Tariffs to bring copper production to U.S. is not the most effective: TD Cowen's Craig Hutchinson
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
9 hours ago
- Yahoo
PayPal embarks on $300M restructuring
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Digital payments pioneer PayPal Holdings has begun a 'large-scale initiative' to update its 'existing technology infrastructure' at an estimated cost of as much as $300 million, the company said. The effort is expected to occur over 18 to 42 months and resulted in a $95 million charge during the second quarter, including for employee severance and benefits costs, according to a PayPal quarterly filing Tuesday with the Securities and Exchange Commission. The workforce reductions associated with the plan are expected to be completed by 2027, the filing said. It's a major 'existential' technology upgrade for a company that's considered the 'grand-daddy' of the fintech industry, TD Cowen analyst Bryan Bergin said in an interview. It's a part of providing the technology support for their new initiatives and re-accelerating growth, he said, referring to plans laid out at a February meeting with investors and analysts by PayPal CEO Alex Chriss and other executives. 'Large organizations need modern technology, and that's a component of this,' Bergin explained in a Thursday interview. 'So a lot of this has to do with making sure they are on the most modern technology, and it is also about consolidating disparate systems behind the scenes.' The company laid out the benefits it's seeking by way of the restructuring in its quarterly filing. 'Management undertook a large-scale initiative (the 'Q2 2025 Plan') to re-engineer our existing technology infrastructure to improve scalability, reduce network latency, decrease operational costs, and optimize our workforce,' the filing said. A spokesperson for the San Jose, California-based company declined to comment on the workforce reduction beyond the quarterly filing, which didn't specify how many employees will be cut. The restructuring was mentioned only briefly during a Tuesday webcast with analysts to discuss the company's second-quarter financial results. 'You'll also see in our (second-quarter) materials that we recorded restructuring costs of approximately $92 million,' PayPal's chief financial officer, Jamie Miller, told analysts during the webcast, referencing a non-GAAP figure. 'These costs are related to workforce actions and the key tech transformation initiatives that we discussed in our investor day,' she said. Chriss, who took the top post in September 2023, has replaced much of the company's management team and set a new strategic course since taking over from Dan Schulman, who struggled to expand the company's business after a temporary benefit from COVID-19 e-commerce activity. The three-year initiative will 're-engineer infrastructure, streamline operations and exit certain data centers as we unify platforms and migrate more to cloud-based solutions,' Miller said. Benefits of the overhaul will include increased speed, more flexibility in operations, better data utilization and increased scalability, she added. Based on the quarterly disclosure, the company expects to absorb as much as $300 million in overall cost reductions under the restructuring plan over time. Overall, PayPal forecast $90 million to $100 million in employee severance costs; $40 million to $60 million in accelerated depreciation expense; and other costs of $110 million to $140 million related to the initiative, the filing said. Some of the other costs are related to the re-engineering work, migration to cloud-based software expense, contractor costs, consulting fees, prepaid software expense and maintenance costs, the filing said. Still, the plan is still developing and the cost estimates could change, PayPal noted. The restructuring is also designed to allow the company to better compete with a slew of fintechs entering the payments arena. The current PayPal management team is showing 'more urgency in ultimately modernizing the company because if you don't it's going to be much more difficult in to compete with digital, native players built on stacks today,' Bergin said. Despite some macroeconomic headwinds this year, including related to U.S. tariffs, the company's PayPal namesake payments business for merchants, its Braintree offering for larger businesses and Venmo peer-to-peer system continued to expand. The company's second-quarter payments volume rose 6%, or 5% on a foreign exchange neutral basis, including 45%-plus growth in its Venmo volume and 20%-plus growth in buy now, pay later payments volume, the earnings report showed. Second-quarter net income rose 12% over the year-ago period to $1.26 billion as revenue climbed 5% to $8.29 billion, including a 20% jump in revenue from Venmo, PayPal said. Second-quarter sales and administrative expense dropped 19% to $461 million from a year ago, according to the earnings report, likely reflecting the smaller workforce. Those costs typically include labor expenses. As of the end of last year, PayPal had about 24,400 employees worldwide, including about 8,900 in the U.S., according to the company's annual filing with the SEC in February. PayPal also noted a 'workforce reduction' that began in the first quarter related to a new regulation in an unidentified international market, saying in the quarterly filing that it resulted in costs for the first half of the year of $36 million. Restructuring and related costs have been a reality for the company for the past two years. While the overall 'restructuring and other' charge for the second quarter this year was 3% higher at $116 million relative to the same quarter last year, PayPal's $182 million expense for the first half of this year was 44% lower than for the first half of 2024, according to the filing. Recommended Reading PayPal pays up for talent Sign in to access your portfolio
