From Briefing.com: Weekly Recap - Week ending 12-Nov-10The S&P 500 shed -2.2% this week, coming under pressure on increasing European sovereign debt concern, a sharp drop in Chinese shares and a profit warning from tech bellwether Cisco (CSCO). The decline breaks a five week winning streak.
Only the energy sector posted a weekly gain, up 1.0%. The other nine sectors all posted declines of at least 1.3%, with financials shedding 4.1% and tech falling 3.2%.
Shares of Cisco plunged -17.0%, acting as the main drag this week. The company posted better-than-expected fiscal first quarter earnings per share, but issued downside guidance for the second quarter and fiscal year. Cisco expects second quarter revenues to be up 3-5% and fiscal year revenues to be up 9-12%. Those forecasts are below current Thomson Reuters consensus estimates that call for growth of 12.8% and 13.1%, respectively. The company is keeping a conservative outlook due to slow public sector spending.
Fellow Dow component Disney (DIS +1.5%) reported earnings that came up just short of expectations. Reassuring comments from the company mitigated some of the initial disappointment from the earnings report.
In other corporate news, Intel (INTC +1.4%) increased its dividend by 15%. Chevron (CVX +0.5%) offered to acquire Atlas Energy (ATLS +43.7%) for $4.3 bln, a hefty 37% premium.
Shares of Boeing (BA -11.5%) fell on news that its Dreamliner 787 delivery date will be delayed once again.
In economic news, the initial claims data should provide a boost to consumer confidence. Granted the initial claims level is still high, yet the latest reading is the first reading below 440,000 since the recession began that didn't have any statistical or seasonal biases behind it. This is an encouraging report on the heels of the October employment report that could prompt more discouraged workers to begin looking for work again.
Continuing claims continued their downward trend, falling to 4.301 mln (Briefing.com consensus 4.350 mln) from 4.387 mln for the week ending October 30. Although that downtrend has been driven by the expiration of benefits more so than a pickup in hiring activity, the drop in initial claims is an encouraging marker that hiring activity could pick up soon.
Separately, the trade deficit narrowed in September to $44.0 bln (Briefing.com consensus -$44.8 bln) from $46.5 bln in August.
In overseas news, European sovereign debt worries were back at the forefront, with notable concern regarding Ireland. Speculation that the country's bailout of its financial sector will prove too expensive and require an EU bailout of Ireland sent the spread between the 10-year Ireland and German notes to all time highs.
Meanwhile, China's Shanghai Composite plunged more than 5% Friday on speculation that China will raise interest rates. The news spurred selling interest in commodities.
The CRB Index plunged 3.2% as the dollar index climbed 2.0%.
Index Started Week Ended Week Change % Change YTD %
DJIA 11444.08 11192.58 -251.50 -2.2 7.3
Nasdaq 2578.98 2518.21 -60.77 -2.4 11.0
S&P 500 1225.85 1199.21 -26.64 -2.2 7.5
Russell 2000 736.59 719.27 -17.32 -2.4 15.0
4:42PM Methode Electronics awarded integrated center stack program from General Motors; expected to represent over $100 mln in revenue per year starting in FY14 (MEI) 9.64 -0.27 : Co has been awarded a next generation integrated center stack program for multiple General Motors vehicle platforms. The center stacks will be featured on certain vehicles starting in model year 2013, and are expected to have a five-year program life. Center stack production will begin during Methode's fiscal year 2013 and is expected to represent over $100 mln in revenue per year starting in fiscal year 2014. Actual revenue will depend on a number of factors, including consumer demand for General Motors' vehicles. Briefing.com note: MEI's FY10 revs were $377.6 mln).
11:08AM Intel lowers prices on solid-state drives (INTC) 21.51 +0.30 : Co has lowered prices and introduced a new model of its award-winning Intel Solid-State Drive product line. SSDs can replace hard disk drives in a PC and provide a substantial performance boost for a notebook or desktop PC, making SSDs one of the hottest new waves in personal computing.
9:01AM Intel announces 15% increase to quarterly cash dividend to $0.18; remains on track to have our best year ever (INTC) 21.21 : Intel announced that its board of directors has approved a 15% increase in the quarterly cash dividend to $0.18 ($0.72 per share on an annual basis), beginning with the dividend that will be declared in the first quarter of 2011 (prior dividend rate was $0.1575 per quarter). "Intel remains on track to have our best year ever and we continue to generate strong cash flows," said Paul Otellini, Intel president and CEO. "Our ongoing operational performance and confidence in our business going forward provide the ability to return more cash to shareholders."
