From Briefing.com: 4:30 pm : The stock market started the fourth quarter on a high note. The Nasdaq closed at its highest level since 2001 and the Dow finished at an all-time high despite negative early-morning news from Citigroup (C 47.72, +1.05), UBS (UBS 54.94, +1.69) and Walgreens (WAG 40.16, +7.08).
Citigroup warned its third quarter earnings would fall approximately 60% from a year ago due to the credit turmoil. Citigroup did say it expected fourth quarter earnings to be back to normal. The CEO of UBS, meanwhile, reportedly said in an interview that the company expects to take a $3.4 billion write-down and a third quarter loss due to credit market woes.
The fact that the market rallied in the wake of these warnings is a reflection of the improvement in sentiment that followed the Fed's rate cuts last month. Today's action suggested that investors are feeling that the worst of the credit crisis is already priced in the market. That consideration, along with early quarter inflows, short-covering, and arguably, a fear of missing out on the next leg higher, bolstered Monday's gains.
Walgreens, though, was one notable outcast. Its stock got hammered after the drugstore operator reported fourth quarter earnings of $0.40 per share that were seven cents below expectations. Walgreens cited lower drug reimbursement, higher salary and store expenses, and higher advertising costs for the disappointment.
Separately, the ISM Index, which is a gauge of national manufacturing activity, dipped to 52.0 for September from 52.9 in August. The data were slightly lower than the consensus estimate of 52.5. The reading shows manufacturing is expanding, though, as a number above 50 reflects growth.
Nine of the ten S&P 500 sectors finished the day in the green. The financial (+2.08%), utility (+1.6%), and materials (+1.6%) sectors had the largest gains today.
Monday's biggest laggard was the consumer staples sector (-0.2%). The substantial decline in Walgreens was the main factor for its underperformance.
Briefing.com downgraded consumer staples to Market Weight on Monday morning, noting the stock market's lower downside risk following the FOMC rate cuts.
As far as commodities go, crude oil futures slipped 1.8% to $80.19. Gold rose 0.5% to $753.70.
The dollar index (+0.2%) saw a slight increase today, but the dollar is still trading near all-time low levels. DJ30 +191.92 NASDAQ +39.49 SP500 +20.29 NASDAQ Dec/Adv/Vol 1.96 bln/855/2135 NYSE Dec/Adv/Vol 792/2508/1.42 bln
4:19PM TranSwitch lowers Q3 revs guidance below consensus (TXCC) 1.38 -0.02 : Co lowers Q3 revs guidance to $7.0-7.4 mln vs $10.0 mln Reuters consensus, down from prior $9.3-10.5 mln prior guidance. Co says, "The revision in outlook for revenues for Q3 of 2007 is due primarily to an unexpected shortfall in business compared to forecast from a few smaller accounts and one of TXCC's Tier-One customers, a multinational headquartered in Europe with considerable business in Europe, North American and Asia. We believe this shortfall is temporary, and we are working closely with the Tier-One customer to better understand its situation... While we are disappointed by this shortfall affecting our revenue in Q3 of 2007, we have confidence in the business potential of TXCC based on our strong customer relationships with major telecommunication manufacturers, our innovative product portfolio and our balance sheet."
4:03PM Palm beats by $0.01, reports revs in-line; guides Q2 EPS below consensus, revs below consensus (PALM) 15.92 -0.35 : Reports Q1 (Aug) earnings of $0.09 per share, excluding non-recurring items and stock based compensation that analysts are excluding, $0.01 better than the Reuters Estimates consensus of $0.08; revenues rose 1.4% year/year to $360.8 mln vs the $360.2 mln consensus. Co issues downside guidance for Q2, sees EPS of $0.06-0.08, excluding non-recurring items, vs. $0.10 consensus; sees Q2 revs of $370-380 mln vs. $396.82 mln consensus. Briefing.com note: Co preannounced Q1 EPS of $0.08-0.09, ex-items, and Q1 revs of $359-361 mln on 09/19.
3:59PM Market View: Trend day up with Dow setting a new all time high (TECHX) : Although there were some negative pre-market developments (C, UBS, ACXM, WAG) and an ISM Index number that was slightly below consensus, the stock market averages opened on a solid note and after a narrowly confined consolidation marched steadily higher into the afternoon. The Dow established a new all time high, the Nasdaq Comp reached its highest level since Feb 2001 while the lagging S&P 500 was able to set a new two month high. It was not a news/data driven day but instead more likely benefited from the positive Fed related vibe, favorable technical price patterns of late (bull flags, three wave pullbacks) and a bullish seasonal bias at the start of the new month/quarter. Gains were virtually across the board with Home Construction +3.2%, Broker +2.7%, Regional Bank +2.3%, Mining +2.5%, Gold/Silver +2.3%, Restaurant +2.2%, Airline +2%, Coal +1.9%, Insurance +1.8% and Oil Service +1.7% pacing the way.
