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Thursday, July 18, 2013 6:14:44 PM
From Briefing.com: 4:15 pm : The S&P 500 settled with a gain of 0.5% after notching a fresh intraday record high of 1693.13. Meanwhile, the tech-heavy Nasdaq underperformed, ending unchanged.
Equities climbed at the open and received an additional boost after the July Philadelphia Fed Index, which is a survey of regional manufacturing conditions, spiked to 19.8 from 12.5. That was well ahead of the Briefing.com consensus estimate of 5.3 and marked the highest reading for the index since March 2011.
The S&P was able to register to a new intraday high as the heavily-weighted energy, financial, and industrial sectors all logged gains of at least 0.9%. The financial space led the way with a gain of 1.3% as just about every large component settled in positive territory. American Express (AXP 74.01, -2.79) was the lone exception following its earnings beat on below-consensus revenue.
Elsewhere, the energy sector rose 0.9% as crude oil jumped to its highest level of the year. The energy component climbed 1.5% to $108.08 per barrel. The recent gains in WTI crude have caused the Brent-WTI spread to narrow to just 68 cents from $5.00 on July 1.
Despite the continued rise in oil, the Dow Jones Transportation Average notched a fresh all-time high before ending with a gain of 1.7%. The relative strength of the bellwether complex helped the industrial sector finish among the leaders.
The benchmark average settled below its session high due to weakness in technology. The tech sector shed 0.3% as eBay (EBAY 53.52, -3.86) and Intel (INTC 23.24, -0.91) weighed following the release of their quarterly results. Online auction site eBay fell 6.7% after its mixed earnings were overshadowed by cautious third quarter guidance. Meanwhile, Intel dropped 3.8% after reporting its fourth quarterly revenue decline in a row. The largest chipmaker weighed on its industry group as the PHLX Semiconductor Index settled lower by 0.9%.
Also of note, IBM (IBM 197.99, +3.44) beat on earnings while missing its revenue expectations. However, upbeat full-year guidance helped the top-weighted Dow component finish higher by 1.8%.
Weekly initial claims decreased by 24,000 to 334,000. The Briefing.com consensus expected claims to come in at 348,000. The encouraging headline number for initial claims is unlikely a number that can be taken at face value, just as last week's disappointing number couldn't be. The issue is that there are seasonal adjustment problems related to the July 4 holiday and auto plant shutdowns for retooling that are not occurring in their usual fashion this year. These factors, and particularly the last factor, have created some saw-tooth volatility in the claims reporting.
Separately, the Leading Indicators report for June was unchanged. That followed a 0.2% increase in May and was worse than the 0.3% increase expected by the Briefing.com consensus.
There is no economic data scheduled to be released tomorrow. However, quarterly earnings will continue pouring in. Notably, General Electric (GE 23.63, +0.09), Honeywell (HON 82.97, +0.53), and Whirlpool (WHR 119.37, -1.23) will report their results ahead of the opening bell.DJ30 +78.02 NASDAQ +1.28 SP500 +8.46 NASDAQ Adv/Vol/Dec 1542/1.63 bln/932 NYSE Adv/Vol/Dec 2067/668.4 mln/952
3:30 pm :
Aug crude oil hit its highest level since March 2012 as it rose above the $108 per barrel level. The energy component came off its session low of $106.83 per barrel and steadily climbed as high as $108.43 per barrel. It settled at $108.03 per barrel, booking a 1.5% gain.
Aug natural gas popped from its session low of $3.67 per MBMtu following inventory data that showed a build of 58 bcf when a higher build of 63-64 bcf was anticipated. It settled 5.0% higher at $3.81 per MMBtu, slightly below its session high of $3.84 per MMBtu.
Aug gold traded higher today despite a stronger dollar index. The yellow metal lifted from its session low of $1276.50 per ounce and spent afternoon floor trade trading in a tight range near the $1284 per ounce level. It eventually settled at $1284.30 per ounce, or 0.5% higher.
Sep silver slipped to a session low of $19.22 per ounce in late morning action but was able to erase most of the loss after chopping around near the unchanged line in afternoon action. It settled 0.1% lower at $19.41 per ounce.
4:31PM Skyworks beats by $0.01, reports revs in-line; guides Q4 EPS above consensus, revs above consensus (SWKS) 22.45 -0.37 : Reports Q3 (Jun) earnings of $0.54 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.53; revenues rose 12.1% year/year to $436.1 mln vs the $436.03 mln consensus.
Co issues upside guidance for Q4, sees EPS of $0.62, excluding non-recurring items, vs. $0.60 Capital IQ Consensus Estimate; sees Q4 revs of $475 mln vs. $470.37 mln Capital IQ Consensus Estimate.
4:31PM Skyworks announces its Board of Directors has authorized the repurchase of up to $250 mlnk of the co's common stock from time to time prior to July 16, 2015 (SWKS) 22.45 -0.37 : This newly authorized stock repurchase program replaces in its entirety the $200 million stock repurchase program which was approved by the Board of Directors on November 8, 2012, and had $35.6 million of repurchase authority remaining.
4:19PM Advanced Micro beats by $0.03, beats on revs; guides Q3 revs above consensus (AMD) 4.64 +0.26 : Reports Q2 (Jun) loss of $0.09 per share, $0.03 better than the Capital IQ Consensus Estimate of ($0.12); revenues fell 17.9% year/year to $1.16 bln vs the $1.11 bln consensus. Gross margin decreased sequentially. Q2 2013 gross margin included an $11 million benefit from sales of inventory that had been previously reserved in Q3 2012 and this positively impacted gross margin by 1 percentage point as compared to a similar $20 million benefit in Q1 2013 which positively impacted gross margin by 2 percentage points.
Co issues upside guidance for Q3, sees Q3 revs of $1.38-1.45 bln (+19-25% q/q) vs. $1.22 bln Capital IQ Consensus Estimate.
