the company leaped as much as 14 percent in after-hours trade.

President and CEO James Debney said the company’s results were driven by strength in both its firearms and outdoor products and accessories segments.

“Sales growth occurred in both our Hunting & Shooting product categories, as well as our Cutlery & Tool product categories, and came from a variety of retailers, particularly our online retailers,” Debney said in a statement.

The gunmaker’s fiscal third-quarter outlook that was above Wall Street projections.

For its fiscal third quarter, American Outdoor says it expects adjusted earnings per share between 9 cents and 13 cents, better than the Refinitiv estimate for earnings of 10 cents a share. The company forecasts fiscal third-quarter revenue between $155 million and $165 million, above the $158 million expected by analysts polled by Refinitiv.

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Americans shelled out $10,739 per person on health care last year, but growth in spending slows

A doctor examines a patient at the UCSF Women's Health Center in San Francisco, California. 

Justin Sullivan | Getty Images
A doctor examines a patient at the UCSF Women’s Health Center in San Francisco, California.

Americans shelled out $3.5 trillion on health care last year, or $10,739 per person, but the increase in spending slowed to a pace not seen since 2013 — before Congress expanded the Affordable Care Act.

Spending in 2017 grew at a rate of 3.9 percent, a marked slowdown after rising 4.8 percent in 2016 and 5.8 percent in 2015, federal officials said, citing new data released Thursday from the Centers for Medicare and Medicaid Services.

“Prior to the coverage expansions and temporary high growth in prescription drug spending during that same period, health spending was growing at historically low rates,” the CMS said in a release. “In 2017, health care spending growth returned to these lower rates and the health spending share of GDP stabilized for the first time since 2013.”

The slowdown was seen in hospitals, medical services, private and public insurance and prescription drugs, federal health officials said. The exception was spending on Medicare, the government-run health insurance program for the elderly and Americans with disabilities, which remained flat for the year.

Private health insurance saw the highest total spending, increasing 4.2 percent to $1.2 trillion, in 2017. The lowest spending was on retail prescription drugs, which reached $333.4 billion in 2017, an increase of 0.4 percent.

The new data comes at a time when health-care groups are being pressured by federal health officials to alter the way they deliver care, which includes facilitating more cooperation between health-care providers, in an effort to reduce sky-high costs and improve overall health outcomes for Americans.

The Trump administration currently has several proposals that would offer lower out-of-pocket costs for American consumers, which include changes to Medicare Part D and Part B.

When compared with the gross domestic product, total heath-care spending in the U.S. was flat last year, representing 17.9 percent of GDP. That’s the same as the prior year and the first year that number didn’t rise since 2013, according to Medicare.

The number of people with health insurance rose sharply in 2013, which coincided with the expansion of eligibility for Medicaid in many states as part of the Affordable Care Act. The expansion resulted in two years of higher spending. But by 2015, spending began to slow, officials said.

The health-care spending rate in 2017, which will appear in the January 2019 issue of “Health Affairs,” was similar to the average annual rate of 3.9 percent during most of Barack Obama’s term, from 2008 through 2013.

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Lululemon expands test loyalty program with $128 annual fee

A woman leaves the Lulilemon store at the Woodbury Common Premium Outlets Mall in Central Valley, NY. 

Gary Hershorn | Corbis News | Getty Images
A woman leaves the Lulilemon store at the Woodbury Common Premium Outlets Mall in Central Valley, NY.

Lululemon has been testing a loyalty program that charges members $128 a year for curated experiences and free shipping, among other benefits, the company announced Thursday.

The retailer told analysts on its third-quarter earnings call that its pilot program was so successful, it plans to expand the it to other test markets. Reviews from its Edmonton test market, the first region for the experiment, indicate customers would pay more — so the price might rise, executives said. Currently, the annual fee pays for a pair of pants or shorts, the ability to attend curated events, workout classes and free expedited shipping.

