Home prices continued to grow at a slower rate in February: S&P Case-Shiller - CNBC

Prospective home owners tour a home in Jurupa Valley, California.

Nichola Groom | Reuters

National home prices rose 4% in February from a year earlier, according to the latest reading on the S&P CoreLogic Case-Shiller home price index. That is down from a 4.2% annual gain in January.

The 10-City Composite rose 2.6% annually, down from 3.1% in the previous month. The 20-City Composite posted a 3% year-over-year gain, down from 3.5% in January.

Markets still gaining big: Las Vegas, Phoenix and Tampa, Florida, saw the highest year-over-year gains among the 20 cities. Las Vegas prices were up 9.7%, followed by Phoenix with a 6.7% increase, and Tampa with a 5.4% increase.

Prices have been gaining since 2012, but in the past year those gains have been shrinking due to higher mortgage rates and a general overheating of values in most metropolitan markets, which hurt sales.

"Home sales drifted down over the last year except for a one-month pop in February 2019," said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. "Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year."

While it is unlikely that home values will go negative on a national level, the San Francisco Bay Area did see home prices fall annually in March for the first time since 2012, according to CoreLogic. Home prices there had overheated far beyond historical affordability levels, causing home sales to drop dramatically in the past eight months.

"Last year, the largest gain was 12.7% in Seattle. Regional patterns are shifting. The three California cities of Los Angeles, San Francisco and San Diego have the three slowest price increases over the last year," added Blitzer. "Chicago, New York and Cleveland saw only slightly larger prices increases than California. Prices generally rose faster in inland cities than on either the coasts or the Great Lakes."

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https://www.cnbc.com/2019/04/30/home-prices-grew-at-slower-rate-in-february-sp-case-shiller.html

2019-04-30 13:00:44Z
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General Electric reports Q1 earnings - Yahoo Finance

The General Electric logo appears above a trading post on the floor of the New York Stock Exchang. (AP Photo/Richard Drew)

General Electric (GE) reported first quarter earnings on Tuesday that beat Wall Street’s expectations, sending its stock soaring as weakness in its beleaguered power unit was partly offset by strength in oil, gas and aviation.

The troubled industrial conglomerate posted adjusted earnings per share of 14 cents on revenue of $27.3 billion. That compared with expectations of 9 cents per share on revenue of $27.11 billion, according to a consensus forecast from Bloomberg.

On a continuing basis, GE’s profit in Q1 was 11 cents per share— more than tripling from the comparable year ago period, when it earned just 3 cents per share.

Those results were enough to send GE’s stock on a tear in pre-market action, rallying by more than 10% from Monday’s close. In early dealings, the company’s shares traded around $10.74, up by more than $1.

GE reported adjusted negative free cash flows—a metric of intense interest to Wall Street—of around $1.2 billion in the quarter. However, that figure narrowed substantially from negative $1.76 billion a year ago.

The company’s most closely-watched segments include its capital, aviation and health care segments. Yet GE is plagued by the underperformance of its power business, which GE expects to pare by about $400 million this year.

During the first quarter, orders in its power business plunged by 14% year-over-year—as expected—and revenue diving by 22%. However, gains in GE’s aviation, oil and gas and healthcare segments helped counteract the softness in power.

Aviation revenues surged 12% from a year ago, while oil and gas money saw a 4% jump year-over-year. Yet renewable energy revenues contracted by 3% from the first quarter of 2018, underscoring GE’s continued struggles in power generation.

Analysts at UBS recently declared that “the bottom is in sight” for GE Power, rating the stock as a buy with a target of $13.

In March, GE guided lower expectations for 2019’s earnings growth, as the company struggles to rein in debt and reform its beleaguered power business. CEO Larry Culp said that the segment — one of GE’s most closely watched segments —would improve but remain in the red.

In a statement, Culp reiterated March’s guidance for the company, saying that he was “encouraged by the improvements we are making inside GE. This is one quarter in what will be a multi-year transformation, and 2019 remains a reset year for us.”

GE’s stock, traded on the New York Stock Exchange closed up 1.7% on Monday at $9.73.

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2019-04-30 11:51:00Z
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Alphabet's stock tanks with analysts asking, 'Hey Google, what happened to revenue growth?' - CNBC

Google CEO Sundar Pichai testifies during a House Judiciary Committee hearing on Capitol Hill in Washington, DC, December 11, 2018.

