From Briefing.com: 4:20 pm : The major averages ended today's session on a mixed note as the Dow shed just over two points while the S&P 500 added 0.7% to notch a fresh all-time high at 1,733.45.
With the third quarter earnings season heating up, the Dow Jones Industrial Average was victimized by disappointing results from two market-moving names. Goldman Sachs (GS 158.32, -3.93) and IBM (IBM 174.83, -11.90) ended with respective losses of 2.4% and 6.4% after both reported bottom-line beats on light revenue. Goldman Sachs missed top-line estimates by roughly $500 million while IBM reported revenue $1 billion below analyst expectations.
Shares of IBM weighed on the technology sector (-0.2%) while financials (+0.9%) were able to shake off Goldman's weakness with help from American Express (AXP 80.23, +3.91). The Dow component jumped 5.1% following its earnings beat.
Among other notable Dow earnings, UnitedHealth Group (UNH 71.37, -3.82) fell 5.1% after reporting in-line results and Verizon (VZ 48.90, +1.65) gained 3.5% on above-consensus earnings.
Thanks to Verizon's strength, the telecom services sector (+1.9%) ended in the lead while other countercyclical groups-consumer staples (+1.0%), health care (+0.9%), and utilities (+1.6%)-also outperformed the broader market.
Elsewhere, the energy sector added 0.2% despite a 1.6% drop in crude oil. The energy component ended at $100.64 per barrel. Among other commodities, gold futures jumped 2.8% to $1318.60 per troy ounce.
Part of the surge in gold could be attributed to significant greenback weakness. The Dollar Index (79.66, -0.81) ended near its lowest level of the year as global investors perceived the Congressional deal to extend the debt ceiling as a temporary fix, rather than a solution to an issue that is sure to re-emerge in the first months of 2014.
In addition, the need to revisit the debt ceiling battle in a few months means the Federal Reserve will be less likely to taper its asset purchases during the early months of next year.
Treasuries finished near their highs with the 10-yr yield down seven basis points at 2.59%. Notably, the 4-week yield tumbled 12.5 basis points to 0.01% as default fears receded following the deal on Capitol Hill. The short-term yield was trading as high as 0.35% just a few days ago.
Trading volume was a bit above average as 758 million shares changed hands on the floor of the New York Stock Exchange.
On the economic front, computer problems in California kept the initial claims level elevated for a second week in a row. The weekly initial claims level fell to 358,000 from a slightly downwardly revised 373,000 (from 374,000) for the week ending October 5. The Briefing.com consensus expected the initial claims level to fall to 330,000.
Separately, the manufacturing sector in the Philadelphia region remained strong in October. The Philadelphia Fed's Business Outlook Survey fell to 19.8 from 22.3 in September. The Briefing.com consensus expected the index to fall to 7.0. Unlike what happened in the New York Fed's Empire Manufacturing Sector, the manufacturing outlook in the Philly region was not affected by the government shutdown.
There is no economic data scheduled to be reported tomorrow.
DJIA +17.3% YTD
S&P 500 +21.5% YTD
Nasdaq +27.9% YTD
Russell 2000 +29.8% YTD
DJ30 -2.18 NASDAQ +23.71 SP500 +11.61 NASDAQ Adv/Vol/Dec 1719/1.90 bln/822 NYSE Adv/Vol/Dec 2547/758.4 mln/499
3:30 pm :
Commodities traded in a mixed fashion today, while the dollar index slumped as the temporary Congressional deal to extend the debt ceiling gave rise to speculation that a taper to the Federal Reserve asset purchases will be less likely. Adding to the dollar's weakness was a downgrade of U.S. debt by Chinese rating agency Dagong
Dec gold extended yesterday's gains as it got a boost from the weaker dollar index. The yellow metal hit a session high of $1324.20 per ounce and settled at $1322.60 per ounce, booking a 3.2% gain. Dec silver also traded higher, brushing a session high of $22.20 per ounce in early morning pit trade. It eventually settled with a 2.8% gain at $21.97 per ounce.
Nov crude oil, on the other hand, traded in negative territory as investors reacted to a build in stockpiles reported by the API and Genscape, an energy intelligence company. The EIA did not release its scheduled inventory report due to the government shutdown, but the API said that oil stocks at Cushing, Oklahoma rose by 0.291 mln barrels last week.
