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Tuesday, April 22, 2014 7:15:39 PM
From Briefing.com: 4:15 pm : Equity indices strung together a daylong rally on Tuesday, giving the S&P 500 its sixth consecutive advance. Some selling during the final hour of action pressured the indices from their highs, but they still ended with the bulk of their gains. The benchmark index added 0.4% with eight sectors finishing in the green, while the Nasdaq (+1.0%) outperformed throughout the session.
Although the stock market began the day on a flat note, the major averages quickly took the lead from two heavily-weighted sectors-consumer discretionary (+0.8%) and health care (+1.0%)-that displayed strength out of the gate.
The health care sector spent the entire session in the lead due, in part, to the relative strength of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 234.72, +7.38) jumped 3.3% to post its third consecutive gain. M&A activity also contributed to the sector's outperformance as Allergan (AGN 163.65, +21.65) surged 15.3% after Valeant (VRX 135.41, +9.40) proposed a merger for $48.30 in cash and 0.83 shares of Valeant for each share of Allergan.
Elsewhere, the discretionary space was underpinned by a solid 7.0% gain in the shares of Netflix (NFLX 372.90, +24.41), which spiked in reaction to above-consensus earnings. The remainder of the sector held up nearly as well with homebuilders (ITB +0.8%) and retailers rallying (XRT +1.2%), while quick-service restaurants appeared unaffected by disappointing earnings from McDonald's (MCD 99.32, -0.35). The fast food giant reported bottom-line results $0.03 below the Capital IQ consensus estimate as comparable sales in the U.S. declined 1.7% during the first quarter.
Among other earnings of note, Dow components Travelers (TRV 86.89, +0.49) and United Technologies (UTX 119.19, +0.89) reported better than expected earnings, while their respective sectors ended in mixed fashion. Financials (+0.7%) settled among the leaders after lagging through the first half of action, whereas the industrial sector (+0.01%) kept pace with the S&P 500 during early afternoon action, but slumped into the close.
Even though the industrial sector ended well below its session high, that was not the case with transports as the Dow Jones Transportation Average advanced 0.6% to a fresh all-time high. Delta Air Lines (DAL 34.95, +1.01) gained 3.0% ahead of its quarterly report, which is expected ahead of Wednesday's opening bell.
On the downside, consumer staples (-0.1%) and energy (-0.2%) were the only two sectors ending in the red.
The Treasury market displayed gains overnight, but slumped shortly after the New York open, before reclaiming its losses into the close. The 10-yr yield ended at 2.72%.
Participation was on the light side as just over 665 million shares changed hands at the NYSE floor.
Today's economic data featured just two reports:
Existing home sales fell 0.2% in March to 4.59 million SAAR from an unrevised 4.60 million SAAR in February. The Briefing.com consensus expected existing home sales to remain at 4.60 million SAAR. Over the past three months, existing home sales have averaged only 4.603 million SAAR, down from an average of 4.94 million SAAR in Q4 2013. Initially, the decline in sales was attributed to extreme weather conditions at the beginning of 2014. However, weather conditions returned more or less to normal in March and sales failed to rebound. A more likely explanation for the recent downward trend is that rising prices combined with higher mortgage rates have caused affordability conditions to weaken. As a result, first-time home buyers, who are needed to drive stable growth, only accounted for 30% of total purchases. In March 2012, first time buyers accounted for 33% of total sales.
The February Housing Price Index from the FHFA increased 0.6%, which followed a revised uptick of 0.4% observed during the prior month.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and New Home Sales for March (Briefing.com consensus 455K) will be reported at 10:00 ET.
S&P 500 +1.7% YTD
Dow Jones Industrial Average -0.4% YTD
Nasdaq Composite -0.4% YTD
Russell 2000 -0.6% YTD
DJ30 +65.12 NASDAQ +39.91 SP500 +7.66 NASDAQ Adv/Vol/Dec 1955/1.73 bln/730 NYSE Adv/Vol/Dec 2248/665.8 mln/812
3:30 pm :
June gold fell for a third consecutive session after pulling back from a session high of $1293.10 per ounce set in early morning action. It dipped to $1275.80 per ounce, its lowest level since early February 2014, and settled with a 0.6% loss at $1281.10 per ounce.
May silver touched a session high of $19.52 per ounce moments after floor trade opened but slipped into the red and to a session low of $19.30 per ounce in late morning action. It managed to rise back above the unchanged line and settled with a 0.1% gain at $19.36 per ounce.
June crude oil traded lower ahead of tomorrow's inventory data. It fell deeper into the red after retreating from its session high of $102.70 per barrel set moments after pit trade began. The energy component brushed a session low of $101.47 per barrel in late morning action and settled with a 1.9% loss at $101.67 per barrel.
May natural gas, on the other hand, traded higher after lifting from its session low of $4.69 per MMBtu in morning action. It eventually settled at its session high of $4.74 per MMBtu, booking a gain of 1.1%.
4:19PM Skyworks beats by $0.03, beats on revs; guides JunQ sharply above consensus (SWKS) 37.96 +0.94 : Reports Q2 (Mar) earnings of $0.62 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.59; revenues rose 13.1% year/year to $481.0 mln vs the $470.3 mln consensus. Co issues upside guidance for Q3 (Jun), sees EPS of approximately $0.73, excluding non-recurring items, vs. $0.63 Capital IQ Consensus Estimate; sees Q3 revs of approximately $535 mln vs. $487.5 mln Capital IQ Consensus Estimate.
"Skyworks exceeded guidance across all key metrics last quarter and is set to substantially outpace the broader semiconductor industry as we capitalize on increasing analog system complexity driven by the Internet of Things."
4:17PM Plug Power announces proposed public offering of common stock; size not disclosed (PLUG) 6.70 -0.31 :
Co announced that it intends to offer and sell, subject to market and other conditions, common stock in an underwritten public offering.
Morgan Stanley & Co. LLC and Barclays Capital Inc. are acting as the book-running managers and Cowen and Company, LLC and FBR Capital Markets & Co. are acting as co-managers for the offering.
Co intends to use the net proceeds of the offering for working capital and general corporate purposes, which may include capital expenditures and potential acquisitions.
4:16PM Super Micro Computer beats by $0.10, beats on revs; guides Q4 EPS above consensus, revs above consensus (SMCI) : Reports Q3 (Mar) earnings of $0.37 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus Estimate of $0.27; revenues rose 34.5% year/year to $373.8 mln vs the $335.19 mln consensus.
