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Textron Profit Beats on Higher Aircraft Sales

April 17, 2019 / WIL BALDWIN

FILE PHOTO: Cessna employee works on an engine of a Cessna business jet at the assembly line in their manufacturing plant in Wichita, Kansas March 12, 2013. REUTERS/Jeff Tuttle

(Reuters) – Cessna business jet maker Textron Inc reported a higher-than-expected quarterly profit on Wednesday, benefiting from robust aircraft deliveries, sending its share up 1.6 percent in early trading.

Business jet demand has been growing steadily in the United States, the world’s biggest market, on the back of an expanding economy and rising corporate profits.

Textron said it delivered 44 jets in the first quarter ended March 30, up from 36 last year. Commercial turboprop deliveries rose to 44 aircraft from 29 last year.

“We think this quarter has pretty much ticked all the boxes for Textron. Aviation growth has continued, with a positive book to bill in the quarter,” Vertical Research Partners analyst Robert Stallard said.

Textron has faced delays in final certification of its newest super mid-size Longitude jet, which is expected to contribute a ‘big chunk’ to the company’s revenue growth in 2019.

Analysts have warned that the certification delays from the U.S. Federal Aviation Administration due to partial government shutdown followed by the regulator’s intense focus on re-certifying Boeing Co’s 737 MAX aircraft might impact sales growth at the company in the short.

Though the aviation business was among the drivers for a profit beat, Textron’s revenue missed Wall Street estimates, hurt by lower sales in its systems unit, which makes tactical armored patrol vehicles.

Textron re-affirmed its full-year profit outlook range of $3.55 to $3.75 per share.

Sales in the company’s aviation business, its biggest, rose 12.3 percent to $1.13 billion in the first quarter, while sales in the systems unit fell more than 20 percent to $307 million.

The company’s net income fell to $179 million in the quarter ended March 30 from $189 million a year earlier.

Textron earned 76 cents per share, above analysts’ average estimate of 68 cents, according to Refinitiv data.

Textron’s revenue fell 5.7 percent to $3.11 billion, below analysts’ estimates of $3.17 billion.

(Reporting by Divya R and Ankit Ajmera in Bengaluru; Editing by Maju Samuel)

Tesla Shares Skid After First-Quarter Deliveries Disappoint

April 5, 2019 / WIL BALDWIN

FILE PHOTO: A Tesla logo is seen at a groundbreaking ceremony of Tesla Shanghai Gigafactory in Shanghai, China January 7, 2019. REUTERS/Aly Song/File Photo

(Reuters) – Tesla Inc shares fell more than 8 percent on Thursday after a bigger-than-expected drop in first-quarter deliveries, led by waning demand for its luxury Model S and X vehicles, added to worries about the electric carmaker’s finances.

At least four Wall Street brokerages cut their price targets on the company’s stock, citing concerns about profitability and revenue after deliveries of the higher-priced luxury cars more than halved compared to the fourth quarter.

RBC analysts called Model S/X deliveries “very disappointing” and estimated the numbers would translate to a more than $1 billion shortfall in revenue compared to previous estimates.

The company had already flagged in February that it expected to post a first-quarter loss as it launched its cheaper $35,000 version of the Model 3 sedan.

In the quarter, Tesla delivered 50,900 Model 3s, the linchpin of its growth strategy, falling short of analysts’ estimates of 58,900, according to IBES data from Refinitiv.

Tesla also pinned the blame for the first-quarter delivery drop to longer transit times, which analysts said could impact cash flow, even though the company claimed it had sufficient cash on hand.

The company said it had delivered only half of the quarter’s numbers by March 21, with 10,600 vehicles still in transit at the end of the quarter. By comparison, only 1,900 vehicles were in transit at the end of the fourth quarter.

Cowen and Co analysts said that the delivery and transit details suggested “cash was likely dangerously low” after Tesla paid off a $920 million convertible bond obligation in cash in the beginning of March.

Still, there were no new downgrades by brokerages on Tesla shares. The company is currently rated “buy” or higher by 12 of the 30 brokerages covering the company, 7 “hold” and 11 “sell” or lower.

The carmaker reaffirmed its forecast to deliver between 360,000 and 400,000 vehicles this year, and said U.S. orders for the new Model 3 outpaced what the company was able to fulfill in the quarter.

Nord LB analyst Frank Schwope called the numbers “more shocking than disappointing” and said there remain doubts whether Tesla could deliver 400,000 cars this year.

Lawyers for Tesla chief Elon Musk will argue on Thursday that he did not violate a fraud settlement with the U.S. Securities and Exchange Commission and should not be held in contempt, the latest twist in a high-profile battle between the billionaire and the government.

Musk’s fight with the SEC, to play out in a Manhattan federal court hearing, has raised investor worries that it could lead to restrictions on his activities or even his removal from Tesla, while distracting him at a pivotal point in the company’s expansion.

(Reporting by Vibhuti Sharma in Bengaluru; Editing by Shounak Dasgupta)

Amazon to Close All U.S. Pop-Up Stores

March 6, 2019 / WIL BALDWIN

March 6 (Reuters) – Amazon.com Inc will close all of its U.S. pop-up stores and focus instead on opening more book stores, a company spokesperson said on Wednesday.

The company’s shares closed down 1.4 percent at $1,668.95.

