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From Briefing.com: 4:25 pm : It didn't take long for Monday's rally to be unwound as a dismal fourth quarter report from Citigroup (C 26.94, -2.12) and a weaker than expected retail sales report for December triggered a host of sell orders that led to material losses for the major indices.

As far as Citigroup is concerned, it reported a large write-down as expected - $18.1 billion to be exact - yet some critics felt that write-down still wasn't large enough to serve as an inflection point that suggested the worst is over for the investment bank.

Altogether Citigroup reported a net loss of $9.83 billion, or $1.99 per share, on a 70% decline in revenues. Analysts had expected the company to record a loss of $1.03 per share.

In addition to posting its operating results, Citigroup said it slashed its dividend by 41% to $0.32 per share and that it raised $12.5 billion in new capital from outside investors that include Saudi Prince Alwaleed bin Talal and former CEO Sanford Weill's family foundation.

The market didn't find anything to cheer about in the report, which also contained the unsettling admission that credit costs for its U.S. Consumer business increased by $4.1 billion due to increased delinquencies on 1st and 2nd mortgages, unsecured personal loans, credit cards and auto loans. This revelation triggered concern about the deteriorating state of debtors in the U.S. that weighed heavily on other banks in Tuesday's trading.

Fellow Dow component JPMorgan Chase (JPM 39.17, -2.19), which reports before Wednesday's open, was among the hardest hit with investors cognizant that its card services business accounted for 24% of its net revenues last year and 25% of its operating income.

Separately, Merrill Lynch (MER 53.01, -2.96) languished after announcing it raised $6.6 billion in new capital through the issuance of convertible preferred stock that carried a 9.0% coupon.

The financial sector, which dropped 3.7%, led Tuesday's retreat that saw the indices close near their lows for the day. The energy sector, which fell 3.5%, the materials sector, which shed 3.0%, and the technology sector, which lost 2.4%, were the other big laggards as slowdown concerns permeated the market.

Every economic sector, in fact, closed the session with a loss that exceeded 1.0%. In turn, there wasn't a single stock in the Dow that closed higher.

A report from the Dept. of Commerce that total retail sales and retail sales, excluding autos, declined 0.4% in December contributed to the slowdown concerns. Economists had forecast a flat reading for retail sales and a 0.1% decline excluding autos.

The December weakness followed an otherwise robust November when retail sales increased 1.0%, so the December data wasn't as bad as it was made out to be. Nonetheless, a number that was off the mark, combined with a fourth quarter earnings warning from Williams-Sonoma (WSM 20.01, -2.19), exacerbated the negative sentiment that was rooted in large part in Citigroup's woeful report.

In typical fashion, the Treasury market advanced in the face of the stock market's weakness. Gains were registered across the yield curve with the strongest performance at the back end. The benchmark 10-year note jumped 22 ticks and its yield fell to 3.68%.DJ30 -277.04 NASDAQ -60.71 NQ100 -2.8% R2K -2.1% SP400 -2.4% SP500 -35.30 NASDAQ Dec/Adv/Vol 2277/724/2.42 bln NYSE Dec/Adv/Vol 2347/815/1.82 bln

5:48PM TTM Tech announces filing of shelf registration statement for maximum aggregate of $200 mln (TTMI) 8.95 -0.45 :

5:10PM Linear Tech beats by $0.05, reports revs in-line; guides Q3 revs in-line (LLTC) 27.80 -0.47 : Reports Q2 (Dec) earnings of $0.46 per share, $0.05 better than the First Call consensus of $0.41; revenues rose 2.6% year/year to $288.7 mln vs the $288.9 mln consensus. Co issues in-line guidance for Q3, sees Q3 revs of $289.6 - $303.14 mln vs. $299.91 mln consensus. Co also raises its dividend to $0.21/share from $0.18/share.

