From Briefing.com: 4:53 pm Dialog Semi. reports prelim Q3 revenue above guidance of approx $345 mln vs $309 mln estimate (DLGNF) :
Co reports preliminary Q3 2016 revenue of ~$345 mln, 13% above the mid-point of the July Q3 2016 outlook range and 5% above Q3 2015. On 28 July 2016, Dialog indicated that it expected revenue in Q3 2016 to be in the range of $290 to $320 million. The higher than expected preliminary revenue reported today is partially the result of delivery dates for certain Q4 Mobile Systems orders being pulled forward into Q3 to accommodate a public holiday in China during the first week of October. Dialog will review its Q4 2016 and full year guidance during the coming weeks. The company is currently finalising the financial accounts for Q3 2016 and will publish full results on Thursday, 3 November 2016.
Upside sales guidance is boosting AAPL, AVGO, QCOM in after hours
4:13 pm Alcoa completes 1:3 reverse stock split, shares to begin trading on split-adjusted basis tomorrow morning (AA) :
4:10 pm Semtech confirms agreement with Comcast (CMCSA) to deploy trial LoRaWAN network in the United States, deal provides warrant for Comcast to acquire up to $30 mln of common stock; co updates Q3 guidance as a result (shares halted) (SMTC) :
The co confirmed that it has entered into an agreement with Comcast (CMCSA) regarding the intended trial deployment by Comcast of a low-power wide-area network in the United States, based on Semtech LoRa Wireless Radio Frequency Technology. The LoRaWAN-based network trial deployment is expected to commence in the calendar fourth quarter of 2016 in Philadelphia and San Francisco, and target "smart" enterprise, government and consumer Internet of Things (IoT) applications such as metering, asset tracking, building and public venue management, security, food safety, vending, and waste management. Upon successful completion of the trials, the network could be expanded to up to 30 U.S. cities within a period of 30 months.
To facilitate an accelerated build-out of the network in at least 30 major cities across the country, Semtech has agreed to grant Comcast a Warrant to purchase 1,086,957 shares of Semtech's common stock at a purchase price per share equal to $0.01. This Warrant will vest in several phases based upon successful completion of milestones which are generally tied to regional coverage targets as follows:
10% will vest on the Warrant issue date; 10% will vest once at least 50% of the population of two target cities have LoRaWAN coverage; 26% will vest once at least 50% of the population of 10 target cities have LoRaWAN coverage; 27% will vest once at least 50% of the population of 20 target cities have LoRaWAN coverage; 27% will vest once at least 50% of the population of 30 target cities have LoRaWAN coverage
This Warrant is expected to vest over a period of 30 months and is valued at approximately $30 mln based on the average closing price of Semtech's common stock over the 10-trading day period ending Oct. 4, 2016. In accordance with U.S. generally accepted accounting principles ("GAAP"), any expense related to this Warrant is expected to be recorded as a reduction to net sales since it is being granted to a customer.
Accordingly, Semtech expects to record a reduction to its GAAP net sales of approximately $3.8 mln in the third quarter of fiscal year 2017 which is expected to reduce GAAP earnings per diluted share for this same period by approximately $0.06. As a result of these items, Semtech is updating its GAAP outlook for the third quarter of fiscal year 2017 and now expects GAAP net sales to be in the range of $130-138 mln compared to the prior range of $134-142 mln (vs $138.48 mln Capital IQ Consensus Estimate). GAAP earnings per diluted share are now expected to be in the range of $0.43-0.47 compared to prior range of $0.49-0.53.
4:03 pm Semtech: Comcast (CMCSA) announces machineQ, will use Semtech's LoRa Wireless Radio Frequency Technology to deploy network trials in Philadelphia and San Francisco later this year (shares halted) (SMTC) :
Comcast (CMCSA) announced machineQ, a new business trial venture focused on building business-to-business solutions and a platform for the Internet of Things. As a part of machineQ, Comcast will work with select commercial partners in proof of concepts to use its network to enable partners to gather, transmit, and analyze data from connected devices distributed throughout their organizations.
Comcast will use Semtech Corporation's globally-proven LoRa Wireless Radio Frequency Technology to deploy network trials in Philadelphia and San Francisco later this year. These trials will focus on enabling use cases such as utility metering, environmental monitoring (e.g., temperature, pollution, noise), and asset tracking through LoRa Technology-enabled devices and network services.
4:15 pm : The stock market ended the midweek affair on a higher note as a rally in crude oil futures and financials (+1.5%) outweighed some lingering rate jitters. The Dow Jones Industrial Average (+0.6%) finished ahead of the Nasdaq Composite (+0.5%) and the S&P 500 (+0.4%).
