Sector Investing

[ReturntoSender]

From Briefing.com: 4:15 pm : The S&P 500 punctuated an uneventful session with a modest gain, adding 0.1% to extend its October advance to 4.8%.

Stocks alternated between gains and losses through the first two hours of action before the S&P climbed to a fresh record high of 1764.99. Final-hour selling cut the S&P's gain in half, but the index still finished ahead of the Dow (unch) and the tech-heavy Nasdaq (-0.1%), which was challenged by its flat line throughout the session.

Although the third-quarter earnings season is far from being over, today featured just a handful of notable reports. Health care components caught the eye of some participants with Biogen (BIIB 254.43, +2.17) reporting solid results and Merck (MRK 45.35, -1.19) beating bottom-line estimates on below-consensus revenue. Although Merck weighed, the broader health care sector (+0.3%) drew strength from the 6.7% gain in Bristol-Myers Squibb (BMY 52.02, +3.25) after the company announced positive clinical trial data.

Generally speaking, countercyclical sectors followed in health care's lead as consumer staples (+1.2%) and telecom services (+0.4%) outperformed while utilities (-0.2%) lagged.

Meanwhile, cyclical groups were a bit more mixed. Energy (+0.1%) and technology (+0.3%) finished in positive territory while consumer discretionary (-0.2%), financials (-0.2%), industrials (-0.1%), and materials (-0.6%) trailed the S&P.

The technology sector ended among the leaders with its top component, Apple (AAPL 529.88, +3.92), adding 0.7% ahead of its after-hours earnings report. However, the Nasdaq could not build on the relative strength of the sector as momentum names like Facebook (FB 50.23, -1.72), Priceline.com (PCLN 1060.15, -10.70), and Netflix (NFLX 314.00, -14.03) weighed.

Also of note, the industrial space was little changed as defense contractors and transports headed in opposite directions. The PHLX Defense Index shed 0.3% as the second largest component, Boeing (BA 129.88, -1.31), fell 1.0%. On the upside, the Dow Jones Transportation Average rose 0.4% as 12 of 20 members advanced.

Treasuries held inside narrow ranges throughout the session, and the 10-yr yield ended at 2.52%.

Trading volume was in-line with average as just over 730 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic data was limited to September industrial production and pending home sales.

Industrial production increased 0.6% after rising 0.4% in August (Briefing.com consensus +0.3%). That was the largest monthly increase since February.

The headline number is undoubtedly striking for its perceived strength. However, that thought process is actually a misnomer. Rather than coming from manufacturing growth, almost the entire gain came from a 4.4% increase in utilities production. After five consecutive months of declines from cooler-than-normal temperatures, utility production returned to more normal levels as weather conditions reverted to their averages.

Manufacturing growth, which is key for economic growth, increased a very modest 0.1% in September, down from a 0.5% gain in August.

Separately, pending home sales for September tumbled 5.6%, which was worse than the 1.3% decrease forecast by the Briefing.com consensus. Today's reading followed last month's decrease of 1.6%.

Tomorrow, September retail sales and Producer Price Index will be reported at 8:30 ET, August Case-Shiller 20-City Index will cross the wires at 9:00 ET, and August business inventories will be announced at 10:00 ET. Also at 10:00 ET, the October Consumer Confidence report will be released.

Russell 2000 +31.6% YTD
Nasdaq +30.5% YTD
S&P 500 +23.6% YTD
DJIA +18.8% YTD

DJ30 -1.35 NASDAQ -3.23 SP500 +2.34 NASDAQ Adv/Vol/Dec 1257/1.73 bln/1303 NYSE Adv/Vol/Dec 1351/731.8 mln/1622

3:30 pm :

Commodities are mostly lower/mixed by the end of today's trading session
In metals, there wasn't much of a change in price as Dec copper ended the day flat at $3.27/lb, Dec gold lost $0.50 to $1351.90/oz and Dec silver fell $0.21 to $22.52
Crude oil rallied right at the open of pit trading from just under the $97.50/barrel level
In electronic trade here, crude oil extended gains and rose to a new HoD of $98.75/barrel. During crude's floor trading session, it rose $0.84 and finished the day at $98.69/barrel
Natural gas was weak all day and basically continued to extend losses slowly throughout the day

