Finance

A Dell Technologies flag outside the company headquarters in Round Rock, Texas, US, on Monday, Feb. 6, 2023.
Jordan Vonderhaar | Bloomberg | Getty Images

Check out the companies making headlines before the bell:
Dell Technologies — Dell Technologies surged 10.5% after exceeding analysts’ second-quarter expectations. The computer company reported adjusted per-share earnings of $1.74 and revenue of $22.93 billion. Analysts polled by Refinitiv anticipated per-share earnings of $1.14 and $20.85 billion. Morgan Stanley named Dell a top pick in IT hardware.

MongoDB — MongoDB advanced 5% after topping Wall Street expectations in its latest quarter. The database software maker posted adjusted earnings of 93 cents per share on revenue totaling $423.8 million for the second quarter. Those results topped expectations of 46 cents earnings per share and $393 million in revenue, according to a consensus estimate from Refinitiv.
Lululemon Athletica — Shares added 2.3% in premarket trading after the athletic apparel retailer reported an earnings beat. Earnings per share for its second fiscal quarter came in at $2.68, topping the Refinitiv consensus estimate of $2.54. Revenue was $2.21 billion, versus the $2.17 expected. Lululemon also upped its guidance for the year.
Walgreens Boots Alliance — The drugstore chain rose by 0.4% in early trading. Walgreens said Friday that Roz Brewer had stepped down as the company’s chief executive and left the board. 
Vale — The metals and mining stock rose nearly 2% after JPMorgan upgraded Vale to overweight from neutral, saying that shares look too cheap too ignore after recent pullback, valuation reset.
VMware — The cloud services company slid 1.9% before the bell. VMware gave a mixed second-quarter report on Thursday, beating expectations for earnings per share while missing on revenue. The company also said it entered a definitive agreement to be acquired by Broadcom.

Broadcom — Shares of the chipmaker fell 4% despite Broadcom’s fiscal third-quarter results beating expectations. The semiconductor company generated $10.54 in adjusted earnings per share on $8.88 billion of revenue. Analysts surveyed by Refinitiv were expecting $10.42 per share on $8.86 billion of revenue. Fourth-quarter revenue guidance of $9.27 billion was roughly in line with estimates.
— CNBC’s Michelle Fox, Alex Harring, Jesse Pound and Samantha Subin contributed reporting More

“China is not really developing as we hoped in the beginning of the year,” said ABB’s Bjorn Rosengren, citing softness in China’s real estate sector as driving factor.
The Chinese real estate industry has been in a state of turmoil for the last three years, most notably marked by the financial woes of heavily indebted property developer Evergrande.
China, a powerhouse of manufacturing often referred as “the world’s factory” due to its influence on global trade, is ABB’s second-biggest market.

The CEO of Swedish-Swiss multinational robotics firm ABB said he has been “disappointed” by the state of the Chinese market, adding he expects conditions will prove challenging for the rest of the year.
“China is not really developing as we hoped in the beginning of the year,” said Bjorn Rosengren, CEO and chairman of ABB, speaking with CNBC’s Joumanna Bercetche on Wednesday, adding ABB has been impacted by a “softening” in China’s property sector.

Rosengren said that a decline in Chinese real estate development and hefty debts faced by the sector have meant pain for its residential construction segment, which is more cyclical and therefore prone to changes in the economy.
“We are pretty pessimistic at the moment” on China, said Rosengren. “We thought in the beginning of the year that we should see some recovery from the Covid period, but I think everybody has been pretty disappointed.”
“China continues to be pretty soft. It’s a big market though, so it’s not dead. It’s still living there, but not really developing as we’d hoped. I think it will be challenging for the rest of the year.”
ABB is one of the largest companies globally operating in the realm of industrial manufacturing. With its machines embedded in so many major global companies’ factories, the company’s performance serves as something of a barometer for the health of the manufacturing sector — and the broader economy.
Notably, China, a powerhouse of manufacturing often referred to as “the world’s factory” due to the country’s influence on global trade, is the company’s second-biggest market.