Genscape reported they rose by 0.837 mln barrels. The energy component brushed a session low of $100.03 per barrel and settled with a 1.6% loss at $100.63 per barrel
Nov natural gas fell for a third consecutive session, brushing a session low of $3.73 per MM
4:20PM Advanced Micro beats by $0.02, beats on revs; guides Q4 revs in-line (AMD) : Reports Q3 (Sep) earnings of $0.04 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.02; revenues rose 15.1% year/year to $1.46 bln vs the $1.42 bln consensus. Co issues in-line guidance for Q4, sees Q4 revs up 5% sequentially, plus or minus 3% (roughly $1.490-1.578 bln) vs. $1.52 bln Capital IQ Consensus Estimate.
4:16PM Interdigital Comm announces formation of Signal Trust; Trust will monetize InterDigital patents related to cellular infrastructure (IDCC) 37.00 -0.27 : Co announced the establishment of the Signal Trust for Wireless Innovation, which will monetize a large InterDigital patent portfolio related to cellular infrastructure. The more than 500 patents and patent applications being transferred to the Trust focus primarily on 3G and LTE technologies, and were developed by InterDigital's engineers and researchers over more than a decade, with a number of the innovations contributed to the worldwide standards process. As a result, the patent portfolio includes patents for pioneering inventions that the Company believes are used pervasively in the cellular wireless industry. InterDigital will retain licensing and other monetization rights to the transferred patents for a limited period of time enabling companies to conclude agreements with InterDigital during a transition period.
4:11PM Rambus beats by $0.04, beats on revs (RMBS) : Reports Q3 (Sep) earnings of $0.15 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.11; revenues rose 27.5% year/year to $73.3 mln vs the $70.09 mln consensus.
4:10PM Google beats by $0.37, reports revs in-line (GOOG) 888.79 -9.23 : Reports Q3 (Sep) earnings of $10.74 per share, $0.37 better than the Capital IQ Consensus Estimate of $10.37; revenues rose 31.4% year/year to $14.89 bln vs the $14.8 bln consensus.
Revenues and other information
On a consolidated basis, Google Inc. revenues for the quarter ended September 30, 2013 were $14.89 billion, an increase of 12% y/y.
Google segment revenues were $13.77 billion, or 92% of consolidated revenues, in the third quarter of 2013, representing a 19% increase y/y.
Google-owned sites generated segment revenues of $9.39 billion, or 68% of total Google segment revenues. This represents a 22% increase y/y.
Google's partner sites generated segment revenues of $3.15 billion, or 23% of total Google segment revenues.
Google segment revenues from outside of the United States totaled $7.67 billion, representing 56% of total Google segment revenues in the third quarter of 2013, compared to 55% in the second quarter of 2013 and 53% in the third quarter of 2012.
Aggregate paid clicks increased approximately 26% y/y and increased approximately 8% q/q.
Average cost-per-click decreased approximately 8% y/y and decreased approximately 4% q/q.
Traffic acquisition costs increased to $2.97 billion in the third quarter of 2013, compared to $2.77 billion in the third quarter of 2012. TAC as a percentage of advertising revenues was 24% in the third quarter of 2013, compared to 26% in the third quarter of 2012.
Motorola Mobile segment revenues were $1.18 billion, or 8% of consolidated revenues in the third quarter of 2013, compared to $1.78 billion, or 13% of consolidated revenues in the third quarter of 2012.
Operating expenses were $5.04 billion in the third quarter of 2013, or 34% of revenues, compared to $4.61 billion in the third quarter of 2012, or 35% of revenues.
Google segment operating income in the third quarter of 2013 was $4.64 billion, or 34% of Google segment revenues. This compares to segment operating income of $3.95 billion in the third quarter of 2012, or 34% of Google segment revenues.
Motorola Mobile segment operating loss in the third quarter of 2013 was $248 million, or -21% of Motorola Mobile segment revenues. This compares to segment operating loss of $192 million, or -11% of Motorola Mobile segment revenues in the third quarter of 2012.
Net cash provided by operating activities in the third quarter of 2013 totaled $5.08 billion, compared to $4.0 billion in the third quarter of 2012. In the third quarter of 2013, capital expenditures were $2.29 billion, the majority of which was for production equipment, data-center construction, and real estate purchases. Free cash flow was $2.79 billion.
