From Briefing.com: 4:14 pm Rambus beats by $0.03, beats on revs; guides Q4 EPS in-line, revs in-line (RMBS) : Reports Q3 (Sep) earnings of $0.16 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.13; revenues rose 21.8% year/year to $89.9 mln vs the $86.6 mln Capital
IQ Consensus.As compared to the third quarter of 2015, revenue was up 22% primarily due to higher revenue from sales of memory products and security technology development projects, including revenue from the various acquisitions during the year.Co issues in-line guidance for Q4, sees EPS of $0.14-0.18, excluding non-recurring items, vs. $0.15 Capital IQ Consensus Estimate; sees Q4 revs of $94-98 mln vs. $94.44 mln Capital IQ Consensus Estimate.
4:11 pm Intersil beats by $0.03, beats on revs; not providing guidance due to previously announced acquisition by Renesas (RNECF) (ISIL) :
Reports Q3 (Sep) earnings of $0.22 per share, $0.03 better than the Capital IQ Consensus of $0.19; revenues rose 8.3% year/year to $139.05 mln vs the $137.62 mln Capital IQ Consensus.Given the pending acquisition by Renesas, Intersil will not be providing guidance for the fourth quarter and will not be holding a third quarter results conference call.
4:08 pm Cadence Design beats by $0.02, reports revs in-line; guides Q4 EPS below consensus, revs in-line (CDNS) :
Reports Q3 (Sep) earnings of $0.30 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.28; revenues rose 2.9% year/year to $446.2 mln vs the $446.47 mln Capital IQ
Consensus. Co issues downside EPS guidance for Q4, sees EPS of $0.32-0.34, excluding non-recurring items, vs. $0.35 Capital IQ Consensus Estimate; sees Q4 revs of $463-473 mln vs. $471.91 mln Capital IQ Consensus Estimate.
4:10 pm : The major averages began the week on an upbeat note as an upswing in M&A activity and sector leadership from the top-weighted technology (+1.1%) space bolstered the broader market. The Nasdaq Composite (+1.0%) finished ahead of both the S&P 500 (+0.5%) and the Dow Jones Industrial Average (+0.4%).
A recent wave of M&A chatter materialized this weekend when several high-profile deals were announced after Friday's close. AT&T (T 36.86, -0.63, -1.7%) and Time Warner (TWX 86.78, -2.70, -3.0%) made headlines on Saturday after the telecom giant agreed to pay $107.50 per share for Time Warner. The deal is valued at $85.4 billion and marks a premium of 20.1% over Friday's closing price. Meanwhile, Rockwell Collins (COL 79.21, -5.25, -6.2%) agreed to acquire BE Aerospace (BEAV 58.89, +8.28, +16.4%) for $62.00 per share, which will amount to $8.3 billion in total consideration. The size and scope of the deals stoked risk appetite as investors looked for further consolidation.
The benchmark index notched a high at the start of the session and inched off that level throughout the morning.
A downturn in crude oil futures contributed to the mid-morning pullback as investors assessed the state of OPEC's proposed supply freeze agreement. Iraq made headlines this morning after indicating that it will seek an exemption from the previously discussed agreement. However, selling remained in check after Iran stated that it would encourage other members to join the output freeze. Crude oil briefly broke below $50.00/bbl before settling at $50.52/bbl (-0.7%; -$0.33).
The Treasury complex pulled back today as an upswing in equities and above-consensus economic data weighed on the group. Bond prices extended their decline after U.S. Manufacturing PMI for October came in ahead of estimates. The yield on the 2-yr note finished higher by two basis point (0.84%) while the yield on the benchmark 10-yr note rose three basis points to 1.76%. The spread between the 2-yr and 10-yr yields expanded to 92 basis points from September's 83 basis point differential.
The benchmark index finished in the upper end of today's trading range, locking in the bulk of today's gain.
