Oblique view of the home depot store entrance in Campbell, California. A few people are entering the store; various items are on display on each side, and a couple of trucks are parked under American flags.
Home Depot (HD) exceeded Wall Street’s estimates on the bottom-line in fiscal first-quarter results, but missed expectations for comparable same-store sales as unfavorable weather earlier this year dented demand for the retailer’s products.
The nation’s largest home improvement retailer delivered adjusted earnings of $2.27 per share on revenue of $26.4 billion for its fiscal first quarter. Consensus analysts expected the company to report adjusted EPS of $2.18 on revenue of $26.4 billion for its fiscal first quarter, according to data compiled by Bloomberg. In the year-ago quarter, the company posted sales of $24.9 billion and adjusted EPS of $2.08.
Comparable same-store sales, however, grew just 2.5% overall in the first quarter, versus the 4.3% expected. In the U.S., same-store sales rose 3%. The metric is closely watched by analysts and serves as a measure of efficiency for retail companies.
Home Depot also reaffirmed its guidance for fiscal 2019. It sees revenue growth of about 3.3% for the year, along with a 5% increase in comparable same-store sales. Adjusted EPS is expected to grow 3.1% from last year to $10.03, below the $10.09 consensus analysts expected.
Shares of Home Depot were little changed as of 6:19 a.m. ET ahead of the opening bell, rising 0.52% to $191.75 each.
Heading into earnings results, analysts expected unfavorable weather at the start of the year to have put a chill on home improvement projects and, by extension, results for companies including Home Depot and Lowe’s (LOW). The latter reports results Wednesday.
"We were pleased with the underlying performance of the core business despite unfavorable weather in February and significant deflation in lumber prices compared to a year ago," Home Depot CEO Craig Menear said in a statement.
In the first several months of the year, data on the housing market had been choppy, with mortgage applications spiking between increases and decreases, according to data from the Mortgage Bankers Association. However, home price growth has slowed, and pending home sales were shown to have jumped a much better-than-expected 3.8% in March, creating a market of new homeowners looking for products to help with home improvement projects.
Shares of Home Depot were up 11.1% for the year-to-date through Monday’s close.
Ashley Merson and her brother Kevin on the porch of the house Ashley is trying to buy in the Hampden neighborhood of Baltimore. A ransomware attack on the city's digital services has delayed the home purchase.
Emily Sullivan/WYPR
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Emily Sullivan/WYPR
Anonymous hackers breached the city of Baltimore's servers two weeks ago. Since then, those servers' digital content has been locked away — and the online aspects of running the city are at an impasse.
Government emails are down, payments to city departments can't be made online and real estate transactions can't be processed.
Hackers demanded 13 Bitcoins — worth around $100,000 today — to relinquish their grip. Baltimore City Mayor Jack Young has said the city won't pay. The FBI and Secret Service are investigating, and the city has contracted with a series of experts to assist in restoring service.
The cyberattack is just one of over 20 made on municipalities this year — and cybersecurity experts say it likely will take months for the city to recover.
"Imagine if somebody would sneak into a government building at night, load up a bunch of boxes with all the paperwork for all the pending permits and all the pending house closings and all the pending business that the city was conducting, put it all in a truck and drive away — and demand some money in order to bring that truck back," said Avi Rubin, a Johns Hopkins computer science professor and cybersecurity expert.
"That's a lot easier to do in cyberspace without getting caught," he said. "And that's what's happened here."
An unbreakable algorithm
The hackers used a ransomware called RobinHood — an extremely powerful and malicious program that makes it impossible to access server data without a digital key. And replicating that key without the hackers is impossible, says Rubin, who has testified about his field before Congress.
"I don't even think that the NSA would be able to break this algorithm," he said. "It's believed by the cryptographic community, both the theoreticians as well as the practitioners, to be unbreakable by today's technologies."
Baltimore officials have said they've turned to their peers in Atlanta for advice on how to deal with the ongoing disruptions.
