Sector Investing

[ReturntoSender]

From Briefing.com: 4:20 pm : Equities settled on their highs after dovish forward guidance from the Federal Reserve offset the immediate impact of a tapering announcement. Although the Federal Open Market Committee reduced the size of its monthly asset purchases from $85 billion to $75 billion, it pledged to keep the target Fed Funds Rate near its current levels 'well past the time that the unemployment rate declines below 6.5%.'

The dovish guidance was also the likely reason for Treasuries retracing all of their post-announcement losses. The benchmark 10-yr yield ended with a five basis point gain at 2.89%, which is essentially where it traded before the afternoon announcement.

During his press conference, Chairman Bernanke elaborated on the decision, saying the Committee plans to introduce further gradual reductions should economic data continue showing measurable improvement.

The S&P 500 surged 1.7%, wiping out its entire December loss. The index ended at a fresh record closing high as nine of ten sectors added at least 1.0%.

Heavily-weighted financials (+2.4%) and health care (+2.4%) finished in the lead. The health care sector received a considerable boost from biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 219.31, +5.92) rose 2.8%.

Despite the relative strength of the two top-weighted sectors, the S&P 500 was kept from registering additional gains by the underperformance of technology (+0.8%). The sector lagged throughout the session as its top component, Apple (AAPL 550.77, -4.22), weighed. The largest tech stock fell 0.8% in the wake of Jabil Circuit's (JBL 15.67, -4.05) disappointing earnings report. Comments from China Mobile (CHL 52.61, +0.81) also weighed as the company said it is still working on an Apple iPhone deal after last week's reports implied the deal was nearing completion.

Today's broad gains overshadowed another key laggard, Ford (F 15.65, -1.05). The stock lost 6.3% after issuing fiscal-year 2014 guidance that fell short of expectations. Specifically, the company said it expects FY14 auto revenue to be about equal with FY13 (the current consensus calls for 11% growth) while adding its global auto operating margin target of 8-9% is at risk. The guidance update pressured rival General Motors (GM 41.27, -0.26) which slid 0.6%.

The removal of the uncertainty associated with today's FOMC decision caused the CBOE Volatility Index (VIX 13.80, -2.41) to slump to last week's levels.

Today's economic data focused on housing. The weekly MBA Mortgage Index fell 5.5% to follow last week's 1.0% increase.

November building permits rose to 1,007,000 from the prior month's upwardly revised rate of 1,039,000 (from 1,034,000). That was above the pace of 983,000 that had been expected among economists polled by Briefing.com.

Regarding Housing Starts, September starts came in at 873,000 while the consensus expected a reading of 915,000. For October, Housing Starts were reported at 889,000 against the 920,000 expected by the consensus. Lastly, November starts increased to 1,091,000 while a reading of 950,000 was broadly anticipated.

Tomorrow, weekly initial claims will be reported at 8:30 ET while Existing Home Sales for November will be reported at 10:00 ET. In addition, November Leading Indicators and the December Philadelphia Fed Survey will also be released at 10:00 ET.

Nasdaq +34.8% YTD
Russell 2000 +33.5% YTD
S&P 500 +27.0% YTD
DJIA +23.4% YTD

DJ30 +292.71 NASDAQ +46.38 SP500 +29.65 NASDAQ Adv/Vol/Dec 1840/2.05 bln/725 NYSE Adv/Vol/Dec 2436/868.0 mln/649

3:30 pm :

Feb gold spent most of today's session chopping around near the unchanged line ahead of the FOMC policy statement. The yellow metal dipped to a pit session low of $1227.00 per ounce but gained steam in the last half hour of floor trade. It popped to a session high of $1237.50 per ounce and settled with a 0.4% gain at $1234.60 per ounce.
Mar silver pushed to a session high of $20.11 per ounce in late afternoon pit trade after trading in a consolidative fashion near the $19.95 per ounce level. It settled at $20.06 per ounce, booking a gain of 1.1%.
Gold fell as low as $1220.00 per ounce in electronic trade and silver slipped to a low of $19.42 per ounce following the 14:00 ET FOMC taper announcement. The Committee stated that beginning in January, it will taper its asset purchases by $10 bln per month. Gold is currently down 0.3% at $12226.80 and silver is up 0.2% at $19.88.
Feb crude oil traded as inventory data showed a draw of 2.941 bln barrels when a draw of 2.3-3.0 mln was anticipated. The energy component dipped to a session low of $97.46 in morning pit trade but eventually settled with a 0.6% gain at $98.08 per barrel, slightly below its session high of $98.30 per barrel.
Jan natural gas, on the other hand, trended lower today, erasing its earlier gains. Prices pulled back from a session high of $4.32 per MMBtu and slipped into the red by late morning floor action. Unable to regain momentum, natural gas settled 0.5% lower at $4.26 per MMBtu.

