CryptoCurrency
How Bad Could This Get?
If you own Boeing (NYSE: BA) stock, you’ve probably been glued to news of the protracted labor strike by Boeing’s machinists union, now entering its fifth week.
And you’ve probably already heard the latest bad news: After two days of renewed talks with union negotiators from the International Association of Machinists (IAM) — talks that apparently went absolutely nowhere — Boeing cut off negotiations entirely, withdrew its “best and final” offer of a 30% pay raise (spread over four years), and walked away. As Boeing Commercial Aircraft CEO Stephanie Pope explained, “The union made non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business.”
In response, IAM complained Boeing “refused to improve wages, retirement plans and vacation or sick leave,” according to a report by CNBC. On Thursday, Boeing filed an “unfair labor practices” complaint with the National Labor Relations Board, accusing IAM of engaging in not negotiating in good faith.
What happens next?
Now, presumably, this story doesn’t end here. At some point, Boeing must return to the table. It simply cannot afford to leave its 737, 767, and 777 production lines shut down indefinitely.
Depending on whom you ask, Boeing is losing anywhere from $1 billion per week (says The Washington Post) to $1 billion per month (says CNBC) as this strike drags on. Prior guesses have ranged as high as $100 million to $150 million per day (which works out to $3 billion to $4.5 billion per month).
Which guess is right? We’ll probably not know until Boeing reports its Q3 earnings (which should include results for the first two weeks of the strike). Meanwhile, it’s in the union’s interests to make Boeing’s losses sound as big as possible, to increase pressure on management to agree to its pay hike and pension demands. Conversely, it’s in Boeing’s interest to make the losses seem as small as believable, to convince workers that it is perfectly content to wait them out.
So whichever estimates you hear, make sure to take them with a few grains of salt.
That said, here’s what we know for sure: According to data from S&P Global Market Intelligence, Boeing lost $1.8 billion through the first half of this year. It’s actually been losing money for the past six straight years — since even before the pandemic. Plus, Boeing has nearly $58 billion in debt on its balance sheet, and interest and principal on those debts must be paid whether or not Boeing’s building airplanes as the strike stretches on.
So however much the strike is costing Boeing, it’s adding to the financial strain this company was under well before the strike began. In what appears to be a first, one local Seattle network — NBC’s King 5 affiliate — suggested on Thursday that this strike could even end in a bankruptcy filing for Boeing.
How does Boeing survive this strike?
Admittedly, that’s a worst-case scenario. Asked about the potential for a bankruptcy filing, though, a Boeing spokesperson merely declined to comment — which doesn’t exactly inspire confidence.
Still, it’s worth pointing out: Even if this strike lasts five, six, seven weeks, or more, Boeing has options.
For example, in a note released Wednesday, investment bank Wells Fargo predicted Boeing will try to sell stock to raise $10 billion to $15 billion to replace money lost to the strike. The company might also simply take out loans to cover its cash needs.
Granted, that wouldn’t be great for Boeing’s credit rating, adding more debt on top of a near-$60 billion debt load already. That’s probably one reason S&P put Boeing on notice for a potential downgrade to its credit rating Thursday. Boeing’s current rating is “BBB-,” which sounds bad, but is still considered investment grade. Now the ratings agency is contemplating cutting Boeing’s credit rating to BB — which sounds better, but is in fact a junk bond rating.
But it’s still an option.
It’s also worth remembering that in the much direr straits Boeing faced during the pandemic, when demand for airplanes nearly dried up worldwide, Boeing did both these things. The company took out tens of billions of dollars in loans. And Boeing issued a lot of new stock. In 2020 alone, Boeing issued 20 million shares, and it’s issued 33 million more in the years since as it continued losing money.
All of which is to say, it’s not ideal that Boeing might need to raise a lot of cash, and sell a lot of stock, to survive this strike — but it’s done this before, and it can do it again if it needs to. So ultimately, I don’t believe the stock is a bankruptcy risk at this point.
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Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Boeing’s Labor Strike Enters Week 5: How Bad Could This Get? was originally published by The Motley Fool
CryptoCurrency
Time to Hit Buy on These 2 Software Stocks, Says Daniel Ives
It’s no secret that tech stocks have been powering the market gains over the past few years, and software stocks were among the biggest drivers of this growth.
Multiple factors are propelling the software industry forward, such as the rapid advancement of AI technology, high demand for IT solutions, and the ongoing expansion of the global digital economy.
Wedbush tech expert Daniel Ives has been watching the tech industry, and his take on it points to continued strength supported by AI and cloud expansion.
“Solid enterprise spending, digital advertising rebound, and the AI Revolution will drive tech stocks higher into year-end in our view,” Ives opined. “We believe 70% of global workloads will be on the cloud by the end of 2025, up from less than 50% today.”
Keeping that in mind, Ives goes on to add that the time has come to hit buy on two software stocks. They may not be household names, but according to the TipRanks data, both stocks are Buy-rated – and Ives sees significantly more upside to each than the consensus on the Street. Let’s take a closer look.
Couchbase (BASE)
We’ll start with Couchbase, a modern database platform provider that offers users and developers everything they need to support a wide range of applications – from cloud, to edge, to AI. Couchbase bills itself as a one-stop-shop for data developers and architects, making its services available through its powerful database-as-a-service platform, Capella. Organizations using the service can quickly create applications and services that deliver premium customer experiences, giving top-end performance at affordable prices.
