Sector Investing

[ReturntoSender]

From Briefng.com: 4:15 pm : The major averages registered broad gains at the open, but only the Dow Jones Industrial Average (+0.8%) and S&P 500 (+0.4%) were able to end in positive territory while the Nasdaq (-0.2%) and Russell 2000 (-0.5%) posted modest losses.

The Dow finished at a fresh record high of 15,746.63 as 27 of 30 components registered gains. Of those 27, twelve added at least 1.0%. Microsoft (MSFT 38.18, +1.54) was the top index performer, climbing 4.2% amid reports Ford (F 16.91, -0.18) Chief Executive Officer Alan Mullaly remains on the list of candidates hoping to replace outgoing CEO Steve Ballmer.

While Microsoft's gain had a limited impact on the price-weighted Dow, the stock provided support to the technology sector (+0.8%), which ended ahead of the remaining cyclical groups. Although the tech sector has a tendency to trade in-line with the Nasdaq, that was not the case today. The Nasdaq ended modestly lower as biotechnology and momentum names lagged.

Companies specializing in biotechnology registered broad losses as the iShares Nasdaq Biotechnology ETF (IBB 201.07, -6.04) tumbled 2.9%, widening its fourth quarter loss to 4.1%. Meanwhile, momentum names like Facebook (FB 49.12, -0.98), Priceline.com (PCLN 1058.04, -24.19), and Yelp (YELP 66.61, -4.52) took a cue from Tesla's (TSLA 151.16, -25.65) weakness. The electric car maker plunged 14.5% in reaction to its cautious guidance and Q3 deliveries that were essentially in-line with Street expectations. Despite today's loss, Tesla remains higher by 346% this year.

Elsewhere, the discretionary sector (-0.2%) spent the bulk of the session in the red as apparel retailers weighed after Abercrombie & Fitch (ANF 33.13, -5.18) issued below-consensus revenue guidance.

Also of note, the financial sector (+0.3%) continued its recent underperformance. Despite today's modest advance, the sector is unchanged this week versus a 0.5% gain in the S&P. In addition, the sector's recent weakness has trimmed its quarter-to-date gain to 3.4%, which puts the group behind the remaining nine sectors in Q4 standings.

Three of four countercyclical groups (consumer staples, telecom services, and utilities) posted solid gains between 1.0% and 1.3% while health care shed 0.3% as biotech pressured the sector.

Treasuries settled near their highs, erasing a portion of yesterday's loss. The benchmark 10-yr yield slipped three basis points to 2.65%.

Participation was on the light side as only 704 million shares changed hands on the floor of the New York Stock Exchange.

In today's economic data, the Conference Board's Index of Leading Indicators increased 0.7% for a second consecutive month in September. The Briefing.com consensus expected the index to increase 0.6%. The index will likely suffer a sizable pullback in October. Initial claims, which added 0.26 percentage points to the increase in the leading indicators, will contribute negatively in October as glitches from California and biases from the government shutdown drove claims to their highest level in several months.

The weekly MBA Mortgage Index fell 7.0% to follow last week's increase of 6.4%.

Separately, October Challenger Job Cuts decreased 4.2% after increasing 19.1% in September.

Tomorrow, weekly initial claims and the advance Q3 GDP reading will be reported at 8:30 ET while the September Consumer Credit report will be released at 15:00 ET.

Nasdaq +30.2% YTD
Russell 2000 +29.4% YTD
S&P 500 +24.1% YTD
DJIA +20.2% YTD

DJ30 +128.66 NASDAQ -7.92 SP500 +7.52 NASDAQ Adv/Vol/Dec 1221/1.97 bln/1321 NYSE Adv/Vol/Dec 1598/704.0 mln/1410

3:30 pm :

Precious metals traded higher today, gaining support from a weaker dollar index. Dec gold brushed a session high of $1320.50 per ounce in early morning pit trade and chopped around slightly below that level for the remainder of the session. It eventually settled with a 0.7% gain at $1317.40 per ounce.
Dec silver rose to a session high of $21.93 per ounce but then inched lower. It settled with a 0.6% gain at $21.76 per ounce, just above its session low of $21.75 per ounce.
Dec crude oil also rose on the weaker dollar index. Adding to today's strength was better-than-anticipated inventory data that showed a build of 1.577 mln barrels when a build of 1.6-2.1 mln barrels was expected. The energy component lifted from a session low of $93.68 per barrel set at pit trade open and advanced as high as $95.40 per barrel. It pulled back slightly heading into the close and settled with a 1.4% higher at $94.74 per barrel.
Dec natural gas also traded in positive territory, advancing to a session high of $3.55 per MMBtu. It pulled back in afternoon pit trade and settled with a 0.9% gain at $3.50 per MMBtu.

