From Briefing.com: 4:12 pm IBM beats by $0.03, misses on revs; reaffirms FY17 EPS guidance (IBM) : Reports Q1 (Mar) earnings of $2.38 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $2.35; revenues fell 2.8% year/year to $18.16 bln vs the $18.37 bln Capital IQ Consensus.
First-quarter cloud revenues increased 33% (up 35% adjusting for currency) to $3.5 bln. Cloud revenue over the last 12 months was $14.6 bln. The annual exit run rate for cloud as-a-service revenue increased to $8.6 bln from $5.4 bln in the first quarter of 2016. Revenues from analytics increased 6% (up 7% adjusting for currency). Revenues from mobile increased 20% (up 22% adjusting for currency) and revenues from security increased 9% (up 10% adjusting for currency).
Cognitive Solutions (includes Solutions Software and Transaction Processing Software) -- revenues of $4.1 bln, up 2.1% (up 2.8% adjusting for currency) were driven by growth in analytics and security, which include
Watson-related offerings.
Global Business Services (includes Consulting, Global Process Services and Application Management) -- revenues of $4.0 bln, down 3.0% (down 1.9% adjusting for currency). Strategic imperatives grew double digits led by the cloud and mobile practices.
Technology Services & Cloud Platforms (includes Infrastructure Services, Technical Support Services and Integration Software) -- revenues of $8.2 bln, down 2.5% (down 2.0% adjusting for currency) with strong growth in strategic imperatives driven by hybrid cloud services.
Systems (includes Systems Hardware and Operating Systems Software) -- revenues of $1.4 bln, down 16.8% (down 16.1% adjusting for currency).
Global Financing (includes financing and used equipment sales) -- revenues of $405 mln, down 1.2% (down 2.1% adjusting for currency).
Co reaffirms guidance for FY17, sees EPS of at least $13.80, excluding non-recurring items, vs. $13.78 Capital IQ Consensus Estimate.
4:09 pm Lam Research beats by $0.25, beats on revs; guides Q4 EPS, revs above consensus (LRCX) :
Reports Q3 (Mar) earnings of $2.80 per share, excluding non-recurring items, $0.25 better than the Capital IQ Consensus of $2.55; revenues rose 63.9% year/year to $2.15 bln vs the $2.13 bln Capital IQ Consensus.
Shipments were $2.41 billion (+25% Q/Q)
Non-GAAP gross margin of 46.1%, non-GAAP operating margin of 26.9%, and non-GAAP diluted EPS of $2.80.
Co issues upside guidance for Q4, sees EPS of $2.88-3.12, excluding non-recurring items, vs. $2.65 Capital IQ Consensus Estimate; sees Q4 revs of $2.2-2.4 bln vs. $2.19 bln Capital IQ Consensus Estimate; sees shipments of $2.5 bln +/- $100 mln
4:08 pm CalAmp beats by $0.01, reports revs in-line; guides Q1 EPS in-line, revs in-line (CAMP) :
Reports Q4 (Feb) earnings of $0.28 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.27; revenues rose 21.6% year/year to $86.1 mln vs the $86.01 mln Capital IQ Consensus.
Q4 gross margin was 41.6%, up from 38.9% in the prior year
Co issues in-line guidance for Q1, sees EPS of $0.24-0.32, excluding non-recurring items, vs. $0.28 Capital IQ Consensus Estimate; sees Q1 revs of $84-90 mln vs. $88.15 mln Capital IQ Consensus Estimate.
4:06 pm Cypress Semi resolves lawsuit brought by departed CEO T.J. Rodgers; co issues statement (CY) :
Statement:
"In a second attempt to settle this matter, Cypress had already offered to provide all Board minutes and presentations that Mr. Rodgers had requested in his demand, subject to agreeing to maintain the confidentiality of such information. We are pleased that the Delaware court ruled only that, in large part, Mr. Rodgers could have access to what we had already said Cypress was willing to provide and subject to the confidentiality restrictions we had sought. While we disagree with the court's determination, and many of the court's extraneous comments, we are pleased that it has recognized the overly broad nature of Mr. Rodgers' demands and has appropriately limited the information to be made available to him and its use.
We do not believe it is in the best interests of Cypress or our stockholders to appeal the court's decision, and will promptly comply with it by providing the requested documents to Mr. Rodgers. We continue to view his litigation as nothing more than a blatant attempt by Mr. Rodgers, who was forced by the Board of Cypress to resign, to further a proxy campaign motivated by a personal vendetta.
Cypress remains fully focused on executing our Cypress 3.0 strategy to drive long-term stockholder value, and we look forward to discussing with stockholders the merits of how the Board and management team are driving the Company forward."
