From Briefing.com: 4:15 pm Cisco Systems beats by $0.03, reports revs in-line; guides Q1 EPS in-line, revs below consensus (CSCO) : Reports Q4 (Jul) earnings of $0.63 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.60; revenues fell 1.6% year/year to $12.64 bln vs the $12.57 bln Capital IQ Consensus.
Revenue by geographic segment:
Americas up 3%
EMEA up 3%
APJC down 2%
Product Revenue
Security at 16%
Collaboration, Wireless and Switching product revenue increased by 6%, 5%, and 2%, respectively
Service Provider Video, NGN Routing and Data Center product revenue decreased by 12%, 6%, and 1%, respectively
Non-GAAP total gross margin and product gross margin were 64.6% and 63.9% (Guidance for 63-64%), respectively. The increase in non-GAAP product gross margin compared with 63.2% in the fourth quarter of fiscal 2015 was primarily due to continued productivity improvement and to a lesser extent product mix, partially offset by pricing.
Deferred Revenue was $16.5 billion, up 8% in total, with deferred product revenue up 8%, driven largely by subscription-based and software offerings, and deferred service revenue was up 9%.
Product Backlog was approximately $4.6 billion at the end of fiscal 2016, an increase of 1% compared with the balance at the end of fiscal 2015 (excluding the SP Video CPE Business).
Days Sales Outstanding in Accounts Receivable (:DSO) was 42 days at the end of the fourth quarter of fiscal 2016, compared with 38 days at the end of the fourth quarter of fiscal 2015.
Co issues guidance for Q1, sees EPS of 0.58-0.60, excluding non-recurring items, vs. $0.60 Capital IQ Consensus Estimate; sees Q1 revs of -1-1% y/y (Approx $12.15-12.39 bln) vs. $12.49 bln Capital IQ Consensus Estimate. Revenue normalized to exclude SP Video CPE Business for Q1 FY2016)
Sees Q1 Gross Margin in the range of 63-64%.
4:12 pm NetApp appoints Jean English as Chief Marketing Officer (NTAP) : Most recently, she was the global VP for IBM Cloud Marketing and led the go-to-market transformation for IBM's cloud business.
4:11 pm Agilent beats by $0.02, reports revs in-line; guides OctQ EPS below consensus, revs below consensus (A) :
Reports Q3 (Jul) earnings of $0.49 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.47 and above prior guidance of $0.45-0.47; revenues rose 3.0% year/year to $1.04 bln vs the $1.05 bln Capital IQ Consensus and vs prior guidance of $1.03-1.05 bln.
Co issues downside guidance for Q4 (Oct), sees EPS of $0.50-0.52, excluding non-recurring items, vs. $0.54 Capital IQ Consensus Estimate; sees Q4 revs of $1.05-1.07 bln vs. $1.09 bln Capital IQ Consensus Estimate.
Co's adjusted operating margin was 20.6%, up 70 basis points over a year ago.
"These results, in a challenging global economic environment, reflect the strength of Agilent's scale and broad differentiated portfolio of products and services."
4:04 pm NetApp beats by $0.10, beats on revs; guides Q2 in-line (NTAP) :
Reports Q1 (Jul) earnings of $0.46 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $0.36; revenues fell 3.1% year/year to $1.29 bln vs the $1.26 bln Capital IQ Consensus.
Clustered Data ONTAP deployed on 32% of installed base systems
Deferred revenue and financed unearned services revenue up 8% year-over-year
FCF of $192 million, up more than 100% year-over-year
$228 million returned to shareholders in share repurchases and cash dividends
Co issues in-line guidance for Q2, sees EPS of $0.51-0.56, excluding non-recurring items, vs. $0.54 Capital IQ Consensus Estimate; sees Q2 revs of $1.265-1.415 bln vs. $1.34 bln Capital IQ Consensus Estimate.
4:15 pm : The stock market ended the midweek affair on a flat note as market participants walked back recently-adjusted rate hike expectations for the year. The change in thinking followed some dovish remarks from St. Louis Fed President Bullard (an FOMC voter) and less hawkish-than-feared minutes from the FOMC's July meeting. The S&P 500 (+0.2%) settled above its flat line, recovering from a 0.5% loss intraday.
The future path of interest rate normalization remained in focus as investors looked to substantiate yesterday's somewhat hawkish remarks from New York Fed President Dudley (an FOMC voter) and Atlanta Fed President Lockhart (not an FOMC voter). The two fed officials pushed forward rate hike expectations, signaling that at least one rate hike remains possible before the end of the year.