That attack "should have been an alarm for many other cities," Rubin said. "All you need is one link in the chain and that's what the attackers will go after."
Those weak links are often preventable vulnerabilities like old hardware and old software, both of which Baltimore was using.
Medical records protected
Rubin is also the director of the Health and Medical Security Lab at Johns Hopkins. When malware attacks became more common a few years ago, hospitals were hackers' favorite targets — medical records are very valuable and are time-sensitive since they're needed to treat patients.
Hospitals responded quickly to the threat of malware by bolstering cybersecurity with new hardware and software, Rubin says, and are largely no longer affected by bad actors.
"However," he said, "the city of Baltimore, like many local governments, was not at all prepared for something like this. And if it's never happened, it's only natural to say, 'well, this type of thing has never happened before, so why should we spend a lot of money on it?' "
Rubin agrees with Mayor Young's decision not to pay the ransom for that key. If no one attacked by malware paid the ransom, "these attacks would just completely go away," he said.
Unfortunately, Rubin said, many private companies do quietly pay, which has encouraged hackers to keep up ransomware attacks.
One analysis from CyberEdge found that 45% of organizations hit with ransomware end up paying a ransom. Another, from RecordedFuture, found that at least 17% of state and local government entities pay.
With no key, Rubin said the city will have to rebuild its servers from the ground up. That process will likely take months, he said, and will involve implementing new hardware and software and restoring any data the city may have backed up.
Frustrated homebuyer
In the meantime, Baltimore residents are frustrated there wasn't a plan for cyber catastrophes.
"The fact that you have a completely unsustainable computer system with no plan in place for when something like this happens after watching it happen to countless other cities — it's frustrating and disappointing," said Ashley Merson, a 31-year-old nanny.
Merson has been scrimping and saving for a house for four years. She paid off her debts, got her credit score up and finally was able to make an offer on a two-bedroom duplex house. She is more than ready to leave her low-income apartment complex, where she, her young son and disabled brother squeeze into a one-bedroom.
But just as she was about to settle on that house, the malware attacks struck.
"The process of buying a house is so long and tedious anyway," Merson said. "Waiting is tough."
City officials announced the development of a multi-step "manual workaround" plan on Monday, nearly two weeks after city servers were first breached.
The City of Baltimore has developed a manual workaround that will allow real estate transactions to proceed during the City's technology outage. Starting tomorrow, the Wolman Municipal Building will be open from 7am - 7pm, Monday - Friday. Instructions below - please share! pic.twitter.com/lvvoa7maTX
Merson hopes the now-heavy backlog of homebuyers won't delay her move-in any further. Rent at her apartment complex will increase significantly "sometime in the near future," she said.
If that happens while her family is still in limbo, Merson said, "then it's just going to be pretty crappy situation."
On Monday, the U.S. government announced that it will allow Huawei to purchase American-made goods in order to maintain existing networks and provide software updates to its existing handsets, though the company is still barred from purchasing American parts and components to manufacture new products without license approvals that likely will be denied.
That development wasn't game-changing news, experts told CNBC.
"This is not going to ... change overnight again in terms of the fortune for Huawei," said Nicole Peng, vice president of mobility at independent analyst company Canalys.
"The biggest problem for them right now is the uncertainty," Peng said, adding that Huawei's suppliers are concerned about business continuity given their increasing reliance on the Chinese tech giant over the past year.
The latest development came on the back of U.S. President Donald Trump's administration adding Huawei last week to a list that mandated a license for stateside companies if they want to do business with the Chinese company.
That led Alphabet's Google to suspend business with Huawei that involves transferring hardware, software and other technical services. Bloomberg News also reported that companies like Intel, Qualcomm and Broadcom will not supply Huawei until further notice.
The "snowball effect" started by Google likely "forced" the Trump administration to pull back from its stance, said Anshel Sag, analyst at Moor Insights & Strategy. He added that the current situation "looks clearly political and related to the trade war."
For its part, Huawei has stood defiant. The company's founder, Ren Zhengfei, told Chinese state broadcaster CCTV on Tuesday that "the U.S. government's actions at the moment underestimate our capabilities," according to a transcript published by the outlet.