Co issues upside guidance for Q4, sees EPS of $0.35-0.41, excluding non-recurring items, vs. $0.35 Capital IQ Consensus Estimate; sees Q4 revs of $370-410 mln vs. $369.05 mln Capital IQ Consensus Estimate.
"Supermicro's third quarter was a second straight quarter of record highs for revenue and earnings. Revenues were 34.4% higher year over year with strong growth coming from North America and from internet data centers. We grew again in multiples of the industry growth rate, expanded market share, and continued to lead the industry in system innovation and time to market..."
4:15PM AT&T beats by $0.02, beats slightly on revs; raises FY14 rev guidance above consensus; adds 1.1 mln postpaid smartphones in Q1 (T) 36.29 +0.23 :
Reports Q1 (Mar) adj earnings of $0.71 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.69; revenues rose 3.6% year/year to $32.5 bln vs the $32.39 bln consensus.
Co issues guidance for FY14, sees EPS of mid single digits including Leap operational pressure (cons +8%); raises FY14 revs to +4% or more (prior guidance of +2-3%) calc to ~$133.9 bln vs. $132.23 bln Capital IQ Consensus Estimate.
Total wireless revenues, which include equipment sales, were up 7.0 percent year over year to $17.9 billion. Wireless service revenues increased 2.2 percent in the first quarter to $15.4 billion. First-quarter wireless operating expenses totaled $12.8 billion, up 6.6 percent versus the year-earlier quarter, and wireless operating income was $5.1 billion, up 8.1 percent year over year.
Total churn was essentially stable at 1.39 percent compared to 1.38 percent in the year-ago quarter. Postpaid churn of 1.07 was down sequentially and up slightly compared to 1.04 percent in the year-ago quarter.
AT&T added 1.1 million postpaid smartphones in the first quarter. At the end of the quarter, 78 percent, or 53.0 million, of AT&T's postpaid phone subscribers had smartphones, up from 72 percent, or 48.3 million, a year earlier. Smartphones accounted for 92 percent of postpaid phone sales in the quarter, a first-quarter record. AT&T's ARPU for smartphones is about twice that of non-smartphone subscribers. At the end of the first quarter, 57 percent of AT&T's postpaid smartphone customers used an LTE-capable device. The company sold 5.8 million smartphones in the quarter.
Total first-quarter wireline revenues were $14.6 billion, down 0.4 percent versus the year-earlier quarter. Wireline service revenues were up 0.1 percent year over year. Total U-verse revenues grew 29.0 percent year over year. First-quarter wireline operating expenses were $13.1 billion, up 0.9 percent versus the first quarter of 2013. AT&T's wireline operating income totaled $1.5 billion, down 10.5 percent versus the first quarter of 2013
4:13PM Juniper Networks reports EPS in-line, beats on revs; guides Q2 EPS above consensus, revs in-line (JNPR) : Reports Q1 (Mar) earnings of $0.29 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.29; revenues rose 10.5% year/year to $1.17 bln vs the $1.15 bln consensus.
Co sees Q2 EPS of $0.36-0.39 vs. $0.36 Capital IQ Consensus Estimate; sees Q2 revs of $1.20-1.23 bln vs. $1.21 bln Capital IQ Consensus Estimate.
4:12PM Sanmina beats by $0.05, beats on revs; guides Q3 EPS above consensus, revs in-line (SANM) 18.26 +0.40 : Reports Q2 (Mar) earnings of $0.44 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.39; revenues rose 3.4% year/year to $1.48 bln vs the $1.45 bln consensus.
Co issues upside EPS guidance for Q3, sees EPS of $0.45-0.49, excluding non-recurring items, vs. $0.43 Capital IQ Consensus Estimate; sees Q3 revs of $1.5-1.6 bln vs. $1.51 bln Capital IQ Consensus Estimate.
4:08PM Harmonic reports EPS in-line, misses on revs; guides Q2 revs in-line (HLIT) 6.90 +0.12 : Reports Q1 (Mar) earnings of $0.03 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.03; revenues rose 6.2% year/year to $108 mln vs the $111.72 mln consensus.
Gross Margin: Non-GAAP gross margin was 53.3% and non-GAAP operating margin was 3.2% for 1Q14, compared with 54.3% and 8.9%, respectively, for 4Q13, and 51.0% and (3.3)%, respectively, for the same period in 2013.
Guidance: Co issues in-line guidance for Q2, sees Q2 revs of $113-$123 mln vs. $119.74 mln Capital IQ Consensus Estimate. Sees Non-GAAP gross margins in the range of 52.5% to 53.5%. Sees Non-GAAP operating expenses in the range of $54.5 million to $55.5 million.
4:05PM Cree beats by $0.01, reports revs in-line; guides Q4 EPS in-line, revs in-line (CREE) 58.05 +0.49 : Reports Q3 (Mar) earnings of $0.39 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.38; revenues rose 16.1% year/year to $405.2 mln vs the $407.45 mln consensus. Gross margin decreased 50 basis points from Q2 of fiscal 2014 to 37.0% on a GAAP basis and decreased 40 basis points to 37.8% on a non-GAAP basis.
Co issues in-line guidance for Q4, sees EPS of $0.38-0.44, excluding non-recurring items, vs. $0.44 Capital IQ Consensus Estimate; sees Q4 revs of $430-460 mln vs. $434.70 mln Capital IQ Consensus Estimate. Operating expenses are targeted to increase $7 million from Q3. Non-GAAP gross margin targeted to be 37.5%+/-
3:31PM Kulicke & Soffa: Lemelson Capital Management announces stake in Kulicke and Soffa Industries, delivers letter to management and board members urging immediate share repurchase (KLIC) 12.84 +0.64 : Lemelson Capital Management, a private investment manager, announced that it has taken a significant equity position in Kulicke & Soffa Industries. Lemelson Capital's acquisition reflects the firm's view that shares of the company remain dramatically undervalued. Lemelson Capital also announced that it is urging K&S to initiate a share repurchase plan and has delivered the following letter to the company's management team, board of directors and other stakeholders.
"...In the not too distant future, if such a buyback were executed, today's forward (and conservative) EPS estimates of just 89 cents per share would grow to $1.23 based on a reduced ~55 million share count. It seems reasonable to expect that with these enlarged figures the share price would appreciate beyond $19 if the market prices the shares at approximately the same forward multiple as the S & P 500 (a multiple at any rate substantially lower than the company's peers)."
