Alibaba Plunges 10% as Growth Slows, GE and Capital One in $8.5 B Deal

Mukesh Buch
12 Aug, 2015
New York City

GE agreed to sell its healthcare financial services business to Capital One for $8.50 billion. Alibaba revenues growth slowed on rising mobile devices traffic with lower yields. Cree net swung to a loss. Fossil net jumped 4% but sales fell 4%. Macy''''s net plunged 26%. Wayfair net loss narrowed.

[R]4:50 PM New York – GE agreed to sell its healthcare financial services business to Capital One for $8.50 billion. Alibaba net and revenues growth slowed on rising mobile devices traffic with lower yields. Cree net swung to a loss. Fossil net jumped 4% but sales fell 4%. Macy's net plunged 26%. Wayfair net loss narrowed.[/R]

Tollbooth Index decreased 135.57 or 1.3% to 10,655.11.

Earnings Review

Alibaba Group Holding Ltd ((BABA)) declined 6.4% or $4.93 to $72.39 after the China-focused online and mobile marketplaces reported total revenues in the first-quarter ending in June jumped 28% to $3.27 billion from a year ago period.

Net income in the quarter climbed 148% to $4.97 billion and diluted earnings per share increased 129% to $1.92 compared to the same period a year ago.

Revenue growth slowed in the quarter as more traffic originated on the mobile devices, which lowers advertising yields. Gross merchandise volume jumped 34% to 673 billion yuan, slowest increase in three years.

Alibaba also announced its plan to repurchase $4 billion of its shares over the next two years to stem the dilution from the stock-based compensation program.

Computer Sciences Corporation ((CSC)) increased 2.9% or $1.83 to $66.03 after the information technology service provider said revenues in the first-quarter ending on July 3 plunged 14.7% to $2.76 billion from a year ago period.

Net income in the quarter jumped 9.6% to $160 million or $1.14 per diluted share compared to $146 million or 98 cents from the same quarter last year.

For the year, the company forecasted earnings per share in the range of $4.75 to $5.05.

Separately, the company agreed to acquire Fixnetix, a front-office trading solutions provider and Fruition Partners, technology-enabled solution provider for undisclosed financial terms.

Cree, Inc ((CREE)) jumped 4.8% or $1.21 to $26.41 after the lighting products maker reported revenues in the fourth-quarter ending on June 28 declined 12% to $382 million form a year ago period.

Net in the quarter swung to a loss of $88 million or 83 cents per diluted share compared to profit of $30 million or 24 cents from the same quarter last year.

For the first-quarter, Cree forecasted revenue in a range of $410 million to $430 million and net loss between $16 million and $22 million and loss per share in the range of 16 cents to 21 cents.

EZchip Semiconductor Ltd ((EZCH)) surged 12.5% or $2.11 to $18.98 after the Israel-based fabless semiconductors maker stated in the second-quarter ending in June climbed 28% to $28.3 million form a year ago period.

Net income in the quarter declined 12.9% to $5.4 million or 18 cents per diluted share compared to $6.2 million or 21 cents from the same quarter last year.

Fossil Group Inc ((FOSL)) slipped 1.2% or 72 cents to $61.39 after the fashion accessories retailer said net sales in the second-quarter ending on July 4 slumped 4.4% to $740 million form a year ago period.

Net income in the quarter jumped 4% to $54.6 million or $1.12 per diluted share compared to $52.5 million or 98 cents from the same quarter last year.

Fossil forecasted net sales for the third-quarter to decrease in the range of 8% to 3% and diluted earnings per share in a range of $1.45 to $1.70.

General Electric Company ((GE)) slid 19 cents to $25.51 after the diversified conglomerate agreed to sell its healthcare financial services business to Capital One Financial Corporation for $8.50 billion.

Separately, GE also agreed to divest healthcare financial services real estate equity investments to another unnamed buyer for about $600 million.

Macy's, Inc ((M)) declined 4.4% or $2.97 to $64.56 after the department stores operator reported sales in the second-quarter ending in June slipped 2.6% to $6.10 billion from a year ago period.

Comparable store sales in the quarter dropped 1.5%

Net income in the quarter plunged 25.7% to $217 million or 64 cents per diluted share compared to $292 million or 80 cents from the same quarter last year.

The retailer reaffirmed forecast for the annual diluted earnings per share in the range of $4.70 to $4.80.

Wayfair Inc ((W)) soared 17.9% or $6.82 to $44.99 after the online home furnishings products retailer reported total revenues in the second-quarter ending in June climbed 66.4% to $491.8 million from a year ago period.

Net loss in the quarter narrowed to $19.3 million or 23 cents per diluted share compared to $28 million or 69 cents from the same quarter last year.