ABB says it’s the leading robotics player in the Chinese market, accounting for more than 90% of sales from locally-made products, solutions and services there.
But it has been showing signs of weakness.
In the second quarter of 2023, ABB reported a 2% increase in orders on a comparable basis, to $8.7 billion. Comparable revenues were up 17%, to $8.2 billion. Income from operations, meanwhile, climbed 15.9%, to $1.3 billion. However, in China, the firm saw its order intake decline 9% on a comparable basis in the period.

More than 50 Chinese property developers have defaulted or failed to make payments in the last three years, according to credit ratings agency Standard and Poor’s.
In July, Fitch Ratings pulled its credit ratings for Central China Real Estate Limited, a Hong Kong-based investment holding company primarily engaged in property businesses.
More recently, economists have flagged concerns with structural issues in China’s economy, such as debt, an aging population and young people unable to find work, and a growing fear of a “decoupling” from the rest of the world as tensions with the United States reach boiling point.
The Chinese real estate sector has been in a state of turmoil over the last two years, most notably marked by the financial woes of heavily indebted property developer Evergrande, which earlier this month filed for U.S. bankruptcy protection.
On Monday, Evergrande’s shares lost as much as 87% of their value after the company resumed trading for the first time since March 21, 2022. The shares have struggled to recover since.

A silver lining?

Rosengren said that, despite the weakness it is seeing in China, electric mobility is proving a fast-growing area for the company globally — especially in China.
“One of the positive things is EV vehicles, which also are getting a position globally as you’ve seen also in Europe today, Chinese cars from that perspective,” said Rosengren.
“I think that’s one of the sectors which has been good, which had some positive for the robotics market. But I think actually the real estate construction part which is low and has been low for quite some time.”
ABB is currently planning an initial public offering for the e-mobility business, which in raised 325 million Swiss francs ($370.6 million) from investors in a pre-IPO placement.
Rosengren said that most businesses and governments are “aligned” on the need to push toward a green energy future, so the ceiling for growth remains high.
In Europe, especially, greater impetus has been placed on the need to accelerate the energy transition due to Russia’s invasion of Ukraine and resulting restrictions of natural gas supplies to the continent.
“Energy generation is of course one of the sectors that needs to go green,” Rosengren said.
“You also need to build up infrastructure, electrification infrastructure globally. And I think that is what we are feeling today and that’s what we are seeing and that’s why we see still very strong market in electrification and that’s why that is important.”
ABB has an e-mobility division responsible for developing electric charging solutions, which are the backbone of the EV industry.
Still, this part of the business has proven challenging as macroeconomic conditions have deteriorated.
In the second quarter, ABB’s e-mobility unit lost $67 million, which the company attributed to “inventory related provisions as well as technology investments triggered by a shift back to a more focused product strategy to secure a continued leading market position.” More

Ralph Orlowski | Getty Images

Check out the companies making headlines after hours.
MongoDB — Shares of the database software maker gained 5% in extended trading. MongoDB reported earnings of 93 cents per share, excluding items, on revenue totaling $423.8 million in the second quarter. That came in ahead of the earnings per share of 46 cents and $393 million in revenue expected by analysts polled by Refinitiv. 

Dell Technologies — Dell popped 7.7% after reporting second-quarter earnings that surpassed Wall Street’s expectations. The technology company reported earnings per share of $1.74, excluding items, and $22.93 billion in revenue, while analysts polled by Refinitiv expected earnings per share of $1.14 and $20.85 billion.
Broadcom — Shares of the semiconductor manufacturing company fell 4% after the company posted soft fiscal fourth-quarter guidance. The semiconductor company called for fourth-quarter revenue of $9.27 billion, while analysts polled by Refinitiv anticipated $9.275 billion.
VMware — The cloud services stock edged down 1.7%. VMware posted mixed earnings, coming out at earnings of $1.83 per share, excluding items, on revenue of $3.41 billion. Meanwhile, analysts polled by Refinitiv expected $1.71 in earnings per share and $3.46 billion in revenue.
Lululemon Athletica — Shares of the athletic apparel retailer gained nearly 2% Thursday after it reported sales and profits that beat Wall Street’s estimates. The company reported earnings per share of $2.68 and $2.21 billion in revenue for its fiscal second quarter, while analysts polled by Refinitiv expected $2.54 in earnings per share and $2.17 billion in revenue. Lululemon also said it now expects sales of $9.51 billion to $9.57 billion for the fiscal year. More