4:08PM CalAmp reports Q3; guides Q4 revs below consensus (CAMP) 2.47 -0.05 : Reports Q3 (Nov) net of breakeven, vs recent company guidance of Breakeven; revenues fell 45.7% year/year to $32.1 mln, in-line with preannouncement. Co issues guidance for Q4, sees EPS of $(0.05)-(0.01), may not be comparable to ($0.09) consensus. Co issues downside revs guidance; sees Q4 revs of $29-33 mln vs. $37.59 mln consensus. Co says, "The settlement agreement with this key DBS customer has allowed CalAmp to start meaningful negotiations with our lenders to address the previously announced noncompliance related to financial covenants under our credit facility. We are working to resolve this matter expeditiously, but we do not believe that the current restriction on borrowing under the credit facility will adversely impact our near term operations."

3:59PM Market View: Broad based pressure from the opening bell (TECHX) : A firmly negative bias in the stock market from the opening bell. Overseas weakness, a substantial EPS miss from C due to sub-prime and consumer loan losses, weak Retail Sales for Dec (-0.4% vs. consensus of 0.0%-- 2007 weakest year since 2002) and disappointing commentary out of AAPL's Macworld expo conspired to pressure the market. We did see a quick rebound in the last hour but the indices gave back the majority of these minor gains into the close. The Dow dropped to its lowest level in nine months and closed under its Jan/Aug lows as well. The S&P 500 and Nasdaq Comp closed at a new 10 month lows (1380, 2417) but are thus far still holding above the intraday lows from Jan (1379, 2407), Aug 2007 lows (1370, 2386) and March 2007 lows (1364, 2331). The weakest performing sectors were led by Oil Service HOLDRs -5.1%, Steel -4.6%, Broker -4.3%, Regional Bank HOLDRs -4%, Oil -3.8%, Bank -3.4%, Housing -3.3%, Natural Gas -3.1%, Internet HOLDRs -3.1%, Casino -3%, Restaurant -2.9%, Semi HOLDRs -2.5%. Little was firmer other than Airline +3.2%.

1:30PM Apple issues press release with details for MacBook Air (AAPL) 170.39 -8.38 : Co confirmrs the MacBook Air, "the world's thinnest notebook. MacBook Air measures an unprecedented 0.16-inches at its thinnest point, while its maximum height of 0.76-inches is less than the thinnest point on competing notebooks. MacBook Air has a stunning 13.3-inch LED-backlit widescreen display, a full-size and backlit keyboard, a built-in iSight(R) video camera for video conferencing, and a spacious trackpad with multi-touch gesture support so users can pinch, rotate and swipe. MacBook Air is powered by Intel Core 2 Duo processors running at 1.6 GHz or 1.8 GHz, and includes as standard 2GB of memory and an 80GB 1.8-inch hard drive. The new MacBook Air will be shipping in two weeks through the Apple Store, Apple's retail stores and Apple Authorized Resellers for a suggested retail price of $1,799.

1:14PM Apple issues press release - Twentieth Century Fox & Apple introduce iTunes digital copy (AAPL) 171.05 6.65 : Twentieth Century Fox and Apple announced Digital Copy for iTunes, which provides customers who purchase a DVD with an additional Digital Copy of the movie. Just like movies purchased from the iTunes Store, an iTunes Digital Copy can effortlessly be transferred to iTunes and then viewed on a PC or Mac, iPod with video, iPhone or on Apple TV. The new iTunes Digital Copy provides a consumer friendly way to transfer a DVD purchase to a user's iTunes library. Once a customer buys the DVD, they insert it into their computer, enter a unique code into iTunes and iTunes automatically copies the movie to their iTunes library within minutes.

12:45PM Apple confirms it Premieres iTunes Movie Rentals With All Major Film Studios (AAPL) 170.67 -8.11 : Co confirms it announced iTunes Movie Rentals featuring movies from all the major movie studios including 20th Century Fox, The Walt Disney Studios, Warner Bros., Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer, Lionsgate and New Line Cinema. Users can rent movies for as low as $2.99 and watch them on their Macs or PCs, all current generation iPods, iPhone and Apple TV. iTunes Movie Rentals launches today and will offer over 1,000 titles by the end of February, including over 100 titles in stunning high definition video with 5.1 Dolby Digital surround sound which users can rent directly from their widescreen TV using Apple TV. iTunes Movie Rentals are priced at $2.99 for library titles and $3.99 for new releases, and high definition versions are just one dollar more with library titles at $3.99 and new releases at $4.99... The all new Apple TV software delivers an entirely new user experience centered around iTunes Movie Rentals, allowing movie fans to rent and watch movies right from their widescreen TV, with no computer required. Users can also view photos from their computers, Flickr and .Mac Web Galleries on their widescreen TV as slideshows or screen savers, and anytime photos are updated on Flickr or .Mac they are automatically updated on Apple TV. Apple TV users can now browse and enjoy the iTunes Store podcast directory of over 125,000 video and audio podcasts, view over 50 million originally created videos from YouTube, or choose from a selection of six million songs, over 600 TV shows and 10,000 music videos to purchase directly from their Apple TV. Purchases downloaded to Apple TV are automatically synced back to iTunes on the user's computer for enjoyment on their computer, iPod or iPhone.