4:14PM Google misses by $1.24, misses on revs (GOOG) 910.68 -7.87 : Reports Q2 (Jun) earnings of $9.56 per share, excluding non-recurring items, $1.24 worse than the Capital IQ Consensus Estimate of $10.80; revenues rose 18.6% year/year to $14.11 bln vs the $14.46 bln consensus. GAAP operating income in Q2 was $3.12 billion, or 22% of revenues. This compares to GAAP operating income of $3.24 billion, or 27% of revenues, in the second quarter of 2012. Non-GAAP operating income in Q2 was $3.99 billion, or 28% of revenues. This compares to non-GAAP operating income of $3.94 billion, or 33% of revenues, in 2Q12.
Revenues and other information
On a consolidated basis, Google Inc. revenues for the quarter ended June 30, 2013 were $14.11 billion, an increase of 19% y/y.
Google Revenues (advertising and other) -- Google revenues were $13.11 billion, or 93% of consolidated revenues, in Q2 representing a 20% increase y/y.
Google Sites Revenues -- Google-owned sites generated revenues of $8.87 billion, or 68% of total Google revenues, in Q2 up 18% y/y.
Google Network Revenues: Google's partner sites generated revenues of $3.19 billion, or 24% of total Google revenues, in tQ2 up 7% y/y.
Other revenues from Google were $1.05 billion, or 8% of total Google revenues, in Q2, up 138% y/y.
Google International Revenues : Google revenues from outside of the United States totaled $7.2 billion, representing 55% of total Google revenues in the second quarter of 2013, compared to 55% in Q1.
Foreign Exchange Impact on Google Revenues - Had foreign exchange rates remained constant from the first quarter of 2013 through the second quarter of 2013, our Google revenues in the second quarter of 2013 would have been $177 million higher. Google revenues from the United Kingdom totaled $1.32 billion, representing 10% of Google revenues in Q1, compared to 11% in 2Q12.
Paid Clicks: Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 23% over the second quarter of 2012 and increased approximately 4% over the first quarter of 2013.
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 approximately 6% over the second quarter of 2012 and decreased approximately 2% over the first quarter of 2013.
Traffic acquisition costs increased to $3.01 billion in Q2, compared to $2.60 billion in 2Q12. TAC as a percentage of advertising revenues was 25% in Q2, same as prior year.
Motorola Mobile Revenues (hardware and other) - Motorola Mobile revenues were $998 million, or 7% of consolidated revenues in Q2, compared to $843 million, or 7% of consolidated revenues in 2Q12.
Operating expenses were $4.92 billion in Q2 or 35% of revenues, compared to $3.89 billion in the second quarter of 2012, or 33% of revenues.
Motorola Mobile Operating Loss: GAAP operating loss for Motorola Mobile was $342 million, or -34% of Motorola Mobile revenues in Q2. This compares to GAAP operating loss of $199 million, or -24% of Motorola Mobile revenues in 2Q12. Non-GAAP operating loss for Motorola Mobile in Q2 was $218 million, or -22% of Motorola Mobile revenues. This compares to non-GAAP operating loss of $49 million, or -6% of Motorola Mobile revenues in 2Q12.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the second quarter of 2013 totaled $4.71 billion, compared to $4.25 billion in the second quarter of 2012. In the second quarter of 2013, capital expenditures were $1.6 billion, the majority of which was for production equipment, data center construction and facilities-related purchases. Free cash flow was $3.09 billion. We expect to continue to make significant capital expenditures.
Cash: As of June 30, 2013, cash, cash equivalents, and marketable securities were $54.4 billion.
4:10PM Microsoft misses by $0.16, misses on revs (MSFT) 35.44 -0.30 : Reports Q4 (Jun) earnings of $0.59 per share, including a $900 mln boost, $0.07/share, from Surface RT inventory adjustments; $0.16 worse than the Capital IQ Consensus of $0.75; revenues rose 10.2% year/year to $19.9 bln vs the $20.7 bln consensus. In addition, these financial results reflect the recognition of $782 million of previously deferred revenue related to the Office Upgrade Offer. All growth comparisons relate to the corresponding period in the last fiscal year.
Microsoft Business Division revenue grew 14% for the fourth quarter and 3% for the full year. Adjusting for the recognition of previously deferred revenue related to the Office Upgrade Offer, Microsoft Business Division non-GAAP revenue increased 2% for the fourth quarter. Office 365 is now on a $1.5 billion annual revenue run rate.
Server & Tools revenue grew 9% for the fourth quarter and 9% for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.
Windows Division revenue grew 6% for the fourth quarter and 5% for the full year. Excluding the impact of the prior year Windows Upgrade Offer revenue deferral, Windows Division non-GAAP revenue decreased 6% for the fourth quarter and 1% for the full year. In June, Microsoft released the public preview of Windows 8.1 which will be made available to OEMs in August.
Online Services Division revenue grew 9% for the fourth quarter and 12% for the full year, driven by an increase in revenue per search and volume. Bing organic U.S. search market share was 17.9% for the month of June 2013, up 230 basis points from the prior year period.
Entertainment and Devices Division grew 8% for the fourth quarter and 6% for the full year. During the quarter, transactional revenue within Xbox LIVE grew nearly 20%, and we unveiled our next-generation gaming and entertainment console, Xbox One.
"While our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter. We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE."
XLNX (45.75 +5.1%): Beat on EPS by $0.09, beat on revs; guided Q2 revs above consensus; target raised to $45 from $39 at Mizuho, to $47 from $37 at Jefferies, to $49 from $43 at Piper, to $50 from $42 at Credit Suisse, to $43 from $36 at Canaccord Genuity; downgraded to Market Perform at Wells Fargo; upgraded to Buy from Neutral at Lazard.
IBM (IBM) announced a multi-billion dollar, 10-year agreement to transform the IT infrastructure that supports all of UniCredit's commercial and private banking activities in Europe.
Cypress Semiconductor (CY) announced that Lenovo (LNVGY) has selected Cypress's PRoC-UI solution for its new SmartTouch N800 wireless touch mouse.
Power Integrations (POWI) introduced CHY100, the first AC-DC wall-charger interface IC that enables designers of mobile devices to implement the Quick Charge 2.0 protocol from Qualcomm (QCOM).
