Opinion The Big Crunch


  Friday, 15 Sep 2017 | 11:44 AM ET

Expect Harvey and Irma to return ... in companies' earnings

Posted ByNick Wells
A destroyed trailer in Key Largo, Fla., after Hurricane Irma swept through the area.
Contessa Brewer | CNBC
A destroyed trailer in Key Largo, Fla., after Hurricane Irma swept through the area.

Hurricanes Harvey and Irma may have faded from the sky, but you can count on them coming up again, this time in company conference calls.

All the big hurricanes live again in the quarters following their landfall in the U.S., according to a CNBC analysis of earnings calls transcripts over the past 12 years. Corporate executives blame the storms for lower-than-expected results, express support for those on the ground and cautiously report the pick-up in spending thanks to relief efforts. For the analysis, we focused on companies valued at $5 billion and more.

Generally, the costlier the hurricane, the more it's mentioned in subsequent calls. Hurricane Katrina, which devastated Louisiana in 2005, caused an estimated $133 billion in damages and was mentioned nearly 500 times in the ensuing quarters. Hurricane Sandy, which struck New York City in 2012 and caused major infrastructure damage across the Northeast, caused about $75 billion in damage and was mentioned over 400 times.

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  Thursday, 14 Sep 2017 | 11:56 AM ET

There are hundreds of companies besides Equifax tracking what you do

Consumers finding that their personal data may have been exposed in the massive Equifax cyberattack might be surprised to learn how many companies have access to different bits of their personal information.

The credit-reporting company announced last week that the personal information of over 140 million Americans could have been accessed by hackers between May and July. Why is that number so big? Equifax is one of the "Big Three" credit reporting companies operating in the U.S. TransUnion and Experian are the other big ones.

Their businesses are based on getting customer data from banks, which allows them to track things like whether you've been paying your mortgage, your credit card or auto loan.

They track checking and savings accounts, too, in case you've been bouncing checks. These companies have all the data anybody would need to steal your identity: name, Social Security number, date of birth, etc. And it's all given to them by third parties, not the customers themselves. There's no opting out, though you can take some steps to secure your information.

But it goes way beyond those "Big Three" companies.

There are literally hundreds of smaller consumer-reporting companies operating in the U.S. and the smaller ones are collecting information you might not expect. The Consumer Financial Protection Bureau maintains a self-reported list of the companies.

Consider Milliman IntelliScript, for example. The company collects information on the prescription drugs you buy. If you've ever authorized the release of your medical records to an insurance company, they might have shared them with Milliman.

Or look at Retail Equation, a company that monitors consumers' return and exchange behavior at retail companies. Company critics say the information collected can prevent legitimate returns from being accepted. Still, fraudulent returns are a big concern for retail companies, costing them billions of dollars a year, company reports say.

The companies did not respond to requests for comment. Consumer-reporting companies are governed by the Fair Credit Reporting Act, according to the CFPB. That means consumers can request copies of their reports, though some will charge you for it.

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  Friday, 8 Sep 2017 | 4:28 PM ET

Here's why hurricane forecasting is getting better

As Hurricane Irma closes in on Florida and the effects of Harvey are still felt, one under-the-radar trend has been the improvement in tropical storm forecasts.

That's been part of a big effort for the federal government's National Weather Service. After the massive impact five years ago of Hurricane Sandy — which caused $70 billion in damage — Congress allocated more than $80 million in supplemental funding to help the meteorological agency.

That money has been spent on all kinds of new technology, according to David Novak, director of the agency's Weather Prediction Center. It has been invested in improved supercomputers, more observation data points and increasingly advanced scientific models. All that improved technology has decreased the average error in forecasting models.

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  Wednesday, 16 Aug 2017 | 11:30 AM ET

Meet the man helping companies like Wawa and McDonald's make winning decisions using big data

Ever have an idea for a new product so good it could hurt your business?

It may seem far-fetched, but that's what happened to Wawa, the popular convenience store chain that operates more than 750 locations in six East Coast states.

The company had introduced a new flatbread breakfast sandwich. Everybody in the company was excited about it. Sales were taking off and it looked like a clear winner. Then Wawa killed it.


Because it was too good. It sold so well that it undercut products Wawa had already been selling. Specifically, it was cannibalizing sales from other, higher-margin Wawa products. More flatbread sandwich sales ultimately meant less money for the company. So it had to go.