5:23PM CalAmp acquires Radio Satellite Integrators; The transaction is expected to be accretive to CAMP's overall margins and non-GAAP EPS in the coming fiscal year (CAMP) 25.05 +0.81 : Co announced that it has acquired privately held Radio Satellite Integrators, a Southern California-based provider of mobile resource management solutions to city and county government agencies.

This transaction improves CalAmp's competitive position and growth prospects in the state and local government market by augmenting CalAmp's current range of public safety solutions.

RSI's Software-as-a-Service (SaaS) solutions are utilized by a wide variety of fleet types including applications in public works, waste management, transit and public safety. On a trailing 12-month basis, RSI generated revenue of ~$5 mln and was profitable.

Consideration for the acquisition was $6.5 mln in upfront cash and future earn-out payments based on post-acquisition sales and gross profit performance. The transaction is expected to be accretive to CalAmp's overall margins and non-GAAP earnings per share in the coming fiscal year.

4:49PM BlackBerry announced two appointments that strengthen the Company's strategy, marketing and operations. (BBRY) 6.06 -0.05 : Co announced two appointments that strengthen the Company's strategy, marketing and operations.

James S. Mackey was appointed Executive Vice President for Corporate Development and Strategic Planning, joining the Company with years of experience executing highly successful corporate strategies that drive growth. Before joining BlackBerry, Mackey served as Senior Vice President of Corporate Development at Open Text Corp., as well as head of Corporate Development at SAP.
Mark Wilson was named Senior Vice President of Marketing and brings extensive experience building brand preference and driving integrated marketing for a number of well-known companies. Wilson will join BlackBerry in January from Avaya, where as CMO he led the marketing transition to a customer-solutions orientation.

4:12PM Oracle beats by $0.02, beats on revs (ORCL) 34.70 +1.07 : Reports Q2 (Nov) earnings of $0.69 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.67; revenues rose 1.9% year/year to $9.28 bln vs the $9.18 bln consensus.

New software licenses revenue -1% to $2.4 bln vs. expectations of just under $2.4 bln (Flat YoY); Non-GAAP software license updates and product support revenues were up 6% to $4.5 bln.
Hardware revenue of $714 mln vs. expectations of ~$675 mln (-8% YoY); Hardware Systems revenues, including hardware systems products and hardware systems support, were unchanged at $1.3 billion.
Non-GAAP operating income was down 1% at $4.2 billion, and the non-GAAP operating margin was 46%.

"We're very pleased with our results as new software license and cloud software subscription revenue grew 1% in constant currency over the 18% growth reported last year. Software revenue grew 5% helping drive our tremendous cash flow and for the first time ever, we generated more than $15 billion in operating cash flow over four quarters. Our hardware business, including support, grew 2% in constant currency this quarter driven by double-digit revenue growth in Exadata, Exalogic and Exalytics. The SPARC SuperCluster and Big Data Appliance were even better, with triple-digit growth and we expect hardware products will show growth next quarter. Our billion dollar SaaS business delivered overall bookings growth of 35% in the quarter."

4:10PM PLX Tech announces preliminary results of 2013 annual meeting; three new independent directors elected (PLXT) 6.51 -0.06 : Co announced that, based on preliminary results from its 2013 Annual Meeting of Stockholders held earlier today, stockholders have elected Martin Colombatto, Stephen Domenik and Eric Singer, three new independent directors nominated by its largest shareholder, Potomac Capital Partners II, L.P., and re-elected five existing directors who ran unopposed, John Hart, David Raun, Michael Salameh, Ralph Schmitt and Patrick Verderico.
Potomac, together with its affiliates, is the beneficial holder of approximately 10.3 percent of PLX's common stock. IVS Associates, Inc., the independent inspector of elections for the Annual Meeting, has indicated that it expects to issue final, certified results over the next few days.

Large Cap Gainers

VRTX (68 +3.69%): Strength attributed to positive comments from BofA/Merrill.
NOK (7.55 +2.51%): Mentioned positively on MadMoney; co's unit, Nokia Solutions and Networks, has won an LTE contract with China Telecom (CHA).
CVS (68.39 +2.36%): Guided FY14 EPS in-line, raised dividend 22% and approved new $6 bln share repurchase at Analyst Day.