Yahoo
10 hours ago
- Yahoo
Palo Alto Networks Broadens Cybersecurity Consolidation With $25B Deal
Faced with something of an identity crisis, Palo Alto Networks is going all-in on identity security. The cybersecurity firm, which has been seeking ways to bulk up and expand its portfolio of services, announced Wednesday an agreement to buy Israeli identity security company CyberArk for $25 billion. It's just the latest in a massive wave of dealmaking in cybersecurity, though investors aren't exactly digging Palo Alto's new look. READ ALSO: Big Tech Pulls Off a Very Big Earnings Week and Barnburner Figma IPO Offers Good Omen as Klarna Reconsiders Debut Check Your Privilege(d Access) Palo Alto's big splurge isn't exactly surprising. The company has been open about its push for 'platformization' of its services, the bundling of lots of different cybersecurity offerings into a single package to better serve customers seeking to slash vendors and limit costs. As a result, the company has spent roughly $7 billion on about 20 acquisitions since 2018, according to a Financial Times analysis, including most recently a $500 million deal in April for AI security firm Protect AI. The CyberArk purchase marks Palo Alto's entrance into the 'identity security' market, which includes services such as privileged access management, secret-keeping and customer access. The acquisition comes at an 'inflection point' for the space, thanks to the rise of agentic AI, Palo Alto Networks CEO Nikesh Arora said in an interview with CNBC's 'Squawk Box' on Wednesday. So no-brainer, right? Not exactly. Palo Alto has also been quite open about its push (more like desperate need) for growth. And given the deal's hefty price tag, which makes it the biggest acquisition in company history, analysts on Wednesday highlighted concerns that the transaction is an all-too-simple, potentially clunky solution to its problem: 'Our initial take is negative since we think the message implied is that Palo Alto is concerned about the organic growth runway, and thus is potentially seeking to acquire into a new market segment and new growth,' BMO Capital Markets analyst Keith Bachman wrote in a note seen by Investor's Business Daily. In its third-quarter earnings report in May, Palo Alto announced lower revenue forecasts for its next quarter than Wall Street expected. RBC Capital analyst Matthew Hedberg, meanwhile, said the 'glaring' size of the deal, struck at a roughly 26% premium to CyberArk's shares over a 10-day period through July 25, is a potential red flag. Palo Alto's share price has plunged more than 12% since The Wall Street Journal reported on a potential deal on Tuesday, while CyberArk's has risen more than 15%. Wiz Kids: The mega deal is part of a fad. Last year, Cisco closed its $28 billion purchase of cyber firm Splunk, while Alphabet's $32 billion acquisition of cloud security firm Wiz, announced in March, remains the biggest deal of 2025 so far. If it's completed, that is. In June, multiple outlets reported that the US Department of Justice's antitrust division began investigating whether the tie-up could illegally limit competition. According to a Reuters report earlier this year, the two sides had accelerated acquisition talks following November's presidential election, believing the new administration would usher in a laxer era of antitrust scrutiny. For now, it seems Big Tech still hasn't built a regulatory firewall. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
Yahoo
12 hours ago
- Yahoo
Microsoft (MSFT) Earnings Beat Expectations—Analysts See More Upside
Microsoft Corporation (NASDAQ:MSFT) is one of the . On July 31, TD Cowen analyst Derrick Wood reiterated their bullish stance on the stock, giving a 'Buy' rating today. The firm's optimism follows Microsoft's earnings report on July 31st, highlighting strong performance and growth potential. The tech giant reported impressive revenue growth in the fourth quarter, beating market expectations. Azure has been a major driver behind this revenue growth, having a notable increase in growth driven by both AI and non-AI workloads. User engagement has also been increasing positively, as evident from the rising adoption of Microsoft's Copilot. Wood also pointed out Microsoft's data center capacity expansion and robust capital expenditures, together which have been driving Azure's continued growth. Northfoto / Management at Microsoft has also been optimistic about maintaining demand signals, resulting in an increased capital expenditure forecast. According to Woods, the company's strong positioning in AI monetization and cloud infrastructure will help keep growth on track, reinforcing his confidence in the company. Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. While we acknowledge the potential of MSFT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Must-Watch AI Stocks on Wall Street and Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
