Stocks making the biggest movers midday: Las Vegas Sands, Southwest, GM, Discover & more

Here are the companies making headlines in midday trading.

Las Vegas Sands — The casino stock jumped more than 8% after the company reported a smaller-than-expected loss for its third quarter. The company said it had an adjusted loss per share of 67 cents during the three month period and $586 million in revenue. Analysts surveyed by Refinitiv expected a loss of 73 cents per share and $579 million of revenue. The company said it had about $2.4 billion in cash at the end of September.

Southwest Airlines – Shares of Southwest Airlines gained more than 4% after the carrier said it managed to cut cash burn even as it suffered its biggest ever quarterly loss. The company posted a loss of $1.99 per share, better than an expected loss of $2.35 a share. Southwest trimmed its cash burn to an average of $16 million a day in the three months ended Sept. 30, from $23 million in the second quarter.

General Motors — The automotive stock rose 2.9% amid strong demand for the newly announced electric Hummer. The company's website says reservations are full for the first edition of the sport utility vehicle, which is due out next fall.

AT&T – Shares of AT&T popped nearly 6% after the telecom company reported quarterly revenue that topped Wall Street expectations. Total revenue came in at $42.3 billion during the third quarter, exceeding analyst expectations of $41.59 billion, according to Refinitiv. The company also posted stronger-than-expected gains in new phone subscribers. Its earnings matched estimates.

Discover Financial Services — The financial stock surged more than 6% after beating expectations for its third quarter. Discover reported earnings of $2.45 per share on revenues of $2.71 billion, while analysts surveyed by Refinitiv expected EPS of $1.56 on revenues of $2.67 billion. The company's CEO said in a release that sales growth was positive in September.

Coca-Cola — Shares of the beverage giant ticked up more than 1% after its quarterly earnings came in above expectations. Coca-Cola reported EPS of 55 cents per share, higher than the forecast 46 cents per share, according to Refinitiv. Revenue fell 9% as the pandemic weighed on demand for soft drinks.

Whirlpool – Shares of Whirlpool dipped about 1% despite its stronger-than-expected quarterly results. The appliance maker reported quarterly profit of $6.91 per share in the previous quarter, well above the consensus estimate of $4.20 a share per Refinitiv. Its revenue also came in above expectations. The stock has risen more than 30% this year.

Tesla – Shares of the electric vehicle maker advanced more than 1% after the company reported its fifth-straight quarter of profits. The company beat top and bottom line expectations for the third quarter after delivering a record number of vehicles during the period. Earlier in the session shares were up more than 5%.

PulteGroup – Shares of the homebuilder declined 4% despite the company beating top and bottom line estimates during the third quarter. The company earned an adjusted $1.34 per share for the quarter, which was ahead of the $1.15 expected by analysts surveyed by FactSet. Revenue came in at $2.82 billion, which was also ahead of expectations.

Netgear — Shares of the tech company fell more than 5% despite beating Wall Street expectations for its third-quarter results. The stock has seen a strong run in recent months, gaining 41% between the end of June and the earnings announcement.

CSX Corp. — Shares of the rail-based freight transportation company popped more than 3% after beating on the bottom line of its quarterly earnings. CSX earned 96 cents per share, topping estimates of 93 cents per share, according to Refinitiv. Sales, however, fell short of estimates.

Danaher — Shares of the business conglomerate rose more than 3% on the back of stronger-than-expected results for the third quarter. Danaher reported earnings per share of $1.72 on revenue of $5.88 billion. Analysts had forecast a profit of $1.36 per share on revenue of $5.51 billion, according to Refinitiv. Those results were driven by better-than-expected sales from Danaher's life sciences and diagnostics divisions.

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Hong Kong and Singapore will form a 'travel bubble' soon. Here's how it'll work

  • Leisure travel between Hong Kong and Singapore could resume in the coming weeks as both cities work to set up a bilateral "travel bubble" that will allow travelers to forgo quarantine.
  • But the arrangement will not bring travel volume between the two cities back to what it was before the pandemic, said Edward Yau, Hong Kong's secretary for commerce and economic development.