4:19PM Novatel Wireless beats by $0.06, misses on revs; guides Q4 EPS in-line, revs below consensus (NVTL) 2.91 -0.07 : Reports Q3 (Sep) loss of $0.04 per share, $0.06 better than the Capital IQ Consensus Estimate of ($0.10); revenues rose 30.5% year/year to $92.7 mln vs the $94.5 mln consensus. For Q4, co sees non-GAAP EPS of $(0.14)-0.00 vs. ($0.06) Capital IQ Consensus Estimate; sees Q4 revs of $66-78 mln vs. $99.5 mln Capital IQ Consensus Estimate.

4:13PM SolarCity beats by $0.02, beats on revs; guides Q4 EPS below consensus, revs in-line (SCTY) 59.65 -3.12 : Reports Q3 (Sep) loss of $0.43 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of ($0.45); revenues rose 52.0% year/year to $48.6 mln vs the $42.42 mln consensus.

Estimated Nominal Contracted Payments Remaining of $1,737 million at September 30, 2013, up 23% from $1,409 million at June 30, 2013.
Retained Value forecast of $846 millionat September 30, 2013, equating to retained value per watt forecast of $1.37/W at September 30, 2013. Investments in Solar Energy Systems, Leased and to Be Leased, of $211.4 million bringing the cumulative total through the first nine months of 2013 to $507.7 million
Undeployed Tax Equity Financing Capacity of 149 MW as of November 1, 2013
MWs Deployed reached a new quarterly record of 78 MW as residential MWs deployed grew 151% year-over-year to 60 MW.
Cumulative total MWs deployed stood at 464 MW as of September 30, 2013. MWs Booked totaled 91 MW.
Cumulative Energy Contracts increased 155% since the end of the third quarter of 2012 (and 21% since the end of the second quarter of 2013) to 72,506.
Cumulative Customers grew to 82,235, up 133% since the end of the third quarter of 2012 (and 18% since the end of the second quarter of 2013).

Guidance for Q4 2013 and Update to 2013 and 2014 Outlook

Co issues mixed guidance for Q4, sees EPS of ($0.65)-($0.55), excluding non-recurring items, vs. ($0.49) Capital IQ Consensus Estimate; sees Q4 revs of $40-46 mln vs. $42.24 mln Capital IQ Consensus Estimate.
For Q4 2013, the Company expects to deploy 101 MW and thus reaffirms its guidance for 2013 MW deployed of 278 MW.
GAAP Operating Lease Revenue: $22 million - $24 million
GAAP Solar Energy Systems Sale Revenue: $18 million - $22 million GAAP Gross Margin: 30%-40%
GAAP Operating Expenses: $50 million - $55 million
Non-GAAP EPS (before Income (Loss) Attributable to Noncontrolling Interests): ($0.55) -- ($0.65)
Positive net cash flow.
For 2014, the Company reiterates its guidance for MW deployed in a range of 475 MW -- 525 MW.

4:12PM Qualcomm misses by $0.03, beats on revs; guides Q1 EPS below consensus, revs below consensus (QCOM) 69.74 +0.73 : Reports Q4 (Sep) earnings of $1.05 per share, excluding non-recurring items, $0.03 worse than the Capital IQ Consensus Estimate of $1.08; revenues rose 33.0% year/year to $6.48 bln vs the $6.35 bln consensus.

Co issues downside guidance for Q1, sees EPS of $1.10-1.20, excluding non-recurring items, vs. $1.28 Capital IQ Consensus Estimate; sees Q1 revs of $6.3-6.9 bln vs. $7.01 bln Capital IQ Consensus Estimate.

MSM chip shipments: 190 mln units, up 35 percent y-o-y and 10 percent sequentially. June quarter total reported device sales: approximately $60.2 bln, up 29 percent y-o-y and 7 percent sequentially. June quarter estimated 3G/4G device shipments: approximately 260 to 264 mln units, at an estimated average selling price of approximately $227 to $233 per unit.

