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From Briefing.com: 4:25PM Intel reports in line EPS, beats on revs, gross margins below expectations; issues in line Q3 rev guidance, lowers FY07 capital spending expectations (INTC) 26.32 +0.37 : Reports Q2 (Jun) earnings of $0.19 per share, excluding 0.03 tax benefit, in line with the Reuters Estimates consensus of $0.19; revenues rose 8.4% year/year to $8.68 bln vs the $8.55 bln consensus. INTC reports Q2 gross margins of 46.9% 48.4% Street expectations. Co issues in-line guidance for Q3, sees Q3 revs of $9.0-9.6 bln vs. $9.34 bln consensus. Sees Q3 gross margin of 52% plus or minus a couple of points, vs 51.6% street expectations. INTC reaffirms FY07 gross margins of 51% plus or minus a few points, vs 51.2% Street expectations. Capital spending: $4.9 bln plus or minus $200 mln, lower than the previous expectation of $5.5 bln plus or minus $200 mln, primarily due to manufacturing efficiencies... Regarding Q2 gross margins of 46.9%, lower than the midpoint of the previous expectation. Microprocessor margins were as expected with higher unit shipments offset by lower average selling prices (ASPs). Demand for NOR flash products was lower than expected, resulting in impacts that lowered Intel's gross margin by one point.

4:20 pm : For a second straight day, stocks finished mixed. A batch of better than expected earnings, more proof the market remains awash in liquidity, and the first drop in producer prices since January initially armed the bulls with enough momentum to power the Dow to its fifth straight victory and, more notably, above 14,000 for the first time ever.

However, some nervousness heading into another deluge of corporate earnings, a closely-watched update on inflation (e.g. CPI), and the start of a two-day testimony before Congress from Fed Chairman Bernanke left some questioning whether the market's sizable gains of late are sustainable.

The Dow closed in record territory again; but its best performer was not among the two components in focus after topping Wall Street's expectations. Johnson & Johnson (JNJ 62.75 -1.05) beat forecasts and backed its full-year profit outlook but lowered its 2007 sales growth guidance. Coca-Cola (KO 53.06 -0.79) also checked in better than expected but continued weakness in North American sales left investors questioning the 52-week high shares hit a day earlier.

The Dow's salvation was American Express (AXP 64.80 +2.92), which accounted for all of the Dow's 20-point gain. The stock soared 4.7% after Goldman Sachs upgraded the stock to Buy and raised its price target to $77 from $66.

A technical breakout in General Electric (GE 40.77 +0.65), the second most heavily-weighted name on the S&P 500, was another bright spot and was the biggest reason behind Industrials pacing the way among just four sectors finishing higher. As evidenced by the Nasdaq turning in the best performance among the major averages, Novellus Systems (NVLS 33.03 +3.34) essentially calling the bottom in bookings helped validate optimism throughout Technology and support our recent upgrade on the sector to Overweight.

KLA-Tencor (KLAC 61.78 +5.08) later in the session offering some upbeat commentary out of the SEMICON West conference also helped pave the way for Intel (INTC 26.32 +0.37), a suggested holding in the Briefing.com Active Portfolio, ahead of its report tonight. A 3.1% rally in Yahoo! (YHOO 27.52 +0.82) ahead of its results after the close and a 2.5% surge in Microsoft (MSFT 30.77 +0.74), which also reports this week, provided additional sector support.

Materials (+0.6%) was the day's third best performing sector. Basell agreeing to buy Lyondell Chemical (LYO 47.05 +6.93) for $12.1 bln in cash and a $2 bln buyback from Rohm & Haas (ROH 61.27 +5.54) earmarked chemical stocks among the session's biggest winners. After being up as much as 1.6% at $75.35/bbl level intraday, crude for August delivery heading into expiration and closing relatively flat was also noteworthy.

Unfortunately, subsequent deterioration in the Energy (-0.9%) sector removed much of the leadership that had helped the S&P 500 recently hit historic highs and contend with the lack of participation from the more heavily weighted Financial sector.

The latter was in focus after Merrill Lynch (MER 86.86 -0.53) posted a 31% jump in Q2 profits; but its CFO saying the market for subprime debt has yet to stabilize prompted a reversal in MER shares and, had it not been for the rally in AXP, the sector would have slipped further into negative territory for the year.

Separately, today's headline PPI unexpectedly falling for the first time in five months due to a drop in food and energy prices was also welcome news for investors. When it was all said and done, though, investors opted to wait for Wednesday's more influential CPI report to get a better inflation read for Fed policy direction. BTK +0.1% DJ30 +20.57 DJTA +0.4% DJUA -0.1% DOT +0.4% NASDAQ +14.96 NQ100 +0.7% R2K +0.2% SOX +3.0% SP400 +0.2% SP500 -0.15 XOI -1.0% NASDAQ Dec/Adv/Vol 1497/1556/2.14 bln NYSE Dec/Adv/Vol 1885/1366/1.43 bln

4:08PM Research In Motion announces the BlackBerry 8820 Smartphone (RIMM) 230.07 +3.53 :

4:06PM Maxim Integrated says Nasdaq's Board of Directors grants stay regarding Maxim common stock (MXIM) 35.00 +0.14 :

3:59PM Market View: Semi/tech continues to outperform (TECHX) : Impressive performance if you were in the right segment of the market. The Nasdaq 100/Comp posted solid gains as they sprinted to new 6 1/2 year highs amid aggressive gains in Semi (SOX +3.1%). Underpinning this group was an encouraging outlook from NVLS (+11.2%) prior to the open and midday commentary from KLAC (+8.9%) at the SEMICON West conference. Tech strength was also seen in Disk Drive +1.5%, Software +0.8% and Computer-Hardware +0.6%. A look at the rest of the indices reveals a different picture. The Dow edged just 32 points above yesterday's high at its peak and it pulled back below in late trade. The S&P 500 failed to take out yesterday's high and ended near unchanged while the small-cap Russell 2000 and the S&P Mid-Cap 400 are still struggling to breakout out above their June highs (Nasdaq 100 has run nearly 5% above its June peak). Groups on the defensive included: Coal -2.4%, Home Construction -1.6%, Oil -1%, Retail HOLDRs -0.9% and Oil Service -0.8%.