11:05AM Solarfun Power announces increase in size and pricing of follow-on public offering of 9.2 mln ADSs at $9.00 per ADS (SOLF) 9.23 -0.06 : Co announced that its follow-on public offering of 8 mln American depositary shares each representing five ordinary shares of the Company, was priced at $9.00 per ADS, and that the underwriters have exercised their option to purchase 1,200,000 additional ADSs. Co plans to use the total proceeds of ~$165.6 million, including $82.8 million from the public offering and ~$82.8 million from the private placement, for capital expenditures and general working capital purposes. Morgan Stanley and UBS Investment Bank acted as joint bookrunners for the public offering.
8:04AM Agilent beats by $0.05, beats on revs; guides Q1 EPS, revs above consensus; guides FY11 EPS in-line, revs above consensus (A) 35.73 : Reports Q4 (Oct) earnings of $0.65 per share, excluding non-recurring items, $0.05 better than the Thomson Reuters consensus of $0.60; revenues rose 35.0% year/year to $1.58 bln vs the $1.52 bln consensus, orders +32% YoY to $1.69 bln. Co issues upside guidance for Q1, sees EPS of $0.55-0.57, excluding non-recurring items, vs. $0.53 Thomson Reuters consensus; sees Q1 revs of $1.53-1.55 bln vs. $1.47 bln Thomson Reuters consensus. Co issues guidance for FY11, sees EPS of $2.30-2.50, excluding non-recurring items, vs. $2.37 Thomson Reuters consensus; sees FY11 revs of $6.1-6.3 bln vs. $6.1 bln Thomson Reuters consensus.
08:29 am Microsemi target raised to $30 at FBR Capital: . FBR Capital raises their MSCC tgt to $30 from $26. Firm notes co took a major step forward in becoming a larger, more technically adept systems provider into its core defense and space markets with the purchase of Actel. With the closing mid quarter, both December- and March-quarter financial results are affected by stub quarter and other acquisition impacts. That said, it notes earnings power now looks much higher by early 2011, a large positive. Finally, firm notes co's business model has many attractive elements, including robust operating margins, sole-source supplier status into growing markets, barriers to entry, and management's track record of execution.
08:28 am LDK Solar upgraded to Buy at Argus; tgt $17: . Argus upgrades LDK to Buy from Hold and sets target price at $17 based on solid evidence of demand strength as well as increasing efficiency across the company's integrated solar PV production model.
10:00 am SPWRA Raised Lower End of FY10 EPS Guidance (SPWRA)
Sunpower (SPWRA 14.83 +0.72) reported third quarter earnings of $0.26 per share, excluding non-recurring items, $0.13 better than the Thomson Reuters consensus of $0.13.
Revenues rose 18.3% year-over-year to $550.6 million, well above the $471.7 million consensus.
Non-GAAP gross margin 22.3% better than the 21.3% expected.
For the fourth quarter, the company guided earnings in the range of $0.95 to $1.15 per share, excluding non-recurring items, in-line with the $1.10 Thomson Reuters consensus. On the top line, revenues are expected to be $870 million to $970 million, in-line with the $935.56 million Thomson Reuters consensus.
For the fiscal year 2010, the company increased the low end of earnings guidance to $1.45 to $1.65, better than the $1.43 Thomson Reuters consensus. Revenues are expected to be in the range of $2.15 billion to $2.25 billion, in-line with the $2.15 billion Thomson Reuters consensus. The company also raised gross margin guidance to 22% to 23% from 20% to 22%.
09:46 am NVDA Guides Q4 Revs Above Consensus (NVDA)
NVIDIA (NVDA 13.59 +0.98) reported third quarter earnings of $0.15 per share, $0.01 better than the Thomson Reuters consensus of $0.14.
Revenues fell 6.6% year-over-year to $843.9 million versus the $844 million consensus.
Third quarter non-GAAP gross margins were reported at 46.5% versus the 46.8% consensus.
For the fourth quarter, the company sees revenues of +3% to 5% quarter-over-quarter, which calculates to $869.2 million to $886.1 million, above the $866.06 million Thomson Reuters consensus.
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