From Briefing.com: 4:20 pm : The stock market finished the Wednesday session on an upbeat note with the Nasdaq (+1.3%) ending in the lead. The S&P 500 settled higher by 1.1% with all ten sectors posting gains.
The benchmark index spent the entire trading day in the green, rallying to new highs during the last hour of action. The tech-heavy Nasdaq, meanwhile, briefly dipped into the red during morning action, but was able to recover swiftly.
Stocks began the trading day with modest gains after the overnight session featured the release of China's Q1 GDP. Although the report could be classified as better-than-feared, it did not necessarily produce a clear-cut signal as the year-over-year reading of 7.4% beat estimates (7.3%), while the quarter-over-quarter growth of 1.4% was just below expectations (1.5%).
When the opening bell rang at the New York Stock Exchange, the Dow and S&P 500 maintained relatively narrow ranges through the first two hours of action, while the Nasdaq slipped below its flat line due to weakness among chipmakers. The largest industry player, Intel (INTC 26.93, +0.16), reported a slim earnings beat, but other semiconductor names struggled. The broader PHLX Semiconductor Index shed 0.2%.
Even though chipmakers knocked the Nasdaq into the red, the index was able to overcome that weakness due to the relative strength of biotechnology and recently-battered momentum names. The iShares Nasdaq Biotechnology ETF (IBB 222.79, +5.18) jumped 2.4%, ending just above its 200-day moving average (219.97) after struggling with that level for the past week.
Interestingly, the broader health care (+0.6%) sector did not follow biotech's lead as several large components weighed. UnitedHealth (UNH 78.19, -1.32) contributed to the underperformance, falling 1.7% after receiving a downgrade from Citigroup ahead of its earnings report, which will be released ahead of tomorrow's opening bell.
Elsewhere among influential sectors, consumer discretionary (+1.4%), energy (+1.2%), and industrials (+1.5%) provided support to the broader market, while financials (+0.9%) lagged. The economically-sensitive sector was pressured by Bank of America (BAC 16.13, -0.26), which lost 1.6% after missing bottom-line estimates. The financial sector will be in focus once again tomorrow with the market digesting quarterly results from American Express (AXP 87.40, +1.36), Goldman Sachs (GS 157.22, +2.30), and Morgan Stanley (MS 29.89, +0.34).
On the countercyclical side, health care (+0.6%) ended at the bottom of the leaderboard, while consumer staples (+0.9%), telecom services (+0.9%), and utilities (+0.8%) had some difficulty keeping up with the broader market.
Treasuries settled modestly lower following a range bound session. The benchmark 10-yr yield ticked up one basis point to 2.64%.
Participation was below average as 661 million shares changed hands at the NYSE.
Reviewing today's data:
Housing starts increased 2.4% in March to 946,000 from an upwardly revised 920,000 in February. The Briefing.com consensus expected 955,000 new starts. Overall, the residential construction report was encouraging, but did not provide any evidence that the weakness in January and February was weather related. Starts remained well below 1.00 million, which was the average in the fourth quarter. Had weather factored into the weakness, then there should have been a much stronger bounce from delayed starts. Single-family construction, which languished below 600,000 in January and February, rebounded 6.0% to 635,000. That was more in-line with the trends over the last 12 months. Multifamily starts fell 3.1% to 311,000 in March from 321,000 in February. That was a typical decline from a normally volatile sector.
Industrial production increased 0.7% in March after increasing an upwardly revised 1.2% (from 0.6%) in February. The Briefing.com consensus expected industrial production to increase 0.5%. Manufacturing production increased 0.5% in March, down from an upwardly revised 1.4% (from 0.9%) in February. The March gain was in-line with the ISM production index. Despite a 0.8% decline in motor vehicles and parts production, durable goods manufacturing production increased 0.5%. Nondurable goods manufacturing production increased 0.7%, which was mostly the result of a 3.3% increase in petroleum and coal products production.
