From Briefing.com: 4:25 pm : The major averages finished today's session on a mixed note despite this morning's strength. The Dow slipped 0.3%, while the S&P 500 and Nasdaq eked out gains of 0.1% and 0.3% respectively.
The S&P 500 began the day on an upbeat note amid strength in industrials and discretionary shares. The two sectors outperformed after Comcast (CMCSA 40.13, +1.16) reported strong earnings and announced the acquisition of General Electric's (GE 23.39, +0.81) 49% stake in NBCUniversal. General Electric gained 3.6%, and settled near its highs while Comcast added 3.0% after being up as much as 7.6% in early trade.
General Electric contributed to the relative strength of the industrial sector, which ended as the top performer. Elsewhere in the space, 3D Systems (DDD 65.61, +2.54) advanced 4.0% after President Obama spoke positively about the three-dimensional printing industry during last night's State of the Union address.
President Obama also called for an increase of the federal minimum wage to $9/hour. This proposal weighed on restaurant operators where many workers earn minimum wage. McDonald's (MCD 94.00, -1.10) lost 1.2% and other quick service restaurants lagged as well. Buffalo Wild Wings (BWLD 76.55, -4.52) fell 5.6% after missing on the bottom line. In addition, the company is expected to face a difficult year with high wing costs responsible for the cautious outlook.
The weakness among restaurant stocks weighed on the discretionary sector and negated some of the strength provided by the shares of Comcast.
Afternoon trade saw underperformance from financials after several sector components notched fresh multi-year highs yesterday. Bank of America (BAC 12.17, -0.07) and Citigroup (C 44.00, -0.35) led the space during yesterday's action, but ended today's session with respective losses of 0.6% and 0.8%.
The CBOE Volatility Index (VIX 12.98, +0.34) climbed throughout the session, but slipped off its highs into the close. Meanwhile, the VIX term structure saw the biggest rise in May and June futures contracts.
Volume remained below average, but today's total of 657 million shares represented the most active session so far this week.
Treasury yields crept higher following today's 10-yr auction which priced at 2.046%, its highest since March 2012. The bid-to-cover ratio came in at 2.68, which was below the 12-auction average of 2.99. Although demand from indirect bidders lagged, primary dealers ended up with nearly 48% of today's supply. The 10-yr settled at 2.023%, its highest level in 10 months.
Overseas, the Bank of England raised its inflation forecast. However, Governor Mervyn King said the central bank will not hike interest rates in response as doing so would risk derailing a "slow but sustained" recovery.
Mr. King's comments were followed by reports which indicated some European Central Bank officials are worried the recent strength of the euro will hamper the recovery in crisis states. These reports were met with a quick rebuttal from Germany's Finance Minister Wolfgang Schaeuble who said another major crisis could develop if countries continue to flood the world with money.
Currency-related comments are likely to continue through the weekend with the G20 summit set to begin on Friday.
Today's economic news had little trading impact. December business inventories rose 0.1%, which was slightly lower than the 0.3% rise expected by the Briefing.com consensus. Elsewhere, January retail sales climbed 0.1%, in-line with expectations. Though retail sales met expectations, this report is likely to be watched in the coming months in order to assess the impact of the expiration of the payroll tax cut as well as higher tax rates for top earners.
In other news, export prices, excluding agriculture, increased by 0.5% in January after they had decreased by 0.2% during the prior month. Excluding oil, import prices increased by 0.2%, which followed the 0.1% decrease experienced in the prior month.
Tomorrow's economic data will be limited to weekly initial and continuing claims. This report will be released at 8:30 ET. General Motors (GM 28.67, +0.12) and PepsiCo (PEP 71.50, -0.67) are among the notable names scheduled to report their quarterly results prior to the open. The U.S. Treasury will auction off $16 billion in 30-yr bonds.DJ30 -35.79 NASDAQ +10.39 SP500 +0.90 NASDAQ Adv/Vol/Dec 1347/1.75 bln/1095 NYSE Adv/Vol/Dec 1765/657.1 mln/1251
3:30 pm :
Mar crude oil fell into negative territory off its session high of $98.05 per barrel following inventory data that showed a build of 0.56 mln barrels when a build of 2.55 mln barrels was anticipated. The energy component then traded just below the unchanged line but dipped again in the last hour of pit trade. Crude oil brushed a session low of $96.63 per barrel moments before settling with a 0.3% loss at $97.03 per barrel.
