From Briefing.com: 4:36 pm Texas Instruments beats by $0.09, beats on revs; guides Q1 EPS, rev midpoint above consensus; promotes Brian Crutcher to COO (TXN) : Reports Q4 (Dec) earnings of $0.91 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus of $0.82; revenues rose 7.1% year/year to $3.41 bln vs the $3.32 bln Capital IQ Consensus.
"Revenue increased 7% from the same quarter a year ago, as demand for our products remained strong in the automotive market. The improvement we saw in the third quarter for the industrial market continued. Demand in the personal electronics market was down slightly from a year ago. "In our core businesses,
Analog revenue grew 10% and Embedded Processing grew 6% from the same quarter a year ago. Operating margin increased in both businesses.
"Gross margin of 62.5% in the fourth quarter reflected the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-millimeter Analog production.
"Our cash flow from operations of $4.6 billion for the year again underscored the strength of our business model. Free cash flow for the year was up 6% from a year ago to $4.1 billion, and represents 30.5% of revenue, up from 29.6% a year ago.
Co issues guidance for Q1, sees EPS of $0.78-0.88, excluding non-recurring items, vs. $0.75 Capital IQ Consensus; sees Q1 revs of $3.17-3.43 bln vs. $3.21 bln Capital IQ Consensus Estimate.
TI said Brian Crutcher has been promoted to chief operating officer. Crutcher, 44, is a 21-year veteran of the company and has been executive vice president responsible for all business and sales operations, as well as for Kilby Labs and information technology. As COO, he adds oversight of TI's global technology and manufacturing operations to his current duties.
4:08 pm Seagate Tech beats by $0.24, beats on revs (STX) :
Reports Q2 (Dec) earnings of $1.32 per share, $0.24 better than the Capital IQ Consensus of $1.08; revenues fell 3.1% year/year to $2.89 bln vs the $2.83 bln Capital IQ Consensus.
gross margin of 31.8%; Gross Margin expansion 600 basis points year-over-year
"Looking ahead, we are optimistic about the long-term opportunities for Seagate's business as enterprises and consumers embrace and benefit from the shift of storage to cloud and mobile applications. Seagate is well positioned to work with the leaders in this digital transformation with a broad market-leading storage solution portfolio."
4:07 pm Cree beats by $0.07, beats on revs; guides Q3 EPS in-line, revs below consensus (CREE) :
Reports Q2 (Dec) earnings of $0.20 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $0.13; revenues fell 11.9% year/year to $347 mln vs the $325.09 mln Capital IQ Consensus.
Co issues guidance for Q3, sees EPS of $0.01-0.09, excluding non-recurring items, vs. $0.08 Capital IQ Consensus Estimate; sees Q3 revs of $285-315 mln vs. $315.25 mln Capital IQ Consensus Estimate.
"We delivered very good results in fiscal Q2, as revenue and non-GAAP earnings were significantly above our targeted range due to the settlement of our patent infringement and false advertising lawsuit with Feit
Electric," stated Chuck Swoboda, Cree Chairman and CEO. "The fundamentals in our business have improved over the last several quarters, and we remain focused on building a larger and more valuable LED lighting company by bringing better light to our customers."
4:20 pm : Slow and steady was the theme on Tuesday as the major averages opened flat and advanced throughout the duration of the session to close solidly higher. The Nasdaq (+0.9%) picked up steam in the afternoon to finish a step ahead of the S&P 500 (+0.7%), while the small-cap Russell 2000 (+1.7%) surpassed them all.
Investors replaced yesterday's cautious tone with a risk-on attitude. The change of heart was most obvious in the Treasury market, which lost all of Monday's gain as the 10-yr yield swung seven basis points higher to 2.47% after losing the same amount the day before. The U.S. dollar faced a similar dynamic, with the U.S. Dollar Index (100.34, +0.39) adding 0.4% after succumbing to selling pressure on Monday.
