STOCK MARKET NEWS: Microsoft earnings, Google lawsuit, Amazon’s drug perk

POLITICS

FDA orders menthol Vuse vape products off the market

The U.S. Food and Drug Administration issued marketing denial orders for two menthol Vuse vape products made by R.J. Reynolds Vapor. The company says it will fight the ban.

The Food and Drug Administration issued marketing denial orders (MDOs) for two menthol e-cigarette products currently marketed by R.J. Reynolds Vapor Company. The currently marketed products include the Vuse Vibe Tank Menthol 3.0% and the Vuse Ciro Cartridge Menthol 1.5%.

The company must not market or distribute these products in the U.S. or they risk FDA enforcement action. The company may resubmit applications or submit new applications to address the deficiencies for the products that are subject to these MDOs.

“The applications for these products did not present sufficient scientific evidence to show that the potential benefit to adult smokers outweighs the risks of youth initiation and use,” said Brian King, director of the FDA’s Center for Tobacco Products. 

Bed from the Beautyrest collection by Nate Berkus Collection (Photo: Serta Simmons)

Serta Simmons Bedding LLC, which accounts for nearly one-fifth of U.S. bedding sales, has filed for bankruptcy protection in an effort to eliminate most of its debt, as the slowing economy and rising interest rates crimp consumer demand.

The Doraville, Georgia-based company, whose roots date to 1870, filed for Chapter 11 protection from creditors on Monday night with the U.S. Bankruptcy Court in the Southern District of Texas.

RETAIL

Serta Simmons files for bankruptcy

Serta Simmons Bedding has filed a pre-arranged bankruptcy though it says business fundamentals remain strong despite financial challenges from a slumping mattress industry.

Its prepackaged bankruptcy plan calls for debt to be reduced to $300 million from $1.9 billion.

Serta Simmons also lined up $125 million in financing to keep operating, including to pay its 3,600 employees.

It hopes to win court approval for its restructuring as soon as May 8.

The company's brands include Serta, Simmons, Beautyrest and Tuft & Needle. Sales totaled $2.4 billion in the year ending June 30, 2022.

Rupert Murdoch, chair of Fox News Channel stands before Rafael Nadal of Spain plays against Kevin Anderson of South Africa. (Reuters/Mike Segar)

Fox Corp said on Tuesday that Rupert Murdoch had scrapped a proposal to combine the company with News Corp in a deal that would have reunited the media empire he split nearly a decade ago.

Murdoch sent a letter to News Corp and Fox withdrawing his proposal to re-unite the companies, according to a regulatory filing. He indicated that he and his son, Fox Corp Chief Executive Lachlan Murdoch, had determined that the combination is "not optimal" for shareholders.

Prominent News Corp investors have been critical of the proposal.

Intuitive Surgical is lower in extended trading. The robotic surgery system maker missed Wall Street revenue and profit estimates.

Fiscal fourth quarter revenue increased 7% to $1.66 billion. The estimate was $1.67 billion.

The Company placed 369 da Vinci Surgical Systems, a decrease of 4% compared with 385 in the fourth quarter of 2021.

Non-GAAP net income attributable to Intuitive was $439 million, or $1.23 per diluted share, compared with $473 million, or $1.29 per diluted share, in the fourth quarter of 2021. The estimate was $1.25 per share.

Texas Instruments office in San Diego, Calif., April 24, 2018. (Reuters/Mike Blake)

Chipmaker Texas Instruments forecast first-quarter revenue below Wall Street targets on Tuesday as a wider economic downturn threatens to shake last year's resilient demand in its key industrial market.

Shares of the Dallas, Texas-based company fell 2% in extended trading. In 2022, the stock lost more than 12% as the chip sector faced its worst year since the 2008 financial crisis.

The consumer electronics segment had taken the first hit when red-hot inflation drove people to abandon discretionary spending on smartphones and PCs, but Texas Instruments in October warned that most of its end-markets were starting to feel the pinch.

