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Home / Business / The Dow Jones Pandemic Fear Index fell by 850 points; Microsoft stock sank after strong earnings; Boeing announced layoffs

The Dow Jones Pandemic Fear Index fell by 850 points; Microsoft stock sank after strong earnings; Boeing announced layoffs



In terms of confirmed cases, the COVID-19 pandemic has set records in the United States and Europe. Both Germany and France are taking new measures to slow down the spread, and some cities and states in the United States may not be behind. According to Johns Hopkins University, about 73,000 COVID-19 cases were recorded in the United States on Tuesday.

Concerns about the economic shutdown caused by the winter COVID-19 wave caused major stock indexes to plummet on Wednesday. Dow Jones Industrial Average (DJ Index: ^ DJI) It was down 2.95% at 1:55 pm Eastern Time. Microsoft (Nasdaq stock code: MSFT) with Boeing (New York Stock Exchange: BA) Their quarterly report exceeded analyst expectations, but for both stocks, the market rout was insurmountable.

A cloud.

Image source: Getty Images.

Microsoft’s strong earnings cannot be compared with the market decline

There is little evidence in Microsoft’s first-quarter report that the epidemic has caused any practical problems for the tech giants. Total revenue soared by 12% to $37.2 billion, while earnings per share increased by 32% to $1.82. These figures exceeded analysts’ expectations of 1.42 billion US dollars and 0.28 US dollars, respectively.

Driven by strong growth in Office, LinkedIn and Dynamics, productivity and business process revenues increased by 11% to $12.3 billion. Thanks to a 47% increase in sales of the Azure cloud platform, smart cloud revenue soared by 20% to $13 billion; thanks to strong growth in game and hardware sales, personal computing revenue increased by 6% to $11.8 billion.

Despite the extraordinary performance, as of Wednesday afternoon, Microsoft’s stock price has fallen about 4.1%. The guidance issued by the company on the earnings call may be related to this. The biggest mistake is in the field of personal computing: Microsoft expects revenue in this area in the second quarter to be between 13.2 billion and 13.6 billion, which is lower than analysts’ expectations of 14 billion. Windows revenue is expected to decline by a high single-digit percentage.

In the cloud business, Microsoft expects that as consumption-based revenue continues to grow strongly, the growth rate of revenue per user will slow. Driven by weak trading software sales and poor year-on-year growth, local server business is expected to decline by single-digit percentages.

Microsoft’s results are not too annoying, its guidance is only moderately negative. However, after this year’s epic rebound, the stock is priced close to perfection. Today, the stock’s price-to-earnings ratio is about 33 times the price-to-earnings ratio, and by early September, the stock price was about 40 times the price-to-earnings ratio. For this company with a market value of several trillion dollars, this is the highest valuation in history.

After falling on Wednesday, Microsoft’s stock price has risen about 30% so far this year.

Boeing layoffs

Boeing’s third-quarter performance greatly exceeded analysts’ expectations, but like Microsoft, the stock plummeted during the stock market downturn. Boeing reported revenue of US$14.1 billion, a 29% year-on-year decrease and US$140 million higher than analysts’ expectations. The adjusted earnings per share was a loss of $1.39, which was a full $0.55 higher than analysts’ expectations. As of Wednesday afternoon, Boeing’s stock price had fallen 3.3%.

Boeing delivered 28 commercial aircraft in the quarter, a decrease of 55% year-on-year. The COVID-19 pandemic played the biggest role in the decline, but the company was also hit by quality issues and rework related to the 787.

Boeing expects that the aviation industry will return to the passenger traffic level of 2019 in about three years, and believes that the long-term growth trend will resume in the next few years. In response to the expected lower demand in the coming years, Boeing is consolidating its 787 production and plans to reduce 7,000 jobs.

Including Wednesday’s decline, Boeing’s share price has fallen by about 54% since the beginning of the year.




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