Generally speaking, investors traded Treasuries for stocks, but they were more specifically after growth-sensitive equities as all six cyclical sectors outpaced the broader market. Materials led all sectors with a 2.5% gain, setting the pace early following DuPont's (DD 76.05, +3.27) positive earnings report. The stock jumped 4.5% after the company beat earnings estimates and announced that its merger with Dow Chemical (DOW 59.64, +2.50) is expected to close in the first half of 2017.
A ways off from the materials sector was the financial space (+1.2%). The sector ended in second place after many of its top components recouped some of the losses suffered at the start of the earnings season. Technology, the only sector with more influence than financials, finished the day 1.0% higher after strength in chipmakers sent the PHLX Semiconductor Index higher by 2.0%. In the broader tech space, Yahoo! (YHOO 43.90, +1.50) was the most notable advancer after reporting favorable earnings results following yesterday's close.
Following the pro-cyclical narrative, energy added 1.0% on the back of crude oil's 0.8% advance. The commodity finished near this week's flat line, at $53.15/bbl, as reports pointing to lower production from top exporters offset an uptick in U.S. drilling.
On the non-cyclical side of the market, telecom services (-2.7%) finished the day at the bottom of the leaderboard following the disappointing earnings report from Verizon (VZ 50.12, -2.29), which also weighed on AT&T (T 41.36, -0.64). The two stocks account for a significant share of the lightly-weighted sector.
Health care (-0.7%) also finished in the red, while consumer staples bucked the trend, advancing 0.8%. The space's solid showing stemmed from an upbeat response to Kimberly Clark's (KMB 121.79, +4.81) better than expected earnings report. Sector heavyweights like like Procter & Gamble (PG 87.86, +0.90) and Coca-Cola (KO 41.90, +0.47) outperformed, adding close to 1.0% apiece.
Today's economic data was limited to December Existing Home Sales:
Existing home sales for December decreased 2.8% from November to an annualized rate of 5.49 million units while the Briefing.com consensus expected a reading of 5.55 million.
The key takeaway from the report is that inventory constraints, rising prices, and higher mortgage rates remain a key obstacle to stronger sales activity.
Tomorrow's economic data will include MBA Mortgage Applications Index at 7:00 am ET and November FHFA Housing Price Index at 9:00 am ET.
Russell 2000 +0.9% YTD
Dow Jones Industrial Average +0.8% YTD
S&P 500 +1.8% YTD
Nasdaq Composite +4.1% YTD
Yesterday's modestly weak start to the week didn't seem to faze the market today, as the Nasdaq Composite and the S&P 500 both made new all-time highs intraday. Leading the session higher at the close, the Nasdaq Composite finished 5600.96, up 48.01 points (+0.86%). The S&P 500 ended higher by 14.87 points (+0.66%) to 2280.07, and the Dow Jones Industrial Average added 112.96 (+0.57%) to 19912.71.
The lone piece of economic data today was the existing home sales reading, which for December saw sales of such homes decline 2.8% from November to an annualized rate of 5.49 million units.
The heavy-handed Technology (XLK 50.20, +0.31 +0.62%) space mirrored the resilient action in the broader market, ending just under highs. Component Corning (GLW 26.18, +1.41 +5.69%), the best performing name in the space, recorded better than expected Q4 earnings and revenues this morning, taking the stock to a new 8-year high. Other sectors as measured by the S&P closed Tuesday XLB +2.58%, XLF +1.26%, XLE +1.10%, XLI +1.00%, XLY +0.82%, XLP +0.67%, XLRE +0.03%, XLU -0.02%, XLV -0.69%, IYZ -0.74% with Materials posting the best performance, and US Telecoms sliding the worst.
To that end, the US Telecom (IYZ 35.04, -0.26 -0.74%) space was particularly weak today on the back of a worse than expected earnings performance out of bellwether Verizon (VZ 50.12, -2.29 -4.37%). Other IYZ components which underperformed today included FTR -1.98%, T -1.52%, SPOK -1.44%, VG -1.40%, CTL -0.93%, SBAC -0.71%, USM -0.67%, WIN -0.48%, LVLT -0.47%.