8:02AM Cypress Semi is halted (CY) 11.92 :
8:02AM Cypress Semi beats by $0.07, beats on revs; Co says that revenue growth and earnings leverage to continue in Q3 (CY) 11.92 : Reports Q2 (Jun) earnings of $0.14 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus Estimate of $0.07; revenues fell 3.9% year/year to $193.5 mln vs the $182.9 mln consensus.
7:35AM Verizon beats by $0.01, reports revs in-line; raises FY13 cap-ex guidance 1.9% (VZ) 50.74 : Reports Q2 (Jun) earnings of $0.73 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.72; revenues rose 4.3% year/year to $29.79 bln vs the $29.83 bln consensus. Consolidated EBITDA grew 9.5% year over year, totaling $10.7 billion in second-quarter 2013. EBITDA margin (non-GAAP) expanded to 35.9% in second-quarter 2013, up 170 basis points year over year. Cash flow from operating activities totaled $17.1 billion in first-half 2013, compared with $15.3 billion in first-half 2012.
Verizon is increasing its capital spending guidance from $16.2 billion to between $16.4 billion and $16.6 billion for full-year 2013, as the co anticipates higher demand for wireless data consumption and begins deployment of AWS (advanced wireless services) spectrum in second-half 2013.
Wireless Financial Highlights
Total revenues were $20.0 billion in second-quarter 2013, up 7.5% year over year. Service revenues in the quarter totaled $17.1 billion, up 8.3% year over year. Retail service revenues grew 7.8% year over year, to $16.4 billion. Retail postpaid ARPA (average revenue per account) increased 6.4% over second-quarter 2012, to $152.50 per month. In second-quarter 2013, wireless operating income margin was 32.4%, compared with 30.8% in second-quarter 2012. Segment EBITDA margin on service revenues was 49.8%, up 80 basis points over second-quarter 2012.
Wireless Operational Highlights
Verizon Wireless added 941,000 retail postpaid net connections, out of a total 1.0 million net retail connections, in the second quarter. These additions exclude acquisitions and adjustments. Verizon expects to continue to see increases in quarterly sequential net additions for retail postpaid connections in the second half of 2013. At the end of the second quarter, the co had 100.1 million retail connections, a 6.3% increase year over year -- including 94.3 million retail postpaid connections. At the end of the second quarter, smartphones accounted for more than 64% of the Verizon Wireless retail postpaid customer phone base, up from 61% at the end of first-quarter 2013. Retail postpaid churn was 0.93% in the second quarter, up 9 basis points year over year. Retail churn was 1.23% in the second quarter, up 12 basis points year over year.
7:33AM Fairchild Semi misses by $0.06, reports revs in-line; guides Q3 revs below consensus (FCS) 14.32 : Reports Q2 (Jun) earnings of $0.01 per share, ex items, $0.06 worse than the Capital IQ Consensus Estimate of $0.07; revenues rose 1.1% year/year to $365.5 mln vs the $365.66 mln consensus.
Co issues downside guidance for Q3, sees Q3 revs of $355-370 mln vs. $388.20 mln Capital IQ Consensus Estimate.
Fairchild reported second quarter adjusted gross margin of 29.8%, up 200 basis points from the prior quarter and 280 basis points lower than the second quarter of 2012. Adjusted gross margin excludes accelerated depreciation related to a line closure.
"Our high voltage product sales supporting the industrial and appliance markets were up 15 percent sequentially. "Our current scheduled backlog is nearly sufficient to achieve the low end of this range. We expect adjusted gross margin to be 31.5 to 33.0 percent due primarily to improved factory utilization and better product mix. We anticipate R&D and SG&A spending to be $97 to $99 million. The adjusted tax rate is forecast at 15 percent plus or minus 3 percentage points for the quarter. Consistent with our usual practices, we are not assuming any obligation to update this information, although we may choose to do so before we announce third quarter results."
6:15AM Taiwan Semi beats by NT$0.10, reports revs in-line; guides Q3 revs below consensus (TSM) 18.45 : Reports Q2 (Jun) earnings of NT$2.00 per share, NT$0.10 better than the Capital IQ Consensus Estimate of NT$1.90; revenues rose 21.6% year/year to NT$155.89 bln vs the NT$155.3 bln consensus.
Gross margin for the quarter was 49.0%, operating margin was 37.0%, and net profit margin was 33.2%. Shipments of 28-nanometer process technology reached 29% of total wafer revenues. 40/45-nanometer accounted for 21% of total wafer revenues. Advanced technologies, defined as 40/45-nanometers and below, accounted for 50% of total wafer revenues.
Co issues downside guidance for Q3, sees Q3 revs of NT$161-164 bln vs. NT$165.53 bln Capital IQ Consensus Estimate.
11:05 am Tech Sector trading higher today but behind the broader market
The tech sector is trading higher today, but trails larger gains in the broader market. Semiconductors are showing relative weakness as well with the SOX trading 0.6% lower. TSM (-8.0%) is weighing on the chip index. Among other major indices, the SPY is trading 0.8% higher today, while the QQQ is up 0.2% and the NASDAQ is trading 0.4% higher on the session. Among tech bellwethers, IBM (+2.7%) is showing notable strength, while INTC (-3.3%) is under pressure.
In tech earnings last night:
IBM (+2.7%) beats Q2 EPS by $0.14, misses on revs and raised FY13 EPS (ex-$1 bln workforce rebalancing charge) above consensus
SNDK (+0.9%) beat Q2 EPS by $0.28, beat on revs and offered Q3 and FY13 guidance above consensus
XLNX (+5.7%) beat Q1 by $0.09, beat on revs and guided Q2 revs above consensus
This morning in earnings:
SAP (-1.7%) missed Q2 EPS by EUR0.14, missed on revs, and reaffirmed non-IFRS operating profit; reduces FY13 revs outlook
ERIC (-4.9%) missed Q2 earnings and revs
CHKP (+6.1%) posted a Q2 EPS beat with inline revs
TSM (-8.0%) reported a Q2 earnings beat, inline revs and guided Q3 below consensus
NOK (-3.0%) posted a mixed Q2 and guided Q3 Device and Services rev higher QoQ
GILT (-13.9%) lowered FY13 guidance FCS () posted a miss and guided lower
VZ (-1.9%) posted a modest beat and raised CapEx
NTCT (+0.8%) posted a beat and reaffirmed guidance
CY (+6.1%) reported a beat and issued revenue growth and earnings leverage to continue in Q3
APH (-7.0%) posted a relatively inline qtr and guided below consensus
SYNT (+2.2%) posted a beat and raise
TZOO (+0.2%) reported a Q2 EPS beat
SIFY (+7.9%) posted a sizeable Q2 beat
In news, DELL (+2.4%) confirmed that today's Special Meeting of Stockholders was convened and adjourned to provide additional time to solicit proxies from Dell stockholder. GLUU (+6.5%) disclosed last night that the Co and MGM Interactive entered into a warrant initially exercisable to purchase up to 3,333,333 shares of the co's common stock at an initial exercise price of $3.00 per share.
