2024-07-24 19:58
July 24 (Reuters) - Alphabet (GOOGL.O) , opens new tab fell more than 3% on Wednesday on fears that its rising investments in AI infrastructure would squeeze margins and YouTube was facing tough competition for ad dollars. The Google parent's capital expenditure rose more than expected in the second quarter to $13.2 billion as it invests heavily in infrastructure needed to support generative AI services, as well as compete with Microsoft (MSFT.O) , opens new tab. While Alphabet has been cutting costs through layoffs to protect profitability, several analysts said that seasonally higher hiring of fresh graduates and the earlier-than-usual Pixel launch will weigh on its margins in the third quarter. Its YouTube video-streaming service is also grappling with tough year-on-year comparisons and competition in the market for online ad videos from the likes of Amazon.com (AMZN.O) , opens new tab. YouTube ad sales grew 13% in the second quarter, compared with an increase of nearly 21% in the first quarter. "Management sounded quite conservative about the outlook for the second half of the year," Bernstein analysts said. "Perhaps this is Google's way of setting an easy bar for the new CFO to come in against the next quarter. Or perhaps there's some truth to the conservatism and we are entering an uncomfortable period for the digital advertising names with decelerating growth and rising costs." Shares of other digital ad-reliant firms such as Meta Platforms (META.O) , opens new tab, Snap (SNAP.N) , opens new tab and Pinterest (PINS.N) , opens new tab were down between 3.2% and 4% as growth slowed at Alphabet's core Search business despite beating estimates. Alphabet was on track to lose around $60 billion in market value on Wednesday. Its stock has gained about 30% so far this year, benefiting from the rally in AI-related stocks. Despite the drop, many analysts were positive on Alphabet, pointing to signs that its AI efforts were driving up cloud revenue and that there was little disruption to Search revenue from the AI overviews it rolled out widely earlier this year. Revenue from cloud computing services rose 28.8%, faster than expectations, in a positive sign for enterprise spending. "We continue to view Google as an AI winner and find core product improvements encouraging," Piper Sandler analysts said. At least 25 brokerages raised their price targets on the stock, pushing up the median view to $204. Alphabet's 12-month forward price-to-earnings ratio stands at 22.2, compared with AI chip firm Nvidia's (NVDA.O) , opens new tab 38.6, according to LSEG data. Sign up here. https://www.reuters.com/technology/alphabet-falls-expenses-overshadow-quarterly-results-beat-2024-07-24/
2024-07-24 19:56
LONDON, July 24 (Reuters) - A software bug in CrowdStrike's (CRWD.O) , opens new tab quality-control system caused the software update that crashed computers globally last week, the U.S. firm said on Wednesday, as losses mount following the outage which disrupted services from aviation to banking. The extent of the damage from the botched update is still being assessed. On Saturday, Microsoft said about 8.5 million Windows devices had been affected, and the U.S. House of Representatives Homeland Security Committee has sent a letter to CrowdStrike CEO George Kurtz asking him to testify. The financial cost was also starting to come into focus on Wednesday. Insurer Parametrix said U.S. Fortune 500 companies, excluding Microsoft, will face $5.4 billion in losses as a result of the outage, and Malaysia's digital minister called on CrowdStrike and Microsoft to consider compensating affected companies. The outage happened because CrowdStrike's Falcon, an advanced platform that protects systems from malicious software and hackers, contained a fault that forced computers running Microsoft's (MSFT.O) , opens new tab Windows operating system to crash and show the "Blue Screen of Death". "Due to a bug in the Content Validator, one of the two Template Instances passed validation despite containing problematic content data," CrowdStrike said in a statement , opens new tab, referring to the failure of an internal quality control mechanism that allowed the problematic data to slip through the company's own safety checks. There is no sign Microsoft plans to limit CrowdStrike's access to the Windows operating system in the wake of the outage, a person familiar with the issue said on Wednesday. CrowdStrike did not say what that content data was, nor why it was problematic. A "Template Instance" is a set of instructions that guides the software on what threats to look for and how to respond. CrowdStrike said it had added a "new check" to its quality control process in a bid to prevent the issue from occurring again. CrowdStrike released information to fix affected systems last week, but experts said getting them back online would take time as it required manually weeding out the flawed code. Wednesday's statement was in line with a widely held assessment from cybersecurity experts that something in CrowdStrike's quality control process had gone badly wrong. The incident has also raised concerns among experts that many organisations are not well-prepared to implement contingency plans when a single point of failure such as an IT system, or a piece of software within it, goes down. Sign up here. https://www.reuters.com/technology/crowdstrike-says-bug-quality-control-process-led-botched-update-2024-07-24/