The chip industry bellwether's dour outlook was also echoed by peers such as Intel Corp and Micron Technology.

China's COVID closures during the fourth quarter also pressured TI's revenue, which fell 3% to $4.67 billion.

The company expects revenue of $4.17 billion to $4.53 billion in the first quarter, the mid-point of which is lower than analysts' average estimate of $4.41 billion, according to Refinitiv data.

NextGen Healthcare is lower in extended trading. The provider of innovative healthcare technology solutions matched Wall Street revenue estimates but missed on profit.

Fiscal third quarter revenue rose 8% to $161.9 million. The company was expected to report a rise in revenue to $162 million from $149.72 million in the same quarter last year.

Net income was $7.8 million, up from $5.2 million.

Diluted net income per share was 26 cents per share. The estimate was 27 cents.

The company raised its guidance. Revenue is expected to be in the range of $642 million to $650 million, an increase from prior guidance range of $630 million to $640 million.

Adjusted EBITDA is expected to be in the range of $110 million to $115 million, consistent with prior guidance.

Microsoft signage is seen at the company's headquarters in Redmond, Wash., Jan. 18, 2023. (Reuters/Matt Mills McKnight)

Microsoft Corp narrowly missed Wall Street estimates for second-quarter revenue on Tuesday, squeezed by a slump in the personal computer market that hammered its Windows software business.

Revenue rose 2% to $52.7 billion in the three months ended Dec. 31, compared with the average analyst estimate of $52.94 billion, according to Refinitiv IBES.

Shares of the Redmond, Washington-based company rose 4% in extended trading. They lost nearly a third of their market value in a dismal 2022 for tech stocks.

Microsoft is wrestling with a steep drop in the computing division, which includes products like Windows operating systems and devices.PC shipments tumbled nearly 29% between October and December, according to Gartner, the largest quarterly shipment decline since the consulting firm began tracking the market in the mid-1990s.

Google logo seen at the Google Store Chelsea in Manhattan, New York City, Nov. 17, 2021. (Reuters/Andrew Kelly)

The U.S. Justice Department sued Alphabet's Google on Tuesday, accusing the company of abusing its dominance of the digital advertising business and saying it should be forced to sell its ad manager suite, in the government's latest jab at thwarting Big Tech's market power.

The lawsuit tackles a business at Google that is responsible for 80% of its revenue. The Justice Department asked the court to compel Google to break up a key piece of its ad technology business.

"Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies," the antitrust complaint said.

Google said the government was "doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.

"The federal government has said it is trying to level the playing field for rivals to Big Tech companies including Amazon.com, Facebook owner Meta Platforms and Apple Inc.

Eight states joined Tuesday's lawsuit, including Google's home state of California.

Treasury Secretary Janet Yellen listens to a reporter's question at a news conference during the Annual Meetings of the International Monetary Fund and World Bank in Washington, Oct. 14, 2022. (Reuters/Elizabeth Frantz)

U.S. Treasury Secretary Janet Yellen activated another extraordinary cash management measure on Tuesday to avoid breaching the federal debt limit, suspending daily reinvestments in a large government retirement fund that holds Treasury debt, the department said.

In a letter notifying Congress of the move to access the Government Securities Investment Fund (G Fund), Yellen did not alter a projected early June deadline for when the Treasury may no longer be able to pay the nation's bills without an increase in the $31.4 trillion statutory borrowing limit.

ECONOMY

Yellen says Treasury will take additional 'extraordinary measures' on debt limit

The U.S. government bumped up against the debt limit last week, prompting the Treasury Department to take emergency measures to avoid a potential default.

The G-Fund maneuver is one of the largest tools that Treasury can employ to reclaim borrowing capacity under the debt ceiling. The fund, part of the Thrift Savings Plan for federal employees, had net assets of $210.9 billion atthe end of 2021, according to its most recent annual report.