In M&A, VZ (-1.9%) on its call said that on call not interested in LEAP (0.0%).
In rumors, AAPL (+0.9%) may be in talks with LPL (-2.6%) on HDTV panels, according to reports.
Among notable analyst upgrades in tech this morning, XLNX (+5.7%) was upgraded to Buy at Lazard and QSII (+4.6%) was upgraded at MS and JP Morgan.
In downgrades, ASML (-0.3%) was downgraded to Neutral at Piper Jaffray, XLNX (+5.7%) was downgraded to Market Perform at Wells Fargo, CTXS (-0.1%) was downgraded to Mkt Perform at Raymond James, and SNDK (+0.9%) was downgraded to Equal-Weight at Morgan Stanley.
AMD (+0.5%), GOOG (-0.4%), MSFT (+0.2%), and SWKS (+0.8%) are the notable names in tech scheduled to report after the close.
Plexus (PLXS) reported third quarter earnings of $0.68 per share, which was better than expected, while revenues fell 6.1% year/year to $571.9 million, which was better than expected. The company issued mixed guidance for the fourth quarter with EPS of EPS of $0.60-0.66 which was better than expected, with fourth quarter revenues of $545-575 million which was in line with consensus.
SanDisk (SNDK) reported second quarter earnings of $1.21 per share, excluding non-recurring items, which was better than expected, while revenues rose 43.0% year/year to $1.48 billion, which was better than expected. "We delivered record second quarter results driven by increasing momentum across our business. We achieved solid revenue growth in our embedded solutions portfolio with many design wins ramping into production," The company sees the third quarter revenues of $1.525-1.575 billion which as better than expected. The company also raised fiscal year 2013 revenue guidance to $5.95-6.05 billion (from $5.6-5.75 bln), which was ahead of expectations.
Intel (INTC) reported second quarter GAAP earnings of $0.39 per share, in-line with estimates, while revenues fell 5.1% year/year to $12.81 billion which was in line with expectations. PC Client Group revenue of $8.1 billion, up 1.4% sequentially and down 7.5% year-over-year. Data Center Group revenue of $2.7 billion, up 6.1% sequentially and flat year-over-year. Other Intel Architecture Group revenue of $942 million, down 3.7% sequentially and down 15.0% year-over-year. Gross margin of 58%, up 2%age points sequentially and down 5%age points year-over-year. The company issued in-line guidance for the third quarter with revenues of $13-14 billion which was in line with estimates. The company issued guidance for fiscal year 2013 revenues to flat year over year to from up in the low single digits previously and lowered fiscal year 2013 gross margin guidance to 59% +/-2% from 60% +/-2%. On the Intel (INTC) conference call management said the company was slow to respond to the ultra-mobile PC trends. The traditional PC segment is down from the company's expectations from the beginning of the year, while the ultra-mobile device market is up. Co believes it has made the appropriate organizational and strategic changes to address these trends. All changes are "based on value creation." The company will provide a further update on the changes at its investor meeting in November. Management also noted that inventory levels across the PC supply chain increased slightly but remain well below historical levels due to uncertainty. In the Q&A session management said it expects the macroeconomic environment to improve in the back half of the year.
IBM (IBM) reported second quarter earnings of $3.91 per share, excluding non-recurring items, which was better than expected, revenues fell 3.3% year/year to $24.92 billion which was lower than expected. Software revenue up 4%, up 5% adjusting for currency; Key branded middleware up 9%; up 10% adjusting for currency; Services revenue down 4%, down 1% adjusting for currency; Global Business Services revenue down 1%, up 2% adjusting for currency; Services backlog of $141 billion, up 3%, up 7% adjusting for currency; Systems and Technology revenue down 12%, down 11% adjusting for currency: System z mainframe revenue up 10%; up 11% adjusting for currency; Growth markets revenue flat, up 1% adjusting for currency; Business analytics revenue up 11%; Smarter Planet revenue up more than 25% in first half; Cloud revenue up more than 70% in first half. The company issued upside guidance for fiscal year 2013 with raised EPS to at least $16.90, excluding $1 bln workforce rebalancing charge, from at least $16.70 which was above expectations.
eBay (EBAY) reported second quarter earnings of $0.63 per share, which was in line with expectations, while revenues rose 14.1% year/year to $3.88 billion which was in line with expectations. Total company Enabled Commerce Volume (ECV) grew 21% for the quarter, to $51 billion. PayPal revenue increased 20% to $1.6 billion. PayPal gained 4.7 million active registered accounts in the period and ended the quarter with 132 million, a 17% increase. PayPal's net total payment volume (TPV) grew 24% to $43 billion driven by consumer and merchant use of PayPal both on and off eBay. Marketplaces revenue of $2.0 billion, increasing 10%, or 12% excluding the gain from the resolution of an indirect tax dispute in 2012. Marketplaces gained 3.5 million active users in the period and ended the quarter with 120 million, a 14% increase. Gross merchandise volume (GMV), excluding vehicles, increased 13% to $18 billion. Fixed price GMV grew 17% globally and represented 69% of total GMV. Operating margin: GAAP operating margin decreased to 19.3% for the second quarter of 2013, compared to 20.5% for the same period last year. Non-GAAP operating margin decreased to 26.3% in the second quarter, compared to 27.3% for the same period last year. Cash flow: The company generated $1.0 billion of operating cash flow and $658 million of free cash flow during the second quarter of 2013. The company issued guidance for the third quarter with EPS of $0.61-0.63 which was below expectations with revenues of $3.85-3.95 billion, which was also below estimates.
