this is "nightly business report" with tyler mathisen and sue herera. hits and miss. amazon knocks it out of the park with 38 billion in sales. but its profit number was a huge wiff. slick spot. why summer concerns, the threat to the stock market rally might come from oil. and ka ching. why home sellers are cashing in like it's 2007. all of that and more tonight on "nightly business report" for thursday, july 27th. good evening, everyone and welcome. the earnings flood gates opened today on wall street. it was the busiest day of corporate earnings so far this quarter and after the bell a company that's seemingly in the news every day, amazon. the company posted its ninth straight profitable quarter

after years of bleeding red ink. at one point the company's founder and ceo jeff bezos was the richest man in the world and then he wasn't. that's because the stocks fell. amazon earned 40 cents a share. good but wall street wanted $1.42. the big number jump 25% to $38 billion in the quarter. shares initially fell following the results. deidre bosa has the maybe takin away for investors. >> reporter: its profit engine is slowing as the company continues to spend big. aws has become the most profitable business segment for the entire company but over the last now nine quarters growth has been decelerating as microsoft's rival business azure has boomed. amazon continues to invest in new markets like india and new businesses and products. that may not matter to investors.

amazon and jeff bezos are known for making bold investments even at the expense of profits. looking forward, investors will want to know when and how those big investments will want to pay off especially how the whole foods acquisition fits into the plans. i'm deidre bosa, san francisco. r.j.hodaby joins us to talk about the mixed quarter for amazon and what he sees for the company. r.j., welcome. good to see you again. did something go wrong here? why were people so surprised with the number? >> no, i don't think anything went wrong here. i think it was just a heavier investment quarter than usual for this company. if you look at the things that they're spending on, we'll get more clarity on the call this afternoon. it looks like they're investing in fulfillment centers, i'm guessing u.s. and international. there's technology expenses as well. i'm assuming that has to do with the echo portfolio products, some of the other investments they're building on and the aws

investments as well. i'd be more concerned if we weren't seeing the top line accelerate. that's the real number to focus on here, particularly with things that are more sticky, too. the third party sales. vendors selling through the platform. that number is getting bigger. that shows that amazon is becoming a vital marketplace for the sellers. aws while decelerating, a big number. amazon's own products, they're doing well. the first party sales are doing well, too. >> all right. you have viewed the stock as undervalued. would you add to positions on the slight selloff that we've seen in the stock post results? >> yeah. i think certainly the pull back opens up an opportunity on this name. i think this is one of the more dynamic long term stories in the consumer space that we've seen. that will continue to play out. there are periods of investment where the profits look weeker. as long as they're backing it up with retention and engagement, this is worth a look at these levels. >> what's whole foods going to

do for them? >> i think what's interesting is a number of facts to the transaction. i think the first and foremost is it gives them credibility in the fresh food market. that's something they've lacked. they've tried to get into the grocery space but never had the suppliers backing it. this will help to move prime members from the prime tier to the prime fresh tier. i think there's a private label play here. you'll see the third and fourth brand of whole foods removed and see it replaced. on top of it all, too, i think there's a lot of interesting ways that amazon can redesign the stores, make it more of an experiential feel. there are a number of angles that make more and more shoppers coming back and praying for a higher pricing tier. >> r.j., thanks again. good to see you with morningstar. another big company reporting after the bell was dell component intel. they earned 72 cents a share

beating it by 4 cents. revenue came in below 15 billion and ahead of consensus. intel raised its full year story. josh lip ton has more. >> $4.4 billion. that was a keenum in intel's report. it refers to the revenue generated by the data center group or chips used in data centers. the data center has been struggling though with this report intel met expectations for the quarter and more importantly, she says, reaffirmed its full year guide of high single digit growth for the unit. intel bulls make the bet that sales of server chips can make up for a challenged p.c. industry. i'm josh lipton, san francisco. two other dow components out today. verizon and procter & gamble. the return of unlimited data helped verizon sales surge past estimates. meanwhile, cost cuts helped beat

expectations at procter & gamble although sales were flat. investors liked the news out of both companies, in particular verizon was up more than 7%. on wall street as a whole the nasdaq touched a record high before tech and a big reversal during the day. the dow managed another record close. the dow rose 89 points, nasdaq dropped 40 and the s&p 500 was off two. >> royal dutch sales said profits tripled while connick could he phillips were better than expected. earnings season so far has been fairly strong, bob pisani explains why the oil patch could, could be a threat to the stock rally. >> earning are humming along with gains of more than 10% now expected for the s&p 500 in the second quarter. there's one potential little fly in the oiptment out there, and that's big oil. exxon mobil, chevron and other big names will be reporting tomorrow. something unusual is happening.