Dry cannabis flowers inside the packaging room at the Aphria Inc. Diamond facility in Leamington, Ontario, Jan. 13, 2021.
Anne Sakkab | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Salesforce — The cloud software company saw its stock jump 3% after it announced quarterly results and guidance that surpassed Wall Street’s expectations. Salesforce delivered growth in all five of its product categories, and CEO Marc Benioff sees expansion ahead through artificial intelligence.

CrowdStrike — The cybersecurity company jumped 9.3% after it not only beat analysts’ second-quarter expectations on the top and bottom lines late Wednesday, but also issued positive earnings and revenue guidance for the third quarter and full year.
Dollar General — The discount retail chain plunged 12.2% Thursday after reporting second-quarter earnings per share of $2.13, which was lower than the StreetAccount consensus estimate of $2.47. Guidance for the second quarter and full year also disappointed.
Cannabis stocks — Cannabis stocks popped a day after the U.S. Department of Health and Human Services recommended easing restrictions on marijuana and classifying it as a lower-risk drug. Canopy Growth, Tilray Brands and Cronos Group gained 25.8%, 11.3% and 9.6%, respectively.
Ciena — The network equipment stock surged nearly 16% after topping Wall Street’s fiscal third-quarter earnings expectations on the top and bottom lines. Revenue rose 23% from a year ago and the company said it expects fiscal 2024 to be a growth year. Ciena also expects AI adoption to contribute to growth over the long run.
Palantir Technologies — The data analytics stock dropped 8.3% following a downgrade from Morgan Stanley, which said difficulties monetizing artificial intelligence could drive the share price down more than 40%. The firm gave Palantir an underweight rating.

Arista Networks — The networking equipment stock rose 4.4% after Citi upgraded Arista Networks to a buy rating, citing its long-term AI exposure.
Okta — Okta shares surged 13.5% after the access management company topped analysts’ second-quarter earnings expectation and issued a strong full-year outlook. The company reported adjusted earnings of 31 cents per share, excluding items, on revenue totaling $556 million. That came in ahead of the earnings per share of 22 cents and $535 million in revenue expected by analysts polled by Refinitiv.
Five Below — The discount retail stock slumped 6% on disappointing third-quarter guidance. For the current period, Five Below said it expects revenue to range between $715 million and $730 million, versus the $738 million expected by analysts polled by StreetAccount. Earnings per share estimates also came in below expectations.
Shopify — Shares popped 10.8% after Shopify announced late Wednesday that its merchants on its e-commerce platform can use Amazon’s “Buy with Prime” option. The new Amazon app on Shopify’s ecosystem gives merchants access to benefits such as fast and free delivery outside of Prime.
Signet Jewelers — The jewelry stock jumped 5% after Signet reported a stronger-than-expected second quarter. The company reported $1.55 in adjusted earnings per share on $1.61 billion of revenue. Analysts surveyed by StreetAccount were expecting $1.45 in earnings per share on $1.58 billion of revenue. The company also said it expected a multiyear rebound in engagements to start later this year.
UBS — U.S.-listed shares rose 5.6% after the Switzerland-based bank topped profit expectations and announced a slew of job cuts as it integrates Credit Suisse following the recent takeover. Shares hit a multiyear high during Thursday’s session.
Chewy — Chewy shares tumbled more than 12%. The pet food retailer topped expectations and posted surprise earnings of 4 cents per share, but said active users declined year over year. The company also indicated that customers are growing more cautious.
Victoria’s Secret — The intimate apparel stock popped nearly 7% even after missing second-quarter earnings expectations on both the top and bottom lines. Victoria’s Secret also said it expects a wider-than-expected loss for the current quarter.
UGI — UGI shares surged nearly 9% in midday trading. The natural gas and electric utility said Thursday that its board will be exploring strategic alternatives, including a review of UGI’s cost structure and capital allocation priorities.
SkyWest — The regional airline jumped 8.9% following an upgrade to outperform from market perform by Raymond James. The firm said the company has an improved outlook for pilot hiring. 
— CNBC’s Tanaya Macheel, Sarah Min, Yun Li, Alex Harring, Michelle Fox, Pia Singh and Jesse Pound contributed reporting. More

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“It’s very difficult to buy a sports team and lose money,” Carlyle Co-Founder David Rubenstein recently said in an interview for a CNBC podcast. 

