Berkshire Hathaway profit rises, helped by stock gains

Warren Buffett’s Berkshire Hathaway Inc on Saturday said quarterly operating income rose 14%, aided by improved results from its insurance businesses, while soaring prices of stock holdings such as Apple Inc led to a nearly $36 billion overall profit.

Fourth-quarter operating income rose to $5.02 billion, or approximately $3,252 per Class A share, from $4.42 billion, a year earlier.

Net income, reflecting the stock gains, rose 23% to $35.84 billion from $29.16 billion a year earlier.

For all of 2020, operating income fell 9% to $21.92 billion, while net income fell 48% to $81.42 billion.

Berkshire, whose shares trailed the broader market over the last decade and significantly in 2019 and 2020, repurchased about $9 billion of stock in the quarter, a sign Buffett considers his Omaha, Nebraska-based conglomerate undervalued.

For all of 2020, Berkshire said it bought back $24.7 billion of its own stock, topping its old record $5 billion in 2019.

“At a discount of 40% to intrinsic value, the repurchases looked extraordinarily compelling,” said Tom Russo, a partner at Gardner, Russo & Gardner in Lancaster, Pennsylvania, a longtime Berkshire shareholder. “Repurchases capture forever the benefits of Berkshire’s businesses for the remaining shareholders.”

Berkshire stock has risen 4.8% this year, beating the Standard & Poor’s 500’s 1.5% gain.

ASM sees higher first quarter revenue on the back of strong orders

ASM estimated first-quarter revenue of 380-400 million euros ($489.20 million) compared with 347 million euros in the fourth quarter.

Fourth-quarter order intake rose 25% quarter on quarter to 379 million euros, above its guidance of 340-360 million euros, citing strong demand in the logic and foundry segment.

($1 = 0.8177 euros)

Roku adds more streaming audience to beat revenue expectations

(Reuters) – Video-streaming device maker Roku Inc reported quarterly revenue above market expectations on Thursday, thanks to an influx of cord-cutting subscribers dropping their cable packages for streaming services.

A pandemic winner, Roku’s aggressive push into original releases on its own app, Roku Channel, and subscriber boosts to the streaming platforms it hosts including Netflix, Prime Video and Disney+ have not only bolstered its device sales, but also its ad income.

Roku added 14.3 million active accounts in the year, bringing total active accounts to 51.2 million.

Sales of its devices, which connects televisions to streaming services, rose 18% to $178.7 million in the fourth quarter.

Platform revenue, which includes ad sales, surged 81% to $471.2 million, beating estimates of $416.07 million.

Total net revenue rose 58% to $649.9 million in the fourth quarter, beating analysts’ average estimate of $617.25 million, according to IBES data from Refinitiv.

Excluding items, Roku posted a surprise profit of 49 cents per share, while analysts expected a 5 cents loss.

For the first quarter, the company expects total revenue between $478 million and $493 million, while analysts expect it to be $461.89 million.

Credit Suisse posts 22% annual profit decline on back of legal troubles

(Reuters) – Credit Suisse on Thursday posted a 22% fall in 2020 net profit as a 757 million franc hit from legal charges placed Switzerland’s second-largest lender in the red for the final three months of the year.

The bank posted a 353 million Swiss franc ($392.79 million) net loss for the fourth-quarter, compared with expectations for a 566 million franc loss in its own poll of 18 analysts.

The poll was compiled before the bank settled a legacy residential mortgage-backed security case for $80 million less than it had previously flagged.

“Despite a challenging environment for societies and economies in 2020, we saw a strong underlying performance across Wealth Management and Investment Banking, while addressing historic issues,” Chief Executive Thomas Gottstein said in a statement.

“Looking forward into 2021 and beyond, we aim to further accelerate growth in Wealth Management and deliver sustainable returns in Investment Banking.”

Wealth managers have profited richly off bumper trading and client demand for greater counsel during the COVID-19 pandemic, helping rivals UBS Group AG and Julius Baer Gruppe AG post windfall gains. Credit Suisse, however, faced setbacks in its core business last year everywhere outside Asia.

Outside Asia, only Credit Suisse’s investment bank managed to post profit gain in 2020, as higher expected lending losses and headwind from negative interest rates and a strong Swiss franc bit into earnings.

Factoring out one-off gains that boosted results in 2019 and set it back in 2020, the bank said it would have seen a 6% pre-tax profit gain for the year.

Zurich-based Credit Suisse targets 10% annual earnings growth in its wealth management business over the next three years as it strives towards profit goals.

Gottstein, who became chief executive last February as the novel coronavirus was surging in China, is also reconfiguring Credit Suisse’s investment banking business and targets branch closures and a digital overhaul of its home business to cut costs.

Its standalone international wealth management unit, which covers rich clients outside Asia and Switzerland, saw net revenue dip 17% in 2020, as bumper trading failed to offset the negative impact of lower interest rates and a depressed U.S. dollar.

The division was also hit by a 414 million franc fourth-quarter impairment on a hedge fund equity stake, which impacted its struggling asset management business.

