TEK2day Podcast

There is insight to be gleaned from recent earnings conference calls. We have highlighted a few from this past week. Many companies assume a deterioration in business from Q1 to Q2 and a potential recovery beginning in Q3. A majority of companies did not provide formal Q2 nor calendar 2020 guidance. Two key questions are: 1.) “How bad will Q2 results be?” and 2.) “Should the economy begin to recover in Q3, what will be the rate of recovery?” Two difficult questions to answer, especially the second. Different communities across the U.S. will re-open at different times and re-engage at different rates. Read our full article here: https://tek2day.com/2020/04/25/it-is-a-mistake-to-look-through-q2-and-2020-earnings/

Ep. 358: Earnings Season Thus Far: Lack of Color & Backbone by TEK2day

Congress will vote on a $484 Billion stimulus plan later this week which includes $250 Billion for the Paycheck Protection Program (“PPP”) and $60 Billion for the SBA’s Disaster Relief Fund. Read more here: https://tek2day.com/2020/04/21/expect-more-smb-failures-despite-latest-310b-sba-relief/

Layoffs are not only taking place across the retail, restaurant, travel and hospitality industries. A number of other industries including the Technology industry have absorbed their fair share of layoffs as well. Some early-stage Technology companies are conserving cash by replacing cash compensation with equity. The list below includes approximately 60 companies (primarily Tech companies) and more than 13,000 people that have been laid off. While not a comprehensive list, it is a good proxy for layoff activity over the past several weeks across a variety of Technology sectors.

Access the full article and data tables here: https://tek2day.com/2020/04/20/layoffs-have-extended-beyond-hotels-and-restaurants/

The macro trade where stocks fall in unison in late March only to recover in unison in early April is doomed to fail. We will re-test market lows. A staggered economic recovery will require that investors identify “winning” stocks coming out of the downturn and avoid “value traps”. Life is about who you choose to partner with and we advocate that investors “partner” with market leading companies. Below are a few reasons why a “normal” economy is not around the corner. Read the full TEK2day article HERE: https://tek2day.com/2020/04/19/investors-sharpen-your-pencils/

Brace yourself for a soft Q1 and an UGLY Q2. The April and July earnings calls will test the will of those investors that have jumped back into the market with both feet.

This market is irrational. All news is good news and at present most news is anything but good. See our related TEK2day article here: https://tek2day.com/2020/04/14/strange-market-indeed/

FIS revises 2020 outlook: https://www.sec.gov/Archives/edgar/data/1136893/000113689320000086/ex991pr-fiscoronavirus.htm

Excerpt from press release:

"...Consequently, we now estimate that we will generate revenue of $3,060 to $3,080 million during the first quarter of 2020, which represents an increase of approximately 49% to 50% over the prior year period, primarily due to the acquisition of Worldpay.

Organic revenue growth is estimated to be 1% to 2% during the first quarter of 2020, including approximately $20 million in anticipated negative foreign exchange impact. We had previously projected revenue of $3,180 to $3,210 million during the first quarter of 2020, representing an increase of approximately 55% to 56% over the prior year period.

Organic revenue growth was previously estimated to be 5% to 6% during the first quarter of 2020, including approximately $10 million in anticipated negative foreign exchange impact.

During the first quarter of 2020, we now estimate that our Merchant Solutions segment revenue will increase significantly over the prior year period, primarily due to the acquisition of Worldpay, with organic growth estimated to be approximately flat; our Banking Solutions segment revenue will increase approximately 7% over the prior year period with organic growth estimated to be approximately 1%; and our Capital Market Solutions segment revenue will increase approximately 9% over the prior year period with organic growth estimated to be approximately 7%. Segment revenue growth is primarily being impacted by declines in payment processing volumes within our Merchant Solutions segment as well as lower issuer processing, debit network and account transaction volumes within our Banking Solutions segment.

In response to COVID-19, we are taking several actions to manage discretionary expenses and achieve cost synergies, including limiting travel, reducing incentive compensation and decreasing third-party spending as well as accelerating automation and functional alignment across the organization.

During the first quarter of 2020, we now estimate that we will generate Adjusted EPS of $1.26 to $1.28 as compared to $1.16 in the prior year period. We had previously projected Adjusted EPS of $1.30 to $1.34 during the first quarter of 2020.

While we remain confident in the long-term fundamentals of our business, due to the speed at which the COVID-19 situation is developing and the unknown duration of this pandemic event, we are withdrawing our Full-Year 2020 financial guidance. We anticipate providing further updates and details on our first quarter 2020 earnings call."

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Vince McMahon's CEORater Profile: https://www.ceorater.com/ceo/412/399/Vince-McMahon

YouTube version of this podcast episode: https://youtu.be/aO0lJLF51jo

CEORater CEO of the Week April 11th 2020 Prepared Remarks:

Welcome to the inaugural CEORater “CEO of the Week”.

Our first “CEO of the Week” is WWE Chairman & CEO Vince McMahon. This is as much a memorial as it is a celebration because Vince McMahon buried his XFL on Friday – Good Friday no less.

This was version 2.0 of the XFL. It was killed not by poor ratings or fan indifference, rather by the Coronavirus.

XFL 2.0 was funded entirely by Vince McMahon who sold approximately $270 million of WWE stock on March 27th 2019.

At the time, speculation was that McMahon was positioning himself to purchase the Carolina Panthers of the National Football League. The Panthers were sold to David Tepper, founder of hedge fund Appaloosa Management.

McMahon wasn’t interested in acquiring the Panthers however. McMahon took the world by surprise on January 25th 2018 when he held a press conference announcing the return of the XFL – version 2.0.

For those who are not familiar, XFL v1.0’s inaugural season took place in 2001 after the conclusion of the NFL season. The original incarnation of the XFL was a partnership between the then WWF (now WWE) and NBC, which was then part of GE.

Version 1.0 of the XFL was sort of a cheesy production, it had a professional wrestling over-the-top promotional feel to it. Ratings dropped off each week before NBC pulled out of the partnership during the inaugural season. ESPN did a 30 for 30 on that initial season which we have linked to in show notes.

XFL 2.0 was very different. It was a serious football league with a promotional strategy that focused on the game and on-field play rather than sensationalism.

XFL 2020 was fairly popular from a ratings standpoint. The league was even more popular from a live gate standpoint. Game attendance grew each week. XFL 2020 also had some exciting in-game innovations.

So… why is Vince McMahon worthy of being named CEORater “CEO of the Week”? After all, he presided over a “failed” football league – twice…

Well, McMahon is an entrepreneur and risk taker. If you follow us you know that CEORater celebrates entrepreneurs and risk takers. We respect their ingenuity, their resourcefulness, their toughness and grit. McMahon placed a material amount of skin in the game, he did not rely on Other People’s Money.

Therefore, rather than poke fun at McMahon and the XFL, we choose to celebrate the spirit of an entrepreneur who was willing to revisit a past failure in an attempt to make it right.

Were it not for the great destroyer of health and value known as the Coronavirus, McMahon very well may have led this latest incarnation of the XFL to the endzone. And for that, we declare Vince McMahon as CEORater’s first “CEO of the Week.”

“This Was the XFL” ESPN 30 for 30 link: https://youtu.be/MVTi1g1MTOg

The SBA lacks the infrastructure to efficiently process the $350 billion capital allotment it received from the recent $2 trillion economic stimulus plan. Read our full TEK2day article here: https://tek2day.com/2020/04/09/sba-loan-processing-every-which-way-but-smooth/

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