You May Want to Consider Investing
By Saghir Aslam
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
The sometimes fractious relations between Wall Street and Silicon Valley enjoyed a moment of harmony on Thursday, as combined $100bn was added to the market of three of the world’s biggest technology companies.
But with the tech giants projecting future jumps in capital spending and on a collision course for greater- potentially margin – eroding competition, it was a harmony that may be shortlived.
The share price bounce for Amazon, Microsoft and Alphabet (the new holding company for Google ) came as the three companies reported third – quarter earnings and took their combined market value to new
In their financial statements and comments in conference calls with analysts, the three conveyed a remarkably consistent message. The new mantra from the west coast of the US: greater cost discipline is the order of the day. New and more detailed disclosures are being tried to give investors a better understanding of how the companies are evolving. Where possible, excess cash is being returned to shareholders, not frittered away on faddish tech ideas.
But behind these more shareholder friendly messages was an unapologetic recognition of the effects of their uniformly expansionist strategies. All three said they were anticipating big periodic jumps in spending as they build the networks of data centers needed to keep up with global internet competitors.
For these week, however, the overriding tone has been one of conciliation. Companies that once seemed almost to scorn Wall Street oversight and which with surges in spending that dented their margins appear united in their desire to appease their shareholder.
Of the three, it is Amazon’s changed relations with Wall Street that have been most remarkable. Investors has grown weary of it high- growth, profitless business model. But Amazon’s share price has doubled since the beginning of the year, including Thursday’s after-market gain, as it has presented a different face to the financial markets.
Amazon’s longstanding policy has been to offer few shareholder incentives – it has never issued dividends or repurchased shares and the company manages profits to be close to zero.
The company’s efforts to get back into the good grace of it investors began early this year when it pledged to break our results separately for its Amazon Web Services business and as management went on an annual unusual shareholder tour. The AWS figures, when they came in April, revealed that the cloud computing service was highly profitable, and still growing fast despite already being the biggest provider in its sector.
Microsoft unveiled a new segmental reporting arrangement of its own on Thursday, in an attempt to present a clearer picture of how the move to cloud computing is affecting its business its business. And the newly named Alphabet is hoping for a lift with its own promise of greater disclosure three months from now, when it next reports quarterly earnings. After years of pressure from Wall Street, the company said ha said it will separate the results of its Google internet services business from its many driverless cars to internet across networks.
Even before that, a studied series of shareholder – friendly gestures has already paid off for Alphabet. Along with greater transparency, new chief financial officer pledged a focus on cost controls after arriving at the company earlier this year prompting a jump in Alphabet’s share price.
Leader, in charge supervisor can change company’s image, company’s sale employee’s efficiency much better by action or in charge instead of just talking .
The Porat effect was in evidence again on Thursday , as the company announced its first - ever return of capital to shareholders in the form of a stock buyback.
But the signaling to Wall Street has had a powerful effect. Eleven years after its IPO, when it laid out its intention to pursue a financial strategy with little regard to immediate shareholder gratification, the company formerly known as Google has sent a clear message that things have changed.
Meanwhile, Microsoft’s stock touched a new 15 year high in after – market trading. Bill Thrill, who tracks the company as an analyst at UBS, said Wall Street’s fears that it was tied to s shrinking PC industry were going to a new confidence in its positioning in the growth market for cloud computing.
Whether the good feelings that washed through Wall Street on Thursday will last is another matter. All three groups warned that capital spending would remain heavy- and , in the cases of Amazon and Alphabet, volatile – as they build out their tech performs.
If the big tech companies are finding themselves back in favor on Wall Street, it could be of their perceived safety in a volatile market as their near – term results.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)