Well, we just got a crapload of earnings and unfortunately pretty much all of them were worse than expected. We got Apple we got Google we got Ford which plummeted the most we got Qualcomm we got Starbucks we got Amazon And we've got some problems to talk about. First, Starbucks is one where obviously we would expect that uh, revenues in China would be the weakest and indeed the Starbucks revenues were the worst in China. Now I Personally think and this is this is my way of trying to get exposure to China and I have not invested in Starbucks yet personally.

but I do think that there could be a potential to invest in Starbucks because they have substantially increased the number of store exposure they have in China relative to 2019. I Feel like during the pandemic? Starbucks basically just flew to China and opened as many Starbucks as they could while everyone was on lockdown. Now that's really interesting because you would not expect to see any of that Revenue really getting Q4 since they basically just started unlocking the economy at the end of Q4. So I wouldn't be surprised to actually start seeing Starbucks revenues come in substantially higher in the future led by China Look, comp store sales in the United States are still kicking it.

you're up or killing it. They're up 10 versus about the 9.2 that was expected and the numbers actually did very, very well. Uh. overall for the United States but again, China comp sales were down negative 27 versus the 13.3 percent expected U.S comp store sales beat.

But net revenue in Starbucks because of China did Miss slightly coming in at just 8.7 billion dollars now. I Personally think Starbucks could be a play you want to pay attention to into the future and they've already recovered off their bottoms. but I still think long term there could be some really big growth and potentially pricing power at Starbucks. After all, who can sell you Starbucks for the price that Starbucks or who could sell you coffee for what? because Starbucks sells it for? This is incredible.

Obviously a lot of coffee shops sell very overpriced coffee, but look at their margins, pay attention to the company. something to consider. I Think that Chinese element is going to be ignored for quite a while and all of a sudden Wall Street and markets are going to go. Oh my gosh, where did all this come from? Oh, that's right, we forgot Starbucks spent the entire basically pandemic just building stores in China It's remarkable how many stores they've added uh in just the uh the last few years here in Starbucks so pay attention to that.

You can see their exact store counts on their annual releases. Now if you look at Amazon Amazon did uh, Well, they had a a total increase in net sales. they beat on net sales. Okay, we got 149.2 versus the 145 estimated.

but when we actually looked at the details because the devil is in the details, we saw some numbers that weren't actually that great. Uh, and this is a problem because Amazon Look, they're in a very expensive business. They're in a business, uh, of fulfilling goods and services. They're in a business of creating content for all y'all which I'll tell you, creating content for all of y'all is very, very difficult.

Y'all don't like something you out of here? Okay, and Amazon feels the same thing on Amazon Prime And it's very expensive. Uh, but anyway, take a look at some of the these Consolidated numbers here. you're on. Product sales down 1.2 percent year over year.

Service sales down. whoops. Lost it there for so there we go. Service sales down 19 I'm sorry.

Service sales up 19.2 percent. so you get sort of that. Blended Uh, increase in Revenue really pushed up by AWS right Server: Services Sales AWS did grow, but it's unfortunately growing slower than it used to. If you look over here.

at the beginning of the year, the AWS segment was growing at a almost a 30 clip at 28.6 Now it's only growing at 19.8 percent. That represents margin. Oh, and margin has compressed. so you've got growth slowing to under 20 in the server business, which is a higher margin business.

But on top of that, you also saw margin compress. You had costs of goods sold of about 71.4 percent. Last year now, costs of goods sold for servers have gone up to 75.6 That leaves you with a 420 basis point compression in margins. So in other words, server and the profitable segment is slowing.

Server growth is slowing and operating expenses are widening. Not so ideal for Amazon And that's leading Amazon to fall about four percent and after hours. We did have a technology and content boost of about 36 percent g, a boost of about 32 percent uh, and another about 2.4 billion dollar hit because of Rivian Rivian again costing Amazon a lot of money. I Personally maintain my belief that there's a high likelihood Bloomberg estimating 35 personally.

I'm estimating a little higher higher likelihood of Uh Rivian potentially going bankrupt. Now a lot of people like, but Kevin Kevin Rivian's going to get bailed out by Amazon. Not necessarily just because Amazon's lost a lot of money on Rivian, doesn't mean that if it's a bad idea to invest in Rivian, Amazon's actually going to choose to fulfill that bad idea and invest in Rivian. In other words, if the dog's gonna die you kind of.

Gotta Give it its peace and let it pass away. Okay, it doesn't mean you gotta keep throwing money at it. Okay, to try to squeeze another week out of it. it's just it starts getting inhumane at some point anyway.

Uh, Ford Also had a disastrous numbers uh, the the Ford numbers not so great. Uh, neither were the expected earnings. By the way, just to wrap up on Amazon, the q1 expected actual net was somewhere between zero to 3.7 The guide was like 3.9 So the fact that the midpoint is, you know, basically closer to zero. Not great, so a little bit disappointing there on the forecast.

