From Briefing.com: Global equity markets stumbled on Wednesday in a sweep of profit taking. Europe led the losses following a spike in sovereign rates that was reportedly triggered by a disappointing 5-yr note auction in Germany.
The U.S. for its part struggled in the wake of a disappointing Q1 GDP report that showed growth rising just 0.2% on an annualized basis. That was below the Briefing.com consensus estimate that called for growth of 1.0% and the 2.2% growth rate reported for the fourth quarter.
Not even another dovish-sounding directive from the Federal Open Market Committee (FOMC) could save the day.
Stocks sagged under the weight of a weak transportation group, continued weakness in Apple (AAPL 128.58, -1.98, -1.5%), and a lack of strong buying interest. Twitter (TWTR 38.49, -3.78, -8.9%) knew the latter all too well as it dropped sharply following its disappointing report and outlook provided on Tuesday.
The energy sector (+0.7%) was the standout performer for the day as it followed oil prices higher (+2.6% to $58.52/bbl).
The S&P 500 information technology sector (-0.5%) trailed the broader market with losses registered by the majority of its components. Things could have been worse, yet Salesforce.com (CRM 74.65, +7.76, +11.6%) provided some offsetting support following press reports that it has been approached by a potential acquirer.
Notable news items from sector components included the following:
Adobe Systems (ADBE 76.65, +0.63, +0.8%): Company and Microsoft (MSFT 49.03, -0.12, -0.3%) announced a strategic partnership that will redefine how enterprises manage their marketing, sales and services to better engage with customers across all touch points. Adobe also announced it has acquired the Tumri advertising technology (also known as Ensemble) from Collective; terms were not disclosed
Corning (GLW 21.36, -0.71, -3.2%): Announced CAO Kirk Gregg will retire at the end of 2015. General Manager Lisa Ferrero will succeed Gregg, effective January 1, 2016
Harris (HRS 79.26, -1.83, -2.3%): The Federal Aviation Administration (FAA) has selected Harris Corporation (HRS) for an eight-year, single-award IDIQ contract with a potential value of $238 million to design and implement a system that will disseminate real-time, comprehensive weather pictures to all aviation users across the National Airspace System
MasterCard (MA 90.25, +0.02, +0.02%): Before Wednesday's open, reported Q1 (Mar) earnings of $0.89 per share, which was ahead of analysts' average expectation. Revenues rose 2.7% year/year to $2.23 bln, which was below estimates. Worldwide purchase volume during the quarter was up 12% on a local currency basis, versus the first quarter of 2014, to $783 billion
Microsoft (MSFT 49.03, -0.12, -0.3%): Company announced new features in Windows 10 and unveiled a set of software development kits (SDKs) to help developers bring their code for the Web, .NET, Win32, Android and iOS to Windows 10
NetApp (NTAP 36.80, +0.20, +0.6%): NetApp CTO will be resigning this summer, according to Register article
Salesforce.com (CRM 74.65, +7.76, +11.6%): Company's stock spiked on press reports that it has been approached by a potential acquirer. CNBC later reported that the company said it had no comment on M&A reports
Western Union (WU 20.39, -0.08, -0.4%): Announced the company has renewed its contract with U.S. Bank whereby U.S. Bank customers will continue to have access to Western Union Money Transfer services
Yahoo! (YHOO 43.28, -1.07, -2.4%): Yahoo! testing two messaging apps, according to Business Insider sources
Elsewhere in the technology space:
Alibaba (BABA 82.45, -2.63, -3.1%): Reuters details news that Alibaba has put a freeze on hiring.
Baidu (BIDU 219.00, -0.19, -0.1%): After Wednesday's close, reported Q1 (Mar) earnings of $1.22 per share, which was ahead of analysts' average expectation. Revenues rose 34.0% year/year to $2.05 bln. For Q2, sees revenues of $2.64-2.702 bln which is in-line with estimates.