12:38PM Apple confirms free software update for its iPhone; allows users to automatically find their location using the redesigned Maps application (AAPL) 170.76 -8.01 : Co confirms a free software update for its iPhone that allows users to automatically find their location using the redesigned Maps application; text message multiple people in one message; create Web Clips for their favorite websites; customize their home screen; and watch movies rented from the new iTunes Movie Rentals right on their iPhone. With its multi-touch user interface and pioneering software, users can add new features to their iPhone through software updates whenever an update becomes available.

12:27PM Apple confirms anouncement of Time Capsule (AAPL) 174.07 -1.77 : Co confirms the introduction of Time Capsule, a backup appliance that automatically and wirelessly backs up everything on one or more Macs running Leopard, the latest release of Apple's Mac OS X operating system including the amazing Time Machine automatic backup software. Time Capsule combines an 802.11n base station with a server grade hard disk in one small package. Simply plug it in, then easily set up automatic wireless backup for every Mac in your house to a single Time Capsule with just a few clicks. Time Capsule offers the benefits of a full-featured 802.11n Wi-Fi base station, and comes in two models: a 500 gigabyte model for just $299 and a 1 terabyte model for just $499.

11:07AM Verichip expects revenues for 2007 at the high-end of the co's previously released guidance (CHIP) 2.40 +0.38 : As mentioned at 11:05 the co expects revenues for 2007 at the high-end of the co's previously released guidance of $30-32 mln vs $31.7 mln single analyst est. During the fourth quarter of 2007, the co said it continued to experience strong sales of its healthcare security products, specifically its infant protection and wander prevention systems. (ADSX, DOC)

Photon Dynamics (PHTN) announces that it has received an order for its ArrayChecker flat panel display test and ArraySaver repair system from Plastic Logic for their new flexible electronic paper display manufacturing facility in Dresden, Germany...

9:01AM Applied Materials will reduce its global workforce by approximately 1,000 positions; expects to record charges of approximately $20 million related to the plan (AMAT) 16.84 +0.44 : Co announces a global cost reduction plan that primarily affects its semiconductor equipment and services businesses and related support organizations. As part of the plan the co will reduce its global workforce by approx 1,000 positions or about 7%, through a combination of job elimination and attrition. AMAT expects to record charges of approx $20 mln related to the plan, with the majority of the charges being recorded in the 1Q08, and to complete the plan by 4Q08. The plan is expected to result in annualized savings of about $150 mln from fiscal 2007 spending levels.

6:42AM Citigroup Q4 results include $18.1 bln write-down; cuts dividend 40%; raises $12.5 bln via private placement (C) 29.06 : Reports Q4 (Dec) loss of $1.99 per share, results include $18.1 billion in pre-tax write-downs and credit costs on sub-prime related direct exposures in fixed income markets, and a $4.1 billion increase in credit costs in U.S. consumer primarily related to higher current and estimated losses on consumer loans, may not be comparable to the First Call consensus of ($1.03); revs fell 69.7% yr/yr to $7.22 bln vs $10.63 bln consensus. Operating expenses increased 18%, primarily driven by the impact of acquisitions, increased business volumes, charges related to approximately 4,200 net headcount reductions, and the impact of foreign exchange. Co announces it is lowering their qtrly dividend to $0.32 per share from $0.54 per share. Co says its raising a total of $12.5 bln of capital through the sale of convertible preferred securities in a private offering. The private offering is complete, subject to settlement, and includes a $6.88 bln investment from the Government of Singapore Investment Corporation as well as investments from Capital Research Global Investors; Capital World Investors; the Kuwait Investment Authority; the New Jersey Division of Investment; HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud; and Sanford I. Weill and The Weill Family Foundation.

