Wedbush is expecting a 35% drop in Best Buy revenue when the company reports fiscal Q1 results Thursday, Michael Pachter emailed investors Monday. The analyst expects a 20% falloff in a coming quarter, which could be “too rosy” if a second wave of COVID-19 infections stretches out quarantines, or unemployment causes even more consumers to scale back on discretionary purchases this year. Best Buy has the “right formula for long-term growth,” but negative near-term impact from COVID-19 is "largely unavoidable,” said Pachter. Crediting the retailer for reaching “difficult financial targets it has set for itself year after year,” Pachter referenced various upcoming tech innovations it had positioned itself to benefit from that “will be delayed by supply chain disruptions and muted by a looming recession.” The company likely benefited from home office and gaming equipment demand arising from quarantine orders, said Pachter, who expects store locations to continue the curbside pickup strategy. Restrictions will ease “broadly” in Q3, the analyst forecast, “before rebounding in Q4.” Q1 ended May 2.
After a record 8.3% falloff in March, April’s retail sales drop nearly doubled to 16.4%, with electronics and appliance store sales plummeting 64.8%, reported the National Retail Federation Friday. NRF CEO Matthew Shay said it's “not a surprise given the current state of affairs.” Most retail stores have been closed, and “we are in the midst of historic unemployment.” During such times, discretionary spending takes a back seat to essentials, he said. With many businesses starting to re-open in May, CARES Act relief payments and pent-up demand “should provide some degree of post-shutdown rebound," said NRF Chief Economist Jack Kleinhenz. Spending will be "far from normal and may be choppy going forward,” he said. NRF will need more data to determine whether the fundamentals of the economy “have been damaged and how badly." Kleinhenz said the reliability of April’s numbers could be “questionable” because many retailers whose businesses were closed were not in their offices to respond to the Census Bureau’s monthly survey of sales data. Every category of retail except online was down on a monthly basis in April, including grocery stores and others that had a surge in March as consumers stocked up; online and other non-store sales were up 8.4 percent month-over-month, it said. Comscore reported Thursday that overall e-commerce visits and spending grew 13% via desktop and mobile vs. March 2019. Online CE sales also grew 13%, it said. The consumer packaged goods and grocery category had a 90% jump in spending in March “as consumers flock to online food delivery services” during the pandemic.
The COVID-19-induced economic slowdown sent Q1 pricing falling in raw materials used in display panel production, said LG Display’s quarterly report Friday. The average pricing of electrolytic galvanized iron, the main raw material in a panel’s backlight components, fell 1.7% in Q1 from the same 2019 quarter, said LGD. The pricing of resins used in panel construction declined 12.2%, and copper, the main raw material in printed circuit boards, fell 5.3%, it said. LGD sources PCBs from Korea SMT, backlights from Heesung Electronics and display glass from Asahi Glass and Paju Electric Glass, an LG group subsidiary, said the report.
IK Multimedia announced a wearable designed to help workers and visitors maintain social distancing. The Safe Spacer senses when other devices come within 6 feet and alerts wearers with a visual, vibrating or audio alarm, said the company. The $99 wearable, which runs on a rechargeable battery, is due in Q3.
A “steady and growing” China-U.S. relationship serves the “fundamental interests” of both countries, said a Chinese Foreign Ministry spokesperson Friday when asked about President Donald Trump saying he's weighing cutting relations with China. “We’re not happy about China, I will tell you that,” said Trump at the White House Thursday. “The ink wasn’t dry on a great trade deal, and all of a sudden, the plague comes in from China.” The phase one trade agreement was signed Jan. 15 and took effect a month later (see 2001160022). The Foreign Ministry thinks China and the U.S. “should strengthen cooperation to prevail over the pandemic at an early date, and focus on saving lives, and resuming economic development and production,” said the spokesperson. “This, of course, calls for the U.S. and China working together towards the same goal.”
Cisco’s Webex videoconferencing platform is operating “at three times the capacity we were running at in February to manage the dramatic increase in usage growth” during the COVID-19 pandemic, said CEO Chuck Robbins on a quarterly call Wednesday. “We had well over 500 million meeting participants, generating 25 billion meeting minutes in April,” he said. Cisco added “many new prospects” through free Webex trials “that we anticipate converting to revenue in the future,” he said. Many enterprise customers already had Webex licenses but “exceeded their usage” and needed to add more users, said Robbins. “We'll work with them to clean that up in the future.” The priority during the crisis was “getting them up and running and just allowing them to be productive,” he said. Cisco spent the past two years “rebuilding and modernizing the Webex architecture,” he said. “We've now gone through two months of building out capacity on a global basis. Webex was the largest platform in the world in February, and now it's three times what it was then.” The stock closed up 4.5% Thursday at $43.85.
Keep providing free internet to low-income families who need it amid COVID-19, said San Jose, Los Angeles, San Francisco and eight other California mayors in a Thursday letter to AT&T, Comcast, T-Mobile, Frontier Communications, Charter Communications and Cox Communications. San Jose's Sam Liccardo (D) and other mayors from both parties urged the companies to extend interim free service at least through July 31. Expand program eligibility including by permitting multiple households with the same address to enroll and qualifying as eligible all families with children at schools with a high percentage of students eligible for the National School Lunch Program, they said. Frontier "shares the concerns of California leaders and is responding to the meet immediate needs during the pandemic through an array of options that provide relief, expand internet access, and promote connectivity to the communities we serve," a spokesperson emailed. Other ISPs didn’t comment.
U.S. District Judge Arthur Schwab in Pittsburgh Thursday ordered consolidated (in Pacer) nearly two dozen complaints from advocates for the blind against Onkyo, Sound United, Vizio and other consumer product companies. The complaints, filed by nine plaintiffs individually or in tandem with others, allege the companies fail to make their e-commerce sites accessible to the visually impaired, in violation of the Americans with Disabilities Act. Their alleged negligence is especially worrisome during the COVID-19 pandemic, say the complaints, because shelter-in-place orders make it more important for the blind to have access to online retailers. Sound United "takes all complaints very seriously," emailed a spokesperson Thursday. "We cannot comment further on pending litigation.” Onkyo and Vizio didn’t respond to queries.
Poor access point placement is the top cause of shoddy Wi-Fi performance, followed by dead zones and neighbor interference, Maravedis reported Wednesday. A third of the world’s population was ordered to “shelter at home” in early April, taxing the internet “as it never has been before,” said the report, sponsored by Ambeent. Telehealth, remote learning, video collaboration, streamed religious services and online concerts are among the high-bandwidth activities households are turning to, but home Wi-Fi networks aren’t keeping up, it said. Legacy 802.11n Wi-Fi products are delivering “a poor experience” under jacked-up demand, especially on the upload end. Since March 1, national upstream peak-hour growth is up 35%, downstream, 19%, NCTA said. A May Sandvine report said video, gaming and social media are generating 80% of internet traffic during the stay-at-home period.
Worldwide smart speaker sales grew 8.2% year on year in Q1 to 28.2 million units, reported Strategy Analytics Wednesday. Amazon had 23.5% share, up from 21.5% a year ago; Google's share grew to 19.3% from 17.9%. Shares of Chinese vendors Baidu, Alibaba and Xiaomi dropped due to pandemic-related supply and demand challenges. Normalizing supply chains will bring growth for Chinese vendors in Q2, it said. Smart speakers have a role during lockdown by giving consumers access to video chat services, said analyst David Watkins.