Sector Investing

[ReturntoSender]

From Briefing.com: 4:54PM STMicroelectronics misses by $0.09, reports revs in-line (STM) 5.95 -0.63 : Reports Q1 (Mar) loss of $0.14 per share, excluding non-recurring items, $0.09 worse than the Capital IQ Consensus Estimate of ($0.05); revenues fell 20.4% year/year to $2.02 bln vs the $2.02 bln consensus.

Outlook: While there are still macro-economic uncertainties, we believe billings have bottomed in Q1. Bookings have improved across the board during the course of the first quarter. "Based on current visibility, we expect broad-based growth in all product segments during Q2 leading to revenue growth of about 7.5% at the mid-point of our guidance. Looking further ahead we also anticipate broad-based revenue growth with a strong acceleration in MEMS and Analog in the second half of 2012 thanks to our new and innovative products and our expanding customer base."

Co expects second quarter 2012 revenues to grow sequentially in the range of about +7.5%, plus or minus 3 percentage points. As a result, gross margin in the second quarter is expected to be about 34.4%, plus or minus 1.5 percentage points, and assumes an improvement from the first quarter amount from fab loading and manufacturing performance.

4:34PM Texas Instruments beats by $0.03, beats on revs; guides Q2 EPS in-line, revs in-line (TXN) 31.89 -0.58 : Reports Q1 (Mar) earnings of $0.32 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.29; revenues fell 8.0% year/year to $3.12 bln vs the $3.05 bln consensus. Co issues in-line guidance for Q2, sees EPS of $0.36-0.44, excluding non-recurring items, vs. $0.40 Capital IQ Consensus Estimate; sees Q2 revs of $3.22-3.48 bln vs. $3.29 bln Capital IQ Consensus Estimate. For the full year of 2012, TI continues to expect approximately the following: R&D expense: $2.0 billion; Capital expenditures: $0.7 billion; Depreciation: $1.0 billion; Annual effective tax rate: 28%.

"As we expected, our business cycle bottomed in the first quarter, and early signs of growth began to emerge... Orders were up 13 percent, and backlog is growing again. Particularly encouraging is the breadth of increased orders across geographical regions and markets, including the industrial sector. "Sales in our Analog segment were about level with the prior quarter. We continue to make progress with Silicon Valley Analog, formerly National Semiconductor, as this product line gains traction with customers and holds a strong position in the important industrial market. Sales in Embedded Processing were up 7 percent led by growth in the automotive and communications infrastructure markets. Sales in our Wireless segment declined sharply as we entered the final phase of our exit from baseband products, which were less than 3 percent of total sales in the quarter. We are expanding the reach of our Wireless segment into multiple markets and experiencing strong diversity in our design-ins."

4:28PM Ultra Clean Holdings beats by $0.03, beats on revs; guides Q2 EPS in-line, revs below consensus (UCTT) 7.25 -0.26 : Reports Q1 (Mar) earnings of $0.20 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.17; revenues fell 12.7% year/year to $110.6 mln vs the $107.1 mln consensus. Co issues mixed guidance for Q2, sees EPS of $0.16-0.19 vs. $0.18 Capital IQ Consensus Estimate; sees Q2 revs of $100-105 mln vs. $106.84 mln Capital IQ Consensus Estimate. Semiconductor revenue was 85.1% of total revenue for the first quarter of 2012 compared to 79.6% in the previous quarter and revenue outside the U.S. accounted for 32% of the total revenue for the first quarter of 2012 compared to 29% for the previous quarter. Gross margin for the first quarter of 2012 was 14.2%, compared to 11.0% for the fourth quarter of 2011 and 13.9% for the first quarter of 2011.

4:11PM Sanmina-SCI reports EPS in-line, misses on revs; guides Q3 EPS below consensus, revs below consensus (SANM) 9.77 -0.32 : Reports Q2 (Mar) earnings of $0.27 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.27; revenues fell 6.8% year/year to $1.46 bln vs the $1.51 bln consensus. Co issues downside guidance for Q3, sees EPS of $0.26-0.32, excluding non-recurring items, vs. $0.36 Capital IQ Consensus Estimate; sees Q3 revs of $1.475-1.525 bln vs. $1.57 bln Capital IQ Consensus Estimate. "As we expected, our second quarter continued to be challenged by relatively flat demand across most of our markets and a decline in the multimedia segment.."Based on our outlook for the third quarter and feedback from our customers, we remain encouraged that we should see improvements in the second half of the calendar year."

4:08PM Volterra Semi beats by $0.05, beats on revs (VLTR) 31.83 -0.96 : Reports Q1 (Mar) earnings of $0.32 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.27; revenues rose 23.1% year/year to $42.1 mln vs the $40.2 mln consensus.

4:30 pm : The major equity averages fell hard in early trade. Although they were able to trim losses in a slow and steady fashion, broad losses were still booked.

Market participants were spooked this morning by news that China's latest manufacturing reading improved from the prior month, but pointed to yet another month of tighter activity. Manufacturing readings from Germany and France were also disappointing. France added to concerns about the eurozone with speculation that the country may experience a political shakeup that could carry implications for the country's plans for fiscal and financial reform. In a similar vein, Netherlands officials failed to reach an agreement on their country's budget.

Those themes, along with the losses suffered by the major averages of Asia and the bourses of Europe, dropped domestic markets for losses in excess of 1% this morning. The S&P 500 stabilized at its monthly closing low of 1358, which is also just a single point above its monthly intraday low of 1357, but the Nasdaq Composite notched a new monthly low before it found support.

