Sector Investing

[ReturntoSender]

From Briefing.com: 4:15 pm : Equities spent the majority of today's session in the red. After a lower open, stocks traded in a tight range until the release of FOMC minutes. After breaking through the unchanged line, stocks could not push much higher as they registered a flat close. The Nasdaq outperformed and ended higher by 0.2%.

The FOMC minutes revealed a discussion between members regarding the costs and benefits of a new large-scale asset purchase program, otherwise thought of as "QE3." Members of the committee agreed that additional easing could provide support for the economic recovery by further depressing longer-term interest rates. However, few members voiced concern over the impact such easing would have on markets which deal in Treasury securities and agency mortgage backed securities. Overall, the committee appears to be maintaining their stance and will provide additional easing if general economic conditions deteriorate further.

Homebuilders saw notable strength after Toll Brothers (TOL 33.01, +1.20) reported strong quarterly results highlighted by a $0.19 earnings beat. Rivals Standard Pacific (SPF 6.49, +0.29), PulteGroup (PHM 13.29, +0.50), MDC Holdings (MDC 33.88, +0.95), and DR Horton (DHI 19.01, +0.76) were all up between 3.5% and 5.0%.

Shares of two apparel retailers headed in opposite directions after announcing earnings. Express (EXPR 15.02, -1.87) slumped 11.1% after reporting an earnings beat and a revenue miss. Meanwhile, American Eagle Outfitters (AEO 22.13, +1.30) surged 6.2% after announcing in-line earnings and issuing upside guidance.

Discover Financial (DFS 38.43, +1.43) ended higher by 3.9% after announcing a partnership which will allow PayPal subscribers to use their accounts at retail merchants who accept the Discover card as a form of payment. Discover marked a new all-time high of $39.13 following the news while shares of PayPal's parent company, EBay (EBAY 47.00, +1.15) advanced 2.5%.

Dell (DELL 11.68, -0.66) slid 5.4% after delivering mixed earnings. The personal computer manufacturer exceeded earnings estimates but missed on revenues while issuing downside guidance. Peer Hewlett-Packard (HPQ 19.20, -0.73) was lower by 3.7% ahead of its earnings release after today's close.

Stocks in the telecom space were lower as MetroPCS (PCS 9.71, -0.44) slipped 4.3%. The pay-as-you-go carrier was down after introducing an unlimited plan with a monthly fee of $55. A price battle between the wireless provider and rival T-Mobile has been ongoing. Today, T-Mobile announced their own unlimited plan with a price tag of $89.99 per month.

Existing home sales for July hit an annualized rate of 4.47 million units, which is weaker than the rate of 4.55 million units that had been generally expected among economists surveyed by Briefing.com. The pace for July is up from the prior month rate of 4.37 million units.

Treasury yields had been on a steady rise since late July. However, longer dated yields were able to hold their 200-day moving averages after rising close to 50 basis points apiece as a result of the selling. After seeing a couple days of modest gains, heavy buying throughout today's session dropped yields to their lowest levels in more than a week. Declines of close to 9 basis points in both the 10- and 30-yr yields dropped them to 1.719% and 2.825%, respectively.

Tomorrow's economic data includes initial and continuing claims at 8:30 AM ET. In addition, the FHFA Housing Price Index and new home sales will be reported at 10 AM ET.DJ30 -30.82 NASDAQ +6.41 SP500 +0.32 NASDAQ Adv/Vol/Dec 916/1.42 bln/1543 NYSE Adv/Vol/Dec 1175/600.8 mln/1830

3:35 pm : In energy, Sept crude oil Crude oil was volatile today and reached a floor session high of $97.50/barrel. Brent crude oil and WTI crude oil are both near a 3-month high as Middle East tension has helped create upside in prices. By the end of today's session, crude oil finished 0.4% higher at $97.24/barrel.

Sept natural gas recovered somewhat today, on choppy trade, after pulling back yesterday on the reports that a U.S. Court has put on hold an EPA rule over limits on sulfur dioxide and nitrogen oxide emissions. Nat gas ended 5 cents higher at $2.83/MMBtu.

In metals, Dec gold and Sept silver were trading near the unchanged line during the afternoon session, but both closed just modestly lower. Following the FOMC minutes, however, both gold and silver to new highs for the day. Sept copper rose 2 cents at $3.47/lb, just above its session low of $3.35. Gold finished pit trade about $2 lower at $1640.60, while silver rose 0.4% to $29.54.DJ30 -29.04 NASDAQ +7.07 SP500 +0.77 NASDAQ Adv/Vol/Dec 940/1190.1 mln/1506 NYSE Adv/Vol/Dec 1178/392 mln/1804

