Sector Investing

[ReturntoSender]

From Briefing.com: 4:25 pm : Financials traded with strength all session, but the broader market failed to follow it higher. In turn, the major averages ended the day mixed.

The mood among participants was positive ahead of the open, but once trade began stocks slid and spent the rest of the session chopping along. Financials, which climbed to a 1.1% gain, failed to stir broader buying interest.

E*Trade (ETFC 14.72, +1.77) was a top performer among financial issues following news that Citadel, which has a near 10% stake in the company, urged it to call a special meeting to maximize value. Better-than-expected earnings from US Bancorp (USB 26.14, +1.11) made the stock a leader among banking plays.

Apple (AAPL 386.90, +10.05) took center stage in the earnings show, though. The company's blowout quarter sent the up to a record high. Yahoo! (YHOO 13.48, -1.11) was at the opposite end of the spectrum; disappointment over the firm's financial forecast overshadowed its in-line earnings results to send the stock to a new 2011 low. Still, Riverbed Tech (RVBD 32.05, -9.35) and Fortinet (FTNT 21.61, -5.17) were the Nasdaq's worst performers in the wake of their quarterly reports. Although the pair lacks weight, the steepness of their losses hampered the Nasdaq, which lagged its counterparts just about all session.

Economic data remained light. Today's only release was the June existing home sales tally, which showed that an annualized sales rate of 4.77 million units. The consensus among economists polled by Briefing.com had called for annualized sales of 4.93 million units. That comes a day after housing starts were reported to have hit their highest rate since January.

With sovereign debt concerns of Europe cooled in the wake of a successful debt auction by Portugal, the dollar drifted lower again today. Its 0.4% loss this session has also left it down 0.4% for the week.

Advancing Sectors: Financials +1.1%, Utilities +0.6%, Industrials +0.2%
Unchanged: Telecom, Materials
Declining Sectors: Energy -0.3%, Health Care -0.4%, Consumer Staples -0.4%, Tech -0.4%, Consumer Discretionary -0.6%DJ30 -15.51 NASDAQ -12.29 NQ100 -0.4% R2K -0.3% SP400 -0.2% SP500 -0.89 NASDAQ Adv/Vol/Dec 1042/1.88 bln/1543 NYSE Adv/Vol/Dec 1662/796 mln/1326

5:19PM Seagate Tech on call issues downside EPS guidance, rev guidance slightly ahead of consensus (STX) 16.99 +0.06 : Co issues downside guidance for Q1 (Sep), sees EPS of $0.29-0.33, excluding non-recurring items, vs. $0.45 Capital IQ Consensus Estimate; sees Q1 (Sep) revs of $2.9 bln vs. $2.87 bln Capital IQ Consensus Estimate.

4:32PM MKS Instruments beats by $0.09, beats on revs; guides Q3 EPS below consensus, revs below consensus (MKSI) 25.08 -0.48 : Reports Q2 (Jun) earnings of $0.73 per share, $0.09 better than the Capital IQ Consensus Estimate of $0.64; revenues rose 1.8% year/year to $224.5 mln vs the $220.5 mln consensus. Co issues downside guidance for Q3, sees EPS of $0.40-$0.60 vs. $0.65 Capital IQ Consensus Estimate; sees Q3 revs of $180-$210 mln vs. $220.61 mln Capital IQ Consensus Estimate.

4:29PM Intel beats by $0.08, beats on revs; guides Q3 revs above consensus (INTC) 22.99 -0.07 : Reports Q2 (Jun) earnings of $0.59 per share, $0.08 better than the Capital IQ Consensus Estimate of $0.51; revenues rose 21.7% year/year to $13.1 bln vs the $12.82 bln consensus. Gross margin was 61 percent, consistent with the company's expectation. The co sees FY11 non-GAAP gross margins of 64% +/- a couple of percentage points. Co issues upside guidance for Q3, sees Q3 revs of $13.6-14.6 bln vs. $13.45 bln Capital IQ Consensus Estimate. Co says "Strong corporate demand for our most advanced technology, the surge of mobile devices and Internet traffic fueling data center growth, and the rapid rise of computing in emerging markets drove record results. Intel's 23 percent revenue growth in the first half and our increasing confidence in the second half of 2011 position us to grow annual revenue in the mid-20 percent range."

4:24PM Xilinx beats by $0.03, beats on revs; guides Q2 revs in-line (XLNX) 33.18 -0.51 : Reports Q1 (Jun) earnings of $0.56 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.53; revenues rose 3.5% year/year to $615.5 mln vs the $599.7 mln consensus. Co issues in-line guidance for Q2, sees Q2 revs -3% to +1% QoQ, which equates to ~$597.0-621.7 vs. $602.79 mln Capital IQ Consensus Estimate.

