Thursday, July 18, 2019
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WHAT TO WATCH
Netflix (NFLX) is under the gun after its second quarter earnings revealed weak subscriber growth, and put its stock under the gun. The streaming giant— the “N” in “FANG” tech stocks — added to concerns about corporate profits as earnings season kicks into high gear.
Netflix ended Q2 with 151.56 million global streamers, inching above the 150 million mark for the first time. However, Wall Street focused on the sluggish pace of new additions, which was worse than the company had warned of prior to results. It also unexpectedly lost subscribers in its domestic market in the three months to June, marking the first quarterly drop in U.S. customers since 2011.
NY’s Schumer asks FBI, FTC to probe Russia's FaceApp over security concerns: U.S. Senate minority leader Chuck Schumer called on the FBI and the Federal Trade Commission to conduct a national security and privacy investigation into FaceApp, a face-editing photo app developed in Russia, in a letter sent on Wednesday.
The viral smartphone application, which has seen a new surge of popularity due to a filter that ages photos of users' faces, requires "full and irrevocable access to their personal photos and data," which could pose "national security and privacy risks for millions of U.S. citizens," Schumer said in his letter to FBI Director Christopher Wray and FTC Chairman Joe Simons. [Reuters]
Trump expressed concern about Pentagon cloud-computing deal: President Donald Trump recently demanded more information about how the Pentagon crafted a massive cloud-computing contract it’s poised to award to Amazon.com (AMZN) or Microsoft (MSFT), in order to decide whether he should intervene.
The Defense Department is set to give the contract, worth as much as $10 billion over ten years, to one of the two companies next month. Amazon, whose cloud-computing technology leads the market, is seen as the favorite. [Bloomberg]
Boeing to pay families affected by 737MAX crash: Boeing (BA) said on Wednesday it will dedicate half of a $100 million fund it created after two crashes of its 737 MAX planes to provide payments to families of those killed, with veteran U.S. compensation expert Ken Feinberg hired by the world's largest plane maker to oversee the distribution. [Reuters]
New fight over debt ceiling spooks Wall Street: The statutory limit caps the amount America can borrow — at least in theory — at just over $22 trillion — and must be raised to avoid default within the next few months.
Congress is scrambling to put together a vote to hike the ceiling ahead of its summer recess in August, and Treasury Secretary Steven Mnuchin recently warned that the government could run out of money as early as September.
Mnuchin has indicated a deal between the Trump administration and the Democrats who control the House of Representatives is close, but market observers aren’t nearly as optimistic. [Yahoo Finance]
IBM profit drops as weak legacy businesses offset cloud growth: International Business Machines (IBM) posted a 4.2% fall in quarterly revenue, in line with analysts' estimates, as weakness in its legacy businesses of selling hardware and software offset growth in its high-margin cloud computing unit.
The Armonk, New York-based technology services giant, which wrapped up the mega cloud merger with Linux maker Red Hat Inc last week, faced years of revenue declines while it shifted focus to the cloud business, away from established businesses such as mainframe servers.
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