From Briefing.com: 5:23PM Linear Tech beats by $0.04, misses on revs; guides Q3 revs below consensus (LLTC) 22.60 +0.91 : Reports Q2 (Dec) earnings of $0.38 per share, $0.04 better than the First Call consensus of $0.34; revenues fell 13.7% year/year to $249.2 mln vs the $254.7 mln consensus. Co issues downside guidance for Q3, sees Q3 revs down ~15-20%, which equates to ~$199.4-211.8 mln vs. $237.76 mln consensus. Co says "Looking ahead to the March quarter, we believe we have not yet seen the bottom from the economic fallout of the global credit crisis as our bookings continue to be weak in the early part of this quarter. At this time it is difficult to forecast when we will see some stabilization and subsequent recovery. Our current estimate anticipates that our third fiscal quarter revenues will be down in the 15% to 20% range from the second quarter. In order to meet these expectations, turnable bookings in February and March will need to exceed the depressed December and January run rate. Nevertheless, we will continue to control costs where possible and make adjustments to our operations as necessary to mitigate the effect of declining revenues. However, pre-tax profits are likely to fall into the low to mid thirties range as a percentage of net sales and around 40% of net sales on a non-GAAP basis, excluding the impact of stock-based compensation. We anticipate having industry leading profitability as we successfully navigate through this difficult period."
4:30 pm : Stocks finished a choppy session with mixed results amid continued uncertainty in the broader market.
Financials were able to register strong gains after receiving some relief this session. The sector advanced 1.4% after finishing lower in each of the four prior sessions. Financials are down 12.6% through the last five sessions, though.
Recent selling efforts in the sector follow revived concerns regarding the health of financial institutions and the losses that may be lurking on their balance sheets. Steep losses could lead to further capital raises, which would likely dilute existing shareholders.
To help ensure a healthy financial system, Fed Chairman Bernanke stated that more capital injections and guarantees may become necessary.
Separately, Fed Vice Chairman Kohn stated TARP funds could be used in modifying large numbers of troubled mortgages, which would help protect lenders from losses associated with failed mortgages. Kohn stated TARP funds could also help restart key credit markets.
Repairing lending and credit markets remain key in stimulating broader economic conditions. With macro conditions still bleak, expectations are low this earnings season.
A collective batch of warnings during recent weeks has also undercut expectations. Most recently, NVIDIA (NVDA 4.65, +0.04) slashed its fourth quarter revenue guidance due to weak demand in end markets. NVIDIA's cut was largely expected, though, so its stock was able to resist selling pressure.
Meanwhile, Dow component Alcoa (AA 9.55, -0.51) succumbed to continued selling pressure. Analysts expected Alcoa to post a loss of $0.10 per share after the company recently indicated it would cut production and restructure itself amid slumping demand. Alcoa disappointed, though, by reporting a loss of $0.28 per share.
Energy stocks were able outperform the broader market for virtually the entire session. The sector closed 2.2% higher, riding a 0.8% advance in crude prices. Crude oil futures closed at $37.90 per barrel.
Crude prices gyrated for the entire session. They had been up as much as 5.1% at its session high, and down as much as 4.0% at its session low.
Stocks also had a choppy session. They had been up as much as 0.8%, and down as much as 1.0% before finishing with mixed results.
The lack of direction in the broader market reflects continued uncertainty among market participants. With dour economic data on tap and profits still a point of concern, investors do not appear ready to jump back into the stock market.DJ30 -25.41 NASDAQ +7.67 NQ100 +0.1% R2K +1.1% SP400 +1.1% SP500 +1.53 NASDAQ Adv/Vol/Dec 1503/1.99 bln/1233 NYSE Adv/Vol/Dec 1648/1.31 bln/1434
4:31PM Applied Materials Chairman James Morgan to become Chairman Emeritus at Annual Meeting (AMAT) 10.19 +0.19 : The co announces that after more than 31 years as a member of the Board of Directors, including over 20 years as Chairman, James Morgan will not be standing for re-election. Having reached the customary Board retirement age of 70, Morgan will step down as Chairman of the Board and will become Chairman Emeritus, effective at the March 10, 2009 Annual Meeting of Stockholders. As part of its succession planning, the Board intends to appoint Mike Splinter, President and Chief Executive Officer and a Board member, to succeed Morgan as Chairman.
4:15PM FormFactor announces cost reduction plan; to reduce workforce by 22% (FORM) 14.68 +0.39 : Co announced a global reorganization and cost reduction plan. As part of the plan the company will reduce its workforce by 22%. FormFactor expects to incur approximately $8 million in charges related to the plan, which will be recorded in the first quarter of fiscal 2009.
8:22AM Arris: Collins Stewart notes MOT wins EMTA order from CMCSA (ARRS) 7.75 : Collins Stewart notes their checks indicate that CMCSA has awarded Motorola (MOT) with an order for D2.0 EMTA modems in the magnitude of 50-100K units with anticipated shipments beginning in Q109. Recent checks indicate that ARRS has lost EMTA market share at CMCSA to MOT. While ARRS mgt has previously warned investors that they do not anticipate to be sole source over the longer term, they do not believe share loss to a second source provider is currently reflected in current Street est. While they remain constructive on ARRS's participation in the D3.0 upgrade cycle over the longer term, they recommend investors remain on the sidelines at this point in time. They are cutting their Q109 ests to $278 mln/$0.20 from $282 mln/$0.21 (consensus $285 mln & $0.20) and their Q209 est to $274 mln/$0.18 from $277 mln/$0.19 previously (consensus $293.9 mln & $0.21).
10:00 am Nvidia (NVDA)
Graphics chip maker Nvidia (NVDA 7.85, +0.24) slashed its fourth quarter revenue expectations as demand continues to crumble.
Nvidia said it now expects fourth quarter revenue to decline between 40% and 50% from the third quarter. The new guidance equates to revenues between $448 million and $538 million. The current First Call consensus still stands at $805.1 million.
Nvidia said the new outlook reflects further weakness in end-user demand and inventory reductions by NVDA's channel partners in the global PC supply chain.
09:17 am Citigroup (C)
Financial Times reports that Citigroup's (C 5.60) deal to cede control of its brokerage unit, Smith Barney, to Morgan Stanley (MS 18.79) is set to result in a tax payment of about $4 billion. Citigroup would pay about $4 billion in federal and local taxes on its expected $10 billion-plus gain from the combination of the two brokerage arms, people close to the situation said.
The gain would comprise a $7.5 billion revaluation of Smith Barney as a result of the deal, and a $2.7 billion payment from Morgan Stanley for a 51% stake in the venture. Morgan Stanley will also have an option to buy the remainder over the next three to five years.
In the end, Citigroup is expected to receive more than $6 billion in post-tax gains, which it plans to use to repair its balance sheet and boost results in the first quarter.
The New York Post reported that Morgan Stanley and Citigroup are looking to set aside between $2 billion and $3 billion to keep top brokers at the wealth-management shop in order to pay out to as retention bonuses for top-tier brokers that the companies hope to keep. Merging the units would result in 22,000 brokers, according to the article.
In a separate report, Reuters reported Citigroup will close its private banking unit in China after nearly three years of operations. The venture aimed to attract money from a rapidly expanding base of millionaires.
The closure will not affect top-end individual clients in China since they will be automatically folded into Citigroup's consumer banking arm, which serves less wealthy customers. Citigroup's private banking businesses elsewhere in Asia, including Hong Kong and Singapore, are being operated normally. However, it is unclear whether the decision to close the China operation would lead to similar restructuring in other locations, said sources to Financial Times. |