In the S&P 500 Information Technology (845.11, +8.61 +1.03%) space, trading also was positively influenced by the record breaking session out of the broader market. Component First Solar (FSLR 32.53, -1.13 -3.36%) was weaker today, despite this positive bias, following a downgrade of the stock to a Mkt Underperform rating from a Mkt Perform rating at JMP Securities. Other names in the space which performed up with the broader market included WDC +4.62%, MU +4.39%, NTAP +3.73%, AVGO +3.53%, HPQ +3.41%, STX +2.94%, IBM +2.85%, ADBE +2.51%, SWKS +2.33%, MSI +2.32%, INTC +2.31%.
Other notable news items among sector components:
Microsoft (MSFT 63.52, +0.56 +0.89%) named Kevin Scott as chief technology officer.
BT Group plc (BT 19.38, -5.05 -20.67%) provided an update on investigation on Italian business. The company also raised adjustments following review and lowered Group outlook for H2.
GlobalStar's (GSAT 1.48, +0.04 +2.78%) President and COO David Kagan will be leaving March 2017 to accept new position with SpeedCast.
Black Box (BBOX 13.90, -0.40 -2.80%) announced CFO Anthony Massetti will resign due to personal reasons.
Ciena's (CIEN 24.65, +0.71 +2.99%) COO Franois Locoh-Donou will step down effective on or about March 23, 2017.
LogMeIn (LOGM 106.55, -1.35 -1.25%) and Citrix (CTXS 94.37, +1.92 +2.08%) said they expect additional time will be required to obtain CPUC approval for transfer of control of GetGo and Grasshopper Group. The additional time is not expected to delay closing of the Merger.
RealPage (RP 29.90, +1.05 +3.64%) to acquire substantially all of the assets of Axiometrics for about $75 million in cash.
Booz Allen Hamilton (BAH 35.79, +0.27 +0.76%) is exploring a possible repricing for its existing Term Loan B credit facility.
In reaction to quarterly results:
Verizon (VZ) reported worse than expected Q4 EPS of $0.86 on revenues which came in in-line with market expectations at $32.34 billion. For FY17, the company sees revenues, on an organic basis with adjusted PES for FY17 expected to be similar to consolidated revenue trends.
Siliconware Precision (SPIL 7.55, -0.05 -0.66%) reported better than expected Q4 earnings of NT$0.89 on revenues of NT$22.18 billion.
SAP AG (SAP 89.63, +0.33 +0.37%) reported better than expected Q4 earnings of EUR1.52 on revenues of EUR6.72 billion. For FY17, the company sees revenues in-line with expectations at EUR23.2-23.6 billion. SAP also raised 2020 targets, expecting non-IFRS cloud subscription and support revenues of EUR8.0-8.5 billion, from EUR7.5-8.0 billion. For non-IFRS total revenues, SAP now sees EUR20-29 billion, from EUR26-28 billion by 2020. For non-IFRS operating profit, SAP now sees EUR8.5-9.0 billion, from EUR8-9 billion by 2020.
Corning (GLW) reported better than expected Q4 earnings and revenues of $0.50 and $2.55 billion, respectively.
Yahoo! (YHOO 43.90, +1.50 +3.54%) reported better than expected Q4 EPS and revenues of $0.25 and $960 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: CA, CREE, LOGI, STX, TXN, TSS/APH, CVLT, OIIM, TEL, WIT
Analyst actions:
MRCY was upgraded to Buy from Neutral at BofA/Merrill,
DATA was upgraded to Buy from Neutral at Citigroup,
MKSI was upgraded to Buy from Neutral at Dougherty;
AAPL was downgraded to Equal Weight from Overweight at Barclays,
WATT was downgraded to Perform from Outperform at Oppenheimer,
MSTR was downgraded to Neutral from Buy at Citigroup,
QCOM was downgraded to Mkt Perform from Buy at Charter Equity,
FSLR was downgraded to Mkt Underperform from Mkt Perform at JMP Securities;
HQY was initiated with an Overweight at KeyBanc Capital Mkts,
EMAN was initiated with a Buy at Craig Hallum
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