4:37PM Apple beats by $0.32, beats on revs; guides Q1 revs above consensus at midpoint, gross margin just below estimates (AAPL) 529.88 +3.92 : Reports Q4 (Sep) earnings of $8.26 per share, $0.32 better than the Capital IQ Consensus Estimate of $7.94; revenues rose 4.2% year/year to $37.47 bln vs the $36.87 bln consensus and high end of $34-37 bln guidance; gross margin 37% vs Street est of 36.9% and high end of 36-37% guidance.

iPhones sold 33.8 mln in Q4 vs Street est of ~32 mln
iPads 14.1 mln vs Street est of ~14.5 mln
Macs 4.6 mln vs Street est of ~4.5 mln

Co issues mixed guidance for Q1, sees Q1 revs of $55-58 bln vs. $55.73 bln Capital IQ Consensus Estimate; sees gross margin 36.5-37.5% vs. ests just below 38%.
4:33PM Integra beats by $0.02, reports revs in-line; guides FY13 EPS in-line, revs in-line (IART) 43.65 +0.23 : Reports Q3 (Sep) adjusted earnings of $0.72 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.70; revenues rose 1.5% year/year to $213.2 mln vs the $213.92 mln consensus.

IART generated $30.8 mln in cash flow from operations and invested $13.2 mln in capex during the quarter.


Guidance: Co issues in-line guidance for FY13, sees adjusted EPS of $2.50-$2.60 vs. $2.53 Capital IQ Consensus Estimate; sees FY13 revs of $838-$843 mln vs. $841.16 mln Capital IQ Consensus Estimate.

Commentary: "We are tightening our revenue guidance to the bottom end of our previous range, primarily reflecting softness in key private label products and weakness in our spine business ... We have, however, kept a tight control on expenses, and are narrowing our guidance for adjusted earnings per share around our previous midpoint. We are pleased with the strong cash flows the business generated during the quarter."

4:27PM Integrated Device beats by $0.02, reports revs in-line; expands buyback (IDTI) : Reports Q2 (Sep) earnings of $0.10 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.08; revenues fell 6.6% year/year to $124.6 mln vs the $125.05 mln consensus. Co also announces that its Board of Directors has approved an expansion of the previously authorized share repurchase program from approximately $80 million to a total of $150 million.

4:11PM PMC-Sierra reports EPS in-line, misses on revs (PMCS) 6.70 +0.17 : Reports Q3 (Sep) earnings of $0.10 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.10; revenues fell 2.2% year/year to $128.86 mln vs the $130.24 mln consensus.

4:10PM Seagate Tech misses by $0.01, misses on revs; raises quarterly dividend 13% (STX) 49.85 +0.05 : Reports Q1 (Sep) earnings of $1.29 per share, $0.01 worse than the Capital IQ Consensus Estimate of $1.30; revenues fell 6.5% year/year to $3.49 bln vs the $3.56 bln consensus.

The Board of Directors has approved an increase in the quarterly cash dividend of $0.05 from $0.38 per share in the previous quarter to $0.43 per share this quarter, an increase of ~13%.

4:08PM Sanmina beats by $0.06, reports revs in-line; guides Q1 EPS below consensus, revs below consensus (SANM) 17.15 +0.01 : Reports Q4 (Sep) earnings of $0.46 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $0.40; revenues fell 4.7% year/year to $1.5 bln vs the $1.51 bln consensus. Cash flow from operations was $90.0 million in Q4, and $317.9 million for fiscal year 2013.

Co issues downside guidance for Q1, sees EPS of $0.35 to $0.41, excluding non-recurring items, vs. $0.42 Capital IQ Consensus Estimate; sees Q1 revs of $1.425 billion to $1.475 billion vs. $1.53 bln Capital IQ Consensus Estimate.

