Sector Investing

[ReturntoSender]

From Briefing.com: 4:15 pm : The major averages saw little change during the last session of the month. The S&P 500 shed 0.2%, while Nasdaq outperformed and ended flat.

Mixed trade unfolded amid economic data which was largely in-line with expectations. Weekly initial claims were reported at 368,000 (Briefing.com consensus 345,000), which supports the notion that the lower readings over the prior two weeks were primarily the result of seasonal adjustment problems. Today's number drives initial claims right back to the 350,000-400,000 range where they have been bounded for most of the last year.

Elsewhere, the personal income report stood out as the December increase of 2.6% was well ahead of the 0.7% rise expected by the Briefing.com consensus. However, the notable rise in personal income was due to a surge in personal income on assets as investors chose to lock in a lower capital gains tax rate ahead of the New Year.

The fourth quarter Employment Cost Index increased by 0.5%, in-line with the Briefing.com consensus.

The day's final economic report saw the January Chicago PMI climb to 55.6. The reading surprised to the upside as economists surveyed by Briefing.com had generally expected the index to come in at 50.5.

In addition to economic data, investors received several notable earnings reports. Ryder System (R 56.78, +2.52), MasterCard (MA 518.40, +2.40), and Qualcomm (QCOM 66.02, +2.49) gained between 0.5% and 4.6% after beating on earnings.

On the downside, ConocoPhillips (COP 58.00, -3.09), Dow Chemical (DOW 32.20, -2.41), and UPS (UPS 79.29, -1.94) fell short of expectations.

With January now in the books, we would like to recap the first month of 2013.

Month in Review: Equities Soar as Full Force of 'Fiscal Cliff' AvertedResponding favorably to the Congressional compromise on tax rates, the S&P 500 jumped 2.8% in the first week of 2013 and rarely looked back. Despite some mixed economic and earnings news along the way, the S&P 500 closed with a gain in 13 out of 21 sessions and ended January at 1498.27 its best level since December 2007. The Dow Jones Industrial Average for its part surged 5.8% and recorded its best January since 1989.

Economic Data Paints Bleak January Picture

The bulk of economic data reported during the month beat the Briefing.com consensus. However, data reported for the month of January often came up short.
Of the seven January reports, five fell short of expectations.
The Empire Manufacturing Index, NAHB Housing Index, Philadelphia Fed Survey, Michigan Sentiment, and Consumer Confidence reports all missed expectations.
Meanwhile, the ADP Employment Change and Chicago PMI surprised to the upside.
The advance fourth quarter GDP reading was a headline disappointment, as a 0.1% contraction was recorded for the final quarter of 2012. However, the report was not as weak as it appeared.
The biggest drag on quarterly growth came in the form of a 6.6% decrease in government spending. This was largely due to a 22.2% decline in defense spending which followed a 12.9% increase during the third quarter.
The change in private inventories also subtracted 1.27 percentage points from the change in real GDP.
Personal consumption expenditures, which constitute more than 70% of GDP, rose 2.2%, which was the largest increase since the first quarter of 2012.
Business investment rose 12.4%, which was the largest uptick since the third quarter of 2011.

Mixed Earnings Unable to Derail Rally

The second half of the month saw the start of the fourth quarter earnings season.
Most companies have beaten on the bottom line per usual, hurdling estimates that had been lowered in many cases by analysts ahead of the reports. Revenue growth is still weak, but similar to earnings, most companies have exceeded depressed top line growth estimates.
Cautious guidance has been a common theme as many companies see headwinds in the first half of the year, although the default opinion is that the second half of the year should look better.

Transports, Energy, Health Care, and Discretionary Stocks Paced the Gains

The Dow Jones Transportation Average gained 9.4% as truckers and railroads joined the rally enjoyed by airlines since mid-November.
Energy stocks also displayed relative strength and the SPDR Energy Select Sector ETF (XLE) advanced 8.3%. This was largely supported by a 6.2% rise in the price of crude oil. The energy component ended the month just a shade under $98.
The Health Care sector has been a standout, trailing behind only energy in the sector rankings on a year-to-date basis (+7.4%).
The discretionary sector has also been among the top performers in the S&P 500.
Homebuilders continued their strength from 2012. The SPDR S&P Homebuilders ETF (XHB) ended January with a gain of 8.3%. Many builders reported strong fourth quarter earnings, replete with reports of strong backlogs and order trends.