because oil never rallied in the second quarter as everyone thought, analysts have been continuing to take down oil company earnings estimates into july. they're continuing to lower them to the third quarter. how did this happen? it's happened because no one can get the price of oil right, they can't get the direction of oil right whether it's up or down. in january when it was well over 50, analysts constantly predicted it would average around $56 by july of this year. wrong, it promptly went straight down bottoming around $42 in june. why has everyone been so wrong? because global oil cheaters are big cheaters. russia did nothing to help cut production. bad news for oil stocks right across the board. analysts have already cut forecasts forex on mobile as well as chevron. so just look at their stocks with the s&p 500 up 10%. exxon and chevron are down 10% for the queeyear.

there's another problem, production growth is flat or declining. it's getting harder and harder for big oil companies to replace the oil pumped out of the ground with new oil, particularly in international spheres. still, this bright spot. exxon's massive chemical operations, for example, has done well and refining operations should also be strong. big oil paying big dividends. exxon pays a big dividend. the dividends are still safe but it's clear that the stocks are not going to move anymore just because the dividend goes up. they're going to move on whether or not that commodity, oil, goes up. for "nightly business report" i'm he bob pa pasani. we are at the halfway point for the second quarter earnings season. the news is good. lindsay bell joins us from cfra research to talk about that. good to see you, lindsay. welcome back. >> thanks for having me. >> how would you characterize the quarter so far? >> oh, it's been a great

quarter. we've got growth of 8.9%. that's so much better than the 6.2% we were expecting going into the quarter. it's well ahead of where we're typically at at this point in the earnings season. usually the index is showing a beat rate of about 1.2 percentage points at this point in time. we're at 1.4, so that's really good or 2 -- excuse me, 2.7. sorry. my numbers are off. >> so it's better than it normally is is really the point you were trying to make there. >> right. it's better than it normally is. the numbers didn't come down significantly going into the quarter. that's also important. and we're seeing top line growth come in significantly better than expected. usually about 50% or so of the companies that report beat on the top line. as it currently stands, 70% of companies are beating our revenue estimates. >> that's a really good economic sign. let's talk a little bit about oil. you just heard bob pasani's report suggesting that maybe some of the big oil companies

might throw a wet blanket on some of these numbers, but i know you think energy's actually going to be a pretty good performer over all earnings wise if not in the stock market? >> that's right. earnings for the energy sector are going to be up over 300% for the second quarter. this will be the second quarter in a row where the sector has been able to show increases in profitability after two years of declining growth on the bottom line for these guys. so, the reason for that primarily is oil prices. they were up in the second quarter. they're 5% higher on average, but that's not as good as what we saw in the first quarter. in the first quarter oil prices were 53% higher on average. earnings are highly correlated to that price of oil. while we think this quarter is going to be good, it's not going to be as much of a contributor to the s&p 500 as it was last

quarter. >> very quickly. give me some of the sectors that are going to be winners and some of the sectors that are going to be losers when it's all said and done. >> sure. well, tech is the biggest winner so far. 18% growth in the quarter. just after energy earnings growth. financials have been very strong, 10.5% growth. those are the two double digits earnings categories. staples, we're looking to see more. those are where your winners will be. health care has been coming in better than expected. >> lindsay bell, thank you very much for joining us. she's with cfra research. coming up, when it comes to houses, it's a seller's market in more ways than one. we'll explain.

