(Bloomberg Opinion) — Sharp swings in the crude price have been an unmitigated pain for the oil industry, right? Not entirely. The silver lining has been a lucrative environment for the oil majors’ trading operations. This was on stark display in the second-quarter performance of Royal Dutch Shell Plc. But it creates a challenge for investors. How do you value this unpredictable and opaque source of income?Shell warned last month that its three-month earnings, released Thursday, would include a colossal impairment charge reflecting the impact of the pandemic on energy demand and prices. That writedown came in at $17 billion after tax. Strip this and other one-offs out of the equation, and Shell made a $638 million net profit, confounding predictions of an underlying loss.Oil and gas prices fell but this was offset by aggressive cost and capital-expenditure reductions plus a “very strong” trading result. Shell doesn't gather trading profits across divisions into a single number. But earnings from refining and trading in its oil products unit were $1.5 billion in the second quarter. That compares with just $52 million in the same period last year. That’s pretty indicative. The result reflects the fact that Shell has the physical resources to exploit a disconnect between cheap spot prices and more expensive future oil prices. It has the storage capacity to stockpile crude and capitalize on this arbitrage, as Bloomberg News’s Javier Blas explains here.Having access to a wealth of oil-market data should give Shell a nose for when trading counterparties can't afford to negotiate too hard, and a feeling for the state of supply in all corners of the market. It’s that kind of expertise that lies behind the success of trading houses such as Glencore Plc. It translates into the ability to be a price maker in trades, rather than a price taker. Shell’s results suggest it has more of this capability than the market envisaged.How beneficial is this for shareholders? They don’t invest in Shell because it’s a trader. Clearly, it made a difference this quarter. Shell’s free cash flow, adjusting for a big working capital swing, was about $4 billion. The group’s quarterly commitments for shareholder payouts and debt interest payments were about $2.5 billion, after Shell cut its dividend in April. There’s some headroom there in case Brent crude slips back below $40 a barrel again. But the volatile trading result makes it harder for investors to believe that this reflects a new steady-state performance.Suppose trading income were to revert to more normal levels this year, could cost and capex cuts pick up the slack? Probably not by much. Shell’s underlying operating expenses in the quarter were 20% lower year-on-year. That comes after a multi-year efficiency program. Cash capex fell by a third. Much more and Shell surely risks cutting into bone, and falling behind in investing in the transition to cleaner energy.Shell has proved it can make a profit even in this environment. But shareholders can’t put much value on the trading arm without more clarity on the moving parts. The shares were little changed after its surprisingly good result. Small wonder investors aren’t betting this will endure.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Jul.30 — Fortescue Metals Group Ltd. Chief Executive Officer Elizabeth Gaines discusses the company’s projects, demand and business outlook. The world’s fourth-largest iron ore producer sees a path to lift export volumes further after shipments climbed to an annual record and it advances a slate of growth projects. Gaines speaks with Haslinda Amin and Rishaad Salamat on “Bloomberg Markets: Asia.”

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Shareholders might have noticed that Amgen Inc. (NASDAQ:AMGN) filed its quarterly result this time last week. The…

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Akamai Technologies, Inc. (NASDAQ:AKAM) defied analyst predictions to release its second-quarter results, which were…

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US $ * Q2 GAAP net income of $6 million / $0.07 per diluted share * Adjusted EBITDA of $37 million * Reduced debt by $191 million; liquidity up $47 million to $396 million * Successful ntegration of recently-acquired U.

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Microsoft Co-Founder Bill Gates joins ‘Influencers with Andy Serwer’ to discuss his efforts to stop the spread of COVID-19.