Eight sectors ended in the green with technology (+1.2%), consumer staples (+0.7%), and consumer discretionary (+0.7%) outperforming. On the other hand, telecom services (-0.8%) and energy (-0.2%) finished at the bottom of the board.
The heavyweight technology space (+1.2%) outperformed as participants continued to assess influential quarterly reports from the sector and looked ahead to a busy week on the earnings calendar. Dow component Microsoft (MSFT 61.00, +1.34) jumped 2.3%, extending its post-earnings gain to 6.6%. The name beat analysts' estimates last Thursday. Meanwhile, Alphabet (GOOG 813.11, +13.74) gained 1.7% ahead of releasing its quarterly results Thursday evening.
In the consumer discretionary sector (+0.7%) Amazon (AMZN 837.71, +18.72) gained 2.3% after Goldman Sachs raised its price target on the stock to $1050 from $920. The name is also scheduled to release its quarterly report this Thursday. Conversely, media company underperformed as investors looked ahead to potential regulatory hurdles that AT&T and Time Warner will face in their merger attempt.
Aerospace and defense names outperformed in the industrial sector (+0.3%) as the sub-group drafted higher alongside BE Aerospace (BEAV 58.89, +8.28). Dow component Boeing (BA 137.45, +1.82) finished ahead of the price-weighted average. Conversely, rail names underperformed as Union Pacific (UNP 89.88, -0.49) fell 0.5%.
Today's trading volume was below the average of 853 million as 779 million shares changed hands at the NYSE floor.
There was no economic data of note released today.
Tomorrow's economic data will include the 9:00 ET release of the Case-Shiller 20-city Index for August (Briefing.com consensus 5.1%) and the FHFA Housing Price Index for August. Separately, Consumer Confidence for October (Briefing.com consensus 100.8) will cross the wires at 10:00 ET.
Russell 2000: +8.0% YTD
Nasdaq Composite: +6.0% YTD
S&P 500: +5.3% YTD
Dow Jones: +4.6% YTD
DJ30 +77.32 NASDAQ +52.42 SP500 +10.17 NASDAQ Adv/Vol/Dec 1711/1.396 bln/1122 NYSE Adv/Vol/Dec 1777/779.5 mln/1158
3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, were +0.1% around the 86.15 level
Crude oil gave up all of Friday's gains after comments surfaced from Iraq's oil minister regarding choosing not to participate in the recently announced OPEC production cut
December crude oil futures fell $0.33 (-0.7%) to $50.52/barrel.
API data will be released tomorrow after the bell.
Weekly EIA petroleum storage data will be released this Wednesday at 10:30 am ET.
Baker Hughes rig count data will be released Friday at 1 pm ET.
Today's weakness in oil is being attributed to reports that Iraq's oil minister stating that Iraq will not be part of the previously announced OPEC production cut, discussing that its market share would be much higher if not for the wars it has been fighting since the 1980's. Iraq also added they could raise output slightly this month from Sept levels around 4.774 mln barrels/day.
Other factors to consider on oil:
After a Gulf Ministerial meeting in Riyadh on Sunday, the Saudi Oil minister held a joint press conference with Russia's oil minister & stated that the current down cycle in oil prices is nearing an end, noting that market fundamentals have begun to improve.
Qatar's energy minister also expressed that the difficult phase of the down cycle is now over.
As announced after the informal meeting in Istanbul, OPEC producers & Russia are expected to meet to discuss details on cooperating to stabilize oil prices.
OPEC & Russia will meet ahead of the OPEC technical meeting in Vienna on Oct 28-29 for further ongoing discussions.
Venezuelan president Maduro has recently been attempting to solicit the help of Iran, calling for increased cooperation on the proposed production cut. It is worth noting that Maduro has been visiting OPEC countries over the past few weeks & has been actively soliciting support for a collective OPEC production cut.
Reminder: Iran, Libya, & Nigeria are all exempt from the OPEC production cut.