4:11PM Qualcomm beats by $0.02, beats on revs; guides Q4 EPS in-line, revs in-line (QCOM) 57.30 +0.32 : Reports Q3 (Jun) earnings of $0.73 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.71; revenues rose 34.2% year/year to $3.62 bln vs the $3.55 bln consensus. Co issues in-line guidance for Q4, sees EPS of $0.75-0.80, excluding non-recurring items, vs. $0.76 Capital IQ Consensus Estimate; sees Q4 revs of $3.86-4.16 bln vs. $3.9 bln Capital IQ Consensus Estimate. CDMA-based Mobile Station Modem MSM shipments: 120 million units, up 17 percent y-o-y and 2 percent sequentially. March quarter total reported device sales: ~$36.4 billion, up 44 percent y-o-y and down 9% QoQ. March quarter estimated CDMA-based device shipments: ~170 to 174 mln units, at an estimated average selling price of ~$209 to $215 per unit. "Looking forward, we continue to see healthy growth in CDMA-based device shipments of ~18% in calendar year 2011, and we are pleased to be raising our revenue and Non-GAAP earnings guidance for the fiscal year, driven primarily by strong global smartphone adoption and the addition of Atheros."

4:10PM F5 Networks beats by $0.06, reports revs in-line; guides Q4 EPS in-line, revs in-line (FFIV) 111.44 : Reports Q3 (Jun) earnings of $0.97 per share, $0.06 better than the Capital IQ Consensus Estimate of $0.91; revenues rose 26.1% year/year to $290.7 mln vs the $290.7 mln consensus. Co issues in-line guidance for Q4, sees EPS of $0.97-0.99 vs. $0.98 Capital IQ Consensus Estimate; sees Q4 revs of $307-312 mln vs. $309.62 mln Capital IQ Consensus Estimate. "Strong sales in APAC and Japan, in particular of our high-end products, accounted for most of the revenue growth during the quarter... EMEA revenue was down from the prior quarter, and Americas revenue was up only slightly, due in part to a slowdown in U.S. Federal sales... With the rollout of these new products and a number of others over the coming year, we continue to believe that our competitive position in the traditional ADC market has never been stronger, and that the opportunity to expand our footprint in adjacent markets has never been greater. As a result, we remain confident in our ability to sustain top-line growth and profitability by continuing to expand our reach into new and existing markets and by hiring and retaining the best people."

4:07PM Cohu beats by $0.07, beats on revs (COHU) 13.47 -0.13 : Reports Q2 (Jun) earnings of $0.28 per share, $0.07 better than the Capital IQ Consensus Estimate of $0.21; revenues rose 8.1% year/year to $80.9 mln vs the $80 mln consensus.

4:06PM Plexus beats by $0.03, misses on revs; guides Q4 EPS below consensus, revs below consensus (PLXS) 33.38 +0.17 : Reports Q3 (Jun) earnings of $0.58 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.55; revenues rose 4.3% year/year to $559 mln vs the $569.6 mln consensus. Co issues downside guidance for Q4, sees EPS of $0.50-0.55, excluding non-recurring items, vs. $0.60 Capital IQ Consensus Estimate; sees Q4 revs of $530-560 mln vs. $582.75 mln Capital IQ Consensus Estimate.

4:06PM Seagate Tech beats by $0.03, beats on revs (STX) 16.99 +0.06 : Reports Q4 (Jun) earnings of $0.28 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.25; revenues rose 7.6% year/year to $2.86 bln vs the $2.71 bln consensus. "Seagate and the industry are benefitting from the significant demand for storage related to new applications and architectures associated with mobile and connected devices... Because hard disk drive storage is a fundamental technology for cloud service providers, data centers and all other network-based content providers, total industry demand grew almost 40% in fiscal year 2011 to 330 million terabytes. For the June quarter, Seagate's average capacity per drive shipped grew to approximately 590GB, an increase of 39% year-over-year. As more online content and services become available to billions of connected mobile devices, we expect demand for storage capacity to continue to grow and Seagate to benefit from this growth."

9:21AM Rudolph Tech prices offering of $50 mln of 3.75% convertible senior notes due 2016; warrent transaction will have a dilutive effect on the co's EPS to the extent that the price of its common stock exceeds the strike price of the warrant, which is ~ $17/share (RTEC) 9.59 : Co announced the pricing of its offering of $50 mln aggregate principal amount of 3.75% convertible senior notes due 2016. The Company also granted the initial purchaser of the notes an option to purchase up to an additional $10 mln aggregate principal amount of the notes. The notes will pay interest semi-annually on January 15 and July 15 at an annual rate of 3.75%, and will mature on July 15, 2016, unless earlier converted or repurchased. In connection with the offering of the notes, the co has entered into a convertible note hedge and a warrant transaction with an affiliate of the initial purchaser. The convertible note hedge transaction is intended to reduce potential dilution to the Company's common stock upon conversion of the notes.

