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Tesla Selling $2 Billion In Stock To Fund Production Ramp-Up

Electric automaker Tesla ( TSLA ) said late Wednesday that it will make a $2 billion secondary stock offering to fund its ambitious production schedule, sending its stock down in after-hours trading. “Because of the overwhelming demand that it has received for Model 3, Tesla intends to use the net proceeds from this offering to accelerate the ramp of Model 3,” said Tesla’s press release. “As noted in the company’s first-quarter shareholder letter , Tesla intends to start volume production and deliveries of Model 3 in late 2017 and to accelerate its 500,000 unit build plan from 2020 to 2018.” The company said $1.4 billion worth of stock will be sold by Tesla for this purpose. The remaining $600 million will be raised by CEO Elon Musk, who is exercising his option to acquire 5.5 million Tesla shares and will use the sale to cover his tax bill, the company said. He’s also donating 1.2 million shares to charity. Tesla stock was down more than 2% in after-hours trading Wednesday. In the regular session in the stock market today , Tesla rose 3.2% to close at 211.17, boosted by Goldman Sachs’ upgrade earlier in the day. Goldman upgraded the stock despite expressing deep skepticism about the 2018 production target, but the investment bank said the stock is attractively priced after falling 23% from early April through Tuesday.

Salesforce.com Q1 Beats, Hikes Revenue Outlook, Stock Rises

Salesforce.com ( CRM )  late Wednesday reported Q1 earnings and revenue that topped expectations and raised its full-year revenue guidance, sending the business software provider’s stock up 6% in after-hours trading. Salesforce, the leading provider of customer relationship software, said Q1 profit jumped 50% to 24 cents per share minus items. Revenue in the three months ended April 30 rose 27% to $1.92 billion, the company said.  Analysts polled by Thomson Reuters had modeled 23 cents and $1.89 billion. In the current quarter, Saleforce forecast earnings ex items of 24 cents to 25 cents per share, up from 19 cents in the year-ago quarter, and revenue of $2.005 billion to $2.015 billion, up 23%. Analysts had estimated 25 cents and $1.98 billion. Salesforce increased its full-year revenue guidance to $8.2 billion from $8.16 billion, “given the strong response to our Customer Success Platform,” Salesforce CEO Marc Benioff said in the earnings release. San Francisco-based Salesforce  garners mainly subscription revenue from on-demand software delivered via the Internet, or cloud. “Salesforce’s  increased penetration of very large organizations and vertical-focused strategy, led by President and COO Keith Block, may mark the beginning of a trend of consistency in enterprise sales execution,” Jefferies analyst John DiFucci said in a pre-earnings research report. Salesforce has a strong IBD Composite Rating of 95, putting it among the top 5% of all stocks on key metrics such as sales and earnings growth. Its Computer Software-Enterprise group, though, ranks just No. 138 out of 197 industry groups tracked by IBD. Salesforce competes with Microsoft ( MSFT ), SAP ( SAP ), Oracle ( ORCL ), ServiceNow ( NOW ) and others. Salesforce last week said it would offer a new “Internet of Things” service using AWS, the cloud computing business of  Amazon.com ( AMZN ). Salesforce’s service, expected to launch this fall, collects data from Web-connected devices. AWS is the No. 1 cloud services provider.

Cisco Earnings, Guidance Beat Wall Street Estimates, Stock Up Late

Cisco Systems ( CSCO ) reported fiscal third-quarter earnings after the market close Wednesday that beat on both the top and bottom lines, and did its earnings guidance. Revenue rose 3% from the year-earlier period, to $12 billion, just beating the consensus estimate of $11.97 billion, as polled by Thomson Reuters. For the quarter ended April 30, Cisco said earnings per share minus items rose 5.6% to 57 cents, edging the consensus of 55 cents. The No. 1 maker of switches and other networking gear projected Q4 EPS ex items of 59 cents to 61 cents, vs. 59 cents in the year-ago quarter and topping consensus of 58 cents. Cisco stock was up 5% in after-hours trading, after the earnings release. Cisco stock rose a fraction in Wednesday’s regular session, to 26.72, which is up 19% from the two-year low of 22.46 touched on Feb. 10. “We delivered a strong Q3, executing well despite the challenging environment,” Cisco CEO Chuck Robbins said in the earnings release. Analysts had lowered expectations ahead of Cisco earnings due to the growing number of companies outsourcing computing workloads to cloud computing service providers such as Amazon.com ( AMZN ) and its Amazon Web Services business. The move to cloud computing has lowered demand for Cisco’s networking gear. The lowered expectations also reflected lower spending on information technology overall. Well aware of the trends, Cisco is diversifying beyond its core switch and router business into newer, higher-growth segments such as software, data centers, security, wireless and the Internet of Things market.