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Qualcomm Inc.’s (QCOM) shares spiked 12% in extended market trading after announcing a $1.8 billion settlement agreement with Huawei Technologies and providing its revenue outlook for the current quarter.The stock surged to $103.83 in Wednesday’s after-hours trading as the world’s largest mobile chipmaker said it entered into a settlement agreement, as well as a new long-term, global multi-year patent license agreement with Huawei.Under the terms of the agreement, which includes a license granting back rights to certain of Huawei’s patents, covering sales beginning Jan. 1, Qualcomm expects to generate an estimated $1.8 billion in revenues. The company is poised to record royalty revenue from Huawei starting in its fourth fiscal quarter.Looking ahead, Qualcomm provided guidance for fourth-quarter adjusted revenue to be in a range of $5.5 billion and $6.3 billion, versus analysts’ estimates of $5.78 billion. EPS in the current quarter is forecast to be in a range of $1.05 to $1.25. The guidance includes an impact of greater than $0.25 reflecting the reduction in handset shipments as a result of COVID-19, including a partial impact from the delay of a 5G flagship phone launch, the company added.“As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins,” said Qualcomm CEO Steve Mollenkopf. “We delivered earnings above the high end of our range, continued to execute in our product and licensing businesses and entered into a new long-term patent license agreement with Huawei, all of which position us well for the balance of 2020 and beyond.”Qualcomm said that during the third quarter of fiscal 2020, it returned $843 million to stockholders, including $733 million, or $0.65 per share, of cash dividends paid and $110 million through repurchases of 1.6 million shares of common stock.Shares in Qualcomm have recouped all of this year’s earlier losses and are now up almost 6% year-to-date.Following the news, five-star analyst Kevin Cassidy at Rosenblatt Securities raised the stock’s price target to $130 (40% upside potential) from $105 and recommended investors own QCOM as a “5G pure play”.“In our view, management's strategy is playing out very well despite the COVID-19 driven uncertainties,” Cassidy wrote in a note to investors. “Considering the 5G traction and the Huawei agreement, we consider [our] 18 multiple [valuation] as conservative.”The rest of the Street is cautiously optimistic on the shares. The Moderate Buy analyst consensus is based on 11 Buys, 1 Hold and 2 Sells. Despite the recent rally, the $107.31 average price target implies 15% upside potential. (See Qualcomm stock analysis on TipRanks)Related News: Logitech Ramps Up Annual Profit Outlook As Q1 Income Leaps 75% Synaptics Snaps Up DisplayLink For $305M In All-Cash Deal; Top Analyst Lifts PT IBM Pops 5% in Extended Trading After Quarterly Profit Beats Expectations More recent articles from Smarter Analyst: * Apple Is Said To Face Multi-State US Probe Into Older iPhones * Quest Gets FDA Nod For Faster Covid-19 Testing; Analyst Flips To Buy Call * ServiceNow Drops 4% in After-Hours Despite 2Q Earnings Beat * FireEye Pops 18% As JPMorgan Lifts PT

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A lender that's offering 30-year loans at 2.5% now has an ultra-low 15-year mortgage.

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Shares of ServiceNow (NOW) fell almost 4% in extended trading on Wednesday despite beating 2Q earnings estimates. Its dismal 3Q revenue outlook weighed on its stock. The company projects subscription revenues between $1.055 billion and $1.06 billion, which lags analysts’ estimate of $1.09 billion.Nevertheless, its 2Q adjusted earnings of $1.27 per share beat analysts’ estimates of $1.01. Moreover, revenues grew 28% to $1.07 billion year-over-year and surpassed Street estimates of $1.05 billion. Rapid digital transformation due to the coronavirus outbreak cushioned its top and bottom-line.Ahead of its earnings, on July 27, Needham analyst Jack Andrews lifted the price target to $481 (7.9% upside potential) from $440 and reaffirmed a Buy rating. He said that ServiceNow stands "well-positioned" to capitalize on accelerating digital transformations across large enterprises. On the same day, JMP Securities analyst Patrick Walravens also raised the price target to $460 (3.2% upside potential) from $350 and maintained a Buy.Currently, the Street has a Strong Buy analyst consensus on the stock. The average price target of $443.18 implies shares are more than fully priced. (See NOW stock analysis on TipRanks).Related News: Shopify Soars 10% On Earnings Beat AMD Gains 10% In After-Hours on 2Q Earnings Beat, Upbeat Guidance Seagate Drops 8% In Extended Trading On Earnings Miss, Weak Outlook More recent articles from Smarter Analyst: * Apple Is Said To Face Multi-State US Probe Into Older iPhones * Quest Gets FDA Nod For Faster Covid-19 Testing; Analyst Flips To Buy Call * Qualcomm Pops 12% In After-Hours On $1.8B Huawei License Deal * FireEye Pops 18% As JPMorgan Lifts PT

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