Sector Investing

[ReturntoSender]

From Briefing.com: 4:30 pm : Aggressive selling threatened to take the major equity averages sharply lower, but for the second straight session losses were pared as pressure eased in afternoon action.

Little hullabaloo was made over news that Portugal has been offered a bailout worth about 78 billion euros, and no real reaction was made to a disappointing ADP Employment Change report for April. The Change report suggested that last month's private payrolls increased by 179,000, which is less than the 200,000 private payrolls that had been expected, on average, among economists polled by Briefing.com.

Stocks began to sell-off in the minutes that followed the ISM Non-Manufacturing Index for April. It fell to 52.8 from 57.3, but was widely expected to remain near 57.4.

Energy stocks and materials stocks were the hardest hit. Both sectors were down in excess of 2% before paring losses in afternoon trade to finish the day down 1.6% and 1.7%, respectively. Their weakness was exacerbated by renewed pressure against commodities. Commodities collectively tumbled 1.8%, as measured by the CRB Commodity Index, even though the Dollar Index probed its two-year low before finishing flat.

At session lows the three major equity averages were down more than 1% in relatively heavy volume, but for no apparent reason pressure began to ease shortly after midday. The afternoon ascent actually took the Nasdaq to within striking distance of the neutral line, but resistance there ultimately caused the major averages to retreat back into the red.

Corporate news continues to have little impact on overall trade, given the dwindling number of blue chips and bellwethers making quarterly reports. CBS (CBS 27.21, +1.97), Time Warner (TWX 36.49, -1.24), Comcast (CMCSA 25.96, -0.65), and Las Vegas Sands (LVS 42.53, -3.34) were among the more widely held names to recently issue reports. Only LVS came short of the consensus earnings estimate.

Consumer staples stocks ConAgra (CAG 25.51, +0.76) and Ralcorp (RAH 87.39, +4.06) were able to put together strong gains in the face of broad weakness. Their strength followed an offer by CAG to acquire RAH for $86 per share, or a premium of more than 20% above the levels that RAH had traded at prior rumors of the offer last week.

For the second straight session, share volume on the NYSE broke 1 billion. That hasn't happened in more than a month.

Advancing Sectors: (None)
Declining Sectors: Materials (-1.7%), Energy (-1.6%), Industrials (-1.4%), Financials (-0.9%), Consumer Discretionary (-0.4%), Telecom (-0.3%), Tech (-0.3%), Utilities (-0.3%), Health Care (-0.1%), Consumer Staples (-0.1%)DJ30 -83.93 NASDAQ -13.39 NQ100 -0.2% R2K -1.3% SP400 -0.9% SP500 -9.30 NASDAQ Adv/Vol/Dec 698/2.24 bln/1872 NYSE Adv/Vol/Dec 940/1.10 bln/2059

4:12PM Atmel beats by $0.01, beats on revs (ATML) 14.75 +0.05 : Reports Q1 (Mar) earnings of $0.16 per share, $0.01 better than the Thomson Reuters consensus of $0.15; revenues rose 0.8% year/year to $461.4 mln vs the $453.2 mln consensus.

4:00PM Atmel announces additional $300 mln to stock repurchase program (ATML) 14.75 +0.05 : 6:21AM

4:09PM JDS Uniphase beats by $0.02, beats on revs; guides Q4 revs in-line (JDSU) : Reports Q3 (Mar) earnings of $0.22 per share, $0.02 better than the Thomson Reuters consensus of $0.20; revenues fell 4.6% year/year to $455.4 mln vs the $448 mln consensus. Co issues in-line guidance for Q4, sees Q4 revs of $455-475 mln vs. $469.82 mln Thomson Reuters consensus.

4:09PM SolarWinds beats by $0.02, beats on revs; guides Q2 EPS in-line, revs in-line; guides FY11 EPS in-line, revs in-line (SWI) 23.70 +0.49 : Reports Q1 (Mar) earnings of $0.21 per share, $0.02 better than the Thomson Reuters consensus of $0.19; revenues rose 25.3% year/year to $43 mln vs the $42.1 mln consensus. Co issues in-line guidance for Q2, sees EPS of $0.19-0.20 vs. $0.20 Thomson Reuters consensus; sees Q2 revs of $43.2-44.7 mln vs. $44.51 mln Thomson Reuters consensus. Co issues in-line guidance for FY11, sees EPS of $0.83-0.89 vs. $0.86 Thomson Reuters consensus; sees FY11 revs of $185.5-191.5 mln vs. $187.41 mln Thomson Reuters consensus.

4:05PM Pericom Semi beats by $0.02, reports revs in-line; guides Q4 revs above consensus (PSEM) 8.88 -0.04 : Reports Q3 (Mar) earnings of $0.10 per share, $0.02 better than the Thomson Reuters consensus of $0.08; revenues rose 7.9% year/year to $39.6 mln vs the $39.5 mln consensus. Co issues upside guidance for Q4, sees Q4 revs of $41.5-43.5 mln vs. $40.57 mln Thomson Reuters consensus. Q4 GAAP gross margins are expected to be between 33.3% and 35.3%, and adjusting for share-based compensation, amortization of intangibles, fair value adjustments, and compensation accruals that are expected to total approximately 1.2%, non-GAAP gross margins are expected to be in the 34.5% to 36.5% range... The sequential revenue decline primarily resulted from lower volume associated with customer inventory adjustments to align with end user demand, an adjustment period that we believe has now been completed. The second and third quarters of fiscal 2011 included a full three months of Pericom Technology, Inc. ("PTI") operations, acquired on August 31, 2010.

Varian Semi: Applied Materials (AMAT) to acquire Varian Semiconductor Equipment Associates for $63 per share in cash (VSEA) 40.55 : The cos announced the signing of a definitive merger agreement under which Applied will acquire Varian for $63 per share in cash for a total price of ~$4.9 billion on a fully-diluted basis. The transaction is expected to be accretive to Applied's earnings on a non-GAAP basis in the first year. The merger received unanimous approval by the Boards of Directors of both companies. Applied expects to fund the transaction with a combination of existing cash balances and debt. Applied has secured a commitment for a $2 billion, one-year senior bridge loan facility and plans to arrange for long-term debt financing. Applied also has in place an existing, undrawn $1 billion revolving credit facility. Additional financing arrangements are expected to include replacement of the existing credit facility with a new four-year, $1.5 billion revolving credit facility. Applied remains committed to a strong investment grade capital structure.

07:49 am First Solar downgraded to Hold at Collins Stewart: . Collins Stewart downgrades FSLR to Hold from Buy following earnings. The firm says given that the DoE process is an unknown to investors, they expect FSLR's P/E multiple to contract while the risk of additional delays is present. Given growing risks associated with a poor solar demand environment, the increasingly back-end loaded nature of FSLR's guidance and uncertainty regarding the timing of its most critical large project, the firm is lowering their rating.

07:48 am Apple resumed with a Outperform at Oppenheimer; tgt lowered to $450: . Oppenheimer resumes coverage of AAPL with a Outperform and lowers their tgt to $450 from $465 saying they view Apple as a core holding in any technology or growth portfolio and are bullish on its outlook. The iPhone has ample room to expand domestically with Verizon/other US carriers and internationally, especially when a lower priced, mini-iPhone is added. Firm notes the iPad is earlier in its ramp and represents a catalyst for Apple in both consumer and enterprise.