Ford you had cost headwinds of an additional about five billion dollars expected for 2023. They're calling car prices flatish with more incentives this year. Now This reiterates what we saw with GM General Motors told us the other day that look, we think prices are good where they are, but we're going to give people a lot more discounts to buy our cars, which is basically doing a price cut without doing a price cut right. All you're basically saying is, we're going to keep the MSRP here and we're gonna let dealers negotiate more.

That's all they're basically saying. So in other words, prices are coming down. That's because, remember Ford and GM they still have the dealership model so they keep prices stable and then they just discount more. At one point, Ford was down as much as nine percent of the post Market Though it seems to be settling down by about six percent down, their adjusted ebitda is expected.

uh, for their, uh, the next year to be sitting at 9 to 11 billion, the estimate was right about in line with that, they're paying an additional dividend of about 65 cents and they've got adjusted free cash flow estimates of about six billion dollars for next year, so you're still in a positive free cash flow territory for four. Qualcomm Not that great. They see weakness for the handset Market that's like cell phones right? like iPhones Sadly Qualcomm still doing a lot of the 5G chips for Apple Even though eventually Apple wants to bring this stuff in-house they haven't fully transitioned away from Qualcomm Yeah, a Qualcomm Still warning about potentially more weakness coming to uh, the the cell phone market initially. Qualcomm Actually Rose after bad earnings, this is because a lot of Uh chip companies are suffering and they've given such bad guidance that the fact that now we're getting Q4 earnings out of the way is kind of seen as a relief.

That some of the bad news is over. their earnings per share came in at about a buck 98 adjusted EPS 237. Uh, their forecasts were kind of roughly in line with estimates. You had a EPS guidance of about a buck 53 to a buck 73 for Qualcomm and Automotive Revenue rising and an EPS beat in this quarter for Qualcomm.

But I think what was more interesting was actually what was going on at Google Now Google Big Boy And then of course we'll get to Apple. So Google was another one where. well, the earnings just weren't as great as we were hoping for. Google We were hoping for some better numbers I don't K numbers but again, when you looked at sort of the devil of the details, they just weren't fantastic.

Here is the devil of the details: Search revenues declined 1.6 YouTube ads a second quarter in a row of declines unfortunately down 7.8 percent. Probably not the best news for one of my favorite players Trade Desk. You're seeing this shrinkage in advertising whether it's in Google search down 1.6 or YouTube down 7.8 percent given that I'm also posting a lot of my videos on YouTube Probably also not the best thing, but oh well, it is what it is Network Revenue down about nine percent You're sitting at about an 18.2 Xpe ratio for Google right now going into 2023 for the year end. Uh, if you Peg their growth at about 18, you're looking at about paying about one peg.

That's assuming they're going to get back to growth, which is generally expected for most of these companies within the next quarter or two. Google services. Uh, actually down 18? 0.5 percent. So some big hits over here.

You do have Google cloud though up 32, so not bad for Google Cloud but a little rough on some of these Revenue numbers here. Uh, and they're operating margin shrinking about 200 basis points. You've got plenty of cash at Google so you don't really have any kind of capitalization issue. and when you look at cash flows for Google, you're still printing cash.

you've got about over 15 billion dollars of free cash flow. In the quarter, you've got about 60 billion dollars of free cash flow for the year. So you really have a company where yes, revenue is shrinking. Yes, we've gone negative on Revenue compared to those crazy comps from last year.

Uh, but uh, you've still got an insane amount of cash flow. You've got a phenomenal company here. I Don't invest in Google right now, but it's something I would consider investing in, especially if we get a nice little treat of a dip I'd probably be more inclined to bet on Google over Amazon because I Personally believe the retail business of Amazon is gonna be a giant anchor for Amazon into the future. I'm not a big fan of investing in companies with giant anchors I'm a big fan of investing in companies with Giant PP That's pricing power.

Okay, I Like Giant PP it's very good. It's very healthy. it's it's very important to have pricing power. Uh, but it's going to take a little bit of time to convince me that ad, uh, ads from Google have pricing power.

Again, the nice thing with Connected TV advertising from Trade Desk uh, is it's a small and growing Market in the advertising space, so it should be easier to beat. but these numbers aren't looking great for the setup potential uh, for 20 or for the next earnings report on Trade Desk. Now the next one is Apple Now, generally Apple has substantial pricing power, but the problem with Apple is we had a Miss We had lots of Misses. Okay, we actually missed on I'll give you the short scoop we missed on wearables.

We missed on Max We missed on iPhones and we did beat on iPads. but unfortunately, that doesn't offset the decline in iPhones Now Tim Cook tells us that had it not been for supply chain disruptions, they would have actually have been able to deliver more iPhones and show iPhone growth, but we didn't see that. Instead, what did we get? We got a decline in sales in China We got a decline in sales in Japan, a decline in the rest of the APAC region, We got a decline in Europe and we got a decline in Europe. In other words, sales declining as a comp purpose everywhere and this was one of the first Apple declines since about 2016.