12:22PM 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
AGN (163.7 +15.28%): Valeant Pharma (VRX) proposed to combine with Allergan for $48.30 in cash and 0.83 shares of Valeant stock for each Allergan share; initiated with a Hold at Jefferies; tgt raised to $200 from $145 at Susquehanna; tgt raised to $190 from $140 at Credit Suisse.
HOG (72.95 +8.01%): Beat on EPS by $0.13, beat on revs; reaffirmed full year shipment guidance.
NFLX (369.34 +5.98%): Beat on EPS by $0.04, reported revs in-line; guided Q2 EPS above consensus; tgt raised to $393 from $356 at FBR Capital; upgraded to Buy from Hold at Cantor Fitzgerald; tgt raised to $425 from $405; upgraded to Outperform from Mkt Perform at Raymond James; tgt raised to $520 from $500 at Pacific Crest.
Large Cap Losers
PHG (32.72 -5.41%): Reported Q1 earnings of EUR0.15 per share, may not be comparable to the EUR0.12 consensus, missed on revs.
PNR (76 -5.57%): Reported EPS in-line, missed on revs; guided Q2 below consensus; reaffirmed FY14 EPS guidance.
RCI (38.83 -3.41%): Missed on EPS by CC$0.04, missed on revs; downgraded to Sell from Hold at Canaccord Genuity.
Mid Cap Gainers
CNC (63.95 +11.63%): Beat on EPS by $0.12, beat on revs; guided FY14 EPS in-line, revs in-line.
MTG (8.95 +7.44%): Beat on EPS by $0.04, missed on revs.
CE (60.88 +4.75%): Beat on EPS by $0.12, beat on revs; guided FY14 EPS above consensus.
Mid Cap Losers
MDSO (38.7 -26.55%): Missed on EPS by $0.05, missed on revs.
LXK (41.85 -10.52%): Beat on EPS by $0.05, beat on revs; guided Q2 EPS in-line, revs in-line.
CDNS (14.25 -3.98%): Beat on EPS by $0.01, reported revs in-line; guided Q2 EPS below consensus, revs below consensus; guided FY14 EPS in-line, revs in-line; announced agreement to acquire Jasper Design automation for $170 mln in cash; to be accretive to non-GAAP EPS in FY15.
12:07PM Floor Talk (TALKX) : The behavior of the S&P futures before the cash market opened didn't suggest there was a lot of conviction on the part of either buyers or sellers. Be that as it may, buyers stepped up and have been controlling the action since the opening bell.
The major indices have been pressing steadily higher, clearing an initial resistance barrier in the 1872/1874 zone. The upward move has been paced by the health care sector (+1.3%), which has been boosted by a spate of M&A activity in the pharmaceutical space and another burst of buying interest in the biotech stocks. Notably, the iShares Nasdaq Biotechnology ETF (IBB 234.74, +7.40) is up 3.3% today and has surged 13% from its recent low over the course of the last four trading sessions (including today).
The return to momentum form for the biotech stocks and other names like Netflix (NFLX 369.20, +20.71), which is up 18% from its April 15 low after impressing with its first quarter report and second quarter guidance, has fueled the outperformance of the Nasdaq Composite and Russell 2000 today.
In turn, the strength in those names has been an additional underpinning factor for the broader market, which is also leaning on better than expected earnings results from the likes of United Technologies (UTX 119.89, +1.59), Harley-Davidson (HOG 73.14, +5.60), and Travelers (TRV 86.44, +0.04). McDonald's (MCD 99.89, +0.22), on the other hand, disappointed but is nevertheless trading higher in today's action.
Broad-based gains for the major indices don't appear to be rooted so much in short covering as they are in a flat squeeze that has been catalyzed by a fear of missing out on further gains. That fear has been stoked by the rapid-fire recovery of the Nasdaq after testing its 200-day moving average last week and another timely reminder from Fed Chair Yellen last week that the stock market has time on its side still when it comes to policy rates remaining at the zero bound.
Today's Existing Home Sales report for March didn't alter the latter perspective as sales slipped 0.2% from February to an annualized rate of 4.59 mln units. That was roughly in-line with the Briefing.com consensus estimate of 4.60 mln, but below the November/December average of 4.85 mln units and reflective of a slowdown earlier this year that wasn't just because of extreme winter weather.
The Treasury market has been tripped up slightly by the stock market's strength, yet it hasn't been undercut by that strength. The 10-yr note is down just three ticks with its yield at 2.729%. Strikingly, the US Dollar Index (DXY 79.93, -0.01) is acting sluggish. It is flat for the day, which is somewhat inconsistent with the stock market's seemingly upbeat view of things at the moment. Something to keep an eye on.
11:46AM Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (150) outpacing new lows (18) (SCANX) : Stocks that traded to 52 week highs: ACMP, AGN, ALV, ANDE, AXAS, BANF, BAS, BHI, BIG, BOCH, BPO, BTI, BUD, BWA, BXE, CAT, CBIN, CBT, CE, CFX, CGI, CHSP, CMRE, CPN, CRD.B, CRK, CRZO, CSL, CWEI, CXDC, DDS, DMRC, DOV, DY, EBR, ECOL, EGAS, EGY, EMES, ENG, EPD, EQM, EQT, EROS, ESTE, EXAM, EXR, FANG, FCH, FN, FNHC, FNSR, FTK, GA, GB, GBX, GEL, GGAL, HES, HIL, HNRG, HOG, HOLI, HP, HST, HTLD, HUBG, IIN, IM, ITC, ITW, JFBI, JNJ, KEG, KEP, KNX, LABC, LLY, LSI, LSTR, LYB, MED, MEMP, MGA, MMP, MOD, MPAA, MPLX, MRH, MTDR, MTR, MU, MXWL, NEU, NGG, NGLS, NS, NVS, NYNY, OCLR, OFED, OKE, ORAN, ORM, PEBO, PES, PHII, PMBC, PRMW, PTEN, PVA, RDNT, REI, RES, REX, RHI, RHP, RMBS, RNR, ROIC, ROK, RTN, SAFM, SEP, SGU, SLB, SLCA, SNA, SOHO, SONA, SPN, STS, SYRG, TFSL, THRM, TI, TOT, TPC, TRGP, TRW, UG, UNP, UNT, UPIP, UPL, UTX, VOCS, WBC, XEC, Z
Stocks that traded to 52 week lows: ACFN, ASTI, CNSI, CTHR, DARA, DMD, DVR, EVRY, LCNB, LQDT, MCGC, NCQ, NEWL, NMR, OGEN, PAL, TGE, ZNH
ETFs that traded to 52 week highs: DBA, DIG, EWK, FXB, GULF, IGE, IOO, IXC, IYE, IYK, IYT, JO, MES, OIH, USCI, XES, XLP, XOP
ETFs that traded to 52 week lows: none
Harris & Harris (TINY) noted the receipt of $6.5 mkn from the sale of Molecular Imprints' semiconductor business to Canon of Tokyo, Japan. Harris & Harris could receive an additional $625,000 from amounts held in escrow as well as up to $1.7 mln upon the achievement of certain milestones.