2024-07-24 19:50
CARACAS, July 24 (Reuters) - Venezuela on Wednesday granted a 20-year license to British energy producer BP (BP.L) , opens new tab and state-owned National Gas Company of Trinidad and Tobago (NGC) to develop the Venezuelan side of a natural gas field that extends into the Caribbean country's waters. Venezuela, whose gas reserves are mostly untapped, has in recent years expanded offers for offshore gas projects to foreign companies, but progress remains slow amid sanctions and a massive need for investment. The Cocuina-Manakin field, whose Venezuelan portion belongs to the idled gas offshore project Plataforma Deltana, has 1 trillion cubic feet of proven gas reserves. The U.S. Treasury Department in May authorized the project to move forward as an exemption to energy sanctions on Venezuela. The field will be jointly developed, with BP and NGC on Venezuela's side, and BP's Trinidad unit on the twin-islands nation's side. The largest investor will be selected as the project's operator, according to the list of documents signed in Caracas. A separate sheet of terms to sell the gas produced on the Venezuelan side of the field to companies in Trinidad was also signed, as was an agreement for a bonus payment to Venezuela. The amount was not disclosed. The companies accelerated negotiations with Venezuela's government and state energy company PDVSA in recent weeks to have the license signed before a presidential election in the South American country on July 28, sources said. "We are making a monumental step in the right direction," said President Nicolas Maduro during the signing ceremony, broadcast by state television station VTV. Trinidad's energy minister, Stuart Young, and Venezuelan oil minister Pedro Tellechea signed some of the documents governing the project. The head of BP Trinidad and Tobago, David Campbell, and NGC Vice President Verlier Quan-Vie signed on behalf of the companies. A larger project in Venezuela also to be shared with Trinidad, the 4-tcf Dragon offshore gas field to be operated by Shell (SHEL.L) , opens new tab, received a similar 20-year Venezuelan license in December. First output is expected in late 2025. Sign up here. https://www.reuters.com/business/energy/venezuela-grants-license-bp-trinidads-ngc-offshore-gas-project-2024-07-24/
2024-07-24 19:34
July 24 (Reuters) - The amount of electricity produced by wind farms in the U.S. fell to a 33-month low on Monday, forcing power generators to crank up natural-gas fired plants to keep air conditioners humming during a hot summer day. Over the past few years, much of the money energy firms have invested in new generation has gone into renewable power sources like wind and solar. But when the wind stops blowing and the sun does not shine, gas is still needed to keep the lights on. Wind power in the Lower 48 states produced about 335,753 megawatt hours (MWh) on July 22, the lowest since Oct. 4, 2021, according to preliminary data from the U.S. Energy Information Administration (EIA). When the wind did not blow, power companies usually burn more gas because it is the only big source of power they can turn to quickly to provide more energy to maintain reliability. And with power demand expected to keep growing as technology firms build more data centers and consumers use more electricity to power cars and heat homes and businesses, reliability is becoming increasingly important following some deadly blackouts like the February freeze in 2021 that left millions in Texas without power, heat and water for days. Wind farms are on track to produce an average of just 4% of power generation this week, down from 7% last week, 12% so far in 2024 and 10% in 2023. Gas-fired power plants are producing an average of 48% of generation this week, up from 46% last week, 40% so far in 2024 and 41% in 2023. It is not unusual for wind power to decline during the summer months, but this has been a particularly bad month for wind. Six of the 10 lowest days for wind power so far this year have occurred in July. That compares with just two of the 10 lowest days during the same period in 2023. Wind produced about 11% of the nation's power in 2023 and is on track to produce about 11% in 2024 and 2025, according projections from the EIA. But the amount of