SINGAPORE — Leisure travel between Hong Kong and Singapore could resume in the coming weeks as both cities work to set up a bilateral "travel bubble" that will allow travelers to forgo quarantine.

The two cities — both major business and financial centers in Asia — have suffered economically as the coronavirus pandemic hit tourism and the aviation sector.

But the arrangement will not bring travel volume between the two cities back to what it was before the pandemic, when several flights ploughed the Hong Kong-Singapore route every day, said Edward Yau, Hong Kong's secretary for commerce and economic development.

"The concept of the bilateral corridor, what's commonly called air travel bubble, must be one that ensure safety, public health on the one hand; and also facilitating traveling as much as possible," Yau told CNBC's "Squawk Box Asia" on Monday.

Specific details of the travel bubble and its start date are still being worked out, but the secretary said the two cities could start with one flight a day. The flight will only ferry passengers traveling under the bubble between Hong Kong and Singapore, and will not include those transiting through either of the cities, he explained.

The secretary outlined the other major features of the travel bubble, which include:

  • Requiring travelers to test negative for the coronavirus pre-departure;
  • Hong Kong may require visitors to take another test upon arrival to make sure they're "fit for travel";   
  • Travelers will not have to serve a quarantine and their itinerary will not be controlled;
  • Authorities from both cities will adjust — or even suspend — the number of dedicated flights under the arrangement based on the coronavirus situation.

Last year, Hong Kong recorded more than 453,000 visitor arrivals from Singapore, while Singapore received 489,000 visitors from Hong Kong, according to the respective cities' official statistics.

Yau said in addition to Singapore, Hong Kong is also in talks with Macao and mainland China to potentially bring back travel.

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Kansas City Southern CEO sees 'modestly strong' economic recovery continuing this year

  • "Across our industrial and consumer economy, we think it's going to continue to be modestly strong from this point through the end of the year," the CEO of Kansas City Southern told CNBC Friday.
  • Shares of the railroad operator closed down 2.7% to $179 apiece after it reported third-quarter earnings.
  • Kansas City Southern missed on revenue estimates but beat per-share earnings forecasts and hiked its full-year guidance.

The CEO of Kansas City Southern told CNBC on Friday he sees the company's recovery from coronavirus business lows continuing for the rest of 2020, an optimistic sign for the broader U.S. economy.

The railroad operator reported third-quarter earnings earlier in the day, posting revenues of $660 million that missed Wall Street estimates of $663 million. However, Kansas City Southern's per-share earnings of $1.96, excluding items, was better than the profits per share of $1.90 analysts had forecast.

"Across our industrial and consumer economy, we think it's going to continue to be modestly strong from this point through the end of the year," CEO Patrick Ottensmeyer said on "Closing Bell."

Kansas City Southern also raised its full-year guidance Friday, saying it expects earnings per share to be slightly higher on a year-over-year basis. Shares of the company closed down 2.72% Friday to $179 apiece. The stock is up nearly 17% this year.

Carload volumes were down 4% in the third quarter compared with the year-ago period. But that is improving, Ottensmeyer said. "We're up a little bit from last year and certainly above pre-Covid levels," he said.

Railroad operators, with their exposure to multiple different industries, are often seen as bellwethers for the economy. The U.S. has added millions of jobs back in recent months after steep employment cuts from the pandemic, and sectors such as housing have seen impressive strength. However, there are questions now about the resilience of the recovery, especially as Congress has been unable to come to terms on another round of stimulus.

Ottensmeyer said Kansas City Southern's strongest segment has been refined petroleum products, largely driven by moving fuel from Gulf Coast refineries into Mexico. The company also has experienced strength in its automotive segment, he said, as the auto industry rebounded from the coronavirus slowdown.

On the other hand, Ottensmeyer said Kansas City Southern has seen weakness in its intermodal volumes, which involve multiple modes of transportation. He said they're lagging the industry there and "that has to do with some service interruptions, some issues going on in Mexico that we're trying to deal with that have caused us to lose some business, at least for some period of time."