Technology Lagged as Apple Weighed

The tech-heavy Nasdaq underperformed the remaining major indices as Apple (AAPL), which is the single largest index component, continued displaying weakness.
Shares of Apple sold off through the first half of the month before pausing near the $500 level.
A disappointing January 23 earnings report caused the stock to lose more than 10%. The company fell short of revenue expectations and issued downside guidance.
The largest tech stock ended the month down 14.4%, at levels last seen in February 2002.
Excluding Apple, the technology sector fared relatively well. Semiconductors outperformed despite a rash of disappointing earnings reports and outlooks. The PHLX Semiconductor Index climbed 7.7%.

Defensive Stocks Bid into Second Half

During the second half of the month, defensive-oriented sectors started to attract increased buying interest.
Telecoms (+1.8%) and utilities (+4.5%) registered the bulk of their gains during the second half of the month after the broader market had already seen the majority of its rise.
Health care stocks enjoyed strength throughout the month as upbeat earnings supported the space.

Headwinds Remain as S&P 500 Nears Uncharted Territory

As the S&P 500 hovers just 4.3% below its all-time high, challenges remain visible.
A notable drop in consumer confidence occurred as the initial impact of the payroll tax cut expiration was felt by income earners.
Sequester cuts are scheduled to go into effect in March, with the brunt of the impact to be absorbed by the defense sector.
The debt ceiling issue has only been deferred rather than fixed.
Japan's bold bid to weaken its currency and to inflate its economy is raising the risk of currency wars as other countries aim to support their exporters.
Geopolitical issues are simmering, with conflicts in the Middle East starting to make headline waves (eg. Egypt, Israel/Syria/Iran) and North Korea toying with nuclear tests.
Rising interest rates threaten to slow the housing recovery.
Bullish sentiment, which is a contrarian indicator, is picking up noticeably.

DJ30 -49.84 NASDAQ -0.18 SP500 -3.85 NASDAQ Adv/Vol/Dec 1525/2.11 bln/946 NYSE Adv/Vol/Dec 1557/933.2 mln/1421

3:30 pm :

Mar crude oil spent its entire floor session in negative territory as mixed economic data released this morning that included weekly initial claims and the personal income report weighed on prices. The energy component dropped to a session low of $96.84 per barrel in early morning action but inched higher for the remainder of the session. It managed to trim its loss to 0.4% as it closed at $97.52 per barrel, slightly below its session high of $97.65 per barrel.
Mar natural gas slid to a floor session low of $3.24 per MMBtu on inventory data that showed a draw of 194 bcf when a draw of 205 to 206 bcf ws anticipated. However, buyers stepped in and pushed prices into positive territory and to a session high of $3.39 per MMBtu. Natural gas eventually settled the session unchanged at $3.34 per MMBtu.
Apr gold retreated from its session high of $1678.50 and fell deeper into negative territory on the economic data. It settled 1.2% lower at $1661.80 per ounce, or slightly above its session low of $1658.40 per ounce.
Mar silver also extended overnight losses, falling as low as $31.12 per ounce in early afternoon pit trade. It eventually closed at $31.36 per ounce, or 2.5% lower.

5:38PM TTM Tech announces resignation of CFO Steven Richards; will be replaced by Todd Schull (TTMI) 7.97 +0.11 : Co announced that Steven Richards, the company's Executive Vice President and Chief Financial Officer has resigned from the company to pursue other interests. Mr. Richards will remain with the company though March 29, 2013 in order to transition his duties to his successor. The company also announced that Todd Schull has been appointed Executive Vice President, effective February 20, 2013 and will assume the role of Executive Vice President and Chief Financial Officer of TTM Technologies, Inc., effective March 2, 2013. Mr. Schull joins TTM Technologies from Sanmina (SANM), where he served as Senior Vice President of Finance and Corporate Controller.

4:18PM Power-One misses by $0.01, reports revs in-line; guides Q1 revs in-line (PWER) 56.85 -0.63 : Reports Q4 (Dec) loss of $0.10 per share, ex-items, $0.01 worse than the Capital IQ Consensus Estimate of ($0.09); revenues fell 28.1% year/year to $191.7 mln vs the $192.78 mln consensus.