4:19 pm Closing Market Summary: Bears Take Game Two (:WRAPX) :
The bears took game two in this week's series after the latest batch of earnings reports failed to generate much conviction among the bulls. The Dow got hit the hardest, losing 0.6%, while the S&P 500 (-0.3%) and the Nasdaq (-0.1%) experienced more modest declines.
Equities opened Tuesday in negative territory with the health care sector (-1.0%) leading the retreat. UnitedHealth (UNH 168.59, +1.41) beat top and bottom line estimates, but it wasn't enough to overcome Johnson & Johnson's (JNJ 121.82, -3.90) miss on revenues. JNJ, the health care sector's largest component by market cap, ended the day lower by 3.1%.
However, the real bearish signal came from the financial sector (-0.8%), which failed, yet again, to capitalize on some positive earnings news. Bank of America (BAC 22.71, -0.10) reported upbeat earnings and revenues in its latest earnings report, but the positive momentum was hijacked by Goldman Sachs (GS 215.59, -10.67), which failed to meet top and bottom line expectations.
The results were eerily similar to last Thursday's activity in which the financial sector stumbled after Wells Fargo (WFC 52.45, -0.27) missed revenue expectations, but JPMorgan Chase (JPM 85.16, -0.70) and Citigroup (C 58.42, -0.57) beat on the top and bottom lines. The flops have been felt throughout the market as the financial sector, which, in many ways, has come to symbolize the stock market's post-election rally, struggles to find more room to run.
Activity in the Treasury market certainly didn't help the financial sector find its footing as unequally distributed buying interest flattened the yield curve. The 10-yr yield (2.17%) closed eight basis points lower while the 2-yr yield (1.15%) lost only five basis points. Nonetheless, it's important to note the risk-off tone that fueled the move higher for U.S. sovereign debt. That risk-off tone contributed to resilience in gold, which rose 0.2% to $1293.90/ozt after being down roughly 1.0% in the morning.
As one might expect, countercyclical groups generally outperformed their cyclical peers with the consumer staples (+0.5%), utilities (+0.2%), and telecom services (+0.2%) spaces profiting from investors' defensive mindset. Conversely, the energy sector (-0.9%) was the worst-performing cyclical group with crude oil closing 0.3% lower at $52.47/bbl.
Investor participation was a bit below average as 890 million shares changed hands at the NYSE floor.
On the data front, investors received the March Housing Starts and March Industrial Production reports:
Housing starts decreased to a seasonally adjusted annualized rate of 1.215 million units in March, down from a revised 1.303 million units in February (from 1.288 million). The Briefing.com consensus expected starts to decrease to 1.256 million units. Building permits increased to a seasonally adjusted 1.260 million in March from a revised 1.216 million for February (from 1.213 million). The Briefing.com consensus expected a reading of 1.240 million.The key takeaway from the report is that single-family permits fell 1.1% to 823,000, which is a discouraging indicator for a housing market very much in need of new supply at lower price points. Industrial Production increased 0.5% in March (Briefing.com consensus 0.4%) while Capacity Utilization rose to 76.1% (Briefing.com consensus 76.2%) from a revised reading of 75.7% in February (from 75.9%). The Industrial Production reading for February was revised to 0.1% from 0.0%.The key takeaway from the report -- and the main source of disappointment -- is that manufacturing output declined 0.4% in March, paced by a big step-down in the production of motor vehicles and parts, but even if that factor is excluded, manufacturing output still declined 0.2%. Furthermore, revisions left the manufacturing output gains for January and February smaller than previously stated.Tomorrow, investors will receive the MBA Mortgage Applications Index at 7:00 ET and the Fed's Beige Book for April at 14:00 ET.
Nasdaq Composite +8.7% YTD
S&P 500 +4.6% YTD
Dow Jones Industrial Average +3.9% YTD
Russell 2000 +0.4% YTD
Today's action ended with the Dow Jones Industrial Average posting the worst losses of the three major indices, shedding 113.64 points (-0.55%) to 20523.28. The S&P 500 lost 6.82 points (-0.29%) to 2342.19, while the Nasdaq Composite declined 7.32 points (-0.12%) to 5849.47. All eyes were on Netflix (NFLX 143.36, -3.89 -2.64%) today, after the company reported earnings last night. Shares quickly retreated lower at the open, and did not get back to positive territory.
Today's economic data included housing starts which decreased to a seasonally adjusted annualized rate of 1.215 million units in March, down from a revised 1.303 million units in February (from 1.288 million). Building permits increased to a seasonally adjusted 1.260 million in March from a revised 1.216 million for February (from 1.213 million). Industrial Production increased 0.5% in March while Capacity Utilization rose to 76.1% from a revised reading of 75.7% in February (from 75.9%). The Industrial Production reading for February was revised to 0.1% from 0.0%.
