From Briefing.com: 4:12 pm Hewlett Packard Enterprise completes the sale of its equity stake in Mphasis Limited to private equity funds managed by Blackstone (BX) (HPE) : Blackstone purchased 100% of HPE's stake in Mphasis for INR 430 per share, or approximately $825 million. In conjunction with the sale, HPE also entered into a five-year renewal of its existing master services agreement with Mphasis, whereby Mphasis will continue to provide strategic service delivery capabilities to HPE.
4:10 pm VeriFone beats by $0.02, misses on revs; guides Q4 EPS below consensus, revs below consensus; guides FY16 EPS below consensus, revs in-line (PAY) :
Reports Q3 (Jul) earnings of $0.42 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.40; revenues fell 3.3% year/year to $493 mln vs the $515.79 mln Capital IQ Consensus."We are managing through what we believe are difficult but temporary local market and lingering EMV adoption issues. Our outlook for Q4 now assumes a significantly slower EMV rollout, and we are projecting fiscal year 2017 consolidated revenues to be approximately 3% below fiscal year 2016 levels. That said, we are relentlessly executing the long-term vision for Verifone to transform from a box shipper to a services provider."Co issues downside guidance for Q4, sees EPS of $0.28-0.29, excluding non-recurring items, vs. $0.50 Capital IQ Consensus Estimate; sees Q4 revs of $460 mln vs. $536.46 mln Capital IQ Consensus Estimate. Co issues guidance for FY16, sees EPS of $1.64-1.65, excluding non-recurring items, vs. $1.85 Capital IQ Consensus Estimate; sees FY16 revs of $2.0 bln vs. $2.1 bln Capital IQ Consensus Estimate.
4:08 pm Broadcom beats by $0.13, beats on revs; guides Q4 rev in-line with midpoint above consensus (AVGO) :
Reports Q3 (Jul) earnings of $2.89 per share, $0.13 better than the Capital IQ Consensus of $2.76; revenues rose 117.3% year/year to $3.8 bln vs the $3.76 bln Capital IQ Consensus. Non-GAAP gross margin 60.4% vs. 59-61% guidance.Co issues guidance for Q4, sees Q4 revs of $4.025-4.175 bln vs. $4.05 bln Capital IQ Consensus; non-GAAP gross margin 59.5-61.5%."We are expecting an even stronger performance in the fourth quarter, driven by robust growth in our wireless segment."
4:03 pm Verizon CFO Fran Shammo announces plans to retire effective Nov 1; Matthew Ellis to succeed Shammo (VZ) : Verizon's Board of Directors today appointed Matthew Ellis to succeed Shammo as executive vice president and CFO. Ellis is currently senior vice president and CFO - Operations Finance, responsible for providing financial support to Verizon's wireless and wireline business units.
4:01 pm Plexus announced collaborative effort with Indiana Integrated Circuits to support the development of a production level Quilt Packaging assembly process (PLXS) : Plexus to provide microelectronic design, assembly & test for IIC's proprietary "Quilt Packaging" microchip integration technology.
4:10 pm : The stock market ended the Thursday affair on a flat note as the S&P 500 (UNCH) clawed back the bulk of today's loss. Trading conditions continued to be on the lighter side as market participants wind down recent vacation schedules and look ahead to tomorrow's Employment Situation Report for August.
Equity indices sputtered at the start of the session as a string of weaker-than-expected economic data weighed on the broader market. The ISM Manufacturing Index for August indicated a contraction, falling to 49.4 (Briefing.com consensus 52.2) from July's reading of 52.6. Additionally, negative revisions to second quarter Productivity (-0.6%; from -0.5%) and Unit Labor Costs (+4.3%; from: +2.0%) weighed on the broader market's outlook for corporate earnings.
The disappointing economic data led to a negative revision of the Atlanta Fed's GDPNow forecast for the third quarter. The model now estimates that GDP growth for the third quarter will come in at 3.2%, declining from the August 29 estimate of 3.5%.
The major averages notched session lows shortly before midday as an extended downturn in crude oil weighed on the broader market. The energy component fell from the $44.35/bbl price level as investors eyed growth concerns associated with a pullback in manufacturing activity. The energy component ended its session lower by 3.4% ($43.17/bbl; -$1.54), extending its week-to-date loss to 9.4%.