The next official OPEC meeting will take place in Vienna, Austria on Nov 30, where details of the Sept 28 OPEC production cut are expected to be announced.
Natural gas traded lower for the fourth consecutive session, ended at session lows & solidified the breach of the $3.00/MMBtu support level
November natural gas closed $0.15 lower (-5.0%) at $2.84/MMBtu.
Weekly EIA natural gas storage data will be released Thursday at 10:30 am ET.
In precious metals, gold ended near session lows as silver saw a modest rally while the dollar index remained nearly flat; the gold:silver ratio dropped
December gold ended today's session down $4.20 (-0.3%) to $1263.50/oz.
December silver closed today's session $0.10 higher (+0.6%) at $17.60/oz.
The gold:silver ratio was ~71.8, compared to Friday's pit trading closing ratio of ~72.4.
The broader market closed out the Monday session at highs with the Nasdaq Composite up a clean +1.00%, up 52.43 points, to 5309.83. The S&P 500 added 10.17 points (+0.47%) to 2151.33, and the Dow Jones Industrial Average was higher by 77.32 points (+0.43%) to 18223.03. Aiding the Nasdaq advance, key Nasdaq 100 components AMZN +2.3%, COST +2.1%, MNST +1.9%, WBA +1.9% and CERN +1.5% provided a lift.
A downturn in crude oil futures contributed to the mid-morning pullback as investors assessed the state of OPEC's proposed supply freeze agreement. Iraq made headlines this morning after indicating that it will seek an exemption from the previously discussed agreement. However, selling remained in check after Iran stated that it would encourage other members to join the output freeze. Crude oil briefly broke below $50.00/bbl before settling at $50.52/bbl (-0.7%; -$0.33).
The Treasury complex pulled back today as an upswing in equities and above-consensus economic data weighed on the group. Bond prices extended their decline after U.S. Manufacturing PMI for October came in ahead of estimates. The yield on the 2-yr note finished higher by two basis point (0.84%) while the yield on the benchmark 10-yr note rose three basis points to 1.76%. The spread between the 2-yr and 10-yr yields expanded to 92 basis points from September's 83 basis point differential.
As the week began, trading in the Technology (XLK 47.99, +0.46 +0.97%) topped all other S&P sectors with gains closing out the day near highs. Component Qorvo (QRVO 57.29, +2.59 +4.73%) posted the best gains in the space today on the heels of a pre-market initiation at JP Morgan. Other sectors as measured by the S&P closed Monday XLY +0.72%, XLP +0.65%, XLFS +0.39%, XLU +0.37%, XLF +0.31%, XLB +0.23%, XLI +0.19%, XLRE +0.13%, XLV -0.19%, XLE -0.30% with only Energy and Healthcare resisting the positive broader market bias.
As a sub-sector, Telecoms (IYZ 31.74, +0.42 +1.34%) were especially strong today on the back of some M&A news and a few earnings reports. On the M&A front, shares of AT&T (T 36.86, -0.63 -1.68%) were modestly lower as the company announced a deal to acquire Time Warner (TWX 86.74, -2.74 -3.06%) for $107.50 per share during the weekend. As for earnings, T-Mobile US (TMUS 51.19, +4.44 +9.50%) and Sprint (S 6.92, +0.37 +5.65%) were higher today as the former reported a mixed Q3, beating market expectations on the bottom line, with strong total net adds; AT&T also reported earnings today. The latter reports earnings tonight after the market closes, and as a result, strength in the space among top names like VG +3.21%, SPOK +3.00%, USM +2.60%, CBB +1.77%, NIHD +1.69%, GNCMA +1.66%, SBAC +1.49%, TDS +1.17%, SHEN +1.15%, ATNI +0.82%, FTR +0.74% led to a higher close.