The company behind Wawa's flatbread sandwich decision was Applied Predictive Technologies. APT's software takes in information from client companies — everything from sales data to local weather patterns — and produces custom reports to understand trends, improve efficiency and hit sales targets.

"In using big data and an understanding of trends, it was valuable to see not just the primary effects but also the secondary," Anthony Bruce, chief executive at APT, told CNBC. "What you need to do is find observations where what you've done is having halo effects, not cannibalization effects."

That's how APT's data-driven platform helped Wawa: It wasn't just showing what the flatbread sandwiches generated in sales, but how it affected the overall bottom line for the company. Data analytics, when applied correctly, can help filter out the "noise" from test results. Starbucks' global strategy officer cited APT as the "best source of industry comp intelligence" on a recent company earnings call.

APT is also the company behind McDonald's recent move to sell breakfast foods all day. The fast-food giant renewed its contract with APT in 2016 to gear up new food offerings and optimize menus. APT's "Test & Learn" software costs about $1 million per year for a typical three-year license, according to CFO Magazine.

See a full interview of APT's Anthony Bruce by CNBC's Eric Chemi here:

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  Friday, 11 Aug 2017 | 11:46 AM ET

On earnings calls, corporate leaders openly bemoan DC's lack of direction

Corporate leaders are openly questioning what, if anything, the Trump administration will be able to do for business, given a lack of major action on his promises of corporate tax reform, new health-care policies and a tax on goods coming across the border.

CNBC analyzed the latest round of earnings calls and found that while many CEOs remain optimistic of a pro-business administration, a growing number are unsure of Washington's direction six months after the inauguration.

Companies are putting off share buybacks, delaying capital investments and waiting to spend on business development. And the hesitation is across industries, in companies both big and small.

Pfizer CEO Ian Read said the company needs corporate tax reform settled before it can move forward with any business development opportunities.

"Right now I believe we need to see tax reform or the absence of tax reform to understand what the market values are," he told analysts in an early August earnings call. "Any focus on BD, to my point of view, is somewhat delayed by a resolution of that."

Advertising giant Interpublic blamed D.C.'s dysfunction in late July after earnings missed EPS and revenue expectations. Revenue fell $32 million in the second quarter, compared with the same period in 2016.

"Our results in the quarter reflect the fact that macro uncertainty and political gridlock are affecting spending, particularly in the U.S. with clients demonstrating caution in terms of releasing budgets," CEO Michael Roth said.

Shares in the company fell 12 percent the following day, erasing a year of gains.

Luxury apparel maker Ralph Lauren reported better-than-expected earnings in August, with net income of $59.5 million for the quarter, compared with a loss of $22.3 million the prior year. But executives said the company would not buy back stock with tax policy so up in the air.

"We are not planning share repurchases for fiscal 2018," CFO Jane Nielsen said. "We make this determination based on the cash needs of our businesses, sector dynamics and with consideration for the uncertain environment around U.S. tax reform."

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  Thursday, 10 Aug 2017 | 2:34 PM ET

Traders speculate Snap is either gonna pop big or drop mightily on Thursday's earnings

Snap co-founders Evan Spiegel (R) and Bobby Murphy walk to ring the opening bell of the New York Stock Exchange, March 2, 2017.
Lucas Jackson | Reuters
Snap co-founders Evan Spiegel (R) and Bobby Murphy walk to ring the opening bell of the New York Stock Exchange, March 2, 2017.

Snap will be anything but boring after the bell Thursday.

That's what the options market thinks. According to options trading data, traders expect Snap shares to move 17 percent in either direction following the company's earnings report on Thursday after the close.

That 17 percent implied is second-highest among 120 stocks reporting earnings Thursday through August 31, with at least $1 billion in market cap and open interest of at least 20,000 options. Wednesday night, Snap was second on the list, beaten out only by another recent problematic IPO: Blue Apron at 19 percent.

Blue Apron fell Thursday morning after reporting a wider-than-expected loss of 47 cents per share. Shares of the meal kit company were down 16 percent Thursay.

These implied volatility moves are based on out-of-the-money put and call options. MKM Partners derivatives strategist Jim Strugger calculated the numbers for CNBC.

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