The Capella platform brings the popular as-a-service subscription model to the database industry. The company can support database services for a wide range of AI applications, including the latest gen-AI tech, as well as database search, mobile access, and analytic functions. Customers can also choose self-managed services through Couchbase’s servers, with on-premises management for both multicloud and community apps.
Couchbase’s database service has found success in a wide range of fields, including the gaming, healthcare, entertainment, retail, travel, and utility sectors. The company’s customer base includes such major names as Verizon, UPS, Walmart, Cisco, Comcast, GE, and PayPal.
Turning to the financial results, we see that Couchbase reported its fiscal 2Q25 figures at the start of last month. The top line of $51.6 million was up almost 20% year-over-year and came in just over the forecast, beating expectations by nearly a half-million dollars. At the bottom line, the company ran a net loss of 6 cents per share in non-GAAP measures, but that was 3 cents per share better than had been anticipated.
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1 Top Stock to Buy Hand Over Fist Before That Happens
2024 is turning out to be a solid year for the global semiconductor industry, driven by multiple catalysts. These include the booming demand for chips that can manage artificial intelligence (AI) workloads, a turnaround in the smartphone market’s fortunes, and a recovery in the personal computer (PC) market.
These factors explain why the global semiconductor industry’s revenue is expected to jump 16% in 2024 to $611.2 billion, according to World Semiconductor Trade Statistics (WSTS). That points toward a nice turnaround from last year, when the semiconductor industry’s revenue fell 8%. Even better, the semiconductor space is expected to keep growing in 2025 as well, with WSTS projecting a 12.5% increase in the industry’s earnings to $687.4 billion next year.
More specifically, WSTS predicts a whopping 25% increase in the memory market’s revenue in 2025 to $204.3 billion. As it turns out, memory is expected to be the fastest-growing semiconductor segment next year as well, following an estimated jump of almost 77% in this segment’s revenue in 2024.
There’s one company that could help investors tap this fast-growing niche of the semiconductor market next year: Micron Technology (NASDAQ: MU). Let’s look at the reasons why buying this semiconductor stock could turn out to be a smart move right now.
WSTS isn’t the only forecaster expecting the memory market to surge higher next year. Market research firm TrendForce estimates that the sales of dynamic random access memory (DRAM) could jump 51% in 2025, while the NAND flash storage market could clock 29% growth. Both these markets are expected to reach record highs next year.
The growth in these memory markets will be driven by a combination of strong demand and improved pricing. TrendForce is forecasting a 35% year-over-year increase in DRAM prices next year, driven by the increasing demand for high-bandwidth memory (HBM) that’s used in AI processors, as well as the growth in DRAM deployed in servers. Meanwhile, the growing demand for enterprise-class solid-state drives (SSDs) and the growth in smartphone storage will be tailwinds for the NAND flash market.
These positive trends explain why Micron is set to begin its new fiscal year on a bright note. The company’s revenue in fiscal 2024 (which ended on Aug. 29) increased 61% year over year to $25.1 billion. The company posted a non-GAAP (generally accepted accounting principles) profit of $1.30 per share, compared to a loss of $4.45 per share in fiscal 2023, driven by a big jump in its operating margin on account of recovering memory prices.
CryptoCurrency
A truly decentralized system would decentralize authority — Cardano exec
Cardano Foundation chief technology officer Giorgio Zinetti told Cointelegraph that centralized authority is good for speed, but decentralized governance would give long-term sustainability.
CryptoCurrency
Intel’s former CEO tried to buy Nvidia almost 2 decades ago
Tech pioneer Intel (INTC) has seemingly missed out on the artificial intelligence boom — and part of it can reportedly be traced back to a decision not to buy the chipmaker at the center of it all almost two decades ago.
Intel’s former chief executive Paul Otellini wanted to buy Nvidia in 2005 when the chipmaker was mostly known for making computer graphics chips, which some executives thought had potential for data centers, The New York Times (NYT) reported, citing unnamed people familiar with the matter. However, Intel’s board did not approve of the $20 billion acquisition — which would’ve been the company’s most expensive yet — and Otellini dropped the effort, according to The New York Times.
Instead, the board was reportedly more interested in an in-house graphics project called Larrabee, which was led by now-chief executive Pat Gelsinger.
Almost two decades later, Nvidia (NVDA) has become the second-most valuable public company in the world and continuously exceeds Wall Street’s high expectations. Intel, on the other hand, has seen its shares fall around 53% so far this year and is now worth less than $100 billion — around 30 times less than Nvidia’s $3.4 trillion market cap.
In August, Intel shares fell 27% after it missed revenue expectations with its second-quarter earnings and announced layoffs. The company missed profit expectations partly due to its decision to “more quickly ramp” its Core Ultra artificial intelligence CPUs, or core processing units, that can handle AI applications, Gelsinger said on the company’s earnings call.
And Nvidia wasn’t the only AI darling Intel missed out on.
Over a decade after passing on Nvidia, Intel made another strategic miss by reportedly deciding not to buy a stake in OpenAI, which had not yet kicked off the current AI hype with the release of ChatGPT in November 2022.
Former Intel chief executive Bob Swan didn’t think OpenAI’s generative AI models would come to market soon enough for the investment to be worth it, Reuters reported, citing unnamed people familiar with the matter. The AI startup had been interested in Intel, sources told Reuters (TRI), so it could depend less on Nvidia and build its own infrastructure.
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