Micron Technology (MU) announced a new enterprise-class solid state drive designed specifically for data center storage platforms.
Altera (ALTR) is the first programmable logic company to integrate hardened IEEE 754-compliant, floating-point operators in an FPGA.
MU +0.7% ( following positive Barron's mention),
7:52AM Arch Coal misses by $0.16, beats on revs; co has lowered its metallurgical coal sales guidance, and now expects to ship between 6.3-7.3 mln tons for 2014 (ACI) 4.97 : Reports Q1 (Mar) loss of $0.60 per share, excluding non-recurring items, $0.16 worse than the Capital IQ Consensus Estimate of ($0.44); revenues fell 0.2% year/year to $736 mln vs the $725.84 mln consensus.
"As expected, our Q1 results reflect a challenging global metallurgical coal market and the impact of rail performance issues," said John W. Eaves, Arch's president and chief executive officer. "At Arch, we are taking proactive steps to manage our controllable costs and capital spending, reduce our cash outflows and preserve our liquidity."
"Moreover, we are reducing our expected metallurgical coal sales volume by ~1 mln tons for 2014 in response to soft market conditions and concentrating our metallurgical production in our lowest-cost assets in Appalachia."
"Based on the smooth start-up of the Leer longwall mine in Q1 of 2014, we also are lowering our full year cost-per-ton guidance in Appalachia."
Market Trends
"We are seeing a strengthening domestic thermal market in 2014, supported by improved power demand, depleting customer coal stockpiles, higher natural gas prices and low natural gas storage levels that will need to be rebuilt," said Eaves.
U.S. power generation hit record levels during the first two months of 2014, and Arch expects U.S. coal consumption for power generation to increase more than 25 mln tons in 2014 versus 2013 levels.
While the domestic thermal market is trending upward, the seaborne market remains challenged, as oversupply has pressured global prices for metallurgical and thermal coals. However, Arch believes the long-term outlook for the seaborne coal trade remains positive and the opportunities for U.S. coal significant.
Global coal trade is projected to exceed 1.5 bln metric tonnes by 2020, with ~100 gigawatts of new coal-fueled power projected to come online in 2014 alone. That new coal-fueled power could result in more than 300 mln metric tonnes of incremental annual coal demand this year.
Arch currently expects the global metallurgical coal market to remain soft in 2014, even as global steel production is projected to grow. However, recent and ongoing closures of some high-cost capacity and an improving demand outlook should lead to a more balanced market over time.
Outlook:
Arch now expects thermal sales volumes for 2014 to be in the range of 124-132 mln tons. The co has lowered its metallurgical coal sales guidance, and now expects to ship between 6.3-7.3 mln tons for 2014. In addition, Arch has reduced its annual cash cost-per-ton guidance range for both its Appalachian and Bituminous Thermal segments, while maintaining its cost outlook for the Powder River Basin. The co has modestly reduced its capital spending levels to a range of $180-190 mln for 2014.
HP Enterprise Services (HPQ) announced the Colorado Department of Health Care Policy and Financing has signed a $116.9 mln contract for HP to implement a new Medicaid management system.
7:04AM Canadian Solar to Supply 43MW of Solar Modules in Japan (CSIQ) 27.08 : Co announces that it has been awarded a module supply agreement to provide 43MW of photovoltaic modules to the second largest solar power plant project in Japan.
Canadian Solar will supply approximately 168,300 pieces of its 60 cell high efficiency CS6P255P modules with power output of 255Wp for this project.
Module delivery is expected to start from May 2014 and to be completed in February 2015.
Mattson Technology (MTSN) has expanded its etch market position with shipments to DRAM, 3D NAND and wafer level packaging fabs in the first quarter of 2014. These shipments are the result of new etch applications released for production on co's paradigmE line of etch systems.
PLX Tech (PLXT) reported first quarter earnings of $0.07 per share, excluding non-recurring items, which is higher than expected, while revenues fell 5.3% year/year to $24.8 million which is below estimates. The company issued guidance for revenues of $27-29 million which is above estimates. Q2 Outlook Details: Non-GAAP gross margins are expected to be ~56 percent with GAAP margins at approximately 55 percent. The non-GAAP number excludes an accrual for royalties associated with the Internet Machines litigation and share-based compensation. Operating expenses are expected to be approximately $15.0 million. Included in operating expenses are share-based compensation charges of approximately $0.6 million. The second quarter also includes a 40nm tape-out. For the year, operating expenses net of share-based compensation are expected to be about $52 million. "The sequential decline in our first quarter revenue was primarily the result of two temporary factors. One of our larger customers moved to a vendor managed inventory (VMI) program where it worked down its owned inventories rather than drawing from our VMI. We expect this customer to return to normal levels in late Q2 or Q3. We were also supply constrained on some of PCI Express Gen2 products in Q1 due to assembly issues at one of our subcontractors. These issues have been addressed and are not expected to be a limitation in the second quarter...These issues aside, the demand for our products remains solid. Based on current backlog, forecasts from customers, and resolution of the assembly issues, we expect all of our market segments to be up in Q2, driven primarily by Gen2 and Gen3 shipments. We are beginning to see an increasing number of Gen3 design wins go into volume production and we believe that this ramp will fuel our growth."
Rambus (RMBS) reported first quarter earnings of $0.17 per share, excluding non-recurring items, which is higher than expected, while revenues rose 17.1% year/year to $78.3 million which is higher than expected. The company issued guidance for the downside guidance for the revenues of $69-74 million which is below estimates.
Liquid Holdings (LIQD) announced that co-founder Brian Ferdinand has stepped down as Vice Chairman of the company's Board of Directors and Head of Corporate Strategy. Mr. Ferdinand will remain a strategic advisor to the company under a consulting agreement and has agreed to a voluntary one-year lock-up on his holdings of the company's common stock until April 17, 2015. The company has already initiated a search to fill Mr. Ferdinand's seat on the Board of Directors.