*Co issues in-line guidance for Q1, sees Q1 revs of $175-200 mln vs. $196.43 mln Capital IQ Consensus Estimate. It is expected that gross margins will improve sequentially from the fourth quarter as a result of the cost reduction initiatives that have been undertaken.

4:17PM Emulex misses by $0.01, reports revs in-line; guides Q3 EPS below consensus, revs below consensus (ELX) 7.64 +0.20 : Reports Q2 (Dec) earnings of $0.19 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.20; revenues fell 5.1% year/year to $122.1 mln vs the $121.92 mln consensus. Co issues downside guidance for Q3, sees EPS of $0.12-0.14, excluding non-recurring items, vs. $0.16 Capital IQ Consensus Estimate; sees Q3 revs of $110-114 mln vs. $117.77 mln Capital IQ Consensus Estimate.

4:13PM PMC-Sierra beats by $0.02, beats on revs (PMCS) 5.78 +0.07 : Reports Q4 (Dec) earnings of $0.12 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.10; revenues fell 15.2% year/year to $129.4 mln vs the $126.5 mln consensus.

4:09PM Micrel misses by $0.01, beats on revs; guides Q1 EPS in-line, revs in-line (MCRL) 10.41 +0.22 : Reports Q4 (Dec) earnings of $0.06 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.07; revenues rose 6.0% year/year to $62.3 mln vs the $60.82 mln consensus. Co issues in-line guidance for Q1, sees GAAP EPS of ~$0.05-0.10 vs. $0.08 Capital IQ Consensus Estimate; sees Q1 revs of $58.6-64.2 mln vs. $63.63 mln Capital IQ Consensus Estimate.

As a result of the sluggish macroeconomic environment, 2012 was one of the most difficult years of the past decade for the entire semiconductor industry. Consequently, we believe semiconductor customers significantly reduced inventory levels during the year which resulted in relatively short lead times and caused the industry as a whole to ship below actual demand. We believe that we are seeing a bottom to the industry decline and we expect growth in the industry to resume. We expect lead times to increase and inventory levels to normalize towards the second half of the year resulting in modest full-year growth in 2013 for the industry.

4:02PM RF Micro Device announces extension of share repurchase program (RFMD) 5.00 +0.09 : Co announced that its board of directors has authorized an extension of RFMD's 2011 share repurchase program to repurchase up to $200 million of the Company's common stock through January 31, 2015. Since January 2011, the Company has repurchased $ 49.9 million of its common stock under this program, leaving it with additional authorization of up to $150.1 million under the program as a result of this extension.

4:01PM Brooks Automation beats by $0.05, beats on revs; guides Q2 EPS above consensus, revs in-line (BRKS) 9.36 -0.08 : Reports Q1 (Dec) loss of $0.06 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of ($0.11); revenues fell 18.5% year/year to $98 mln vs the $90.66 mln consensus. Co issues mixed guidance for Q2, sees EPS of ($0.05)- $0.00, excluding non-recurring items, vs. ($0.05) Capital IQ Consensus Estimate; sees Q2 revs of $102-100 mln vs. $107.83 mln Capital IQ Consensus Estimate.

11:28AM MEMC Elec subsidiary SunEdison and CAP sign agreement to build 100 MW solar PV plant (WFR) 4.05 +0.03 : SunEdison, a leading global solar energy services provider and subsidiary of MEMC Electronic Materials (WFR), has signed an agreement with the Chilean mining and steel group CAP to construct what is expected to be the largest solar photovoltaic power plant in Latin America and one of the largest in the world. The plant is designed to have an installed capacity of 100MW (DC) and will be located in the Atacama Desert of Chile. It is estimated that the plant will produce as much as 15% of the mining group's energy needs.

10:17AM JDS Uniphase breaks out to multi-month highs on earnings (JDSU) 14.92 +2.52 : The stock attacts bids this morning after beating on earnings and revenues last night. This morning's price gap has the stock breaking out to fresh multi-month highs above the $14-level to challenge its 2012 highs along $15/15.17.