Its Swiss private clients business, covering both wealthy home market customers and the bank’s only retail accounts, saw pre-tax profit dip 16% on the back of weaker revenue and higher provisions for loan losses.

Its Asia-Pacific business, meanwhile, saw revenue rise 4% on higher transaction fees and the region’s stronger recovery from the pandemic. That, however, failed to offset a jump in lending provisions, resulting in a 10% profit decline.

REVERSING COURSE

In a reversal of fortunes, Credit Suisse’s investment bank, which has been the focus of overhaul efforts over the past five years, saw a surge in revenue, helping the business to its second consecutive year of profit gain.

Profit grew six-fold from the prior year during the fourth quarter, with higher trading activity helping equity sales and trading rise 5%. Fixed income trading was largely flat and advisory revenue was up 16%, while capital markets revenue leaped by 90%.

The bank proposed a dividend of 0.2926 francs per share, up 5.4%, and said it started a buyback in January targeting a total of 1.0 billion to 1.5 billion francs in buybacks for the year.

($1 = 0.8987 Swiss francs)

Capgemini sees 2021 profitability above market expectations

(Reuters) – Capgemini on Wednesday said profitability would beat market expectations in 2021, after the group reported full-year results in line with consensus, boosted by growth in its digital and cloud services.

The French consulting and IT services provider expects revenue to rise 7% to 9% in constant currency terms in 2021 from the 15.85 billion euros ($19.07 billion) reported in 2020, with an operating margin of between 12.2% and 12.4%. That would be a return to pre-COVID levels and slightly above the 12.1% consensus view.

The COVID-19 pandemic has given IT services providers, such as Capgemini, a silver lining of an increasing number of companies expediting their move to the cloud to adapt better to a new flexible or exclusively remote working model.

“This (COVID-19) health crisis has clearly accelerated the digital transformation needs of companies across all sectors,” said chief executive Aiman Ezzat in a statement.

Capgemini said its digital and cloud services, which represented 65% of its business in October-December period, grew around 15% in 2020 thanks to clients prioritising spending on digital transformation projects.

The full-year 2020 operating margin dropped by less than the company had guided, to 11.9% from 12.3% the previous year, also beating the 11.7% expected in a company-provided poll.

($1 = 0.8310 euros)

Bitcoin within a whisker of $50,000

(Reuters) – Bitcoin hit a new record high $60 shy of $50,000 on Tuesday, extending a sharp rally that has been mostly fuelled by big investors beginning to take digital assets seriously.

The first and most famous cryptocurrency, bitcoin hit $49,938 and has gained roughly 70% this year, most of that after electric carmaker Tesla said it bought $1.5 billion in bitcoin and would accept the currency as payment.

Tesla’s move was the latest in a string of large investments that have vaulted bitcoin from the fringes of finance to company balance sheets and Wall Street dealing desks, as U.S. firms and traditional money managers have started to buy a lot of it.

The soaring cryptocurrency, which was near worthless a decade ago when software developer Laszlo Hanyecz paid 10,000 bitcoins for two pizzas, surpassed $20,000 only in mid-December, but has so far struggled to crack $50,000 after a few attempts.

“Bitcoin has been range bound for the past four or five days, suggesting either stalling momentum or a consolidation period,” said Justin d’Anethan, sales manager at digital asset company Diginex in Hong Kong.

“We believe in the latter,” he said, since strong recent demand has been drawing down bitcoin’s finite supply.

Bitcoin last traded just short of its new record at $49,045 while rival cryptocurrency ethereum also held near its own record top of $1,879 made last week.

Besides Tesla, bitcoin has drawn unprecedented flows from big and small investors in recent months and posted new milestones on the path to greater takeup as a mode of exchange.

The cryptocurrency was created by the mysterious Satoshi Nakamoto, whose real identity is unknown and is based on blockchain technology which acts like public ledger of transactions. It began circulating in 2009, mostly among speculators – something which is beginning to change.

Business software firm MicroStrategy made the first of several multimillion-dollar bitcoin purchases in August and a number of Wall Street fund managers, such as billionaire Stanley Druckenmiller, now sound positive on the asset.

PayPal is allowing customers to use bitcoin at its merchants and Mastercard preparing to do likewise, moves which bring both opportunity and risk.

“The more mainstream the digital currency becomes, the more we should expect regulators to pay attention,” said Mike O’Rourke, chief market strategist at JonesTrading.

AstraZeneca forecasts 2021 growth after fourth – quarter sales beat

(Reuters) – AstraZeneca on Thursday forecast 2021 revenue growth after the COVID-19 vaccine developer beat analysts’ estimates for fourth-quarter product sales, as a wide range of therapies helped cushion the hit from the pandemic.

The British drugmaker said it expects 2021 revenues to increase by a low teens percentage, with “faster growth” in core earnings to $4.75 to $5.00 per share. Quarterly product sales of $7.01 billion surpassed a company-compiled consensus of $6.81 billion.

2020 was a crucial year for AstraZeneca. It teamed up with the University of Oxford to develop a COVID-19 vaccine, and made its largest ever deal by buying U.S. drugmaker Alexion for $39 billion as it bet on rare-disease and immunology drugs.