In the S&P 500 Information Technology (811.68, +9.75 +1.22%) sector, trading ventured further north of the $800-level today following a strong broader market session. Shares of both Alphabet (GOOG 813.11, +13.74 +1.72%) and Alphabet A (GOOGL 835.74, +11.68 +1.42%) made fresh all-time highs today less than a week after breaking into new all-time high territory as shares had been weighed down for most of the summer. Other names in the space which outperformed today included NVDA +4.69%, SYMC +3.41%, ADS +3.27%, AMAT +2.53%, TXN +2.44%, JNPR +2.29%, MSFT +2.25%, AVGO +2.10%, ATVI +2.09%, AKAM +2.03%, MCHP +1.92%.
Other notable news items among sector components:
On Friday, reports were out suggesting Time Warner (TWX) and AT&T (T) were near a deal for T to acquire TWX for $110 per share. Out over the weekend, T confirmed the deal to buy TWX in a stock-and-cash transaction valued at $107.50 per share. TWX shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock. The stock portion will be subject to a collar such that TWX shareholders will receive 1.437 AT&T shares if AT&T's average stock price is below $37.411 at closing and 1.3 AT&T shares if AT&T's average stock price is above $41.349 at closing. This purchase price implies a total equity value of $85.4 billion and a total transaction value of $108.7 billion, including TWX's net debt. Post-transaction, TWX shareholders will own between 14.4% and 15.7% of AT&T shares on a fully-diluted basis based on the number of AT&T shares outstanding. AT&T expects the deal to be accretive in the first year after close on both an adjusted EPS and free cash flow per share basis. AT&T expects $1 billion in annual run rate cost synergies within 3 years of the deal closing. The expected cost synergies are primarily driven by corporate and procurement expenditures. In addition, over time, AT&T expects to achieve incremental revenue opportunities that neither company could obtain on a standalone basis. By the end of the first year after close, AT&T expects net debt to adjusted EBITDA to be in the 2.5x range.
Microsoft (MSFT 61.00, +1.34 +2.25%) confirmed it will be increasing British pound pricing for enterprise software and cloud services within the EU/EFTA region effective Jan 1 2017.
Rambus (RMBS 11.99, +0.37 +3.18%) licensed to NVIDIA (NVDA 70.71, +3.17 +4.69%) its Differential Power Analysis countermeasures to protect its visual computing products against side-channel attacks.
Visa (V 83.17, +0.82 +1.00%) and Intel (INTC 35.26, +0.11 +0.31%) announced a collaboration agreement to help bring world-class payment and data security technologies to the growing world of connected devices-from personal computers and mobile devices, to intelligent appliances and wearable technologies.
PTC (PTC 46.12, -0.27 -0.58%) and Hewlett Packard Enterprise (HPE 21.68, +0.05 +0.23%) announced a planned collaboration to facilitate the availability of the Converged IoT Solutions, based on PTC ThingWorx software and HPE Edgeline Systems.
Intuit (INTU 109.62, +1.17 +1.08%) and PayPal (PYPL 43.88, -0.27 -0.61%) announced the expansion of their partnership, helping small businesses and the self-employed get paid faster. The partnership will provide QuickBooks Online customers with a new way of accepting payments via PayPal, and automate the work traditionally associated with managing the books.
Alliance Data (ADS 206.49, +6.54 +3.27%) proposed to offer $400.0 million aggregate principal amount of senior notes due 2021.
Elsewhere in the tech space:
TD Ameritrade (AMTD 35.46, -1.62 -4.37%) confirmed a deal to acquire Scottrade in a cash and stock transaction valued at $4 billion. AMTD expects to realize about $450 million in combined annual expense synergies, and more than $300 million in additional longer-term opportunities. The first 25% of the expense synergies are expected to be realized in Year 1 post-close and the remainder realized in Year 2. Furthermore, the transaction is expected to generate double-digit EPS accretion post-conversion. Additionally, Toronto-Dominion Bank (TD 44.94, -0.09 -0.20%) confirmed it will acquire Scottrade Bank.