9:02AM Ultratech beats by $0.01, beats on revs (UTEK) 38.22 : Reports Q4 (Dec) earnings of $0.48 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.47; revenues rose 16.9% year/year to $65.59 mln vs the $62.49 mln consensus. "Ultratech completed 2012 with positive momentum financially and operationally. We again achieved record quarterly levels of net sales and net income. Due to our strong balance sheet and financial success, over the course of 2012, we made key acquisitions and introduced exciting new products that bolster our position in existing markets and expand our addressable markets."

1:06AM NXP Semi beats by $0.03, beats on revs; sees Q1 EPS above conensus; revs in-line (NXPI) 29.98 : Reports Q4 (Dec) earnings of $0.50 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.47; revenues rose 19.9% year/year to $1.12 bln vs the $1.09 bln consensus. Co sees Non - GAAP EPS $ 0.47-0.51 vs $0.45 CIQ est; Total Revenue $ 1,051-1,082 mln vs 1,066 mln CIQ est

Skyworks (SWKS) reported first quarter earnings of $0.54 per share, excluding non-recurring items, in-line with the Capital IQ consensus of $0.54, while revenues rose 15.2% year/year to $453.7 million versus the $450.57 million consensus. The company issued guidance for the second quarter with EPS of $0.47, excluding non-recurring items, versus the $0.47 consensus and revenues of approximately $420 million versus the $417.36 million consensus. Expands operating margin 70 bps QoQ to 25.3 percent on a non-GAAP basis; repurchased 1.9 million shares of common stock.

Qualcomm (QCOM) reported first quarter earnings of $1.26 per share, excluding non-recurring items, $0.14 better than the Capital IQ consensus of $1.12, while revenues rose 28.6% year/year to $6.02 billion versus the $5.9 billion consensus. First Quarter Key Business Metrics MSMTM chip shipments: 182 million units, up 17 percent y-o-y and 29% QoQ. September quarter total reported device sales: ~$53.3 billion, up 29 percent y-o-y and 15 percent QoQ. September quarter estimated 3G/4G device shipments: approximately 233 to 237 million units, at an estimated average selling price of approximately $224 to $230 per unit. The company issued guidance for the second quarter with EPS of $1.10-1.18, excluding non-recurring items, versus the $1.10 consensus and revenues of $5.8-6.3 billion versus the $5.89 billion consensus Estimate. The company issued guidance for fiscal year 2013 with raised EPS to $4.25-4.45, excluding non-recurring items, from $4.12-4.32 versus the $4.32 consensus and raised fiscal year 2013 revenues to $23.4-24.4 billion from $23-24 billion versus $23.57 billion consensus.

Facebook (FB) reported fourth quarter earnings of $0.17 per share, $0.02 better than the Capital IQ consensus Estimate of $0.15, while revenues rose 40.1% year/year to $1.59 billion versus the $1.52 billion consensus. Mobile revenue represented ~23% of advertising revenue for the fourth quarter of 2012, up from ~14% of advertising revenue in the third quarter of 2012. Revenue from advertising was $1.33 billion, representing 84% of total revenue and a 41% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 43%. The company reported Monthly Average Users increased 25% YoY to 1.06 billion versus 26% YoY growth rate in Q3. The company reported Daily Average Users increased 28% YoY to 618 million versus 28% YoY growth rate in Q3. The company reported Mobile MAU's increased 57% YoY to 680 million versus 61% YoY growth rate in Q3.

09:13 am Facebook downgraded to Hold at Stifel Nicolaus; time to take profits: . Stifel Nicolaus downgrades FB to Hold from Buy. Co reported what it views as solid 4Q12 results; ad revenue growth accelerated to 43% ex-FX. Mobile now represents 23% of total ad revenues, up from 14% in 3Q. But the Co guided to significant margin compression in 2013, marking a fundamental downshift in the earnings trajectory. Co also downplayed the prospects for some growth initiatives, such as Gifts. With its earnings model totally re-calibrating, it is time to take some profits and evaluate the likelihood of potential earnings upside in future quarters. Firm potentially would look to add to positions in the mid-$20s, or when the duration of this investment phase is better understood, all else being equal.