republican leaders working on playing an overhaul and they said in order to move the plans further that the border adjustment tax is dead. the b.a.t. was part of the gop plan. it would have taxed imports but not exports. most lobbied aggressively. congress hopes to push through a tax reform plan later this year. joining us now with more on tax reform is john harwood. he joins us from washington. good to see you as always, john. let's start with health care. where do things stand now? what's next? >> well, republican senators are getting ready to have votes tonight with their democratic colleagues and try to figure out if they can pass something to get to a conference committee with the house. none of the comprehensive approaches have succeeded so

far. republican leaders are now trying to pass what they're calling a skinny repeal, which is a narrow bill repealing just the individual mandate and some other items as a means of getting to a conference but, of course, the house has the possibility of simply passing that. late in the day we've heard from john mccain, lindsey graham and ron johnson who said they will not vote for skinny repeal unless they have a guarantee that the house will go to a conference committee and just not pass it. so it's a confused situation. without those three votes it couldn't pass but we don't know how that's going to go and voting will go late into the night. >> on to tax reform the republicans dropped the border adjustment tax that raised a lot of revenue. how does the gop keep tax reform from ballooning the deficit. >> they do not know and that's why they haven't told us. that was the number one lynchpin of tax reform in which they

could change the tax code in a way that didn't cost the treasury a lot of money. one option is to find another source of revenue, another which i think is more likely is that republicans are going to try to figure out a way to pass a tax cut that does lose revenue because it's simply too hard to find other revenue sources. they might be able to do that if they can make those tax cuts expire after ten years, which is what the bush administration did early in the 2000s. >> earlier this week we've talked about john mccain who spoke so passionately the other day on the floor about bipartisanship. will tax reform be a bipartisan effort as it was back in 1986? >> no sign of it so far. orrin hatch, the republican senator of the finance committee has entertained that idea, but there's not been a consensus on that within the republican leadership. >> we will leave it there. you're going to be up late tonight, john. john harwood in washington. >> if you're thinking of selling your home, now would be a great

time as diana olick tells us, sellers are seeing the biggest profits in a decade and not just because of higher prices. >> are you altogether? >> no. >> reporter: show up at most open houses today and you will not be alone. you'll probably see a crowd. it is a seller's market for sure as demand outpaces supply and profits so i remember. -- soar. those who sold their homes this past spring saw the highest profit. on average, $51,000 over their original purchase price. that represented an average return of 26%, also the high nest a decade, all according to adam data solutions. here's why. home values shot up quickly after the recession and continued to move to new record highs but it's not just the price. the housing crash kept homeowners in place longer than normal. those who sold this spring owned their home just over eight years, which is the longest tenure going back to the year

2000, which is when adams started tracking this. that's because values fell so dramatically that it took about a decade to see real gains again. where were the biggest profits? san jose and san francisco, of course, and then seattle and denver, which have high demand and extremely low supply. so given all that profit, why aren't more people selling? >> i think it really comes down to something we at zillo often call the musical chairs phenomenon. you don't want to get out of your chair because you're not sure you're going to get another chair once the music stops. i think a lot of sellers feel that way now. >> the competition is so fierce more and more buyers are using cash. that share increased annually than four years ago. sellers are willing to take a lower cash offer over one using the mortgage just to get the deal done fast. for "nightly business report" i'm diana olick from watching to be. starbucks leave investors

with a bad taste. quarterly profits matched while revenue came in light. the coffee giants saw global same store sales thanks to higher customer spending. it still wasn't enough to beat estimates. starbucks said it would close all of its struggling stores. shares were volatile in after hours trading but they ended the regular day at 2% to 5950. anheuser-busch imbev ended sales higher. earnings grew but not enough to top analyst estimates. shares jumped 6% to 122.84. comcast earnings topped expectations thanks to higher revenue in the company's filmed, entertainment and themed park businesses. the results were ahead of the expectations and the sales giants will be ahead. shares of comcast were up by 8 cents to 39.43.

dd. and twitter is having a difficult time attracting new users to its platform. the social media company reported user growth that stalled from the previous quarter. earnings and revenue, however, did beat street targets but that was not enough to improve investor sentiment for the stock. shares were down very sharply today, 14% or so, to $16.84. the rise in online shopping was a boon for ups in the latest quarter. the company delivered more ecommerce packages leading to stronger than expected profit and revenue. they left their guidance unchanged and that disappointed investors. shares off 4% at $107.79. with demand for barbie dolls and fisher price toys caused mattel to post disappointing sales. the toy maker did note it saw strong sales tied to the cars 3 franchise. mattel posted a wider loss. shares initially fell after hours erasing a nearly 2% gain from earlier when shares closed at $21.30.