Equities climbed at the open and received an additional boost after the July Philadelphia Fed Index, which is a survey of regional manufacturing conditions, spiked to 19.8 from 12.5. That was well ahead of the Briefing.com consensus estimate of 5.3 and marked the highest reading for the index since March 2011.
The S&P was able to register to a new intraday high as the heavily-weighted energy, financial, and industrial sectors all logged gains of at least 0.9%. The financial space led the way with a gain of 1.3% as just about every large component settled in positive territory. American Express (AXP 74.01, -2.79) was the lone exception following its earnings beat on below-consensus revenue.
Elsewhere, the energy sector rose 0.9% as crude oil jumped to its highest level of the year. The energy component climbed 1.5% to $108.08 per barrel. The recent gains in WTI crude have caused the Brent-WTI spread to narrow to just 68 cents from $5.00 on July 1.
Despite the continued rise in oil, the Dow Jones Transportation Average notched a fresh all-time high before ending with a gain of 1.7%. The relative strength of the bellwether complex helped the industrial sector finish among the leaders.
The benchmark average settled below its session high due to weakness in technology. The tech sector shed 0.3% as eBay (EBAY 53.52, -3.86) and Intel (INTC 23.24, -0.91) weighed following the release of their quarterly results. Online auction site eBay fell 6.7% after its mixed earnings were overshadowed by cautious third quarter guidance. Meanwhile, Intel dropped 3.8% after reporting its fourth quarterly revenue decline in a row. The largest chipmaker weighed on its industry group as the PHLX Semiconductor Index settled lower by 0.9%.
Also of note, IBM (IBM 197.99, +3.44) beat on earnings while missing its revenue expectations. However, upbeat full-year guidance helped the top-weighted Dow component finish higher by 1.8%.
Weekly initial claims decreased by 24,000 to 334,000. The Briefing.com consensus expected claims to come in at 348,000. The encouraging headline number for initial claims is unlikely a number that can be taken at face value, just as last week's disappointing number couldn't be. The issue is that there are seasonal adjustment problems related to the July 4 holiday and auto plant shutdowns for retooling that are not occurring in their usual fashion this year. These factors, and particularly the last factor, have created some saw-tooth volatility in the claims reporting.
Separately, the Leading Indicators report for June was unchanged. That followed a 0.2% increase in May and was worse than the 0.3% increase expected by the Briefing.com consensus.
There is no economic data scheduled to be released tomorrow. However, quarterly earnings will continue pouring in. Notably, General Electric (GE 23.63, +0.09), Honeywell (HON 82.97, +0.53), and Whirlpool (WHR 119.37, -1.23) will report their results ahead of the opening bell.DJ30 +78.02 NASDAQ +1.28 SP500 +8.46 NASDAQ Adv/Vol/Dec 1542/1.63 bln/932 NYSE Adv/Vol/Dec 2067/668.4 mln/952
3:30 pm :
Aug crude oil hit its highest level since March 2012 as it rose above the $108 per barrel level. The energy component came off its session low of $106.83 per barrel and steadily climbed as high as $108.43 per barrel. It settled at $108.03 per barrel, booking a 1.5% gain.
Aug natural gas popped from its session low of $3.67 per MBMtu following inventory data that showed a build of 58 bcf when a higher build of 63-64 bcf was anticipated. It settled 5.0% higher at $3.81 per MMBtu, slightly below its session high of $3.84 per MMBtu.
Aug gold traded higher today despite a stronger dollar index. The yellow metal lifted from its session low of $1276.50 per ounce and spent afternoon floor trade trading in a tight range near the $1284 per ounce level. It eventually settled at $1284.30 per ounce, or 0.5% higher.
Sep silver slipped to a session low of $19.22 per ounce in late morning action but was able to erase most of the loss after chopping around near the unchanged line in afternoon action. It settled 0.1% lower at $19.41 per ounce.
4:31PM Skyworks beats by $0.01, reports revs in-line; guides Q4 EPS above consensus, revs above consensus (SWKS) 22.45 -0.37 : Reports Q3 (Jun) earnings of $0.54 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.53; revenues rose 12.1% year/year to $436.1 mln vs the $436.03 mln consensus.
Co issues upside guidance for Q4, sees EPS of $0.62, excluding non-recurring items, vs. $0.60 Capital IQ Consensus Estimate; sees Q4 revs of $475 mln vs. $470.37 mln Capital IQ Consensus Estimate.
4:31PM Skyworks announces its Board of Directors has authorized the repurchase of up to $250 mlnk of the co's common stock from time to time prior to July 16, 2015 (SWKS) 22.45 -0.37 : This newly authorized stock repurchase program replaces in its entirety the $200 million stock repurchase program which was approved by the Board of Directors on November 8, 2012, and had $35.6 million of repurchase authority remaining.
4:19PM Advanced Micro beats by $0.03, beats on revs; guides Q3 revs above consensus (AMD) 4.64 +0.26 : Reports Q2 (Jun) loss of $0.09 per share, $0.03 better than the Capital IQ Consensus Estimate of ($0.12); revenues fell 17.9% year/year to $1.16 bln vs the $1.11 bln consensus. Gross margin decreased sequentially. Q2 2013 gross margin included an $11 million benefit from sales of inventory that had been previously reserved in Q3 2012 and this positively impacted gross margin by 1 percentage point as compared to a similar $20 million benefit in Q1 2013 which positively impacted gross margin by 2 percentage points.
Co issues upside guidance for Q3, sees Q3 revs of $1.38-1.45 bln (+19-25% q/q) vs. $1.22 bln Capital IQ Consensus Estimate.
4:14PM Google misses by $1.24, misses on revs (GOOG) 910.68 -7.87 : Reports Q2 (Jun) earnings of $9.56 per share, excluding non-recurring items, $1.24 worse than the Capital IQ Consensus Estimate of $10.80; revenues rose 18.6% year/year to $14.11 bln vs the $14.46 bln consensus. GAAP operating income in Q2 was $3.12 billion, or 22% of revenues. This compares to GAAP operating income of $3.24 billion, or 27% of revenues, in the second quarter of 2012. Non-GAAP operating income in Q2 was $3.99 billion, or 28% of revenues. This compares to non-GAAP operating income of $3.94 billion, or 33% of revenues, in 2Q12.
