Tag: Business News

Adobe shares rose more than 3% after hours on Tuesday after the company announced better-than-expected earnings for the second quarter of its 2019 fiscal year, which ended on May 31, and lighter-than-expected guidance.

Here are the key numbers:

• Earnings: $1.83 per share, excluding certain items, vs. $1.78 per share as expected by analysts, according to Refinitiv.
• Revenue: $2.74 billion, vs. $2.71 billion as expected by analysts, according to Refinitiv.

Adobe’s revenue grew 25% year over year in the quarter, according to a statement.

Adobe’s largest business segment, Digital Media, which includes the Creative Cloud and Document Cloud products, produced $1.89 billion in revenue, up 22% and above the $1.86 billion consensus estimate among analysts polled by FactSet. The Digital Experience segment, which contains Magento and Marketo, had revenue of $784 million, over the FactSet consensus estimate of $777.2 million.

“With Digital Media ARR [annualized recurring revenue growth coming down from 30%-plus range in the last couple of quarters, investors have begun to question the long-term growth potential of the segment,” Stifel analysts led by Tom Roderick wrote in a note distributed to clients on Sunday. “While the potential for seat conversion still remains internationally, we view existing account penetration and new use-cases as the primary seat and ARR growth drivers in the near-term.”

The analysts suggested that additional price increases could bring about more growth.

Adobe said that for the fiscal third quarter, it expects $1.95 in earnings per share, excluding certain items, on $2.80 billion in revenue. Analysts polled by Refinitiv had been looking for $2.05 in earnings per share, excluding certain items, and $2.83 billion in revenue for that period.

Adobe’s stock is up 22% so far in 2019.

Executives will discuss the quarterly results with analysts on a conference call at 5 p.m. Eastern time.

This is breaking news. Please check back for updates.

WATCH: Adobe CEO: We’re ‘optimistic’ about our prospects in the wake of tariffs

President Donald Trump, asked if he still wants to demote Federal Reserve Chairman Jerome Powell, told reporters Tuesday, “Let’s see what he does.”

Trump’s remark came a day before the Fed was set to announce its next decision on interest rates.

Trump added that he wants a “level playing field” from the central bank.

Bloomberg News reported Tuesday morning that the White House had looked into demoting Powell in February. Top White House economic advisor Larry Kudlow told reporters that the Trump administration was not currently considering such a move.

The Fed will make a decision on interest rates on Wednesday at 2 p.m. ET, concluding a two-day meeting. The central bank is not expected to make any policy changes, but is investors are hoping for the central bank to signal a rate cut as soon as July. Powell will be holding a news conference Wednesday following the decision.

This is breaking news. Please check back for updates.

Bitcoin appears to be back in business.

Having crossed above the $9,000 level on Sunday ahead of Facebook announcing its own cryptocurrency, Libra, bitcoin is now up 146% this year. But that could be just the beginning for its bounce back, says bitcoin bull and Fundstrat Global Advisors’ research chief Tom Lee.

“I think bitcoin is easily going to take out its all-time highs” of $20,000, and has the potential to run to $40,000 if its use cases grow, Lee said Tuesday on CNBC’s “Futures Now.” “We’re deep into a bull market, and people are pretty silent about it.”

In his latest note, Lee wrote that he felt there was a lack of conviction about bitcoin’s recent rally, based on his attendance at the CryptoCompare Digital Asset Summit in London last week.

Many in the crypto space were hesitant to agree that the “crypto winter” was indeed over, Lee wrote. They cited worries around persistent volatility in alt-coins and initial coin offerings, fundraising issues in the digital currency market, general bearishness and residual concerns stemming from crypto’s huge drop in 2018, he wrote.

But Facebook’s latest move serves to legitimize the space in a way that could provide further runway for bitcoin, which could even become a “reserve currency in crypto” down the line, Lee said Tuesday.

