Sector Investing

[ReturntoSender]

From Briefing.com: 4:20 pm : It was another whipsaw day of trading for the stock market on Wednesday, with several sizable gains and declines during the session. By the end of the trading day, the major indices were mixed with the Nasdaq closing slightly higher, and the S&P and Dow finishing slightly lower. There were no economic reports, but there was plenty of corporate and Federal Reserve news to keep the market occupied.

Yesterday, Goldman Sachs (GS 204.16, +2.65) topped its earnings expectations, but its stock still finished 3.4% lower. Today, fellow Wall Street firm Morgan Stanley (MS 50.08, +2.01) significantly missed earnings expectations, but its stock finished 4% higher.

Morgan Stanley reported a loss of $3.61 per share for its fiscal fourth quarter, well short of analysts' expectations that called for a loss of $0.39 per share. The larger than expected loss was due to $5.7 billion in additional mortgage-related write-downs, bringing the company's total fourth quarter write-down to approximately $9.4 billion.

Investor disappointment was mitigated, however, after the investment bank said it sold a $5 billion stake to China Investment Corp. to further strengthen its capital position amid ongoing credit market turmoil and weakness in the financial sector.

While market participants were able to find an upside in Morgan Stanley's earnings report, the same cannot be said for earnings reports from General Mills (GIS 57.99, -1.08), homebuilder Hovnanian (HOV -0.96, 11.43%) and, Olive Garden operator Darden Restaurants (DRI 28.60, -7.74).

Standard & Poor's added to today's volatility after lowering its outlook on several bond insurers, which caused a steep decline in the indices around 11:30 ET. S&P affirmed its AAA rating on MBIA (MBI 27.02, -0.68) and Ambac (ABK 27.46, +0.48), but changed their outlook to negative. On Monday, Moody's also affirmed its highest rating on MBIA and Ambac, but stated Ambac's outlook was stable, while MBIA's was negative.

Also, Standard & Poor's cut its rating on ACA Capital to CCC from A. Before the rating change, The New York Times reported that several banks were talking about a possible bailout plan for ACA Capital.

Meanwhile, shares of student loan provider SLM Corp. (SLM 22.89, -5.98), known as Sallie Mae, got pummeled. During the company's shareholder meeting call, management seemed combative, and indicated that it may cut its dividend. A failed buyout of SLM earlier this year has taken a toll on its stock, which is down 60% since July.

Four sectors traded higher, with energy (+0.4%) leading the way for the second straight session. Financials (+0.1%) were providing leadership in morning trade, but managed to finish with only a slight gain following the headlines regarding the Standard and Poor's outlook on bond insurers. Telecom (-1.2%) was the main laggard.

Separately, the Federal Reserve released a press release regarding its Dec. 17 $20 billion 28-day credit auction results. The auction drew 93 financial institution, totaling $61.5 billion in bids. The Fed will lend the money at 4.65%, well above the 4.17% minimum bid set by the Fed and below the 4.75% discount rate. This auction is the first of four, which the Fed enacted in hopes to improve liquidity.

In commodities trading, crude oil (+$1.23 to $91.34) closed higher today after the Dept. of Energy said in its weekly report that inventories fell by a larger amount than most analysts expected. DJ30 -25.20 NASDAQ +4.98 NQ100 +0.1% R2K +0.3% SP400 -0.1% SP500 -1.98 NASDAQ Dec/Adv/Vol 1509/1485/1.86 bln NYSE Dec/Adv/Vol 1793/1391/1.23 bln

5:00PM Trident Microsystems announces resignation of CFO (TRID) 6.02 -0.10 : Co announces the resignation of John Edmunds, its Chief Financial Officer, who has accepted a similar position with Inphi Corporation, a privately-held fabless high speed analog components company. Mr. Edmunds will remain with Trident as Chief Financial Officer through January 11, 2008. Trident has begun a search for a new chief financial officer. Trident also expects to announce the appointment of an acting chief financial officer prior to Mr. Edmunds' departure in January.

4:17PM SMSC reports EPS in-line, beats on revs; guides Q4 EPS in-line, revs in-line (SMSC) 34.36 -0.23 : Reports Q3 (Nov) earnings of $0.53 per share, excluding non-recurring items, in-line with the First Call consensus of $0.53; revenues rose 6.8% year/year to $104.7 mln vs the $100.2 mln consensus. Co issues in-line guidance for Q4, sees EPS of $0.46-0.49 vs. $0.48 consensus; sees Q4 revs of $94-97 mln vs. $95.60 mln consensus.

4:12PM LDK Solar reports EPS in-line, beats on revs; guides Q4 EPS in-line, revs above consensus (LDK) 66.11 -3.89 : Reports Q3 (Sep) earnings of $0.37 per share, in-line with the First Call consensus of $0.37; revenues rose 404.6% year/year to $158.7 mln vs the $145.4 mln consensus. Co issues guidance for Q4, sees EPS of $0.40-0.43 vs. $0.41 consensus; sees Q4 revs of $180-185 mln vs. $167.52 mln consensus. "We remain on track to meet our wafer production capacity goal of 400MW by the end of 2007. Additionally, the construction of our polysilicon plant is tracking with our original plan. In addition to the anticipated cost efficiencies we expect to achieve upon completion of our polysilicon plant, we are continuing cost reduction efforts through further advancements of our product processes."

09:17 am Palm Inc. (PALM)

Maker of mobile products and handheld devices, Palm, Inc. (PALM) announced last evening revenue for its second quarter totaled $349.6 million on unit sales of 686,000. However, the company posted a net loss of $0.09 per share, or an adjusted loss of $0.07 per share. Last year the company generated sales of $392.9 million and earned $0.17 per share on an adjusted basis. Analysts had expected the company to report $350.3 million in sales and a loss of $0.08 per share for the company's most recent quarter.

The company continues to produce new smartphone models in an effort to diversify its product offering and bolster future sales. During the second quarter, the company released at least three new models aimed at strengthening its position in various markets.

Next quarter, management anticipates revenues to range between $310 million and $320 million, producing an adjusted per share loss between $0.14 and $0.16. Analysts forecast sales of $358 million and a loss per share of $0.04.

Shares of Palm are set to open sharply lower. The company has been battered in recent months after delaying product launches and tapering its outlook.