From Briefing.com: 4:22 pm Microchip completes Atmel (ATML) acquisition; provides updated Q4 guidance with Microchip sales between the mid-point and high end of guidance and EPS to be near the high end of guidance (MCHP) :
Microchip expects Q4 net sales for fiscal fourth quarter ended March 31, 2016 to be an all-time record and between the mid-point and high end of the guidance of $552.0 mln to $568.5 mln vs. $560.31 mln Capital IQ Consensus Estimate. Microchip also expects its non-GAAP earnings per share to be near the high end of its February 3, 2016 guidance of $0.65-0.69 vs. $0.67 Capital IQ Consensus Estimate. Microchip also announced that Atmel's sales and earnings for the quarter ending March 31, 2016 are expected to be significantly lower than Atmel's December 31, 2015 quarterly results. Specifically, Atmel's net sales are expected to be in the range of $219 mln to $221 mln in its quarter ended March 31, 2016, down 15.8% at the mid-point from Atmel's net sales in the quarter ended December 31, 2015. In calendar year 2015, Atmel's distributors where revenue is recognized on a sell-in basis increased their inventory levels significantly and the inventory in this sales channel saw a severe inventory contraction in the March 2016 quarter. Prior to the acquisition closing, Atmel recognized revenue in the Americas and Europe based on sell-through from distribution, but recognized revenue in Asia based on sell-in to distribution. Based on sell-through revenue recognition, Atmel's March 31, 2016 quarter net sales are expected to be between $250 mln to $253 mln, down 6.1% at the mid-point from its net sales based on sell-through in the quarter ended December 31, 2015. Following the closing of the acquisition, GAAP net sales from Atmel will continue to be reflected based on sell-in revenue recognition in Asia until the contracts with distributors are changed to support revenue recognition based on sell-through. This process is expected to take a few quarters to implement based on Microchip's experience with prior acquisitions. Microchip also announced that in consolidating Atmel's results, it expects to treat the mobile touch business of Atmel as an asset held for sale and will report the net profit/loss of this business below the operating line of Microchip's income statement. For reference, for the quarter ending March 31, 2016, the net sales for Atmel's mobile touch business is expected to be about $6 mln to $7 mln on a GAAP revenue basis (sell-in revenue recognition in Asia) compared to $18 mln in the December 2015 quarter.
4:02 pm Aehr Test Systems announces follow-on order of more than $500,000 for multiple WaferPak full-wafer contactors for its FOX-15 Multi-wafer Burn-In and test system (AEHR) : The WaferPak contactors are expected to ship over the next several months.
Broader market action was modestly lower today. Trading began with slightly losses, and action briefly peeked above flat lines near 10 a.m. ET. Sellers took hold then, and the three major indices gradually ticked lower as the afternoon progressed, eventually coming to a stop just off session lows. The worst performer today was the tech-heavy Nasdaq Composite which shed 22.75 points (-0.46%) to close 4891.79. The S&P 500 was down 6.65 points (-0.32%) to close Monday 2066.13. Posting the most shallow losses on Monday, the Dow Jones Industrial Average lost 55.75 points (-0.31%) to end the day 17737.00.
Technology (XLK 44.53, -0.17 -0.38%) sector trading was mostly in the red, as was the broader market, as component Intel (INTC 32.00, -0.45 -1.39%) was notably weak following a premarket downgrade at Exane BNP Paribas to a Neutral rating from an Outperform. Other sectors finished as follows: XLV +1.20%, IYZ +0.55%, XLP +0.04%, XLU -0.42%, XLF -0.48%, XLE -0.74%, XLY -0.78%, XLI -1.13%, XLB -1.30%.
In the S&P 500 Information Technology (739.66, -3.79 -0.51%) sector, trading was also notably weak as component Yahoo! (YHOO 37.02, +0.54 +1.48%) led the way higher following a NY Post article out over the weekend suggesting Softbank (SFTBY 24.35, -0.06 -0.23%) wants to gain control of various company assets. Other names which finished trading in the red included FB -3.02%, ADS -2.90%, CTSH -2.15%, MU -2.09%, CSC -1.66%, PYPL -1.55%, JNPR -1.45%, PAYX -1.33%, HPQ -1.31%.
Other notable news items among sector components:
Hewlett Packard Enterprise (HPE 18.04, -0.36 -1.96%) sold its equity stake in Mphasis to Blackstone (BX 27.40, -0.73 -2.60%) for about $825 million.
Microchip (MCHP 48.38, +0.10 +0.21%) announced that Atmel (ATML 8.14, +0.02 +0.25%) shareholders approved merger with MCHP.
Finjan Holdings (FNJN 0.89, -0.02 -2.20%) announced the stay was lifted in case of FNJN v. Symantec (SYMC 18.60, +0.19 +1.03%).
A NY Post report suggested that Softbank (SFTBY) wants to gain control of various Yahoo! (YHOO) assets.
