Alphabet’s 2Q earnings soar despite losses on risky bets
SAN FRANCISCO (AP) — Business is booming at Google’s parent company, Alphabet Inc., even as it loses billions of dollars on kooky-sounding projects that may never produce any revenue.
Powered by Google’s dominant search engine, Alphabet earned $4.9 billion during the April-June period, a 24 per cent increase from the same time last year. After subtracting ad commissions, Alphabet’s revenue climbed 22 per cent from last year to $17.5 billion.
Both the profit and net revenue topped analyst estimates. Alphabet’s stock surged 4 per cent to $797.85 in extended trading after the numbers came out.
Alphabet would have made even more money if not for its commitment to exploring far-out ideas in its “X” lab and other risky ventures known as “Other Bets.” That segment suffered an $859 million loss in the second quarter.
Debt-collection proposals: Fewer calls, easier to dispute
NEW YORK (AP) — Consumers could no longer receive multiple calls per day from debt collectors and would have more ability to dispute their bills under proposals released Thursday to overhaul the multibillion-dollar debt collection industry.
The new rules from the Consumer Financial Protection Bureau would also require collectors to have more documentation to prove a debt is owed, and initiate a 30-day waiting period for loans tied to someone who has recently died — halting all collection attempts from a spouse or child during that time.
Regulators estimate roughly 70 million Americans are contacted by debt collectors each year, and more Americans submit complaints to state and federal agencies about unfair or deceptive practices than any other part of the consumer financial system. These would be the biggest changes to the industry since Congress passed the Fair Debt Collections Practices Act nearly 40 years ago.
Amazon’s already large distribution empire keeps expanding
NEW YORK (AP) — Online shoppers want their packages — now. And Amazon is spending heavily to make sure that happens.
Amazon’s Prime service has, at heart, always been about free two-day shipping. The $99 annual subscription includes a variety of other goodies, but the near-instant gratification of fast, no-extra-cost delivery was the program’s original draw, and remains central to its appeal for its estimated 60 million subscribers.
But fast delivery — everything from Prime’s two-day service to one-day or one-hour options, grocery delivery and delivery for third party sellers — doesn’t come cheap. In the April-June quarter, for instance, Amazon spent $3.88 billion on its distribution network, or what it calls “fulfilment,” up 35 per cent from the prior year. The company spent $13.41 billion on fulfilment in all of 2015, up 25 per cent from the prior year — and fully 13 per cent of its $104.8 billion in total operating expenses.
Chipotle branching out, plans to open burger restaurant
NEW YORK (AP) — Chipotle, still struggling to win back customers after a series of food scares, plans to open its first burger restaurant this year.
The chain known for burritos said Thursday it will open a Tasty Made location this fall in Lancaster, Ohio, which is southeast of Columbus. The menu will be limited to burgers, fries and milkshakes, it said.
Chipotle Mexican Grill Inc. already has its hands full trying to recover from the E. coli outbreak and norovirus cases that sent sales plunging starting last fall. It has been giving away coupons for free burritos and stepping up marketing to win back customers, but sales were still down 24 per cent at established locations in the second quarter.
US homeownership rate of 62.9 per cent matches a 51-year low
WASHINGTON (AP) — The proportion of U.S. households that own homes has matched its lowest level in 51 years — evidence that rising property prices, high rents and stagnant pay have made it hard for many to buy.
Just 62.9 per cent of households owned a home in the April-June quarter this year, a decrease from 63.4 per cent 12 months ago, the Census Bureau said Thursday. The share of homeowners now equals the rate in 1965, when the census began tracking the data.
The trend appears most pronounced among millennial households, ages 18 to 34, many of whom are straining under the weight of rising apartment rents and heavy student debt. Their homeownership rate fell 0.7 percentage point over the past year to 34.1 per cent. That decline may reflect, in part, more young adults leaving their parents’ homes for rental apartments.
Applications for US jobless aid rise to still-low 266,000
WASHINGTON (AP) — More Americans sought unemployment aid last week, but the number of applications was still at a low level that suggested hiring is healthy.
Applications for unemployment benefits rose 14,000 to a seasonally adjusted 266,000, the Labor Department said Thursday. The four-week average, a less volatile measure, slipped 1,000 to 256,500.
The number of Americans receiving benefits ticked up 7,000 to 2.14 million. Still, that’s down nearly 6 per cent from a year ago.
Watchdog: IMF response to European crisis ‘uneven’
WASHINGTON (AP) — The International Monetary Fund was unprepared for the debt crisis that hit Europe and was slow to press for debt relief that might have eased Greece’s economic pain and allowed it to pay its bills, an IMF watchdog says.
In a report released Thursday, the Independent Evaluation Office declared the IMF’s response “uneven.” The watchdog also suggested that the fund’s decision-making was vulnerable to political pressure — a charge that IMF chief Christine Lagarde rejected.
Stocks post slight gains as investors work through earnings
NEW YORK (AP) — Stocks had another day of meagre gains on Thursday as investors worked through a new batch of mixed company earnings, including results from Facebook, Ford and Whole Foods.
Cautious investors are looking ahead to a meeting of the Bank of Japan on Friday which is expected to result in an announcement of more stimulus for the world’s third-largest economy.
After the market’s run-up this month, investors have mostly been in wait-and-see mode this week. While it’s been a busy week for corporate earnings, and individual stocks have moved a lot, the overall market has been relatively quiet. Market strategists have said that stocks have gotten expensive in recent days, and many investors are waiting for earnings to play out before making any major moves.
Oracle buying cloud business software provider NetSuite
NEW YORK (AP) — Software mogul Larry Ellison once famously mocked cloud computing as a fad. Now his company, Oracle, will spend $9.3 billion to acquire cloud upstart NetSuite.
NetSuite is just the latest cloud acquisition by Oracle, and its biggest splurge in more than a decade. It paid $11.1 billion for PeopleSoft in 2005.
More businesses are switching to the cloud model because it provides flexibility and saves on the cost of running their own computers. Oracle and its leading competitors, including Microsoft and IBM, are increasingly trying to beef up their cloud offerings.
Ford surprises with lower 2Q profit on trouble in US, China
DEARBORN, Mich. (AP) — Ford Motor Co.’s shares tumbled Thursday after it reported weaker-than-expected second-quarter earnings and warned that things could get worse in the second half of the year.
Ford’s net income fell 9 per cent to $2.0 billion in the second quarter as the company struggled with flattening U.S. sales and a tougher market in China.
The Dearborn, Michigan-based company said its full-year guidance — which calls for a pretax profit of $10 billion to $11 billion — remains intact but is at risk. Among the looming issues in the second half of this year are the expensive launch of Ford’s new aluminum-sided Super Duty pickup truck and an expected $145 million hit to sales in Britain because of its vote to leave the European Union.
The automaker’s shares fell $1.13, or 8.2 per cent, to finish at $12.71 Thursday.
The Dow Jones industrial average lost 15.82 points, or 0.1 per cent, to 18,456.35. The Standard & Poor’s 500 index rose 3.48 points, or 0.2 per cent, to 2,170.06 and the Nasdaq composite rose 15.17 points, or 0.3 per cent, to 5,154.98.
Benchmark U.S. crude fell 78 cents to close at $41.14 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, lost $1.40 to close at $43.47 a barrel in London.
In other energy trading, wholesale gasoline fell 2 cents to $1.31 a gallon, heating oil fell 2 cents to $1.27 a gallon and natural gas rose 4 cents to $2.67 per 1,000 cubic feet.