The 11 S&P sectors ended split today, and Technology (XLK 52.84, -0.01 -0.02%) for its part finished just this side of flat lines. Component First Solar (FSLR 26.89, -0.45 -1.65%) was weaker today on no particular news. The Consumer Staples space led the remaining S&P sectors XLP +0.49% followed by XLRE +0.25%, XLU +0.21%, IYZ +0.21%, XLY +0.01%, XLB -0.12%, XLI -0.32%, XLE -0.94%, XLF -0.94%, XLV -1.09%.
In the S&P 500 Information Technology (896.64, -0.69 -0.08%) space, trading fell under flat lines as the bell rang. Component Corning (GLW 26.89, +0.35 +1.32%) was one of the better performing names today after the company and Verizon (VZ 49.22, +0.41 +0.84%) confirmed a $1.05 billion three-year minimum purchase agreement for optical solutions. Other names in the space which underperformed today included WDC -1.53%, CTSH -1.41%, EBAY -1.22%, KLAC -0.94%, IBM -0.61%, HRS -0.59%, CRM -0.58%.
Other notable news items among sector components:
Verizon (VZ) confirmed a $1.05 billion three-year minimum purchase agreement with Corning (GLW) for next-generation optical solutions.
Disney (DIS 114.19, +0.41 +0.36%) shares were strong into the close following headlines that Verizon (VZ) CEO suggested the company is open to deals with DIS, Comcast (CMCSA 37.59, +0.39 +1.05%) and CBS (CBS 68.39, +1.21 +1.80%).
Motorola Solutions (MSI 82.64, -0.44 -0.53%) filed patent infringement complaints with the Regional Court of Dsseldorf in Germany, asserting that Hytera's two-way wireless communication devices that utilize 'pseudo-trunking' functionality are infringing its patent.
Wi-LAN (WILN 1.86, -0.14 -7.00%) disclosed a plan to transform its business into a growth-oriented diversified holding company, will acquire International Road Dynamics for $47.4 million.
Microsoft (MSFT 65.39, -0.09 -0.14%) to acquire Intentional Software. Financial terms were not disclosed.
Rambus (RMBS 12.67, +0.13 +1.04%) to expand collaboration with Microsoft (MSFT) researchers to develop prototype systems that optimize memory performance in cryogenic temperatures.
58.com (WUBA 35.53, -0.69 -1.91%) raised $200 million from investment by Tencent (TCEHY 29.37, -0.39 -1.33%) for the development of used goods trading platform Zhuan Zhuan.
In reaction to quarterly results:
Barracuda Networks (CUDA 19.71, -3.70 -15.81%) reported better than expected Q4 EPS of $0.19 on revenues which were modestly ahead of market expectations at $89.26 million. For Q1, the company sees in-line revenues and EPS of $90-92 million and $0.17-0.19, respectively. For FY18, CUDA sees revenues of $370-380 million on EPS of $0.73-0.78.
Netflix (NFLX) reported better than expected Q1 EPS of $0.40 on in-line revenues of $2.64 billion. For Q2, NFLX sees EPS below market expectations at $0.15. Net subscriber additions (streaming) in Q1 came in at +4.95 million (+1.42 in US and +3.53 international), which was below prior guidance of +5.2 million and below its prior year performance of +6.74 million.
Analyst actions:
CUDA was upgraded to In-Line from Underperform at Imperial Capital,
SSYS was upgraded to Overweight from Neutral at Piper Jaffray,
CHKP was upgraded to Equal Weight from Underweight at Morgan Stanley;
BABA, JD, NTES, BIDU, CTRP, EDU, MOMO, VIPS, WB, SINA, TAL, TCEHY, HTHT, YY were all initiated with Buy ratings at The Benchmark Company,
WUBA, ATHM, SOHU, SFUN and CYOU were all initiated with Hold ratings at The Benchmark Company, DATA, SPLK, and TLND were all initiated with Buy ratings at BTIG Research,
TDC and VMW were initiated with Neutral ratings at BTIG Research,
MTCH was initiated with a Buy at Jefferies,
AYX was initiated with a Buy at Goldman, an Outperform at William Blair, Raymond James, JMP Securities and Cowen, an Overweight at Pacific Crest, and a Neutral at JP Morgan,
SYNC was initiated with a Buy at Canaccord Genuity,
ELVT was initiated with a Neutral at Compass Point,
DBD was initiated with a Buy at Feltl
