U.S. equities were a mixed bag on Tuesday, book-ended by a 0.6% decline in consumer staples, but a 0.5% rise in healthcare stocks. The end result was middling performance for the major indices, including a 0.1% gain for the S&P 500 Index, a 0.2% improvement for the Dow Jones Industrial Average and a 0.1% return for the Nasdaq Composite.
Tuesday night was filled with reports from some of tech’s heavy hitters, resulting in several big moves heading into Wednesday morning’s trade. Today, investors should have their eyes on Apple Inc. (NASDAQ:AAPL), FireEye Inc (NASDAQ:FEYE) and Twilio Inc (NYSE:TWLO).
Here’s what you should know heading into the trading day:
Apple Inc. (AAPL)
Apple’s race to all-time highs ran into a wall Tuesday night after the company reported a disappointing fiscal second quarter.
The company’s iPhone sales slowed to just 50.8 million units over the period, which was below the 51.2 million sold in the year-ago quarter.
“We’re seeing what we believe to be a pause in purchases on iPhone, which we believe are due to the earlier and much more frequent reports about future iPhones,” Tim Cook, Apple’s CEO, said on a conference call Tuesday.
iPad sales were weaker, too, by 13% to 9 million units. As a result of those two product declines, revenues of $52.9 billion — which still were up more than 4% year-over-year — came in weaker than expected. Analysts were hoping for sales of $53.02 billion.
Earnings were a bright spot for Apple, as the company’s $2.10 per share in profits was well above the $2.02 bar set by Wall Street. Services pleased, too, growing 18% annually to $7.04 billion — and more importantly, only declining 2% sequentially despite a 39% sequential drop in iPhone sales.
AAPL stock is off more than 1% this morning — a disappointment, to be sure. But on the upside, there’s not too much worry from a technical perspective.
Shares should still open above all of their major moving averages, and the dip should help to work off Apple stock’s slightly overbought Relative Strength Index (RSI) reading.
Still, the most important work is yet to come, and investors should continue to monitor the reaction in AAPL for the next few days, as there’s plenty of room below should shares begin to break down.
Twilio Inc (TWLO)
TWLO shareholders are no doubt envious of Apple’s fate. Twilio is being gouged Wednesday morning after the company put up a mixed report last night.
Twilio’s headline numbers were good, with a 4-cent adjusted loss beating expectations for a 6-cent loss, and revenues of $87.4 million well above the consensus mark of $83.6 million.
However, CEO Jeff Lawson said in the earnings call that Uber, one of Twilio’s biggest customers at 12% of revenues, will cut down on its use of Twilio this year. That explained weak revenue guidance of $356 to $362 million for the full year ($370 million expected), as well as $85.5 million to $87.5 million for Q2 ($87 million expected).
Customer concentration has long been a worry point for investors, with Uber and WhatsApp comprising large chunks of Twilio’s business.
TWLO stock is set to open Wednesday’s trade 30% lower to just above the $23 mark, which would represent all-time lows.
FireEye Inc (FEYE)
If there was a positive note in Tuesday night’s slew of reports, it was FEYE, which is up by double digits thanks to epic quarterly results.
The company’s loss of $83 million (48 cents per share) for its fiscal first quarter filtered down to an adjusted loss of just 9 cents per share. That was far narrower than the 26 cents per share that FactSet-polled analysts believed the company would bleed.
Revenues cralwed ahead 3% to $173.7 million, but that was far better than Wall Street’s expectations for a slight dip to $163.7 million. Guidance of a 10- to 14-cent loss and revenues between $173 million and $179 million also pleased the Street.
FireEye expects billings of $155 million to $175 million in the second quarter, while reaching $745 million to $775 million for the full year, ahead of expectations of $734.5 million.
Among things FireEye shareholders should be thankful for is its new product Helix, which is finally putting the company on the right track after more than a year of steady declines.
CEO Kevin Mandia has performed well since taking over as boss a year ago, noting in a telephone interview that “how we do business was so deeply rooted in that appliance mind-set, and we have to continue to evolve.”
He admitted that he didn’t understand this element of the job when first taking over.
FEYE shares should open Wednesday’s trading 15% higher to prices last seen in November.