Tomorrow, weekly initial claims (Briefing.com consensus 312K) will be reported at 8:30 ET and the Philadelphia Fed Survey for April (consensus 8.6) will be released at 10:00 ET.
S&P 500 +0.8% YTD
Dow Jones Industrial Average -0.9% YTD
Nasdaq Composite -2.2% YTD
Russell 2000 -2.6% YTD
DJ30 +162.29 NASDAQ +52.06 SP500 +19.33 NASDAQ Adv/Vol/Dec 1967/1.73 bln/751 NYSE Adv/Vol/Dec 2429/660.6 mln/623 3:35 pm :
June gold traded in positive territory for most of today's pit session. Prices advanced as high as $1307.10 per ounce and dipped to a session low of $1297.90 per ounce in mid-morning action. The yellow metal eventually settled with a 0.3% gain at $1303.40 per ounce.
May silver rose to a session high of $19.81 per ounce shortly after floor trade opened. It then chopped around near the $19.60 per ounce level and settled with a 0.8% gain at $19.64 per ounce.
May crude oil rose to a session high of $104.82 per barrel in early morning floor trade but slipped into negative territory following inventory data that showed a build of 10.0 mln barrels when a smaller build of 1.8-2.3 mln barrels was anticipated. The energy component managed to inch higher in afternoon action and settled at $103.73 per barrel, or 5 cents above the unchanged line.
May natural gas chopped around in the red today. It touched a session high of $4.57 per MMBtu in early morning action and settled with a 0.9% loss at $4.53 per MMBtu, just above its session low of $4.52 per MMBtu.
4:53PM IBM Conference Call Takeaways (IBM) 196.40 -0.62 :
Took substantial charges during the qtr to realign to align resources and skills to demand profile it sees
$1.5 bln in R&D spending reflects shift of development priorities to where co sees future growth
Continue to see strong demand in mobile, cloud
Hardware challenges persist (esp in US), combo of secular and cyclical challenges continued; now selling industry standard sever business to Lenovo (system x business)
Improved gross margins by 90 bps driven by services and ongoing mix to software
"Major market" revs down 1% in the qtr with improvement from last qtr driven by EMEA; growth markets were down 5%, despite high single digit growth in Latin America; expect it was take time for business in China to improve
Views the bulk of its challenges in growth markets as cyclical and still see good long term opportunity
Workforce rebalancing impacted SG&A base performance by 16 points
Total backlog was $138 bln (up 1% in constant currency terms) including $3.8 bln for customer care divestiture
Application server business delivered strong growth for 4th consecutive qtr; co is now 30% of market share
Storage hardware revs down 23%; saw "substantial weakness" in high-end storage.
$600 mln in FCF, down $1.1 bln y/y driven by $1.4 bln increase in tax payments driven by audit settlement payments and other prior periods that settled in the qtr
Returned $59.2 bln to investors; at the end of 1Q have $6.3 bln remaining in buyback authorization
Cloud revs up over 50%; strong growth of mobile and security
Co ranked #1 overall business consulting and cloud professional services by IDC and #1 immobility consulting services by Forrester IBM is trading at $188.22 in after-hours trading
4:17PM IBM reports EPS in-line, misses on revs; reaffirms FY14 EPS guidance above consensus (IBM) 196.40 -0.62 : Reports Q1 (Mar) earnings of $2.54 per share, in-line with the Capital IQ Consensus of $2.54; revenues fell 3.9% year/year to $22.48 bln vs the $22.95 bln consensus.
Non-GAAP gross margin +90 bps tp 47.6%.
Revenue: $22.5 billion, down 4%; down 1% adjusting for currency, excluding divested customer care outsourcing business:
Software, Services and Global Financing each grew, adjusting for currency;
Software up 2% as reported and adjusting for currency
Services down 2%; up 2% adjusting for currency and excluding divested customer care outsourcing business
Global Financing up 3%, up 6% adjusting for currency
Systems and Technology down 23% as reported and adjusting for currency;
Services backlog of $138 billion, up 1% adjusting for currency and excluding divested customer care outsourcing business;
Business analytics revenue up 5%, up 6 percent adjusting for currency;
Cloud revenue up more than 50%: For cloud delivered as a service, first-quarter annual run rate of $2.3 billion doubled year to year
Co reaffirms guidance for FY14, sees EPS of at least $18.00, excluding non-recurring items, vs. $17.83 Capital IQ Consensus Estimate.
