From Briefing.com: 4:15 pm : The major averages finished today's uneventful session near their flat lines as the S&P 500 ended flat while the Nasdaq added 0.2%.
The outperformance of the Nasdaq resulted from the relative strength of the technology sector (+0.5%), which was the leading cyclical group of the session. Top component, Apple (AAPL 521.36, +12.47), advanced 2.5% in anticipation of tomorrow's press event where the company is expected to unveil a new line of tablets. The largest tech stock also drew strength from comments made by Gartner after the research firm said it expects tablet demand to remain strong into the holiday season.
Apple accounted for much of the tech sector's gain while other large components were mixed. Microsoft (MSFT 34.99, +0.03) added 0.1% while IBM (IBM 172.86, -0.92) remained under pressure following its earnings miss last Thursday.
Elsewhere, the industrial sector (+0.4%) outperformed with its top member, General Electric (GE 26.14, +0.59), making a significant contribution. General Electric rallied 2.3% after UBS raised its target for the stock to $29 and Citigroup added the stock to its US Focus List. Transports also displayed relative strength as the Dow Jones Transportation Average added 0.4%.
The discretionary sector was the last cyclical group to climb into positive territory after several components reported earnings. Hasbro (HAS 49.72, +2.48) and V.F Corp (VFC 211.23, +6.93) settled with respective gains of 5.3% and 3.4% after both delivered bottom-line beats. Toymaker Hasbro also surpassed its revenue expectations while V.F. Corp missed top-line estimates, but raised its quarterly dividend 21% to $1.05 and announced that a 4:1 stock split will take place on December 20.
Also of note, McDonald's (MCD 94.59, -0.61) lost 0.6% after the company's cautious-sounding guidance overshadowed its earnings beat. The fast food giant said it expects October comparable store sales to be flat, which is a reflection of the challenging operating environment.
Even though three influential sectors posted gains, the broader market was pressured by the underperformance of energy (-0.4%) and financials (-0.2%). In addition, three countercyclical sectors-consumer staples (-0.3%), health care (-0.6%), and utilities (-0.2%)-also weighed while telecom services (+1.2%) outperformed. AT&T (T 35.22, +0.61) climbed 1.8% after the company agreed to sell 9,700 towers to Crown Castle International (CCI 74.66, -1.30) for $4.85 billion.
Treasuries settled near their lows with the 10-yr yield up two basis points at 2.61%.
Trading volume was on the light side as 678 million shares changed hands on the floor of the NYSE.
September existing home sales hit an annualized rate of 5.29 million units, which was a bit weaker than the rate of 5.30 million units that had been generally expected by the Briefing.com consensus. The pace for September was down from the prior month's revised rate of 5.39 million units.
Tomorrow, the September nonfarm payrolls report, which was delayed by the partial government shutdown, will be released at 8:30 ET while August net long-term TIC flows will be reported at 9:00 ET. Separately, the August Construction Spending report will cross the wires at 10:00 ET. Among earnings of note, Delta Air Lines (DAL 24.69, -0.32), United Technologies (UTX 107.62, -0.12), and Wipro (WIT 11.56, 0.00) will report their quarterly results before the opening bell.
DJIA +17.5% YTD
S&P 500 +22.3% YTD
Nasdaq +29.8% YTD
Russell 2000 +31.0% YTD
DJ30 -7.45 NASDAQ +5.77 SP500 +0.16 NASDAQ Adv/Vol/Dec 1233/1.70 bln/1324 NYSE Adv/Vol/Dec 1458/677.7 mln/1523
3:30 pm :
Nov crude oil fell below the $100 per barrel level for the first time since July as weak inventory data pressured prices. The Dept of Energy reported that crude oil inventories for the week ending Oct 11 had a build of 4.0 mln barrels when a smaller build of 2.2-3.0 mln barrels was anticipated
The energy component pulled back from its session high of $100.70 per barrel set in morning pit trade and brushed a session low of $99.41 per barrel. It eventually settled with a 1.4% loss at $99.72 per barrel
Nov natural gas also fell today. It brushed a session high of $3.77 per MMBtu in morning floor action but quickly retreated into negative territory. It settled 2.4% lower at $3.67 per MMBtu, just above its session low of $3.66 per MMBtu
Precious metals, on the other hand, registered gains
Dec gold traded slightly higher in a tight range near the $1316.00 per ounce level. It brushed a session high of $1319.70 per ounce in morning pit trade and settled 0.1% higher at $1315.80 per ounce
Dec silver climbed to a session high of $22.33 per ounce and settled at $22.28 per ounce, booking a gain of 1.6%
4:36PM Texas Instruments beats by $0.03, reports revs in-line; guides Q4 below consensus (TXN) 40.99 +0.28 : Reports Q3 (Sep) GAAP earnings of $0.56 per share, $0.03 better than the Capital IQ Consensus of $0.53; revenues fell 4.3% year/year to $3.24 bln vs the $3.22 bln consensus. Sept 10 mid-quarter update, co narrowed Q3 EPS guidance to $0.51-0.55 from $0.49-0.57; co narrowed rev guidance to $3.15-3.29 bln from $3.09-3.35 bln.