Normally the money market-like retirement fund reinvests its entire balance daily into special-issue Treasury securities that count against the debt limit. Halting the reinvestments allows more normal Treasury bills, notes and bonds to be issued.

But the Treasury is required by law to replenish the fund, along with any lost earnings, once a debt limit impasse ends. Federal retirees and employees would be unaffected by this action.

ECONOMY

Walmart hiking wages for US employees

Walmart U.S. announced Tuesday the company is raising wages for its associates across the nation, which it expects will bring its average hourly rate above $17.50.

Walmart Inc on Tuesday said it will raise average hourly wages for its U.S. store workers starting next month, as it seeks to attract and retain employees in a tight domestic labor market.

Walmart's new wage hikes lift its average hourly wage pay to $17.50 from the current $17 an hour and will reflect in March 2 paychecks, the company said. The minimum wage will rise by as much as $2 for staff at its U.S. stores to a range of $14-$19 per hour, depending on location, a spokesperson said in an email, adding that about 340,000 workers at about 3,000 stores will be eligible.

Walmart employs 1.6 million U.S. workers, a majority of whom work in rural and semi-urban areas.

LIFESTYLE

Amazon launches new subscription prescription drug service

Prime members will be able to get as many prescription medications as they need for $5 a month with the new RxPass, according to e-commerce giant Amazon.

Amazon.com Inc said on Tuesday it is offering a $5 monthly subscription plan for U.S. Prime members that will cover a range of generic drugs and their doorstep delivery, furthering the ecommerce giant's push into healthcare.

The program, named RxPass, includes more than 50 medications addressing over 80 chronic conditions such as high blood pressure, anxiety, diabetes and male pattern baldness, Vin Gupta, Amazon Pharmacy's chief medical officer, told Reuters.

However, customers enrolled in Medicare, Medicaid or any other government healthcare program will not be able to enroll in Amazon Pharmacy's RxPass service.

The average Prime member would save about $100 per year with RxPass, John Love, vice president of Amazon Pharmacy, said in an interview. 

Dollar Tree store in Runnemede, N.J, Dec. 17, 2022

Dollar Tree Inc said on Tuesday Executive Chairman Richard Dreiling will replace Chief Executive Officer Mike Witynski, nearly a year after agreeing to revamp its board in a settlement with activist investor Mantle Ridge.

Witynski was appointed as the CEO in July 2020 to succeed Gary Philbin, who retired after serving in the role for nearly three years.

BUSINESS-LEADERS

Dollar Tree CEO Mike Witynski to step down

Dollar Tree Inc. announced on Tuesday that CEO Mike Witynski would step down from the board and leave the company. Rick Dreiling will assume the role of chief executive.

Dreiling, 69, who has previously served as chairman and CEO of rival Dollar General, was appointed to Dollar Tree's board as part of the settlement in March 2022. He will take on the role of top boss at the company effective Jan. 29.

In late 2021, Mantle Ridge pushed for a review of Dollar Tree's business strategy and Dreiling as the top boss at the discount retailer along with an overhaul of its board.

Last year November, the company lowered its annual profit forecast for the second time as price cuts to attract inflation-wary shoppers pressured its margins.

As part of the settlement with Mantle, Dollar Tree in June announced the exit of finance chief Kevin Wampler and some other top executives.

Lockheed Martin F-35 fighter jet (REUTERS/Axel Schmidt)

Lockheed Martin Corporation reported fourth quarter 2022 net sales of $19.0 billion, compared to $17.7 billion in the fourth quarter of 2021.

Net earnings for the fourth quarter of 2022 include certain non-operational items of $129 million, or $0.39 per share, compared to $(92) million, or $(0.25) per share in the fourth quarter of 2021.

In 2022, the defense manufacturer saw net sales reach $66 billion, compared to $67 billion in 2021, while net earnings over the year peaked at $5.7 billion, or $21.66 per share, compared to $6.3 billion, or $22.76 per share, in 2021.

Bassett Furniture Industries Inc. on Tuesday reported fiscal fourth-quarter net income of $5 million.