Ren said Huawei was at odds with the U.S. government, not U.S. firms, and that Huawei is capable of making the chips it buys from the United States — though that does not mean it will stop buying American chips.
"I don't necessarily see Huawei changing course," Sag said. "Ultimately, Huawei knows that what's best for their business is to act as if this 90-day pause is not a pause at all."
Google, for its part, said in a statement that the temporary pause allows the U.S. tech giant "to continue to provide software updates and security patches to existing (Huawei) models for the next 90 days."
Who stands to gain
As Huawei's fortunes hit a roadblock, the discussion has shifted to who may stand to benefit the most from the situation.
"(The) biggest winner in the long run will be US IT companies, but in the short term, tension between two countries raises opportunity for Korea," Daniel Yoo, head of global strategy and research at Kiwoom Securities, told CNBC in an email.
In the smartphone segment, where Huawei was among the few companies seeing annual growth in shipments at a time of slowing sales, South Korea's Samsung Electronics would be a beneficiary, Yoo said. Data from Canalys showed Samsung's annual growth in worldwide smartphone shipments declining 10% in the first quarter of 2019, while Huawei surged 50.2%. In the same period, American technology giant Apple smartphone growth slid 23.2%.
Canalys' Peng agreed, saying that Samsung has "the most overlap" in terms of product and segments with Huawei.
Sag offered a different take, saying that Huawei's domestic competitors Vivo and Oppo could have the biggest upside from the telecommunications giant's vulnerability.
Huawei is growing the most in Europe, he said, a region where the two Chinese brands are becoming "more aggressive" and consumers are more dependent on the Google ecosystem.
— CNBC's Fred Imbert, along with Reuters, contributed to this report.
On Monday, the U.S. government announced that it will allow Huawei to purchase American-made goods in order to maintain existing networks and provide software updates to its existing handsets, though the company is still barred from purchasing American parts and components to manufacture new products without license approvals that likely will be denied.
That development wasn't game-changing news, experts told CNBC.
"This is not going to ... change overnight again in terms of the fortune for Huawei," said Nicole Peng, vice president of mobility at independent analyst company Canalys.
"The biggest problem for them right now is the uncertainty," Peng said, adding that Huawei's suppliers are concerned about business continuity given their increasing reliance on the Chinese tech giant over the past year.
The latest development came on the back of U.S. President Donald Trump's administration adding Huawei last week to a list that mandated a license for stateside companies if they want to do business with the Chinese company.
That led Alphabet's Google to suspend business with Huawei that involves transferring hardware, software and other technical services. Bloomberg News also reported that companies like Intel, Qualcomm and Broadcom will not supply Huawei until further notice.
The "snowball effect" started by Google likely "forced" the Trump administration to pull back from its stance, said Anshel Sag, analyst at Moor Insights & Strategy. He added that the current situation "looks clearly political and related to the trade war."
For its part, Huawei has stood defiant. The company's founder, Ren Zhengfei, told Chinese state broadcaster CCTV on Tuesday that "the U.S. government's actions at the moment underestimate our capabilities," according to a transcript published by the outlet.
Ren said Huawei was at odds with the U.S. government, not U.S. firms, and that Huawei is capable of making the chips it buys from the United States — though that does not mean it will stop buying American chips.
"I don't necessarily see Huawei changing course," Sag said. "Ultimately, Huawei knows that what's best for their business is to act as if this 90-day pause is not a pause at all."
Google, for its part, said in a statement that the temporary pause allows the U.S. tech giant "to continue to provide software updates and security patches to existing (Huawei) models for the next 90 days."
Who stands to gain
As Huawei's fortunes hit a roadblock, the discussion has shifted to who may stand to benefit the most from the situation.
"(The) biggest winner in the long run will be US IT companies, but in the short term, tension between two countries raises opportunity for Korea," Daniel Yoo, head of global strategy and research at Kiwoom Securities, told CNBC in an email.
