SATURDAY, MAY 2, 2015
B3
MARKET PERFORMANCE
LinkedIn fails to meet estimates, shares dip 27% SAN FRANCISCO: LinkedIn’s shares plunged as much as 27 per cent after the company delivered quarterly revenue that missed analysts’ estimates for the first time, shaking confidence in a historically stable business plan. The professional-networking website also forecast sales that missed projections for the second quarter and cut its guidance for annual revenue, citing the strong US dollar and slower-than-predicted growth. “This is an extraordinary miss for a company that has by and large avoided any major blowups since going public,” said Paul Sweeney, an analyst at Bloomberg Intelligence. Since its debut as a public company in 2011, LinkedIn has steadily surpassed estimates for sales until now. The company, with its mix of job-related tools for consumers and businesses, has been expanding its offerings every year under Chief Executive Officer Jeff Weiner, through acquisitions and rapid hiring. Those efforts aren’t translating to as much revenue growth as expected, Sweeney said. Second-quarter revenue will be $670 million to $675 million, the company said on Thursday. Analysts had predicted $718.3 million, on average, according to data compiled by Bloomberg. LinkedIn also trimmed its forecast for annual revenue to $2.9 billion, from $2.93 billion to $2.95 billion. Growth was also hurt by currency-exchange rates, as LinkedIn generated 39 per cent of its revenue from outside the US. The Bloomberg Dollar Spot Index, a measure of the US currency against 10 major peers, gained 6.2 per cent in the first quarter. — Bloomberg News
Sony operating profit set to quadruple to $2.7b this year trouble if it makes a downward revision as it’s in the process of rebuilding trust.” Sony forecast a 17 per cent surge in revenue from devices, the unit that makes image sensors, and a 16 per cent increase in the pictures division. New releases this year include “Spectre,” the latest instalment in the James Bond franchise. The earnings revival comes after Hirai sold Sony’s personalcomputer business, pruned its smartphone lineup and placed the TV manufacturing business into a separate structure to boost performance after years of losses. It also started selling the PlayStation 4 console in China to tap the world’s biggest game market.
That forecast given on Thursday is about 20 per cent less than analysts projected as Sony tries to shake its yearslong reputation for disappointing investors
TOKYO: Kazuo Hirai, leading Sony on a comeback after years of losses, is giving himself plenty of room to deliver more good news in the future. The chief executive officer says operating profit will more than quadruple to 320 billion yen ($2.7 billion) this fiscal year. That forecast given on Thursday is about 20 per cent less than analysts projected as Sony tries to shake its years-long reputation for disappointing investors. Cutting costs Hirai is cutting costs and focusing on profitability in businesses where Sony has an advantage. That approach, coupled with Chief Financial Officer Kenichiro Yoshida’s emphasis on account-
Sony Chief Executive Officer Kazuo Hirai. — Bloomberg file picture
ability, has helped boost the stock 103 per cent in the past year. “We have revised our forecasts down 15 times in the past seven years, and that’s not something we want to repeat,” Yoshida said in Tokyo. “The profit forecast takes into account a considerable risk from foreign exchange fluctuations.” The outlook for the current year includes 35 billion yen in restructuring charges and a negative impact from foreign exchange of 150 billion yen. Sales will be 7.9 trillion yen this
year, Sony said. Net income will reach 140 billion yen, marking the first annual profit in three years. Analysts projected revenue of 8.2 trillion yen and profit of 189.9 billion yen. ‘Minimum’ targets “The targets announced are the minimum line, and the point is how much can Sony increase them during the year,” said Yasuaki Kogure, chief investment officer at SBI Asset Management Co. in Tokyo. “Sony will be in
ENERGY INDUSTRY
TV profit The TV making unit had a profit of 8.3 billion yen in the year ended March — its first in 11 years. The business will post earnings of five billion yen in the current year, Sony said. Hirai forecast in February that operating profit will climb to 500 billion yen in the year ending March 2018. That’s the highest since 1998, when the company featured cathode-ray tube TVs and one of its biggest music sellers was the “Titanic” soundtrack. Sony forecast a 40 billion-yen operating profit in the games division this year. The PS4 has sold almost twice as many units as Microsoft’s Xbox One, according to VGChartz, making it the most successful of the latest generation consoles. The company is strengthening its game streaming service, purchasing the patents of OnLive. PlayStation Now is avail-