The London-listed company said its forecast did not include any impact from its COVID-19 vaccine, adding it intended to break out sales from the shot beginning in the first quarter this year.

Maersk sees first-quarter boost from strong container demand

Increased demand for goods like furniture, exercise equipment and home improvement goods from shoppers sheltering at home during the pandemic has triggered a spike in shipping rates, boosting Maersk’s earnings.

Maersk’s ocean shipping business, its largest division, “performed at record level in the quarter as a consequence of the strong rebound of demand,” CEO Soren Skou said in a statement.

“Our continued progress makes us confident that we will continue to grow the earnings of the company as the economic situation normalises in 2021 and beyond,” Skou said.

The world’s largest container shipping line, Maersk said it expects earnings before interest, tax, depreciation and amortisation (EBITDA) before restructuring and integration costs of $8.5 billion-$10.5 billion this year, up from $8.3 billion last year.

In the fourth quarter last year, EBITDA rose 85% to $2.71 billion, beating the 2.68 billion forecast by analysts.

Cisco forecasts third-quarter sales above estimates on remote work boost

Cisco Systems Inc forecast current-quarter revenue above analysts’ estimates on Tuesday as the pandemic-induced rise in remote working drives up demand for its networking and teleconferencing tools.

With offices staying shut and scores of professionals working from home due to the health crisis, demand for the company’s videoconferencing platform Webex, virtual private network AnyConnect and cybersecurity products has surged.

Cisco said it expects third-quarter revenue to increase between 3.5% to 5.5%, which implies a range between $12.4 billion to $12.64 billion compared with analysts’ estimate of $12.35 billion.

The company’s revenue from the services business rose 2% to $3.39 billion in the second quarter ended Jan. 23.

However, total revenue fell slightly to $11.96 billion, from $12.01 billion a year earlier. Analysts were expecting a figure of $11.92 billion, according to IBES data from Refinitiv.

Lyft says cost cuts, coming ride recovery could bring third-quarter profit

Lyft Inc said on Tuesday it could become profitable on an adjusted basis by the third quarter of this year despite the pandemic, three months ahead of a previous target, forecasting a rebound in ride-hail demand beginning in the second quarter of 2021.

Shares surged 9% to $58.65 in after-hours trading following the announcement.

Lyft expects COVID-19 vaccine distribution to scale up in the second quarter, allowing more people to return to pre-pandemic normality, and said its own cost cuts were ahead of target. That will help it achieve a profit.

“Based on the improvements we’ve made, there is a chance we can achieve profitability in Q3. Obviously, pulling in profitability would require a strong summer rebound,” Lyft Chief Financial Officer Nelson Chai said during an investor call, adding the more optimistic outlook should increase investor confidence.

The company reported roughly $570 million in fourth-quarter revenue, a 44% decline on a yearly basis, but an uptick of 14% compared with the third quarter. Analysts on average had expected the company to post revenue of $562 million, according to Refinitiv data.

Lyft reported a loss in adjusted earnings before interest, taxes, depreciation and amortization of $150 million in the fourth quarter, indicating it must improve to reach its year-end target of adjusted EBITDA profitability. That compares with a $185 million adjusted EBITDA loss projected by analysts on average.

The smaller-than-expected loss is largely due to Lyft shaving off more costs than originally anticipated, including for software hosting services, payment processing and insurance, John Zimmer, the company’s president, told Reuters in an interview.

Those cuts of $360 million in fixed costs and additional decreases in variable costs would allow the company to continue operating more efficiently once riders return.

“As riders increase … those lower costs will also help drive higher contribution margins,” Zimmer said.

Lyft’s number of active riders in the fourth quarter decreased by more than 45% on a yearly basis to 12,552, but revenue per active rider rose by $1 to $45.40 – a record number, the company said.

James Cordwell, an analyst with Atlantic Equities, said those numbers spoke to the pricing power held by ride-hail companies, even during a pandemic.

Lyft shares have recovered from their record lows during the early months of the virus outbreak in the United States and are trading at roughly the same level as a year ago. Shares of larger rival Uber Technologies Inc have gained more than 47% over the past 12 months.

Unlike Uber, Lyft has not been able to offset the drop in ride-hail revenue with food delivery services. Uber is scheduled to report results on Wednesday after the bell.

Lyft executives in the past have said they remained squarely focused on moving people, not goods, but last quarter the company announced it was working on a white-label or non-Lyft-branded platform to allow deliveries between different businesses for groceries, food and packages.

Zimmer told Reuters on Tuesday that Lyft’s delivery platform was still early in the process and that the business would just be additive, with the company hoping to announce partners by the middle of this year.

Zimmer said Lyft was confident that retail businesses and restaurants were looking to avoid the fees charged by food delivery platforms, including Uber Eats, GrubHub Inc and others.

“They don’t want to pay the 20% to 30% to Uber Eats to do that long-term,” he said. “Those retailers are investing in their own infrastructure, of which we would be part.”