In the smartphone segment, where Huawei was among the few companies seeing annual growth in shipments at a time of slowing sales, South Korea's Samsung Electronics would be a beneficiary, Yoo said. Data from Canalys showed Samsung's annual growth in worldwide smartphone shipments declining 10% in the first quarter of 2019, while Huawei surged 50.2%. In the same period, American technology giant Apple smartphone growth slid 23.2%.
Canalys' Peng agreed, saying that Samsung has "the most overlap" in terms of product and segments with Huawei.
Sag offered a different take, saying that Huawei's domestic competitors Vivo and Oppo could have the biggest upside from the telecommunications giant's vulnerability.
Huawei is growing the most in Europe, he said, a region where the two Chinese brands are becoming "more aggressive" and consumers are more dependent on the Google ecosystem.
— CNBC's Fred Imbert, along with Reuters, contributed to this report.
About 7,000 white-collar jobs are being eliminated as part of Ford's massive organizational restructuring. The automaker says it will save $600 million per year as a result.
Rebecca Cook/Reuters
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Rebecca Cook/Reuters
Updated at 11:25 a.m. ET
Ford is eliminating about 7,000 white-collar jobs — or about 10% of its salaried workforce — as part of a previously announced company-wide global restructuring.
About 800 U.S. workers will be losing their jobs between now and August. Some workers are being laid off while others are being reassigned, Ford says.
It says the company's management team is shrinking by close to 20% as part of the restructuring, which will save Ford about $600 million a year.
In a letter to employees, Ford CEO Jim Hackett said the restructuring is reducing bureaucracy and making Ford "flatter" — meaning most teams have no more than 9 layers of management, rather than up to 14.
He acknowledged saying goodbye to colleagues is "difficult and emotional."
"We have moved away from past practices in some regions where team members who were separated had to leave immediately with their belongings, instead giving people the choice to stay for a few days to wrap up and say goodbye," he wrote.
Ford's massive restructuring, expected to cost about $11 billion, is designed to cut costs dramatically. The company has seen profits slump, and while its North American operations continue to make money — thanks largely to the wildly popular F-150 pickup — Ford's operations overseas are struggling.
Hackett has promised that the "organizational redesign" currently underway will turn the company around.
Ford(F) says workers will begin to be notified of cuts starting Tuesday, and the terminations will be completed by the end of August. About 2,400 of the jobs cuts are in North America, and 1,500 of the positions will be eliminated through a voluntary buyout offer.
The move is an effort to cut bureaucracy within the company and flatten the management structure in addition to its desire to cut costs, according to a letter CEO Jim Hackett sent to employees Monday morning.
Ford has been making cuts over the past several months as part of a massive restructuring that is expected to cost thousands of jobs across the globe. The company committed last year to spending $11 billion to reshape its business, hoping to boost sales overseas and modernize its fleet of vehicles by focusing more on electric and autonomous driving tech.
But Ford has been slow to give details of how it will spend the $11 billion and what jobs might be cut as part of the restructuring of the business. It has said it will close three plants in Russia, one factory in Europe and another in Brazil. But it has said the moves announced so far represent only about $1 billion of the $11 billion restructuring it plans to do.
Ford also faces global challenges. The domestic unit is the strongest part of the company, and Ford reported last quarter that sales and profits increased in North America. But it has struggled overseas, prompting significant restructuring there. Last year it reported losses in South America, Asia and Europe even as it made money in North America and from its finance arm.
In March, the company said it was cutting roughly 5,000 jobs in Germany through a "voluntary separation" program. It also said it would cut a number of jobs in the United Kingdom, but did not provide more information about those positions at that time.
Ford's struggles
Ford faces pressure to improve its profitability. Its profit margin has lagged those of some competitors. It has announced the costs of commodities it buys, such as steel and aluminum, have increased about $1 billion annually after tariffs were imposed on those products, even though it sources most of those raw materials from domestic mills. But its executives have said the effort to reshape the business is part of a longer term strategy and not a response to those increased costs.