able in North America for streaming content on Bravia TVs and other Sony devices. Smartphone revamp “The target of operating profit is conservative,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “Investors expected too much so Sony is trying to lower their expectations.” Sony stopped developing new smartphones for China and culled the Xperia lineup as it struggled to compete with Apple, Samsung Electronics and Chinese vendors. The company took a 180 billionyen charge in the business last fiscal year. The company is moving its mobile-phone operations from its Tokyo headquarters to save on rent, according to a memo obtained by Bloomberg. The company boosted investment in semiconductors by 150 billion yen this year to tap surging demand for the sensors that power cameras in Apple and Samsung smartphones. It’s also shifting 220 employees involved in developing and producing chips for gaming consoles to the sensor business and other operations. Sony said it will restore its dividend and plans to pay out 10 yen per share in the first half of the year. In September, the company scrapped its annual dividend for the first time since listing in 1958. — Bloomberg News
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FISCAL SECOND-QUARTER
Tesla forays into energy storage with Visa profit declines batteries for utilities, firms, homes LOS ANGELES: Tesla Motors on Thursday unveiled Tesla Energy — storage systems or batteries for homes, companies and utilities that will expand its business beyond electric vehicles and tap into a fast-growing area of the energy industry. Chief Executive Elon Musk said the company’s goal was to “fundamentally change the way the world uses energy on an extreme scale.” He introduced the products to a crowd of business partners and journalists at a Tesla facility near Los Angeles. In Tesla’s view, such storage systems could become part of a fossil-fuel-free lifestyle in which people can have solar panels on their roof generating electricity to power their home and recharge their electric car batteries. The smallest battery unveiled on Thursday, known as Powerwall, is housed in a six-inch-wide container that is meant to be hung
Tesla Chief Executive Elon Musk. — Bloomberg News
inside a garage or on the outside wall of a house. At $3,500 for a 10kWh model, excluding inverter and installation prices, the Powerwall can be used for backup power or to store solar energy. Tesla’s lead installation partner for the home battery will be SolarCity, the solar installer backed
by Musk. The company will also partner with many others, Musk said. Tesla has several hundred batteries installed with SolarCity systems in California already. The growth of those projects has been helped by a subsidy from California’s public utility regulator. Utilities have also been seeking out energy storage to help manage
increasing amounts of renewable energy on the grid. To address that market, Musk unveiled what he called the “power pack,” a 100 kWh battery block that is meant to help smooth out power from intermittent solar and wind energy production or add energy to the grid quickly when demand levels are high. Tesla already has several utility-scale batteries deployed on the grid in California, which requires its biggest utilities to source large amounts of energy storage. Musk told reporters Tesla expected to have a low but growing gross margin in battery products in the fourth quarter of this year and added that battery products would be “materially profitable” some time next year. Tesla will initially manufacture the batteries at its automobile factory in California but will move production to its planned “gigafactory” in Nevada next year. — Reuters
NEW YORK: Visa, the world’s biggest payments network, said profit fell three per cent on a strengthening US dollar and revised its full-year forecast for earnings-per-share growth. The stock slid in late trading. Net income for the fiscal secondquarter ended March 31 dropped three per cent to $1.55 billion, or 63 cents a share, from $1.6 billion, or 63 cents, a year earlier, adjusted for a stock split, the Foster City, California-based company said on Thursday in a statement. The average estimate of 34 analysts surveyed by Bloomberg was 62 cents a share. Visa, led by CEO Charlie Scharf, 50, is investing in new technology aimed at accelerating mobile and other forms of digital payments and striking deals with merchants as consumers demand more rewards. Spending on the network increased even as consumers spent less at the pump amid lower gas prices in the US. “While the negative impacts from the strengthening of the US dollar and lower gasoline prices
– Bloomberg file picture
continued to exert pressure on revenue growth, our results and volume trends have remained strong,” Scharf said in the statement. Visa revised its EPS growth forecast for the fiscal year ending on September 30 to the “lowend of the mid-teens range,” from “mid-teens” on January 29. Visa shares dropped two per cent to $64.72 at 4:35pm in New York. The stock climbed 0.8 per cent this year through the close of regular trading, compared with the 4.7 per cent advance of MasterCard, the second-biggest payments network. Visa announced a 4-for-1 stock split in January that took effect March 19. — Bloomberg News