Products declined 7.7 percent, products and services down 5.5 percent on top of another 150 basis point squeeze on margin Apple Very excited though that they've got about 2 billion active devices right now and uh, they are hoping to get back to growth here in 2023. As many companies are, we're getting this over and over and over again at companies here like: Second half Kevin Focus on the second half, Second half, Second half, Second half. Everybody wants to talk about the second half being a lot better, but uh, you know, so far it seems like we gotta get the bad earnings out of the way from Q4 First, now there are two things that can happen here. We can see some of the Euphoria of today relax, which is probably honestly a healthy thing since quite frankly let's be real.

even a three percent decline which we're seeing right now on Amazon or Starbucks or Apple Not a big deal relative to the price increases that we've just seen over the last few days. Apple after all, was up 3.71 today. So even though Apple missed, you're literally just going back to yesterday's pricing like, who cares, who cares, it's not that big of a deal. Google was up seven percent today.

Okay, it's down 3.75 percent. And after hours, who cares? 60 billion dollars of free cash flow. The company's killing it with money. Yes, it is going to be difficult to compare to 2021 and that's what Q4 does.

So the goal is, how can you look forward? word, and which companies do you think are going to have the greatest pricing power going into the middle of 2023? When we finally expect to get some of these companies back to growth while I don't invest in Starbucks I'm very tempted to look at Starbucks a little closer for that potential Chinese exposure. I'm also curious to see how Apple's going to reposition themselves. Uh, and how quickly we think some of those supply chain issues could go away. because just because you have supply chain issues doesn't mean you don't have pricing power.

It means people want your product, but you can't deliver. We'll have to pay attention to the earnings calls for details on that. What concerns me more for Amazon is that compression in the high margin business which is the server business, right? Content Generation: Amazon Prime is a loss leader. Really, in my opinion.

I don't think you're really making big money there yet? Uh, we could also see that in the numbers. We know Amazon's not making money on selling you goods and service or basic, well stuff. Uh, at Amazon.com that seems to be another money loser. So they're really trying to get AWS go going as as a cash cow.

But so far, they're cash flow negative. So I'm not the biggest fan of investing in cash flow of negative companies. and Amazon is a big boy when it comes to, uh, negative cash flow. Unfortunately, consistently representing negative cash flow.

You can actually see that on screen here: Q4 2022 Negative cash flow: 11.5 billion dollars last quarter Negative: 19.6 The quarter before that negative 23, but quarter before that negative 18. So you kind of get the idea there. Okay, we're not generating cash flow at Amazon whereas when you look at Google you're looking at 91 minus 31, you're looking about 60 billion dollars for the Year. This is incredible, but wait if I add that together for 2022.

Oh my gosh, that's embarrassing. Hold on a second if I add together 18 plus 23 plus 19 plus 11 and add a couple there because I rounded a bit, you're about negative 70. Okay, as much as Google made in free cash flow, Amazon lost more of that's insane. Like if if Google took all of their free cash flow and gave it to Amazon in 2022, Amazon would have still managed to lose cash.

That's insane. Uh, that's actually really insane. Now if we look at the Apple cash flow. also, look at that nice 30 billion dollars of free cash flow and that folks is just for the quarter of the the fourth quarter.

So Apple massive free cash flow? your yes, you've got a little bit of a squeeze on margin and Supply so again, we've got to pay attention. What is that Supply going to improve? Does Apple still have a big PP a big set of pricing power or not. TBD So these are things we're going to want to pay attention to: Ford Expecting to see discounting? Not a surprise, the stock is selling off on that news. Uh, Qualcomm Qualcomm has been one of those stocks that's been having a little bit of a rough time really coming up.

Uh, I'm curious to see what we hear in the earnings call though. if it's anything like what we're seeing from Samsung Taiwan Semiconductors Asml uh, or really anyone in the chip sector. Nvidia AMD It's probably second half of 2023 is when folks really expect chips to to launch. so we'll see.

It's an interesting set of earnings today, and hopefully you appreciated this. uh uh. this this um, breakdown on earnings. Make sure to check out the programs on building your wealth down below.

Learn all about Big PP Big Pricing Power Uh, you've got uh, someone over here that says I cringe every time he says PP Well, I'm sorry I keep talking about PP Okay, PP is very important to talk about. We have to build. PP You have to grow it. It's the most important thing you could do in investing.

Uh Haynes underwear for PP Yeah, maybe? uh. Anyway, Big big fan of Pricing Power Big big fan. Thank you so much for watching Free Cash Flow 45 billion annualized for Google Doug That's terrible. Oh you you what? Hold on, hold on, hold on.

We got a hater. Uh, 40 billion? There's no annualizing. It's 40 billion dollars of free cash flow? Yeah, uh. Free Cash Flow for Google 40 billion dollars I Think you're being sarcastic.

You being a facetious, aren't you? Uh oh oh. You're predicting forward. Oh, what you're doing is, you're taking this quarter. Is that what you're doing? Let me see: Free Cash Flow.

Um, no, that's not right either. 23.6 minus 7.6 16 times 4, 64 Bill a little more anyway. Uh, Cheers my friends. We'll see you in the next one.

Goodbye and I Wish you a great PP.