Although the stock market began the day on a flat note, the major averages quickly took the lead from two heavily-weighted sectors-consumer discretionary (+0.8%) and health care (+1.0%)-that displayed strength out of the gate.
The health care sector spent the entire session in the lead due, in part, to the relative strength of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 234.72, +7.38) jumped 3.3% to post its third consecutive gain. M&A activity also contributed to the sector's outperformance as Allergan (AGN 163.65, +21.65) surged 15.3% after Valeant (VRX 135.41, +9.40) proposed a merger for $48.30 in cash and 0.83 shares of Valeant for each share of Allergan.
Elsewhere, the discretionary space was underpinned by a solid 7.0% gain in the shares of Netflix (NFLX 372.90, +24.41), which spiked in reaction to above-consensus earnings. The remainder of the sector held up nearly as well with homebuilders (ITB +0.8%) and retailers rallying (XRT +1.2%), while quick-service restaurants appeared unaffected by disappointing earnings from McDonald's (MCD 99.32, -0.35). The fast food giant reported bottom-line results $0.03 below the Capital IQ consensus estimate as comparable sales in the U.S. declined 1.7% during the first quarter.
Among other earnings of note, Dow components Travelers (TRV 86.89, +0.49) and United Technologies (UTX 119.19, +0.89) reported better than expected earnings, while their respective sectors ended in mixed fashion. Financials (+0.7%) settled among the leaders after lagging through the first half of action, whereas the industrial sector (+0.01%) kept pace with the S&P 500 during early afternoon action, but slumped into the close.
Even though the industrial sector ended well below its session high, that was not the case with transports as the Dow Jones Transportation Average advanced 0.6% to a fresh all-time high. Delta Air Lines (DAL 34.95, +1.01) gained 3.0% ahead of its quarterly report, which is expected ahead of Wednesday's opening bell.
On the downside, consumer staples (-0.1%) and energy (-0.2%) were the only two sectors ending in the red.
The Treasury market displayed gains overnight, but slumped shortly after the New York open, before reclaiming its losses into the close. The 10-yr yield ended at 2.72%.
Participation was on the light side as just over 665 million shares changed hands at the NYSE floor.
Today's economic data featured just two reports:
Existing home sales fell 0.2% in March to 4.59 million SAAR from an unrevised 4.60 million SAAR in February. The Briefing.com consensus expected existing home sales to remain at 4.60 million SAAR. Over the past three months, existing home sales have averaged only 4.603 million SAAR, down from an average of 4.94 million SAAR in Q4 2013. Initially, the decline in sales was attributed to extreme weather conditions at the beginning of 2014. However, weather conditions returned more or less to normal in March and sales failed to rebound. A more likely explanation for the recent downward trend is that rising prices combined with higher mortgage rates have caused affordability conditions to weaken. As a result, first-time home buyers, who are needed to drive stable growth, only accounted for 30% of total purchases. In March 2012, first time buyers accounted for 33% of total sales.
The February Housing Price Index from the FHFA increased 0.6%, which followed a revised uptick of 0.4% observed during the prior month.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and New Home Sales for March (Briefing.com consensus 455K) will be reported at 10:00 ET.
S&P 500 +1.7% YTD
Dow Jones Industrial Average -0.4% YTD
Nasdaq Composite -0.4% YTD
Russell 2000 -0.6% YTD
DJ30 +65.12 NASDAQ +39.91 SP500 +7.66 NASDAQ Adv/Vol/Dec 1955/1.73 bln/730 NYSE Adv/Vol/Dec 2248/665.8 mln/812
3:30 pm :
June gold fell for a third consecutive session after pulling back from a session high of $1293.10 per ounce set in early morning action. It dipped to $1275.80 per ounce, its lowest level since early February 2014, and settled with a 0.6% loss at $1281.10 per ounce.
May silver touched a session high of $19.52 per ounce moments after floor trade opened but slipped into the red and to a session low of $19.30 per ounce in late morning action. It managed to rise back above the unchanged line and settled with a 0.1% gain at $19.36 per ounce.
June crude oil traded lower ahead of tomorrow's inventory data. It fell deeper into the red after retreating from its session high of $102.70 per barrel set moments after pit trade began. The energy component brushed a session low of $101.47 per barrel in late morning action and settled with a 1.9% loss at $101.67 per barrel.
May natural gas, on the other hand, traded higher after lifting from its session low of $4.69 per MMBtu in morning action. It eventually settled at its session high of $4.74 per MMBtu, booking a gain of 1.1%.
4:19PM Skyworks beats by $0.03, beats on revs; guides JunQ sharply above consensus (SWKS) 37.96 +0.94 : Reports Q2 (Mar) earnings of $0.62 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.59; revenues rose 13.1% year/year to $481.0 mln vs the $470.3 mln consensus. Co issues upside guidance for Q3 (Jun), sees EPS of approximately $0.73, excluding non-recurring items, vs. $0.63 Capital IQ Consensus Estimate; sees Q3 revs of approximately $535 mln vs. $487.5 mln Capital IQ Consensus Estimate.
"Skyworks exceeded guidance across all key metrics last quarter and is set to substantially outpace the broader semiconductor industry as we capitalize on increasing analog system complexity driven by the Internet of Things."
4:17PM Plug Power announces proposed public offering of common stock; size not disclosed (PLUG) 6.70 -0.31 :
Co announced that it intends to offer and sell, subject to market and other conditions, common stock in an underwritten public offering.
Morgan Stanley & Co. LLC and Barclays Capital Inc. are acting as the book-running managers and Cowen and Company, LLC and FBR Capital Markets & Co. are acting as co-managers for the offering.
Co intends to use the net proceeds of the offering for working capital and general corporate purposes, which may include capital expenditures and potential acquisitions.
4:16PM Super Micro Computer beats by $0.10, beats on revs; guides Q4 EPS above consensus, revs above consensus (SMCI) : Reports Q3 (Mar) earnings of $0.37 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus Estimate of $0.27; revenues rose 34.5% year/year to $373.8 mln vs the $335.19 mln consensus.
Co issues upside guidance for Q4, sees EPS of $0.35-0.41, excluding non-recurring items, vs. $0.35 Capital IQ Consensus Estimate; sees Q4 revs of $370-410 mln vs. $369.05 mln Capital IQ Consensus Estimate.
