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From Briefing.com: 4:20 pm : Evidently, the absence of potentially troubling economic data a day earlier did help investors place more of an emphasis on the "good" news embedded in earnings reports because today's mixed earnings news and economic data dashing hopes of a Fed rate cut anytime soon took a toll on sentiment.

The major averages opened mixed as investors weighed the sustainability of yesterday's impressive rally against another round of better than expected results. Dow component AT&T (T 36.84 0.21) was the day's biggest name, opening at a multi-year high (+2.6%) after beating expectations and guiding for double-digit EPS growth this year and next. Nonetheless, blue-chip buyers began showing some reserve early on, especially after the Dow hit record levels and the S&P 500 hit six-year highs Wednesday.

The Nasdaq wasn't faring much better early on as it was clinging to a small gain following unexpectedly strong results from tech companies like eBay (EBAY 33.65 +3.65) and Qualcomm (QCOM 38.16 -0.46). eBay, a recommended holding in the Briefing.com Active Portfolio, was up as much as 18% last night following its encouraging Q4 report and still closed up 8%. Be that as it may, a two-day hiatus from any economic reports also left investors anxiously waiting to see if the housing market was still showing signs of stabilization.

Then, at 10:00 ET, existing home sales for December checked in shy of economists' forecasts and, for all of 2006, fell 8.4% -- the largest annual decline in 17 years. While that was responsible for a knee-jerk reaction in stocks that exacerbated the temptation to take some of yesterday's gains off the table, the worst was yet to come.

Fed funds futures, which were pricing in a nearly 50% rate cut before June, erased all expectations of a Fed easing. As a result, bonds began selling off, which lifted the yield on the 10-year note to five-month highs and left investors pricing in a more hawkish Fed stance just days before the next FOMC meeting. Such concerns weighed heavily on the rate-sensitive and influential Financials sector.

Since higher interest rates spark valuation concerns among growth stocks, Technology found itself under some additional profit-taking pressure. That was especially evident on the tech-heavy Nasdaq, which surrendered nearly all of Wednesday's 1.4% advance. In fact, Microsoft (MSFT 30.45 -0.64), which is also a Dow component and the fourth most influential constituent on the S&P 500, was up as much as 1.3% at 4 1/2-year highs earlier in the session. However, the overwhelmingly bearish bias eventually weighed on the software giant as investors growing nervous about tonight's Q2 report closed the stock at its worst level of the day and down 2.1%.

On a positive note, oil prices plunged 2.1% to close at $54.23/bbl, but subsequent absence of leadership from Energy (-2.0%) -- today's worst performing sector -- and the failure of transportation stocks to take notice raised another wall of worry about current valuations. Sure, the bulk of earnings reports were again better than expected today; but the percentage of those beating estimates (~55%) running below normal (65-70%), and the number of blowout reports not as large as in recent quarters, merely fed into underlying worries about decelerating profit growth. BTK -1.4% DJ30 -119.21 DJTA -1.4% DJUA -0.6% DOT -0.8% NASDAQ -32.04 NQ100 -1.4% R2K -1.3% SOX -0.5% SP400 1.2% SP500 -16.23 XOI -2.1% NASDAQ Dec/Adv/Vol 2146/883/2.15 bln NYSE Dec/Adv/Vol 2551/771/1.70 bln

4:37PM Magma Design reports in-line; guides in-line (LAVA) 8.38 -0.38 : Reports Q3 (Dec) earnings of $0.06 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus of $0.06; revenues rose 9.1% year/year to $45.1 mln vs the $44.7 mln consensus. Co issues in-line guidance for Q4, sees EPS of $0.05-0.09, ex items vs. $0.09 consensus; sees Q4 revs of $46-50 mln vs. $49.00 mln consensus.

4:34PM Sanmina-SCI reports Q1 EPS above consensus, revs below consensus; issues in-line Q2 guidance (SANM) 3.41 +0.02 : Reports Q1 (Dec) earnings of $0.07 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.06; revenues fell 2.9% year/year to $2.78 bln vs the $2.8 bln consensus. Co issues in-line guidance for Q2, sees EPS of $0.05-0.07 vs. $0.06 consensus; sees Q2 revs of $2.65-2.75 vs. $2.72 bln consensus.