Revenues and other information
On a consolidated basis, Google Inc. revenues for the quarter ended June 30, 2013 were $14.11 billion, an increase of 19% y/y.
Google Revenues (advertising and other) -- Google revenues were $13.11 billion, or 93% of consolidated revenues, in Q2 representing a 20% increase y/y.
Google Sites Revenues -- Google-owned sites generated revenues of $8.87 billion, or 68% of total Google revenues, in Q2 up 18% y/y.
Google Network Revenues: Google's partner sites generated revenues of $3.19 billion, or 24% of total Google revenues, in tQ2 up 7% y/y.
Other revenues from Google were $1.05 billion, or 8% of total Google revenues, in Q2, up 138% y/y.
Google International Revenues : Google revenues from outside of the United States totaled $7.2 billion, representing 55% of total Google revenues in the second quarter of 2013, compared to 55% in Q1.
Foreign Exchange Impact on Google Revenues - Had foreign exchange rates remained constant from the first quarter of 2013 through the second quarter of 2013, our Google revenues in the second quarter of 2013 would have been $177 million higher. Google revenues from the United Kingdom totaled $1.32 billion, representing 10% of Google revenues in Q1, compared to 11% in 2Q12.
Paid Clicks: Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 23% over the second quarter of 2012 and increased approximately 4% over the first quarter of 2013.
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 approximately 6% over the second quarter of 2012 and decreased approximately 2% over the first quarter of 2013.
Traffic acquisition costs increased to $3.01 billion in Q2, compared to $2.60 billion in 2Q12. TAC as a percentage of advertising revenues was 25% in Q2, same as prior year.
Motorola Mobile Revenues (hardware and other) - Motorola Mobile revenues were $998 million, or 7% of consolidated revenues in Q2, compared to $843 million, or 7% of consolidated revenues in 2Q12.
Operating expenses were $4.92 billion in Q2 or 35% of revenues, compared to $3.89 billion in the second quarter of 2012, or 33% of revenues.
Motorola Mobile Operating Loss: GAAP operating loss for Motorola Mobile was $342 million, or -34% of Motorola Mobile revenues in Q2. This compares to GAAP operating loss of $199 million, or -24% of Motorola Mobile revenues in 2Q12. Non-GAAP operating loss for Motorola Mobile in Q2 was $218 million, or -22% of Motorola Mobile revenues. This compares to non-GAAP operating loss of $49 million, or -6% of Motorola Mobile revenues in 2Q12.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the second quarter of 2013 totaled $4.71 billion, compared to $4.25 billion in the second quarter of 2012. In the second quarter of 2013, capital expenditures were $1.6 billion, the majority of which was for production equipment, data center construction and facilities-related purchases. Free cash flow was $3.09 billion. We expect to continue to make significant capital expenditures.
Cash: As of June 30, 2013, cash, cash equivalents, and marketable securities were $54.4 billion.
4:10PM Microsoft misses by $0.16, misses on revs (MSFT) 35.44 -0.30 : Reports Q4 (Jun) earnings of $0.59 per share, including a $900 mln boost, $0.07/share, from Surface RT inventory adjustments; $0.16 worse than the Capital IQ Consensus of $0.75; revenues rose 10.2% year/year to $19.9 bln vs the $20.7 bln consensus. In addition, these financial results reflect the recognition of $782 million of previously deferred revenue related to the Office Upgrade Offer. All growth comparisons relate to the corresponding period in the last fiscal year.
Microsoft Business Division revenue grew 14% for the fourth quarter and 3% for the full year. Adjusting for the recognition of previously deferred revenue related to the Office Upgrade Offer, Microsoft Business Division non-GAAP revenue increased 2% for the fourth quarter. Office 365 is now on a $1.5 billion annual revenue run rate.
Server & Tools revenue grew 9% for the fourth quarter and 9% for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.
Windows Division revenue grew 6% for the fourth quarter and 5% for the full year. Excluding the impact of the prior year Windows Upgrade Offer revenue deferral, Windows Division non-GAAP revenue decreased 6% for the fourth quarter and 1% for the full year. In June, Microsoft released the public preview of Windows 8.1 which will be made available to OEMs in August.
Online Services Division revenue grew 9% for the fourth quarter and 12% for the full year, driven by an increase in revenue per search and volume. Bing organic U.S. search market share was 17.9% for the month of June 2013, up 230 basis points from the prior year period.
Entertainment and Devices Division grew 8% for the fourth quarter and 6% for the full year. During the quarter, transactional revenue within Xbox LIVE grew nearly 20%, and we unveiled our next-generation gaming and entertainment console, Xbox One.
"While our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter. We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE."
XLNX (45.75 +5.1%): Beat on EPS by $0.09, beat on revs; guided Q2 revs above consensus; target raised to $45 from $39 at Mizuho, to $47 from $37 at Jefferies, to $49 from $43 at Piper, to $50 from $42 at Credit Suisse, to $43 from $36 at Canaccord Genuity; downgraded to Market Perform at Wells Fargo; upgraded to Buy from Neutral at Lazard.
IBM (IBM) announced a multi-billion dollar, 10-year agreement to transform the IT infrastructure that supports all of UniCredit's commercial and private banking activities in Europe.
Cypress Semiconductor (CY) announced that Lenovo (LNVGY) has selected Cypress's PRoC-UI solution for its new SmartTouch N800 wireless touch mouse.
Power Integrations (POWI) introduced CHY100, the first AC-DC wall-charger interface IC that enables designers of mobile devices to implement the Quick Charge 2.0 protocol from Qualcomm (QCOM).
8:02AM Cypress Semi is halted (CY) 11.92 :
8:02AM Cypress Semi beats by $0.07, beats on revs; Co says that revenue growth and earnings leverage to continue in Q3 (CY) 11.92 : Reports Q2 (Jun) earnings of $0.14 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus Estimate of $0.07; revenues fell 3.9% year/year to $193.5 mln vs the $182.9 mln consensus.