Amazon’s all 87 pop-up stores in the United States are expected to close by the end of April, the Wall Street Journal reported https://www.wsj.com/articles/amazon-to-shut-all-u-s-pop-up-stores-as-it-rethinks-physical-retail-strategy-11551902178 earlier on Wednesday, citing some of the employees at the stores.

The news underscores how the online retailer is still working out its brick-and-mortar strategy.

Pop-up stores for years helped Amazon showcase novel products like its voice-controlled Echo speakers, but the company is now able to market those products and more at its larger chain of Whole Foods stores, acquired in 2017, and cashierless Amazon Go stores, which opened to the public last year.

The online retail giant will also open more “4-star stores” – stores that sell items rated 4-stars or higher by Amazon customers, the spokesperson added.

“After much review, we came to the decision to discontinue our pop-up kiosk program, and are instead expanding Amazon Books and Amazon 4-star, where we provide a more comprehensive customer experience and broader selection.”

Shares of bookseller Barnes & Noble Inc closed down 8.9 percent at $5.84.

(Reporting by Uday Sampath in Bengaluru; Editing by Maju Samuel)

FAA Investigates Southwest over baggage weight discrepancies

February 18, 2019 / WIL BALDWIN

(Reuters) – The U.S. Federal Aviation Administration is investigating Southwest Airlines Co for widespread failure to accurately track the combined weight of checked bags loaded onto its jets, the Wall Street Journal reported on Monday.

The U.S. aviation safety agency’s year-long civil probe found systemic and significant mistakes with employee calculations and luggage-loading practices, resulting in potential discrepancies when pilots compute takeoff weights, the Journal reported, citing government officials and internal agency documents

The FAA has not decided whether to impose fines or any other punishment, the report cited people familiar with the investigation as saying.

The inaccuracies ranged from a few dozen pounds to more than 1,000 pounds (450 kg) in excess of what the paperwork indicated, sparking disputes between the company and some agency inspectors about potential safety consequences, the report said.

A company spokeswoman said there was an open Letter of Investigation (LOI), which is a common mechanism for the FAA to document and share safety interests or concerns with an airline.

The airline has not been issued fines and faces no enforcement action regarding its weight and balance program, Southwest spokeswoman Brandy King said.

“In this case, the LOI addresses an issue that Southwest voluntarily reported to the FAA last year and since that time, Southwest has implemented controls to address weight and balance program concerns, and shared those measures with the FAA,” King said.

The FAA said in a statement it initiated a probe against Southwest in 2018 regarding weight and balance performance data.

“Since that time, the FAA has directed the development of a comprehensive solution to the methods and processes used by Southwest Airlines to determine this performance data,” it said in the statement. “The FAA will not close its investigation until it is satisfied that Southwest’s corrective actions are consistent and sustained.”

(Reporting by Rama Venkat in Bengaluru; Editing by Bernadette Baum and Peter Cooney)

Musk Not Worried About Tesla Model 3 Demand

January 31, 2019 / WIL BALDWIN

(Reuters) – Shares in Tesla Inc fell nearly 4 percent on Thursday as Wall Street analysts following up on its fourth-quarter results questioned underlying demand for its crucial Model 3 sedan and the electric car maker’s ability to make inroads in China.

Tesla reported quarterly profit below analysts’ expectations on Wednesday and surprised investors by announcing that Chief Financial Officer Deepak Ahuja, 56, would leave and handover the reins to 34-year-old Zach Kirkhorn, its vice president of finance.

JPMorgan analysts were among those warning that Ahuja’s leaving deprived the company of long automotive industry experience and relative stability in a company which has seen a steady stream of senior staff come and go since 2016.

Analysts were also concerned by Tesla’s indication that it is only making cars for China and Europe right now, and expects a gap of about 10,000 vehicles between production and deliveries due to vehicles in transit at the end of the first quarter.

“This is a strong indication that demand in the U.S. for both the mid-range and long-range Model 3 versions has largely been exhausted, and the company is still working through the estimated ~6.8k of unsold Model 3 inventory,” Cowen analysts said.

Still, the fall in Tesla shares was less than that suggested by initial pricing after Wednesday’s results and also far smaller than some of the swings in one of the past year’s most volatile Wall Street stocks.

The company, which is striving to stabilise production and deliver consistent profit, ended the quarter with $4.3 billion in cash and said it had “sufficient cash on hand” to pay a $920 million convertible bond maturing in March.

Of the 31 brokerages covering Tesla, 10 have a “buy” or higher rating, 10 “hold” and 11 have a “sell” or lower rating and their median price target is 327.50.

Only four changed their price targets on the stock on Thursday, with two raises and two cuts. Wedbush cut its price target by $50 to $390 (297 pounds).

While Tesla is pumping money into a Shanghai factory, which it hopes to bring on line around the end of this year with a target of producing 500,000 vehicles a year, several analysts questioned whether that investment will pay off.

“Tesla serves the purpose of a ‘stalking horse’ to the fast growing domestic Chinese EV industry, but we believe it has limited to zero terminal value in a region where a number of domestic champions should emerge,” Morgan Stanley analysts said.

(Reporting by Sonam Rai and Jasmine I S in Bengaluru; Editing by Anil D’Silva)

Image from http://www.tesla.com

Textron Profit Beats on Higher Aircraft Sales

Tesla Shares Skid After First-Quarter Deliveries Disappoint

Amazon to Close All U.S. Pop-Up Stores

FAA Investigates Southwest over baggage weight discrepancies

Musk Not Worried About Tesla Model 3 Demand

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