Geographic Regions
The Americas' first-quarter revenues were $9.6 billion, a decrease of 4% (down 2%, adjusting for currency) from the 2013 period.
Revenues from Europe/Middle East/Africa were $7.6 billion, up 4% (up 1%, adjusting for currency).
Asia-Pacific revenues decreased 12% (down 6%, adjusting for currency) to $5.0 billion.
OEM revenues were $355 million, down 17% compared with the 2013 first quarter.
Growth Markets
Revenues from the company's growth markets decreased 11% (down 5%, adjusting for currency).
Revenues in the BRIC countries - Brazil, Russia, India and China - decreased 11% (down 6%, adjusting for currency).
4:31PM JDS Uniphase issues restricted stock units in connection with acquisition of Time-Bandwidth Products (JDSU) 13.28 +0.23 : Co announced that, in connection with the acquisition of Time-Bandwidth Products, a provider of high-powered and ultrafast lasers for the industrial and scientific markets, which was completed on January 26, 2014, it has issued grants of compensatory restricted stock unit awards to Time-Bandwidth employees joining JDSU in connection with the acquisition. The restricted stock unit awards to be granted to those employees by JDSU are generally comparable to equity awards that JDSU grants to its similarly situated new employees. These grants were made under the JDS Uniphase Corporation 2005 Acquisition Equity Incentive Plan, which was approved by the Board of Directors of JDSU, but not submitted for the approval of the stockholders of JDSU. These restricted stock unit awards were approved by the JDS Uniphase Corporation Board of Directors on April 15, 2014, with a grant date of April 15, 2014. Pursuant to such approval, JDSU awarded restricted stock units covering a total of 205,000 shares of JDSU common stock to 40 employees.
4:10PM Google misses by $0.15, reports revs in-line (GOOG) 556.54 20.10 : Reports Q1 (Mar) earnings of $6.27 per share, $0.15 worse than the Capital IQ Consensus Estimate of $6.42; revenues rose 19.1% year/year to $15.42 bln vs the $15.52 bln consensus.
Sites Revenues- Generated revenues of $10.47 billion, or 68% of total revenues, in the first quarter of 2014. This represents a 21% increase over first quarter of 2013 sites revenues of $8.64 billion.
Network Revenue- Partner sites generated revenues of $3.40 billion, or 22% of total revenues, in the first quarter of 2014. This represents a 4% increase over first quarter of 2013 network revenues of $3.26 billion.
Other Revenues- Were $1.55 billion, or 10% of total revenues, in the first quarter of 2014. This represents a 48% increase over first quarter of 2013 other revenues of $1.05 billion.International Revenues- Revenues from outside of the United States totaled $8.76 billion, representing 57% of total revenues in the first quarter of 2014, compared to 56% in the fourth quarter of 2013 and 55% in the first quarter of 2013.Paid Clicks- Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 26% over the first quarter of 2013 and decreased approximately 1% over the fourth quarter of 2013.
Cost-Per-Click- Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 9% over the first quarter of 2013 and remained constant from the fourth quarter of 2013.
TAC- Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.23 billion in the first quarter of 2014, compared to $2.96 billion in the first quarter of 2013. TAC as a percentage of advertising revenues was 23% in the first quarter of 2014, compared to 25% in the first quarter of 2013.