Upon finding a floor, the broad market was able to trend upward at a modest pace in afternoon trade. The Energy sector made a more rapid recovery that took it all the way to the flat line after it had been down more than 1% in morning trade. Still, the sector's rebound lost momentum at the flat line. As such, the sector settled with a 0.1% loss. Baker Hughes (BHI 41.07, +0.61) was a leader among Energy issues ahead of its quarterly report tomorrow morning, but ConocoPhillips (COP 72.33, -0.55) shares remained in the red after the integrated outfit reported this morning an earnings miss.

Crude oil was also able to cut its loss, but not completely so. It set a session low of $101.82 per barrel, but settled the day with a 0.7% loss at $103.09 per barrel.

Other resource related plays were less impressive in their ability to rebound. Materials stocks were down about 2% at their session low, but ended the day with a 1.4% loss. Diversified metals and miners were particularly poor performers, as was US Steel (X 28.22, -0.77), which reports its latest quarterly results tomorrow morning.

Energy stocks ended the day as the best performing sector of the session, but Materials were the worst.

As investor skittishness decreased during afternoon trade demand for the safety of the dollar declined. Still, the greenback ended the day with a gain of about 0.2% against a basket of major foreign currencies.

Treasuries made modest gains, too. The benchmark 10-year Note saw its yield move to a monthly low closer to 1.90% this morning, but some of that gain was given back. The yield on Germany's 10-year Bund actually fell to a record low of 1.57%.

Advancing Sectors: None
Declining Sectors: Energy -0.1%, Utilities -0.6%, Telecom -0.7%, Tech -0.7%, Health Care -0.8%, Financials -0.8%, Industrials -1.0%, Consumer Discretionary -1.1%, Materials -1.4%, Consumer Staples -1.5%DJ30 -102.09 NASDAQ -30.00 NQ100 -1.0% R2K -1.5% SP400 -1.1% SP500 -11.59 NASDAQ Adv/Vol/Dec 613/1.76 bln/1931 NYSE Adv/Vol/Dec 789/784 mln/2231

9:30AM Cirrus Logic's Board of Directors issues statement regarding passing of Cirrus Logic Chairman and co-founder Michael L. Hackworth (CRUS) 20.74 -0.33 : 'We are deeply saddened by the loss of our friend and Chairman Mike Hackworth. In creating Cirrus Logic he led the way for the fabless semiconductor industry, and with the company's success proved that "real men really don't need fabs." Through his work and philanthropy he had a tremendous positive impact on thousands of people. We will miss him greatly. Our thoughts go out to his family in this sad time.'

8:33AM Ixys raises Q4 revenue guidance above consensus; issues upside FY12 revenue guidance (IXYS) 12.01 : Co raises guidance for Q4 (Mar), sees Q4 (Mar) revs of $86-87 mln from prior guidance of $84-86.4 mln vs. $86.00 mln Capital IQ Consensus Estimate. Co issues upside guidance for FY12 (Mar), sees FY12 (Mar) revs of $367-368 mln vs. $366.11 mln Capital IQ Consensus Estimate. The gross margin for the fourth quarter ended March 31, 2012 are estimated to be around 33% or 34%, which would be a significant increase over the gross margin of 28.9% in the December 2011 quarter.

Lasertel, a subsidiary of SELEX Galileo, a Finmeccanica co, and Veeco Instruments (VECO) announced that Lasertel has purchased a second high-throughput, multi-wafer GEN200 Edge Molecular Beam Epitaxy production system from Veeco to increase their manufacturing capacity for laser diodes.

8:02AM MEMC Elec corrects market rumors: 'Ahmad Chatila remains CEO' (WFR) 3.50 : Co stated "We have been made aware of rumors relating to the company which may be causing concern...and we wish to make it absolutely clear that Ahmad Chatila remains our CEO....The restructuring led by Ahmad and management announced in December 2011 is reflective of this engagement, but the announced restructuring was not the end of our work."

Nokia (NOK) officially started the development of its manufacturing facility in Vietnam. ARM today announced that MStar, a leading semiconductor supplier for display and digital home solutions, has licensed the ARM Cortex-A9 MPCore and ARM926EJ-S processors, in addition to a range of ARM system IP for use in smart-TVs, set-top-boxes and smartphones.

BWS Financial downgrades Rambus (RMBS $4.60 -0.30) to Hold from Buy saying the company continues to find ways to disappoint investors. Even though new licensees have been signed, the Company has not been able to generate an increase in revenue as a result of discounts to the royalty rate. The firm says it now seems, as the Company tries to gain acceptance with other patents in the portfolio, as though RMBS could be treading near breakeven for the next two to three quarters.

10:14 am Technology sector trading lower as overall market declines

The tech sector is trading lower today, roughly inline with losses in the broader market. Semiconductors are also showing relative weakness within the tech space. The Philly Semi Index is trading 2.0% lower. STM (-4.9%) is a notable laggard in the chip index, while SNDK (+3.2%) is bucking the trend. Among other major indices, the SPY is trading 1.4% lower today, while the QQQ is 1.5% lower and the NASDAQ is trading 1.6% lower on the session. Among tech bellwethers, ORCL (-1.9%) is showing notable weakness.

In earnings, XRX (+0.8%) reported a Q1 beat and offered inline guidance, while CHL (+4.1%) posted a miss. In news, TLAB (-1.3%) announced its CEO was diagnosed with colon cancer.

Also, VOD (+0.1%) has agreed to purchase Cable & Wireless Worldwide for $1.7 bln, according to reports. Among rumors, there is chatter of AAPL (-1.1%) iPhone nano launch this year making the rounds.

Among notable analyst upgrades this morning, ARMH (-2.7%) was upgraded to Neutral at JP Morgan and FTE (-1.7%) was upgraded to Buy at Nomura. While in downgrades, ABVT (0.0%) was downgraded to Sector Perform at RBC Capital. SANM (-3.6%), TXN (-1.4%) and STM (-4.9%) are the notable names in tech scheduled today after the close.