Saul Loeb | AFP | Getty Images

Wall Street analysts were largely caught off guard after Alphabet posted a rare revenue miss in its earnings report on Monday after the bell and they were still confused after the results. Analysts noted a slowdown in advertising revenue growth and repeated calls for the company to be more transparent in its earnings report.

Shares plunged more than 7% in premarket trading.

"This quarter will no doubt result in a reset to forward expectations, particularly for the ads business, as investors search for reasons for the fairly meaningful deceleration – we expect the stock to trade sideways while we all grapple with whether this quarter was simply a result of product change headaches or if ad budgets are shifting elsewhere," Nomura Instinet analyst Mark Kelley said.

"We side with the former and maintain our Buy rating, though calls for more disclosure to help us all with these questions were once again a main theme, and with good reason," the analyst added.

Google revenue increased 17%, slower than the 28% pace a year earlier. Advertising sales increased 15%, compared to a 24% growth rate a year ago. Alphabet executives said on the call that the slowdown was due to currency fluctuations and timing of product changes but analysts apparently wanted more.

The parade of transparency calls continued with analysts at J.P. Morgan. "Overall, we expect GOOGL shares to be under pressure in the near-term given sub-20% revenue growth & downward earnings revisions. As noted above, the exact drivers of GOOGL's slowing topline are unclear, & we believe frustration around GOOGL's lack of transparency will only increase," they said.

Revenue deceleration was enough for analysts at Stifel who downgraded the stock to hold from buy. "The unexpected degree of revenue deceleration and lower visibility into the near-term reacceleration / deceleration potential lead us to believe the multiple on shares may be challenged to move meaningfully higher over the next twelve months," wrote Stifel analyst Scott Devitt.

"Hey Google, What Happened To Revenue Growth?" asked RBC analyst Mark Mahaney in his earnings wrap note to clients.

Still, he said, "we're modest buyers on the 7% AM pullback; we'd be material buyers on a material pullback. We don't believe GOOGL is going through a material, sustained growth deceleration."

Here's what major analysts are saying about Alphabet:

Stifel- Downgraded to hold from buy

"We view shares as fairly-valued at current levels and believe the multiple is likely to remain range bound over the next twelve months as a potential deceleration digestion period lies ahead with lower visibility into near-term revenue growth rates. The upside to Street margin in 1Q would be an encouraging trend all else equal, though the topline deceleration path and questions regarding Alphabet's long-term revenue growth trajectory are likely more meaningful to intermediate-term stock performance in our view, while discretionary spending could also cause opex to tick up again in future quarters. At aftermarket prices, GOOGL shares trade at approximately 22x our 2020E GAAP EPS, matching the three-year historical average of 22x forward two-year EPS."

Goldman Sachs- Buy rating and price target to $1,350 from $1,400

"Despite upside to GAAP EPS excluding the EU fine, Alphabet shares will likely be under pressure as Sites revenue growth on a constant currency basis came in below 20% for the first time since 1Q15. While a bigger FX headwind was clearly a key reason for the shortfall, management cited the timing of ad product changes as another factor that in some quarters are cited as tailwinds but this quarter was cited as hurting revenue growth. The focus will now turn to 2Q19 results and whether or not net ad growth will reaccelerate."

Barclays- Overweight rating and price target to $1,315 from $1,350

"Google missed every revenue line by 1.5%-4% for 1Q, and we were below consensus. We have to imagine that some of the deceleration is deliberate around product changes, and some is Google resetting the bar. Network trends are likely to get worse as Yahoo and AOL drop out of AFS going forward."

J.P. Morgan - Overweight rating and price target to $1,310 from $1,250

"Overall, we expect GOOGL shares to be under pressure in the near-term given sub-20% revenue growth & downward earnings revisions. As noted above, the exact drivers of GOOGL's slowing topline are unclear, & we believe frustration around GOOGL's lack of transparency will only increase. That being said, GOOGL has maintained 20%+ growth for a very long time—off a large base—and now represents roughly 1/3 of the global online ad market. It also faces increased advertising competition from AMZN, at least on the margin. Our 2019/2020 revenue & GAAP EPS all come down about 2% as improved Other Bets losses partly offset slower Google Segment revenue growth. We maintain our Overweight rating, but prefer other FANG names Facebook, Amazon, & Netflix to Google."

