Quoteworthy: "Sheldon, he never questioned the viability (of online betting). He questioned the ability to police it properly. We are going to explore it." –— Robert Goldstein, who took over from Sheldon Adelson as CEO of Las Vegas Sands Corp. Adelson, who died on Jan 11, had long opposed online gambling on moral grounds.
Tesla dismays Wall Street with first results as a blue chip
Tesla reported lower-than-expected profit and record revenue, mixed results that disappointed investors used to razzle-dazzle — but more in tune with the S&P 500 heavyweight it has become.
The electric vehicle (EV) market leader on Jan 27 reported a fourth quarter profit of US 80 cents ($1.06) a share, on an adjusted basis due largely to price cuts. This falls short of analysts’ consensus estimate for US$1.03 and well below the blowout US$2.14 of a year ago — before the global pandemic set in.
The results marked a sixth straight profitable quarter but also the first time the company missed Wall Street’s forecast since July 2019.
Tesla shares fell as much as 7.6% in post market trading after closing down 2.1% to $864.16.
The Palo Alto, California-based company, which joined the ranks of the prestigious S&P 500 Index last month, said operating margins shrank to 5.4% in the latest quarter, down from 9.2% in the previous three months. It blamed aggressive price cutting in China, supply-chain costs and a big pay package for CEO Elon Musk and other executives.
It was a mixed bag,” Gene Munster of Loup Ventures said in an interview, noting the dip in margins were accompanied by price cuts to win market share.
“It’s negative for today, but good for the long term given the EV market is nascent.”
Tesla did not give a specific number for how many cars it expects to deliver in 2021, but said that it anticipates beating last year’s 50% growth rate, which would mean more than 750,000 units. It delivered almost 500,000 vehicles globally in 2020.
Despite missing analyst income estimates, the results showed Tesla’s first full-year profit.
The company has defied skeptics by achieving sustained growth and been rewarded with a record stock price and a $819 billion market capitalisation, dwarfing other carmakers. Its success has helped spur a rally in shares of other companies with lofty EV strategies, both old and new.
Tesla’s revenue hit US$10.74 billion in the October to December period, surpassing analysts’ estimate for US$10.38 billion and exceeding the US$7.38 billion in the last quarter of 2019.
The company earns money by selling regulatory credits to automakers that need them to comply with carbon-emissions standards in California, Europe and elsewhere.
Investors view this revenue as a double-edged sword because they want to know Tesla can be profitable from its core business: Making and selling cars.
Sales of regulatory credits were US$401 million, up from US$397 million in the third quarter.
Tesla said that it has been upgrading its factory in Fremont, California, to launch refreshed versions of its S and X models with new powertrains and an entirely new interior. A photo in the shareholder letter shows a small screen for passengers in the back seat. The first deliveries of the Model S began in 2012, and speculation about an overdue refresh have circulated for months. Besides refreshing the S and X models, Tesla said the high-performance ‘Plaid’ version of its flagship S sedan is now available for order on its website. — Bloomberg
Don’t treat China as ‘strategic rival’, says China’s US ambassador
Treating China as a “strategic rival” of the US is a misjudgement that could lead to mistakes, China’s ambassador to the United States said in a speech to an online forum.
Since the Donald Trump administration defined China as a strategic rival in 2018, Washington and Beijing have frequently clashed over issues ranging from trade to Beijing’s handling of Covid-19, and the new administration of President Joe Biden is expected to maintain pressure on China.
In the first major speech by a Chinese official on relations between the world’s two biggest economies since Biden took office, Ambassador Cui Tiankai reasserted China’s long-standing position of seeking peaceful coexistence with the US, while warning it not to cross China’s red lines.
“Treating China as a strategic rival and imaginary enemy would be a huge strategic misjudgement,” Cui told the forum that took place late on Jan 28 in Beijing.
“To develop any policy on the basis of that would only lead to grave strategic mistakes.”
Cui stressed that China wanted cooperation not confrontation, and called for both sides to address differences through dialogue. But he also said China would not yield on matters concerning sovereignty and territorial integrity.
“China will not back down. We hope the United States will respect China’s core interest and refrain from crossing the red line,” Cui said.
Hong Kong, the western region of Xinjiang, the South China Sea and Taiwan were points of intensifying contention between China and the US during the Trump administration.
With the Biden administration expected to take a more multilateral approach to China, Cui warned that a coalition of allies against China could create “new imbalances”.
He said China welcomed Biden’s decisions to rejoin the Paris climate agreement and the World Health Organisation, and said China hoped to work with the US on fighting the Covid-19 pandemic and on global policy coordination to fend off economic and financial risk. — Reuters
Toyota unseats VW to become world’s top-selling automaker
Toyota Motor Corp overtook Volkswagen AG (VW) last year to become the world’s top-selling automaker, the first time the Japanese group has clinched the position in five years.
Toyota’s group sales — which include those of its subsidiaries Daihatsu Motor and Hino Motors — for the year were 9.53 million units, the company said on Jan 28. That compares with VW’s 9.31 million, announced earlier this month.
The victory for Toyota came despite a painful year for automakers. Although demand for cars recovered marginally toward the end of 2020, industry-wide factory and showroom shutdowns in the spring were enough to drag sales down 14% from 2019, according to an estimate from IHS Markit.
It was also a topsy-turvy year in which the gravity of automakers’ losses was largely determined by their level of exposure to the regions most disrupted by the virus.
VW has a strong footprint in the European Union, where passenger car sales fell an “unprecedented” 24% to fewer than 10 million units last year, according to the European Automobile Manufacturers Association. The German carmaker’s sales fell 15%, its worst performance in close to a decade.
VW CEO Herbert Diess initiated a strategic shift after he took over the top job in 2018 to focus on lifting profitability rather than chasing sales growth. VW’s return on sales has been lagging behind Toyota for years and the market slump triggered by the Covid-19 pandemic a year ago exposed the German manufacturer’s relatively high costs.
Toyota, on the other hand, has a bigger presence in the US, where total car sales in the nation fell 15% in 2020. The Japanese automaker’s global sales were down 11%. Although the US has the most Covid-19 deaths and cases, there have not been the same lockdowns as in Europe.
“Naturally the number of units sold was lower than in the previous year because of the spread of coronavirus,” Toyota spokeswoman Chisato Yoshifuji said on Jan 28.
“But because Toyota and its partners were able to thoroughly implement measures to combat the spread of the virus, we were able to continue our corporate activities and keep yearly declines at the level they were,” she added.
Prior to 2020, VW outsold Toyota every year since 2015, but the two companies’ results last year may be indicative of a longer-term trend, according to analysts.
While VW is expected to temporarily surpass Toyota again in 2021, Toyota is projected to pull ahead each year through 2025, IHS Markit said.
VW’s push to produce more electrified vehicles should lead to a sales spike this year, but prolonged lockdowns and shop closures in its domestic market will continue to have an adverse impact, analyst Yoshiaki Kawano said.
Kawano also said Toyota will continue to enjoy strong sales in its core markets of Japan and the US.
In China, the world’s largest car market, it should “put up a good fight” by pushing out more EVs and SUVs in line with local demand, he added.
Although a number of factors such as the continued spread of the virus and a global chip shortage will persist in 2021, IHS Markit estimates auto sales will recover steadily to 84.4 million units, from 76.8 million in 2020.
Global car sales are expected to touch 94.8 million units in 2025. — Bloomberg