The broader market recovered losses in the second half as a rebound in the heavily-weighted consumer discretionary (+0.2%) and technology (+0.4%) sectors boosted the broader market. The S&P 500 (UNCH) jostled near the 2170 price level, settling with six sectors in the green. The health care (-0.2%), energy (-0.3%), financial (-0.4%), and utilities (-0.4%) sectors rounded out the board while consumer discretionary (+0.2%), telecom services (+0.3%), and technology (+0.4%) outperformed.
The economically-sensitive financial sector (-0.4%) displayed relative weakness, responding to negative economic data and uncertainty ahead of tomorrow's Employment Situation Report for August. The Briefing.com consensus expects the employment reading will show that 180,000 nonfarm payrolls were added in August, following July's reading of 255,000. The report has taken on added significance as participants continue to adjust rate hike expectation for the year. In the group, Dow component American Express (AXP 64.86, -0.72) finished at the bottom of the price-weighted index.
In the health care space (-0.2%), health care plan names underperformed while the iShares Nasdaq Biotechnology ETF (IBB 281.44, +0.55) narrowed its week-to-date loss to 1.3%. In the ETF, Mylan Labs (MYL 41.92, -0.44) continued to underperform, sinking 1.0%. The broader sector has declined 0.6% this week, leading only energy (-0.3%; week-to-date: -1.4%) over that time.
Retail names underperformed in the consumer discretionary space (+0.2%) as the SPDR S&P Retail ETF (XRT 44.21, -0.26) declined by 0.6%. The sub-group was under pressure as investors pored over a mixed set of same-store sales data for August. L Brands (LB 74.81, -1.40) underperformed after reporting that August same-store sales increased 2.0%. Separately, Ford (F 12.44, -0.16) fell by 1.3% after announcing that U.S. sales declined by 8.4% year-over-year.
The high-beta chipmakers demonstrated relative strength, evidenced by the 0.9% gain in the PHLX Semiconductor Index. Marvell (MRVL 12.87, +0.47) finished at the top of the price-weighted index. For the week, the index has gained 0.9%, which compares to an advance of 0.3% in the broader sector.
Treasuries ended on a mixed note with the short end of the curve demonstrating relative strength. The yield on the 2-yr note ended lower by three basis points (0.78%) while the yield on the 30-yr bond settled flat at 2.23%. For its part, the yield on the benchmark 10-yr note slipped one basis point to 1.57%
Today's participation was below the recent average as fewer than 805 million shares changed hands on the NYSE floor.
Today's economic data included August Challenger Job Cuts, weekly initial claims, revised estimates for second quarter Productivity and Unit Labor Costs, Construction Spending for July, and the ISM Index for August:
August Challenger Job Cuts reported in at 32,200, which compares to the prior month's reading of 45,300.
Initial jobless claims increased by 2,000 to 263,000 for the week ending August 27. There were no special factors driving the report, which produced the 78th straight week that initial claims have been below 300,000.
Continuing claims for the week ending August 20 increased by 14,000 to 2.159 million. That uptick drove the four-week moving average to 2.160 million from 2.155 million the week before.
Second quarter productivity was revised down to a decline of 0.6% from a preliminary decline of 0.5%. The revision was in-line with the Briefing.com consensus estimate.
Unit labor costs were revised up to 4.3% (Briefing.com consensus +2.1%) from the preliminary reading of 2.0%.
The report signals that corporate profit margins are at risk with productivity down and unit labor costs up.
Total construction spending was unchanged in July (Briefing.com consensus +0.6%) following an upwardly revised 0.9% increase (from -0.6%) for June.
On a year-over-year basis, total construction spending is up 1.5%, which is the slowest pace of growth since November 2011.
The total value of construction put in place increased 0.9% versus June, so that will remain a positive input for Q3 GDP forecasts.
The ISM Manufacturing Index for August produced a big headline disappointment, falling to 49.4 (Briefing.com consensus 52.2) from 52.6 in July. A number below 50.0 denotes a general contraction in the manufacturing sector.
The report plants a negative seed for third quarter GDP growth prospects and also supports the notion held by many market participants that the Federal Reserve should refrain from raising the fed funds rate at this month's FOMC meeting.