KEMET (KEM) introduced its first-to-market F5D Series metallized polyester film capacitors with integrated ceramic capacitors. These multicomponent capacitors eliminate the need for two devices by filtering both low and high frequency noise in automotive motors and other suppression applications.

LSI Corporation (LSI) announced the availability of a family of network accelerator cards that offload functions and reducing time to market. The accelerator cards allow OEMs to use existing software investments and reducing development costs.

8:17AM Micron announces a $600 mln convertible sr notes offering (MU) 7.52 : Micron intends to use a portion of the net proceeds from these offerings to pay the cost of the capped call transactions entered into in connection with the offering of the Notes. A portion of the net proceeds will be used to repurchase shares of Micron's common stock pursuant to a Board authorized $150.0 million stock repurchase program including purchases in negotiated transactions with institutional investors in the offering through one of the initial purchasers, as Micron's agent, subject to availability, in other privately negotiated or market transactions following the offering and the remainder will be used for general corporate purposes, including working capital, capital expenditures, and potential acquisitions and strategic transactions.

7:00AM EMC beats by $0.01, beats on revs; raises FY11 EPS, revs in-line (EMC) 27.38 : Reports Q2 (Jun) earnings of $0.35 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.34; revenues rose 20.4% year/year to $4.85 bln vs the $4.73 bln consensus. Co issues in-line guidance for FY11, raises EPS to exceed $1.48 from $1.46 vs. $1.49 Capital IQ Consensus Estimate; raises FY11 revs to exceed $19.8 bln from $19.6 bln vs. $19.83 bln Capital IQ Consensus Estimate. Second-quarter highlights included double-digit revenue growth for EMC Information Storage business, which increased 19% year over year. EMC's high-end EMC Symmetrix storage product portfolio, which includes the EMC Symmetrix VMAX, increased rev 15% YoY, and EMC's portfolio of mid-tier storage products3 grew revenue 27% YoY. Revenue from VMware (VMW), which is majority-owned by EMC, increased 37% and revenue from EMC's RSA Information Security business grew 13% YoY. Additional second-quarter highlights included strong revenue growth for the EMC VNX unified storage and the co's backup and recovery solutions. EMC saw increasing customer demand for its Big Data technologies -- product revenue from EMC Isilon, EMC Atmos and EMC Greenplum each doubled year over year. VCE's year-to-date revenue for 2011 has already exceeded its full-year 2010 revenue amount. EMC's consolidated second-quarter revenue from the United States reached $2.5 bln, an increase of 17% year over year, representing 52% of consolidated second-quarter revenue. Revenue from EMC's business operations outside of the United States hit an all-time record $2.3 bln, an increase of 25% year over year, representing 48% of consolidated second-quarter revenue. Within this, revenue increased 20%, 34% and 43% year over year, respectively, in EMC's Europe, Middle East and Africa; Asia Pacific and Japan; and Latin America regions.

6:03AM Microsemi announces proposal to acquire Zarlink Semiconductor $548.7 mln; expected to be immediately accretive to co's earnings; net sales are expected to be at the high end of Microsemi's revenue guidance (MSCC) 19.94 +0.77 : Co announced today that it has made a proposal to the board of directors of Zarlink Semiconductor to acquire all of the outstanding shares of the Company for CAD $3.35/share in cash. The proposed transaction has a total equity value of $548.7 mln based on a fully diluted share count and represents a 40 percent premium to Zarlink's share price as of July 19, 2011, and a 43 percent premium to Zarlink's trailing 30 day average share price. The CAD $3.35 proposal exceeds every Zarlink closing share price over the last five years. Co sees Q3 (Jun) revs of at the high end of prev range $213.7-217.9 mln vs. $215.82 mln Capital IQ Consensus Estimate.

Zoran (ZRAN) announced that it has licensed its IPS print language software, including page description language interpreters for PCL 5 and PostScript for use in the recently launched HP Officejet Pro 8000 Enterprise Printer.

10:46 am Riverbed Technology Reports In-line Second Quarter Earnings Results (RVBD)

Riverbed Technology (RVBD $32.18 -9.22) reported second quarter earnings of $0.21 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.21.

Revenues rose 34.9% year/year to $170.3 million versus the $172.7 million consensus.

The company said, "Overall it was a solid second quarter, with sales in the U.S. increasing 50% over the prior year... We experienced softness in the EMEA region, which we attribute to both the regional economy and our own execution. Looking ahead, we have confidence in our ability to improve our execution in this region with new EMEA sales leadership announced last week. Our top-line growth was led by a 38% year-over-year increase in product sales. Non-GAAP product gross margin reached an all-time high of 81.5%, and we achieved a record non-GAAP operating margin of 29.6%. Our competitive position is stronger than ever, our product portfolio is even more robust with the acquisitions announced today, and our market opportunity is growing. We expect a strong second half of 2011."

Separately, Riverbed announced today the acquisition of two companies, Zeus Technology and Aptimize.