US markets ended a week dominated by events in the technology sector slightly lower. First Tesla (TSLA:NASDAQ) founder Elon Musk agreed a deal to buy Twitter (TWTR:NYSE) for $44 billion and then a string of earnings reports from the tech space put it front and centre for investors.
Consumer electronics giant Apple (AAPL:NASDAQ) lost ground after warning of an up to $8 billion hit from supply chain woes (28 Apr). That detracted from an otherwise very positive quarter as revenues rose 9% to $97.3 billion, delivering net profits of $14.4 billion thanks to gains in Services (music, TV and games), where revenue rose 17% to $19.8 billion with margins of 72.6%.
Revenue from iPhones, iPads, Macs and other products was up across the board but profits relied on services; $14.26 billion of the $14.4 billion net profit came from this part of the business
There was a big shock for investors after-hours on 28 April as Amazon (AMZN:NASDAQ) posted its first quarterly loss since 2015. It was dragged down by its investment in electric truck maker Rivian (RIVN:NASDAQ) but this didn't tell the whole story, with the company also warning of continuing challenges in the months ahead given pressures on household budgets. The Amazon Web Services cloud platform performed strongly.
Google-owner Alphabet (GOOG:NASDAQ) spooked investors as earnings and revenue came in slightly behind consensus estimates but, more damagingly, the company missed forecasts on Youtube advertising revenue.
After a disastrous previous quarter Meta Platforms (FB:NASDAQ) reported a rebound in active users on Facebook (27 Apr), albeit a slight one. Expectations had been so beaten down that the market marked the shares nearly 20% higher on the news despite revenue guidance of $28 billion to $30 billion coming in short of analysts' expectations.
Microsoft (MSFT:NASDAQ) was a lot more encouraging (27 Apr), its Q1 2022 beating expectations on both the top and bottom lines, with earnings coming in at $2.22 versus the $2.19 expected on revenue of $49.4 billion compared to the anticipated $49.1 billion.
Elsewhere the market didn't seem too spooked by a disappointing US GDP number. While the US economy contracted by 1.4% in the first quarter on an annualised basis, factors like reduced spending by business on inventories and an increase in the trade deficit as imports into the US surged were identified as the main culprits for the downturn.
COCA-COLA/PEPSICO
In the competition between the soft drinks giants it was something of a high scoring draw. On 25 April Coca-Cola (KO:NYSE) reported quarterly results ahead of expectations thanks to more people buying its products and, perhaps more notably, increased prices with the company eking out 7% growth in price and product mix. Coca-Cola served up earnings per share of 64 cents against the 58 cents which had been pencilled in and $10.5 billion in revenue against an anticipated $9.83 billion. PepsiCo (PEP:NASDAQ) reported its own better than expected earnings on 26 April and lifted revenue guidance as demand remained steady despite price increases across its product range which includes food items like Doritos and Quaker oatmeal as well as the eponymous Pepsi cola drink. Both firms have demonstrated their pricing power for now, although as inflation continues to surge their ability to pass on higher costs to consumers may be challenged.
CATERPILLAR
The size of US engineering outfit Caterpillar (CAT:NYSE) and the breadth of its market exposure means it offers a useful insight into the wider global industrials sector. It posted (28 April) first quarter numbers marginally ahead of expectations with revenue of $13.59 billion surpassing expectations by 0.5% and earnings per share more than 20% better than forecast at $2.69. The shares still fell slightly as investors weighed the risks of rising costs and a slowdown in demand from China where the impact of lockdown restrictions weighed. Given the importance of this market to Caterpillar it was no surprise to see investors react negatively to the news.
