Sector Investing

[ReturntoSender]

From Briefing.com: 4:30 pm : Dampened sentiment that stemmed from an earnings miss at Alcoa led to broad-based weakness that culminated in the stock market's first loss of the new year.

Alcoa (AA 15.52, -1.93) announced last evening earnings results that fell short of the consensus estimate. Though the miss doesn't necessarily carry implications for the broader economy, it did undermine the positive tone of trade that had taken stocks higher in each of the past six sessions.

Commodities were also broadly weak this session. Specifically, the CRB Commodity Index dropped 1.7%, which was its worst single session percentage loss in more than one month.

Softer commodity prices and weakness among Alcoa and other diversified metals plays (-3.8%) dragged the materials sector to a 1.9% loss, which was the worst of the major indices.

Diversified financial services stocks (-2.9%) and diversified bank shares (-1.8%) slumped amid news that the government wants to impose fees on banks to help recoup TARP funds. The weakness that emanated from bank stocks even undercut multiline insurers, which had traded with strength after Hartford Financial (HIG 27.12, +0.95) issued a strong earnings update. Multiline insurers finished fractionally lower, while the broader financial sector fell to a 1.6% loss.

Large-cap tech remained weak. Its losses caused the Nasdaq Composite to lag for the second straight session.

The Dow managed to limit its move to the downside, though. That was largely the result of Procter & Gamble (PG 60.89, +0.69), which was upgraded by analysts at Bank of America's Merrill Lynch. DJ30 -36.73 NASDAQ -30.10 NQ100 -1.3% R2K -1.3% SP400 -1.3% SP500 -10.76 NASDAQ Adv/Vol/Dec 755/2.39 bln/1923 NYSE Adv/Vol/Dec 852/1.10 bln/2187

6:18PM Linear Tech beats by $0.04, beats on revs; guides Q3 revs above consensus (LLTC) 30.23 -0.41 : Reports Q2 (Dec) earnings of $0.35 per share, excluding non-recurring items, $0.04 better than the First Call consensus of $0.31; revenues rose 2.9% year/year to $256.4 mln vs the $247.1 mln consensus. Co issues upside guidance for Q3, sees sequentialy Q3 revs growth of 7-10%, which equates to ~$274.3-282.0 mln vs. $257.55 mln consensus. Co said, "Our factories continue to execute well, enabling us to maintain low lead times which allows our customers to place orders on us close to their demand requirements. Strong second quarter bookings and a related positive book-to-bill ratio that was higher than we have experienced in the past several quarters, leads us to be optimistic as we enter our Q3."

4:31PM QLogic guides Q3 above consensus (QLGC) 20.66 +1.76 : Co expects to report net revenue in the range of $147-149 million for3Q10 (First Call consensus $138 mln), which represents a sequential increase of approximately 12-13% q/q. The updated expected net revenue exceeds the previously forecasted third quarter net revenue range of $134 million to $140 million. "Our revenue performance was driven by strong sequential growth for our Host Products compared to the second quarter of fiscal 2010." Co anticipates reporting GAAP net income per diluted share for the third quarter of fiscal 2010 in the range of $0.23 to $0.24. On a non-GAAP basis, the Company expects to report net income per diluted share of $0.29 to $0.30, compared to the previously forecasted range of $0.22 to $0.24 per diluted share, First Call consensus $0.24. The non-GAAP net income per diluted share amounts exclude stock-based compensation, acquisition-related charges, and the related income tax effects.

9:06AM FormFactor lowers Q4 rev outlook; issues 1Q10 rev outlook below consensus (FORM) 20.58 : Co issues downside guidance for Q4 (Dec), sees Q4 (Dec) revs of $32-33 mln vs. $39.54 mln First Call consensus, from $38-39 mln previously. The lower than expected fourth quarter revenue results are due primarily to a delay in the timing of customer technology transitions, tooling cycles and volume plans. Co issues downside guidance for Q1 (Mar), sees Q1 (Mar) revs in the $40 mln+ range vs. the $45.82 mln consensus. The co continues to expect strong growth in 2010 fueled by design proliferation and volume ramps resulting in approximately 60% year over year revenue growth, plus or minus 10%. The company currently expects revenues in the first quarter of 2010 to be in the range of $40 million plus or minus 10%.

9:01AM Tegal received a repeat order for a 981ACS plasma etch system (TGAL) 1.27 : Co announced that it has received a repeat order for a 981ACS plasma etch system from a leading hard disk drive manufacturer to support a critical capacity expansion for magnetic data storage device fabrication. The new Tegal 981ACS unit adds to the customer's extensive installed base of Tegal 900 Series plasma etch systems already being used for precision photoresist descum applications in high volume manufacturing.

9:01AM Benchmark Elec says expects to exceed guidance for fourth quarter 2009 (BHE) 19.45 : Co announces that it expects sales and EPS to exceed the high end of guidance for Q4. On October 27, 2009, the co had provided Q4 guidance for sales between $520-$560 mln (vs $543 mln consensus) and diluted EPX, excluding restructuring charges, between $0.22-$0.26 (vs $0.24 consensus).

8:36AM RF Micro Device announces it has hit its financial goals for 3Q10; sees 15% non-GAAP operating margin for FY10 and FY11; will be net cash positive by end of FY11 (RFMD) 4.77 : Co at a conference today said RFMD had achieved its financial targets for its fiscal 2010 third quarter, ending January 2, 2010, related to revenue, non-GAAP gross margin, non-GAAP earnings per share and free cash flow. RFMD's CFO and vice president of administration, said that, based upon RFMD's December 2009 quarterly performance and current projections for the March 2010 quarter, RFMD believes its non-GAAP operating margin will converge on 15% for its fiscal 2010, ending April 3, 2010. Regarding future periods, RFMD indicated order and shipment momentum had extended into the March 2010 quarter. RFMD also reiterated previous guidance indicating it plans to achieve 15% non-GAAP operating margin for its fiscal 2011 and it expects to be net cash positive by the end of its fiscal 2011.

8:03AM Cray sees FY09 revs of ~$284 mln vs $284.90 mln First Call consensus; expects rev growth and profitability in 2010 (CRAY) 6.47 : The co says based on preliminary results, total revenue for 2009 is now expected to be about $284 million and earnings are expected to be in the range of about break-even to a small loss from operations. Cash and short-term investments as of December 31, 2009 are expected to be above $110 million. Cray retired all remaining convertible notes during the fourth quarter of 2009. During the fourth quarter, a contract modification was not finalized and consequently a milestone was delayed in the agreement covering Phase III of the Defense Advanced Research Projects Agency's High Productivity Computing Systems program. This contract delay will have an approximately $7 million negative impact to net research and development expenses in the fourth quarter of 2009. Substantive talks regarding this contract are ongoing and the company expects to complete a contract modification and milestone in the first quarter of 2010. After the anticipated contract modification, the remaining amount of the contract is expected to be reduced by $60 million, to $92.5 million... "While a wide range of results remains possible, we expect revenue growth and profitability for 2010... Many variables may impact this outlook, but one significant item is the timing of the availability and release of our next generation supercomputer, code named "Baker," including the completion of development and testing of the Baker interconnect chipset, known as "Gemini," and associated system software. We currently expect Baker development to be completed in the third quarter 2010. As a result, we expect a significant majority of 2010 revenue to be recognized in the fourth quarter."