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It is not surprising that Altria Group Inc. is in desperate need of an electronic cigarette manufacturer, Juul Labs.
The volume of shipments of the tobacco giant has been declining for some time, but the latest figures show that a company is deteriorating faster than investors thought. Altria
MO -6.63%
The volume of cigarettes dropped by more than 14% at the start of the year, marking the largest drop in the company in at least three years.
Even after adjusting for factors such as inventory movements, volume fell by 7%, the worst adjusted decline of the year. In total, the shipping numbers were "much worse than feared," writes Bonnie Herzog of Wells Fargo.
Read: Altria confirms a $ 12.8 billion investment for a 35% stake in Juul, an e-cigarette startup
Altria has raised cigarette prices to offset these declines, setting a "record" hike in February, according to Herzog. Although cigarette manufacturers generally have strong pricing power, it remains to be seen how often companies like Altria can get away with this leverage to mask demand problems.
Management remained optimistic about tobacco trends during Altria's call for results. Chief Financial Officer William Gifford said that smokeless and smokeless tobacco "is performing well" and that the Marlboro brand remains "strong and relevant".
Stocks were down in morning trading.
• Comcast Corp.
CMCSA, + 3.00%
Craig Mediaoff, of MoffettNathanson, said, "It's a good time to be wired." Cable revenues increased 4.2%, above last year's average, and cable margins further increased. Shares rose in Thursday's session.
• Shares of 3M Co.
MMM, -11.90%
were on track for their worst performance in a day since 1987 after the company lowered its forecast and announced the loss of 2,000 jobs.
On deck this afternoon
Amazon.com Inc.
AMZN, + 0.59%
Cloud computing is a well-known profit driver, but the advertising industry also contributes to margins.
The e-commerce giant continues to assert itself in the world of advertising by eating budgets formerly reserved for Google's Alphabet Inc. The category "other products" of Amazon, which mainly includes the advertising sector, is expected to grow by 2% in the first quarter to $ 2.9 billion, according to Canaccord Genuity's Maria Ripps.
Overview of Amazon's revenues: revenues are taken into account in 2019
The company's overall turnover has slowed, which is a bit of a concern for investors, but this slowdown in growth has positive spin-offs as cloud and advertising businesses grow rapidly. As these more profitable areas make up a larger share of total revenue, Amazon's margins will likely benefit, which Ripps says will contribute to "stock stability".
• Intel Corp.
INTC, -1.95%
Bob Swan is no stranger to the company's earnings appeal, but this is the first time he has taken questions as a permanent general manager.
• An attractive factor that could contribute to the earnings growth of Starbucks Inc.
SBUX, + 0.67%
This year marks a change in accounting related to the way the company records non-traded gift cards. Andrew Charles of Cowen would prefer to see Starbucks profits increase due to higher margin beverages, but the accounting change is still worth it.
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