Category: Company News

Amazon fell 4 percent Friday morning after the company announced on a call with investors it would likely increase investment in 2019 and raised concerns about new regulation in India.

Amazon’s stock initially popped after hours on its fourth quarter 2018 earnings report Thursday. The stock took a steep turn during the company’s call with analysts when Amazon CFO Brian Olsavsky said Amazon plans to increase investments this year after scaling back capital expenditures and hiring the year prior.

The company’s market value hovered around $800 billion Friday morning, and briefly fell below $800 billion in early trading. At one point last year, the stock hit $1 trillion in market value during intraday trading.

In notes following the report, analysts expressed concern about increased expenditures and a new law in India that will soon come into effect preventing foreign online retailers from selling products through affiliated companies. Amazon’s roadblocks in India have contributed to slowing international sales growth and may have influenced the company’s light guidance for the first quarter of 2019. Amazon expects revenue for Q1 between $56 billion and $60 billion, slightly below the $60.8 billion consensus estimated by FactSet.

“There is much uncertainty as to what the impact of the government rule change is going to have on the e-commerce sector there,” Olsavsky said on the call. “Our main issue and our main concern is trying to minimize the impact to our customers and sellers in India.”

Analysts largely seemed confident in the stock despite slightly lowering their price targets.

J.P. Morgan’s Doug Anmuth lowered his price target, writing, “Uncertainty in India, along w/a higher 4Q base, takes early 2019 revenue acceleration off the table… But we still expect AMZN to grow revenue 18% FXN for the year and operating income by 30%. And we want AMZN to invest into long-term growth opportunities…”

Deutsche Bank’s Lloyd Walmsley, on the other hand, raised his price target and said, “We think Amazon is ultimately going to substantially expand its physical footprint and push further into healthcare and shipping/logistics, opening up its addressable markets further. Notwithstanding the volatility in the shares, we think valuations remain compelling..”

-CNBC’s Eugene Kim contributed to this report.

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Watch: Amazon beat on earnings and revenues—here’s what three experts are saying about the stock now

Amazon entered bear market territory on Friday, falling at least 20 percent below its 52-week/intraday all-time high of $2,050.50. The stock was trading around $1,640 in the afternoon. The stock had previously entered bear market territory in December. Shares fell more than 4 percent Friday morning after the company announced on a call with investors that it would likely increase investment in 2019 and raised concerns about new regulation in India.

Amazon’s stock initially popped in after-hours trading on its fourth-quarter 2018 earnings report Thursday. The stock took a steep turn during the company’s call with analysts when Amazon CFO Brian Olsavsky said Amazon plans to increase investments this year after scaling back capital expenditures and hiring the year prior.

The company’s market value hovered around $800 billion Friday morning, and briefly fell below $800 billion in early trading. At one point last year, the stock hit $1 trillion in market value during intraday trading.

In notes following the report, analysts expressed concern about increased expenditures and a new law in India that will soon come into effect preventing foreign online retailers from selling products through affiliated companies. Amazon’s roadblocks in India have contributed to slowing international sales growth and may have influenced the company’s light guidance for the first quarter of 2019. Amazon expects revenue for Q1 between $56 billion and $60 billion, slightly below the $60.8 billion consensus estimated by FactSet.

“There is much uncertainty as to what the impact of the government rule change is going to have on the e-commerce sector there,” Olsavsky said on the call. “Our main issue and our main concern is trying to minimize the impact to our customers and sellers in India.”

Analysts largely seemed confident in the stock despite slightly lowering their price targets.

J.P. Morgan’s Doug Anmuth reduced his price target, writing, “Uncertainty in India, along w/a higher 4Q base, takes early 2019 revenue acceleration off the table. … But we still expect AMZN to grow revenue 18% FXN for the year and operating income by 30%. And we want AMZN to invest into long-term growth opportunities.”

Deutsche Bank’s Lloyd Walmsley, on the other hand, raised his price target and said, “We think Amazon is ultimately going to substantially expand its physical footprint and push further into healthcare and shipping/logistics, opening up its addressable markets further. Notwithstanding the volatility in the shares, we think valuations remain compelling..”

— CNBC’s Eugene Kim contributed to this report.

Subscribe to CNBC on YouTube.

Watch: Amazon beat on earnings and revenues—here’s what three experts are saying about the stock now

WASHINGTON — President Donald Trump said Friday that the United States is ready to withdraw from a crucial nuclear weapons treaty with Russia on Saturday, a move that has sparked concerns of a budding arms race between the world’s two greatest nuclear powers.

The announcement comes a day after Russia and the United States said that discussions to save the Intermediate-Range Nuclear Forces, or INF, Treaty, failed.

“Tomorrow, the United States will suspend its obligations under the INF Treaty and begin the process of withdrawing … which will be completed in six months unless Russia comes back into compliance by destroying all of its violating missiles, launchers, and associated equipment,” Trump said in a statement Friday.