Ciena (CIEN 22.34, -0.01, -0.02%): Announced it has been selected to provide its converged packet optical solutions to Forsythe Data Centers for the metro fiber network connecting its new Retail managed hosting facility, to 350 East Cermak in Chicago
Cree, Inc. (CREE 32.35, -0.25, -0.8%): Announced the development and availability of a new XLamp XP-L High Intensity LED, a single-die LED that delivers over 100,000 candela with a 50mm diameter optic at 10 watts.
Flextronics (FLEX 12.22, +0.05, +0.4%): After Wednesday's close, reported Q4 (Mar) earnings of $0.27 per share, excluding non-recurring items, which was ahead of expectations. Revenues fell 11.5% year/year to $5.95 bln which was below estimates. For Q1, sees EPS of $0.20-0.26, excluding non-recurring items, and revenues of $5.6-6.2 bln. Separately, company announced it has entered into a definitive agreement to acquire Mirror Controls International (MCi) from private equity firm Egeria in an all cash transaction valuing its share capital at 457 million ($494 million USD). The acquisition is expected to be accretive to Flextronics' growth, margin, EPS and cash flow profile and is expected to close in the September quarter.
Glu Mobile (GLUU 5.40, +0.29, +5.7%): After Wednesday's close, reports Q1 (Mar) non-GAAP earnings of $0.02 per share, excluding non-recurring items, which was ahead of analysts' average expectation. Non-GAAP revenues rose 32.8% year/year to $62.4 mln, well above the $50-52 mln prior guidance. Separately, the company announced that Tencent has agreed to purchase 21 million shares of Glu's common stock at a price of $6.00 per share for total consideration of $126 mln. The transaction will be completed in two tranches, with Tencent purchasing 12.5 million shares, and committing to purchase the remaining 8.5 million shares upon the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Tencent will own approximately 14.6% of the total shares on a fully-diluted and as converted basis immediately after completion of the investment.
Silicon Graphics (SGI 9.15, -0.42, -4.4%): After Wednesday's close, reported Q3 (Mar) loss of $0.10 per share, excluding non-recurring items, which was worse than analysts' average expectation. Revenues fell 4.7% year/year to $118.5 mln, which was also below estimates. For Q4, sees EPS of (0.24) - (0.12) and revenues of $130-145 mln. Both guidance rnages are well below analysts' average expectations. For FY15, sees revenues of $500-515 mln, also below estimates. Company said, "...it now appears likely that revenue for one of our large DoD projects will be delayed one quarter, adding to what we believe will be a strong first half of fiscal 2016. Overall, we remain encouraged by our progress in diversifying our HPC business, entering the In-Memory market with our UV products and continuing our focus on operational excellence."
Unisys Corporation (UIS 22.46, +0.05, +0.3%): Announced the launch of it Unisys Global Innovation Center in Bogota, the capital of Colombia. The unit will be focused on the creation of tailored IT solutions for global application
Yelp (YELP 51.28, +0.06, +0.1%): After Wednesday's close, reported Q1 (Mar) earnings of $0.10 per share, excluding non-recurring items, which was shy of analysts' average expectation. Revenues rose 55.1% year/year to $118.5 mln, also below estimates. For Q2, sees revenues of $131-134 mln, which is below average expectations. For FY15, reaffirms revenues of $574-579 mln and EBITDA of $102-105 mln versus prior guidance of $100-103 mln.