For further details on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include the Employment Situation Report for August (Briefing.com consensus 180k) and the Trade Balance for July (Briefing.com consensus -$43.0 billion), which will each cross the wires at 8:30 ET. Separately, Factory Orders for July (Briefing.com consensus +2.0%) will be released at 10:00 ET. DJ30 +18.42 NASDAQ +13.99 SP500 -0.09 NASDAQ Adv/Vol/Dec 1500/1.451 bln/1337 NYSE Adv/Vol/Dec 1400/804.4 mln/1538
3:40 pm :
Energy futures take a hit in Thursday's session
Following today's weekly storage data, natural gas futures took a hit and ended the day down 3.1% at $2.80/MMBtu
WTI oil futures were weak as well, extending recent losses and is down 11% since last Friday
Today, Oct crude oil ended the session -3.4% at $43.17/barrel
Looking over at metals...
Dec gold rose 0.4% to $1317/oz, while Dec silver closed 1.3% higher at $18.95/oz
Dec copper ended unchanged at $2.08/lc
Moving over to the agriculture market, some grains, such as wheat and corn are sitting at multi-year lows
Wheat is at a 10-year low currently, while corn is at a 7-yr. low
Today, Dec corn rose 2.5% to $3.23/bushel, Dec wheat gained 0.8% to $3.94/bu and Nov soybeans climbed 0.4% to $9.45/bu
Equities indices began the day under pressure as investors pored over a mixed set of global manufacturing data. Positive reports from China and the United Kingdom helped bolster things overnight, but negative domestic data pushed those reports to the backburner. The ISM Manufacturing Index for August fell to 49.4 from July's reading of 52.6. A number below 50.0 indicates contraction in the manufacturing sector and could act as a headwind for third-quarter GDP growth prospects.
Market data today included August Challenger Job Cuts which came in at 32,200 compared to the prior month's reading of 45,300. Also, Initial jobless claims increased by 2,000 to 263,000 for the week ending August 27. There were no special factors driving the report, which produced the 78th straight week that initial claims have been below 300,000. Additionally, second quarter productivity was revised down to a decline of 0.6% from a preliminary decline of 0.5%. Total construction spending was unchanged in July following an upwardly revised 0.9% increase (from -0.6%) for June. Finally, the aforementioned ISM Manufacturing Index for August produced a big headline disappointment, falling to 49.4 from 52.6 in July. A number below 50.0 denotes a general contraction in the manufacturing sector.
The first day of September ended a mixed affair. Action was led to the upside today by the Nasdaq Composite which added 13.99 points (+0.27%) to 5227.21. The Dow Jones Industrial Average also finished in positive territory, up 18.42 points (+0.10%) to 18419.30, and the S&P 500 shed less than a point (-0.00%) to 2170.86.
Technology (XLK 47.14, +0.15 +0.32%), in context, fared moderately well as only Materials out-paced gains in Tech. Component Hewlett Packard Enterprise (HPE 22.16, +0.68 +3.17%) was the best performer today as a Reuters article circulated suggesting the company may sell its software unit for $8-10 billion. Other sectors as measured by the S&P closed today XLB +0.41%, XLY +0.20%, XLI +0.09%, XLP +0.04%, XLV -0.26%, XLE -0.29%, XLF -0.41%, XLU -0.51%, XLFS -0.52%, IYZ -0.75%.
In the S&P 500 Information Technology (785.64, +2.74 +0.35%) sector, trading ended higher after a brief portion of the day in negative territory. Component Salesforce.com (CRM 75.94, -3.51 -4.42%) was lower today in reaction to quarterly results which were mixed and guidance which came in worse than expected. Other names in the space which closed moderately higher today included NVDA +2.95%, CSRA +2.76%, ADS +2.74%, KLAC +2.15%, ATVI +1.89%, FSLR +1.64%, AMAT +1.51%, MCHP +1.44%, LRCX +1.40%.
Other notable news items among sector components:
Charter Comm (CHTR 268.82, +11.61 +4.51%) to join the S&P 500, replacing EMC (EMC 28.86, -0.13 -0.45%) after the close on September 7.