"Supermicro's third quarter was a second straight quarter of record highs for revenue and earnings. Revenues were 34.4% higher year over year with strong growth coming from North America and from internet data centers. We grew again in multiples of the industry growth rate, expanded market share, and continued to lead the industry in system innovation and time to market..."
4:15PM AT&T beats by $0.02, beats slightly on revs; raises FY14 rev guidance above consensus; adds 1.1 mln postpaid smartphones in Q1 (T) 36.29 +0.23 :
Reports Q1 (Mar) adj earnings of $0.71 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.69; revenues rose 3.6% year/year to $32.5 bln vs the $32.39 bln consensus.
Co issues guidance for FY14, sees EPS of mid single digits including Leap operational pressure (cons +8%); raises FY14 revs to +4% or more (prior guidance of +2-3%) calc to ~$133.9 bln vs. $132.23 bln Capital IQ Consensus Estimate.
Total wireless revenues, which include equipment sales, were up 7.0 percent year over year to $17.9 billion. Wireless service revenues increased 2.2 percent in the first quarter to $15.4 billion. First-quarter wireless operating expenses totaled $12.8 billion, up 6.6 percent versus the year-earlier quarter, and wireless operating income was $5.1 billion, up 8.1 percent year over year.
Total churn was essentially stable at 1.39 percent compared to 1.38 percent in the year-ago quarter. Postpaid churn of 1.07 was down sequentially and up slightly compared to 1.04 percent in the year-ago quarter.
AT&T added 1.1 million postpaid smartphones in the first quarter. At the end of the quarter, 78 percent, or 53.0 million, of AT&T's postpaid phone subscribers had smartphones, up from 72 percent, or 48.3 million, a year earlier. Smartphones accounted for 92 percent of postpaid phone sales in the quarter, a first-quarter record. AT&T's ARPU for smartphones is about twice that of non-smartphone subscribers. At the end of the first quarter, 57 percent of AT&T's postpaid smartphone customers used an LTE-capable device. The company sold 5.8 million smartphones in the quarter.
Total first-quarter wireline revenues were $14.6 billion, down 0.4 percent versus the year-earlier quarter. Wireline service revenues were up 0.1 percent year over year. Total U-verse revenues grew 29.0 percent year over year. First-quarter wireline operating expenses were $13.1 billion, up 0.9 percent versus the first quarter of 2013. AT&T's wireline operating income totaled $1.5 billion, down 10.5 percent versus the first quarter of 2013
4:13PM Juniper Networks reports EPS in-line, beats on revs; guides Q2 EPS above consensus, revs in-line (JNPR) : Reports Q1 (Mar) earnings of $0.29 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.29; revenues rose 10.5% year/year to $1.17 bln vs the $1.15 bln consensus.
Co sees Q2 EPS of $0.36-0.39 vs. $0.36 Capital IQ Consensus Estimate; sees Q2 revs of $1.20-1.23 bln vs. $1.21 bln Capital IQ Consensus Estimate.
4:12PM Sanmina beats by $0.05, beats on revs; guides Q3 EPS above consensus, revs in-line (SANM) 18.26 +0.40 : Reports Q2 (Mar) earnings of $0.44 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.39; revenues rose 3.4% year/year to $1.48 bln vs the $1.45 bln consensus.
Co issues upside EPS guidance for Q3, sees EPS of $0.45-0.49, excluding non-recurring items, vs. $0.43 Capital IQ Consensus Estimate; sees Q3 revs of $1.5-1.6 bln vs. $1.51 bln Capital IQ Consensus Estimate.
4:08PM Harmonic reports EPS in-line, misses on revs; guides Q2 revs in-line (HLIT) 6.90 +0.12 : Reports Q1 (Mar) earnings of $0.03 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.03; revenues rose 6.2% year/year to $108 mln vs the $111.72 mln consensus.
Gross Margin: Non-GAAP gross margin was 53.3% and non-GAAP operating margin was 3.2% for 1Q14, compared with 54.3% and 8.9%, respectively, for 4Q13, and 51.0% and (3.3)%, respectively, for the same period in 2013.
Guidance: Co issues in-line guidance for Q2, sees Q2 revs of $113-$123 mln vs. $119.74 mln Capital IQ Consensus Estimate. Sees Non-GAAP gross margins in the range of 52.5% to 53.5%. Sees Non-GAAP operating expenses in the range of $54.5 million to $55.5 million.
4:05PM Cree beats by $0.01, reports revs in-line; guides Q4 EPS in-line, revs in-line (CREE) 58.05 +0.49 : Reports Q3 (Mar) earnings of $0.39 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.38; revenues rose 16.1% year/year to $405.2 mln vs the $407.45 mln consensus. Gross margin decreased 50 basis points from Q2 of fiscal 2014 to 37.0% on a GAAP basis and decreased 40 basis points to 37.8% on a non-GAAP basis.
Co issues in-line guidance for Q4, sees EPS of $0.38-0.44, excluding non-recurring items, vs. $0.44 Capital IQ Consensus Estimate; sees Q4 revs of $430-460 mln vs. $434.70 mln Capital IQ Consensus Estimate. Operating expenses are targeted to increase $7 million from Q3. Non-GAAP gross margin targeted to be 37.5%+/-
3:31PM Kulicke & Soffa: Lemelson Capital Management announces stake in Kulicke and Soffa Industries, delivers letter to management and board members urging immediate share repurchase (KLIC) 12.84 +0.64 : Lemelson Capital Management, a private investment manager, announced that it has taken a significant equity position in Kulicke & Soffa Industries. Lemelson Capital's acquisition reflects the firm's view that shares of the company remain dramatically undervalued. Lemelson Capital also announced that it is urging K&S to initiate a share repurchase plan and has delivered the following letter to the company's management team, board of directors and other stakeholders.
"...In the not too distant future, if such a buyback were executed, today's forward (and conservative) EPS estimates of just 89 cents per share would grow to $1.23 based on a reduced ~55 million share count. It seems reasonable to expect that with these enlarged figures the share price would appreciate beyond $19 if the market prices the shares at approximately the same forward multiple as the S & P 500 (a multiple at any rate substantially lower than the company's peers)."
12:22PM 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
AGN (163.7 +15.28%): Valeant Pharma (VRX) proposed to combine with Allergan for $48.30 in cash and 0.83 shares of Valeant stock for each Allergan share; initiated with a Hold at Jefferies; tgt raised to $200 from $145 at Susquehanna; tgt raised to $190 from $140 at Credit Suisse.
