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Salesforce soars post-earnings; TEGNA, Apollo move amid M&A chatter

As global trade tensions continued heating up this week, salesforce.com inc. stock surged after Wall Street cheered the cloud-based software company's latest earnings results. Meanwhile, ongoing M&A chatter sent shares in private equity giant Apollo Global Management LLC and broadcasting company TEGNA Inc. in opposite directions for the week.

U.S. stocks fell after China on Aug. 23 announced plans to impose tariffs on $75 billion worth of U.S. products. The tariffs are in retaliation to the United States' recent intentions to impose tariffs on an additional $300 billion of Chinese goods.

In the software space, Salesforce shares leaped this week after the company delivered top-line growth that beat analysts' expectations and also raised its revenue outlook for fiscal year 2020.

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Salesforce on Aug. 22 posted a 22% year-over-year increase in revenue for the fiscal second quarter of $4.0 billion, up from $3.29 billion a year ago. The consensus estimate for consolidated revenue during the quarter was $3.96 billion, according to S&P Global Market Intelligence. Subscription and support revenues were $3.75 billion, up 22% year over year from $3.06 billion.

For fiscal year 2020, the company raised its revenue guidance to a range of $16.75 billion to $16.90 billion, up from a previous estimate of $16.10 billion to $16.25 billion. The company expects GAAP EPS of 28 cents to 30 cents and non-GAAP EPS of $2.82 to $2.84.

Evercore ISI analyst Kirk Materne said in a research report that Salesforce's solid earnings results highlight the strength in the tech giant's customer-service software business and set the stage for continued growth during the rest of 2019.

Salesforce's stock was trading at $154.11 a share around midday Aug. 23, up 7.10% for the week.

Turning to M&A, TEGNA shares slipped this week while Apollo's jumped, after TEGNA confirmed rumors that Apollo had offered to buy the company, but would not provide any further details about potential next steps.

In an Aug. 21 news release, TEGNA said Apollo first approached in late February about plans to buy the company without specifying a price. Then in June, Apollo offered to combine TEGNA with broadcasting assets it is in the process of buying.

The proposed transaction would not have constituted a change of control of TEGNA. The company said it "does not intend to update this disclosure."

The statement came after a report by The Wall Street Journal indicated that Apollo considered merging TEGNA's assets with those of Cox Media Group Inc., in which Apollo agreed to buy a majority stake earlier this year, sending shares in TEGNA soaring.

TEGNA stock was trading at $14.36 apiece midday Aug. 23, down 4.27% from its Aug. 16 close. Apollo shares were trading at $35.90, up 12.17% for the week.

In other news, Apple Inc. shares tumbled slightly this week, even as the company launched its first credit card and is gearing up to release a new slate of iPhones.

Apple on Aug. 20 launched its highly anticipated Apple Card to all customers in the U.S. The card, which is backed by Goldman Sachs Group Inc. and Mastercard Inc., charges no fees and offers a percentage of cash back on purchases made directly with Apple.

While analysts largely do not expect the new credit card to be a game-changer for the financial services industry, it could help Apple retain iPhone users and drive demand for the company's other products.

"This is part of [Apple's] overall services strategy, and it's an ecosystem lock-in play," Avi Greengart, founder and lead analyst at market research and advisory firm Techsponential, said in an interview.

As the smartphone market matures and consumers hold onto their phones for longer, the Apple card should strengthen the need for consumers to have an iPhone and continue to bolster Apple's entire business, said Ron Shevlin, director of research at Cornerstone Advisors.

Also this week, Bloomberg News reported that Apple is preparing to unveil new "Pro" iPhone models with enhanced camera features at an event in September.

The tech giant will also reveal upgraded versions of the iPad Pro with an upgraded camera and faster chips; an entry-level iPad with a bigger screen; new versions of the Apple Watch; and a revamped MacBook Pro laptop, according to the report.

Apple shares were trading at $203.65 around midday Aug. 23, down 1.38% for the week.