We expect to continue to make significant capital expenditures.A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
As of September 30, 2013, cash, cash equivalents, and marketable securities were $56.52 billion.
9:04AM Ultratech misses by $0.32, misses on revs (UTEK) 29.38 : Reports Q3 (Sep) loss of $0.28 per share, $0.32 worse than the Capital IQ Consensus Estimate of $0.04; revenues fell 50.9% year/year to $29.7 mln vs the $42.68 mln consensus.
"Despite recent reports of strengthening in the memory segment of the semiconductor market, we continue to be impacted by the pause in capital equipment spending that is occurring within the logic sector of the market," commented Arthur W. Zafiropoulo, Chairman and Chief Executive Officer of Ultratech. "As we have indicated in the past, the markets that we serve can be volatile, and due to the size of our average unit sale, this volatility can result in significant variability of our near-term results. However, we remain confident in our longer-term view that our leading technology solutions will be key to enabling the industry to make the inevitable and necessary migration to smaller process nodes and larger wafer sizes."
Newisys, a product division of Sanmina (SANM), announced availability of the NDS-1122, an advanced 1U integrated storage server with a capacity of 48TB
8:28AM Gapping down (SCANX) : In reaction to disappointing earnings/guidance: SCSS -26.4% (also downgraded at Keybanc and Piper), IBM -6.3% (IBM downgraded to Neutral from Buy at UBS), USG -5.6%, RDA -5.3%, XLNX -4.6%, EBAY -4.2%, UNH -2.9%, GS -2.5%, BX -1.9%, DGX -1.7%, FLR -0.9%, EWBC -0.9%.
Select financial related names showing weakness following GS results: BCS -1.8%, MS -1.2%, C -0.7%, BAC -0.4%.
Select tech names lower following IBM results: HPQ -1.2% SI -1% , ORCL -0.7% (acquires Compendium; financial terms not disclosed ), MSFT -0.1%
A few names are lower with XLNX/CY: AMD -2.2%, TXN -0.7%, ARMH -1.8%.
Cypress Semiconductor (CY) announced that HUAWEI has selected its TrueTouch controllers to drive the touchscreens in four HUAWEI smartphones.
Analyst comments: SCTY +3.7% (initiated with an Overweight at JPMorgan), AAP +2% (light volume, upgraded to Outperform from Neutral at Wedbush), CLF +1.4% ( upgraded to Market Perform at Cowen), BBY +1% (upgraded to Outperform from Perform at Oppenheimer), DDD +0.9% ( tgt to $61 from $52 at Piper Jaffray)
8:07AM Cypress Semi beats by $0.02, beats on revs (CY) 9.40 : Reports Q3 (Sep) earnings of $0.14 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.12; revenues fell 7.0% year/year to $188.72 mln vs the $185.43 mln consensus.
Q3 revenue declined 2% sequentially and was slightly higher than recently revised guidance. Co was disappointed to lower guidance for Q3, but it experienced unforecasted weakness in the mobile handset market. Gross margins remained strong at 53.8% and operating expenses achieved a 3.5-year low. Co said it would continue to endure volatility and granularity in mobile handset business in the fourth quarter, leading to a sequential decline of 10% to 14% in revenue, consistent with the guidance given in pre-announcement. Despite some delays, design win pipeline remains robust, especially for new TrueTouch Gen5 touchscreen products, and co expects to resume revenue growth in early 2014.
7:39AM Verizon beats by $0.03, reports revs just above consensus (VZ) 47.25 : Reports Q3 (Sep) earnings of $0.77 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.74; revenues rose 4.4% year/year to $30.28 bln vs the $30.15 bln consensus. Consolidated EBITDA grew 16.9% YoY to $11.3 billion; EBITDA margin expanded 400 bps to 37.3%. Cash flow from operating activities totaled $28.4 billion in the first nine months of 2013, a 14.7% YoY increase.
Wireless Financial Highlights
Total revenues were $20.4 billion in third-quarter 2013, up 7.2% year over year. Service revenues in the quarter totaled $17.5 billion, up 8.4% year over year. Retail service revenues grew 8.0% year over year, to $16.8 billion.
Retail postpaid ARPA (average revenue per account) increased 7.1% over third-quarter 2012, to $155.74 per month.