4:36PM Semtech reports EPS in-line, revs in-line; guides Q3 EPS below consensus, revs below consensus (SMTC) 24.77 -0.35 : Reports Q2 (Jul) earnings of $0.41 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.41; revenues rose 15.7% year/year to $150.7 mln vs the $149.97 mln consensus. Non-GAAP gross profit margin for the second quarter of fiscal year 2013 was 61.2%. Non-GAAP gross profit margin for the second quarter of fiscal year 2012 was 60.6%. "The second quarter of fiscal year 2013 was another record quarter for Semtech. Our organic business grew 10% sequentially, and the $35 million, excluding IP revenue, posted by Gennum was a quarterly record for that business. Our 1,384 design wins and 21 new products indicate continued demand for our highly differentiated solutions. We believe our market-leading products, balanced end market exposure, and diversified growth platforms will enable us to deliver sustainable growth and profitability for our shareholders." Co issues downside guidance for Q3, sees EPS of $0.41-0.45 vs. $0.48 Capital IQ Consensus Estimate; sees Q3 revs of $148-154 mln vs. $158.14 mln Capital IQ Consensus Estimate. Capital expenditures are expected to be approximately $8.0 mln.

4:11PM Hewlett-Packard reports Q3 EPS in-line with slight upside preannouncment, misses on revs; lowers FY12 EPS slightly, in-line (HPQ) 19.20 -0.73 : Reports Q3 (Jul) earnings of $1.00 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.98 an in-line with guidance from Aug 8 of ~$1.00; revenues fell 4.9% year/year to $29.67 bln vs the $30.19 bln consensus. Co issues in-line guidance for FY12, lowers EPS to $4.05-4.07, excluding non-recurring items, from $4.05-4.10 vs. $4.06 Capital IQ Consensus Estimate.

Personal Systems Group (PSG) revenue was down 10% YoY with a 4.7% operating margin. Commercial revenue decreased 9%, and Consumer revenue declined 12%. Desktop units were down 6%, notebook units were down 12% and total units were down 10%. Imaging and Printing Group (IPG) revenue declined 3% YoY with a 15.8% operating margin. Commercial hardware revenue and units were up 4% YoY. Consumer hardware revenue was down 13% YoY with a 23% decline in printer units. Services revenue declined 3% YoY with an 11.0% operating margin. Technology Services revenue was down 1% YoY, Application and Business Services revenue was flat, and IT Outsourcing revenue declined 6% YoY. Enterprise Servers, Storage and Networking (ESSN) revenue declined 4% YoY with a 10.9% operating margin. Networking revenue was up 6%, Industry Standard Servers revenue was down 3%, Business Critical Systems revenue was down 16%, and Storage revenue was down 5% YoY. Software revenue grew 18% YoY with an 18.0% operating margin, including the results of Autonomy. Software revenue was driven by 2% license growth, 16% support growth, and 65% growth in services. HP Financial Services revenue was flat YoY as the 2% increase in net portfolio assets was offset by a 2% decrease in financing volume. The business delivered a 10.4% operating margin.

4:10PM Rambus announces restructuring (RMBS) 4.76 -0.04 : With this restructuring and related cost saving measures, Rambus expects an overall net cash savings of $30-$35 million annually. The majority of the reduction in expenses are being made in general and administrative (G&A), while the company continues to invest in strategic businesses.

"After reviewing our expenses in detail, we have concluded that the support infrastructure can be reduced to improve profitability," said Dr. Ronald Black, Rambus chief executive officer. "While we have refined some of our R&D investments, we are preserving all of our strategic initiatives as we believe they will drive significant growth in the future."

The reductions in expense and associated workforce will begin in the coming weeks and are expected to be completed during the fourth quarter of 2012. As a result of this action, the company will reduce its workforce by approximately 15%. Satish Rishi, Rambus chief financial officer, stated: "We expect to take a charge for severance, on a cash basis, of approximately $6 million over the next two quarters. We are also reviewing our assets, businesses, and other contractual obligations and may take additional charges by the end of the year. Excluding these charges, and including additional investment in strategic initiatives, we expect significant net cash savings of approximately $30-$35 million annually."

11:14AM Agilent and China Mobile (CHL) agree to collaborate to develop solutions for next-generation radio access network (A) 36.85 -0.28 : The two companies signed a memorandum of understanding to initiate a collaboration that will focus on developing technology and test methods for a next-generation cloud-based radio access network, or C-RAN.

Riverbed Technology (RVBD) announced a reinforced commitment to the federal market with delivery of critical assessment and validation for its Cascade application-aware network performance management solutions that support requirements of U.S. DoD, civilian government agencies, and many private sector companies.

Manila Electric and Cisco (CSCO) announced they are collaborating on a holistic approach to providing reliable computing and networking infrastructure as a foundation for operations on a smart grid.

