Wipro’s third-quarter profit beats estimates

Indian software services provider Wipro Ltd reported a better-than-expected rise in third-quarter profit yesterday, and forecast slightly higher sequential revenue growth from IT services for the March quarter.Net profit rose to Rs25.10bn ($353mn) in the three months to December 31 from Rs19.31bn in the same period a year earlier, the company said.That compared with analysts’ average estimate of Rs23.25bn, compiled from Refinitiv Eikon data.Wipro said it expects revenue from its IT services to be between $2.05bn to $2.09bn for the March quarter.Revenue from IT services grew 13% to Rs146.66bn ($2.06bn) in the third quarter, while total revenue rose 10.2%.The board also approved an issue of bonus shares in a ratio of 1:3. Shares in the Bengaluru-based company closed 3.2% higher while the broader Mumbai market ended up 0.02%.Bigger rival Tata Consultancy Services Ltd reported a 24% rise in quarterly net profit while Infosys Ltd reported a 29.6% profit slump on account of a one-off gain last year.Netflix Netflix shares swung lower yesterday as spending on original shows at the leading streaming television service weighed on quarterly revenue and competition heated up.Shares sank nearly 4% to $339.70 in after-market trades that followed release of earnings figures that showed the Silicon Valley company logged profit of $134mn on revenue of $4.2bn in the final three months of last year.That compared with a profit of $186mn on revenue of $3.3bn in the same period the prior year.Netflix ended the year with 139mn paying members worldwide, up 29mn from the start of the year.The company beat analyst expectations on subscriber growth and per-share earnings, but missed slightly on revenue.Operating margin — the money a company keeps after expenses — shrank to 5.2% from 7.5% in a year-over-year comparison of quarters.The company said it had expected its margin to dip because of the number of shows that launched in the quarter.“Our multiyear plan is to keep significantly growing our content while increasing our revenue faster to expand our operating margins,” Netflix said in a letter to shareholders released along with the earnings report.Over the past quarter, Netflix said it added 8.8mn new subscribers at the end of last year, with 7.3mn of those outside the US.Netflix unveiled plans on Tuesday to boost prices for US subscribers as it faces increasing competition in the streaming television market.The California-based company will raise the price of its most popular streaming plan with high-definition video by 18% to $12.99 per month.Netflix will also be boosting prices of some other subscription plans and will apply those rates to Latin America and Caribbean countries where it bills customers in US dollars.Netflix investment in content will be “more of the same, but on a continued and larger scale,” said chief content officer Ted Sarandos.Spending on original content up front sets the stage for Netflix to profit more from shows or films it owns as time goes on, executives reasoned.“Our early investment in doing original content was betting there would come a day when studios and networks might opt not to license their content in favour of launching their own services,” Sarandos said.American ExpressAmerican Express Co missed Wall Street’s fourth-quarter profit estimates yesterday, as the rate of customer spending slowed despite a strong US holiday sales season.The credit-card issuer’s shares fell 2.4% in extended trading.“For the past couple of quarters card spending for AmEx in the US has been 10%, that dropped down to about 9% this quarter, that is having an effect on the stock,” Buckingham Research Group analyst Chris Brendler said.The slowing growth came despite the United States witnessing its strongest holiday season in six years on the back of a robust economy and more deals.According to a Mastercard report on December 26, holiday spending rose 5.1% to over $850bn.This strong health of the consumer spurred more customers to take loans on credit cards in the quarter, growing AmEx’s loan portfolio by 12% in the fourth quarter.However, this also drove provisions for credit losses higher by 14%.Meanwhile, expenses rose 9% as AmEx poured more money into offering perks such as rewards programmes and lounge access at airports to better compete against companies such as JPMorgan’s Chase cards division and payment networks Visa and Mastercard.Card member rewards expenses rose 11%, AmEx said.The company said https://reut.rs/2RyxpFO its net income was $2.01bn, or $2.32 per share, in the quarter ended December 31, compared with a loss of $1.21bn, or $1.42 per share, a year earlier, when it took a charge due to a change in US tax laws.Excluding items, the company earned $1.74 per share, missing analysts’ average estimate of $1.80, according to IBES data from Refinitiv data.Revenue, net of interest expense, rose 7.9% to $10.47bn, but fell short of analysts’ estimates of $10.56bn.Morgan StanleyMorgan Stanley’s quarterly profit fell short of expectations as bond trading revenue slumped more than rivals and its wealth management business faltered, sending its shares down 4.4%.The bank has pledged that its expansion into wealth management over the past decade would help deliver more stable results.But the unit, which accounts for roughly half of Morgan Stanley’s revenue, was not immune from year-end market volatility that drove customers to the sidelines.Morgan Stanley also noted the impact of changes to compensation that addressed what chief executive James Gorman called a “very aggressive” deferral programme.Gorman said that Morgan Stanley had been “mortgaging (its) future” by delaying payouts.On a call with analysts, Gorman characterised the fourth quarter as a temporary, if disappointing, blip.Although market volatility hurt trading, underwriting, wealth management and asset management revenue, Morgan Stanley is keeping a tight lid on costs and making purposeful decisions to position itself for growth, he said.The bank held its profit margin outlook for wealth management steady at 26% to 28% through this year.The business had a profit margin of 24% in the fourth quarter and 26% for all of 2018. Gorman, who has been pressed by analysts to increase that target, cautioned that the current goal is “not a limit” but that the bank is putting revenue growth in that business ahead of profitability for now.“The trade-off between revenue growth and margin expansion is important,” he said.”This year, we would be more interested in driving higher revenue growth within this margin range that we’ve been public on.”A pay structure for wealth management employees also weighed on the unit during the market slump.Morgan Stanley has for years paid its roughly 15,700 brokers a combination of cash up front and stock, which is deferred for several years and invested by the firm.The bank reported that net revenues for the current quarter fell to $4.1bn from $4.4bn a year earlier because of losses in the investments of some deferred compensation plans.Overall, Morgan Stanley reported a fourth-quarter pre-tax operating income of $1.9bn, down 25% from the $2.5bn it reported in the year-earlier period, when changes to US tax law dramatically affected results across Wall Street.Its earnings per share of 80 cents missed analysts’ average estimate of 89 cents per share.Net revenue fell 10% to $8.6bn, falling well short of the $9.3bn Wall Street expected, according to IBES data from Refinitiv.Morgan Stanley’s fixed-income trading revenue fell 30% to $564mn.That was a much sharper drop than at rivals, who have bigger bond trading businesses.Revenue from Morgan Stanley’s wealth business dropped 6%.The unit’s profit margin fell to 24% from 26% in the year-ago quarter.Investors shifted $121bn into US money market funds in December, Lipper estimates, the most since November 2008.One bright spot in the bank’s results was its M&A advisory business, which delivered a 41% rise in revenue.Goldman Sachs also saw similar surge in dealmaking.In the last 12 months, Morgan Stanley’s stock has fallen nearly 22%, versus a 12.5% decline in the financial index and a 5.6% drop in the S&P 500 index over the same period.