Elsewhere in the tech space:
Ruckus Wireless (RKUS 13.24, +3.24 +32.40%) to be acquired by Brocade (BRCD 9.19, -1.45 -13.63%) for $14.43 per share in cash and stock, or about $1.5 billion. Under the terms of the agreement, RKUS stockholders will receive $6.45 in cash and 0.75 shares of BRCD common stock for each share of RKUS common stock. BRCD expects the transaction to be accretive to its non-GAAP earnings by its first quarter of fiscal 2017.
GigOptix (GIG 2.58, -0.14 -5.15%) to acquire Magnum Semiconductor in a cash and stock transaction valued at about $55 million. The company also expects the deal to be immediately accretive to its FY16 financial results.
Groupon (GRPN 4.29, +0.37 +9.44%) announced a $250 million investment from Atairos, which will explore collaboration opportunities with Comcast (CMCSA 61.43, -0.19 -0.27%). Additionally, the company's Board added $200 million to repurchase program.
Zayo Group Holdings (ZAYO 24.52, +0.23 +0.95%) acquired privately held Clearview International for about $19 million.
Net 1 UEPS Techs (UEPS 8.99, -0.12 -1.32%) acquired a 60% stake in Masterpayment and signed strategic co-operation agreement with Bank Frick. Financial terms were not disclosed.
Analyst actions:
RKUS was downgraded at BTIG Research and Craig Hallum,
INTC was downgraded to Neutral from Outperform at Exane BNP Paribas,
CVG was downgraded to Neutral from Buy at Sidoti,
CNSL was downgraded to Underperform from Neutral at DA Davidson,
ILIAY was downgraded to Sell from Hold at Kepler;
OTEX was initiated with a Buy at TD Securities,
MKTO was initiated with a Buy at Craig Hallum,
CSIQ and SEDG were initiated with an Overweight at Barclays
4:15 pm : The major averages began the week on a lower note as the broader market pulled back from its impressive finish to the first quarter. Additional factors to today's decline included a slide in crude oil prices, hawkish remarks Boston Fed President Eric Rosengren (an FOMC voter), and the underperformance of the heavily-weighted technology (-0.5%), financial (-0.5%), and industrial (-1.0%) sectors. The Nasdaq Composite (-0.5%) finished the day behind the Dow Jones Industrial Average (-0.3%), and the S&P 500 (-0.3%).
The equity market drifted lower to begin the day as a slump in the oil patch outweighed a quiet overnight session. Meanwhile, hawkish commentary from Boston Fed President Rosengren pushed the major averages to fresh morning lows as he alluded to a rate hike taking place before the financial markets expect to see one. Furthermore, President Rosengren stated that expectations of one or zero interest rate hikes in 2016 might be "too pessimistic."
Equity indices recovered to their flat lines by the early-afternoon, but were unable to hold these levels as the heavyweight technology (-0.5%), financial (-0.5%), and industrial (-1.0%) sectors extended their losses. Additionally, crude oil spent most of the afternoon drifting towards fresh session lows. WTI crude ended its day lower by 2.8% at $35.72/bbl.
Eight sectors finished their day beneath their flat lines as industrials (-1.0%), materials (-1.0%), and consumer discretionary (-0.9%) led to the downside while health care (+1.0%) and telecom services (+0.7%) sported the only gains of the day.
In the industrial space (-1.0%), heavyweight constituents General Electric (GE 31.23, -0.70) and Danaher (DHR 93.78, -1.1.88) demonstrated relative weakness after both were downgraded from "Outperform" to "Market Perform" at Bernstein.
Meanwhile, the Dow Jones Transportation Average (-0.9%) underperformed as rail names and JetBlue (JBLU 20.41, -0.92) weighed on the index. JetBlue was initially reported to be in contention to acquire Virgin America (VA 55.11, +16.21), but Alaska Air (ALK 78.92, -3.09) won its bid for the company with its offer of $57/share in an all cash transaction.
In the influential technology space (-0.5%), Facebook (FB 112.55, -3.51) weighed on the broader sector after cautious commentary from Deutsche Bank warned against the company's first quarter earnings. Elsewhere, the high-beta chipmakers underperformed, evidenced by the 0.9% decline in the PHLX Semiconductor Index. The index slipped as Intel (INTC 32.00, -0.45) declined 1.4% in response to a downgrade at Exane BNP Paribas.
On top of the leaderboard, the health care space (+1.0%) outperformed to continue its recent rebound effort. The sector has gained 2.3% since the beginning of April, but remains down 3.8% since the beginning of 2016. The iShares Nasdaq Biotechnology ETF (IBB 270.65, +2.34) underperformed the broader sector, but trimmed its 2016 loss to 18.3%. Meanwhile, positive results from Edwards Lifesciences' (EW 105.08, +15.16) PARTNER II Trial of its SAPIEN 3 valve helped boost the broader sector.
The U.S. Dollar Index (94.57, -0.05) ended its session above its session low as the greenback fell against the euro and the yen. The euro ended unchanged against the dollar at 1.1391. Meanwhile, the dollar/yen lost 0.3%, slipping to 111.34.
The retreat in the equities was enough to cause a momentary uptick in the Treasury complex, but the yield on the 10-yr note ended its day unchanged at 1.77%.