Mar natural gas extended yesterday's gains as it lifted off its session low of $3.26 per MMBtu and trended higher for its entire floor session. It eventually settled with a 2.5% gain at $3.31 per MMBtu.
Apr gold old popped to a session high of $1655.00 per ounce following retail sales and export prices data released this morning. However, the yellow metal quickly pulled-back and trended lower for the remainder of floor trade. It settled 0.3% lower at $1644.70 per ounce, or slightly above its session low of $1642.20 per ounce.
Mar silver also rose to a session high of $31.19 per ounce moments after floor trade opened and fell into negative territory by mid-morning action. It eventually settled 0.5% lower at $30.88 per ounce.
4:39PM Brocade awarded a new permanent injunction for trade secret theft against A10 Networks (BRCD) 5.76 0.00 : Co announced that a San Jose federal court denied A10 Networks' request to stay a new permanent injunction originally issued on Jan. 23, 2013, barring A10 from using four Brocade trade secrets a jury found A10 stole and incorporated in its AX series products. This order followed previous rulings for a permanent injunction for patent infringement as well as $60 million in damages for copyright infringement. As a result, A10 is now prohibited from "making, using, selling, offering to sell, or importing any AX series application delivery controller" that uses Brocade's trade secrets or infringes on Brocade's patents.
4:32PM Photronics beats by $0.01, reports revs in-line (PLAB) 6.40 +0.04 : Reports Q1 (Jan) earnings of $0.04 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.03; revenues fell 11.0% year/year to $99.84 mln vs the $99.33 mln consensus.
"As anticipated, the soft demand environment for integrated circuit (IC) photomasks continued into our seasonally slow first fiscal quarter. Flat panel display (FPD) photomask demand gained strength during the quarter resulting in sales of $99.8 million, which was at the high end of our guidance range."
4:19PM Ingram Micro reports 4Q12 results (IM) 18.46 -0.06 : Reports Q4 (Dec) earnings of $0.73 per share, excluding $0.07/share in items. CapIQ consensus is for EPS of $0.58. Revenue increased 14.3% year/year to $11.38 bln. CapIQ consensus for revenue is $10.83 billion.
*The co's recently completed acquisitions of BrightPoint, Inc. and Aptec Holdings Ltd. contributed approximately $1 billion and $75 million, respectively, to the quarter's revenues. BrightPoint's contribution to the company's fourth quarter revenues is for the period of October 16, 2012 through the end of the quarter, reflecting BrightPoint's acquisition by Ingram Micro on October 15, 2012.
* Outlook: For the 2013 year, the company currently expects worldwide consolidated revenue growth in the low teens, which includes the contribution of BrightPoint. The company affirms its expectations for BrightPoint to be accretive to 2013 earnings by at least 18 cents per diluted share, which includes absorbing approximately $37 million, or 17 cents per diluted share, in additional amortization of intangibles, but excludes integration costs.
For the 2013 first quarter, the company currently expects to experience a seasonal sequential decline in worldwide consolidated revenue consistent with the past two years and expects a seasonal sequential decline in gross margin due primarily to lower contribution from Ingram Micro logistics services.
4:16PM NetApp beats by $0.11, reports revs in-line; guides Q4 EPS above consensus, revs in-line (NTAP) 35.82 +0.41 : Reports Q3 (Jan) earnings of $0.67 per share, excluding non-recurring items, $0.11 better than the Capital IQ Consensus Estimate of $0.56; revenues rose 4.1% year/year to $1.63 bln vs the $1.62 bln consensus.
Co issues mixed guidance for Q4, sees EPS of $0.65-0.70, excluding non-recurring items, vs. $0.65 Capital IQ Consensus Estimate; sees Q4 revs of $1.7-1.8 bln vs. $1.75 bln Capital IQ Consensus Estimate.
4:12PM Cisco Systems beats by $0.03, reports revs in-line (CSCO) 21.14 +0.17 : Reports Q2 (Jan) earnings of $0.51 per share, excluding non-recurring items but including a tax benefit of ~$60 mln or $0.01 per share as a result of the reinstatement of the U.S. federal R&D tax credit on January 2, 2013., $0.03 better than the Capital IQ Consensus Estimate of $0.48; revenues rose 5.0% year/year to $12.1 bln vs the $12.06 bln consensus.