Dell (DELL $11.63 -0.71) reported second quarter earnings of $0.50 per share, excluding non-recurring items, $0.05 better than the Capital IQ consensus of $0.45, while revenues fell 7.5% year/year to $14.48 billion versus the $14.66 billion consensus; desktop and mobility revenue contracted. Large Enterprise revenue was $4.5 billion in the quarter, a 3% decline. Operating income was $433 million, or 9.5% of revenue. Enterprise Solutions and Services revenue increased 9% on 17% growth in server and networking revenue and 5% increase in services. Public revenue was $4.1 billion, a 6% decrease. Operating income for the quarter was $379 million, or 9.3% of revenue. Server and networking revenue increased 4%. Small and Medium Business revenue was $3.3 billion, a 1% decline. Operating income was $382 million, or 11.7% of revenue. Enterprise solutions and services grew 15% led by an increase of 27% in services revenue and 16% in servers and networking. Consumer revenue was $2.6 billion, a 22% decline. Operating income was $14 million or 0.5% of revenue. Revenue in Americas was down 6%; EMEA was down 7%, and Asia-Pacific and Japan revenue was down 12%. Revenue in BRIC countries was down 15%. The company issued downside guidance for the third quarter with revenues of -2 to -5% QoQ to approximately $13.76-14.19 billion versus the $14.87 billion consensus. The company issued downside guidance for fiscal year 2013 with EPS of at least $1.70, excluding non-recurring items, but including $0.02-0.03 dilution from Quest acquisition, versus the $1.91 consensus, guidance from February was for over $2.13.

Analog Devices (ADI $39.95 -0.39) reported third quarter earnings of $0.56 per share, in-line with the Capital IQ consensus of $0.56, while revenues fell 9.9% year/year to $683 million versus the $692.53 mln consensus. Gross margin was 65.6% and Op Margin 32%, ex restructuring charges. The company issued downside guidance for the fourth quarter with EPS of $0.54-0.60 versus the $0.61 consensus and revenues of h5-715 million versus $716.56 million consensus. Sees gross margins of approx 65%. Op expense expected to be approx $231 million.

Intuit (INTU $58.55 -0.40) reported fourth quarter earnings of $0.03 per share, excluding non-recurring items, $0.03 worse than the Capital IQ consensus of $0.06, while revenues rose 13.6% year/year to $651 million versus the $652.54 million consensus. The company issued upside guidance for the first quarter with EPS of $(0.07)-(0.06), excluding non-recurring items, versus the ($0.08) consensus, and downside first quarter revenue guidance of $630-640 million versus the $653.08 million consensus. The company issues in-line guidance for fiscal year 2013 with EPS $3.32-3.38, excluding non-recurring items, versus $3.36 consensus and revenues of $4.55-4.65 billion versus the $4.62 billion consensus.

Needham raises their Apple (AAPL $654.56 -1.36) target to $750 from $620. Since the firm's previous valuation exercise in February 2012, AAPL's sales have continued to grow, although more slowly than in the hype-growth period following the launch of the iPad and iPhone 4S. The increase in their price target stems chiefly from across-theboard upward revisions in all of AAPL's businesses, with the iPhone contributing almost half of the increase. The firm says, iPad sales have likewise continued to grow faster than the rate forecast in their valuation model, thanks to the device's dramatic invasion of the business and education markets.

09:14 am Dell shares fall 5% following disappointing guidance

Dell (DELL $11.62 -0.72) reported second quarter earnings of $0.50 per share, excluding non-recurring items, $0.05 better than the Capital IQ consensus of $0.45, while revenues fell 7.5% year/year to $14.48 billion versus the $14.66 billion consensus; desktop and mobility revenue contracted. Large Enterprise revenue was $4.5 billion in the quarter, a 3% decline. Operating income was $433 million, or 9.5% of revenue. Enterprise Solutions and Services revenue increased 9% on 17% growth in server and networking revenue and 5% increase in services. Public revenue was $4.1 billion, a 6% decrease. Operating income for the quarter was $379 million, or 9.3% of revenue. Server and networking revenue increased 4%. Small and Medium Business revenue was $3.3 billion, a 1% decline. Operating income was $382 million, or 11.7% of revenue.

Enterprise solutions and services grew 15% led by an increase of 27% in services revenue and 16% in servers and networking. Consumer revenue was $2.6 billion, a 22% decline. Operating income was $14 million or 0.5% of revenue. Revenue in Americas was down 6%; EMEA was down 7%, and Asia-Pacific and Japan revenue was down 12%. Revenue in BRIC countries was down 15%. The company issued downside guidance for the third quarter with revenues of -2 to -5% QoQ to approximately $13.76-14.19 billion versus the $14.87 billion consensus. The company issued downside guidance for fiscal year 2013 with EPS of at least $1.70, excluding non-recurring items, but including $0.02-0.03 dilution from Quest acquisition, versus the $1.91 consensus, guidance from February was for over $2.13.