Diamonds and Dogs

8/22/19

Nordstrom's (JWN) piano sounds sweet. The retailer is up 4% following better than expected earnings. Earnings beat by 13 cents even as sales fell 4.8% to $3.87 billion. The company's prior quarter led to losses, coming on the heels of a tough holiday 2018 season. Nordstrom had been one of the worst performing stocks of the year thus far, and even todays pop. The original Nordstrom family is looking to increase their stake in the retailer. At least one analyst at Telsey Advisory Group maintained a price target of $32 a share.

Splunk (SPLK) went kerplunk following earnings. The big-data analytics company is down 8% following better than expected earnings. Splunk raised sales guidance for the current quarter and full year but cut forecasts for full year cash flow. The company now sees cash flow from operations for fiscal 2020 of negative $300 million. That is a $550 million swing from the original projection of positive $250 million. Splunk is accelerating a shift in its business model toward subscriptions and away from more traditional perpetual licenses for software. Many enterprise-software companies have gone through similar shifts, usually resulting in a period of messy financial results.