wind power produced has fallen to 425.0 billion kilowatt-hours (kWh) in 2023 from a record high of 434.0 billion kWh in 2022, the first annual decline in wind power produced since 1998. To be sure, EIA projects wind power will rise to 447.5 billion kWh in 2024. That decline in wind power output is even more surprising considering how many new wind farms have been built in recent years. Energy firms have added about 53.3 gigawatts (GW) of wind over the past five years (2019-2023), bringing total wind capacity up to around 147.6 GW by the end of 2023, according to EIA data. That is an average increase of about 9% a year over the past five years. A gigawatt is enough power for about one million U.S. homes. Sign up here. https://www.reuters.com/business/energy/us-wind-power-falls-33-month-low-generators-burn-more-natgas-2024-07-24/
2024-07-24 18:58
ANAHEIM, California, July 24 (Reuters) - Unions representing 14,000 Disneyland employees said on Wednesday they had reached a tentative labor agreement with Walt Disney Co (DIS.N) , opens new tab, averting a work stoppage at the California theme park. The new, three-year agreement, which includes wage increases and other benefits for park employees, whom Disney calls "cast members," was signed by an alliance of unions representing custodians, ride operators, merchandise clerks and other workers at the Disneyland Resort in Anaheim, in Southern California. A ratification vote on the proposed contract is scheduled for Monday. "Cast members have fought hard for the past four months and this tentative agreement would not have been possible without the strength we all showed throughout this process and the unwavering support from guests and community members," the unions said in a statement. Disney confirmed the tentative deal in a statement to Reuters: "We care deeply about the wellbeing of our cast members ... and are pleased to have reached a tentative agreement with the Master Services council that addresses what matters most to our cast." Last week, workers protested outside Disneyland with signs saying, "Mickey Would Want Fair Pay!" Union members had voted overwhelmingly on Friday to authorize a strike if an agreement could not be reached. “We have shown Disney that we are the true magic makers of the park and today proves that when workers stand together for what they deserve, we win," the unions said in a joint statement. Disney shares fell 1.4% in afternoon trading on the New York Stock Exchange at $89.65 amid a broad downturn in stocks. The Dow Jones Industrial Average was trading down about 1% and the Nasdaq dropped 3%. Sign up here. https://www.reuters.com/sustainability/boards-policy-regulation/walt-disney-unions-reach-tentative-pact-avoiding-work-stoppage-disneyland-2024-07-24/
2024-07-24 18:09
Canadian dollar weakens 0.1% against the greenback Touches its weakest since April 17 at 1.3807 Flash estimate shows decline in factory sales 2-year yield touches a 14-month low at 3.595% TORONTO, July 24 (Reuters) - The Canadian dollar weakened to a three-month low against its U.S. counterpart on Wednesday as the Bank of Canada lowered interest rates, as expected, for a second time in two months and signaled it was likely to ease further. The Bank of Canada cut its benchmark rate by 25 basis points to 4.5% and said more reductions in borrowing costs were likely if inflation continued to cool in line with forecasts. In June, the BoC became the first G7 central bank to begin easing policy. "The market initially is taking it a little bit dovishly," said Michael Greenberg, head of Americas portfolio management, at Franklin Templeton Investment Solutions. "The Canadian dollar sold off a little bit, bond yields (are) rallying a little bit - that suggests people are focusing more on some of the verbiage around excess supply, slowing demand and a cooling economy, which of course would suggest there's more rate cuts to come this cycle still," Greenberg said. Investors see a roughly 50% chance of another rate cut at the next policy announcement in September and 43 basis points of additional easing in total this year. The Canadian dollar was trading 0.1% lower at 1.3790 to the U.S. dollar, or 72.52 U.S. cents, after touching its weakest intraday level since April 17 at 1.3807. It was the currency's sixth straight day of declines. A preliminary estimate showed Canadian factory sales falling 2.6% in June from May The price of oil, one of Canada's major exports, rebounded from a six-week low, supported by large draws in U.S. crude and fuel stocks. U.S. crude oil futures were up 1.3% at $77.97 a barrel. Canadian bond yields moved lower across the curve. The two-year was down 8.6 basis points at 3.620%, after earlier touching its lowest since May 2023 at 3.595%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-hits-3-month-low-dovish-bank-canada-cuts-rates-2024-07-24/
