New home sales up, Ford (NYSE:F) reports drop in profits and Microsoft (MSFT) announces strong quarter

Bourbon & Bayonets / Friday, October 24th, 2014

Markets were headed slightly higher on Friday after it was reported that new home sales in the U.S. hit a six-year high in September. The Commerce Department announced that home sales were up 0.2% to a seasonally adjusted rate of 467,000 units. A reading of this level has not been recorded since July 2008. They also reported that August’s data was downwardly revised to show 466,000 units from the previously reported 504,000 units. Despite the large gain, the reading still missed analysts’ expectations of 470,000 units. New home sales have an 8% affect on the overall housing market. When compared with sales from last year, September’s reading was up 17%. Gennadiy Goldberg, an economist at TD Securities, said, “We expect the housing market recovery to remain relatively gradual over the coming months.”

Shares of Ford Motor Co. (NYSE:F) were sinking after the company announced a drop in profits. They reported a 34% decline in profits and a decline in revenue. Ford said that that revenue came in 3% lower to $34.9 billion. The drop was largely attributed to the planned shut down of an F-150 plant. They also added that there was a decline of 3% in wholesale volumes and higher recall costs also affected the numbers. Earnings came in at 24 cents per share, which did beat out analysts’ expectations of 19 cents. They have recently begun the redesign of their F-150 bodies and are now producing them with aluminum bodies. CEO of the NYSE:F, Mark Fields, said, “During the third quarter, we continued to introduce an unprecedented number of new products and technologies that will deliver strong profitable growth beginning next year. We also addressed business challenges head-on using our proven One Ford plan. Everyone at Ford (NYSE:F) remains focused on accelerating our pace of progress.”

Shares of Microsoft Corporation (MSFT) were trading higher after the company reported strong quarterly revenue. They said revenue came in 25% higher to $23.3 billion, which was boosted by the purchase of Nokia in April. They reported sales of the Lumia smart phones also hit 9.3 million for the quarter and sales of their surface tablet more than doubled. Tablet sales brought in $908 million, up from the $400 million last year. They have also had success with their cloud portion of the business. Microsoft said sales were up 128% from that arm of the company followed by sales of their services based Azure cloud platform that were up 121%. CEO, Satya Nadella, said, “We’re the only company with cloud revenue at our scale that is growing at triple digit rates.”

That’s all for today,

Warren Gates, Normandy Research

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