In industry news, International Data Corporation reported that vendors shipped a total of 336.5 million smartphones worldwide in the first quarter of 2015, up 16.7% from the 288.5 million units in 1Q14, but down by -10.9% from the 377.5 million units shipped in 4Q14. In the overall mobile phone market (smartphones plus feature phones), vendors shipped 458.9 million units worldwide, down -0.1% from the 459.3 million units shipped in 1Q14
Analyst Action:
Akamai Technologies (AKAM 75.13, -0.94, -1.2%): upgraded to Buy from Hold at Deutsche Bank... Canaccord Genuity raises its target to $78 from $75; Buy
Altera (ALTR 40.72, +0.57, +1.4%): downgraded to Neutral from Outperform at Robert W. Baird on April 24; target lowered to $36 from $40
Applied Micro Circuits (AMCC 5.35, +0.20, +3.5%): target raised to $10 from $8 at Canaccord Genuity; Buy
Cirrus Logic (CRUS 34.97, -0.16, -0.4%): target raised to $44 from $37.50 at Northland Capital; maintain Outperform
Corning (GLW 21.36, -0.71, -3.2%): downgraded to Sell from Underperform at Credit Agricole
Total System (TSS 40.22, +1.83, +4.7%): downgraded to Market Perform from Outperform at Wells Fargo
Twitter (TWTR 38.49, -3.78, -9.1%): target lowered to $39 from $48 at Nomura... RBC Capital Markets lowers target to $47 from $54; reiterates Sector Perform... Wunderlich Securities lowers price target to $40 from $50... Canaccord Genuity lowers target to $52 from $56; Buy... downgraded to Neutral from Buy at Rosenblatt... Barclays downgrades TWTR to Equal Weight from Overweight and lowers target to $44 from $60... target lowered to $60 from $65 at Deutsche Bank; Buy... target lowered to $50 from $58 at UBS
Western Digital (WDC 95.84, -2.06, -2.2%): target lowered to $125 from $131 at Maxim Group; maintain Buy... RBC Capital Markets lowers target to $109 from $116... Stifel lowers target to $125 from $140
Seagate Tech (STX 58.16, -0.84, -1.4%): initiated with a Buy at The Benchmark Company; target $65
4:30 pm TTM Tech reports EPS in-line, revs in-line; guides Q2 EPS in-line, revs above consensus; currently expect VIAS acquisition to close in Q2 2015 (TTMI) : Reports Q1 (Mar) earnings of $0.13 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate of $0.13; revenues rose 12.8% year/year to $329.2 mln vs the $329 mln consensus.
Co issues in-line EPS guidance for Q2, sees EPS of $0.11-0.17, excluding non-recurring items, vs. $0.15 Capital IQ Consensus Estimate; sees Q2 revs of $330-350 mln vs. $326.33 mln Capital IQ Consensus Estimate.
4:20 pm Cascade Microtech beats by $0.04, misses on revs; guides Q2 EPS in-line, revs in-line (CSCD) : Reports Q1 (Mar) earnings of $0.15 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.11; revenues fell 5.9% year/year to $31.7 mln vs the $33.56 mln consensus.
Gross margin of 53.6%, up from 53.4% in Q4 2014 and up from 48.3% in Q1 2014.
Guidance: Co issues in-line guidance for Q2, sees EPS of $0.14-$0.20 vs. $0.15 Capital IQ Consensus Estimate; sees Q2 revs of $34-$38 mln vs. $35.63 mln Capital IQ Consensus Estimate.
4:09 pm Intersil beats by $0.02, reports revs in-line; guides Q2 EPS below consensus, revs in-line (ISIL) : Reports Q1 (Mar) earnings of $0.17 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.15; revenues fell 4.2% year/year to $134.2 mln vs the $133.3 mln consensus.
Gross margin improved again and was up to 59.9% on a GAAP basis and 60.2% on a non-GAAP basis.
Guidance: Co issues mixed guidance for Q2, sees EPS of $0.15-$0.17 vs. $0.19 Capital IQ Consensus Estimate; sees Q2 rev flat to up 3%, equating to approx $140.1-$144.3 mln vs. $143.37 mln Capital IQ Consensus Estimate.
4:07 pm CalAmp announces a proposed private offering of $125 mln in convertible senior notes due 2020 (CAMP) : Co expects to use a portion of the net proceeds from the offering of the notes to fund the cost of convertible note hedge transactions with the hedge counterparties. Co also expects to use the remainder of the net proceeds from the sale of the notes for general corporate purposes, which may include acquisitions, strategic transactions and working capital
4:06 pm Flextronics beats by $0.02, misses on revs; guides Q1 EPS below consensus, revs below consensus (FLEX) : Reports Q4 (Mar) earnings of $0.27 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.25; revenues fell 11.5% year/year to $5.95 bln vs the $6.26 bln consensus. Co issues downside guidance for Q1, sees EPS of $0.20-0.26, excluding non-recurring items, vs. $0.26 Capital IQ Consensus Estimate; sees Q1 revs of $5.6-6.2 bln vs. $6.51 bln Capital IQ Consensus Estimate.