Nomura Instinet- Buy rating and price target to $1,300 from $1,310

"This quarter will no doubt result in a reset to forward expectations, particularly for the ads business, as investors search for reasons for the fairly meaningful deceleration – we expect the stock to trade sideways while we all grapple with whether this quarter was simply a result of product change headaches or if ad budgets are shifting elsewhere. We side with the former and maintain our Buy rating, though calls for more disclosure to help us all with these questions were once again a main theme, and with good reason. We're slightly lowering our forward outlook and our target price moves to $1,300."

Morgan Stanley- Overweight rating and price target to $1,425 from $1,500

"GOOGL's 1Q ex FX Websites revenue came in 1% lower than our estimate…growing 19% Y/Y, the first time GOOGL has grown ex FX less than 20% in 17 quarters (Q3:14). GOOGL pointed to "the timing of product changes in ads" as one of the factors that drove the growth deceleration…but didn't provide any more clarity around what the changes were, whether the impact will be linear by quarter, or whether there will be more changes to come. The fact is we aren't sure what changes GOOGL made in the quarter that drove the deceleration and this is something the Street must figure out. While EBIT, EBITDA, and FCF were all stronger than expected, the forward growth trajectory of Websites revenue (given the scale and leverage in this ~$100bn annualized business) is likely to remain top of mind to determining long-term valuation."

RBC- Outperform rating

"We're modest buyers on the 7% AM pullback; we'd be material buyers on a material pullback. We don't believe GOOGL is going through a material, sustained growth deceleration. 1) The TAM remains $1T+ in global advertising/marketing spend. 2) Based on our extensive survey work, we don't see evidence of changes in Marketers' view of Google – budget allocations, future spend intentions, or perceived ROI (absolute or relative). And 3) We believe GOOGL's investments in Cloud, Internet-connected Homes & Autonomous Vehicles help set the company up for more years of premium growth & profits. And valuation remains reasonable, in our view, at ~20x Core Google '19E GAAP EPS, adjusting for cash."

Bank of America- Buy rating

"Revenue decelerated more than expected, while several peers exceeded expectations (though FB ad growth decelerated 220 bps q/q, much like Google ads) and we would expect Google stock to give back some of the recent gains (stock has rallied from $1,200 in early April, vs S&P index up 4%). Looking forward, while tougher comps may continue to impact 2019 ad revenues, Google could also introduce improvements which could accelerate revenues. While we are disappointed by below-Street revenue (and Google could avoid some stock volatility with better disclosure), we continue to be optimistic on medium-term benefit from machine learning on ad targeting, revenue potential driven by new investments (Google cloud and Waymo) and relatively undemanding core Google valuation. We maintain our Buy rating. Potential catalysts from here include: 1) new products (hardware) at Google I/O on May 7th; 2) YouTube news from upfront; and 3) visibility on Google Cloud or Waymo."

Deutsche Bank- Buy rating and price target to $1,300 to $1,385

"We appreciate quarterly results can be volatile and acknowledge the company's long-term focus, but the magnitude of the deceleration on a constant-currency basis marked the largest sequential move down since 3Q12. Given the magnitude of the change here, particularly given the consistency of growth rates historically, we think Google did a poor job explaining the slow-down. While the CFO flagged timing uncertainty last quarter, the comments were so opaque as to render them meaningless to most investors rather than a proper warning that top line growth would slow. In addition to the sharp deceleration, with gross ad revenue approaching $154B at Google in 2020, combined Google + Face-book ad revs of $237B in 2020 is on track to cross 40% of the global ad market by our estimates. Given slowing growth and rising penetration, we see saturation fears coming back to the fore on Alphabet shares. We reduce our total sites revenue ex-FX in 2019 to 18% (from 20.7%) and reduce our target price to $1,300 (from $1,385 previously) reflecting lower estimates and slightly lower multiples."

UBS- Buy rating

"After a Q4 earnings call message of potential volatile ad revs due to product changes, GOOG's Q1 '19 earnings report reflected that message (our conservative modeling was not enough) US/Europe ad revs decelerated worse than expected (our initial take is that trend is driven by supply/clicks as opposed to demand). Mgmt framed tough YoY comps (we think referencing YouTube product strength from year ago as headwind to volumes) & emphasized that no one product change caused such a headwind. We take a more modest approach to ad revs growth in 2019 to conservatively frame tough comps and/or potential product changes as we attempt to correctly frame the headwind. Leaving aside the short term debate (as a stock overhang), we still see GOOG as a key long term holding and nothing in this quarter changes our view on the structural drivers of revenue growth and FCF generation (AI/machine learning, local advertising, media consumption, cloud computing, hardware & Other Bets) – especially at what we see as a reasonable absolute valuation when measured against growth."