Because of its restructuring efforts Ford's stock is up by about a third so far this year, though its was slightly lower in morning trading on the news. Still, that's more a reflection of how low Ford shares were coming into the year.
Ford's market value of $41 billion is only slightly higher than that of Tesla(TSLA), an automaker a fraction of its size that has rarely posted a profit. And it's worth about 40% less than Uber(UBER), which only recently went public and has yet to report a profit.
But Ford and the rest of the auto industry is facing a lot of pressure to prepare itself for the future. The major automakers all have to buy into new technology and plan for a world full of self-driving cars and customers who would rather buy rides than autos themselves. They also face competition from tech companies that are also interested in the market, like Tesla and Alphabet's(GOOGL) Waymo.
"It's Ford today. It was GM. All the automakers are looking to do this," said Michelle Krebs, senior analyst with Cox Automotive. "Everyone cut to the bone during the great recession, then they beefed up since then. They have to figure out how do you wring more money out of today's business to free up money for future business. The problem is we don't know when that future business will pay off."
Krebs said automakers are also preparing for a possible slowdown in auto sales and a possible slowing US economy. Ford sold 237,000 fewer cars and trucks globally in the first quarter, a drop of 14%. It has essentially dropped the traditional sedan from its US product lineup.
Ford is playing catch-up with other automakers, which are further along in their ambitions for electric and self-driving vehicles. It does not currently offer any battery-only electric vehicles, because it halted production of the electric Focus when it discontinued production of the gas version of that vehicle. It lags some other automakers in the race to bring self-driving vehicles to the market, though like other automakers it does have test versions of those vehicles on the road.
So Ford is looking to make new alliances as it restructures its business. It's teamed with Volkwagen to develop new products, and recently announced a $500 million investment in Rivian, which plans to debut an electric truck next year.
Other big auto companies are also looking toward the future. GM, for example, has brought in millions in investment by setting up a separate unit known as Cruise to focus on self-driving cars. GM has also sold stakes to Softbank and Honda. Ford has said it's looking at possible outside investors in its electric and self-driving car unit as well.
-- CNN's Vanessa Yurkevich contributed to this report
A T-Mobile and Sprint store sit side-by-side in a strip mall on April 30, 2018 in El Cerrito, California.
Getty Images
The chairman of the Federal Communications Commission says he plans to recommend the agency approve the $26.5 billion merger of wireless carriers T-Mobile US and Sprint, saying it'll speed up 5G deployment in the U.S.
FCC Chairman Ajit Pai also said Monday that the combination will help bring faster mobile broadband to rural Americans.
"Two of the FCC's top priorities are closing the digital divide in rural America and advancing United States leadership in 5G, the next generation of wireless connectivity. The commitments made today by T-Mobile and Sprint would substantially advance each of these critical objectives," he said in a statement.
Pai said the companies have committed to deploying a 5G network that would cover 97% of the U.S. population within three years of the closing of the merger and 99% of Americans within six years. In addition, 85% of rural Americans would be covered within three years and 90% covered within six years. T-Mobile and Sprint also guaranteed that 90% of Americans would have access to mobile broadband service at speeds of at least 100 Mbps and 99% would have access to speeds of at least 50 Mbps.
Pai said T-Mobile US Inc. and Sprint Corp. would suffer "serious consequences" if they don't meet their FCC commitments, including the possibility of having to pay billions to the Treasury Department.
Both the FCC and Justice Department must approve the deal. The companies argue that the combination will lead to better "5G" service, the next generation of wireless. They've also promised to create U.S. jobs and say they will compete with cable companies as well as Verizon and AT&T. Public-interest and labor groups have raised concerns about wireless price increases and job cuts.
The Obama administration rebuffed the companies' earlier effort to merge, as well as an attempted deal between AT&T and T-Mobile, on concerns that such deals would hurt competition in the wireless industry.
Shares of T-Mobile jumped nearly 7 percent in early trading, while Sprint's stock soared 27 percent.