“The Facebook announcement is a complete validation that mainstream is now focused on cryptocurrencies,” he said. “I think it really destroys those arguments that say, ‘I believe in blockchain, not bitcoin.'”

And, while Lee saw Facebook’s Libra project as “clearly a cryptocurrency play,” the main thrust of it revolves around the idea of decentralized finance, he said.

“I think it is more targeted at stablecoin and creating a new kind of banking system, and it’s very complementary to bitcoin,” he said. “So I think this is actually a really bullish development for bitcoin. I think it’s really bad for stablecoins and anyone who’s been trying to do decentralized finance.”

Facebook’s project has the backing of payment processors Mastercard and Visa, as well as travel giant Booking Holdings. Lee noted that decentralization in finance is “probably really good for payment processors” but will likely pose a challenge to traditionally structured banks.

“One thing to keep in mind [is] Facebook’s annual revenue per user is probably $50. That might be a little high,” Lee said. “But an average bank generates close to $1,000 per user. So, Facebook has a 20x upside to their customer model if they start doing banking services, and so I can see why banks aren’t really enthusiastic about this.”

Bitcoin was down nearly 3% toward the end of Tuesday’s trading session. The digital currency managed to retrace its 2018 highs in late May.

Disclaimer

What does it mean for the average consumer that the first truly global currency could be on the horizon?

To start: lower fees, more accessibility and close-to-instantaneous transfers worldwide. At least that’s Facebook’s goal.

The social media behemoth announced on Tuesday it’s creating a cryptocurrency called Libra to debut in 2020. The currency, built on blockchain, the technology underlying other cryptocurrencies like Bitcoin, was developed in part to ease money transfers across borders and serve un- and underbanked populations around the globe.

The currency is meant to be sent almost instantly, with fewer fees than current money transfer services. Here’s what consumers need to know.

Essentially, Facebook wants to make it as easy to move money around the world as it is to send a text message.

The company released a White Paper to explain the details. It doesn’t see the cryptocurrency as an attempt to replace the current financial system, as is Bitcoin’s aim. Rather, it’s intended to extend a digital payment method to under-served populations that don’t currently have easy access to traditional financial institutions.

Worldwide, almost two billion adults “remain outside of the financial system with no access to a traditional bank, even though one billion have a mobile phone and nearly half a billion have internet access,” reads the paper. Libra aims to fill the gap.

Even in the U.S., where consumers have access to a wealth of payment options, the FDIC estimates that more than 8 million households are unbanked. But the currency’s potential lies well beyond the U.S. Populations in Africa, Southeast Asia and some Latin American countries are lacking stable, accessible currencies and payment methods, Nicholas Colas, co-founder of DataTrek Research, tells CNBC Make It.

“For large chunks of the world, Libra will be about having a superior form of payment and wealth preservation,” says Colas. Representatives from Libra did not respond to CNBC Make It’s request for comment.

Libra will be managed by a Swiss-based nonprofit. It is currently backed by Facebook and more than two dozen Founding Member companies, including Ebay, Uber, Lyft, Spotify, Visa, Mastercard, PayPal, Coinbase and venture capital firm Andreessen Horowitz. Unlike other cryptocurrencies, Libra will be backed by “real” government-backed assets from central banks to give it stability.

Facebook says Libra will be made available to Messenger and WhatsApp users, who can cash in their local currency to buy Libra. The currency will be held in a digital wallet called Calibra (more on that below) and can be spent on products and services at participating merchants, just like any other currency.

To withdraw funds, users will be able to convert their digital currency into legal tender based on an exchange rate. It won’t be so dissimilar to when you exchange U.S. dollars for euros during a European vacation, for example.

Currently, Libra is not “pegged” to a single currency. Its value will depend on the value of its underlying assets, which may fluctuate. Still, this will reportedly help it be less volatile than other cryptos.

For those worried about security, Libra payments will not be connected to a user’s Facebook data and won’t be used for ad targeting.

Libra will not be available until the first half of 2020, so you can’t buy the currency today. Once it does become available, there should be several ways consumers can buy the currency, and you won’t necessarily need to go through Facebook.