HOG (72.95 +8.01%): Beat on EPS by $0.13, beat on revs; reaffirmed full year shipment guidance.
NFLX (369.34 +5.98%): Beat on EPS by $0.04, reported revs in-line; guided Q2 EPS above consensus; tgt raised to $393 from $356 at FBR Capital; upgraded to Buy from Hold at Cantor Fitzgerald; tgt raised to $425 from $405; upgraded to Outperform from Mkt Perform at Raymond James; tgt raised to $520 from $500 at Pacific Crest.
Large Cap Losers
PHG (32.72 -5.41%): Reported Q1 earnings of EUR0.15 per share, may not be comparable to the EUR0.12 consensus, missed on revs.
PNR (76 -5.57%): Reported EPS in-line, missed on revs; guided Q2 below consensus; reaffirmed FY14 EPS guidance.
RCI (38.83 -3.41%): Missed on EPS by CC$0.04, missed on revs; downgraded to Sell from Hold at Canaccord Genuity.
Mid Cap Gainers
CNC (63.95 +11.63%): Beat on EPS by $0.12, beat on revs; guided FY14 EPS in-line, revs in-line.
MTG (8.95 +7.44%): Beat on EPS by $0.04, missed on revs.
CE (60.88 +4.75%): Beat on EPS by $0.12, beat on revs; guided FY14 EPS above consensus.
Mid Cap Losers
MDSO (38.7 -26.55%): Missed on EPS by $0.05, missed on revs.
LXK (41.85 -10.52%): Beat on EPS by $0.05, beat on revs; guided Q2 EPS in-line, revs in-line.
CDNS (14.25 -3.98%): Beat on EPS by $0.01, reported revs in-line; guided Q2 EPS below consensus, revs below consensus; guided FY14 EPS in-line, revs in-line; announced agreement to acquire Jasper Design automation for $170 mln in cash; to be accretive to non-GAAP EPS in FY15.
12:07PM Floor Talk (TALKX) : The behavior of the S&P futures before the cash market opened didn't suggest there was a lot of conviction on the part of either buyers or sellers. Be that as it may, buyers stepped up and have been controlling the action since the opening bell.
The major indices have been pressing steadily higher, clearing an initial resistance barrier in the 1872/1874 zone. The upward move has been paced by the health care sector (+1.3%), which has been boosted by a spate of M&A activity in the pharmaceutical space and another burst of buying interest in the biotech stocks. Notably, the iShares Nasdaq Biotechnology ETF (IBB 234.74, +7.40) is up 3.3% today and has surged 13% from its recent low over the course of the last four trading sessions (including today).
The return to momentum form for the biotech stocks and other names like Netflix (NFLX 369.20, +20.71), which is up 18% from its April 15 low after impressing with its first quarter report and second quarter guidance, has fueled the outperformance of the Nasdaq Composite and Russell 2000 today.
In turn, the strength in those names has been an additional underpinning factor for the broader market, which is also leaning on better than expected earnings results from the likes of United Technologies (UTX 119.89, +1.59), Harley-Davidson (HOG 73.14, +5.60), and Travelers (TRV 86.44, +0.04). McDonald's (MCD 99.89, +0.22), on the other hand, disappointed but is nevertheless trading higher in today's action.
Broad-based gains for the major indices don't appear to be rooted so much in short covering as they are in a flat squeeze that has been catalyzed by a fear of missing out on further gains. That fear has been stoked by the rapid-fire recovery of the Nasdaq after testing its 200-day moving average last week and another timely reminder from Fed Chair Yellen last week that the stock market has time on its side still when it comes to policy rates remaining at the zero bound.
Today's Existing Home Sales report for March didn't alter the latter perspective as sales slipped 0.2% from February to an annualized rate of 4.59 mln units. That was roughly in-line with the Briefing.com consensus estimate of 4.60 mln, but below the November/December average of 4.85 mln units and reflective of a slowdown earlier this year that wasn't just because of extreme winter weather.
The Treasury market has been tripped up slightly by the stock market's strength, yet it hasn't been undercut by that strength. The 10-yr note is down just three ticks with its yield at 2.729%. Strikingly, the US Dollar Index (DXY 79.93, -0.01) is acting sluggish. It is flat for the day, which is somewhat inconsistent with the stock market's seemingly upbeat view of things at the moment. Something to keep an eye on.
11:46AM Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (150) outpacing new lows (18) (SCANX) : Stocks that traded to 52 week highs: ACMP, AGN, ALV, ANDE, AXAS, BANF, BAS, BHI, BIG, BOCH, BPO, BTI, BUD, BWA, BXE, CAT, CBIN, CBT, CE, CFX, CGI, CHSP, CMRE, CPN, CRD.B, CRK, CRZO, CSL, CWEI, CXDC, DDS, DMRC, DOV, DY, EBR, ECOL, EGAS, EGY, EMES, ENG, EPD, EQM, EQT, EROS, ESTE, EXAM, EXR, FANG, FCH, FN, FNHC, FNSR, FTK, GA, GB, GBX, GEL, GGAL, HES, HIL, HNRG, HOG, HOLI, HP, HST, HTLD, HUBG, IIN, IM, ITC, ITW, JFBI, JNJ, KEG, KEP, KNX, LABC, LLY, LSI, LSTR, LYB, MED, MEMP, MGA, MMP, MOD, MPAA, MPLX, MRH, MTDR, MTR, MU, MXWL, NEU, NGG, NGLS, NS, NVS, NYNY, OCLR, OFED, OKE, ORAN, ORM, PEBO, PES, PHII, PMBC, PRMW, PTEN, PVA, RDNT, REI, RES, REX, RHI, RHP, RMBS, RNR, ROIC, ROK, RTN, SAFM, SEP, SGU, SLB, SLCA, SNA, SOHO, SONA, SPN, STS, SYRG, TFSL, THRM, TI, TOT, TPC, TRGP, TRW, UG, UNP, UNT, UPIP, UPL, UTX, VOCS, WBC, XEC, Z
Stocks that traded to 52 week lows: ACFN, ASTI, CNSI, CTHR, DARA, DMD, DVR, EVRY, LCNB, LQDT, MCGC, NCQ, NEWL, NMR, OGEN, PAL, TGE, ZNH
ETFs that traded to 52 week highs: DBA, DIG, EWK, FXB, GULF, IGE, IOO, IXC, IYE, IYK, IYT, JO, MES, OIH, USCI, XES, XLP, XOP
ETFs that traded to 52 week lows: none
Harris & Harris (TINY) noted the receipt of $6.5 mkn from the sale of Molecular Imprints' semiconductor business to Canon of Tokyo, Japan. Harris & Harris could receive an additional $625,000 from amounts held in escrow as well as up to $1.7 mln upon the achievement of certain milestones.
