?? Dell hits record highs with AI-optimized server orders, Thor Industries faces challenges, Kroger achieves strong performance in Q4 and more.

Hello, dear readers! ??We hope you had a great week.? Here's your weekly update on the latest news from finance and markets.

Dell reaches new all-time highs after beating earnings expectations for the sixth consecutive quarter. After a federal judge blocked the JetBlue Airways and Spirit Airlines merger in January, citing anti-competitive concerns, the chances of completing the deal by the July 24 deadline dwindled. Apple's stock continues to drop for the second consecutive trading day, following Bloomberg's revelation of a 24% decline in iPhone sales in China during the first six weeks of the year.

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Dell hits record highs with AI-optimized server orders sparking investor enthusiasm

Dell reaches new all-time highs after beating earnings expectations for the sixth consecutive quarter. Despite a 10.9% year-over-year decline in revenue to $22.32 billion, it exceeded projections. Dell also announced a 20% dividend increase. Unlike HPQ, Dell's focus on networking equipment and AI-optimized servers are paying off, with a nearly 40% sequential increase in AI-optimized server orders. Dell shipped $800 million worth of AI-optimized servers, doubling its backlog to $2.9 billion. The company believes it is well-positioned in AI, especially with the strong demand for its flagship PowerEdge XE9680. Dell anticipates continued growth in AI adoption by enterprises and sees on-premises solutions as crucial for data security.

Spirit Airlines takes a hit as it ends merger deal with JetBlue Airways

After a federal judge blocked the JetBlue Airways (JBLU) and Spirit Airlines (SAVE) merger in January, citing anti-competitive concerns, the chances of completing the deal by the July 24 deadline dwindled. Despite plans to appeal, both airlines officially terminated the merger, resulting in a $69 million payment from JBLU to SAVE. This termination fee provides only limited consolation for SAVE and its shareholders, who saw the merger as a potential lifeline for the struggling discount carrier. SAVE reported a smaller-than-expected Q4 loss, with an upside Q1 revenue guidance of $1.25-$1.28 billion. However, on an absolute basis, SAVE's financials are concerning, with a FY23 pre-tax margin of (13.8%) and cash burn of over $520 million. The balance sheet shows $3.06 billion in long-term debt as of December 31, 2023, and just $1 billion in cash and short-term investments. SAVE is exploring refinancing options for its 2025 debt, including $1.1 billion in senior secured notes due next year. Another $500 million in convertible bonds matures in 2026. Bankruptcy rumors have surfaced post-merger ruling, though SAVE may seek to extend maturity dates by working with creditors. For JBLU, the merger termination is likely in the company's best interest, freeing it from SAVE's balance sheet concerns. JBLU can now focus on its own cost-cutting efforts without the complications of integrating and reconfiguring SAVE's fleet. The termination puts SAVE in a vulnerable position, and the coming months may be turbulent as it seeks to bolster liquidity and improve profitability.

Apple's stock approaches October 2023 levels due to reported weak iPhone sales in China

Apple's stock continues to drop for the second consecutive trading day, following Bloomberg's revelation of a 24% decline in iPhone sales in China during the first six weeks of the year. This news adds to a series of setbacks for Apple's sales in China, including discounts on iPhones and a weak performance in Q4 sales, with a decrease of over 13% year-over-year in constant currency. Despite surpassing iPhone sales estimates in Q4, the recent trends in China suggest a challenging outlook. Increased competition in the region, economic difficulties, and growing preference for cheaper alternatives may impact Apple's market position. Apple is also facing regulatory challenges, both in the European Union and China. The EU recently imposed fines and mandated third-party app store options, while China has implemented new regulations for apps listed in the App Store. Geopolitical risks and tensions have further potential to disrupt Apple's supply chain concentrated in China. Notably, Chinese officials have been instructed to avoid using iPhones for business purposes. Despite these challenges, buying opportunities may arise as Apple's shares approach October lows.

Thor Industries faces challenges as FY24 guidance drops; Unexpected headwinds persist

Thor Industries, Inc. (THO) disclosed a drop in Q2 net income to $7.22 million, or $0.13 per share, down from $27.08 million, or $0.50 per share, in the previous year. Quarterly net sales fell by 11.9% to $2.21 billion, below analyst expectations. Citing ongoing challenges, Thor revised its FY24 guidance, projecting lower industry wholesale shipments between 330,000 and 340,000 units, compared to the prior estimate of 350,000 to 365,000 units. The company now forecasts fiscal 2024 earnings in the range of $5.00 to $5.50 per share on net sales between $10 billion and $10.5 billion, down from the earlier guidance of $6.25 to $7.25 per share on net sales between $10.5 billion and $11 billion.

Kroger achieves strong performance in Q4, thriving on consumer value preferences

Kroger (KR) achieves multi-year highs with impressive Q4 profits and foresees continued success through FY25. The national grocer's positive trajectory, sustained from Q3, includes outperforming economic pressures, household growth, and cost-cutting. Q4 highlights include a 35% year over year increase in adjusted EPS to $1.34 and a 6.4% rise in revenue to $37.06 billion. Identical sales, excluding fuel, slightly decreased as expected. Kroger attributes success to strategic pillars: fresh produce, private labels, seamless (digital growth), and personalization. An omnichannel approach remains key, with plans for more store openings and continued digital expansion in FY25. Future outlook includes adjusted EPS of $4.30-4.50, surpassing analyst estimates, and identical sales growth of 0.25-1.75%.

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