The prospect of a sooner-than-expected rate hike was enough to keep buying interest under wraps through the first half of trade. Vacillating oil prices, some strengthening in the dollar, and weakness in the heavily-weighted consumer discretionary (-0.3%) and technology (-0.3%) sectors also helped keep the broader market in check.
The market shifted gears shortly after midday as reports indicated that German Chancellor Merkel signaled that there would be some scope for tax cuts in the Germany's next legislative session. That headline seemed to stoke some risk appetite as investors eyed potential fiscal stimulus measures, which have been lacking in the midst of very aggressive monetary policy accommodations.
St. Louis Fed President Bullard (an FOMC voter) also helped elicit some buying interest after he suggested that the Fed may only be likely to raise rates one time between now and late 2018. The comments echoed remarks made by Mr. Bullard in the past, citing trend growth remaining under 2.0%.
The Fed minutes for July also helped to brush away lingering rate hike angst.
The minutes indicated that the Federal Open Market Committee was split on whether or not an interest rate hike would be appropriate in the coming months. The committee agreed that economic data and labor markets had improved, but the sustainability of hiring and inflation continuing to run below the two percent objective worried some members. Several members said they preferred to defer another increase in the fed funds rate until they were more confident that inflation was moving closer to two percent on a sustained basis.
The market's initial impression of the minutes skewed toward the dovish side of things, evidenced by a downturn in the CBOE Volatility Index (VIX 12.21, -0.43, -3.4%), a dip in the U.S. Dollar Index (94.78, -0.02, -0.02%), an uptick in Treasury prices across the curve, and an upturn in the S&P 500 utilities sector (+1.5%) after their release.
The S&P 500 finished the session near its high, finding technical support near the 2168 price level, which marked a rising 20-day moving average.
Seven sectors ended in the green with industrials (+0.3%), financials (+0.4%), and utilities (+1.4%) leading the advance. The heavily-weighted health care sector (+0.2%) performed in-line with the market, but got a boost from M&A speculation. Medivation (MDVN 66.48, +1.26) jumped 1.9% after the company confirmed that it received indications of interest from several parties. Biotechnology heavyweight Gilead Sciences (GILD 80.70, +1.45) climbed 1.8%, trimming its post-earnings loss to 8.9%.
In the consumer discretionary space (-0.2%), retail names underperformed as Lowe's (LOW 76.88, -4.60) and Target (TGT 70.63, -4.58) declined by 5.6% and 6.4%, respectively. The two came under pressure after disappointing investors with their quarterly results and/or guidance. Wal-Mart (WMT 72.93, +0.04) ended higher by 0.1% ahead of tomorrow morning's earnings report.
The technology sector (-0.1%) ended the day modestly lower as Dow component Cisco Systems (CSCO 30.72, -0.40) pressured the group. Cisco fell 1.3% after reports indicated that the company might be planning to layoff between 9,000 and 14,000 employees. The company is scheduled to report earnings after today's close. The high-beta chipmakers finished the day flat as Analog Devices (ADI 64.20, -0.68) weighed on the PHLX Semiconductor Index (UNCH). The stock fell 1.1% despite beating quarterly estimates and issuing in-line guidance for the fourth quarter.
Treasuries ended the day on a higher note, enjoying a decent bid across the complex. The yield on the 10-yr note slipped two basis points to 1.55%.
Today's participation was below the recent average as fewer than 765 million shares changed hands at the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index:
The MBA Mortgage Index showed that mortgage applications fell 4.0% in the week ending August 13 after a 7.1% increase in the prior week.
Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 265k) and the Philadelphia Fed Survey for August (Briefing.com consensus 0.5), which will each be released at 8:30 a.m. ET. The Leading Indicators report for July (Briefing.com consensus 0.4%) will conclude the day's data, crossing the wires at 10:00 a.m. ET.