Historically, that purported upside has only been enjoyed by the wealthiest of the wealthy. But most major U.S. sport leagues have – just within the last few years – modified ownership rules to allow for private-equity firms to have minority stakes. Major League Baseball was the first to open its coffers to private-investment funds in 2019; a slew of other leagues followed, including the National Basketball Association, Major League Soccer and the National Hockey League. 
Since the start of 2019, more than $120 billion in private equity and venture capital funds have been funneled into the sports industry, according to PitchBook. A big participant in that is Sixth Street Partners, a $74 billion behemoth, known historically for its direct lending and growth prowess, and has been making big inroads in the sports world in recent years, with several billion dollars’ worth of investments. 
The firm recently co-founded Bay FC, part of the National Women’s Soccer League, alongside several retired players, as well as Sheryl Sandberg. Sixth Street also made investments in FC Barcelona’s LaLiga TV broadcasting rights and a majority investment in Legends, a sports and entertainment experiences company. In June 2021, Sixth Street led a strategic investment with Michael Dell in the San Antonio Spurs basketball team. Last year, the firm also invested in legendary Spanish soccer club Real Madrid.
Alan Waxman, the CEO and co-founder of the firm, spoke exclusively for the Delivering Alpha Newsletter – in his first-ever TV interview – about the firm’s vision in what’s become an increasingly crowded sector. He said technology streaming, and social media are changing the team-fan dynamic. 
“Instead of just interacting with your fans in that local market, it’s opened the floodgates on being able to interact with your customers around the world,” he said. 

Waxman said that 10 years from now, fans will be able to put on a headset from their couch and be virtually transported to a game across the world. 

Great returns

Historically, investing in the sports space has paid off. Between 2002 and 2021, the average price return for stakes in NFL, MLB and NBA surpassed the S&P 500, with the NHL slightly trailing, according to PitchBook. But the research firm notes that “returns will likely be lower than the prevailing 20-year period. 
And even though minority stakes are typically sold at a discount – due to lack of control – that gap may be narrowing as more and more institutional firms raise dedicated funds for sports. That competition is likely to drive up prices. 
So how does that change the dynamic about whether or not someone can lose money investing in sports? 
Waxman says, in any investment, one has to protect themselves from even the most unlikely scenario. For example, no one saw COVID coming. 
“So would I go so far as to say that you can’t lose money in sports? For a normal investor, I wouldn’t say that,” Waxman said. “What I can say is the way Sixth Street thinks about things, we’re typically able to create opportunities and customized solutions that work for whatever that particular sports team is looking for, but also in a way that protects our investors’ capital.” More

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Traders on the floor of the NYSE, August 29, 2023.
Source: NYSE

The drought in the IPO market could be near an end, according to a big investor overseeing more than $70 billion.
Alan Waxman, the CEO and co-founder of Sixth Street, believes we’re in about the seventh inning of the downturn in the IPO market as he sees a “real pickup” in the pipeline. His firm has exploded in growth, invested in everything from direct lending to growth companies to real estate to insurance to sports.

