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The Morning Ledger: Apple’s Revenue Disclosures Confound Analysts |
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Apple’s services segment, which includes app-store sales, mobile payments and streaming-music subscriptions, is being closely watched by analysts. PHOTO: KIICHIRO SATO/ASSOCIATED PRESS
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Good day. Apple Inc. this month sparked confusion and frustration among analysts and investors trying to decipher the performance of the company’s services business, fanning lingering concerns about transparency at one of the world’s most closely watched companies.
It's not the math: Instead, analysts say, it was with a seemingly backward sequence of financial disclosures from Apple, and a perceived lack of transparency that led to erroneous forecasts by some analysts who cover the company.
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How it started: Apple on Jan. 2 shared a sneak peek of its first-quarter services business’s performance in a letter to shareholders, projecting that it generated about $10.8 billion in revenue. That estimate was above analyst expectations.
The confusion: The letter left out an important detail: Its services revenue was calculated using new revenue-recognition rules. Apple had shared that information in November but didn’t repeat the disclosure in the letter, so some analysts missed the switch. Analysts also didn’t have comparable quarterly revenue figures to calculate the performance of the services business.
“The letter figure, which looked like a $300 million beat, now looks like a $300 million miss,” said Jeffrey Kvaal, an analyst at Nomura Group’s Instinet research division.
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U.S. unemployment claims data is due out at 8:30 a.m. ET. Economists surveyed by the WSJ predicting the number of Americans claiming new unemployment benefits will climb to 220,000 from 216,000 a week earlier.
The Federal Reserve Bank of Philadelphia will release its manufacturing survey at the same time. Economists expect factory activity across the mid-Atlantic slowed its growth pace to 8.0 in January from 9.4 in December.
Morgan Stanley, Fastenal Co., State Street Corp., Netflix Inc., American Express Co. and J.B. Hunt Transport Services Inc. are among the companies reporting earnings today.
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Lawmakers on Tuesday soundly rejected Prime Minister May’s agreement with Brussels, putting the process in jeopardy ahead of a March 29 deadline to leave. PHOTO: BLOOMBERG NEWS
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British Prime Minister Theresa May’s failure to get U.K. parliamentary approval for a deal to split the country from the European Union adds significant pressure on continental companies as they plan for the now greater possibility of an abrupt and disorderly exit.
Amazon.com Inc. commands an unrivaled customer base for the books, ebooks and audiobooks it publishes. As a result, it’s jolting the publishing industry, creating instant best sellers out of self-published writers.
Fiserv Inc. is acquiring First Data Corp. in an all-stock transaction valued at $22 billion, a deal that would combine two companies that focus on payments and financial-services technology.
WeWork Cos. Chief Executive Adam Neumann has made millions by leasing multiple properties in which he has an ownership stake back to WeWork, one of the country’s most valuable startups.
BlackRock Inc.’s assets fell below the $6 trillion mark in the fourth quarter, a sign of how volatile markets are posing new challenges for the largest U.S. money managers.
Ford Motor Co. warned its 2018 profit will fall short of Wall Street expectations and declined to give a specific forecast for this year.
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Ren Zhengfei, founder and CEO of Huawei, said the tech giant never would spy on behalf of China’s government. PHOTO: VINCENT YU/ASSOCIATED PRESS
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U.S. federal prosecutors are pursuing a criminal investigation of China’s Huawei Technologies Co. for allegedly stealing trade secrets from U.S. business partners, including the technology behind a robotic device that T-Mobile US Inc. used to test smartphones, according to people familiar with the matter.
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A watchdog report released Wednesday said the U.S. General Services Administration improperly ignored a constitutional provision when it was reviewing whether to allow the Trump International Hotel in Washington to keep its lease after President Trump’s inauguration.
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Signet Jewelers Ltd. agreed to pay $11 million in penalties to federal and state regulators for allegedly opening credit-card accounts—possibly hundreds of thousands—without customer consent at retail stores it operates under such brands as Kay Jewelers and Jared.
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Former Nissan Motor Co. Chairman Carlos Ghosn is set to stay in jail at least until March after the Tokyo District Court on Thursday upheld its earlier decision to deny his release on bail.
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Pearson to Reduce Legacy Systems in Bid to Drive Down Costs |
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U.K. higher-education company Pearson PLC is shrinking the number of legacy technology systems it operates, Chief Financial Officer Coram Williams said Thursday. "At the moment, our focus is to make sure that we are running the business on one system," Mr. Williams said.
The company is half-way through a transformation program to reduce costs by around £300 million ($386 million) a year between 2017 and 2020. Streamlining back office functions and shrinking headcount to around 25,000—down from 40,000 in 2016—is part of the turnaround exercise, Mr. Williams said.
By 2020, the company plans to have one single enterprise resource system to combine information on finance, inventory management, supply-chain and human-resource management. It had 63 enterprise-resource systems and around 3,500 legacy applications.
Pearson has a physical presence in around 70 countries, with the U.S. being its biggest market. The company on Wednesday said it expects to deliver adjusted operating profit for 2018 of between £540 million and £545 million pounds.
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Jerome Powell, chairman of the U.S. Federal Reserve. PHOTO: ANDREW HARRER/BLOOMBERG NEWS
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Optimism is waning among U.S. businesses as they grapple with a volatile stock market, rising borrowing costs and concerns about trade and the government shutdown, according to a new Federal Reserve report.
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The European Union set restrictions on steel imports to manage disruptive U.S. trade policies, making permanent a policy that has the unintended consequence of helping enforce President Trump’s metals tariffs.
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American companies that recycle aluminum are seeing a boom in business after China implemented more-stringent quality standards on U.S. scrap exports early last year, followed by tariffs totaling 50% on U.S. scrap aluminum.
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Student debt has prevented hundreds of thousands of young Americans from buying a home in recent years and may help explain why many college graduates have moved out of rural areas, the Federal Reserve said Wednesday.
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Premier Foods PLC, a U.K.-based foods maker, said its Chief Financial Officer Alastair Murray will assume the role of the acting chief executive officer in addition to his existing responsibilities, effective Feb. 1.
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The company's current CEO Gavin Darby will leave the group on Jan. 31 and the board has commenced the search for a replacement. Mr. Murray will serve as acting CEO until a successor for Mr. Darby is found.
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