09:45 am NVIDIA: Deutsche Securities downgrades Buy to Hold. Deutsche Bank downgraded NVDA to Hold from Buy with a $30 tgt saying they are taking a more cautious stance on NVIDIA due to a seasonally slow period and limited share gain potential. After several quarters of accelerated growth driven by share gains vs. ATI/AMD and a strong P.C cycle, they believe that demand has slowed in the 1H. Given the background of a seasonally weak period and lack of new product cycle, the firm does not see near-term drivers for the stock.

09:41 am O2Micro: Needham & Co reiterates Strong Buy. Target $21 to $17. Needham notes OIIM is on a negative sentiment streak that until Dec 2007 was totaly unfathomable. Firm notes OIIM should be riding high on the waves of spectacular LCDTV growth or its penetration into LED notebook backlighting or high voltage battery charger sockets or Intel prospects in 2008. Instead everyone is running around trying to count notebooks like it is the third grade all over again. With nothing more than "seasonal" to work with, firm decided to lower their MarQ1 Q/Q decline from 5% to 13%. Carrying this less into Q2 resulted in a reduction of their 2008 EPS from $0.95 to $0.81 and a more pronounced reduction in target price from $21 to $17.

09:30 am Citigroup (C)

The fourth quarter was a dismal quarter for Citigroup (C 29.06). The question is, was it dismal enough to convince investors that the worst is behind the company?

For the three-month period ending December 31, Citigroup posted a net loss of $9.83 billion, or $1.99 per share, compared to a profit of $1.03 per share in the year-ago period. The current results included an $18.1 billion pre-tax write-down for its subprime exposure, as well as a $4.1 billion increase in credit costs for its U.S. Consumer segment.

On Monday it was speculated that Citigroup's write-down could be as much as $24 billion, so the reported figure wasn't as bad as anticipated. It was, however, much worse than the company's initial $8 billion to $11 billion estimate provided in November.

In addition to the earnings report, Citigroup also announced that it is cutting its dividend 41% to $0.32 per share and that it is raising $12.5 billion in new capital through the sale of convertible preferred stock to several different investors, including Saudi Prince Alwaleed bin Talal and Sanford I. Weill and The Weill Family Foundation. Mr. Weill used to be CEO at Citigroup and is considered to be the architect of Citigroup's empire.

Citigroup is also offering an additional $2 billion in convertible preferred securities to the public, bringing its total capital raise to $14.5 billion, excluding the capital it will preserve by cutting its dividend.

In a remark that will go in to the stating the obvious hall of fame, recently named CEO Vikram Pandit said the fourth quarter results are "clearly unacceptable." Pandit noted that Citigroup will continue to focus on divesting non-core assets, enhancing its risk management processes, and improving expense productivity. It can be presumed, too, that significant job cuts will eventually be announced as part of the restructuring effort.

At the end of the fourth quarter Citigroup had $37.3 billion of net CDO Super Senior exposures and gross Lending & Structuring exposures versus $54.6 billion at the end of the third quarter. It can be inferred, then, that another large write-down is still possible if market conditions deteriorate.

The latter consideration, combined with the dilutive nature of the capital raising effort, has limited investor interest following the report. Moreover, we suspect the acknowledgment that the bank has had to increase credit costs for its U.S. Consumer business due to increased delinquencies on 1st and 2nd mortgages, unsecured personal loans, credit cards, and auto loans is also serving as an unsettling factor since it speaks to the weakened state of debtors in the U.S.

All things considered, there isn't a lot to root about with this report. The bank is doing what is necessary to improve its capital base, but it is coming at the expense of common shareholders. Its ability to sell preferred stock in the current environment to some sophisticated investment entities can be construed as a hopeful sign for long-term investors, but clearly, the near-term outlook continues to be cloudy.

--Patrick J. O'Hare, Briefing.com