“I think people are starting to look for capital and pick on their heads up and obviously having the IPO market open a little bit of a small crack that obviously helps sort of gets commerce moving again,” Waxman said in his first-ever TV interview with CNBC’s Leslie Picker.
Sixth Street has invested in Spotify, Airbnb and Stripe through its growth strategy. Waxman believes that the market will come back to life in the fourth quarter and into the first quarter, adding that volumes will be “materially higher” in 2024 than they were in 2023.
The IPO market experienced a big lull over the past year as an aggressive Federal Reserve and recession fears diminished appetite. If interest rates stabilize and the stock market maintains its 2023 gains, investors might be open to new issuance again. Many believe the highly anticipated IPO of Softbank-backed Arm next month could be a test for sentiment.
Candidates for debuting in the fall could include Instacart, shoe maker Birkenstock, marketing automation firm Klaviyo, carsharing firm Turo and Waystar, which provides software for healthcare billing. More

The group posted a $28.88 billion second-quarter net profit Thursday.
UBS also announced that it will fully integrate Credit Suisse’s Swiss banking unit, a key profit center, in 2024.
This will result in 1,000 redundancies on top of a further 2,000 reduction in head count across the group as part of a mass restructure of the rescued lender.
“Clearly the group remains a construction site in the near term, however we believe this set of results and announcements should give confidence in the mid-term bull case, Buy,” Deutsche Bank said.

Swiss authorities brokered the controversial emergency rescue of Credit Suisse by UBS for 3 billion Swiss francs ($3.37 billion) over the course of a weekend in March.
Fabrice Coffrini | AFP | Getty Images

UBS shares rallied to 15-year highs on the back of what analysts branded a “historic” earnings report, though Deutsche Bank said the Swiss banking giant may remain a “construction site” for some time.
The group posted second-quarter net profit of $28.88 billion on Thursday as a result of $28.93 billion in negative goodwill from its acquisition of stricken rival Credit Suisse, which was brokered by Swiss authorities in March and completed on June 12.

UBS also announced that it will fully integrate Credit Suisse’s Swiss banking unit, a key profit center, in 2024. This will result in 1,000 redundancies on top of a further 2,000 reduction in head count across the group as part of a mass restructure of the rescued lender.
UBS shares were up 5.6% by midafternoon in Zurich on Thursday, touching levels not seen since late 2008.
Notably, UBS highlighted that the massive net asset and deposit outflows seen by Credit Suisse over the last year have finally begun to reverse, and turned positive in June. Meanwhile, UBS’ CET1 ratio, a measure of bank solvency, nudged up to 14.4% from 14.2% in the same period last year, despite the disruption of one of the largest mergers in banking history.

“The underlying UBS business is seemingly not impacted by the deal. Non-Core is significant but made solid progress and the CET1 ratio was strong/ahead of expectations in 2Q23,” Deutsche Bank analysts Benjamin Goy and Sharath Kumar said in a research note Thursday.
“Clearly the group remains a construction site in the near term, however we believe this set of results and announcements should give confidence in the mid-term bull case, Buy.”

This bullishness was echoed by Bruno Verstraete, partner at Zurich-based Lakefield Partners, who told CNBC that Thursday’s result was a “once in a blue moon, historic number.”
“Clearly the good news is indeed that stabilization came and that the market seems to de-risk what was out there and what was potentially something which still had some hidden dead bodies in the cupboard,” he said, referring to the Credit Suisse’s troubled history of legacy compliance and oversight failures.
“That seems not to be the case now, that seems to be under control, and I think investors are really reacting positively to that.”

Earlier this month, UBS announced that it had ended a 9 billion Swiss franc ($10.24 billion) loss protection agreement and a 100 billion franc public liquidity backstop that were put in place by the Swiss government when it agreed to take over Credit Suisse in March.
Verstraete suggested that severing any financial dependence on the Swiss government and central bank had freed up UBS to take the decision on absorbing Credit Suisse’s domestic banking unit without being subject to any political pressure. The prospect of further mass layoffs may be unpopular among some portions of the political and public sphere in Switzerland.
“It’s difficult to combine a blowout result like that and then to announce layoffs at the same time. I think there will be different ways of layoffs in order to get to that integration and into the cost-cutting opportunity that is there. That’s clearly positive for the investors,” Verstraete said.
However, he argued that it is in the interests of the Swiss public to have a “solid bank.”
“One third of Switzerland is banking with the group, combined. They want to have a stable group, they don’t want to have a mastodon created that is too big to save. I think this de-risking, this going from a risk culture to another one is something that is clearly going to be beneficial for the general public in the end,” Verstraete added.

