Hey Snackers,
Mid-summer move: Rent the Oscar Mayer Wienermobile on Airbnb. Now a thing.
Stocks barely budged up Thursday as investors digested the final big bank earnings report from Morgan Stanley.
Microsoft sets a profit record ($13B), so we'll update you on what it actually does
Amazon <> Microsoft... They're cross-lake tech rivals in Seattle. Amazon set sales records earlier with Prime Day — Now it's Bill Gates' baby's turn: Microsoft profits spiked 49% to a record high last quarter. And it remains the world's only $1T (trillion with a "T") publicly-traded company as the stock rose 3% after the report.
It's thanks to the "profit triangle"... You probably notice Microsoft products at work. But it's so much more than that. Here's how its $33.7B of revenue last quarter was almost perfectly divided 33/33/33:
- 👔 Productivity & business processing: This includes Office (Word, Excel, PowerPoint), messaging (Outlook and Teams), and LinkedIn (acquired in 2016).
- ☁️ Intelligent Cloud: Companies that have apps or websites (that's most of 'em) need processing power. These days they rent it via servers from tech companies like Microsoft, Amazon, or Google.
- 🎮 Personal computing: Regular folk don't rent processing power as much as companies do. We buy computers, tablets, and an Xbox or two.
Microsoft owned chapter 1 and chapter 3 of computers... but completely missed chapter 2.
- Personal Computers. Paul Allen and Bill Gates founded Microsoft and quickly dominated computers (with Windows) and TPS reports (with Word/Excel/PowerPoint).
- Mobile. Bill Gates confessed his biggest business mistake: letting Google become the default operating system for smartphones with Android.
- Cloud. Under new CEO Satya Nadella, Microsoft is #1 again thanks to growth in cloud services and subscription products, like Office 365.
iHeartMedia falls on 1st day of trading (and rebound from bankruptcy)
It's the comeback tour... For nearly a decade, America's biggest radio broadcaster was drowning in corporate debt. Then bankruptcy. Now iHeartMedia re-debuted on the Nasdaq stock exchange yesterday (the stock slipped 3.5% on day 1). The return was kindly made possible by a bankruptcy judge who expunged (great word) $10B of those debts. Prior to that, it was paying almost $2B per year (1/3 of revenue) in interest payments alone.
iHeartMedia is Jackson Maine (from A Star Is Born) — and podcasts are Ally... iHeart's radio reaches 275M users monthly in the US — that's almost all Americans over the age of 6, which iHeart boldly claims is a vaster reach than Google. But a driver of its comeback is podcasts:
- Users who pod spend more time listening overall than just-music listeners do.
- And iHeartMedia is the #2 pod publisher behind only NPR, with shows like "Stuff You Should Know" and "The Ron Burgundy Show".
"Companionship" is now the real star... Talk radio shows and podcasts (which the CEO calls "radio on demand") foster relationships with listeners. IHeartMedia even dropped the term "companionship" 21 times in its S-1, the critical filing document for companies that want to trade on stock exchanges like Nasdaq or the NYSE. Engaged listeners are more valuable for the company that's already reaching nearly the entire country.
Skechers ignored fashion trends, and its stock still popped 12%
Dress for the earnings report you want... not the one you have. Skechers is channeling it. Your go-to middle school shoe option's overall sales jumped 11% last quarter. But it's basically become a foreign company — nearly 60% of those sales were overseas, where sales surged about 20%.
Influencers not wanted... Skechers' US growth strategy may be less extensive as it expands abroad, but it's got one theme: C-list celebs who can side hustle as shoe ambassadors.
- Ex-QB Tony Romo is the new face of Skechers' feet (his wife is in on the deal too), headlining the brand's 2-year turnaround.
- He's flanked by retired childhood sports icons like Joe Montana and David Ortiz who still try to feel active.
- Golfers are playing too — Brooke Henderson and Russell Knox are repping Skechers golf spikes.
Avoiding trends is Skechers' trend... With more than 3,000 style options, the company is focused on giving a little something to everyone — not the next "it" thing that one friend of yours always has first. That mass-market strategy is captured by this single quote from the CFO: “Our core demographic isn’t the teenage fashionista.” You do you.
What else we’re Snackin’
- Fetch: Chewy's first earnings report since last month's IPO — sales jumped 45%
- Retry: Slack is resetting thousands of passwords because of a 2015 hack
- Re-run: Toys 'R' Us is coming back with 2 smaller stores after all 700 had closed (ETA is just before the holidays)
- Fined: Qualcomm falls 2% on word it'll be fined $270M by the EU for 'predatory pricing'
- Out: WeWork's co-founder has apparently cashed out $700M of his WeWork stock
- Rise: Morgan Stanley finishes off bank earnings strong with profits that beat expectations
Friday
- Earnings from American Express
- The Consumer Sentiment survey
Disclosure: An author of this Snacks owns shares of Amazon.
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