Facebook and Yum! are champs this week — IBM and GE are chumps
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This week’s champs are Facebook (FB), Under Armour (UA), and Yum Brands (YUM).
What do they all have in common? They’re all making it happen overseas.
Facebook beat on earnings overall, and Asia really drove the company’s strong third quarter with 38% year-over-year growth. That was led by India, Indonesia, and the Philippines.
Yum! Brands’ net income rose to $454 million in the third quarter, and the company said the major push came from international exposure. Having just come back from a trip overseas, I can attest that KFC is everywhere. Casablanca, Marrakech, Egypt — and what was right there? The colonel and his 11 herbs and spices. (Yum also owns Pizza Hut and Taco Bell.)
As for Baltimore-based Under Armour, it saw revenue declines in the U.S. but reported strong earnings — thanks to restructuring and pivoting towards international business, up 15% to $351 million.
IBM swings and misses
This week’s chumps are two companies that are doing the opposite of innovating: GE (GE) and IBM (IBM).
IBM announced this week it would pay $34 billion to acquire Red Hat and get into the cloud space. Getting into the cloud is great. What’s not great is paying $34 billion dollars for a company valued at $20 billion – especially when $20 billion is arguably high. The move is IBM’s biggest deal ever, and the third-largest in the history of tech.
Wall Street showed IBM and CEO Ginni Rometty what it thought of the move: The stock sank 4% after the deal was announced.
As for GE, they cut their dividend to one cent.
So investors now get paid one red cent every three months to hold stock in this falling knife of a company that keeps shedding assets. The stock fell to its lowest price in nine years.
IBM and GE, this week’s chumps.
Dion Rabouin is a global markets reporter for Yahoo Finance. Follow him on Twitter: @DionRabouin.
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