Markets continue to trade in more or less churning action as earnings reports hit the wires and gurus find out if they guessed right or wrong. Microsoft reports earnings after the bell today. For most of the day the Dow was down triple digits on trade worries but rallied into the close to finish 3 points higher at 27,222 on heavier volume. This was a constructive day in that is was a reversal higher from an intraday low.
Netflix reported disappointing earnings which sent shares tumbling about 11%. The firm was expected to report about 5 million new subscribers globally but came in at about half that. In the US, Netflix was expected to add 100k subscribers but instead lost 300k subscribers. Ouch! Revenue for the quarter was up 26% while net income was lower by 29% which is not good for a company sporting a PE ratio of 145. Part of the issue is increased competition from Disney which launched its own streaming service compete with more movie content along with things like…..sports!
IBM reported earnings which showed rising cloud computing revenue offsetting falling legacy revenue. Overall revenue was down 4% and net income gained 3%. Shares of Big Blue were higher as the company was optimistic on forward business prospects. IBM had recently purchased Red Hat Software and also announced it inked a $2 billion contract to provide cloud services to AT&T which means that Ma Bell and Big Blue are in cahoots.
US natural gas pipeline biggie Kinder Morgan reported mixed results with a 6% revenue drop and a 5% increase in net income. The company saw higher volumes of natural gas but had challenges in the CO2, refined product and oil segments of its business. KMI continues to build pipelines in the Permian Basin and is also working on an LNG export facility which it hopes to have up and running later this year.