Today's participation fell beneath the recent average as fewer than 801 million shares changed hands at the NYSE floor.
Today's economic data was limited to Factory Orders for February:
New orders for manufactured goods in February declined 1.7%, as expected, marking the third time in the last four months that they have been down.
January was the exception in that string, yet it was shown today as well that factory orders for January were up only 1.2% versus a previously reported 1.6% increase.
Excluding transportation, factory orders declined 0.8% on top of a downwardly revised 0.6% decline in January (from -0.2%) and are down 3.4% year-over-year.
The downturn in orders in February, coupled with the downward revisions for January, underscore an economy that has failed to gain any excitable momentum in the first quarter after growing at an annualized rate of just 1.4% in the fourth quarter.
The inventories-to-shipments ratio was unchanged at 1.37.
Tomorrow's economic data will include the February Trade Balance (Briefing.com consensus -$46.20 billion) and the ISM Service Index for March (Briefing.com consensus 54.0), which will be released at 8:30 ET and 10:00 ET, respectively.
Russell 2000 -2.4% YTD
Nasdaq Composite -2.3% YTD
S&P 500 +1.1% YTD
Dow Jones +1.8% YTD
DJ30 -55.75 NASDAQ -22.75 SP500 -6.65 NASDAQ Adv/Vol/Dec 1138/1.555 bln/1684 NYSE Adv/Vol/Dec 801/800.3 mln/2230
3:30 pm :
The dollar index rallied off of today's lows, putting downward pressure on commodities in afternoon trading
Commodities, as measured by the Bloomberg Commodity Index, are currently down about -1.0% at 77.19
Crude oil briefly spiked in the green before a steady and prolongued downtrend the rest of the day, closing notably lower in the afternoon
May WTI crude oil futures closed down $1.04 (-2.8%) at $35.72/barrel
Crude oil is down -13.8% from this year's high of $41.45/barrel seen on Mar 22, 2016
Natural gas spiked to new highs of the day around $2.07/MMBtu in early trading before entering a downtrend the rest of the day, bouncing off today's low at $1.98/MMBtu and closing near the midpoint of the initial rally
May natural gas futures closed up $0.05 (+2.6%) at $2.00/MMBtu
Natural gas has rallied about +13% off of its 1-month low of $1.77/MMBtu seen a few weeks ago
In precious metals, gold closed near its low of the day
June gold futures closed down $4.10 (-0.3%) at $1219.40/oz
Silver consolidated and moved slightly lower, closing near its low of the day
May silver futures closed $0.12 lower (-0.8%) at $14.94/oz
Base metal copper plummeted in early morning trading before entering into a modest recovery, still closing lower for the day
May copper futures closed $0.02 lower (-0.9%) at $2.14/lb
8:46 am Ruckus Wireless to be acquired by Brocade (BRCD) for $14.43/share in cash and stock, or ~$1.5 bln (RKUS) :
Brocade (BRCD) and Ruckus Wireless announced that Brocade has entered into a definitive agreement to acquire Ruckus Wireless, Inc. in a cash and stock transaction.
Under the terms of the agreement, Ruckus stockholders will receive $6.45 in cash and 0.75 shares of Brocade common stock for each share of Ruckus common stock. Based on the closing price of Brocade's stock on April 1, 2016, the transaction values Ruckus at a price of $14.43 per common share, or approximately $1.5 billion, and may fluctuate until close. Net of estimated cash acquired, the transaction value is approximately $1.2 billion. Brocade expects the transaction to be accretive to its non-GAAP earnings by its first quarter of fiscal 2017. The Ruckus organization will be led by current Ruckus CEO, Selina Lo, and report directly to Brocade CEO, Lloyd Carney.Brocade also announced that its Board of Directors has increased the authorization to repurchase its common stock under its existing stock repurchase program by $800 million, bringing the total remaining amount authorized under the program to approximately $1.7 billion.
8:45 am Marvell receives Nasdaq Staff Determination Letter; will remain listed pending hearing on April 14 (MRVL) : As a result of its delayed filing of its Form 10-K for fiscal 2016, as disclosed in the Form 12b-25 filed on March 31, 2016, Marvell received notice from the Listing Qualifications Staff of The Nasdaq Stock Market LLC that this matter serves as an additional basis for delisting Marvell's securities from the Nasdaq Stock Market, which will be considered at Marvell's upcoming hearing before the Nasdaq Hearings Panel. Marvell is scheduled for a hearing before the Panel on April 14, 2016. The Panel granted Marvell's request for the Company's shares to remain trading on Nasdaq pending the hearing and a final determination following the hearing.
ASML +1.6% (target raised to $105 at RBC Capital Mkts)
8:02 am Ruckus Wireless sees Q1 EPS and revenue at high end of prior range (RKUS) : Raises Q1 EPS to $0.09-0.10 from $0.08-0.10 vs $0.09 Capital IQ Consensus; revs $98-101 mln from $96-101 mn vs $98.38 mln Capital IQ Consensus Estimate.
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