Operating Expenses- Operating expenses, other than cost of revenues, were $5.34 billion in the first quarter of 2014, or 35% of revenues, compared to $4.07 billion in the first quarter of 2013, or 31% of revenues.Depreciation and loss on disposal of property and equipment and amortization expenses were $1.09 billion for the first quarter of 2014, of which $1.06 billion was related to Google, compared to $899 million in the first quarter of 2013. Of the $1.09 billion, $116 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.Cash Flow and Capital Expenditures
Net cash provided by operating activities in the first quarter of 2014 totaled $4.39 billion, compared to $3.63 billion in the first quarter of 2013. In the first quarter of 2014, capital expenditures were $2.35 billion, the majority of which was for production equipment, data-center construction, and real estate purchases. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the first quarter of 2014, free cash flow was $2.05 billion.
We expect to continue to make significant capital expenditures.
Cash
As of March 31, 2014, cash, cash equivalents, and marketable securities were $59.38 billion, which excludes cash classified as held for sale, compared to $58.72 billion as of December 31, 2013.4:09PM SanDisk beats by $0.19, beats on revs; will guide for Q2 and FY14 revs on call at 17:00 (SNDK) 75.85 +0.51 : Reports Q1 (Mar) earnings of $1.44 per share, excluding non-recurring items, $0.19 better than the Capital IQ Consensus Estimate of $1.25; revenues rose 12.8% year/year to $1.51 bln vs the $1.49 bln consensus.
SanDisk reports Q1 non-GAAP gross margin of 51.2% vs Street expectations near 48% and guidance of 47-49%, compared to 40.5% in Q1 of prior year.
"We delivered record first quarter results, driven by 61 percent growth in our SSD revenue and strong retail performance...We are excited by the momentum we are building in our business as we continue to execute on our growth initiatives."
Co is expected to guide for Q2 and FY14 revenue and gross margins on the conference call that begins at 17:00 (for more information please see our SNDK preview at 12:37)
12:37PM Notable movers of interest (SCANX) : The following are some of today's most notable movers of interest, categorized by market capitalization (large cap over $10 billion and mid cap between $2-10 billion) and ranked by % change (all stocks over 100K average daily volume).
Large Cap Gainers
IEP (98.3 +8.31%): Mentioned positively in Barron's article
YHOO (36.44 +6.50%): Beat quarterly EPS by $0.01 ($0.38 vs $0.37 estimate), revs rose 1.2% yoy to $1.09 bln vs $1.08 bln estimate; Alibaba revs rose 66% yoy to $3.05 bln, gross profit rose 73% yoy to $2.37 bln; upgraded to Outperform from Market Perform at Wells Fargo; upgraded to Buy from Hold at Gabelli & Co
WFT (17.85 +4.75%): Mentioned positively at Barclays
Large Cap Losers
ASML (81.25 -4.57%): Missed quarterly EPS by EUR 0.04 (EUR 0.57 vs EUR 0.53 estimate), revs rose 56.6% yoy to EUR 1.4 bln vs EUR 1.42 bln estimate; sees Q2 revs of EUR 1.6 bln vs EUR 1.69 bln estimate
LLTC (45.24 -4.01%): Beat quarterly EPS by $0.02 ($0.48 vs $0.46 estimate), revs rose 10.6% yoy to $348.01 mln vs $350.02 mln estimate; sees Q4 revs +2-6% sequentially (~$355-368.9 mln) vs $365.41 mln estimate
BAC (16.05 -2.07%): Missed quarterly EPS by $0.10 (-$0.05 vs $0.05 estimate), revs fell 2.7% yoy to $22.77 bln vs $22.1 bln estimate
Mid Cap Gainers
NMBL (33.73 +8.60%): Upgraded to Buy from Neutral at UBS; initiated with a Market Perform at Raymond James
NPSP (25.13 +7.49%): Assumed with a Buy at Canaccord Genuity, target $42