Facebook is launching a digital wallet called Calibra to hold and transfer the currency to other organizations. (Calibra is also the name of the subsidiary Facebook is operating that will build financial services, including the cryptocurrency.) Colas relates it to a “Starbucks card with a balance on it, but one you can use for more things than just coffee.”

Transaction fees will likely be lower than those currently charged by traditional finance companies, Colas notes, which will primarily benefit merchants, but also people who, for example, routinely send money to family members abroad and are forced to rely on expensive wire transfer services.

Facebook says that it won’t make money on the currency at first. But Colas notes that once the company has set up the first-of-its-kind global payment system, it will be a natural progression to add other services to Calibra, such as loans, that can earn the company returns.

“Everybody understands the global payment system is inefficient in cross-border transactions, and there’s no bigger market than money,” he says. “It’s the biggest market on the planet.”

One of the purposes of Libra is to serve people who do not currently have access to traditional banking and financial tools. Currently cryptocurrencies can be used like a credit card to buy goods online. But Libra will theoretically go beyond that. Consumers will be able to purchase the currency and use it at participating merchants.

“You have a balance of, say, $100, you go to a merchant, you scan your smartphone for a $10 purchase, the Libras are taken out of your account and held by the merchant,” says Colas.

Transaction fees will also be lower than they are for traditional forms of payment. Calibra is similar, then, to a payment network like PayPal, but uses the cryptocurrency Libra rather than a fiat currency, like the U.S. dollar for transactions.

The currency won’t launch until next year, but users can sign up for early access here.

Don’t miss: Facebook’s cryptocurrency chief says if you don’t trust our digital wallet use our competitors

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Tesla investors are regaining confidence in a quieter Elon Musk — even as they question the company’s ability to hit its production goals for the second quarter.

The automaker’s stock rose by as much as 4.3 percent Tuesday and are up by more than 7% over the last four trading days, giving investors a short respite from a tough year for Tesla. Its shares have fallen by about a third so far this year, shaving almost $19 billion off its market value since Dec. 31. 

Musk has been largely laying low on Twitter after reaching an agreement in April with federal securities regulators governing his social media use. On Monday, he claimed he was deleting his Twitter account before changing his profile picture to black and his Twitter handle to “Daddy DotCom,” presumably in honor of Father’s Day on Sunday.

While it stirred some controversy among his followers, it didn’t worry shareholders, said analyst Dan Ives of Wedbush Securities. Musk has steered clear of tweeting about the company’s financial performance and production numbers, which is what got him into trouble with the Securities and Exchange Commission. 

“I think it takes risk out of the equation, I mean not just from the SEC situation but there’s just so much more bad that could happen than good. From an investor perspective, the less that he talks on twitter the better,” Ives said in an interview.

The Securities Exchange Commission charged Musk with contempt over a February tweet that contained production forecasts — after Musk agreed not to share potentially market-moving information without the company’s approval. 

Musk has frequently set ambitious production goals, only to repeatedly fall short. He told employees in a May 22 email Tesla was on track to break its production record of 90,700 vehicles set in the fourth quarter.

“In order to achieve this, we need sustained output of 1,000 Model 3′s per day. Almost all parts of the Model 3 production system have exceeded 1,000 units on multiple days (congratulations!) and we’ve averaged about 900/day this week, so we’re only about 10% away from 7,000/week,” Musk said. 

The company has produced 1,000 Model 3s on just one day since Musk sent that email, Business Insider reported Tuesday, citing documents describing Tesla’s daily  output rate for one segment of the Model 3 production. 

Ives said he too doubts Tesla will hit that goal. 

“We think that there’s a better chance of the Knicks making the playoffs than [Tesla] hitting their year-end number,” he said.

Tesla’s goal of producing 360,000 to 370,000 vehicles for the year is a “herculean task,” he said. However, Ives said he estimates Tesla will be able to produce 345,000 to 350,000 vehicles, which would be the closest Musk has ever come to reaching one of his production targets and gives investors hope. 