09:12 am JDS Uniphase upgraded to Buy at Needham; tgt $18 following strong CY4Q: . Needham upgrades JDSU to Buy from Hold and sets target price at $18 following strong CY4Q. Stronger than expected results in T&M helped JDSU beat on Revs and better than expected Operating Margins in all three units helped JDSU beat EPS handily with $0.18/sh, up from $0.14 forecasted. JDSU management noted 1) conversations with OEMs and service providers suggest a stronger CY13; 2) European demand has bottomed out and looks poised to improve, 3) China is embarking on a major 100G build 4) January demand was better than October, and finally, 5) JDSU believes the timing of the spend in CY13 will start a bit later than typical as the "larger spending takes more time to allocate."

08:28 am Facebook shares fall 5% despite beat on EPS
Facebook (FB $29.50 -1.74) reported fourth quarter earnings of $0.17 per share, $0.02 better than the Capital IQ consensus Estimate of $0.15, while revenues rose 40.1% year/year to $1.59 billion versus the $1.52 billion consensus. Mobile revenue represented ~23% of advertising revenue for the fourth quarter of 2012, up from ~14% of advertising revenue in the third quarter of 2012. Revenue from advertising was $1.33 billion, representing 84% of total revenue and a 41% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 43%. The company reported Monthly Average Users increased 25% YoY to 1.06 billion versus 26% YoY growth rate in Q3. The company reported Daily Average Users increased 28% YoY to 618 million versus 28% YoY growth rate in Q3. The company reported Mobile MAU's increased 57% YoY to 680 million versus 61% YoY growth rate in Q3.

08:26 am Qualcomm shares rise 7% following better than expected earnings
Qualcomm (QCOM $67.70 +4.27) reported first quarter earnings of $1.26 per share, excluding non-recurring items, $0.14 better than the Capital IQ consensus of $1.12, while revenues rose 28.6% year/year to $6.02 billion versus the $5.9 billion consensus. First Quarter Key Business Metrics MSMTM chip shipments: 182 million units, up 17 percent y-o-y and 29% QoQ. September quarter total reported device sales: ~$53.3 billion, up 29 percent y-o-y and 15 percent QoQ. September quarter estimated 3G/4G device shipments: ~233 to 237 million units, at an estimated average selling price of approximately $224 to $230 per unit. The company issued guidance for the second quarter with EPS of $1.10-1.18, excluding non-recurring items, versus the $1.10 consensus and revenues of $5.8-6.3 billion versus the $5.89 billion consensus Estimate. The company issued guidance for fiscal year 2013 with raised EPS to $4.25-4.45, excluding non-recurring items, from $4.12-4.32 versus the $4.32 consensus and raised fiscal year 2013 revenues to $23.4-24.4 billion from $23-24 billion versus $23.57 billion consensus.

08:24 am SkyWorks shares rise 11% following better than expected earnings
Skyworks (SWKS $24.00 +2.44) reported first quarter earnings of $0.54 per share, excluding non-recurring items, in-line with the Capital IQ consensus of $0.54, while revenues rose 15.2% year/year to $453.7 million versus the $450.57 million consensus. The company issued guidance for the second quarter with EPS of $0.47, excluding non-recurring items, versus the $0.47 consensus and revenues of approximately $420 million versus the $417.36 million consensus. Expands operating margin 70 bps QoQ to 25.3 percent on a non-GAAP basis; repurchased 1.9 million shares of common stock.

08:19 am Citrix Systems shares soar 11% following better than expected earnings
Citrix Systems (CTXS $74.48 +7.50) reported fourth quarter earnings of $0.90 per share, $0.06 better than the Capital IQ consensus of $0.84, while revenues rose 19.5% year/year to $740 million versus the $705.89 million consensus. Product and license revenue increased 17%; Software as a service revenue increased 18%; Revenue from license updates and maintenance increased 22%; Professional services revenue, which is comprised of consulting, product training and certification, increased 20%; Revenue increased in the Pacific region by 52%; increased in the EMEA region by 19%; and increased in the America's region by 14%; Deferred revenue totaled $1.2 billion, compared to $960 million as of December 31, 2011, an increase of 25%; non-GAAP operating margin was 30%. The company issues guidance for the first quarter with EPS of $0.62-0.63, excluding non-recurring items, versus the $0.67 consensus and revenues of $670-680 million versus the $669.14 million consensus. The company issued guidance for fiscal year 2013 with EPS of $3.12-3.15, excluding non-recurring items, versus the $3.12 consensus and revenues of $2.95-2.98 billion versus the $2.91 billion consensus.