ATHL (41.9 +6.26%): Announced Q1 average daily production volumes for the first quarter 2014 reached a record high of 16,987 BOE/d as compared with 9,959 BOE/d produced in the first quarter 2013, representing a 71% increase y/y; announced 11 mln share public offering of common stock and launched proposed $500 mln senior notes offering
Mid Cap Losers
AEM (28.36 -6.99%): Co and Yamana Gold (AUY) entered into agreement to jointly acquire Osisko Mining in transaction valued at C$3.9 bln, or C$8.15 per common share of Osisko
HK (5.01 -2.81%): Downgraded to Reduce from Hold at KLR Group
HBAN (9.33 -1.48%): Reported Q1 EPS of $0.17 (in-line), revs rose 0.8% yoy to $691.9 mln vs $676.74 mln estimate 12:07PM Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (107) outpacing new lows (35) (SCANX) : Stocks that traded to 52 week highs: AA, AAV, ADM, AEP, AGRO, ANDE, ATHL, ATI, ATO, AVA, AXAS, BAM, BUD, BXP, CCK, CJES, CL, CLB, CLR, CMS, CPE, CQP, CRK, CXO, DEJ, DIOD, DTE, DVCR, DVN, E, EDE, EDGW, EGY, EIX, EPD, EQM, ERF, ETR, FANG, FNHC, FTK, FTR, GA, GAS, GLNG, GLOG, GXP, HAL, HCSG, HES, HIL, HP, HSKA, HST, INTC, ITC, JFBI, JNJ, KNX, LFUS, LNT, LYB, MCS, MPLX, MRH, MRTN, MYE, NEE, NFX, NU, NWE, ORM, PNM, PPC, PTEN, RDS.B, REI, RHP, RMBS, RNR, RRC, RUBI, RUSHB, SAFM, SCS, SE, SEM, SEP, SGY, SLB, SLCA, SLG, SPN, SRE, ST, STO, STS, TRGP, TSLX, UHAL, VLP, VOCS, VVC, WEC, WFT, WLL, WR
Stocks that traded to 52 week lows: AMBT, AMSC, ANTH, ARQL, AUY, AXGN, DMD, DRNA, EGLT, EVRY, FMD, GMAN, IGC, IMI, LEI, LINC, LUB, MBII, NCQ, NRX, OIBR, OIBR.C, OVRL, PBPB, PMFG, PRAN, QURE, RSH, SPEX, SQBK, STRL, TEAR, TEDU, TRVN, ZNH
ETFs that traded to 52 week highs: DIG, DJP, FXB, IEO, IXC, IYE, JJA, RJA, XLE, XLU, XOP
ETFs that traded to 52 week lows: none
ANADIGICS (ANAD) is shipping production volumes of its ALT6735 ProEficient-Plus power amplifier to Samsung Electronics (SSNLF) for the new GALAXY S 5.
Mellanox Technologies (MLNX) announced its 10/40GbE adapters for rack servers and 10GbE mezzanine adapters for blades are now available with Dell Fluid Cache for SAN.
Cypress Semiconductor (CY) announced that American Semiconductor has chosen Cypress Foundry Solutions to develop and manufacture custom optical devices
Broadcom (BRCM) announced that Lava International selected Broadcom's quad-core HSPA+ turnkey platform for Lava's newly released QPAD e704 tablet.
(upgraded to Buy from Neutral at UBS), CREE +2.3% (upgraded to Buy from Hold at Needham),
8:01AM SMTC Corp appoints Jim Currie as interim CFO (SMTX) 1.54 :
Co announced the appointment of Jim Currie as its interim Chief Financial Officer effective April 16, 2014. With this appointment, Clarke Bailey will continue to serve as a Director and Chairman of the Board.
Currie has provided services as a financial executive to a number of public and private companies. Most recently, Currie was with Kapsch Trafficcom IVHS where he was employed from 2009 to 2012 as Vice President Finance and Chief Financial Officer.
Texas Instruments (TXN) announced support for iBeacon technology across its Bluetooth low energy portfolio.
7:01AM JinkoSolar Holding successfully connects two solar PV projects totaling 39MW to the grid in Jiangsu Province (JKS) 25.75 : Co announced that its 24MW solar PV power plant in Xinyi, Jiangsu Province and 15MW solar PV power plant in Lianyungang, Jiangsu Province were successfully connected to the grid. The company has so far successfully connected to the grid for more than 252 MW of solar PV power projects. The 24MW Xinyi and 15MW Lianyungang power plants were granted blended 20-year subsidies of 1.125 RMB/KWh and 1.1 RMB/KWh, respectively, including subsidies from the local government. Both locations are among areas with the highest insolation level in Jiangsu Province.
