From Briefing.com: Following Monday's session, we indicated that trading activity was likely to remain subdued short of either a noticeably weaker Consumer Confidence report and/or news that Saddam Hussein had been killed or captured. As it so happens, the confidence report was noticeably weaker than expected and there were rumors Hussein had been captured. Both, in their own way, helped quicken the pace of trading activity, but when it was all said and done, neither succeeded in prompting a meaningful move in the major indices.
The Nasdaq, which shed a mere 3 points, or 0.2%, outperformed the Dow and S&P, which were both down approximately 0.7%. As far as the tech sector was concerned, it was a mixed bag with little news of note to force the market's hand. Semiconductor shares, which led the modest advance on Monday, led the modest decline on Tuesday; the SOX Index dropped 1.9%. The choppy action in that key leadership group speaks to the relatively anxious tone of the market at the moment as it awaits further confirmation of strengthening economic activity.
To that end, the confidence report, which fell to 76.6 in July (consensus 85.0) from 83.5 in June, didn't offer a reassuring indication, and consequently, a knee-jerk sell-off ensued. Consistent with the underlying bullish bias that has prevailed since March, the market soon recovered its losses as the report was written off, for the most part, as an anomaly. That is understandable when one recognizes that (1) the correlation between confidence and spending is weak and (2) more telling economic indicators in the form of the July employment report and ISM Index are due out on Friday.
With rumors of Hussein's capture floating around, the confidence data were also easy to dismiss. In due time, those rumors - like most rumors do - fell by the wayside. Tech stocks, and the broader market, then fell prone to renewed selling interest, and ended the day on a feeble note with talk of the continued backup in interest rates, and reports al-Qaeda is planning more plane hijackings, weighing on the action.
Since it's safe to assume that al-Qaeda is always planning something that would be harmful, we're inclined to put more emphasis on the rise in interest rates as the more significant deterrent for market participants. Interest rates will remain a focal point on Wednesday, but again, it would be little surprise if we witnessed another trendless session. Overall, we continue to believe the path of least resistance for the tech sector over the near-term is still to the downside.-- Patrick J. O'Hare, Briefing.com
6:00PM Tuesday After Hours price levels vs 4 pm ET levels: A downbeat session in the after hours session as a number of earnings warnings has pushed the market lower. Presently, the S&P futures, at 987, are 1 point below fair value, while the Nasdaq 100 futures, at 1274, are 3 points below fair value.
To begin, Genesis Microchip (GNSS 12.15 -1.60) has taken a beating after warning for 2Q04 (Sept). The developer of display technologies for consumer and PC-display products said revenues should be $44-48 mln, below the Reuters Research consensus estimate of $55.7 mln. In other news, Genesis topped the consensus EPS estimate of $0.12 by a penny in its Q1 (June) report. This fact, however, has been by dismissed by traders in light of the weak Q2 outlook. Related companies of GNSS include the likes of PXLW and STM.
Cree Inc (CREE 14.56 -2.05), similarly, has lost ground in the extended session after missing the Q4 (June) consensus EPS expectation by a penny. The manufacturer of compound semiconductor materials reported EPS of $0.15 (consensus of $0.16) on revenues that rose 70% to $64.1 mln.
Strikingly, Centillium Communications (00C0 9.80 -0.55) has slumped 5% despite turning in a Q2 (June) earnings report that topped consensus estimates. The innovator of broadband communications technology reported a GAAP net loss of $0.01 per share, which was $0.03 better than the Reuters Research estimate of ($0.04). The stock has more than doubled since April, and traders have most likely booked profits. Competitors of CTLM include the likes of ADI, BRCM, CNXT, IFX, STM, and TXN.
Turning to the retail space, Pier One (PIR 19.94 -0.01) has traded lower after cutting its Q2 (Aug) EPS forecast to $0.20-0.23 from previous guidance of $0.21-0.25. Management said that sales started soft in July, and the expected pick-up has not materialized and then announced its Q2 same store sales forecast is negative 3% to negative 5%. As a side note, Lehman Brothers downgraded PIR today to Equal-Weight from Overweight, citing a lack of near-term catalysts and tougher comparisons.
Finally, Reebok (RBK 33.36 +0.04) has followed in the steps of other companies that have issued a cash dividend as a result of the new tax laws, and said it will issue a semi-annual cash dividend in the amount of $0.15 per share, for a dividend yield of approximately 1%.
For more detail on these, and other after hours developments, be sure to visit Briefing.com's In Play, Earnings Calendar and Guidance pages---- Heather Smith, Briefing.com
5:38PM TTM Tech correction: (TTMI) 6.85 +0.38: -- Update -- Earlier we reported that TTMI reported a loss of $0.01, ex items, missing Reuters consensus of breakeven. In fact, TTMI reported a profit of $0.01, beating breakeven consensus by $0.01.
4:51PM TTM Tech misses by $0.01, ex items; guides for Q3 (TTMI) 6.85 +0.38: Reports Q2 (Jun) loss of $0.01 per share, excluding a $824,00 extraordinary gain that accounted for $0.02 per share, $0.01 worse than the Reuters Research consensus of $0.00; revenues rose 76.3% year/year to $41.0 mln vs the $40.6 mln consensus. Co. sees Q3 EPS of $0.01-0.03, R.R. consensus is $0.02 and revenues of $42-44 mln, estimate is $43 mln.
4:35PM Asyst misses by $0.01, ex items, guides Q2 revs in line with consensus (ASYT) 10.98 -0.40: Reports Q1 (Jun) pro forma loss from continuing operations of $0.46 per share, excluding gain on sale of co's WRC product lines of $28.4 mln and net loss from discontinued operations of $(9.3 mln), $0.01 worse than the Reuters Research consensus of ($0.45); revenues fell 12.7% year/year to $45.3 mln vs the $44.9 mln consensus. Co also guides Q2, sees consolidated net sales of approx $49.8 mln (based on 10% sequential increase from $45.3 mln) vs estimate of $47.8 mln.