"I am very pleased with our record financial performance this year as we delivered revenues of $25 bln, up 30% versus last year. Our technologies underpin the global growth of wireless data, and our semiconductor solutions are used across the industry's flagship smartphones...Looking forward, we expect continued strong growth of 3G and 3G/4G multimode devices around the world, particularly in China with the anticipated launch of LTE. Qualcomm remains well positioned from a growth standpoint, and we expect double-digit compound annual growth rates for both revenues and earnings per share over the next five years."

On August 21, 2013, we entered into a definitive agreement under which we agreed to sell the North and Latin American operations of our Omnitracs division for $800 mln, subject to closing conditions, including receipt of regulatory approvals. We expect the transaction to close in the first quarter of fiscal 2014. Upon close, we expect to record a gain on sale of approximately $0.22 to $0.25 earnings per share, which has been excluded from our fiscal first quarter and fiscal 2014 outlook.

4:12PM Axcelis Tech misses by $0.01, misses on revs (ACLS) 2.26 +0.4 : Reports Q3 (Sep) loss of $0.04 per share, $0.01 worse than the Capital IQ Consensus Estimate of ($0.03); revenues rose 9.4% year/year to $48.8 mln vs the $52.67 mln consensus.

4:03PM Brooks Automation changes time of its Q4 earnings release and conference call to before market open at 8:30 a.m. EST on Thursday, November 14, 2013 (BRKS) 9.45 0.00 : The company will release the financial results in advance of the call that morning.

Large Cap Gainers

LBTYA (80.94 +6.45%): Reported Q3 loss of -$2.09 per share, revs rose 73.5% yoy to $4.37 bln vs $4.41 bln estimate
ESV (60.5 +6.01%): Increased quarterly cash dividend 50% to $0.75 from $0.50 per share; upgraded to Buy from Hold at Nordea Securities, target raised to $68
RL (177.96 +3.95%): Beat quarterly EPS by $0.03 ($2.23 vs $2.20 estimate), revs rose 2.8% yoy to $1.92 bln vs $1.91 blne stimate; sees Q3 revs +8-10% (~$1.99-2.03 bln) vs $2 bln estimate; sees FY14 revs +5-7% (~$7.29-7.43 bln) vs $7.35 bln estimate

Large Cap Losers

TSLA (152.01 -14.03%): Beat quarterly EPS by $0.02 ($0.12 vs $0.10 estimate), GAAP revs rose 760.9% yoy to $431.3 mln; sees Q4 profitability consistent with Q3 ($0.12 vs $0.20 estimate); deliveries were shy of some expectations but exceeded guidance
VRSK (62.25 -8.19%): Beat quarterly EPS by $0.02 ($0.62 ex items vs $0.60), revs rose 10.0% yoy to $438.56 mln vs $444.55 mln estimate
PXD (199.73 -5.05%): Downgraded to Neutral from Buy at Sterne Agee

Mid Cap Gainers

FNGN (61.58 +12.21%): Beat quarterly EPS by $0.02 ($0.20 vs $0.18 estimate), revs rose 28.3% yoy to $62.1 mln vs $60.73 mln estimate; sees FY13 revs of $238-240 mln vs $236.72 mln estimate
VOYA (33.41 +7.88%): Beat quarterly EPS by $0.39 ($1.08 ex items vs $0.69 estimate); upgraded to Buy from Neutral at BTIG Research
AU (15.77 +7.83%): Reported Q3 net loss of -$0.34 per share vs $0.09 two analyst estimate, revs $1.26 bln vs $1.21 bln estimate; gold production rose 12% from previous quarter to 1,043koz, above 950koz-1000koz guidance

Mid Cap Losers

NPSP (23.25 -16.93%): Reported Q3 loss of -$0.01 per share (in-line), revs tose 45.2% yoy to $39.2 mln vs $38.25 mln estimate
JCOM (49.15 -10.83%): Missed quarterly EPS by $0.06 ($0.64 ex items vs $0.70 estimate), revs rose 37.1% yoy to $127.8 mln vs $130.26 mln estimate; reaffirmed FY13 EPS guidance of $2.78-2.98 ex items vs $2.91 estimate, revs of $510-535 mln vs $526.73 mln estimate
MELI (123.25 -7.88%): Missed quarterly EPS by $0.08 ($0.66 vs $0.74 estimate), revs rose 26.5% yoy to $123.1 mln vs $125.47 mln estimate; downgraded to Sector Perform from Outperform at Pacific Crest

STMicroelectronics (STM) announced its close collaboration with Memoir Systems has made the Algorithmic Memory Technology available for embedded memories in application-specific integrated circuits and Systems on Chips manufactured in ST's fully-depleted silicon-on-insulator process technology.

