Another day, another batch of mixed messages. The ISM Index peeled back to 49.4, breaking the critical 50 level denoting the difference between economic growth and economic contraction, while the Challenger Job Cuts report said employers are planning 22% fewer layoffs than planned for the prior month. Unsure if the news was collectively good or bad, investors opted to remain on the fence. The S&P 500 ended the session at 2170.86, down just a hair from Wednesday’s close.
Not every stock escaped Thursday unscathed, though. Tesla Motors Inc (NASDAQ:TSLA), Campbell Soup Company (NYSE:CPB) and Salesforce.com, inc. (NYSE:CRM) all found big trouble.
Here’s the deal.
Salesforce.com, inc. (CRM)
Customer-database service provider Salesforce.com may have topped last quarter’s earnings and sales expectations, but disappointing billings and guidance for the third quarter were lackluster, sending CRM down 4.4% for the day.
Last quarter — the company’s second fiscal quarter — salesforce.com earned 24 cents per share on $2.04 billion in sales, versus estimates for of profit of 22 cents per share of CRM and revenue of $2.0 billion.
Billings were up 15% on a year-over-year basis, but analysts were calling for billings growth of at least 17%. Worse, the billings growth rate may get uglier before it gets better. The currently underway third quarter and the company’s third quarter guidance left CRM owners wanting. Salesforce.com thinks it’s going to earn between 20 and 21 cents per share on revenue ranging from $2.11 to $2.12 billion, versus analyst estimates for a profit of 24 cents and $2.12 billion in sales.
Campbell Soup Company (CPB)
Despite the moniker, Campbell Soup Company isn’t just a soup company anymore … though after its fiscal Q4 numbers were posted following Wednesday’s close, CPB shareholders were likely wishing Campbell Soup Company was just in the soup business. Its venture into fresh produce isn’t going so well.
For its recently completed fourth quarter, Campbell Soup earned an operating profit of 46 cents per share on $1.69 billion in revenue. Sales were in line with estimates, and mostly in line year-ago levels. The bottom line, however, fell short of the expected 50 cents per share of CPB, and were down 6% from year-ago levels.
Carrots were a key culprit in Q4’s struggle. The so-called “Fresh” division, which sells a variety of produce and packaged-produce goods, saw a 5% dip in sales as supply issues materialized. Campbell Soup booked an impairment charge of $141 million to reflect the struggles it has met following its 2012 purchase of Bolthouse Farms, which got it into the produce game in the first place.
CPB ended the session down 6%.
Tesla Motors Inc (TSLA)
Finally, the planned pairing of Tesla Motors and SolarCity Corp (NASDAQ:SCTY) — already widely hated by many TSLA investors — got even uglier today once the market had a chance to read the fine print of the official SEC filing detailing the intended acquisition.
As it turns out, SolarCity may be even deeper in financial quicksand than Tesla Motors CEO Elon Musk let on when the merger plans were unveiled. Before Tesla tendered an offer, 15 other institutional investors declined the opportunity to invest privately in the solar power players. Tesla Motors also divulged it will need to raise more funds by the end of this year to fund its own operation in addition to keeping cash-burning SolarCity afloat.
Oppenheimer analyst Colin Rusch summed it up by saying:
“We believe SCTY needs the acquisition to close as soon as possible noting that liquidity concerns have been on investors minds since 2H:15 as the company completed smaller than expect ABS transactions. We continue to be very skeptical of this deal as a prudent investment of TSLA resources but do expect it to close given the extent of mutual shareholders.”
TSLA finished the session off to the tune of 5.3%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
