From Briefing.com: 4:30 pm : Thanks to a late-session surge, the stock market closed at its session high with a gain of 6.3%. Though the rally was impressive, stocks still finished the week 8.4% lower due to heavy losses earlier in the week.
Those heavy losses prompted bargain hunters to bid stocks higher. Whether the push was merely rooted in short-term interest or marked a true turning point for the stock market will only be seen in time.
The move was supported by relatively heavy volume. Nearly 2.4 billion shares traded hands on the New York Stock Exchange this session, compared with average volume of 1.5 billion shares this month.
Despite the strong finish, stocks traded in mixed fashion throughout much of the session, and struggled to find direction. During that time the financial sector stood out as a notable laggard. At one point the financial sector was down 7.5%, which marked the sector's lowest level since 1995. However, it finished 3.4% higher.
Weakness in the financial sector stemmed from the large-cap names included among other diversified financial services companies (-3.8%), such as Citigroup (C 3.75, -0.96). Speculation continues to surround Citi's fate. Reports indicate the financial services giant is weighing its strategic options, but the stock extended its downturn and fell through the prior session's low to its worst level since 1992.
While financials lagged, energy posted the largest advance. Energy finished the session 11.7% higher. A 2% rebound in crude oil futures helped give energy a lift. Crude settled around $50.40 per barrel, though it actually fell to a new multiyear low of $48.25 per barrel midway through the session.
It appeared that Dell (DELL 9.30, -0.51) was going to provide stocks with some support after it posted better-than-expected earnings per share results for the third quarter. However, shares fell under pressure as investors and analysts critiqued the quarterly report.
The tech sector still finished with a 5.8% gain, though, thanks largely to strength among large-cap tech stocks.
The renewed interest in stocks caused Treasuries to fall substantially, especially at the long end of the curve. The 10-year Note fell 49 ticks, while the 30-year Bond dropped 117 ticks. The downturn reverses some of the gains Treasuries made in the prior session.
Investors got a little bit of clarity regarding the future face of the Treasury team; President-Elect Obama has nominated New York Fed President Geitner for Treasury Secretary. Obama is expected to announce the rest of his economic team Monday.DJ30 +494.13 NASDAQ +68.23 NQ100 +4.7% R2K +5.5% SP400 +5.9% SP500 +47.59 NASDAQ Adv/Vol/Dec 1781/3.12 bln/1170 NYSE Adv/Vol/Dec 2019/2.37 bln/975
9:01AM Ixia announces a $25 mln stock buyback (XXIA) 4.90 :
6:12AM Canadian Solar misses by $0.13, beats on revs; guides Q4 revs below consensus; guides FY08 revs below consensus (CSIQ) 3.78 : Reports Q3 (Sep) earnings of $0.41 per share, excluding stock-based compensation, $0.13 worse than the First Call consensus of $0.54; revenues rose 159.1% year/year to $252.4 mln vs the $248 mln consensus. Co issues downside guidance for Q4, sees Q4 revs of $70.0-85.0 mln vs. $270.06 mln consensus. Co issues downside guidance for FY08, sees FY08 revs of $650.0-750.0 mln vs. $901.87 mln consensus. Q308 gross margin was 15.5%, compared to 15.8% for Q208. Given the uncertainty of project and customers' financing coupled with softening solar market demand in Europe and USA at the year-end, co has shifted its short-term operational emphasis to preserving cash and minimizing risk from the credit environment. Based on this adjustment, Q4 shipments are estimated to be approx 20 - 25 MW. This will result in revenues of approx $70.0-85.0 mln, as noted above. Accordingly, CSIQ is returning to its previously stated May annual revenue estimate of $650.0-750.0 mln, as noted above. The co anticipates that it will have $40 mln available in unused credit lines by the end of Q4 and is actively negotiating more credit facilities with local banks. For FY09, CSIQ is maintaining its guidance of 500-550 MW with margins of 13-15%.
08:08 am Oppenheimer downgrades select solar stocks: . Oppenheimer downgrades Suntech Power (STP), Canadian Solar (CSIQ) and JA Solar (JASO), to Perform from Outperform based on murky fundamentals, given a volatile euro, tight credit markets and sub-$50 oil; firm prefers to wait for the euro stabilize or improve, credit markets to loosen or poly pricing to stay consistently below $200/kg before turning more positive ($150/kg poly would make them very bullish, assuming stable FX).
08:07 am Microsoft upgraded to Outperform at Oppenheimer- tgt $22: . Oppenheimer upgrades MSFT to Outperform from Perform and sets a $22 tgt, as they believe business is less insulated from the macro-headwinds vs their previous outlook yet feel the recent sell-off in its shares makes for an attractive entry point.
08:03 am Dell downgraded to Market Perform at Friedman Billings- tgt cut to $15: . Friedman Billings downgrades DELL to Market Perform from Outperform tgt cut to $15 from $20 following yesterday's guidance. The firm says while Dell made great margin progress this quarter, they believe inconsistent execution and rapidly growing competition from Acer, Asus, and Apple will keep investors wary, despite Dell's attractive valuation
08:51 am Dell (DELL)
Dell (DELL 9.81) reported better-than-expected third quarter earnings, but only because of intense cost cutting measures as revenue fell more than $1 billion short of estimates.
Third quarter revenue dropped 3.1% year-over-year to $15.16 billion, which missed the $16.22 billion consensus estimate.
Unit shipment growth of 3% was offset by lower selling prices. Desktop PC net revenue (-14%) continues to drop as consumer preferences shift toward mobile products and businesses pare spending. The decline in Desktop PC sales was partially offset by a 3% increase in mobile net revenue and a 2% increase in software and peripherals net revenue.
Despite the revenue drop, earnings per share increased 11% year-over-year to $0.37, beating the expected earnings of $0.31. How does Dell increase earnings per share when revenue unexpectedly declined? Cost cutting and share repurchases.
The company's total headcount stands at 80,800, as Dell slashed 2,200 jobs in the second quarter, bring its total cuts to 8,300 from the prior year. This helped selling, general and administrative expenses fall $169 million, or to 6.7% of revenue from 11.2% of revenue in the year-ago quarter.
Product mix was also better, with more sales of higher margin software, peripherals and services helping to increase gross margin to 18.8% from 18.5%.
Dell spent $400 million to repurchase 21 million shares in the third quarter, with the number of diluted outstanding shares falling 2% from the second quarter and 14% from the prior year. This gave EPS a boost of about $0.04 compared to the year-ago quarter. Net income, which is not impacted by share buybacks, fell 5% to $727 million compared to the previous year.
The company's cash conversion cycle, which is negative unlike most companies' because Dell sells products quicker than it pays suppliers, rose to -25 days from -35 days, resulting in a decrease of $86 million in operating cash flow. Dell said the negative operating cash flow was due to slowing global industry demand in October. Dell continue to have a strong liquidity position with $8.9 billion in cash and investments.
Dell did not give guidance, but did note that it expects global IT end-user demand will continue to be challenging. In turn, Dell will continue to cut costs and has implemented a hiring freeze across the company.
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