On a per-share basis, the Bassett, Virginia-based company said it had profit of 55 cents. Earnings, adjusted to account for discontinued operations, were 61 cents per share.

The furniture seller posted revenue of $121 million in the period.

For the year, the company reported profit of $65.3 million, or $6.96 per share. Revenue was reported as $485.6 million.

Bassett shares have risen 4% since the beginning of the year. The stock has climbed 34% in the last 12 months.

North Korean flag flutters at the propaganda village of Gijungdong in North Korea, in this picture taken near the truce village of Panmunjom inside the demilitarized zone (DMZ) separating the two Koreas, South Korea, July 19, 2022. (Reuters/Kim Hong-Ji/Pool)

A hacker group associated with North Korea, the Lazarus Group, also known as APT38, was responsible for the theft last June of $100 million from U.S. crypto firm Harmony's Horizon bridge, the Federal Bureau of Investigation said on Monday.

On Jan. 13, North Korean cyber actors used a privacy protocol called Railgun to launder over $60 million worth of ethereum stolen during the theft in June, the FBI said in a statement.

A portion of the stolen ethereum was subsequently sent to several virtual asset providers and converted to bitcoin, the FBI said.

The FBI said North Korea's theft and laundering of virtual currency is used to support its ballistic missile and Weapons of Mass Destruction programs.

MARKETS

DOJ to sue Google alleging monopoly on online ads: report

The Justice Department plans to file an anti-trust lawsuit against Alphabet Inc.'s Google this week, alleging the company has an unfair dominance over digital advertising.

The U.S. Justice Department is poised to sue Alphabet Inc's Google as soon as Tuesday regarding its dominance over the digital advertising market, Bloomberg News reported on Monday, citing people familiar with the matter.

The lawsuit would be the second federal antitrust complaint filed against Google, alleging violations of antitrust law in how the tech giant acquires or maintains its dominance. The Justice Department lawsuit filed against Google in 2020 focuses on its monopoly in search and is scheduled to go to trial in September.

The Justice Department did not immediately respond to a Reuters request for comment, while Google declined to comment on the report.

MARKETS

3M cutting thousands of jobs, profits tumble

3M, the maker of Scotch Tape and Post It Notes, will reduce 2,500 jobs at locations around the world due to macroeconomic uncertainty.

3M Co said on Tuesday it would cut 2,500 manufacturing jobs after reporting a lower profit, as the U.S. industrial conglomerate faces a demand slowdown in its unit that sells products including notebooks, air purifiers and respirators.

The diversified manufacturer said demand for its consumer-facing unit fell faster in December as weaker customer spending spilled into the holiday season.

3M expects adjusted sales growth to drop 6% to 2% this year due to declining disposable respirator sales and its exit from Russia.

The company was able to offset higher raw material and logistics costs by raising prices which helped it beat profit in the previous quarter.

Sales in the quarter fell 6% to $8.1 billion. Excluding items, the company reported a profit of $2.28 per share compared to $2.45 per share a year earlier.

U.S. flag is seen over the company logo for Johnson & Johnson to celebrate the 75th anniversary of the company's listing at the New York Stock Exchange (NYSE) in New York, U.S., Sept. 17, 2019. (Reuters/Brendan McDermid)

Johnson & Johnson on Tuesday forecast annual profit above Wall Street estimates, as steady demand for its drugs such as cancer treatment Darzalex is expected to help ease pressure from inflation and a strong dollar.

J&J also expects sales of its medical devices to be lower in the first half of 2023 than in the second half, as surging COVID-19 cases in China limit medical procedures in hospitals.

Overall, the healthcare conglomerate posted better-than-expected quarterly earnings, helped by demand for Darzalex and its COVID-19 vaccine.

J&J expects to earn between $10.45 and $10.65 per share on an adjusted basis for 2023, above analysts' estimates of $10.35 per share profit at the midpoint.