4:07PM Riverbed Technology beats by $0.03, misses on revs (RVBD) 14.36 +0.47 : Reports Q3 (Sep) earnings of $0.26 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.23; GAAP revenues rose 19.7% year/year to $261.7 mln; non-GAAP rev +21% to $265 mln; $267.28 mln consensus.

"In a mixed economic environment, which was particularly evident in the government vertical, Riverbed delivered solid third quarter results," said Jerry M. Kennelly, Riverbed chairman and CEO. "Strong margin performance and prudent expense control drove higher profitability in the quarter," continued Kennelly. "We further demonstrated our commitment to driving shareholder value by executing a $50 million stock repurchase during the quarter, continuing our track record of returning a substantial amount of free cash flow to investors in the form of share repurchases."

4:05PM Vishay announces cost reduction programs (VSH) 12.99 -0.05 : The programs primarily focus on a plan to enhance the competitiveness of its MOSFETs segment and a voluntary separation / early retirement offer to certain employees Company-wide. The co also plans to implement two other smaller cost reduction programs concerning the manufacturing of products within its Diodes segment. The programs in total are expected to lower costs by approximately $36 million per year when fully implemented by the first quarter of 2016, at expected cash costs of approximately $26 mln. The project for the MOSFETs segment will extend over a period of approximately two years. The manufacture of wafers for certain critical products will be transferred into a more cost-efficient fab. As a consequence, certain other wafer manufacturing currently occurring in-house will be transferred to third-party foundries. The total cash costs associated with the MOSFETs initiatives, principally severance, are expected to be approximately $10 mln. Once fully implemented, the co anticipates that the MOSFETs programs will result in an annual reduction in variable and fixed manufacturing costs of approximately $23 mln at current volumes.

4:04PM Ingram Micro announces acquisition of Shipwire, terms not disclosed (IM) 23.06 -0.20 : IM announced that it has entered into a definitive agreement pursuant to which it will acquire Shipwire, a leading provider of global fulfillment services for emerging multi-channel brands. Shipwire serves brands from more than 50 countries, selling to buyers across the world from facilities in North America, Europe and Asia. Shipwire will operate as a wholly owned subsidiary of Ingram Micro. Damon Schechter, founder and CEO of Shipwire, will continue to lead the company as president of Shipwire. The acquisition is expected to close before the end of the year.

SunPower (SPWR) and its manufacturing partner, Flextronics (FLEX) announced the production milestone of the 500,000 solar panel manufactured at the Flextronics facility in Milpitas.California.

7:41AM Freescale Semi announced that FSL ts wholly owned indirect subsidiary, plans to offer, subject to market and other conditions, $500 million aggregate principal amount of senior secured notes (FSL) 15.55 : Co announced that its wholly owned indirect subsidiary, plans to offer, subject to market and other conditions, $500 million aggregate principal amount of senior secured notes to extend a portion of its debt maturities and reduce its interest expense. Freescale intends to use the net proceeds from the offering of the Notes to redeem a portion of its outstanding 9 % Senior Secured Notes due 2018 in accordance with the indenture governing those notes and to pay the related premium and fees.

7:06AM Tessera Tech announced that its Tessera, Inc. subsidiary has reached a settlement with Sony Corporation (SNE) (TSRA) 18.73 : Co announced that its Tessera, Inc. subsidiary has reached a settlement with Sony Corporation (SNE) in its breach of contract action against Sony in the United States District Court for the Northern District of California. The terms of the settlement were identified by the court as confidential. The Company intends to provide additional details of the terms of the settlement after the parties enter into a definitive settlement agreement, subject to the terms of such agreement.

3:23AM LDK Solar enters new forbearance arrangement with noteholders (LDK) 1.52 : Co announces that it has entered into a new 30-day forbearance arrangement with holders of a majority in aggregate principal amount of its US$-Settled 10% Senior Notes due 2014. The new forbearance arrangement, which expires on November 26, 2013, relates to the interest payment due under the Notes on August 28, 2013. That interest payment is still unpaid. It is LDK Solar's intention to find a consensual solution to its obligations under the Notes as soon as possible and LDK Solar remains hopeful that it will be able to achieve that goal.