Russell 2000 +8.1% YTD
S&P 500 +6.8% YTD
Dow Jones +6.6% YTD
Nasdaq Composite +4.4% YTD
DJ30 +21.92 NASDAQ +1.55 SP500 +4.07 NASDAQ Adv/Vol/Dec 1173/1.605 bln/1718 NYSE Adv/Vol/Dec 1553/765.6 mln/1419
3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, +0.2% around the 85.87 level
Crude oil closed higher for the fifth consecutive session, hit fresh 5-week highs post-EIA
September crude oil futures rose $0.24 (+0.5%) to $46.81/barrel
The next OPEC meeting will be in Algeria on Sept 26-28
Rig count data will be released Friday at 1 pm ET
EIA highlights:
Crude oil inventories had a draw of -2.509 mln (consensus called for a build of ~450K barrels)
Gasoline inventories had a draw of -2.724 mln (consensus called for a draw of ~1.7 mln barrels)
Distillate inventories had a build of +1.939 mln
Natural gas snapped its 3 day loss streak ahead of tomorrow's inventory data
September natural gas closed $0.01 higher (+0.4%) at $2.62/MMBtu
In precious metals, gold & silver futures gave up nearly all of the previous session's gains
December gold ended today's session down $8.00 (-0.6%) to $1348.40/oz
September silver closed today's session $0.24 lower (-1.2%) at $19.64/oz
Base metal copper held onto its initial morning losses, erased yesterday's gains
September copper closed $0.02 lower (-0.9%) at $2.15/lb
The major averages began the day under modest selling pressure as investors responded to a downturn in European markets, where investors reacted apprehensively to increased expectations regarding the speed and path of interest rate normalization in the U.S. and a downturn in crude oil.
New York Fed President Dudley (an FOMC voter) and Atlanta Fed President Lockhart (not an FOMC voter) each struck a somewhat hawkish tone yesterday, indicating that at least one rate hike is still a possibility before the end of the year. St. Louis Fed President Bullard (an FOMC voter) is beginning a speech now on the economy and monetary policy.
During the session, the Fed released the minutes from the July 26-27 FOMC meeting. Those minutes mimicked many of the other minutes from FOMC meetings in that they highlighted a range of opinions on economic, financial market, and monetary policy conditions without offering a strong view of any consensus opinion, other than the one that prevailed in the vote to leave the fed funds rate unchanged at the July meeting.
Further, a recent report that German Chancellor Merkel indicated there would be scope for tax cuts in the next German legislative session helped drive the rebound efforts, as investors are cognizant that fiscal stimulus has been lacking in the midst of very aggressive monetary policy accommodation.
The lone bit of market data today came in the form of the MBA Mortgage Index which showed that mortgage applications fell 4.0% in the week ending August 13 after a 7.1% increase in the prior week.
Wednesday action ended higher following the aforementioned FOMC minutes. Trading was led by the S&P 500 which added 4.07 points (+0.19%) to 2182.22. The Dow Jones Industrial Average was up 21.92 points (+0.12%) to 18573.94, and the Nasdaq Composite advanced 1.55 points (+0.03%) to 5228.66.
On a split day as far as the S&P sectors go, Technology (XLK 46.97, -0.02 -0.04%) ended barely in negative territory. Component Analog Devices (ADI) was one of the weaker names in the space following what was generally a strong Q3 report. Other sectors as measured by the S&P closed the middle of the week XLU +1.49% XLF +0.33% XLE +0.30% XLI +0.29% XLP +0.27% XLV +0.20% XLB -0.08% XLY -0.23% IYZ -0.56% as Utilities and Financials led positive trading and Telecoms continued their recent losing streak.
In the S&P 500 Information Technology (781.19, -0.30 -0.04%) sector, trading came close to flat lines as the bell rang, but the sellers held on and the sector finished in the red. Component Alliance Data (ADS) was among the worst performing names today following a premarket downgrade to Underperform from Neutral at Credit Suisse. Other names in the space which under-performed today included NVDA -2.32%, WDC -2.29%, FSLR -2.25% CRM -2.10% STX -2.09% HPE -1.95% QRVO -1.30% CSCO -1.29% XRX -1.12% JNPR -1.07% VRSN -0.99% ADBE -0.89%.
Other notable news items among sector components:
Apple (AAPL 109.22, -0.16 -0.15%) announced a commitment by major supplier Lens Technology to run its Apple operations on entirely renewable energy.
AT&T (T 41.86, -0.10 -0.24%) stated it is working with global tech companies to bring 5G to market sooner. Named preliminary discussions underway with China Mobile (CHL), Intel (INTC), Qualcomm (QCOM),
Nokia (NOK) and Vodafore (VOD) among others.