Yahoo (YHOO) reported first quarter earnings of $0.38 per share, which is higher than expected, while revenues rose 1.2% year/year to $1.09 billion which is also higher than expected. Display: GAAP display revenue was $453 million for the first quarter of 2014, flat compared to the first quarter of 2013. Display revenue ex-TAC was $409 million for the first quarter of 2014, a 2 percent increase compared to $402 million for the first quarter of 2013. The Number of Ads Sold increased approximately 7 percent compared to the first quarter of 2013. Price-per-Ad decreased approximately 5 percent compared to the first quarter of 2013. Search: GAAP search revenue was $445 million for the first quarter of 2014, a 5 percent increase compared to $425 million for the first quarter of 2013. Search revenue ex-TAC was $444 million for the first quarter of 2014, a 9 percent increase compared to $409 million for the first quarter of 2013. Paid Clicks increased approximately 6 percent compared to the first quarter of 2013. Price-per-Click increased approximately 8 percent compared to the first quarter of 2013 Cash Balance: Cash, cash equivalents, and investments in marketable securities were $4.6 billion as of March 31, 2014 compared to $5 billion as of December 31, 2013, a decrease of $0.4 billion. Alibaba revenues increased 66% y/y to $3.05 bln; Gross profit increased 73% y/y to $2.37 billion; Net Income increased 110% y/y. Yahoo sees Q2 revs $1.06-1.1 billion which is line with estimates and sees non-GAAP operating income of $130-170 million.
Intel (INTC) reported first quarter earnings of $0.38 per share, which is higher than expected while revenues rose 1.5% year/year to $12.76 billion which in line with estimates. Q1 gross margin of 59.7% vs Street expectations of just above 59% (co guided for Q1 gross margin of 57-61%). PC Client Group revenue of $7.9 billion, down 8% sequentially and down 1% year-over-year. Data Center Group revenue of $3.1 billion, down 5% sequentially and up 11% year-over-year. Internet of Things Group revenue of $482 million, down 10% sequentially and up 32% year-over-year. Mobile and Communications Group revenue of $156 million, down 52% sequentially and down 61% year-over-year. Software and services operating segments revenue of $553 million, down 6% sequentially and up 6% year-over-year. "In the first quarter we saw solid growth in the data center, signs of improvement in the PC business, and we shipped 5 million tablet processors, making strong progress on our goal of 40 million tablets for 2014." The company issued guidance for the second quarter with EPS of $12.5-13.5 billion and gross margins of 61-65%. The company reaffirmed revenue guidance raises gross margin guidance for FY14, sees FY14 revs flat YoY at approximately $52.7 billion. Gross margin percentage: 61 percent, plus or minus a few percentage points, 1 percentage point higher than prior expectations; R&D plus MG&A spending: $18.9 billion, plus or minus $200 million, higher than prior expectations of $18.6 billion.
Linear Tech (LLTC) reported third quarter GAAP earnings of $0.48 per share, which is higher than expected, while revenues rose 10.6% year/year to $348.01 million which is line with estimates. Non-GAP EPS was $0.55. The company issued guidance for the fourth quarter with revenue +2-6% sequentially (approximately $355-368.9 million) which is line with estimates. "After the slight decline we experienced last quarter, we are pleased to report that the bookings momentum that occurred at the end of our second quarter continued through the third quarter. As a result, we grew revenues 4% sequentially and 10.6% year-over-year. The book-to-bill ratio was positive for the quarter and bookings increased sequentially in all of our major markets, with the automotive, industrial and communications markets showing the most gains. Looking forward, we are encouraged by our current bookings momentum and the breadth of the bookings across our major markets. Accordingly, we are currently estimating sequential revenue growth of 2% to 6% for our fiscal fourth quarter."
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