Tesla is set to release its second-quarter production numbers as soon as July 1 and earnings on July 30.

Facebook on Tuesday revealed its much-anticipated Libra cryptocurrency project, and in the process it published a corresponding white paper alongside other groups participating in the non-profit Libra Association.

The announcement is significant because it’s the first time a major technology company is implementing a digital currency, which could further legitimize the overall category.

“The existing blockchain systems have yet to reach mainstream adoption,” the white paper states. “Mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange.”

The document spells out various facets of the project.

• How the currency is funded: The group stresses that its Libra currency is different because it’s backed a reserve of real assets, including short-term securities from central banks. The assets will be distributed on “custodian” infrastructure located around the world. Money for the reserve will come from people who use Libra and Libra Investment Tokens that are bought by founding members of the nonprofit association. Interest on the assets in the reserve will help cover costs for maintaining the system. Only the association can create or delete Libra currency coins.
• The underlying blockchain: In general, cryptocurrencies like bitcoin and ether use a technological concept known as a blockchain, which uses a set of computers distributed among different owners and locations to keep track of all transactions on the system. The idea is that this computerized ledger makes it impossible for bad actors to manipulate the system by creating new coins, or duplicating old ones, out of thin air. The Libra currency depends on a new Libra blockchain database. This database can keep track of resources like Libra coins. The blockchain uses an implementation of Byzantine Fault Tolerance, or BFT, for its consensus protocol, which is a system whereby various “validator nodes” decide to accept or turn down a transaction. “This approach builds trust in the network because BFT consensus protocols are designed to function correctly even if some validator nodes — up to one-third of the network — are compromised or fail,” the association says. “This class of consensus protocols also enables high transaction throughput, low latency, and a more energy-efficient approach to consensus than “proof of work” used in some other blockchains.”
• A programming language: Facebook has developed lots of open-source projects over the years, and as Facebook is leading the initiative, it’s not surprising to see Facebook unveil an entire language called Move, which will enable developers to build atop the Libra blockchain. The new language code and other components of the blockchain are available online on GitHub under an open-source license. The open-source approach is “designed so that anyone can build on it, and billions of people can depend on it for their financial needs,” the organization says.
• Organizational plans: Although the organization already involves more than two dozen companies and nonprofits, it wants to rack up 100 members by the intended launch of the entire system, which will happen sometime in the first half of 2020. The group says it also wants to appoint a managing director.
• Additional information: The group points to detailed technical documents describing the blockchain, the Move language and the implementation of BFT.

WATCH: Facebook’s cryptocurrency is way more ambitious than bitcoin, says Tally CEO Jason Brown

As the calendar crosses the mid-year mark, are you on track to reach your retirement savings goals?

The IRS has raised the limits for what you can put away in pre-tax retirement savings account this year.

That means you can sock away as much as $19,000 in your 401(k), 403(b), Thrift Savings Plan and most 457 plans, up from $18,500 in 2018.

You can also save as much as $6,000 in an IRA, up from $5,500 in 2018.

If you’re age 50 and over, you can put in an additional $6,000 in your 401(k) and other employee plans and another $1,000 in your IRA.

Even if your personal savings will be nowhere near those limits, now is a great time to check on whether your savings rates will get you to your goals for this year and beyond.

If you’re behind, these two tips will help you maximize your savings.

Ideally, you should be saving as much as 10% to 15% of your salary annually toward retirement.

If you are saving 6% now, getting to 15% may sound daunting.

One way to gradually get there: Strive to increase your savings rate by at least 1% each year. You may not notice the difference this year. That change could add up big over time.

“Those small jumps by just 1% or 2% over a 20-year or 30-year career can really make a big difference in the end,” said Meghan Murphy, vice president at Fidelity Investments. “The longer that money is in the plan and has time to grow, the better off you are.”