Co announces acquisition of Mirror Controls International (See 16:03). Acquisition is not having an impact on co's guidance.
4:03 pm Flextronics to acquire Mirror Controls International from private equity firm Egeria in an all cash transaction valuing its share capital at 457 mln, or $494 mln USD; expected to be accretive to co's growth, margin, EPS and cash flow profile and is expected to close in the September quarter (FLEX) : Co announced that it has entered into a definitive agreement to acquire Mirror Controls International (MCi) from private equity firm Egeria in an all cash transaction valuing its share capital at 457 million ($494 million USD*).
Based in Woerden, the Netherlands, and with three highly automated manufacturing facilities in China, Mexico, and Ireland, MCi is a leading global manufacturer of glass and powerfold mirror actuators in the automotive market and generated ~200 million ($216 million USD*) in revenue over the past twelve months, historically growing over 20% year over year. The acquisition is expected to be accretive to Flextronics' growth, margin, EPS and cash flow profile and is expected to close in the September quarter.
4:03 pm Coherent beats by $0.07, beats on revs (COHR) : Reports Q2 (Mar) earnings of $0.94 per share, $0.07 better than the Capital IQ Consensus Estimate of $0.87; revenues rose 2.3% year/year to $203.7 mln vs the $201.24 mln consensus.
Bookings received during the second fiscal quarter ended April 4, 2015 were $220.6 million. This result compares to bookings of $261.8 million in the same prior year period and $162.5 million in the immediately preceding quarter. The book-to-bill ratio was 1.08, and ending backlog expected to ship in the next 12 months was $315.3 million at April 4, 2015, compared to a backlog of $295.9 million at December 27, 2014 and a backlog of $303.8 million at March 29, 2014.
4:02 pm FormFactor beats by $0.01, beats on revs (FORM) : Reports Q1 (Mar) earnings of $0.10 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.09; revenues rose 26.6% year/year to $70.82 mln vs the $68.12 mln consensus.
4:10 pm : The stock market ended the midweek session on a modestly lower note. The S&P 500 shed 0.4% while the Nasdaq Composite (-0.6%) underperformed throughout the session.
Equity indices struggled in the early going after the advance reading of Q1 GDP (0.2%; Briefing.com consensus 1.0%) missed expectations. However, that disappointment was partially offset by the FOMC directive, which did not stir concerns of a rate hike taking place in the near term. Instead, the FOMC reiterated that the current policy stance will remain appropriate until there is reasonable confidence among members that inflation will move back to the 2.0% objective.
Seven sectors registered losses while energy (+0.7%) outperformed throughout the session thanks to a 2.6% gain in crude oil, which settled at $58.52/bbl. The energy component was boosted by a storage report that showed a smaller than expected inventory build while dollar weakness also factored into the move higher. The Dollar Index (95.22, -0.88) fell 0.9%, registering its sixth consecutive decline. Most notably, the euro (1.1111) added 1.3% against the dollar.
On the flip side, countercyclical consumer staples (-0.8%) and health care (-0.8%) ended at the bottom of the leaderboard, but health care managed to cut its loss in half thanks to modest gains in the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 344.81, +0.31) added 0.1% to snap its three-day skid, but could not close above its 50-day moving average (348.51), which served as resistance for the second day in a row. Meanwhile, the broader health care sector slumped under the weight of Express Scripts (ESRX 84.79, -2.71) and Humana (HUM 168.05, -13.06) after both reported earnings. Express Scripts reported in-line and narrowed its guidance while Humana missed expectations.