2:30PM Amkor and IMEC sign collaboration agreement for 3D wafer-level packaging (AMKR) 15.48 +0.15 : The co and and IMEC, announce that they have entered into a 2-year collaboration agreement to develop cost-effective, 3D integration technology based on wafer-level processing techniques.

2:28PM Semi HOLDRs -SMH- extends near resistance zone (TECHX) 41.32 +1.02 : Aggressive extension above the early high has brought Fib extension targets in the 41.41/41.50 area into play (session high 41.36). KLAC +8.3%, LRCX +10.1%, INTC +2%, AMAT +6.4%, TER +2.6%, XLNS +3.1%.

8:45AM Marvell names Michael Rashkin new Chief Financial Officer (MRVL) 18.63 : Co announces it has named Michael Rashkin CFO effective immediately.

8:30AM O2Micro receives patent for DC/DC controller architecture (OIIM) 13.00 : Co announces it was issued 15 claims under United States patent number 7,203,048 for its Direct Current- to-Direct Current Controller with In-rush Current Protection invention.

8:05AM Chipmos Technology reports June 2007 revs of $57.7 mln, a decrease of 4% from May 2007; Q2 revs were $177.5 mln vs. $179.37 mln consensus (IMOS) 7.36 :

8:03AM Nu Horizons Elec and Micron announce North American distribution agreement (NUHC) 10.86 : Co and Micron Technology (MU) announce a distribution agreement for MU's full line of products, including D.R.A.M, memory modules, Mobile D.R.A.M, P.S.R.A.M, N.A.N.D Flash, Multichip Packages and C.M.O.S Image Sensors. The agreement gives NUHC non-exclusive distribution rights throughout the US, Canada and Mexico, in addition to global fulfillment for North American designs being manufactured in other parts of the world.

Xilinx (XLNX) announces that the Xilinx Spartan-3E F.P.G.A and MicroBlaze soft processor has been selected for Samsung Electronics' latest digital video surveillance system...

2:32AM Photon Dynamics updates Q3 guidance and announces intention to restate historical financial statements in light of revised customs expense estimates (PHTN) 11.22 : Co updates its guidance for the quarter ended June 30, 2007. Based on preliminary results, the co estimates Q3 revenue to be approx $15.0 mln (Reuters Est. calls for revenue of $19.0 mln and loss per share between $0.45 to $0.55 (Reuters Est. calls for loss of $0.23). The co's previously issued guidance for the quarter was for revenue to be between $15 mln and $20 mln, with loss per share between $0.30 to $0.40. The revised lower guidance for loss per share is principally due to a customer cancellation of a purchase order for multiple Generation 5.5 systems which had been manufactured, resulting in a write-down of approximately $2 mln of excess inventory and the Q3 charge for customs duty and other related expense of approx $500,000. As a result of conducting an internal review of its customs duty valuation practice, the co has concluded that it had under recorded customs duty expense related to the import of warranty parts into the foreign countries in which it operates, and that it will therefore restate its historical financial statements to correct the previously understated expenses related to customs duties, interest, penalties and other related costs. Co currently estimates that the aggregate of such duties and other related expenses including the amount charged in the quarter ended June 30, 2007 will be approx $7 mln to $8 mln.

08:17 am Novellus Systems (NVLS)

After issuing a profit warning back on June 28th on weak industry fundamentals, expectations were running low for Novellus (NVLS, 30.00). The chip equipment maker's interim report kicks off a week's worth of results from the semiconductor industry, including the largest chip maker on the planet, Intel (INTC. 25.85). We recently raised the Technology sector to Overweight based partly on the industry's cyclical recovery.

NVLS, which counts Intel as one of its largest customers, reported inline revenues ($416.3 million), earnings ($0.45), and gross margins. However, bookings ($332.2 million) came in even lower than the revised guidance, declining 19% sequentially.

With the second quarter fully priced into shares, the market was looking for insight into the second half of the year. Order guidance for the September quarter of flat to +/-5% came in well ahead of expectations of a 15% decline or worse.

The guidance provided a lift to sentiment, sending shares up in the after-market. However, there still remains considerable risk to expectations, including next month's memory orders. We think the risk/reward scenario continues to tip out of NVLS's favor and instead prefer Applied Materials (AMAT, 20.60) and Lam Research (LRCX, 52.88).

--Kimberly DuBord, Briefing.com

09:29 am STEC Inc: CIBC Wrld Mkts upgrades Sector Perform to Sector Outperform. Target $9. CIBC upgrades STEC to Outperform from Sector Perform with a $9 tgt based on improving prospects for STEC's Zeus line of high ASP ($6K-$10K), high margin (above 50%), game-changing solid state drives, as well as stabilizing trends in the DRAM business.

09:26 am SanDisk: Oppenheimer reiterates Buy. Target $53 to $60. Oppenheimer raises their tgt on SNDK to $60 from $53 saying while the demand outlook remains soft, they believe, multiple catalysts, from slower supply growth, improving retail market share, gross margin upside, license upside position SNDK favorably for 2H07.

I guess we are right where I thought we were? Time will tell.

RtS