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From Briefing.com: Weekly Recap - Week ending 19-Oct-12

Dow -205.43 at 13343.51, Nasdaq -67.25 at 3005.62, S&P -24.15 at 1433.19

http://finance.yahoo.com/marketupdate/update

Today's session was dominated by the sellers as disappointing third quarter earnings continued to roll in. Equities opened lower, and spent the majority of the session sliding to fresh lows. The sell-off came to an end once the S&P 500 hit the 1,430 level 90 minutes ahead of the close. The index then staged a minor bounce during the final hour before closing with a loss of 1.7%.

The technology sector was the weakest performer, Advanced Micro Devices (AMD 2.18, -0.44) reported a loss of $0.20, which was $0.04 worse than the Capital IQ consensus estimate. In addition, the company's revenue of $1.27 billion was in-line with Capital IQ analyst expectations. Also of note, the second largest manufacturer of microprocessors issued downside guidance for the fourth quarter, and announced restructuring plans in order to improve profitability. AMD shares settled lower by 16.8%.

Marvell Technology (MRVL 7.56, -1.26) slid 14.3% after lowering its third quarter guidance. The company now expects revenue to fall between $765 million and $785 million. This is down from the previous range of $800 million to $850 million, and below the Capital IQ consensus estimate of $815.58 million. The management commented on the lowered expectations by saying that "the continued slowdown in the global economy during the third quarter is resulting in a weaker PC market than previously anticipated." The guidance cut was met with a slew of downgrades as Credit Suisse, Credit Agricole, JP Morgan, Lazard, Jefferies, Deutsche Bank, and FBR Capital all lowered their rating of the semiconductor manufacturer.

On the upside, SanDisk (SNDK 44.02, +1.16) advanced 2.7% after beating on earnings and revenues. The flash memory maker reported earnings of $0.48, which was $0.14 ahead of the Capital IQ consensus estimate. Meanwhile, the company's revenue of $1.27 billion was ahead of the $1.22 billion expected by the Capital IQ consensus. Additionally, Piper Jaffray upgraded the stock to ‘overweight' from ‘neutral' following the earnings release.

Looking at industrials, General Electric (GE 22.03, -0.78) slipped 3.4% after reporting earnings and revenues below Capital IQ consensus. However, the management noted that the company is performing well, and is on track to deliver double-digit earnings growth in 2012.

Caterpillar (CAT 83.86, -2.76) slid 3.2% after reporting a 6.0% increase in retail sales of machines during September. The rate appears to be slowing as sales growth during the previous two months was reported at 13.0% in August and 14.0% in July. Note that Caterpillar will report its third quarter results before Monday's open.

On the upside, freight carrier Forward Air (FWRD 32.54, +1.93) gained 6.3% after beating Capital IQ earnings estimates by $0.01, and reporting in-line revenue at $143.5 million. In addition, the company issued in-line guidance for the fourth quarter as it expects its earnings to fall between $0.48 and $0.52. Following the report, Wolfe Trahan upgraded the stock to ‘outperform' from ‘peer perform.'

Staffing firm ManpowerGroup (MAN 39.53, +3.55) surged 9.9% after beating top and bottom line expectations. In addition, the company raised its fourth quarter guidance above Capital IQ consensus.

Quick service restaurants saw weakness following disappointing earnings from McDonald's (MCD 88.72, -4.14) and Chipotle (CMG 242.97, -42.96).

McDonald's dropped 4.5% after its earnings of $1.43 fell short of the Capital IQ consensus estimate of $1.47. Meanwhile, the company's revenues were reported at $7.15 billion, which was in-line with the Capital IQ consensus.

Meanwhile, Chipotle plunged 15.0% after missing on both earnings and revenues. The management commented on the upcoming quarter by saying they do not expect food inflation to be an issue. Following the earnings report, Wedbush downgraded the stock to ‘neutral' from ‘outperform' with a $270 price target. Peers Buffalo Wild Wings (BWLD 83.92, -2.21), Panera Bread (PNRA 161.85, -7.69), and Starbucks (SBUX 45.68, -1.72) all registered losses between 2.6% and 4.5%.

The Dow Jones Transportation Average shed 1.4%, and outperformed the remaining industrials. Kansas City Southern (KSU 78.43, +1.05) was the lone advancer among the twenty transportation stocks. The rail operator settled higher by 1.4% after reporting earnings of $0.82, which was $0.03 below Capital IQ consensus estimates. Meanwhile, the company's third quarter revenue of $577.4 million was in-line with the Capital IQ consensus. Peers CSX (CSX 21.10, -0.26), Norfolk Southern (NSC 65.64, -1.06), and Union Pacific (UNP 123.77, -1.57) all lost between 1.2% and 1.6%.

