Which tech giant will come full circle in online retail
It will be a busy day of forecasts and interpretations, as all three have been in focus lately. The reasons why differ, but one thing is for sure – they are setting the tone for what (online) shopping is and will be in the near future.
Amazon’s earnings estimates and margins are the traditional key figures, but investors haven’t been able to come out with a tight range for their predictions (not that they generally do, but this time more than usual). Revenue expectations float around the $30 billion mark, although if anything above that. Margins are thought to be moving solidly upward with the shift to promoting more high-margin products, but the exact results of this endeavor will be seen in the results.
There is an additional factor to be considered this time – the strength of the dollar. Almost 38% of revenue comes from markets outside the U.S. making Amazon relatively exposed to larger currency fluctuations. The company’s own guidance will be affected by this and investors will pay more attention to it than usual.
Google’s results last quarter had some traders worried, as they saw signs of weakening in the effective monopoly in online search. Tomorrow they will be reporting their numbers after the bell and more information about the performance of the company in this key segment will be sought by investors.
Not that they are too worried, no clear and solid threat has emerged as of yet and the only big issue has been occasional capital expenditures on acquisitions of companies or construction of data centres that they hope will keep up with the continued growth and diversification of the company. Any news on the rapidly growing Google Play and other businesses might constitute a surprise and possible upside for the stock.
Alibaba will report their earnings before the market opens and they received a great warm-up yesterday with Yahoo announcing the spinning off of their share in the Alibaba business – effectively protecting it from higher taxes. Some analysts suggested today that this might prompt the Chinese tech giant to buy those shares back, but we’ll see what they have to say on that matter.
Several challenges have come up, most notably accusations from the Chinese government that the number of fake goods offered through their markets was too high, but still the most important unknown value for Alibaba is acquisitions. Other aspects of their activity like the increase in mobile revenue, have been scrutinised, but the companies they’ve bought recently not only show their confirmed path of development, but also the key battle grounds with local rivals that need to be won to secure future growth.
All three companies are giants, but it would be wrong to discount others like Apple (especially after yesterday’s stellar numbers), Facebook and even Microsoft for what they can add to online retail. Competition is a good thing and will provide plenty of winners and losers to trade on.