Micron Technology (MU) announced a new enterprise-class solid state drive designed specifically for data center storage platforms.
Altera (ALTR) is the first programmable logic company to integrate hardened IEEE 754-compliant, floating-point operators in an FPGA.
MU +0.7% ( following positive Barron's mention),
7:52AM Arch Coal misses by $0.16, beats on revs; co has lowered its metallurgical coal sales guidance, and now expects to ship between 6.3-7.3 mln tons for 2014 (ACI) 4.97 : Reports Q1 (Mar) loss of $0.60 per share, excluding non-recurring items, $0.16 worse than the Capital IQ Consensus Estimate of ($0.44); revenues fell 0.2% year/year to $736 mln vs the $725.84 mln consensus.
"As expected, our Q1 results reflect a challenging global metallurgical coal market and the impact of rail performance issues," said John W. Eaves, Arch's president and chief executive officer. "At Arch, we are taking proactive steps to manage our controllable costs and capital spending, reduce our cash outflows and preserve our liquidity."
"Moreover, we are reducing our expected metallurgical coal sales volume by ~1 mln tons for 2014 in response to soft market conditions and concentrating our metallurgical production in our lowest-cost assets in Appalachia."
"Based on the smooth start-up of the Leer longwall mine in Q1 of 2014, we also are lowering our full year cost-per-ton guidance in Appalachia."
Market Trends
"We are seeing a strengthening domestic thermal market in 2014, supported by improved power demand, depleting customer coal stockpiles, higher natural gas prices and low natural gas storage levels that will need to be rebuilt," said Eaves.
U.S. power generation hit record levels during the first two months of 2014, and Arch expects U.S. coal consumption for power generation to increase more than 25 mln tons in 2014 versus 2013 levels.
While the domestic thermal market is trending upward, the seaborne market remains challenged, as oversupply has pressured global prices for metallurgical and thermal coals. However, Arch believes the long-term outlook for the seaborne coal trade remains positive and the opportunities for U.S. coal significant.
Global coal trade is projected to exceed 1.5 bln metric tonnes by 2020, with ~100 gigawatts of new coal-fueled power projected to come online in 2014 alone. That new coal-fueled power could result in more than 300 mln metric tonnes of incremental annual coal demand this year.
Arch currently expects the global metallurgical coal market to remain soft in 2014, even as global steel production is projected to grow. However, recent and ongoing closures of some high-cost capacity and an improving demand outlook should lead to a more balanced market over time.
Outlook:
Arch now expects thermal sales volumes for 2014 to be in the range of 124-132 mln tons. The co has lowered its metallurgical coal sales guidance, and now expects to ship between 6.3-7.3 mln tons for 2014. In addition, Arch has reduced its annual cash cost-per-ton guidance range for both its Appalachian and Bituminous Thermal segments, while maintaining its cost outlook for the Powder River Basin. The co has modestly reduced its capital spending levels to a range of $180-190 mln for 2014.
HP Enterprise Services (HPQ) announced the Colorado Department of Health Care Policy and Financing has signed a $116.9 mln contract for HP to implement a new Medicaid management system.
7:04AM Canadian Solar to Supply 43MW of Solar Modules in Japan (CSIQ) 27.08 : Co announces that it has been awarded a module supply agreement to provide 43MW of photovoltaic modules to the second largest solar power plant project in Japan.
Canadian Solar will supply approximately 168,300 pieces of its 60 cell high efficiency CS6P255P modules with power output of 255Wp for this project.
Module delivery is expected to start from May 2014 and to be completed in February 2015.
Mattson Technology (MTSN) has expanded its etch market position with shipments to DRAM, 3D NAND and wafer level packaging fabs in the first quarter of 2014. These shipments are the result of new etch applications released for production on co's paradigmE line of etch systems.
PLX Tech (PLXT) reported first quarter earnings of $0.07 per share, excluding non-recurring items, which is higher than expected, while revenues fell 5.3% year/year to $24.8 million which is below estimates. The company issued guidance for revenues of $27-29 million which is above estimates. Q2 Outlook Details: Non-GAAP gross margins are expected to be ~56 percent with GAAP margins at approximately 55 percent. The non-GAAP number excludes an accrual for royalties associated with the Internet Machines litigation and share-based compensation. Operating expenses are expected to be approximately $15.0 million. Included in operating expenses are share-based compensation charges of approximately $0.6 million. The second quarter also includes a 40nm tape-out. For the year, operating expenses net of share-based compensation are expected to be about $52 million. "The sequential decline in our first quarter revenue was primarily the result of two temporary factors. One of our larger customers moved to a vendor managed inventory (VMI) program where it worked down its owned inventories rather than drawing from our VMI. We expect this customer to return to normal levels in late Q2 or Q3. We were also supply constrained on some of PCI Express Gen2 products in Q1 due to assembly issues at one of our subcontractors. These issues have been addressed and are not expected to be a limitation in the second quarter...These issues aside, the demand for our products remains solid. Based on current backlog, forecasts from customers, and resolution of the assembly issues, we expect all of our market segments to be up in Q2, driven primarily by Gen2 and Gen3 shipments. We are beginning to see an increasing number of Gen3 design wins go into volume production and we believe that this ramp will fuel our growth."
Rambus (RMBS) reported first quarter earnings of $0.17 per share, excluding non-recurring items, which is higher than expected, while revenues rose 17.1% year/year to $78.3 million which is higher than expected. The company issued guidance for the downside guidance for the revenues of $69-74 million which is below estimates.
Liquid Holdings (LIQD) announced that co-founder Brian Ferdinand has stepped down as Vice Chairman of the company's Board of Directors and Head of Corporate Strategy. Mr. Ferdinand will remain a strategic advisor to the company under a consulting agreement and has agreed to a voluntary one-year lock-up on his holdings of the company's common stock until April 17, 2015. The company has already initiated a search to fill Mr. Ferdinand's seat on the Board of Directors.
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