4:34PM Skyworks reports Q1 results in-line; guides Q2 EPS in-line, revs below consensus (SWKS) 7.00 -0.07 : Reports Q1 (Dec) earnings of $0.13 per share, in line with the Reuters Estimates consensus of $0.13; revenues fell 1.2% year/year to $196 mln vs the $196.4 mln consensus. Co issues guidance for Q2, sees EPS of $0.09-0.11 vs. $0.10 consensus; sees Q2 revs of $180 mln vs. $187.25 mln consensus.

4:24PM Zarlink Semi beats by $0.04, issues downside Q4 guidance (ZL) 2.19 +0.07 : Reports Q3 (Dec) earnings of $0.04 per share, $0.04 better than the Reuters Estimates consensus of ($0.00); revenues fell 8.8% year/year to $34.1 mln vs the $34.6 mln consensus. Co issues downside guidance for Q4, sees EPS of -$0.01 to $0.00 vs. $0.01 consensus; sees Q4 revs of $32-34 vs. $35.76 mln consensus. Co also says "In line with our industry peers, we expect to see this market slowdown continue into the fourth quarter. However, as we continue to focus on opportunities in optoelectronics, network communications, low-power wireless telemetry, and analog foundry, I am confident that when the semiconductor market rebounds we are well-positioned for long-term success."

4:20PM Microsoft beats by $0.03; guides in-line (MSFT) 30.45 -0.64 : Reports Q2 (Dec) earnings of $0.26 per share, $0.03 better than the Reuters Estimates consensus of $0.23; revenues rose 6.0% year/year to $12.54 bln vs the $12.08 bln consensus. MSFT reports Q2 revenue deferral of $1.64 bln vs $1.5 bln prior guidance. Co issues in-line guidance for Q3, sees EPS of $0.45-0.46 vs. $0.46 consensus; sees Q3 revs of $13.7-14.0 bln vs. $14.01 bln consensus. Co issues in-line guidance for FY07, sees EPS of $1.45-1.47 vs. $1.46 consensus; sees FY07 revs of $50.2-50.7 bln vs. $50.48 bln consensus and prior guidance of $50-50.9 bln.

4:19PM Western Digital reports $0.04 above consensus (WDC) 20.80 -0.03 : Reports Q2 (Dec) earnings of $0.57 per share, $0.04 better than the Reuters Estimates consensus of $0.53; revenues rose 13.0% year/year to $1.43 bln vs the $1.36 bln consensus.

3:59PM Market View: Stock indices reverse (TECHX) : The rebound off early week lows in the S&P 500 was fractionally extended in opening trade, setting a new 6yr intraday high in the process, but this proved to be the high for the session. Whether it was concern about earnings (smaller percentage of stocks beating expectations, fewer blowout reports), a jump in the 10-Yr Yield to a new five month high or the technical failure near a Fib extension target mention yesterday at 1439, the market trended steadily lower for the remainder of the day. The slide resulted in a negative outside day/lower close for several averages and brought the 20 exp back into play for the S&P 500 and the Dow (Nasdaq 100 near 50 exp), which is where the indices stabilized early in the week. The reversal was accompanied by broad based selling with Housing -3.2%, Broker/Dealer -2.7%, Coal -2.7%, Oil Service HOLDRs -2.2%, Oil -2.1%, Restaurant -2%, Disk Drive -2%, Airline -1.9%, Networking -1.7%, Natural Gas -1.7% and Media -1.7% pacing the way. Little was on the plus side other than Steel +1.9% Internet HOLDRs +0.8%, Medical Supplies +0.5% and REITs +0.4%.

12:31PM Semi HOLDRs -SMH- extends pullback off 50 sma (TECHX) 33.69 +0.10 : Noted resistance at its 50 sma (34.25) in the 09:48 update with the SMH reversing after a morning test (session high 34.27). The decline has stalled at 33.64 which marks the top of the Jan 18-Jan 24 consolidation. Intraday need a recovery off this level back above the 33.79/33.82 area to help neutralize the developing weaker intraday action (click for chart). Support below unchanged (33.59) is in the 33.46/33.40 area.

8:09AM Cypress Semi reports in-line (CY) 17.12 : Reports Q4 (Dec) earnings of $0.15 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus of $0.15; revenues rose 20.3% year/year to $287 mln vs the $288.3 mln consensus. Co states, "Cypress's business remains fundamentally solid with a book-to-bill ratio of 0.96 and 86% of the first quarter booked, going into the quarter. We expect routine seasonality in our core semiconductor business, and are seeing some softness in certain communications-related markets--especially cell phone basestations--but we currently do not anticipate any significant or prolonged slowdown in 2007."