8:08AM Chipmos Technology says Chairman found 'not guilty' by the Taipei district court of misues of corp funds (IMOS) 5.99 : Shih-Jye Cheng, chairman and chief executive officer of IMOS)was found not guilty for the first instance today by the Taipei District Court of misuse of corporate funds.
7:31AM Qualcomm signs 3G worldwide subscriber unit and modem card license agreement with CNTF (QCOM) 42.26 : Co announces that it has granted TechFaith Wireless Technology Group, a wholly-owned subsidiary of China TechFaith Wireless Communication Technology (CNTF), a royalty-bearing, worldwide license under Qualcomm's patent portfolio to develop, manufacture and sell subscriber units and modem cards implementing the WCDMA and TD-SCDMA standards. TechFaith is now licensed by Qualcomm for 3G subscriber units and modem cards that implement the CDMA2000, WCDMA/UMTS and/or TD-SCDMA standards. The royalties payable by TechFaith are at Qualcomm's standard worldwide rates and are the same irrespective of the CDMA standard implemented by the subscriber unit or modem card.
7:12AM Semiconductor Industry Association says worldwide semiconductor sales up sharply in August : The Semiconductor Industry Association announces that worldwide sales of semiconductors rose sharply in August, growing to $21.6 bln, an increase of 4.5% over August 2006, when sales were $20.5 bln, and an increase of 4.9% from July of this year when sales were $20.6 bln. Sales of NAND flash memory devices led the growth as supplies tightened and prices firmed. NAND flash sales were up by 48% compared to August 2006 and up by 19% from July of this year.
09:15 am Nokia (NOK)
Nokia Corp. (NOK 37.93) agreed to acquire navigation software maker Navteq Corp. (NVT 77.97), in an $8.1 billion deal to expand its mobile services offerings and further strengthen its position in the fast-growing mobile navigation area.
Nokia shares, which are up about 87% in 2007, were indicated more than 4% lower in pre-market activity, while Navteq shares edged slightly higher following the announcement on Monday. Other navigation companies such as Garmin (GRMN 119.40) and Trimble Navigation (TRMB 39.21) also traded lower in sympathy.
Under the agreement, Nokia will pay $78 per Navteq share, or approximately $8.1 billion in total. The deal has already been approved by the board of directors of both companies, but is still subject to customary closing conditions. It is expected to close in the first quarter of 2008.
Nokia does not expect the deal to affect share buy-backs or its future cash flow distribution strategy in terms of dividends and buy-backs. The acquisition is expected to be dilutive to earnings in 2008 and 2009 on a reported basis. However, on a cash basis, it is expected to be only slightly dilutive next year and slightly accretive in 2009.
--Richard Jahnke, Briefing.com
09:31 am Apple: Caris & Company reiterates Above Average. Target $165 to $175. Caris raises their tgt on AAPL to $175 from $165 as they are increasing their ests of MAC shipments and tweaking their iPhone ests. Key reasons include: 1) strong MAC sales (PC market strong, AAPL being a share gainer, recent MacBook/iMAC refreshes helping) and 2) better iPhone unit sales following the recent price drop.
09:30 am Intersil: Lehman Brothers upgrades Underweight to Equal-weight. Lehman upgraded ISIL to Equal-weight from Underweight and raised their tgt to $35 from $30 noting they do not see much downside risk in the stock due to several product ramps in consumer (MP3, LCD TV, optical storage) and stabilizing gross margin that should drive consensus ests higher in C07. The firm says computing appears poised to moderate in the coming months but they believe consumer will likely catalyze a solid Q4 above consensus.
09:30 am Marvell: Lehman Brothers downgrades Overweight to Equal-weight. Lehman downgraded MRVL to Equal-weight from Overweight and lowered their tgt to $15 from $20. The firm believes rev ests this year are likely conservative on the heels of solid HDD demand, RIMM, and AAPL product cycles. Long term, though they project rev growth to slow given major SoC programs (STX, Samsung, Hitachi) in HDD are going to LSI, traction in handsets (XScale) outside RIMM is limited, and WLAN opp seem confined to gaming and AAPL. |