7:35AM Verizon beats by $0.01, reports revs in-line; raises FY13 cap-ex guidance 1.9% (VZ) 50.74 : Reports Q2 (Jun) earnings of $0.73 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.72; revenues rose 4.3% year/year to $29.79 bln vs the $29.83 bln consensus. Consolidated EBITDA grew 9.5% year over year, totaling $10.7 billion in second-quarter 2013. EBITDA margin (non-GAAP) expanded to 35.9% in second-quarter 2013, up 170 basis points year over year. Cash flow from operating activities totaled $17.1 billion in first-half 2013, compared with $15.3 billion in first-half 2012.
Verizon is increasing its capital spending guidance from $16.2 billion to between $16.4 billion and $16.6 billion for full-year 2013, as the co anticipates higher demand for wireless data consumption and begins deployment of AWS (advanced wireless services) spectrum in second-half 2013.
Wireless Financial Highlights
Total revenues were $20.0 billion in second-quarter 2013, up 7.5% year over year. Service revenues in the quarter totaled $17.1 billion, up 8.3% year over year. Retail service revenues grew 7.8% year over year, to $16.4 billion. Retail postpaid ARPA (average revenue per account) increased 6.4% over second-quarter 2012, to $152.50 per month. In second-quarter 2013, wireless operating income margin was 32.4%, compared with 30.8% in second-quarter 2012. Segment EBITDA margin on service revenues was 49.8%, up 80 basis points over second-quarter 2012.
Wireless Operational Highlights
Verizon Wireless added 941,000 retail postpaid net connections, out of a total 1.0 million net retail connections, in the second quarter. These additions exclude acquisitions and adjustments. Verizon expects to continue to see increases in quarterly sequential net additions for retail postpaid connections in the second half of 2013. At the end of the second quarter, the co had 100.1 million retail connections, a 6.3% increase year over year -- including 94.3 million retail postpaid connections. At the end of the second quarter, smartphones accounted for more than 64% of the Verizon Wireless retail postpaid customer phone base, up from 61% at the end of first-quarter 2013. Retail postpaid churn was 0.93% in the second quarter, up 9 basis points year over year. Retail churn was 1.23% in the second quarter, up 12 basis points year over year.
7:33AM Fairchild Semi misses by $0.06, reports revs in-line; guides Q3 revs below consensus (FCS) 14.32 : Reports Q2 (Jun) earnings of $0.01 per share, ex items, $0.06 worse than the Capital IQ Consensus Estimate of $0.07; revenues rose 1.1% year/year to $365.5 mln vs the $365.66 mln consensus.
Co issues downside guidance for Q3, sees Q3 revs of $355-370 mln vs. $388.20 mln Capital IQ Consensus Estimate.
Fairchild reported second quarter adjusted gross margin of 29.8%, up 200 basis points from the prior quarter and 280 basis points lower than the second quarter of 2012. Adjusted gross margin excludes accelerated depreciation related to a line closure.
"Our high voltage product sales supporting the industrial and appliance markets were up 15 percent sequentially. "Our current scheduled backlog is nearly sufficient to achieve the low end of this range. We expect adjusted gross margin to be 31.5 to 33.0 percent due primarily to improved factory utilization and better product mix. We anticipate R&D and SG&A spending to be $97 to $99 million. The adjusted tax rate is forecast at 15 percent plus or minus 3 percentage points for the quarter. Consistent with our usual practices, we are not assuming any obligation to update this information, although we may choose to do so before we announce third quarter results."
6:15AM Taiwan Semi beats by NT$0.10, reports revs in-line; guides Q3 revs below consensus (TSM) 18.45 : Reports Q2 (Jun) earnings of NT$2.00 per share, NT$0.10 better than the Capital IQ Consensus Estimate of NT$1.90; revenues rose 21.6% year/year to NT$155.89 bln vs the NT$155.3 bln consensus.
Gross margin for the quarter was 49.0%, operating margin was 37.0%, and net profit margin was 33.2%. Shipments of 28-nanometer process technology reached 29% of total wafer revenues. 40/45-nanometer accounted for 21% of total wafer revenues. Advanced technologies, defined as 40/45-nanometers and below, accounted for 50% of total wafer revenues.
Co issues downside guidance for Q3, sees Q3 revs of NT$161-164 bln vs. NT$165.53 bln Capital IQ Consensus Estimate.
11:05 am Tech Sector trading higher today but behind the broader market
The tech sector is trading higher today, but trails larger gains in the broader market. Semiconductors are showing relative weakness as well with the SOX trading 0.6% lower. TSM (-8.0%) is weighing on the chip index. Among other major indices, the SPY is trading 0.8% higher today, while the QQQ is up 0.2% and the NASDAQ is trading 0.4% higher on the session. Among tech bellwethers, IBM (+2.7%) is showing notable strength, while INTC (-3.3%) is under pressure.
In tech earnings last night:
IBM (+2.7%) beats Q2 EPS by $0.14, misses on revs and raised FY13 EPS (ex-$1 bln workforce rebalancing charge) above consensus
SNDK (+0.9%) beat Q2 EPS by $0.28, beat on revs and offered Q3 and FY13 guidance above consensus
XLNX (+5.7%) beat Q1 by $0.09, beat on revs and guided Q2 revs above consensus
This morning in earnings:
SAP (-1.7%) missed Q2 EPS by EUR0.14, missed on revs, and reaffirmed non-IFRS operating profit; reduces FY13 revs outlook
ERIC (-4.9%) missed Q2 earnings and revs
CHKP (+6.1%) posted a Q2 EPS beat with inline revs
TSM (-8.0%) reported a Q2 earnings beat, inline revs and guided Q3 below consensus
NOK (-3.0%) posted a mixed Q2 and guided Q3 Device and Services rev higher QoQ
GILT (-13.9%) lowered FY13 guidance FCS () posted a miss and guided lower
VZ (-1.9%) posted a modest beat and raised CapEx
NTCT (+0.8%) posted a beat and reaffirmed guidance
CY (+6.1%) reported a beat and issued revenue growth and earnings leverage to continue in Q3
APH (-7.0%) posted a relatively inline qtr and guided below consensus
SYNT (+2.2%) posted a beat and raise
TZOO (+0.2%) reported a Q2 EPS beat
SIFY (+7.9%) posted a sizeable Q2 beat
In news, DELL (+2.4%) confirmed that today's Special Meeting of Stockholders was convened and adjourned to provide additional time to solicit proxies from Dell stockholder. GLUU (+6.5%) disclosed last night that the Co and MGM Interactive entered into a warrant initially exercisable to purchase up to 3,333,333 shares of the co's common stock at an initial exercise price of $3.00 per share.