and the video game publisher electronic arts topped revenue estimates but the company gave a weak sales outlook for the current quarter. e.a. said the higher sales of the games battlefield 1 and the sims helped earnings beat street targets. initially shares dropped after hours and also ended the regular section down a fraction to $117.60. finding skilled labor is becoming an increasingly burdensome target for main street. it's making it difficult for small companies to find talent. in her latest installment of "small business matters," kate is in denver with how entrepreneurs are dealing with the skills gap. >> reporter: for denise burget, the biggest challenge in running the construction management firm is simply finding the right people for the job. her business is a second generation family owned company with 12 so 15 year-round employees, but depending on the size of the project she's

working on, she can need more than 100 subcontractors at a time and that's when things get complicated. >> they're younger, not as trained, not as seasoned as previously and it's also a career path that's not glamorous. it's not silicone valley software, not facebook. it's something that you are yo' going to work hard but you also get paid really well for. so it's a hard thing -- it's a hard sell, not impossible sell. >> she isn't alone in struggling with the workplace skills gap. in fact, finding skilled labor has become a top three issue behind taxes and government regulations. here in denver, it's an extremely tight labor market with unemployment at just over 2%. >> this is really good news that companies are luooking to hire, but it's a real struggle for them sometimes. it's always a particular problem for smaller companies that don't have the networks the large companies do. >> west of denver, tony employs

12 employees. he knows those with particular skill sets including his top two mechanics would be nearly impossible to replace. >> as it stands today with the labor market being what it is and how competitive it is, in the front range it would be very difficult for us to find a replacement for somebody with that level of experience. >> reporter: so song, like burgess, works to offer competitive benefits like a health care stipend, paid time off and flexibility in scheduling to hang onto the good workers both business vs. >> with the cycling industry there are very few places that are making six figures plus. our ability to to be able to retain employees has to come from somewhere outside of the dollar figure that they're making. that ability to hold on to their enjoyment in working in the bike shop is very key. >> reporter: for "nightly business report" i'm kate rogers, denver. coming up, the half million dollar car rolls royce hopes

will reel in a younger crowd. we'll have a firsthand look. and here's a look at what to watch for tomorrow. we get the first look at second quarter gdp. economists are expecting the economy in the second quarter

grew twice as fast as the first quarter. the market will be watching earnings from big oil companies. exxon mobil and chevron. investors will be keeping an ear open for anything minneapolis federal reserve president neil kashkari says about the interest rates. that's what to watch for on friday. it is the status symbol among status symbols. the rolls royce and tonight the famous luxury car brand rolled out the flagship phantom model more than a decade after the last one. as robert frank tells us, this time rolls is aiming for a younger audience. >> reporter: it is the most expensive, the rolls royce phantom. in today's effort to lure younger buyers, rolls royce rolled out the iconic land yacht in years. it's the phantom 8. it's the eighth version since it debuted in 1925. it's critical to parent company

bmw's magic crowded with competitors and younger buyers who want smaller, sleeker, stealthier rides. it has a tougher front end, beefed up engine and aluminum body that still weighs in at over two tons will bring in more millennials to the brand. >> what we've achieved over the last seven years is to bring the rolls royce customer significantly down by nearly 10 years from 56 average age down to 45 now and that is due to quite a lot of factors. number one is we are playing quite a significant can't new game when it comes to marketing, social media, the way how we position the brand but also, of course, what kind of products we're offering. >> the price for a new phantom starts around $450,000, but most buyers pay a lot more since they custom design everything from

the on board humadors and champaign coolers to the star constellations on the ceiling. selling a $450,000 car requires a different strategy. rolls created a mobile design center that's been traveling the world giving rich buyers a sneak peek at the car and private rooms to design their own vehicles. >> our customers are not buying a car, they are buying a piece of art and they're even commissioning a piece of art. so nearly all of our cars are cars where customers are putting quite significant efforts into making sure that the car speaks their personal language. >> last year rolls had its second highest sales ever delivering over 4,000 cars. the u.s. is their number one market although china is gaining fast and while chinese buyers like to be driven in the back of their phantom, the u.s. buyers prefer the driver's seat. no word yet on the fuel consumption of the phantom, but with a 6.75 liter turbo v-12,

phantom buyers are not likely to care much about gas mileage. for "nightly business report" i'm robert frank. >> i like the champaign cooler. >> the champaign cooler is nice. i bet they don't have to care much about the gas price. >> no, that's not going to be part of the equation. >> that's not a worry. >> exactly. that's "nightly business report." i'm sue herera. thanks for joining us. >> and i'm tyler mathisen. have a great evening, everybody. we'll see you back here tomorrow ni

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