Index futures climbed in pre-market action, receiving a boost after the release of a weaker-than-expected reading of the ADP National Employment Report for September. The report indicated the addition of 154,000 (Briefing.com consensus 171k) private sector payrolls in September, but it is worth remembering that the Employment Situation Report, which will be released on Friday, carries a lot more influence. The September Employment Situation Report will be released on Friday at 8:30 ET (Briefing.com consensus 176,000). The hiring landscape remains in focus as participants continue refining their rate hike expectations.
Interest rates edged higher, keeping a lid on the market after the ISM Services Index for September handily beat expectations. The index jumped to 57.1 (Briefing.com consensus 52.8) from 51.4 in August. The Treasury complex sold off in response as yields moved higher across the curve. The increase in interest rates pressured defensively-oriented real estate (-1.9%), telecom services (-1.8%), utilities (-0.3%), and consumer staples (-0.2%) for a second straight session.
A rally in crude oil also contributed to strength in growth-sensitive sectors. The energy component extended an early lead after the Department of Energy confirmed a positive reading from the American Petroleum Institute. The EIA reported that crude oil stockpiles declined by 2.97 million barrels (consensus: +2.56 million) while gasoline inventories rose by 0.22 million barrels (consensus: +0.70 million). WTI crude finished the day higher by 2.2% ($49.76/bbl; +$1.08).
The benchmark index finished off its session high, testing technical resistance near the 2160 price level. Seven sectors settled in the green with financials (+1.5%), energy (+1.4%), and materials (+0.7%) leading the advance.
The heavily-weighted financial (+1.5%) sector topped the leaderboard as steepening in the yield curve improved the earnings potential for the group. The spread between the 2-yr yield and 10-yr yield expanded to 89 basis points. Money center banks and life insurance names outperformed as MetLife (MET 45.74, +0.87) and Wells Fargo (WFC 44.76, +1.01) gained 2.7% and 2.9%, respectively. The broader group has gained 1.5% this week, leading the remaining sectors on the weekly leaderboard.
The high-beta chipmakers outperformed in the technology sector (+0.4%), evidenced by the 0.8% gain in the PHLX Semiconductor Index. Broadcom (AVGO 173.97, +4.92) gained 2.6% after receiving an "Outperform" designation at Bernstein. Micron (MU 17.77 -0.02) settled modestly lower as a disappointing gross interest margin masked a bottom-line beat. Separately, Twitter (TWTR 24.75, +1.23) gained 5.6% after reports indicated that the company could receive takeover bids as early as this week. Recall that Alphabet (GOOG 780.44, +4.01), Microsoft (MSFT 57.85, +0.61), Disney (DIS 93.08, +0.49), and Salesforce.com (CRM 67.72, -4.91) have previously been cited as potential suitors.
Retail names displayed relative strength in the consumer discretionary space (+0.4%) as the SPDR S&P Retail ETF (XRT 44.05, +0.64) gained 1.3%. In the group, apparel retailers led as Nordstrom (JWN 52.83, +1.18) and Gap (GPS 22.50, +0.72) moved higher by 2.4% and 3.5%, respectively. Conversely, discount retailers underperformed for a second session as Dollar Tree (DLTR 76.43, -3.10) weighed on the group.
Treasuries finished near their worst levels as yields rose through the curve. The yield on the 2-yr note increased one basis point (0.83%) while the yield on the benchmark 10-yr note rose three basis points (1.72%).
Today's participation was above the recent average as more than xxx million shares changed hands on the NYSE floor.
Today's economic data included weekly MBA Mortgage Index, ADP Employment Report for September, August Trade Balance, Factory Orders for August, and ISM Services for September:
The MBA Mortgage Index indicated that mortgage applications rose 2.9% in the week ending October 1. This followed a 0.7% decline in the prior week.
ADP said an estimated 154,000 positions (Briefing.com consensus 171,000) were added to private sector payrolls in September, almost all of which came from the Service-providing sector (151,000).
Small businesses added 34,000 jobs, midsized businesses increased their payrolls by 56,000 positions, and large businesses added 64,000 jobs.
The Trade balance report for August showed a widening in the deficit to $40.7 billion (Briefing.com consensus -$39.1 billion) from $39.5 billion in July.
Factory orders increased 0.2% in August (Briefing.com consensus +0.1%) following a downwardly revised 1.4% increase (from 1.9%) in July. Total manufacturing shipments were unchanged after declining 0.4% in July.
The ISM Non-Manufacturing PMI increased to 57.1 in September (Briefing.com consensus 52.8) from 51.4 in August.
September marked the highest reading for the index since October 2015.
Tomorrow's economic data will be limited to September Challenger Job Cuts and weekly initial claims (Briefing.com consensus 258k), which will be released at 7:30 ET and 8:30 ET, respectively.