Avnet Electronics Marketing, an operating group of Avnet (AVT), introduced the MicroZed 7020 System-on-Module featuring the Xilinx (XLNX) Zynq-7000 XC7Z020-1CLG400C All Programmable SoC, with three times more programmable logic.

7:14AM Suntech Power files an application for a provisional liquidation with the Grand Court of the Cayman Islands, the jurisdiction of its incorporation (STP) 1.50 : Co announced it has filed an application for a provisional liquidation with the Grand Court of the Cayman Islands, the jurisdiction of its incorporation. In the event the Grand Court grants the Company's application, restructuring professionals selected by the Company would be appointed to work with the Company's Board of Directors to continue progressing a restructuring of the Company. By commencing such proceeding in the Cayman Islands, the Company will have the benefit of protection and additional time to complete negotiations and conclude the restructuring in the best interests of all stakeholders. The Company will consider pursuing a Chapter 15 filing in the United States following the grant of the application in the Cayman Islands to obtain similar protections in the United States. As previously announced, the Company has reached an understanding with its Creditor Working Group which includes implementing a recapitalization plan that contemplates a scheme of arrangement. The principal components of the restructuring scheme would include, among other things, the exchange of outstanding debt into the Company's equity and the introduction of a new strategic investor that will provide necessary funding to complete the restructuring process.

7:10AM Tessera Tech reports Q3 (Sep) results, beats on revs; guides Q4 revs below consensus; authorizes additional $50 mln in buybacks (TSRA) 18.84 : Reports Q3 (Sep) loss of $0.87 per share, may not be comparable to the Capital IQ Consensus Estimate of ($0.18); revenues fell 38.3% year/year to $37.3 mln vs the $36.5 mln consensus. Non-GAAP net losses from continuing operations for the third quarter of 2013 include a provision for income taxes of $40.5 million due to a valuation allowance on the Company's deferred tax assets.

Co issues downside guidance for Q4, sees Q4 revs of $56-60 mln vs. $65.08 mln Capital IQ Consensus Estimate. Intellectual Property revenue is expected to range between $48 million and $50 million. The Company expects DigitalOptics revenue to range between $8 million and $10 million, including initial product sales of its mems|cam camera modules and a one-time license fee related to a legacy DOC license agreement. GAAP operating expenses are expected to range between $59 million and $63 million. Due to the anticipated ramp in production of the Company's mems|cam modules in the fourth quarter, the Company expects cost of sales and R&D to be higher than the prior quarter. SG&A is expected to be higher than the prior quarter due to increased patent analysis and business development activities, some of which relates to anticipated expenses that moved from the third quarter to the fourth quarter. Litigation expenses are expected to be slightly higher than the prior quarter. The Company expects amortization of intangibles of $5.4 million and stock based compensation expense of $4 million.

Share Repurchase Program
During the third quarter of 2013, the Company repurchased 259,000 shares for an aggregate amount of $5.0 million. As a reminder, in May 2013 the Company announced it expected to execute at least $16.0 million of stock repurchases through its stock repurchase program over the next four quarters based on the Company's episodic gains in the prior four quarters. In November 2013 our Board of Directors increased the total authorized to be repurchased from $100.0 million to $150.0 million. The Company intends to use this new authorization to execute stock repurchases in excess of the previously committed $16.0 million of stock repurchases.

07:49 am Mindspeed shares soar 65% following acquisition for $5.05/share
Mindspeed (MSPD) announced that it has entered into a definitive agreement to be acquired by M/A-COM Technology Solutions (MTSI), for $5.05 per share in a cash tender offer. This represents a premium of ~ 66% to the close of $3.04 on Nov 4, 2013. MACOM intends to commence a tender offer to purchase each outstanding common share of Mindspeed for $5.05 in cash, without interest, and MACOM will assume certain equity awards held by Mindspeed employees. The transaction value is approximately $272 million in diluted equity value.The boards of both companies have approved the transaction, which is subject to customary closing conditions and regulatory approvals. MACOM estimates that the acquisition will result in substantial synergies from corporate overhead, SG&A, and exit from underperforming businesses. MACOM also expects that the acquisition will be accretive to non-GAAP earnings per share between $0.15 and $0.20 in fiscal 2014 and between $0.25 and $0.30 in fiscal 2015.