Overseas Shipholding Group (OSG 3.25, -0.29) was the weakest transportation component. The oil tanker operator slid 8.2% after trading near its all-time low of $3.13.

Existing home sales for September hit an annualized rate of 4.75 million units, which is stronger than the rate of 4.70 million units that had been generally expected by the Briefing.com consensus. The pace for September is down from the prior month rate of 4.83 million units.

Third Quarter Earnings Season Enters Full Force

The first busy week of the Q3 earnings season has concluded, featuring many bellwethers in the financial, technology and industrial sectors. As expected, earnings are down year over year. Meanwhile, last quarter's trend of most companies beating earnings expectations and missing sales estimates has held up.

Banks once again came in with relatively solid results, due in part to the Fed's accommodations. Financials have reported modest sequential improvements amid meager economic growth.

However, disappointing reports from high profile, large cap names like Intel (INTC 21.26, -0.40), IBM (IBM 193.36, -1.60), Google (GOOG 681.79, -13.21), Microsoft (MSFT 28.64, -0.85), General Electric (GE 22.03, -0.78), and McDonald's (MCD 88.72, -4.14) have since stolen the headlines and added to bearish sentiment.

So far, earnings from the 117 companies in the S&P 500 that have reported third quarter results are down approximately 4.0% year-over-year. Roughly 63.0% have beat earnings expectations while only 38.0% of companies have beat sales estimates. At the same juncture last quarter, about 68.0% of companies had beat earnings expectations while 42.0% beat sales expectations.

Looking to next week, about 700 companies covered by Briefing.com are expected to report Q3 results, including more than 150 companies in the S&P 500. Apple (AAPL 609.84, -22.80) will report on Thursday afternoon.

Weekly Recap: Stocks Rise Ahead of Friday's Sell-off

On Monday, equities got off to a slow start as the major averages spent the first 90 minutes near their respective unchanged levels. The day's economic data was mixed, and did little to move the markets. After early indecision, the three indices rose to their session highs, and maintained those levels into the afternoon. The S&P 500 saw brief afternoon weakness before late-day buying lifted the index to a gain of 0.8%. Financial stocks showed strength after Citigroup (C 37.16, -1.26) beat its earnings expectations by $0.07 and reported revenue of $19.4 billion.

Tuesday's session opened on a higher note after reports indicated Spain may be willing to ask for access to precautionary credit. The reports were followed by comments out of Germany which suggested the country's officials believe additional hurdles remain in Spain's way. Separate reports indicated the old continent's other troubled sovereign, Greece, is far from reaching an agreement with the Troika on its next bailout tranche. The European news did little to curb optimism as buyers lifted the major averages to midday highs, which were maintained into the close. As a result the S&P 500 registered a gain of 1.0%. Citigroup advanced 1.6% after announcing Chief Executive Officer, Vikram Pandit, and President and Chief Operating Officer, John Havens, have resigned. The resignations were effective immediately and the company's board elected Michael Corbat as the new CEO.

Wednesday's session began on a negative note after two technology bellwethers reported disappointing earnings. However, the cautious sentiment was short-circuited when the housing starts report revealed its highest reading since 2008. The major averages reacted by staging a steady climb to their respective session highs. A brief afternoon stumble followed, but the move was promptly retraced as the S&P 500 returned to its prior level, and closed higher by 0.4%. The technology sector was the worst performing group in the S&P 500 and Intel (INTC 21.26, -0.40) slipped 2.5% despite beating its earnings and revenue expectations.

On Thursday, stocks opened modestly lower after the weekly initial claims report missed expectations by 28,000. The early weakness was erased before midday as the major averages rallied to their respective session highs. However, the slim gains were short-lived as disappointing quarterly results from Google (GOOG 681.79, -13.21) hit the wires early and weighed on the markets. The tech-heavy Nasdaq saw the biggest impact, as the index tumbled to fresh session lows before closing with a loss of 1.0%. Google fell 8.0% after its earnings were reported at $9.03, which fell $1.63 short of the Capital IQ consensus estimate. Meanwhile, revenues came in at $11.87 billion, which represents a shortfall of about $540 million when compared to the Capital IQ analyst forecast.

 
 Index     Started Week  Ended Week  Change % Change  YTD % 
 DJIA	    13328.85     13343.51   14.66     0.1    9.2 
 Nasdaq	     3044.11      3005.62  -38.49    -1.3   15.4 
 S&P 500	1428.59      1433.19    4.60     0.3   14.0 
 Russell 2000  823.09	   821.00   -2.09    -0.3   10.8

Microsoft (MSFT $29.10 -0.40) reported first quarter non-GAAP earnings of $0.65 per share, $0.02 better than the Capital IQ consensus of $0.63, while GAAP EPS of $0.53 versus the $0.56 Capital IQ consensus, while revenues fell 7.9% year/year to $16.01 billion, may not compare directly to the $16.42 billion consensus. Non-GAAP revs were $17.4 bln, including Revenue deferred for Windows Upgrade Offer, Windows 8 Pre-sales, and Office Offer. Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion. These financial results reflect the deferral of $1.36 billion of revenue and $0.13 of diluted earnings per share, due to the Windows Upgrade Offer, pre-sales of Windows 8 to OEMs prior to general availability, and the Office Offer.