Netflix (NFLX 127.33, -0.17 -0.13%) intends to offer $800 million aggregate principal amount of senior notes through an offering.
Digital Ally (DGLY 6.40, +0.70 +12.28%) announced the receipt of notable orders from the Santa Fe, New Mexico Police Department for its FirstVu HD body-worn camera, DVM-800 in-car digital audio/video system, DVM-440 Motorcycle system and patented VuLink automatic activation system. Managment also stated, "The automatic activation technology included in our patented VuLink has quickly become a standard requirement in many requests for proposals and has drawn attention from our competitors, who have attempted to introduce their own automatic activation technology that we believe infringes on our patent. In that regard, the Company has initiated patent infringement lawsuits against two competitors: Taser International, Inc. (TASR 23.54, +0.34 +1.47%) and Enforcement Video, LLC d/b/a WatchGuard Video."
SS&C Tech (SSNC 32.66, +0.48 +1.49%) to acquire Salentica. Financial details of the deal were not disclosed.
Rackspace's (RAX 31.92, +0.06 +0.19%) acquisition by Apollo Global (APO 17.90, +0.15 +0.85%) was cleared by the European Union.
ITUS (ITUS 5.35, -0.35 -6.14%) named Mike Catelani as CFO effective November 1.
CACI Intl (CACI 101.25, +1.10 +1.10%) received a $93 million prime contract to provide tactical communications engineering and maintenance support services to the U.S. Immigration and Customs Enforcement.
In reaction to quarterly results:
After the TWX deal was announced AT&T (T) reported in-line EPS and revenues for Q3 at $0.74 and $40.89 billion, respectively. Further, the company commented that it remains on track to achieve or exceed its full-year guidance.
Siliconware Precision (SPIL 7.40, +0.06 +0.82%) reported worse than expected Q3 EPS and revenues of NT$0.64 and NT$21.96 billion, respectively.
T-Mobile US (TMUS) reported better than expected Q3 EPS of $0.27 on worse than expected revenues which rose 17.8% compared to a year ago to $9.25 billion. TMUS also reported 2.0 million total net adds on 851,000 branded postpaid phone net adds. The company also raised FY16 EBITDA guidance to $10.2-10.4 billion from $9.8-10.1 billion. Further, branded postpaid net customer additions for FY16 are now expected to be between 3.7-3.9 million, an increase from the previous guidance range of 3.4 to 3.8 million.
TD Ameritrade (AMTD) reported worse than expected Q4 EPS of $0.35 on n-line revenues of $829 million. The company also guided FY17 EPS of $1.50-1.80.
Companies scheduled to report tonight/tomorrow morning: CDNS, CMP, CLGX, EFII, ISIL, KN, RMBS, V/AXE, CVLT, GLW, CTG, S
Analyst actions:
VZ was upgraded to Buy from Hold at Drexel Hamilton,
BIDU was upgraded to Mixed from Negative at OTR Global,
VMW was upgraded to Outperform from Market Perform at William Blair,
TRUE was upgraded to Buy from Neutral at B. Riley & Co.;
TWX was downgraded at RBC Capital Markets, Credit Suisse, Pivotal Research Group, Goldman, MoffettNathanson, Macquarie, Atlantic Equities, Evercore ISI and MKM Partners,
T was downgraded to Market Perform from Outperform at Cowen and to Hold from Buy at Drexel Hamilton, FEYE was downgraded to Underweight from Equal Weight at First Analysis Sec,
SYNT was downgraded to Hold from Buy at SunTrust,
EA was downgraded to Neutral from Buy at BofA/Merrill,
WIT was downgraded to Reduce from Neutral at Nomura;
CYBR was initiated with an Overweight,
FTNT and SCXW were initiated with Equal Weight ratings at First Analysis Sec,
QRVO was initiated with an Overweight at JP Morgan,
SWKS was initiated with a Neutral at JP Morgan