Co will guide for Q3 on the conf call at 4:30 ET.
"Cisco delivered record earnings per share this quarter and record revenue for the 8th quarter in a row in a challenging economic environment. We continue to drive the innovation, quality and leadership our customers expect, and we remain focused on consistent returns to our shareholders."
Cash flows from operations were $3.3 bln for the second quarter of fiscal 2013, compared with $2.5 bln for the first quarter of fiscal 2013, and compared with $3.1 bln for the second quarter of fiscal 2012. Cash and cash equivalents and investments were $46.4 bln at the end of the second quarter of fiscal 2013, compared with $45.0 bln at the end of the first quarter of fiscal 2013, and compared with $48.7 bln at the end of fiscal 2012.
Cisco repurchased ~25 mln shares of common stock under the stock repurchase program at an average price of $20.15 per share for an aggregate purchase price of $500 mln. As of January 26, 2013, Cisco had repurchased and retired 3.8 bln shares of Cisco common stock at an average price of $20.34 per share for an aggregate purchase price of ~$76.9 bln since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under this program is ~$5.1 bln with no termination date.
4:11PM Amkor beats by $0.01, beats on revs; guides Q1 EPS in-line, revs in-line (AMKR) 4.99 +0.16 : Reports Q4 (Dec) earnings of $0.13 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.12; revenues rose 5.7% year/year to $723 mln vs the $704.22 mln consensus. Co issues in-line guidance for Q1, sees EPS of ($0.03) - $0.09 vs. $0.08 Capital IQ Consensus Estimate; sees Q1 revs of $640-690 mln vs. $647.81 mln Capital IQ Consensus Estimate.
Q4 Gross margin 18%.
"We are pleased with our fourth quarter results and improvements over the prior quarters of 2012 and the fourth quarter of 2011...Bolstered by solid sales growth in mobile communications, results for the quarter came in at the higher end of our expectations. Our investments in support of the communications end market are paying off and continue to gain momentum. Driven by notable strength in smartphones and tablets, our communications revenue grew 12% and represented nearly 50% of our total sales in 2012."
Outlook:
Co sees Q1 Gross margin of 14% to 17%.
"Looking ahead to the first quarter 2013, we are seeing seasonal demand patterns with revenues expected to be down 5% to 11% from the fourth quarter 2012...We are currently planning capital additions of around $450 million for 2013 primarily to support the growth opportunities we see in mobile communications. We are also planning an additional $150 million of spending for the acquisition of land and construction relating to our previously announced new factory and R&D center in South Korea."
4:06PM Applied Materials beats by $0.03, beats on revs; guides Q2 EPS above consensus, revs above consensus (AMAT) : Reports Q1 (Jan) earnings of $0.06 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.03; revenues fell 28.1% year/year to $1.57 bln vs the $1.55 bln consensus. Co issues upside guidance for Q2, sees EPS of $0.09-0.15 vs. $0.11 Capital IQ Consensus Estimate; sees Q2 revs up 15-25% sequentially (roughly $1.81-1.97 bln) vs. $1.79 bln Capital IQ Consensus Estimate.
4:02PM Diodes beats by $0.07, reports revs in-line; guides Q1 revs in-line (DIOD) 19.96 +0.22 : Reports Q4 (Dec) earnings of $0.13 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus Estimate of $0.06; revenues rose 14.0% year/year to $163.3 mln vs the $163.7 mln consensus.
Co issues in-line guidance for Q1, sees Q1 revs of $157-170 mln vs. $162.55 mln Capital IQ Consensus Estimate.
"As we look to the first quarter of 2013, we are expecting a slightly better than seasonal quarter with revenue ranging between $157-170 mln, or flat plus or minus 4 percent sequentially. We expect gross margin to be 25% , plus or minus 2 percent. Operating expenses are expected to be 23% of revenue, plus or minus 1 percent. We expect our income tax rate to range between 10-17%, and shares used to calculate GAAP EPS for the first quarter are anticipated to be ~47.0 mln."