Co issues downside guidance for Q4, sees GAAP EPS of $0.42-0.50 vs. $0.51 Capital IQ Consensus Estimate; sees Q4 revs of $2.86-3.10 bln vs. $3.11 bln Capital IQ Consensus Estimate.
"Our revenue in the quarter was up 6 percent sequentially. Excluding the legacy wireless products, revenue grew 10 percent sequentially. Our book-to-bill ratio was 0.97, consistent with an expected seasonal revenue decline in the fourth quarter. Analog and Embedded Processing are now 80 percent of TI's revenue, eight points higher than a year ago. The combined revenue from these two businesses grew 10 percent sequentially and 7 percent from a year ago. Our legacy wireless products declined to less than 2 percent of revenue.
4:33PM Ultra Clean Holdings beats by $0.03, reports revs in-line; guides Q4 EPS above consensus, revs above consensus (UCTT) 7.11 : Reports Q3 (Sep) earnings of $0.12 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.09; revenues rose 6.3% year/year to $107.2 mln vs the $107.65 mln consensus.
Co issues upside guidance for Q4, sees EPS of $0.18-0.22, excluding non-recurring items, vs. $0.11 Capital IQ Consensus Estimate; sees Q4 revs of $120-125 mln vs. $113.07 mln Capital IQ Consensus Estimate.
4:16PM Netflix beats by $0.03, reports revs in-line; guides Q4 EPS above consensus (NFLX) 354.99 +21.49 : Reports Q3 (Sep) earnings of $0.52 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.49; revenues rose 22.2% year/year to $1.11 bln vs the $1.1 bln consensus. Co issues upside guidance for Q4, sees EPS of $0.47-0.73, excluding non-recurring items, vs. $0.44 Capital IQ Consensus Estimate.
Q3 Metric Performance vs Guidance
Domestic Streaming
Total Subscriptions: 31.09 mln, Guidance 30.5-31.3 mln
Revenue: $701 mln, Guidance $693-701 mln
Contribution Profit: $166 mln, Guidance $161-171 mln
International Streaming
Total Subscriptions: 9.19 mln, Guidance 8.3-9.0 mln.
Revenue: $183 mln, Guidance $170-184 mln
Contribtution Profit (Loss): ($74 mln), Guidance ($86 mln)-($70 mln)
Global
Net Income (Loss): $32 mln, Guidance $18-24
EPS: $0.52 , Guidance $0.30-0.56
Netflix Q4 Guidance
Domestic Streaming
Total Subscriptions: Guidance 32.7-33.5 mln
Revenue: Guidance $731-741 mln
Contribution Profit: Guidance $165-177 mln
International Streaming
Total Subscriptions: Guidance 10.1-10.9 mln.
Revenue: Guidance $210-224 mln
Contribution Profit (Loss): Guidance ($73 mln)-($57 mln).
Domestic DVD
Contribution Profit: Guidance $96-110 mln
Global
Net Income (Loss): Guidance $29-45 mln
EPS: Guidance $0.47-0.73
Notable Commentary
"We expect Q4 net additions to be approximately equal to Q4 of the prior year and to expand our contribution margin about 400 basis points year over year to about 23%, assuming the midpoint of our guidance. This means that sequentially our target contribution margin is slightly down Q3 to Q4. As a reminder, we shifted our contribution margin target a few months ago from "100 basis points of quarterly sequential improvement" to "400 basis points Q over prior year Q" so we are right on target with our articulated margin growth strategy".
"International net additions were way up from the prior year at 1.4 million new members, driven by our expansion to the Nordics and the Netherlands since last Q3, as well as growth in our existing markets from our steadily improving service, content and marketing. In addition, there was a surge in low quality free trials in September in Latin America that temporarily boosted the total member number. The paid net adds remain a reliable indicator of progress".
"Sequentially, we expect international total member net adds in Q4 to be flat to down (1.4 million in Q3 to 1.3 million) as we work through the low-quality Latin America free trials from Q3, but paid net adds in Q4 are forecasted to rise (1.1 million in Q3 to 1.3 million)".
"In 2014, we expect to double our investment in original content (though still representing less than 10% of our overall global content expense)".
11:27 am Technology
The tech sector is trading higher today, ahead of slight losses in the broader market. Semiconductors are showing just modest strength with the SOX trading 0.1% higher. Within the chip index, AMD (-6.5%) is a notable laggard. Among other major indices, the SPY is trading 0.1% lower today, while the QQQ is up 0.3% and the NASDAQ is trading 0.2% higher on the session. Among tech bellwethers, AAPL (+2.4%) is showing notable strength ahead of tomorrow's next-gen iPad reveal, while FB (0.0%) is flat on the session.
This morning in earnings, SAP (+4.2%) posted inline Q3 earnings, light revs, and reaffirmed guidance, while IRDM (-11.1%) lowered guidance.
In news, CCI (-2.7%) announced a $4.85 bln T (+1.2%) tower transaction and updated guidance.