Its expansion into a loyalty program comes as retailers are looking to make shopping “experiential” in order to keep customers coming back. Brick-and-mortar stores have been looking beyond the products on their racks to make shopping in-store worth a trip to the mall.

“Guests are seeing value beyond just the product,” Lululemon’s COO Stuart Haselden said on the company’s quarterly conference call about early reviews of the program.

Lululemon is also facing greater competition in the athleisure market as it becomes more evident that the popularity of leggings is no fad.

Free shipping is one way retailers are looking to breed customer loyalty. Retail giants like Walmart and Target have been lowering their thresholds for free shipping to compete with Amazon, pushing smaller brands like Lululemon to do the same.

CEO Calvin McDonald said on the conference call that the program has so far received strong initial reviews from Edmonton members. He did not say where it plans to expand the program to.

Shares of the athleisure retailer dipped 3 percent in aftermarket trading after providing its outlook for the fourth quarter that disappointed investors. It beat on the top and bottom lines, however, posting adjusted earnings of 75 cents per share and $748 million in revenue.

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CEO of world’s largest restaurant company talks chasing growth with e-commerce technology

Yum CEO on chasing growth with e-commerce technology

Yum CEO on chasing growth with e-commerce technology   4 Hours Ago | 00:54

An unusual motif was strung throughout Wednesday’s Investor Day presentations at Yum Brands, the parent company of Pizza Hut, KFC and Taco Bell and the world’s biggest restaurant operator: “Proud, but dissatisfied.”

A 45,000-restaurant operation spread across 140 countries, Yum Brands has seen its properties gain momentum globally in recent years, culminating in the 2016 spin-off of Yum China. Its brands have gained popularity for their distinct messaging as well as high-profile partnerships with organizations like the National Football League.

But CEO Greg Creed, who sat down with CNBC’s Jim Cramer for an exclusive interview on “Mad Money,” still thinks the Louisville, Kentucky-based operation can do more.

“We have three global, iconic brands. We have incredible scale. We have this global diversity,” he said. “We’re proud of the brands, but we’re dissatisfied because we can get more growth.”

To do that, Yum’s management is using a three-word motto, not dissimilar to some of its brands’ catchier slogans, to promote its ideals: RED, short for “relevant, easy and distinct.”

Creed said that KFC, with its well-known mascot, red-and-white-striped buckets and “finger-lickin’ good” catchphrase, embodies distinction; Pizza Hut, with its newly lowered prices and focus on delivery, is growing in relevance; and Taco Bell sits at the cornerstone of “relevance and distinctiveness.”

But, he told Cramer, “we’re dissatisfied because not every brand is purely great at RED, and I think we can make some improvements.”

Those include getting rid of ingredients like artificial colors and flavors and trans fats; rolling out kiosks at every Taco Bell in the United States by the end of 2019; and Pizza Hut’s newly announced acquisition of QuikOrder, an online ordering platform that will help the chain close the gap with tech-savvy competitors like Domino’s.

While KFC and Taco Bell have seen notable growth in recent quarters — with KFC posting 14 straight quarters of same-store sales growth — Pizza Hut has remained a challenge for the company as the brand has struggled to attract new customers and take market share from its rivals.

“Look, I think that it’s fair to say that Pizza Hut is as easy to access as our competitors. We’ve just got to make it more distinctive,” Creed said. “We now own that e-commerce engine that’s going to drive between two and a half and three billion dollars’ worth of work. We’ve bought it in-house. We’ve got 75 incredibly talented people now joining Yum. We think we can unleash that power.”

But the QuikOrder purchase — made for a yet-undisclosed amount — is more of a foray into e-commerce technology than it is a snub to delivery giant GrubHub, in which Yum has a roughly $200 million stake.

“We love our GrubHub relationship. We think it’s a great for GrubHub and it’s great for Yum and our brands,” Creed said. “GrubHub was all about delivery. QuikOrder was all about an e-commerce platform.”

Shares of Yum Brands managed to withstand the stock market’s Thursday sell-off, rising 0.9 percent to $91.50 a share.

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