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https://www.cnbc.com/2019/04/30/alphabet-stock-slammed-as-analysts-cite-lack-of-revenue-growth-and-transparency.html

2019-04-30 11:21:40Z
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GE +7.3% as profit triples, confirms guidance - Seeking Alpha

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1. GE +7.3% as profit triples, confirms guidance  Seeking Alpha
2. GE shares pop 8% after earnings beat expectations, CEO Culp reaffirms 2019 forecast  CNBC
3. GE posts strong 1Q on improved aviation-related revenue  Fox Business
4. GE stock surges 10% after Q1 earnings beat Wall Street  Yahoo Finance
5. General Electric quarterly profit more than triples  Reuters
6. View full coverage on Google News

https://seekingalpha.com/news/3455996-ge-plus-7_3-percent-profit-triples-confirms-guidance

2019-04-30 11:23:00Z
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GE burns through $1.2 billion but Wall Street is happy it wasn't worse - CNN

Shares of GE (GE) climbed 6% in premarket trading on Tuesday after the company reported profit and revenue that exceeded forecasts. Wall Street is betting the company's recovery remains intact.

GE's struggles continue to be driven by its slumping power division. Profit tumbled 71% in that unit as orders nosedived.

Yet GE is standing by its 2019 guidance for industrial free cash flow to range between negative $2 billion and zero.

"I am encouraged by the improvements we are making inside GE," CEO Larry Culp said in a statement. "This is one quarter in what will be a multi-year transformation, and 2019 remains a reset year for us."

That's despite the emergence of a new risk: the Boeing (BA) 737 Max crisis. A GE joint venture supplies the engines to the 737 Max, which has been grounded due to safety concerns.

"GE is also working arm in arm with Boeing while actively monitoring the grounding of the 737 MAX fleet," the company said.

Culp, who became GE's first outsider CEO last fall, has moved urgently to try to fix the iconic company after years of bad decisions broke its balance sheet. GE slashed its dividend to a penny, accelerated sales of long-held businesses and promised to rapidly pay down debt.

During the first quarter, GE announced the sale of its BioPharma unit to Danaher (DHR), closed the spinoff of its century-old railroad division and cleaned up its financial arm. GE Capital reached a $1.5 billion settlement with the Justice Department to resolve allegations against its defunct subprime lender WMC Mortgage. Last week, WMC filed for bankruptcy.

"We continue to focus on reducing leverage and improving the underlying performance of our businesses," Culp said on Tuesday.

GE Power sales fell 14% decline as the fossil-fuels division continues to get hurt by the rise of renewables. However, GE said its power business performed better than expected, and it reported a 6% increase in its orders backlog. GE has moved to fix the power division by cutting jobs and closing plants.

Aviation continues to be a bright spot at GE. The jet engine division reported a 12% increase in revenue as orders rose 7% thanks to strong demand from manufacturers. GE shipped 424 LEAP engines during the first quarter, up from just 186 the year before.

GE continues to wind down GE Capital, the financial arm that nearly ruined the company during the 2008 crisis. GE Capital reported a profit of $171 million, up from a loss of $1.8 billion a year ago.

"GE remains focused on shrinking and de-risking GE Capital, including improving its leverage profile," the company said.

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https://www.cnn.com/2019/04/30/investing/ge-earnings-stock/index.html

2019-04-30 10:59:00Z
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‘Hidden backdoors’ were found in Huawei equipment, reports Bloomberg - The Verge

Vodafone Italy discovered “hidden backdoors” in Huawei equipment that would have allowed the Chinese company to access users’ home networks as well as Vodafone’s Italian fixed-line network, reports Bloomberg. The vulnerabilities were discovered between 2009 and 2011 in Huawei’s home internet routers, as well as its equipment used in parts of Vodafone’s network infrastructure. There was no evidence of data being compromised.

Bloomberg reports that both the router and network vulnerabilities continued to exist beyond 2012, and also existed in the company’s networks in the UK, Germany, Spain, and Portugal. Sources say that Vodafone continued to use the equipment because it was cheaper than the competition and the cost to remove it was prohibitive.