In M&A, VZ (-1.9%) on its call said that on call not interested in LEAP (0.0%).
In rumors, AAPL (+0.9%) may be in talks with LPL (-2.6%) on HDTV panels, according to reports.
Among notable analyst upgrades in tech this morning, XLNX (+5.7%) was upgraded to Buy at Lazard and QSII (+4.6%) was upgraded at MS and JP Morgan.
In downgrades, ASML (-0.3%) was downgraded to Neutral at Piper Jaffray, XLNX (+5.7%) was downgraded to Market Perform at Wells Fargo, CTXS (-0.1%) was downgraded to Mkt Perform at Raymond James, and SNDK (+0.9%) was downgraded to Equal-Weight at Morgan Stanley.
AMD (+0.5%), GOOG (-0.4%), MSFT (+0.2%), and SWKS (+0.8%) are the notable names in tech scheduled to report after the close.
Plexus (PLXS) reported third quarter earnings of $0.68 per share, which was better than expected, while revenues fell 6.1% year/year to $571.9 million, which was better than expected. The company issued mixed guidance for the fourth quarter with EPS of EPS of $0.60-0.66 which was better than expected, with fourth quarter revenues of $545-575 million which was in line with consensus.
SanDisk (SNDK) reported second quarter earnings of $1.21 per share, excluding non-recurring items, which was better than expected, while revenues rose 43.0% year/year to $1.48 billion, which was better than expected. "We delivered record second quarter results driven by increasing momentum across our business. We achieved solid revenue growth in our embedded solutions portfolio with many design wins ramping into production," The company sees the third quarter revenues of $1.525-1.575 billion which as better than expected. The company also raised fiscal year 2013 revenue guidance to $5.95-6.05 billion (from $5.6-5.75 bln), which was ahead of expectations.
Intel (INTC) reported second quarter GAAP earnings of $0.39 per share, in-line with estimates, while revenues fell 5.1% year/year to $12.81 billion which was in line with expectations. PC Client Group revenue of $8.1 billion, up 1.4% sequentially and down 7.5% year-over-year. Data Center Group revenue of $2.7 billion, up 6.1% sequentially and flat year-over-year. Other Intel Architecture Group revenue of $942 million, down 3.7% sequentially and down 15.0% year-over-year. Gross margin of 58%, up 2%age points sequentially and down 5%age points year-over-year. The company issued in-line guidance for the third quarter with revenues of $13-14 billion which was in line with estimates. The company issued guidance for fiscal year 2013 revenues to flat year over year to from up in the low single digits previously and lowered fiscal year 2013 gross margin guidance to 59% +/-2% from 60% +/-2%. On the Intel (INTC) conference call management said the company was slow to respond to the ultra-mobile PC trends. The traditional PC segment is down from the company's expectations from the beginning of the year, while the ultra-mobile device market is up. Co believes it has made the appropriate organizational and strategic changes to address these trends. All changes are "based on value creation." The company will provide a further update on the changes at its investor meeting in November. Management also noted that inventory levels across the PC supply chain increased slightly but remain well below historical levels due to uncertainty. In the Q&A session management said it expects the macroeconomic environment to improve in the back half of the year.
IBM (IBM) reported second quarter earnings of $3.91 per share, excluding non-recurring items, which was better than expected, revenues fell 3.3% year/year to $24.92 billion which was lower than expected. Software revenue up 4%, up 5% adjusting for currency; Key branded middleware up 9%; up 10% adjusting for currency; Services revenue down 4%, down 1% adjusting for currency; Global Business Services revenue down 1%, up 2% adjusting for currency; Services backlog of $141 billion, up 3%, up 7% adjusting for currency; Systems and Technology revenue down 12%, down 11% adjusting for currency: System z mainframe revenue up 10%; up 11% adjusting for currency; Growth markets revenue flat, up 1% adjusting for currency; Business analytics revenue up 11%; Smarter Planet revenue up more than 25% in first half; Cloud revenue up more than 70% in first half. The company issued upside guidance for fiscal year 2013 with raised EPS to at least $16.90, excluding $1 bln workforce rebalancing charge, from at least $16.70 which was above expectations.
eBay (EBAY) reported second quarter earnings of $0.63 per share, which was in line with expectations, while revenues rose 14.1% year/year to $3.88 billion which was in line with expectations. Total company Enabled Commerce Volume (ECV) grew 21% for the quarter, to $51 billion. PayPal revenue increased 20% to $1.6 billion. PayPal gained 4.7 million active registered accounts in the period and ended the quarter with 132 million, a 17% increase. PayPal's net total payment volume (TPV) grew 24% to $43 billion driven by consumer and merchant use of PayPal both on and off eBay. Marketplaces revenue of $2.0 billion, increasing 10%, or 12% excluding the gain from the resolution of an indirect tax dispute in 2012. Marketplaces gained 3.5 million active users in the period and ended the quarter with 120 million, a 14% increase. Gross merchandise volume (GMV), excluding vehicles, increased 13% to $18 billion. Fixed price GMV grew 17% globally and represented 69% of total GMV. Operating margin: GAAP operating margin decreased to 19.3% for the second quarter of 2013, compared to 20.5% for the same period last year. Non-GAAP operating margin decreased to 26.3% in the second quarter, compared to 27.3% for the same period last year. Cash flow: The company generated $1.0 billion of operating cash flow and $658 million of free cash flow during the second quarter of 2013. The company issued guidance for the third quarter with EPS of $0.61-0.63 which was below expectations with revenues of $3.85-3.95 billion, which was also below estimates.
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