According to Reuters, Hewlett Packard Enterprise (HPE) might sell if software unit for $8-10 billion.
According to Bloomberg, private equity firm TPG is among those parties bidding for Intel's (INTC 36.02, +0.13 +0.36%) McAfee unit and could be valued at $3 billion.
HP Inc. (HPQ 14.50, +0.13 +0.90%) debuted two new PCs, HP Pavilion Wave and HP Elite Slice. HP Pavilion Wave will start at $549.99 and is expected to be available at select retailers and HP.com on September 23, 2016, and the HP Elite Slice will start at $699 and is expected to be available in September 2016.
Harris (HRS 92.85, -0.13 -0.14%) filed a mixed securities shelf offering.
Salesforce (CRM) announced the expansion of its Wave Analytics portfolio with new apps built by Salesforce and independent software vendors (ISVs) in its ecosystem.
According to Digital Trends, Alphabet's (GOOG 768.78, +1.73 +0.23%) Google might introduce a new photo creation tool. Shares of Shutterfly (SFLY 50.04, -0.18 -0.36%) traded lower today in reaction.
Elsewhere in the tech space:
Digital Turbine (APPS 1.25, -0.16 -11.51%) named Barrett Garrison as CFO effective September 12, 2016.
Advanced Micro (AMD 7.35, -0.05 -0.68%) amended its Wafer Supply Agreement with Globalfoundries for the period from Jan. 1, 2016 to Dec. 31, 2020.
In addition to reporting quarterly results, Box (BOX 13.98, +0.24 +1.75%) acquired Wagon Analytics. Financial terms of the deal were not disclosed.
Softbank (SFTBY 33.14, +0.53 +1.64%) announced a partnership agreement with Niantic for Nintendo's (NTDOY 28.01, +0.73 +2.71%) Pokmon GO.
In addition to reporting quarterly results, Itron (ITRI 50.95, +3.32 +6.97%) announced restructuring activities in order to improve operational efficiencies, reduce expenses and improve competitiveness. The Company estimates pre-tax restructuring charges of $55 million to $65 million, with about $16 million to $19 million related to closing or consolidating facilities and operations and about $39 million to $46 million associated with severance and other one-time termination benefits. Of the total estimated charge, more than 90% is expected to result in cash expenditures.
In reaction to quarterly results:
Ciena (CIEN 23.17, +1.72 +8.02%) reported better than expected Q3 EPS of $0.42 on revenues which rose 11.2% compared to last year to $670.6 million. For Q4, CIEN sees revenues in the range of $700-730 million.
Itron (ITRI) reported better than expected Q2 EPS and revenues of $0.65 and $513.02 million, respectively. For FY16, ITRI sees better than expected EPS of $2.20-2.45 on revenues of $1.95-2.00 billion.
Salesforce.com (CRM) reported better than expected Q2 EPS of $0.24 on in-line revenues of $2.04 billion. For Q3, CRM sees EPS and revenues worse than market expectations at $0.20-0.21 and $2.11-2.12 billion, respectively. For FY17, CRM expects EPS and revenues of $0.93-0.95 and $8.275-8.325 billion (from $8.26-8.32 billion).
SMTC Corp (SMTC 27.49, +0.89 +3.35%) reported better than expected Q2 EPS of $0.35 on revenues which rose 8.1% compared to a year ago to $135.9 million. The company sees EPS and revenues for Q3 of $0.34-0.38 and $134-142 million, respectively.
Box (BOX) reported a better than expected Q2 loss per share of $0.14 on revenues which also came in ahead of expectations and rose 30.2% year-over-year to $95.7 million. For Q3, the company sees EPS of ($0.20)-($0.19) and revenues of $100-101 million. For FY17, BOX sees EPS and revenues of ($0.69)-($-0.67) (from ($0.78)-($0.75)) and $394-396 million (from $391-395 million.
Companies scheduled to report quarterly results tonight: AMBA, AVGO, SEAC, PAY
Analyst actions:
WEX was upgraded to Outperform from Underperform at CLSA;
ININ was downgraded to Market Perform from Outperform at Northland Capital and to Neutral from Buy at Roth Capital,
MBT was downgraded to Hold from Buy at HSBC,
BT was downgraded to Neutral from Overweight at JP Morgan