8:02AM RF Micro Device receives GaN purchase order from military supplier (RFMD) 7.82 : Co announces announces it has received its first purchase order from a top-tier military supplier for a new product using RFMD's gallium nitride high electron mobility transistor process technology. RFMD began efforts to commercialize GaN technology in 2000 and expects to commence first shipments in the FH of calendar 07.

7:11AM Kulicke & Soffa beats on top and bottom lines, guides Q2 revs below consensus (KLIC) 8.53 : Reports Q1 (Dec) earnings of $0.08 per share, $0.09 better than the Reuters Estimates consensus of ($0.01); revenues fell 25.6% year/year to $152.3 mln vs the $144.4 mln consensus. Co issues downside guidance for Q2, sees Q2 revs of "about $140 mln" vs. $150.48 mln consensus. "This is primarily the result of lower equipment sales anticipated in the March quarter. In addition, capillary and wire unit volumes are expected to be seasonally lower due to the lunar New Year holidays in February."

09:21 am Qualcomm (QCOM)

38.62: Shares of Qualcomm traded higher on Thursday after the wireless chip maker posted a 5% increase in first quarter profits on record 3G handset and chipset shipments, and reaffirmed its outlook for the full-year. The stock, which has shed more than 18% over the past year amid several legal disputes and increasing competition, gained 2% in pre-market activity following the announcement.

Despite the better than expected results, persistent legal issues with Broadcom (BRCM) and regulatory complaints in Europe from several competitors, as well as ongoing negotiations with Nokia (NOK) over a technology license pact that expires in April, remain significant overhangs on the stock. Accordingly, we believe the current risk/reward does not warrant an investment, and we would not be committing money to the stock at this time.

For its fiscal first quarter, Qualcomm earned $648 million, or $0.38 per share, up from $620 million, or $0.36 per share, in the year-ago period. Excluding stock-based compensation, earnings were $0.43 per share - a penny better than the Reuters Estimates consensus. Revenue rose 16% year/year, and 1% sequentially, to $2.02 billion, driven by strong demand for 3G handsets, but fell just short of analysts' estimate of $2.07 billion.

Based on the latest results, Qualcomm projected second quarter earnings of $0.42 to $0.44 per share on revenue between $2.0 and $2.1 billion. That is in line with analysts' expectations, according to Reuters Estimates. It expects to ship between 55 and 57 million chipsets in the quarter, up from 49 million in the same period last year. For the full-year, the company still expects earnings to be in a range of $1.72 to $1.77 per share on revenue of $8.1 to $8.6 billion, versus the consensus estimate of $1.78 per share on $8.56 billion.

--Richard Jahnke, Briefing.com

08:54 am Nokia (NOK)

20.21: This round goes to the Finns. After Motorola's (MOT) abysmal fourth quarter results, which were led by a severe contraction in handset margins, expectations for Nokia were cautious at best. Even though the world's largest handset maker has been producing a myriad of new, compelling models, market pricing pressures remain as competition has intensified.

But for Nokia, its shares are skyrocketing in Europe after the company delivered a better than expected interim result despite falling handset prices.

The Finland-based company reported revenues of 11.7 billion euros and earnings of 0.30 euros versus consensus of 11.6 billion euros and 0.28 euros, respectively. The upside likely came from stronger gross margins, which bounced back 250 basis points from last quarter to 32.4%. Operating margins increased 110 basis points to 13.3% from 12.2% in last year's quarter.

Nokia's device ASPs did decline, as expected, to 89 euros, from 93 euros in the prior year. Meanwhile, device volumes posted a healthy 19% sequential, and 26% year over year, increase to 106 million units.

Overall, the handset market posted healthy growth rates in the quarter, which are estimated at 19% in terms of global Q4 device units. Nokia's market share was left unchanged at 36% compared to last year, but it was up two points from the third quarter. The company expects ASP declines for the entire market in 2007.

Speaking of 2007, Nokia estimates market unit volumes will grow up to 10% versus a 20% run rate over the past few years. This fact, coupled with declining ASPs, will make for a challenging profit environment for the entire group. For investors looking for names in techland, we would suggest looking elsewhere.

--Kimberly DuBord, Briefing.com