Russell 2000: +9.9% YTD
Nasdaq: +6.2% YTD
S&P 500: +5.7% YTD
Dow Jones: +4.9% YTD
DJ30 +112.58 NASDAQ +26.36 SP500 +9.24 NASDAQ Adv/Vol/Dec 1953/1.614 bln/889 NYSE Adv/Vol/Dec 1804/962.1 mln/1162
3:45 pm :
WTI crude oil ends the day strong following API/EIA weekly oil storage data
Nov WTI crude oil finished today's session +2.2% at $49.76/barrel
Nov natural gas futures rose back above the $3/MMBtu level again today, closing +2.7% at $3.04/MMBtu
Moving over to the metals...
Dec gold closed out today's session -0.1% at $1268.20/oz, while Dec silver ended -0.5% at $17.69/oz
Dec copper slipped one cent to $2.16/lb
Interest rates remained in focus as investors pored over a mixed set of economic data. The ADP National Employment Report for September came in below consensus, indicating that 154,000 jobs were added in September. Conversely, the ISM Services Index for September topped expectations, rising to 57.1 from 51.4. This was the highest reading since October 2015.
The fed funds futures market ticked higher following the mixed data, but the needle remains little changed ahead of Friday's Employment Situation Report for September. The government employment report is expected to show that 176,000 nonfarm payrolls were added. The fed funds futures market indicates that the implied probability of a rate hike at the November meeting is 16.6%, rising from 14.5% in the prior session. The odds of a rate hike in December have increased to 64.3% from 63.4% yesterday.
An extended rally in crude oil has also contributed to early strength. The energy component gained ground overnight after the American Petroleum Institute reported its weekly inventory data. Oil added to its winning streak after the Department of Energy confirmed the reading with its more influential inventory data. The EIA reported that crude oil stockpiles declined by 2.97 million barrels while gasoline inventories rose by 0.22 million barrels. At the end of the session, November WTI crude oil futures were +2.2% at $49.76/barrel.
Market data today included the MBA Mortgage Index which indicated that mortgage applications rose 2.9% in the week ending October 1. This followed a 0.7% decline in the prior week. As mentioned, the ADP said an estimated 154,000 positions were added to private sector payrolls in September, almost all of which came from the Service-providing sector (151,000). Also, the trade balance report for August showed a widening in the deficit to $40.7 billion from $39.5 billion in July. Additionally, factory orders increased 0.2% in August following a downwardly revised 1.4% increase (from 1.9%) in July. Total manufacturing shipments were unchanged after declining 0.4% in July. Lastly, as mentioned, the ISM Non-Manufacturing PMI increased to 57.1 in September from 51.4 in August.
The stock market ended on a higher note but modestly off highs of the day. The session was led higher by the Dow Jones Industrial Average which added 112.58 points (+0.62%) to 18281.03. The Nasdaq Composite was up 26.36 points (+0.50%) to 5316.02, and the S&P 500 rounded out the trio higher by 9.24 points (+0.43%) to 2159.73. Large cap Dow components which held the sector higher included XOM +0.9%, JNJ +0.3%, JPM +1.6%, PG +0.6% and PFE +0.5%.
Technology (XLK 47.64, +0.17 +0.36%) continued the recent trend, finishing middle of the pack among other S&P sectors but ending positive for the first time in October. Component Salesforce.com (CRM 68.42, -4.21 -5.80%) was the worst performer today on the back of continued, and unconfirmed, speculation that the company would make a bid for Twitter (TWTR 24.87, +1.35 +5.74%). Other sectors as measured by the S&P closed the day XLF +1.61%, XLE +1.53%, XLFS +1.51%, XLB +0.70%, XLI +0.64%, XLY +0.44%, XLV +0.38%, XLP -0.10%, XLU -0.21%, IYZ -0.59%, XLRE -1.86%.
In the S&P 500 Information Technology (800.87, +3.53 +0.44%) sector, Wednesday ended above the 800-level for the first time in October. Component Micron (MU 17.70, -0.10 -0.56%) turned in a modestly lower session following mostly better than expected earnings. Other names in the space which closed higher included FSLR +4.00%, GPN +3.40%, TSS +3.09%, AVGO +2.62%, ADSK +2.51%, AKAM +2.46%, JNPR +2.43%, TDC +2.06%, HPE +1.83%, HPQ +1.76%, ADS +1.68%.
Other notable news items among sector components:
Shares of both Twitter (TWTR) and Salesforce.com (CRM) were active today amid the latest round of speculation that CRM would make an attempt at purchasing TWTR. CRM's CEO Mark Benioff appeared on CNBC, not acknowledging, but not refuting the merger talks as he said the company looks at everything, and passes on most things (when asked about M&A).