In general, Kansas City Southern has seen an "incredible" V-shaped recovery on its shipping volumes from pandemic lows, according to Ottensmeyer. He said the last few months have been like a roller coaster "if you think about the things we needed to do, not knowing what was ahead, with volumes falling that quickly and that dramatically in the second quarter, and then bouncing back 90 days later."

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World News

COVID-19 forced car companies to delay products and put office workers on assembly lines — but it's a challenge experts think the industry will overcome

  • American Honda Motor Co. had to send white-collar workers in July and August to its Marysville, Ohio plant due to labor shortages from the ongoing pandemic.
  • The move introduced a slew of concerns for customers, particularly around product quality.
  • While substituting automotive assembly lines with untrained department staff may have consequences for customers long term, experts said it may be a risk the industry needs to take to protect short-term sales.
  • The industry also had to delay several launches of new models, as supply-chain concerns and understaffed production lines persisted for six months.
  • Though stacking up production lines with staff could improve the industry's current state, the resulting losses might lead to significant consolidation and cost-cutting measures in recovery. 
  • Visit Business Insider's homepage for more stories.

It would seem like a nightmare situation for any highly-specialized industry: the need to tag in white-collar workers to take over product assembly lines due to an unprecedented string of absences among employees. It's the kind of emergency measure one expects to hear about during wartime or a natural disaster.

Welcome to the COVID-19 reality faced by American Honda Motor Co., which in the months of July and August was forced to do all of the above at its Marysville, Ohio assembly plant. The facility is a key component of Honda's US operations, as it's responsible for building not just the Honda CR-V compact SUV and the Honda Accord sedan, but also the brand's Acura NSX hybrid halo car.

The situation required accounting, research and development, and other internal departments to send workers down to the factory floor, with some of these employees having been called in from home, where they'd been working remotely. No training was provided to any of the temporary line replacements about the tasks they were charged with until they arrived at the 4-million square-foot plant. 

It was a highly unusual situation in an industry where most temporary workers, such as those hired by Ford in advance of potential COVID-19 absences, are pulled from an existing pool of skilled labor.

When untrained hands are working on some of the most important vehicles in an automaker's line-up, it immediately poses concerns for new car buyers:

  • Are the vehicles that were assembled during the past two months at Honda's Ohio plant built to the same quality standards as other Hondas?
  • Would it be wise to avoid plunking down a deposit on an Acura or Honda model that may have been put together at Marysville during the period in which clerks, accountants, and administrative personnel were substituted in for long-time assembly experts?
  • And finally, is this merely one symptom of how COVID-19 has disrupted automotive production and sales for many different automakers across the entire country?

Experts say Honda's decision was a risk worth taking

Reaching out to a number of automotive industry experts revealed a broad range of opinions about what Honda's COVID-19 assembly line substitutions could mean for customers down the road.

"Vehicle production is an extremely complicated process, and snags at any part of the supply chain, including final assembly, can wreak havoc on the delicate balance required to turn a profit on the multibillion-dollar investments required to develop and produce new vehicles," said Eric Lyman, senior vice president at ALG, a leader in automotive analytics. 

Lyman said he feels that Honda's decision in Ohio could have consequences for customers down the road, but concedes that it's one the automaker may have been forced into by the uncertainty surrounding the current pandemic.

"Replacing absentee assembly line workers with untrained staff from other departments is a move that puts long-term quality/durability at risk to protect sales in the short term, but it may be a risk worth taking if suspending production leads to significant reductions in revenue or precious market share that can be costly to win back over the long run," he said.

It's important to understand, however, that automotive quality assurance doesn't begin and end with assembly workers. Each major factory has its own quality department that performs extensive checks on vehicles as they come off of the line, and in some cases even perform spot inspections in the midst of the production process. Cars, trucks, and SUVs then have any individual issues corrected prior to being allocated to dealers, well before they reach a new owner's driveway.