In third-quarter 2013, wireless operating income margin was 33.8%, compared with 31.8% in third-quarter 2012. Segment EBITDA margin on service revenues was 51.1%, up 110 basis points over third-quarter 2012.
Verizon Wireless is on track to deliver 49% to 50% segment EBITDA margin on service revenues for the full year. Through the first three quarters of 2013, segment EBITDA margin on service revenues was 50.4%, with Verizon Wireless maintaining margins of 49% or higher in five of the past six quarters.
Wireless Operational Highlights
Verizon Wireless added 1.1 million net retail connections, including 927,000 retail postpaid net connections, in the third quarter. These additions exclude acquisitions and adjustments. The company expects customer growth to increase sequentially in the fourth quarter.
At the end of the third quarter, the company had 101.2 million retail connections -- a 5.5% increase year over year -- including 95.2 million retail postpaid connections.
Verizon Wireless had 35 million retail postpaid accounts at the end of the third quarter -- an average of 2.7 connections per account. Nearly 42% of retail postpaid accounts are now on a Share Everything Plan, which allows customers to share data among multiple devices.
At the end of the third quarter, smartphones accounted for more than 67% of the Verizon Wireless retail postpaid customer phone base, up from 64%at the end of second-quarter 2013.
Retail postpaid churn was 0.97% in the third quarter, up 6 basis points year over year. Retail churn was 1.28% in the third quarter, up 10 basis points year over year.
Integrated Device Technology (IDTI) announced the third generation of its Universal Frequency Translator family of timing devices for high-performance optical networks, wireless base stations, and 100 Gigabit Ethernet interface applications
6:52AM Taiwan Semi beats by NT$0.01; revs in-line; sees Q4 revs in-line with consensus (TSM) 18.28 : Reports Q3 EPS of NT$2.00 vs NT$1.99 CIQ estimate; revs increased 15% YoY to NT$162.6 bln vs NT$162.8 bln CIQ est.
Margins:
Gross margin for the quarter was 48.5%
operating margin was 36.7%
net profit margin was 32%.
Shipments of 28-nanometer process technology reached 32% of total wafer revenues.
40/45-nanometer accounted for 20% of total wafer revenues.
Advanced technologies, defined as 40/45-nanometers and more advanced technologies, accounted for 52% of total wafer revenues.
Guidance:
Revenue is expected to be between NT$144-147 bln vs NT$145.7 bln CIQ est.
Gross profit margin is expected to be between 44-46%
Operating profit margin is expected to be between 32-34%
07:21 am IBM shares plunge 6% following miss on revenues
IBM (IBM $174 .80 -11.93) reported third quarter earnings of $3.99 per share, excluding non-recurring items, which was better than expected, while revenues fell 4.1% year/year to $23.72 billion which is about $1 billion below expectations.
IBM has posted YoY rev declines six straight quarters and missed rev expectations three straight quarters.
Key branded middleware up 3%; up 4% adjusting for currency; Services revenue down 3%, up 1% adjusting for currency; Global Business Services revenue flat, up 5% adjusting for currency; Services backlog of $141 billion, up 2%, up 6% adjusting for currency; Systems and Technology revenue down 17%, down 16% adjusting for currency; System z mainframe revenue up 6%; up 7 percent adjusting for currency; Growth markets revenue down 9%, down 5 percent adjusting for currency; Business analytics revenue up 8% year to date; Smarter Planet revenue up more than 20% year to date; Cloud revenue up more than 70% year to date The company reaffirmed guidance for fiscal year 2013 with EPS of at least $16.90, excluding non-recurring items versus which is above expectations.
"We are taking action to improve execution in our growth markets unit and in the elements of our hardware businesses that are under performing. Given these actions, our strategic initiatives and the strength of our model, we are maintaining our view for the full year and remain confident in our ability to achieve at least $20 operating EPS in 2015."
Comments from conference call: Have been significantly impacted by depreciation of the yen... N America sales flat y/y, an improvement q/q; APAC down 4%, driven by emerging mkts; Half emerging markets trouble was execution, half China, which was down 22%; Hardware performance in China accounted for all 5 points of decline in emerging mkts; co does not see China recovery until Q1... growth across portfolio... Europe returned to growth for first time since beginning of 2012... solid backlog growth headed into Q4... saw strength in mobile in Webshare... have a strong pipeline in software...
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