Gap Is Splitting and Nutanix Tumbles – The Motley Fool

Inventories opened higher Friday, fell during the morning, but rose in the afternoon to close the session. the S & P 500 (SNPINDEX: ^ GSPC) is 4.3% of its highest close of all time and Dow Jones Industrial Average (DJINDICES: ^ DJI) is in the 3%.

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Data source: Yahoo! Finance.

The health sector has led the way, and the Health Sector SPDR ETF ETF (NYSEMKT: XLV) increased by 1.4%. Gold stocks fell; the ETF VanEck Vectors Junior Gold Miners (NYSEMKT: GDXJ) fell by 3%.

As for individual stocks, gap (NYSE: GPS) announced its split into two companies, and Nutanix (NASDAQ: NTNX) expected a slowdown in its rapid growth.

Gap disappears from the old navy

Gap announced its split of Old Navy, creating two publicly traded companies, and investors applauded the news, pushing equity up to 16.2%. The other business areas of the company – Gap, Athleta, Banana Republic, Intermix and Hill City – will be grouped together in a new company that has not yet been named.

When the split occurs in 2020, Gap's shareholders will receive shares of the new company and Old Navy equally in what should be a tax-free transaction. Old Navy has outperformed other brands for years. Sales reached $ 7.9 billion in fiscal 2018, accounting for 47% of Gap 's business revenue. The split will allow the two companies to pursue different strategies, and investors anticipate that the value of the Old Navy business could be unlocked.

Gap also announced its fourth quarter results, stating that net sales fell 3.2% to $ 4.62 billion and earnings per share increased 38% to 0%. , 72 dollar. Comparable sales were stable at Old Navy, down 5% at Gap and 1% at Banana Republic.

Nutanix sees its growth slow down

Hybrid Cloud Infrastructure Company Nutanix has announced second-quarter financial results ahead of expectations, but has released extremely low forecasts for the next quarter. Investors lost 32.7% of the share price. Revenues increased 17% to $ 335.4 million and non-GAAP loss per share was $ 0.23. Both figures beat the consensus of analysts.

But Nutanix said it was underinvesting in lead generation customers and that a smaller-than-expected sales pipeline would generate revenue of $ 290 million to $ 300 million in the third quarter, compared with the expected 348 million on Wall Street. The company said that it was too focused on generating sales for existing customers rather than on acquiring new customers.

The mistake made by Nutanix in the misallocation of resources could have been attributed to the growth difficulties of a rapidly expanding company. But the market was already preoccupied with the competition of people like IBM and VMwareInvestors are now worried that the declining growth in the number of new customers is a sign that the problem is not entirely internal.

Jim Crumly owns shares in Nutanix. The Motley Fool is a short part of IBM. The Motley Fool recommends Nutanix and VMW. Motley Fool has a disclosure policy.