UBS on Thursday announced plans to further wind down noncore units of Credit Suisse’s ailing investment bank, wealth management and asset management divisions, which it said are “not aligned with our strategy and policies.”
Gildas Surry, senior analyst at Paris-based Axiom Alternative Investments, told CNBC on Thursday that the market will be closely watching UBS’ efforts to wind down these noncore divisions, and seeking further guidance on the future of the bank’s CET1 ratio.
“What is very positive is the actual inflows, so the deposit reversal is taking place that’s also a very good sign for the franchise,” Surry said.
“The integration of Swiss operations from Credit Suisse is very much in line so nothing new there, but what’s going to be very interesting is indeed the timeline of share buybacks, and for that we need to have the repayment of the funding line from the Swiss National Bank and also the demonstration that UBS has access to the AT1 markets following the write-downs of the Credit Suisse AT1s in March.”
The Swiss government, central bank and UBS came under fire in March after the emergency rescue package included the controversial write-down of 16 billion francs of Credit Suisse AT1 bonds. More

A pause on monthly payments and interest for student loans has been in place since early 2020.
Interest accrual resumes for borrowers on Sept. 1.
That puts a spotlight on differences between two types of federal debt: subsidized and unsubsidized student loans.
Unlike with subsidized loans, interest starts accruing on unsubsidized loans upon disbursement, and during grace periods and deferments.

Srdjanpav | E+ | Getty Images

How interest accrues on loans

Direct Subsidized Loans are available to undergraduate students who demonstrate a financial need.
They don’t accrue interest while a borrower is in school (at least half-time) or during a six-month grace period after leaving school. The loans also don’t accrue interest during deferment, a period when payments are postponed due to unemployment or economic hardship.
The U.S. Department of Education pays the interest on subsidized loans in these instances.

However, that protection isn’t available for Direct Unsubsidized Loans, which are available to a broader group of borrowers (including graduate students) and are not based on financial need.
Unlike subsidized loans, interest on unsubsidized loans starts accruing immediately (i.e., upon disbursement) and during times like deferment or grace periods — making this debt more expensive.

Additionally, in some cases — after a deferment, for example — unpaid interest on unsubsidized loans may “capitalize.” When this happens, unpaid interest is added to the loan’s principal balance; future interest is then calculated off that higher principal, thereby increasing future interest payments.
Borrowers can carry both subsidized and unsubsidized loans, which have different borrowing limits.
About 30.3 million borrowers had subsidized Stafford Loans as of March 31, with an average balance of $9,800, according to Education Department data. About 30.7 million people have an unsubsidized loan, with an average balance of about $19,000, according to the Education Department.
(The term Stafford Loan is an informal way of referring to Direct Subsidized Loans and Direct Unsubsidized Loans made via the Direct Loan Program. It also refers to subsidized or unsubsidized Federal Stafford Loans made via the Federal Family Education Loan, or FFEL, program.)

How the payment pause, interest waiver affected loans

A pause on monthly student loan payments and interest has been in place since the onset of the Covid-19 pandemic in 2020. During that time, interest wasn’t accruing on any loans — meaning unsubsidized loans essentially became subsidized debt for some borrowers.
However, interest will start accumulating on borrowers’ debt again on Sept. 1, and monthly payments will resume in October.
The interest waiver cost the federal government about $5 billion a month.

Some financially strapped borrowers may now wonder if it’s a good idea to pursue deferment or forbearance as payments resume, Mark Kantrowitz, a higher education expert, previously told CNBC.
But “you’re effectively digging yourself into a deeper hole” by pursuing these avenues, Kantrowitz said, since interest will typically be accruing during deferral or forbearance. (There are exceptions: for example, if a subsidized loan is in deferment, or if either type of loan is in deferment due to active medical treatment for cancer.)
Pursuing an income-driven repayment plan, which caps monthly payments, is generally a better option for borrowers, unless the financial difficulty is short term in nature, Kantrowitz said.
“In general, you don’t want to use deferment or forbearance if you’re capable of repaying the loan,” he said. More