In a statement given to Bloomberg, Vodafone acknowledged the vulnerabilities but contested the timeline, saying they were resolved in 2011 and 2012. Huawei says it was informed of the vulnerabilities in 2011 and 2012, and that they were fixed at the time.

The revelations come as Huawei’s role in future 5G networks is under intense scrutiny worldwide over fears that its equipment could be exploited to aid in China’s intelligence efforts. Multiple countries are currently scrutinising Huawei’s security practices, as governments decide which parts of their 5G networks to allocate to the Chinese giant. The US is moving to ban the use of Huawei equipment, and is lobbying its allies to do the same. Meanwhile, the UK has reportedly made a preliminary decision to allow the use of Huawei’s equipment in non-core parts of its networks, but is under pressure from US officials to ban it completely.

Along with issues affecting its networking equipment, Vodafone Italy also identified issues with Huawei’s home internet routers, which Vodafone believed would give Huawei backdoor access to both local machines and wide-area networks. Huawei was reportedly reluctant to disable the Telnet feature that was creating the vulnerability, claiming it relied on it to configure the devices remotely.

Huawei characterized the vulnerabilities as “mistakes” rather than deliberate inclusions in the equipment. “These were technical mistakes in our equipment, which were identified and corrected,” the company told ZDNet, “The accepted definition of ‘backdoors’ is deliberately built-in vulnerabilities that can be exploited — these were not such. They were mistakes which were put right.”

A computer security professor quoted in the report, Stefano Zanero, said that there’s no obvious way to know if a vulnerability is an accidental bug or an intentional backdoor. However, he added that “the vulnerabilities described in the Vodafone reports from 2009 and 2011 have all the characteristics of backdoors: deniability, access and a tendency to be placed again in subsequent versions of the code.”

In January this year, Vodafone paused the use of Huawei’s equipment in its core infrastructure across Europe, citing the ongoing debates around the security of the equipment. More recently, Vodafone has warned that a total ban could impact the rollout of its 5G networks, and argued that there was no evidence that Huawei’s equipment posed a security risk. The revelations about these historical vulnerabilities, and Huawei’s approach to patching them, continues to raise questions about how safe its equipment is to use.

Last month, a UK cybersecurity watchdog raised concerns over the Chinese company’s “basic engineering competence and cyber security hygiene.” The same day, The Register reported lapses with how Huawei had patched a vulnerability in its routers in 2013 which later allowed them to be used as part of a botnet.

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https://www.theverge.com/2019/4/30/18523701/huawei-vodafone-italy-security-backdoors-vulnerabilities-routers-core-network-wide-area-local

2019-04-30 09:42:53Z
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Vodafone found security flaws in Huawei equipment in 2011, 2012 - Reuters

FILE PHOTO: The Logo of Huawei is seen at its showroom in Shenzhen, Guangdong province, China March 29, 2019. REUTERS/Tyrone Siu/File Photo

LONDON (Reuters) - Telecoms group Vodafone found security flaws in equipment supplied by China’s Huawei to its Italian business in 2011 and 2012, the two companies said on Tuesday.

Vodafone, Europe’s biggest telecoms group, said it had found security vulnerabilities in two products and that both incidents had been resolved quickly. Bloomberg reported the news first.

Huawei, the world’s biggest producer of telecoms equipment, is under intense scrutiny after the United States told allies not to use its technology because of fears it could be a vehicle for Chinese spying. Huawei has categorically denied this.

Britain last week sought to navigate its way through the bitter dispute between the two countries, deciding to block Huawei from all core parts of its 5G network and restrict access to non-core parts.

Huawei said it was made aware of historical vulnerabilities in 2011 and 2012 and that they had been addressed at the time.

“Software vulnerabilities are an industry-wide challenge,” it said. “Like every Information and Communications Technology vendor we have a well-established public notification and patching process, and when a vulnerability is identified we work closely with our partners to take the appropriate corrective action.”

Reporting by Kate Holton and Jack Stubbs, editing by Louise Heavens

Our Standards:The Thomson Reuters Trust Principles.

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https://www.reuters.com/article/us-huawei-security-vodafone/vodafone-found-security-flaws-in-huawei-equipment-in-2011-2012-idUSKCN1S60N0

2019-04-30 08:37:00Z
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