U.S. equities posted modest growth on Wednesday, led by a roughly 1% climb in basic materials but held back by a dip in energy stocks. The S&P 500 index and the Dow Jones Industrial Average each rose 0.1%, while the Nasdaq Composite gained 0.2% by the closing bell.
Thursday’s spotlight continues to hover over earnings performances, with Cisco Systems, Inc. (NASDAQ:CSCO) and L Brands Inc (NYSE:LB) making headlines this morning. However, also keep an eye on Alphabet Inc (NASDAQ:GOOGL), which made a play on AI.
Here’s what you should know:
Cisco Systems, Inc. (CSCO)
CSCO stock is dipping after the company’s lackluster fiscal fourth-quarter earnings report, out after Wednesday’s bell.
Excluding one-time items, the company earned 61 cents per share, which was just in line with analysts’ expectations. Net income of $2.42 billion was about 14% lower than the year-ago quarter.
Meanwhile, revenues declined by 4% to $12.1 billion, below Wall Street’s projections of $12.07 billion, marking the seventh consecutive quarter of sales declines. Cisco’s switching business — the company’s largest division — saw sales decline 9% year-over-year to $3.44 billion, below analyst estimates of $3.57 billion.
Guidance was nothing special either. Cisco expects first-quarter earnings of fiscal 2018 to be between 59 and 61 cents per share, while revenue will be 1% to 3% less than in the year-ago quarter. Wall Street expects earnings of 60 cents per share.
CSCO is off by about 2% in Thursday’s morning trade.
L Brands Inc (LB)
A lousy 2017 for LB stock holders will continue today after the company’s second-quarter report.
The owner of brands such as Victoria’s Secret and Bath & Body Works earned 48 cents per share in its second quarter, a year-over-year decline of nearly 45%. Adjustments kept per-share profits at 48 cents, which were 3 cents short of analyst estimates.
Revenues, meanwhile, declined 3.5% year-over-year to $2.8 billion, merely coming in line with expectations. The figure was weighed down by an 8% drop in comparable-store sales, partly due to Victoria’s Secret’s decision to no longer sell products in the swim and apparel categories.
Guidance also spooked Wall Street. L Brands is now looking for full-year earnings between $3 and $3.20 per share, lowered from a previous range of $3.10-$3.40. Third quarter earnings are expected to come in between 25 cents and 30 cents per share.
LB stock is down about 8% this morning, extending what already has been a roughly 40% decline year-to-date.
Alphabet Inc (GOOGL)
Artificial intelligence is becoming one of the tech sector’s top drivers, and GOOGL is now jumping further into the action.
Alphabet on Wednesday announced it has bought Belarus startup AIMatter, which boasts advanced image processing technologies. Its software development kit (SDK) “runs state-of-the-art deep learning models in real time directly on smartphones,” and it showcases this technology via a photo and video editing app called Fabby.
TechCrunch reported that it “had wind of the deal going down as far back as May,” but Wednesday marked the official notification, with both AIMatter and Alphabet confirming the news. However, no deal terms have been disclosed.
The Fabby app has been downloaded more than 2 million times.
GOOGL shares, which are essentially unchanged on the news, are up 19% year-to-date.