Elsewhere, the technology sector (-0.5%) ended a bit behind the broader market, but that masked a late afternoon spike in Salesforce.com (CRM 74.65, +7.76) after Bloomberg reported the company has hired bankers to discuss potential offers. As for high-beta chipmakers, the group struggled with the PHLX Semiconductor Index losing 0.6%.
Similarly, another high-beta group-transport stocks-could not catch up to the broader market. The Dow Jones Transportation Average lost 1.2% with Norfolk Southern (NSC 103.18, -1.19) falling 1.1% after reporting in-line with its warning. However, airline stocks led the group lower amid rising fuel prices with Delta Air Lines (DAL 45.03, -1.17) sliding 2.5%.
Treasuries retreated throughout the day, but they trimmed their losses during afternoon action. The 10-yr note ended essentially where it traded just ahead of the FOMC Statement with the benchmark yield higher by four basis points at 2.05%.
Today's participation was ahead of recent averages with more than 845 million shares changing hands at the NYSE floor.
Economic data included advance Q1 GDP, Pending Home Sales, and MBA Mortgage Index:
According to the advance estimate, Q1 2015 GDP increased 0.2% after increasing 2.2% in Q4 2014 while the Briefing.com consensus expected an increase of 1.0%
Even more disappointing, the downside miss on the top-line growth number masked an even worse overall trend. If not for an increase in inventories, GDP would have been negative in the first quarter. Real final sales declined 0.5% in the first quarter after increasing 2.3% in Q4 2014. That was the worst quarter since real final sales declined 1.0% in Q1 2014.
Personal consumption expenditures increased 1.9% in the first quarter, down from a 4.4% increase in Q4 2014
Goods spending increased a modest 0.2%, down from 4.8% in the fourth quarter
Services spending increased 2.8% after increasing 4.3% in the fourth quarter
Pending home sales for March rose 1.1% while the Briefing.com consensus expected an increase of 1.2%
The weekly MBA Mortgage Index fell 2.3% to follow last week's 2.3% increase
Tomorrow, weekly Initial Claims (Briefing.com consensus 290K), Personal Income/Spending data for March, and Q1 Employment Cost Index (consensus 0.6%) will be released at 8:30 ET while the Chicago PMI report for April (expected 50.0) will cross the wires at 9:45 ET.
Nasdaq Composite +6.1% YTD
Russell 2000 +3.5% YTD
S&P 500 +2.3% YTD
Dow Jones Industrial Average +1.2% YTD
DJ30 -74.61 NASDAQ -31.78 SP500 -7.91 NASDAQ Adv/Vol/Dec 881/1.73 bln/2118 NYSE Adv/Vol/Dec 1016/847.7 mln/2036
3:40 pm :
Commodities had a number of catalysts today, including industry data, Fed data and morning econ data
WTI crude oil futures were sitting near the day's high, at the time, just ahead of the weekly EIA storage data
Following the data, WTI oil extended gains above $59/barrel, but closed the day +$1.47 at $58.52/barrel
Natural gas futures rallied 3% today to end at $2.60/MMBtu
Precious metals sold off today, extending losses post-Fed
June gold ended -$3.80 at $1210/oz, while May silver +$0.07 at $16.55/oz
11:54 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (87) outpacing new lows (60) (:SCANX) : Stocks that traded to 52 week highs: ALSK, AMG, AVY, BANR, BGCP, BK, BKSC, CATY, CBG, CEB, CFNL, CISG, CLGX, CMT, COL, CRI, CUBI, CYN, CYNO, CYOU, DDC, DHIL, DOVR, DOX, EBF, EEFT, ETFC, EVI, FAC, GNE, GSH, GT, HELE, HLT, HOT, HQY, HTLF, ING, INTL, IPWR, JBSS, JYNT, KALU, KMG, KTCC, LMAT, LOGM, LQ, LVLT, MA, MCGC, MSTR, NORD, NRZ, NTES, OEC, OMAM, OSHC, PKT, PNFP, QTM, RNG, SAR, SBBX, SBCF, SC, SEIC, SFG, SSB, SYKE, SYUT, TOWN, TPX, TRCB, TREE, TRQ, TSS, UBSI, USAT, USCR, VNTV, VRSK, VRX, WD, WTBA, WVVI, XPO