“We cannot be the only country in the world unilaterally bound by this treaty, or any other. We will move forward with developing our own military response options and will work with NATO and our other allies and partners to deny Russia any military advantage from its unlawful conduct,” Trump added.

The INF treaty, signed in 1987 by President Ronald Reagan and Soviet leader Mikhail Gorbachev, prohibited the development and deployment of ground-launched nuclear missiles with ranges of 310 miles to 3,420 miles. The agreement forced each country to dismantle more than 2,500 missiles and kept nuclear-tipped cruise missiles off the European continent for three decades.

In October, Trump said the U.S. would withdraw from the Cold War-era pact and sent national security advisor John Bolton to personally deliver the decision to the Kremlin. Russia, Trump says, has violated the arms agreement by building and fielding the banned weapons “for many years.”

Two months later, Secretary of State Mike Pompeo cited material evidence that Russia has quietly added nuclear-tipped missiles that are currently banned by the INF treaty to its colossal arsenal. Russia, Pompeo said, has developed “multiple battalions of the SSC-8 missiles,” a move that falls outside the arms agreement.

“Its range makes it a direct menace to Europe,” he said after a meeting with his NATO counterparts.

Pompeo then offered Russia an ultimatum: come into compliance of the agreement within 60 days or the United States will exit the weapons pact.

NATO also called on Moscow to “return urgently to full and verifiable compliance.” “It is now up to Russia to preserve the INF Treaty,” wrote NATO foreign ministers in a joint statement.

Russian President Vladimir Putin upped the ante a day later by saying he is prepared to develop nuclear-tipped missiles if the U.S. withdraws from the INF Treaty.

“Now it seems our American partners believe that the situation has changed so much that the United States must also have such a weapon. What’s our response? It’s simple: in that case we will also do this,” Putin said.

Read more: The U.S. and Russia are threatening to make more weapons. Here’s how many nukes each nation has

And so, on Saturday, the U.S. will begin to withdraw from the INF Treaty, a process that will last six months but could be reversed if Russia came back into compliance.

“We stand ready to engage with Russia on arms control negotiations that meet these criteria, and, importantly, once that is done, develop, perhaps for the first time ever, an outstanding relationship on economic, trade, political, and military levels,” Trump said adding that “this would be a fantastic thing” for Russia, the U.S. and the world.

2018 was the worst year ever for smartphone shipments, according to the latest figures from research firm IDC. It means Apple isn’t the only company fighting to keep people interested in buying new phones every year.

IDC said 1.4 billion smartphones were sold in 2018, marking a 4.1 percent decline for the year in an industry that’s typically used to rapid growth. 1.4 billion phones were shipped in 2014, which means the industry seems to have regressed about 5 years. Shipments shrank 4.9 percent for the fourth quarter of 2018, IDC said.

Apple said earlier this week that iPhone revenues were 15 percent lower than last year. CEO Tim Cook said the strengthened dollar, an economic slowdown in China, lower subsidies on phones and its battery replacement program contributed to the drop in sales.

Samsung phone shipments declined 5.5 percent and Apple’s slipped 11.5 percent during the quarter, IDC said. But firms Huawei, which was able to capitalize on China, saw a 33.6 percent bump in shipments. Chinese vendors Oppo and Xiaomi also increased shipments, IDC said.

“Globally the smartphone market is a mess right now,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers in the report.

Reith said that consumers are using phones for longer, which means that replacement cycles are lengthening. He also said consumers are frustrated with rising prices. Economic uncertainty and increased penetration in large markets are also slowing shipments, Reith said.

“China, which accounts for roughly 30 percent of the world’s smartphone consumption, had an even worse 2018 than the previous year with volumes down just over 10 percent. High inventory continues to be a challenge across the market as is consumer spending on devices, which has been down overall. At the same time the top 4 brands, all of which are Chinese – Huawei, OPPO, vivo, and Xiaomi – grew their share of the China market to roughly 78 percent, up from 66 percent in 2017.”

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The January jobs report showed more than 100,000 jobs were created last month than economists expected. Beats of that magnitude usually spark a lot of optimism about the economy, driving stocks higher over the subsequent days and months and benefiting energy, industrial and banking stocks the most, history shows.

CNBC analysis using Kensho looked at all the times in the last 20 years when the jobs report exceeded estimates by 100K or more and what happens to stocks and certain sectors the day of the report, as well as one week and three months later.

• S&P 500 jumps 0.6 percent on average
• Best stocks: Industrials (+1.1 percent avg. gain), Energy (+0.9 percent), Technology (+0.8 percent)

This fits with the current reaction as stock futures surge in reaction to Friday’s better-than-expected report.

• S&P 500 adds 0.6 percent on average
• Best stocks: Industrials (+1.5 percent avg. gain), Energy (+1.2 percent), Technology (+0.9 percent)

• S&P 500 adds 1.8 percent
• Best stocks: Energy (+6.9 percent) Materials (+4.2 percent avg. gain), Industrials (+3.4 percent), Financials (+3.2 percent)

This historical data via Kensho fits with the fundamental case. A much stronger-than-expected jobs report signals the economy is doing better than we thought, so investors pile into economically-sensitive stocks like energy and industrial shares. Bank stocks do well as rates jump, like they were on Friday.