8:32AM Apple updates processors & prices of MacBook Pro With retina display; 13-inch MacBook Pro with retina display now starts at $1,499 for 128GB of flash, and $1,699 for a new 2.6 GHz processor and 256GB of flash (AAPL) 468.44 : Co announced that it is making the MacBook Pro with updated processors and lower starting prices. The 13-inch MacBook Pro with Retina display now starts at $1,499 for 128GB of flash, and $1,699 for a new 2.6 GHz processor and 256GB of flash. The updated MacBook Pro with Retina display and MacBook Air models are available today through the Apple Online Store.
6:16AM MEMC Elec beats by $0.08, beats on revs (WFR) 4.50 : Reports Q4 (Dec) earnings of $0.08 per share, $0.08 better than the Capital IQ Consensus Estimate of ($0.00); revenues fell 8.8% year/year to $704.3 mln vs the $668.91 mln consensus.
Semiconductor Materials
Semiconductor Materials revenue was flat year-over-year as increased shipments offset price declines. Year-over-year pricing declined across all diameters but was most significant among large diameter products. Volumes of both 200mm and 300mm semiconductor wafers increased year-over-year, while smaller diameter product volumes declined. The sequential revenue decline was primarily driven by lower volumes for smaller diameter wafers.
Solar Energy
The year-over-year GAAP revenue decline was driven by lower solar project and solar wafer sales.
Outlook
The co will provide its 2013 first quarter and full year outlook, as well as detailed commentary regarding its strategy and 2013 business plan, at its 2013 Capital Markets Day on March 13, 2013.
NETGEAR (NTGR) reported fourth quarter earnings of $0.55 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.55; revenues rose 0.4% year/year to $310.4 million versus the $307.8 million consensus. The company issued downside guidance for the first quarter, sees Q1 revs of $290-305 mln versus the $317.8 million consensus Estimate. Non-GAAP operating margin was 11.4% in Q4 vs 12.4% last year and 11.5% in Q3. "While the slowdown faced in the second half of 2012 has been challenging, we remain committed to pursuing the growth opportunities we see in Smart Homes, Next Generation Service Providers and 21st Century SMBs." Expects Q1 non-GAAP operating margin between 11-12%, which does not include revenues or costs associated with the AirCard acquisition.
10:41 am Tech Sector trading higher by +0.3% today
The tech sector is trading higher today, along with gains in the broader market. Semiconductors are showing relative strength as well with the SOX trading 0.5% higher. Within the chip index, WFR (+5.7%) is a notable standout. Among other major indices, the SPY is trading 0.4% higher today, while the QQQ is up 0.7% and the NASDAQ is trading 0.6% higher on the session. Among tech bellwethers, FB (+1.6%) is showing notable strength, while QCOM (-0.4%) is lagging.
In tech earnings last night, NTGR (-7.2%) posted an inline qtr and guided lower, RAX (-16.0%) reported a modest miss, LPSN (-4.8%) reported a slight beat and guided just below consensus, RKUS (-14.6%) posted a solid beat but guided shy of consensus, and RATE (-18.9%) missed qtrly and forward ests. This morning, NICE (+0.8%) reported a mixed qtr and guided below consensus and VG (+6.6%) posted a slight beat. In news, CMCSA (+6.2%) announced plans to acquire GE's (+3.7%) 49% common equity ownership interest in NBCUniversal for approx. $16.7 bln, increased its dividend by 20% to $0.78 and announced plans to repurchase $2 billion of its stock in 2013. Among rumors, VOD (-1.4%) is planning on purchasing Kabel Deutschland, according to reports. Among notable analyst upgrades this morning in the tech space, GRPN (+5.3%) was upgraded to Buy at Sterne Agee, WU (+0.7%) was upgraded to at Credit Agricole and Compass Pt., PRO (+22.4%) was upgraded to Buy at Craig Hallum following earnings and CMCSA (+6.2%) was upgraded to Outperform at Credit Suisse. Among downgrades, Needham downgraded RKUS (-14.2%) to Hold, SAPE (-6.9%) was downgraded at Citigroup, First Analysis, and William Blair, CLWR (0.0%) was downgraded to Underperform at Raymond James and Stifel downgraded RAX (-16.0%) to Hold. AMAT (+0.4%), CTL (-0.3%), CSCO (+0.2%), IM (+0.3%), NTAP (-0.6%), and NVDA (+1.3%) are notable names in tech scheduled to report quarterly results today after the close.
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