NVIDIA (NVDA 68.23, -0.07 -0.10%) and FANUC Corporation announced a collaboration to implement artificial intelligence on the FANUC Intelligent Edge Link and Drive system to increase robotics productivity and bring new capabilities to automated factories worldwide.
Harris (HRS 91.79, +0.53 +0.58%) announced the U.S. Army has placed an initial order of about $10 million for the company's Falcon III AN/VRC-118 Mid-tier Networking Vehicular Radios.
Accenture (ACN 118.21, -0.03 -0.03%) to acquire Defense Point Security. Financial terms were not disclosed. Also, startup incubator 1776 selected ACN to provide guidance and insights to its roster of digital health startups. Financial terms of the deal were not disclosed. The company also announced it has teamed with Adobe (ADBE 108.80, +0.41 +0.38%) to launch new digital marketing solutions for financial services organizations in North America and Europe. The newly released solutions are designed to help financial services clients attract, engage and retain high-value customers by creating relevant digital experiences that grow sales and revenue while improving retention and loyalty.
CSRA (CSRA 26.61, -0.32 -1.19%) announced it was one of seven companies to win a new indefinite-delivery, indefinite-quantity award to modernize the application, database and infrastructure used to administer and pay contracts issued to defense companies. The contract has a $142 million ceiling over a 10 year period.
The Safariland Group, the parent company of VIEVU, a leading provider of body worn video cameras used by thousands of law enforcement agencies in 17 countries, announces it has satisfied its contract to provide body worn cameras to the Miami-Dade Police Department, enabling the MDPD to achieve its goal of deploying more than 1,000 body worn cameras by the end of September 2016. The video data collected from the body worn cameras provided to the MDPD officers equipped with the body worn cameras will be uploaded, stored, and managed on VIEVU Solution, the industry's most flexible and mobile-friendly evidence management system built on the Microsoft (MSFT 57.64, +0.40 +0.70%) Azure Government Cloud.
Elsewhere in the tech space:
Twilio's (TWLO 61.47, +0.53 +0.87%) Chief Operating Officer Roy Ng transitioned to Senior Vice President of Commercial Operations effective immediately.
AT&T (T 39.16, -0.26 -0.66%) and Communications Workers of America reached a tentative agreement in national internet contract negotiations (covers nearly 1,200 employees in 16 states).
Network-1 (NTIP 2.74, -0.00 -0.10%) announced the settlement of patent litigation with Polycom (PLCM) which agreed to license NTIP's Remote Power Patent for Power over Ethernet products through March 2020.
QTS Realty Trust (QTS 50.27, -0.39 -0.77%) acquired the sole rights to VMware vCloud Government Service from VMware (VMW 74.00, +1.55 +2.14%). Financial terms of the deal were not disclosed.
Nokia (NOK 5.71, -0.07 -1.21%) has acquired Eta Devices, a US-based start-up specializing in power amplifier efficiency solutions for base stations, access points and devices. Eta Devices will bolster Nokia's push to enhance base station energy efficiency, an increasingly important area for operators on the path to 4.9G and 5G.
Acacia Communications (ACIA 113.54, +11.54 +11.31%) filed an amended S-1 for offering of 4.5 million shares and raised Q3 guidance to EPS of $0.83-0.90 on revenues of $130-133 million; ACIA recently raised guidance on 9/26 for EPS of $0.72-0.81 on revs of $127-131 million.
According to The Verge, a Samsung (SSNLF 1600.00, +50.00 +3.23%) replacement smartphone caught fire while on a Southwest Airlines (LUV 39.10, -0.06 -0.15%) flight.
In reaction to quarterly results:
Micron (MU) reported a better than expected Q4 loss per share of $0.05 on revenues which fell 10.6% compared to last year to $3.22 billion. The company also guided Q1 EPS in the range of $0.13-0.21 on revenues of $3.55-3.85 billion.
Global Payments (GPN 79.04, +2.60 +3.40%) reported better than expected Q1 EPS of $0.86 on revenues which increased 52.5% compared to last year to $817.3 million. The company also raised FY17 EPS guidance to $3.45-3.55 from $3.40-3.50.
Analyst actions:
GIMO was downgraded to Neutral from Buy at DA Davidson and to Mkt Perform from Outperform at Raymond James,
ATEN was downgraded to Neutral from Buy at DA Davidson,
IDCC was downgraded to Neutral from Buy at Dougherty;
NFLX was initiated with a Buy at Loop Capital,
AVGO was initiated with an Outperform at Bernstein,
ADS was initiated with an Overweight at Atlantic Equities,
TEAM was initiated with an Outperform at Cowen
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