Wall Street Lunch: Boeing Loses $6 Billion
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Summary:
- Boeing post a $9.97 per share loss and $1.3 billion cash burn, but it may be priced in.
- AT&T posted a small revenue miss but beat adjusted profit expectations, reaffirming its full-year forecast with steady growth in wireless and broadband services.
- Technology stocks, particularly chipmakers like Arm and Nvidia, faced setbacks, while Texas Instruments received positive analyst ratings for its strong inventory position.
- Billionaire Paul Tudor Jones advocates for inflation hedges like gold, bitcoin, and commodities, citing the Nasdaq as a preferred inflation hedge for younger investors.
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Is all the bad news priced in now for Boeing? (0:15) Stocks slump on chip weakness. (2:35) Nvidia mea culpa. (3:58)
The following is an abridged transcript:
Our top story so far, is Boeing (NYSE:BA) at a bottom?
There’s a case to be made that all the bad news it priced into the plane-maker’s stock, with shares down slightly after Boeing reported a $6.7 billion quarterly loss.
In line with an earlier warning, Boeing reported a net loss of $9.97 a share on revenue of $17.8 billion. The company burned through $1.3 billion in cash, leaving it with about $10.5 billion at the end of September.
CEO Kelly Ortberg says the company has lots of work ahead before it can build a newly designed plane.
“We need to know what’s going on, not only with our products, but with our people,” he said in a memo to employees. “And most importantly, we need to prevent the festering of issues and work better together to identify, fix, and understand the root cause.”
He said the company must fix a broken culture, get smaller and improve execution on new plane models that have been delayed for years. Ortberg’s memo included remarks for his first earnings call.
Boeing in the past six years has worked to overcome two deadly crashes of its popular 737 Max jet, the pandemic’s effect on air travel and global supply chains, a criminal conviction, factory delays, a blowout of a door panel on an Alaska Airlines flight and a strike by 33,000 machinists.
SA Investing Group Leader Dhierin Bechai says: “A 1% decline in sales for the entire company is not extremely bad, but it should be noted that the biggest part of the impact on the work stoppage will likely be felt in Q4. The results were not pretty, but with the challenges Boeing faces, a $2 billion free cash flow burn, while a lot, is actually quite OK.”
Also reporting this morning, AT&T (T) followed suit like its peer Verizon (VZ) and posted a small revenue miss and an adjusted profit beat for the third quarter while reaffirming its forecast for the full year.
But for the full year, it continues to expect adjusted EPS in the $2.15-$2.25 range (midpoint $2.20) vs $2.20 consensus, on wireless service revenue growth of 3%. Broadband revenue growth is seen up +7% and adjusted EBITDA growth is in the 3% range.
In today’s trading, Wall Street slumped on Wednesday, weighed down by a slide in technology and consumer discretionary stocks and a post-earnings plunge in some high-profile companies.
Meanwhile, a continued bond sell-off on bets that the Federal Reserve would not be as aggressive with rate cuts as previously expected also weighed on equities.
Technology was slammed as chip stocks fell, led by a big decrease in Arm (ARM). The British chip designer canceled a license deal that allows Qualcomm (QCOM) to use its intellectual property.
Among other active stocks, Texas Instruments (TXN) got some buying love after third-quarter beat as Wall Street analysts had largely positive views on the stock.
Benchmark reiterated its Buy rating and its $230 price target on the stock.
The analysts believe Texas Instruments elevated internal inventory should allow it to aggressively compete for sockets it was forced to pass on during the period of COVID-related supply constraints. That should continue the momentum it is currently enjoying in its non-auto and Industrial businesses. It also allows the company to flex its supply and capacity strengths as its broader core markets begin to see shipments return to consumption levels next year.
And Enphase Energy (ENPH) plunged after reporting a wide miss on Q3 adjusted earnings and a 31% Y/Y decline in revenues, while also guiding Q4 revenues well below consensus.
For Q4, Enphase issued downside guidance for revenues of $360 million to $400 million vs. $433.5 million analyst consensus, with non-GAAP gross margin seen in a range of 49%-52%.
In other news of note, Nvidia (NVDA) CEO Jensen Huang said the design flaw that caused production of its Blackwell line of GPUs to be delayed is now fixed and that it was entirely the semiconductor giant’s fault.
“We had a design flaw in Blackwell,” Huang said in Denmark, according to Reuters. “It was functional, but the design flaw caused the yield to be low. It was 100% Nvidia’s fault.”
Huang added that Taiwan Semiconductor (TSM), which manufactures processors for Nvidia, helped the company recover from the yield issues and “resume the manufacturing of Blackwell at an incredible pace.”
And in the Wall Street Research Corner, billionaire hedge fund manager Paul Tudor Jones says he is long gold (XAUUSD:CUR), bitcoin (BTC-USD) and commodities, and also noted that the tech-heavy Nasdaq Composite index (COMP:IND) was a “great” inflation hedge.
On CNBC he said the “playbook” for the way to reduce U.S. debt to GDP ratio is to “inflate your way out.”
He said: “You have a small tax on the consumer, and you run interest rates below inflation and nominal growth above inflation.”
“All roads lead to inflation. I am long gold. I am long bitcoin. I think commodities are so ridiculously underowned, so I’m long commodities.”
“I think most young people find their inflation hedges via the Nasdaq, that’s also been great. I probably have some basket of gold, bitcoin, commodities and Nasdaq, something like that. And I own zero fixed income.”