Apple on Friday apologized for a massive FaceTime flaw that allowed folks to eavesdrop on other people. It said a fix that will re-enable group FaceTime is now scheduled to be released next week.

Word about the bug went viral this week after people noticed that it was possible to listen in on, or even see someone, during a group FaceTime call, even if the person receiving the call didn’t pick up.

Apple credited the family of a 14-year-old boy who helped discover the bug and report it to Apple, though the company didn’t appear to react immediately to his report. Apple’s statement says the company is “committed to improving the process by which we receive and escalate” reports of bugs.

The company disabled group FaceTime as a temporary fix but said that a more permanent solution will roll out in a software update next week. Apple had originally said that a fix was coming this week.

Here’s the company’s full apology and statement:

We have fixed the Group FaceTime security bug on Apple’s servers and we will issue a software update to re-enable the feature for users next week. We thank the Thompson family for reporting the bug. We sincerely apologize to our customers who were affected and all who were concerned about this security issue. We appreciate everyone’s patience as we complete this process.

We want to assure our customers that as soon as our engineering team became aware of the details necessary to reproduce the bug, they quickly disabled Group FaceTime and began work on the fix. We are committed to improving the process by which we receive and escalate these reports, in order to get them to the right people as fast as possible. We take the security of our products extremely seriously and we are committed to continuing to earn the trust Apple customers place in us.

The Trump administration on Friday called on Congress to pass its proposed ban on “backdoor deals” that pharmaceutical companies cut with middlemen who get preferred status for their drugs in Medicare’s prescription drug plans.

The proposal, unveiled Thursday, would pass an estimated $29 billion in rebates paid to so-called pharmacy benefits managers to consumers. Drug manufacturers pay PBMs the rebates for getting their drugs covered by Medicare’s Part D prescription plan. Instead, PBMs would get a flat fee for including drugs on their plans. The rule would also create a new so-called safe harbor for drug discounts to be passed on to patients at the pharmacy counter.

Health and Human Services Secretary Alex Azar also urged Congress to extend the rule to employer-sponsored and other private insurance plans.

“Today’s rebate system is set up in the shadows, to serve entrenched interests: drug companies who set these prices so high, and the pharmacy benefit managers who receive billions of dollars in rebates without patients ever knowing where the money goes,” Azar said in a statement. “Congress has an opportunity to follow through on their calls for transparency, too, by passing our proposal into law immediately and extending it into the commercial drug market.”

Azar, who is scheduled to deliver the remarks at the Bipartisan Policy Center in Washington on Friday, said the Trump administration plans to end “the era of backdoor deals in the drug industry.”

Futures prices for shares of the parent companies of the nation’s largest PBMs plunged. The nation’s four largest PBMs are now all integrated with health insurance firms, following the recent completion of CVS Health’s merger with Aetna and Cigna‘s acquisition of Express Scripts. UnitedHealth Group owns the OptumRX PBM and Anthem will be launching its own unit IngenioRx in the second quarter.

(Chart showing after-hours trading action Thursday)

Cigna’s shares were down 5 percent in premarket trading Friday while CVS and UnitedHealth were down 2.6 percent and 1.6 percent, respectively.

The Pharmaceutical Research and Manufacturers of America, or PhRMA, the industry’s main trade group, applauded the administration’s proposals. The health insurance lobby blasted the proposal, saying the administration “should go back to the drawing board” and take aim directly at high prices set by drugmakers.

House Speaker Nancy Pelosi criticized the plan, warning the new rules could force insurers to raise premiums and the total out-of-pocket cost for Medicare beneficiaries.

Democrats have vowed to lower prescription drug costs as well but have focused on the pharmaceutical industry, which sells their drugs at higher prices in the U.S. than abroad. Spending on prescription drugs in the U.S. increased to $333.4 billion in 2017, according to the latest data from the Centers for Medicare and Medicaid Services.

Earlier this month, House Oversight Committee Chairman Elijah Cummings, D-Md., said he sent letters to 12 drugmakers seeking detailed information and documents about the companies’ pricing practices. House Democrats also sent letters to Eli Lilly, Novo Nordisk and Sanofi on Wednesday requesting information on insulin prices and the obstacles to providing more affordable medication.

“For years, drug companies have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs while recording windfall profits,” Cummings said in a statement. The committee’s goal is to “determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds, and what steps can be taken to reduce prescription drug prices.”

The proposal, if adopted, would take a while before consumers see a difference. The legislation would have to be debated and passed by both houses of Congress, and federal regulations implementing the rules would likely take months to write.

The proposed rules would apply only to Medicare and Medicaid plans. But senior administration officials say the new rules could ultimately influence the way private sector drug plans are negotiated.