The higher 2023 profit forecast also reflects better-than-expected cost controls by J&J, Edward Jones analyst John Boylan said.

Pharmaceutical sales of $13.16 billion for the fourth quarter beat estimates of $13.14 billion. Darzalex sales were $2.08 billion, while analysts were expecting $2.02 billion, according to Refinitiv.

J&J also recorded $821 million in COVID-19 vaccine-related costs, which were related to changes in its research program and manufacturing capacity.

Excluding items, J&J earned $2.35 per share, above analysts' average estimates of $2.23 per share, according to IBES data from Refinitiv.

Union Pacific train engine - (AP Photo/Ashley Landis, File)

Union Pacific Corp reported lower-than-expected fourth-quarter profit on Tuesday, hurt by delayed shipments amid labor shortages and a winter storm that crippled freight operations across the United States.

The company, which operates from all major West Coast and Gulf Coast ports to eastern gateways, added it expected volume growth for 2023 to exceed industrial production.

Its net income fell 4% to $1.64 billion, or $2.67 per share, in the quarter ended Dec. 31, from $1.71 billion, or $2.66 per share, a year earlier. Analysts on average had forecast a profit of $2.78, Refinitiv IBES data showed.

Union Pacific's operating ratio, a key profitability metric for railroads, was 61% in the quarter compared with 57.4% a year earlier. The lower the ratio is, the better.

Woman stands in front of a General Electric (GE) sign in Shanghai, China, Sept. 1, 2022. (Reuters/Aly Song)

General Electric Co on Tuesday reported better-than-expected quarterly earnings on robust demand for its jet engines and power equipment, but offered a disappointing profit forecast for this year as it struggles with persistent problems at its renewable energy business.

GE expects full-year adjusted earnings in the range of $1.60 to $2.00 per share this year, up from a profit of 77 cents a share in 2022. The forecast compares with analysts' average forecast of $2.36 per share, according to Refinitiv.

The Boston-based company also expects to generate higher free cash flow this year as its aviation business is tipped to benefit from strong demand for engines and after-market services.

It, however, forecast an operating loss between $200 million and $600 million for its energy business GE Vernova in 2023.

The company's renewable energy business has been facing challenges due to inflation and supply chain pressures. The unit reported a loss of $2.2 billion in 2022.

It is reducing global headcount at the onshore wind unit by about 20% as part of a plan to restructure and resize the business.

GE's adjusted profit for the fourth quarter came in at $1.24 per share, beating analysts' average estimate of $1.13 per share.

Verizon store, Voorhees, N.J., Oct. 19, 2021

Verizon Communications Inc's annual profit forecast fell short of Wall Street estimates on Tuesday, as it grapples with slowing growth in wireless customer sign-ups compared with last year and makes heavy investments in 5G technology.

Verizon, whose plans are the most expensive among U.S. peers, lost subscribers last year to its fast-growing rivals AT&T Inc and T-Mobile that have been doubling down on promotional activity or have more developed 5G networks.

However, thanks to promotional offers and Apple's flagship iPhone launch during the fourth quarter, the company added 217,000 net new monthly bill paying wireless phone subscribers in the fourth quarter, higher than Factset estimates of 200,400 additions.

Analysts reckon the No. 1 U.S. wireless carrier by subscribers has to be careful about lowering plan prices or offering steep discounts so as to not hurt profit and free cash flow, given its substantial 5G investments.

Verizon, which added 558,000 subscribers in the fourth quarter last year, expects adjusted profit between $4.55 per share and $4.85 per share in 2023. Analysts had estimated a profit of $4.97 per share, according to Refinitiv data.

For the fourth quarter, Verizon earned $1.19 per share on revenue of $35.3 billion, both largely in-line with analysts' estimates.

ECONOMY

Business taxes rising just as US economy heads into choppy water

Corporate taxes are rising this year, with the increases likely to cost U.S. businesses about $115 billion even amid an increasingly dark economic outlook.

The new year is also bringing big tax changes to both small and large businesses.