Large Cap Losers

F (15.6 -6.6%): Co sees FY14 automotive rev about equal to 2013 with a lower operating margin; sees lower pretax profit; sees 2014 US industry volume: 16-17 mln.
ESV (55.64 -4.1%): Tgt lowered to $61 from $64 at RBC Capital Mkts.
EQT (82.91 -3.41%): Announced the co's 2014 CAPEX forecast of $2.4 bln.

Mid Cap Gainers

KOG (10.94 +3.89%): Announced 2014 capital budget of $940 mln, co expects to increase production ~45% in 2014, borrowing base increased to $1.35 bln from $1.1 bln.
EVHC (33.56 +3.33%): Initiated with a Buy at KeyBanc Capital Mkts.
CGNX (35.44 +3.5%): Initiated with a Buy at BB&T Capital Mkts; tgt $45.

Mid Cap Losers

JBL (15.58 -21.01%): Missed on EPS by $0.03, beat on revs; guided Q2 EPS below consensus, revs below consensus; announced $200 mln stock repurchase authorization; co to divest aftermarket services for $725 mln; downgraded at Citigroup, Needham, and Longbow; tgt cut to $24 from $26 at Stifel.
GOGO (26.82 -12.75%): Announced Ripplewood distribution and director resignations; Delta Air Lines (DAL) CEO affirmed no voice calls during flight for customers.
PAY (22.76 -8.96%): Beat on EPS by $0.01, beat on revs; guided Q1 EPS below consensus, revs in-line; guided FY14 EPS below consensus, revs in-line.

IBM (IBM) and 21Vianet Group (VNET) have entered a definitive agreement to introduce IBM's private cloud infrastructure service and accelerate high value managed private cloud services to China

Riverbed Technology (RVBD) and Gigamon (GIMO) announced that Riverbed Cascade Shark now supports Gigamon's time stamping solution in the GigaVUE H Series

Apple (AAPL) announced the all-new Mac Pro will be available to order starting Thursday, Dec 19.

INTC +0.2% (Intel added to the short-term buy list at Deutsche Bank)

5:23AM First Solar modules selected to power projects totaling 48MW in France (FSLR) 55.51 : Co announces that its advanced thin-film photovoltaic modules will power four solar energy plants in France, with a combined capacity of 48 megawatts.

4:04AM Tower Semicon raises its credit line to $70 mln from $45 mln at reduced rate (TSEM) 3.91 :

SunPower (SPWR) announced that it has signed multiple supply agreements with Ecomax Japan to purchase SunPower's high efficiency E20/327 solar panels totaling 20-megawatts. In 2014, Ecomax plans to install the solar panels at several locations in Central and Northern Japan.

Jabil Circuit (JBL) reported first quarter earnings of $0.51 per share, which is worse than expected, while revenues fell 0.6% year/year to $4.61 billion which is higher than expected. The company issued second quarter guidance for EPS of $0.05-0.15 and revenues of $3.5-3.7 billion which is worse than expected. The company also announced that its Board of Directors has authorized the repurchase of up to $200 million of its common stock over the next 12 months. The company also announced that it has entered into an agreement with iQor Holdings for the sale of its aftermarket services business for $725 mln. "Today, Jabil's AMS business is concentrated in depot repair for consumer electronics, which is not aligned with our strategy to focus on diversified manufacturing solutions...This divesture should provide us the financial flexibility to potentially add more engineering intensive capabilities, which should allow us to expand and diversify our core manufacturing business." Of the $725 million purchase price, $675 million is cash and $50 million is senior nonconvertible preferred stock of iQor.
Dice Holdings (DHX) announced new $50 million stock repurchase program. The new authorization is effective upon the completion of the existing $50 million repurchase program and will be in effect for one year. In January 2013, the Board of Directors authorized the purchase of up to $50 million of its common stock. Under this plan, the Company has repurchased about 5.9 million shares of its common stock on the open market for approximately $49.4 million through December 13, 2013.
VeriFone (PAY) reported fourth quarter earnings of $0.27 per share, which is better than expected, while NON-GAAP revenues fell 11.7% year/year to $432 million which is higher than expected. The company issued first quarter with EPS of $0.26, excluding non-recurring items, which is below estimates with first quarter NON-GAAP revenues $425-430 million which is line with estimates. The company issued fiscal year 2014 with EPS of $1.35-1.40, which is below estimates with revenues of $1.77-1.80 billion which is line with estimates.