"Honda's internal processes for checking quality throughout the assembly process is extremely robust, among the most robust in the industry," said Ed Kim, vice president of industry analysis at automotive marketing research and consulting firm AutoPacific. "It is possible that vehicles assembled during this time may need more adjustments before they are deemed fit to be shipped, which may ultimately affect overall plant productivity."

Kim said he's also less concerned with the lack of prior training being given to workers tapped for the shift from a white-collar to a blue-collar role, explaining that modern autoplant assembly processes are automated to the degree where any specialized knowledge would be quick and easy to impart on a newcomer.

Honda, along with several other brands, closed factories completely in the United States earlier this year as a result of the pandemic, while Fiat Chrysler Automobiles was forced to deal with line shutdowns resulting from friction between employees and management over how worker protections against the virus were being handled. When asked for comment, Honda representative Chris Abbruzzese reiterated that quarantining a portion of its factory workforce this summer was part of a comprehensive contact-tracing program intended to protect the health of its staff.

Abbruzzese pointed to recent improvements to onsite testing that have reduced the impact of COVID-19 on Honda's worker availability, and explained that office staff had been returned to their original roles at the Marysville plant. "These were temporary measures we used successfully on previous occasions to meet our customer needs," he said. "However, we are no longer utilizing this practice in Ohio."

Big ripples in future product plans as companies delay new vehicle launches

Production quality and staffing aren't the only challenges facing the automotive industry as a result of COVID-19. The economic downturn of the past six months, combined with rising unemployment, have led automakers to introduce new models later in the year than they would normally. Auto sales are expected to plunge as much as 22% compared to 2019, according to a new report from Freedonia Focus Reports, and the uncertainty over when the public would be willing to buy again dovetailed with production concerns and logistics issues with suppliers to cause a pushback in important vehicle launches.

Ford has born the brunt of the pandemic problem with two of its highly anticipated trucks. The Ford Bronco, a retro-inspired SUV that was the focus of huge promotional efforts by the company, had its showroom appearance delayed until 2021, even after a major summer launch event. More importantly, the next-generation Ford F-150 full-size truck, which is the bestselling vehicle in the country, saw a delay of over two months before dealers could accept orders for the new pickup. 

Each of these holdups was directly tied to production concerns on the part of the Dearborn, Michigan-based company, according to Michael Levine, production communications manager for Ford's truck programs. "The launches of F-150 and Bronco have been retimed to match how long our factories were shut down for COVID-19," he told Business Insider.

Changing course mid-stream, as Ford and several other automakers have been forced to do, is not an easy process due to the extremely complex web of manufacturing realities, supplier schedules, and market timing that dictate when new vehicles go one sale.

"It's detrimental to the program to delay the launch of a vehicle,"  Kim said. "Certainly, there have been COVID-related launch delays, but those have generally been due largely to supply chain issues rather than a desire to wait to launch the vehicle in a more favorable economic climate."

Lyman added that sales recovery could be coming much quicker than predicted, and that automakers are fortunate that consumer interest in new cars and trucks did not completely collapse over the summer. 

"Vehicle demand in the post-COVID environment has largely outpaced expectations." he said. "Decisions made in Q2 to pull back on vehicle production or the launch of new products seemed logical at the time, but have proven to be the wrong course of action."

A reckoning on the horizon

The prospects for those buying cars and crossovers assembled by Honda's Ohio plant pinch hitters are less grim than it would initially seem. Most experts consulted agreed that while there was a risk for quality issues to develop with the vehicles built during this small summer window, Honda's internal controls would do a strong job of picking up the slack and filtering out almost all problems prior to them going on sale.

As for vehicle availability and launch dates, the situation remains necessarily fluid. The course of the COVID-19 pandemic is unpredictable, and staffing issues at plants located around the world — combined with the interwoven network of suppliers feeding vehicle parts and systems to those plants, and the transportation hubs required to distribute them to customers — reveal just how vulnerable the industry is to this type of disruption. 

The resulting massively reduced profits and predicted losses for 2020 will no doubt shake up the status quo at every major car company, which could in turn lead to a flurry of consolidation and cost-cutting measures in the ensuing recovery phase.

Get the latest Ford stock price here.

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