Riverbed Technology (RVBD $22.75 +2.09) reported third quarter earnings of $0.28 per share, excluding non-recurring items, $0.03 better than the Capital IQ consensus of $0.25, while revenues rose 15.2% year/year to $218.6 million versus the $216.74 mln consensus. Revenue grows 10% sequentially and 15% over prior year. Cash and investments grew by more than $100 million and totaled more than $670 million at September 30, 2012."

Google (GOOG $703.18 +8.10) reported third quarter earnings of $9.03 per share, excluding non-recurring items, $1.63 worse than the Capital IQ consensus of $10.66, while revenues rose 19.3% year/year to $11.33 billion versus the $11.87 bln consensus. Paid Clicks -- Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of Network members, increased ~33% YoY and increased ~6% QoQ. Cost-Per-Click -- Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased ~15% YoY and ~3% QoQ. Motorola revenues were $2.58 billion ($1.78 billion from the mobile segment and $797 million from the home segment), or 18% of consolidated revenues in the third quarter of 2012. As of September 30, 2012, cash, cash equivalents, and short-term marketable securities were $45.7 billion.

Lattice Semi (LSCC $3.50 -0.01) reported third quarter net of breakeven, in-line with the Capital IQ consensus of ($0.00), while revenues fell 13.2% year/year to $70.9 million versus the $70.84 mln consensus. The company issued downside guidance for the fourth quarter with revenues of $69.5-72.3 versus the $73.78 million consensus Estimate. Gross margin percentage is expected to be approximately 51-55%. Total operating expenses are expected to be approximately $43 million, including approximately $5.5 million in restructuring charges.

SanDisk (SNDK $46.50 +3.56) reported third quarter earnings of $0.48 per share, $0.14 better than the Capital IQ consensus of $0.34, while revenues fell 10.1% year/year to $1.27 billion versus the $1.22 billion consensus. The company also reports Q3 gross margin of 31% vs 44% last year, and Operating margin of 12.9% vs 29.4% last year. The company stated "Our retail business delivered strong results in Q3 and we believe we gained share across all major geographies worldwide on the strength of the SanDisk brand... Our results also reflect a solid recovery in our mobile embedded business and we made good progress toward expanding our SSD product roadmap. We believe we are well positioned to build on our business momentum and improved industry fundamentals to deliver strong sequential growth in the fourth quarter."

09:17 am Google down 8% yesterday
Google (GOOG $703.55 +8.55) reported third quarter earnings of $9.03 per share, excluding non-recurring items, $1.63 worse than the Capital IQ consensus of $10.66, while revenues rose 19.3% year/year to $11.33 billion versus the $11.87 bln consensus. Paid Clicks -- Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of Network members, increased ~33% YoY and increased ~6% QoQ. Cost-Per-Click -- Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased ~15% YoY and ~3% QoQ. Motorola revenues were $2.58 billion ($1.78 billion from the mobile segment and $797 million from the home segment), or 18% of consolidated revenues in the third quarter of 2012. As of September 30, 2012, cash, cash equivalents, and short-term marketable securities were $45.7 billion.

09:11 am Riverbed shares rise 10% following better than expected earnings
Riverbed Technology (RVBD $22.90 +2.21) reported third quarter earnings of $0.28 per share, excluding non-recurring items, $0.03 better than the Capital IQ consensus of $0.25, while revenues rose 15.2% year/year to $218.6 million versus the $216.74 million consensus. Revenue grows 10% sequentially and 15% over prior year. Cash and investments grew by more than $100 million and totaled more than $670 million at September 30, 2012."

09:08 am Microsoft shares fall by 2% following disappointing earnings as consumers await Windows 8
Microsoft (MSFT $29.00 -0.50) reported first quarter non-GAAP earnings of $0.65 per share, $0.02 better than the Capital IQ consensus of $0.63, while GAAP EPS of $0.53 versus the $0.56 Capital IQ consensus, while revenues fell 7.9% year/year to $16.01 billion, may not compare directly to the $16.42 billion consensus. Non-GAAP revs were $17.4 bln, including Revenue deferred for Windows Upgrade Offer, Windows 8 Pre-sales, and Office Offer. Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion. These financial results reflect the deferral of $1.36 billion of revenue and $0.13 of diluted earnings per share, due to the Windows Upgrade Offer, pre-sales of Windows 8 to OEMs prior to general availability, and the Office Offer.