HP Inc. (HPQ 14.50, +0.09 +0.62%) launched a new family of gaming products -- the OMEN X Desktop, OMEN 17 Laptop, OMEN X Curved Display and OMEN with SteelSeries accessories.
CA Technologies (CA 33.93, -0.23 -0.67%) announced CA Privileged Access Manager is the first and only security solution for controlling, monitoring and auditing privileged user access to attain Common Criteria certification outlined in the National Information Assurance Partnership (NIAP) Protection Profile for Enterprise Security Management -- Policy Management.
KLA-Tencor (KLAC 69.64, +0.45 +0.65%) introduced three advanced reticle inspection systems that address 10nm and below mask technologies: the Teron 640, Teron SL655 and Reticle Decision Center (RDC).
Elsewhere in the tech space:
E*TRADE (ETFC 25.23, -0.16 -0.63%) priced $400 million of preferred stock. ETFC will use the proceeds to finance the purchase of OptionsHouse
MeetMe (MEET 5.32, +0.30 +5.98%) reiterated its Q3 and FY16 guidance. Was possibly in response to recent volatility in the share price and in anticipation of upcoming investor meetings.
Camtek (CAMT 2.45, +0.03 +1.37%) announced it will reorganize its current mode of operation with respect to its functional inkjet technology (FIT) activity. As a result, the company expects to record one-time re-structuring costs of $300-400 thousand. All financial related implications will be recorded in the third quarter financial results.
According to Bloomberg, Sprint (S 6.01, -0.04 -0.66%) shareholder Softbank (SFTBY 25.40, +0.29 +1.15%) may be looking at a potential merger between S and T-Mobile US (TMUS 46.38, +0.14 +0.30%).
RingCentral (RNG 22.93, +0.09 +0.39%) named David Sipes as Chief Operating Officer.
Nuance Communications (NUAN 14.58, -0.28 -1.88%) filed for an approximate 6.15 million share common stock offering by selling shareholders with proposed maximum offering price per share of $14.98. Also announced the closure of TouchCommerce acquisition.
Shopify (SHOP 38.74, +0.37 +0.96%) priced an offering by the company and selling shareholders of 7.5 million shares of Class A stock at $38.25 per share.
Amazon's (AMZN 764.63, +0.59 +0.08%) Twitch announced a deal to acquire Curse. Financial terms of the deal were not disclosed.
Vivint Solar (VSLR 3.25, -0.04 -1.22%) expanded solar energy system sales and financing to Connecticut, Maryland and South Carolina.
In reaction to quarterly results:
Analog Devices (ADI) reported better than expected Q3 EPS and revenues of $0.82 and $869.59 million, respectively. The company also gave in-line guidance for Q4 EPS and revenues of $0.84-0.94 and $910-970 million, respectively. Gross margins were 66.0% of revenues.
Cree (CREE 23.38, -4.10 -14.92%) reported worse than expected Q4 EPS of $0.19 on in-line (with pre-announcement) revenues of $388.4 million. For Q1, the company sees EPS of $0.10-0.16 on revenues of $356-378 million (including Wolfspeed); excluding Wolfspeed, the company sees non-GAAP EPS of $0.06-0.11 on revenues of $310-330 million.
21Vianet (VNET 9.20, -1.31 -12.46%) reported a worse than expected loss per share of $0.17 on better than expected revenues of $137.1 million. For Q3, VNET sees revenues ahead of expectations at RMB 900-940 million, and sees FY16 revenues of RMB 3.62-3.66 billion.
Jack Henry (JKHY 85.94, -2.46 -2.78%) reported Q4 EPS of $0.84 on better than expected revenues of $366.97 million.
OSI Systems (OSIS 68.23, +7.58 +12.50%) reported better than expected Q4 EPS of $0.55 on worse than expected $221.5 million. The company also guided FY17 EPS ahead of market expectations at $2.60-2.90 on in-line revenues of $865-895 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: A, CACI, CSCO, NTAP, NTES, SNPS/CSIQ, PLAB
Analyst actions:
CREE was downgraded to Market Perform from Outperform at Northland Capital,
VNET was downgraded to Underweight from Neutral at JP Morgan,
ASML was downgraded to Neutral from Buy at BofA/Merrill,
ADS was downgraded to Underperform from Neutral at Credit Suisse;
HPE was initiated with a Mkt Perform at Raymond James,
MTSC was initiated with a Market Perform at Wells Fargo,
HLTOY was initiated with a Sell at Berenberg