Among M&A in the tech space, NTS (+23.9%) agreed to be acquired for $2.00 per share by Tower Three Partners. Also, TLAB (+4.9%) agreed to be acquired by Marlin Equity Partners for $2.45 per share in cash. WBMD (+7.2%) entered into agreement to repurchase all of the shares of WebMD common stock beneficially owned by Carl C. Icahn and certain of his affiliates, at a purchase price of $32.08 per share.
Among notable analyst upgrades in tech this morning, AAPL (+2.4%) was upgraded to Buy at Societe Generale and CRM (+1.8%) was upgraded to Strong Buy at Raymond James.
In downgrades, TKC (-1.5%) was downgraded to Neutral from Buy at UBS, VIP (-0.5%) was downgraded to Hold at Deutsche Bank, NIHD (-8.3%) was downgraded to Underperform at Credit Suisse, PLXS (-0.5%) was downgraded to Neutral at Longbow and CLS (-1.7%) was downgraded to Hold at Canaccord.
TXN (+0.4%) and VMW (+0.9%) are the notable names in tech scheduled to report after the close.
10:07AM SolarCity (+8%) surges to new all time highs (SCTY) 61.25 +4.79 :
SanDisk (SNDK) announced that Kaminario has selected the Optimus Serial Attached SCSI solid-state drive for use in its next-generation K2 all solid-state SAN storage solution.
Mellanox Technologies (MLNX) announced the availability of its Messaging Accelerator as an Open Source software platform for message-based and streaming network socket applications.
Cypress Semiconductor (CY) announced it is nearing the shipment of its 1 billionth CapSense capacitive touch-sensing controller.
Skyworks Solutions (SWKS) announced that its wireless connectivity front-end modules are being leveraged by Broadcom (BRCM) for use in several of the co's 5G WiFi solutions, enabling some of the fastest download speeds available in access points, routers, DSL/cable gateways, PCs, smartphones and tablets.
8:04AM Canadian Solar to Supply Modules to Saudi Aramco's KAPSARC Solar Power Project (CSIQ) 23.13 : Co announces that it has been awarded a contract to supply 1.78MW to Saudi Aramco's KAPSARC (King Abdullah Petroleum Studies and Research Center) solar power project in Saudi Arabia. Following a very detailed and intense selection process Saudi Arabian Oil Company (Saudi ARAMCO), the world's largest crude oil producer, has awarded Canadian Solar a contract to supply 1.78MW of its high quality solar panels to the extension of the KAPSARC Solar Power Project which, once completed, will be largest ground mounted solar photovoltaic power plant in Saudi Arabia.
6:05AM Suntech Power announces quick-install PV modules and 1500V frameless PV module (STP) 1.41 : Co announced a quicker and more cost effective method, using Zep Solar technology, to install PV arrays for commercial and residential roof applications. In addition, the co will showcase its 1,500V frameless photovoltaic module at the Solar Power International (SPI) Exhibition in Chicago, Illinois. This higher voltage module, engineered for utility-scale and commercial applications, lowers balance of system costs.
Xilinx (XLNX) and TSMC (TSM) announced production release of the Virtex-7 HT family, the industry's first heterogeneous 3D ICs in production. With this milestone, all Xilinx 28nm 3D IC families are now in volume production
Google (GOOG) beat by $0.37, reports revs in-line; Q3 earnings were $10.74 per share, better than expected; revenues rose 31.4% y/y.
On a consolidated basis, Google 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 (GOOG) tgt raised earlier to $1100 from $1020 at UBS. Moving from 2H13 to 1H14, firm believes that co's innovation in digital advertising will allow co to produce above digital ad market growth rates. Co is quickly transforming into a digital economy powerhouse by addressing consumer & enterprise needs across technology hardware, software/services/apps, ecommerce and cloud computing. In the coming years, firm expects co to be the main beneficiary of many of the themes (mobile, personalization, social and disruption/innovation) that will drive secular growth in the Internet.
Verizon (VZ): Canccord Genuity notes, solid execution highlighted by wireless strength and wireline improvement. Firm notes once again Verizon demonstrates its US wireless strength in the quarter with solid postpaid subscriber growth in an increasingly competitive market place, while delivering strong margin performance despite the latest iPhone launch in the quarter. With a now fully financed deal to acquire the 45% interest in Verizon Wireless held by Vodafone, they believe Verizon continues to be uniquely positioned to deliver the financial benefits of the combined entity to shareholders. With higher revenue and EBITDA growth rates forecasted for the next few years, firm believes Verizon should continue to trade at a premium to its peers; $50 tgt.
DISH Network (DISH) filed a complaint against Media General, requesting that the Federal Communications Commission immediately require Media General to negotiate in good faith to resolve a blackout that began Oct. 1. In the Complaint, DISH explains how Media General has breached its statutory duty to negotiate in good faith: "Media General's conduct violates the Commission's rules requiring good faith negotiation for retransmission consent rights, because, among other things, Media General failed to respond for 11 days to DISH's last pre-blackout offer." Media General blocked programming from DISH customers in 17 markets after a retransmission contract expired.
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