4:25PM Genesis Microchip beats by $0.01, guides below consensus (GNSS) 12.66 -0.96: Reports Q1 (Jun) earnings of $0.13 per share, ex items, $0.01 better than the Reuters Research consensus of $0.12; revenues rose 29.6% year/year to $53.9 mln vs the $54.1 mln consensus. Company sees Q2 revenues of $44-48 mln, consensus $55.7 mln.
4:23PM Axcelis Tech reports in lin with consensus. (ACLS) 8.89 -0.21: Reports Q2 (Jun) loss of $0.10 per share, in line with the Reuters Research consensus of ($0.10); revenues fell 4.8% year/year to $84.7 mln vs the $81.5 mln consensus. Company sees Q3 EPS loss of $0.16-0.18 vs consensus loss of $0.05, revs $60-70 mln, est $83.1 mln.
4:12PM Centillium files $90 mln mixed shelf (CTLM) 10.35 -0.02: -- Update --
4:11PM Centillium beats by 3 cents (CTLM) 10.35 -0.02: Reports Q2 (Jun) GAAP loss of $0.01 per share, $0.03 better than the Reuters Research consensus of ($0.04); revenues fell 1.5% year/year to $33.9 mln vs the $32.7 mln consensus.
4:09PM JNI Corp misses by $0.05, ex items (JNIC) 6.44 -0.06: Reports Q2 (Jun) loss of $0.21 per share, excluding items, $0.05 worse than the Reuters Research consensus of ($0.16); revenues fell 46.8% year/year to $5.8 mln vs the $8.3 mln consensus.
4:08PM Pericom Semi beats by $0.01, guides SepQ revs lower (PSEM) 9.97 -0.03: Reports Q4 (Jun) loss of $0.01 per share, ex-items, $0.01 better than the Reuters Research consensus of ($0.02); revenues fell 11.3% year/year to $11.5 mln vs the $11.8 mln consensus. Co sees Q1 (Sep) revs of $10-$11 mln vs R.R. consensus of $12.5 mln.
4:03PM Cree misses by a penny (CREE) 16.66 +0.57: Reports Q4 (Jun) earnings of $0.15 per share, $0.01 worse than the Reuters Research consensus of $0.16; revenues rose 69.5% year/year to $64.1 mln vs the $63.6 mln consensus.
Close Dow -62.05 at 9204.46, S&P -7.24 at 989.28, Nasdaq -3.96 at 1731.40: An unexpected plunge in the July Consumer Confidence report held the stock market down for most of the day, and led to moderate losses for the indices... Rumors of Saddam Hussein's capture sparked a short-covering rally around mid-day; however, as soon as it became apparent that such talk was false, sellers resumed their previous efforts and sent the market towards its worst levels of the day... The sell-off, as mentioned, was spurred by the weaker than expected Consumer Confidence index...
The report slumped to its lowest reading in four months - to 76.6 versus the consensus estimate calling for an increase to 85.0 - on account of sharp declines in the key current conditions and expectations components of the index... The increase in the June employment rate to its highest level in nine years was the culprit behind the fall as it renewed concerns about economic growth in 2H03... Expectations of stronger economic activity have underpinned the market's recent run, and with data pointing to just the opposite, traders booked profits across the board...
Briefing.com would add, though, that the Conference Board reading reflects consumer sentiment on the prior month's environment, and is thus not the best indicator of future economic conditions... Nonetheless, the Dow, Nasdaq, and S&P 500 all sank 99, 22, and 12 points, respectively, on the headline number, with influential sectors such as biotech, retail, internet, and drug leading the way lower... One of the few industry groups, however, to buck the bearish trend was the restaurant sector... Fast food giant McDonald's (MCD 22.12 +0.86) met the consensus forecast in its Q2 (June) report, and contributed to the group's solid advance...
Elsewhere, the treasury market got clobbered across the yield curve, with the 10-year note tumbling 38 ticks, bringing its yield to 4.43%... The belief that Thursday and Friday's barrage of economic data will show notable improvement has weighed heavily on treasuries...NYSE Adv/Dec 1259/2010, Nasdaq Adv/Dec 1562/1569
3:40PM Centillium Communications Earnings Preview (CTLM) 10.20 -0.16: Centillum Communications reports its Q2 after the close with Reuters Research consensus earnings of ($0.04) per share and revs of $32.7 mln. Needham recently raised its estimates and price target to $12 ahead of earnings on the basis of the continued Japanese upgrading cycle to higher speed ADSL. The analyst also believes the co is breaking into the Chinese ADSL markets with a central office win at Huawei, capturing the second spot behind Texas Instruments.
3:24PM Genesis Microchip Earnings Preview (GNSS) 13.80 +0.17: Genesis Microchip reports its Q1 after the close, with Reuters Research consensus earnings estimates of $0.12 per share and revs of $54.1 mln. Pacific Growth Equities recently lowered its earnings outlook ahead of today's earnings, saying the pricing environment continues to constrain volume. Despite the analyst's actions, he believes the stock continues to be undervalaued in light of his modest revision to estimates. Firm also believes concerns over the Genesis/Pixelworks merger are overblown, as both companies appear to remain committed to the deal.
9:53AM ATI Tech (ATYT) 12.51 +0.51: Goldman Sachs upgrades In-Line to OUTPERFORM. Believes co will remain well positioned over next 2-3 quarters following news that ATYT increased its leading share in notebook graphics market.
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