Stocks that traded to 52 week lows: AGNC, AHC, AIXG, AKAO, AMCF, ANIK, ASND, BAGR, BV, CALX, CBAY, CBLI, CEL, CIDM, CLDN, CPTA, DAR, DEST, DRYS, DXM, EMES, EOX, ESBK, FREE, FTK, FUEL, GLRI, GOV, HGT, HURN, ICON, IF, IKAN, LL, LPTN, LXP, MOBL, MSL, MTGE, NLY, NNVC, NVTA, OTEL, PESI, PKY, PRTS, PTNR, RYN, SAIA, SPW, SSYS, STRM, TGEN, UTIW, VIDE, VRS, VTNR, WPG, WYNN, XOMA
ETFs that traded to 52 week highs: TAO
ETFs that traded to 52 week lows: none
9:05 am Integrated Silicon misses by $0.02, misses on revs (ISSI) : Reports Q2 (Mar) earnings of $0.18 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus Estimate of $0.20; revenues fell 1.0% year/year to $80.1 mln vs the $82.62 mln consensus.
"Revenue in Q2 reflected softer than anticipated demand across our end markets as well as reduced flash sales due to the ongoing wafer shortage. However, design activity in the quarter was strong, including a number of large DDR3 and mobile DRAM wins for automotive and industrial applications. We also secured our first design wins for RLDRAM3 memory and for our flash products in an automotive application. Additionally, analog revenue increased in the quarter compared to Q1 as we continue to gain customer traction with key new products, in particular for our higher margin business outside of China."
Co will not be providing financial guidance due to the pending acquisition.
8:06 am O2Micro reports EPS in-line, misses on revs (OIIM) : Reports Q1 (Mar) loss of $0.12 per share, in-line with the Capital IQ Consensus Estimate of ($0.12); revenues fell 20.6% year/year to $13.1 mln vs the $13.67 mln consensus. Co sees Q2 revs of 10-16% QoQ vs +11.2% Capital IQ consnsus
7:12 am Silicon Labs beats by $0.08, beats on revs; guides Q2 EPS in-line, revs in-line (SLAB) : Reports Q1 (Mar) earnings of $0.54 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus Estimate of $0.46; revenues rose 12.4% year/year to $163.7 mln vs the $159.16 mln consensus.
Co issues in-line guidance for Q2, sees EPS of $0.50-0.56, excluding non-recurring items, vs. $0.53 Capital IQ Consensus Estimate; sees Q2 revs of $164-169 mln, and anticipates another record in its IoT products, vs. $167.14 mln Capital IQ Consensus Estimate.
6:32 am United Micro beats by $0.04, reports revs in-line (UMC) : Reports Q1 (Mar) earnings of $0.32 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.28; revenues rose 18.8% year/year to $37.65 bln vs the $37.73 bln consensus.
Foundry revenue from advanced nodes: 9% from 28nm, 24% from 40nmFoundry capacity utilization rate: 93% During 1Q15, wafer shipments increased 3.5% sequentially, which led to foundry revenue of NT$36.00 billion.
Quarter-over-Quarter Guidance:
Foundry Segment Wafer Shipments: To remain flatFoundry Segment ASP in US$: To remain flatFoundry Segment Profitability: Gross profit margin will be in the mid-20 percentage rangeFoundry Segment Capacity Utilization: Approximately 90%2015 CAPEX for Foundry Segment: $1.8bnGuidance to New Business Segment: Revenue to be approximately NT$1.75bn and operating loss to be ~NT$280mn
Dialog Semiconductor plc (DLGNF) announced that its DA9210 IC will deliver precision power management to the MediaTek processor in HTC's latest smartphones, the HTC One M9+ and HTC One E9+
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