From Briefing.com: 4:30 pm : Stocks extended their prior session slide in the opening minutes of trade, but a combination of technical support and leadership from financials led stocks back to higher ground. The effort was extended in response to word that eurozone officials agreed to boost bailout funds, although that story was called into question at the close.
The stock market scored a 2.0% gain today, offsetting a move of similar degree to the downside yesterday. Participants were initially inclined to cut down stocks this morning. Negative sentiment was stirred by news that China, which carries the burden of being the primary supporter of global growth amid tenuous macro conditions, experienced a slowdown in economic growth during the third quarter. The 9.1% growth rate was also less than the 9.3% clip that many had anticipated.
Early selling interest was also ushered in by the threat of a future downgrade of France's pristine debt rating, which was put on negative watch by analysts at Moody's. The notion that the countries in the core of the eurozone, not just those in the region's periphery, face precarious fiscal and financial conditions put pressure on Europe's major bourses and further undermined the morning mood.
The S&P 500 was down about 1% within the first 30 minutes of trade, but it was able to bring buyers back in by holding steady at its 50-day exponential moving average.
Financials also offered leadership. The sector's refusal to turn negative in conjunction with the broad market's early dive convinced many that the sector's strength was sustainable, prompting many to push back into the space. Financials finished the session with a 5% gain.
Bank of America (BAC 6.64, +0.61) was one of the strongest performers. Not only did the stock boast the most robust share volume on the Big Board, but it also swung to a 10% gain. The move made for the stock's best one-day bounce in almost two months. The stock's surge came even though the company's latest quarterly report was muddled with numerous items. Even Goldman Sachs (GS 102.25, +5.35) staged an enviable gain, although the company reported a loss that was worse than what most of Wall Street had expected.
While financials offered leadership, the broad market got an additional boost amid news that leaders from France and Germany agreed to balloon the region's rescue fund to 2 trillion euros, although specifics continue to elude the leaders. Some doubt was cast on the report shortly before the close, causing stocks to surrender a portion of their gains.
The broad market's late bounce failed to carry shares of IBM (IBM 178.90, -7.69) to higher ground. The stock's loss came in the face of an upside earnings surprise and strong forecast. Fellow large-cap tech plays like Intel (INTC 23.40, +0.12) and Apple (AAPL 422.24, +2.25) stayed out of the red, but also lagged ahead of their latest reports.
Not to be ignored, Dow components Johnson & Johnson (JNJ 64.42, +0.63) and Coca-Cola (KO 66.74, -0.26) both bested bottom line expectations, but only JNJ shares were bid higher at the end of the day.
No sector logged a loss, but defensive-oriented issues like utilities, telecom, consumer staples, and health care were the only groups that failed to generate gains greater than 1%. Such relative weakness came as market participants showed an increased appetite for risk.
Advancing Sectors: Financials +5.0%, Energy +3.0%, Industrials +2.9%, Materials +2.4%, Consumer Discretionary +1.8%, Tech +1.0%, Health Care +0.8%, Consumer Staples +0.8%, Telecom +0.8%, Utilities +0.7%
Declining Sectors: (None)DJ30 +180.05 NASDAQ +42.51 NQ100 +1.3% R2K +3.0% SP400 +2.6% SP500 +24.52 NASDAQ Adv/Vol/Dec 1982/1.93 bln/595 NYSE Adv/Vol/Dec 2562/1.09 bln/487
4:35PM Apple misses by $0.22, misses on revs; guides Q1 EPS, revs above consensus (AAPL) 422.24 +2.25 : Reports Q4 (Sep) earnings of $7.05 per share, $0.22 worse than the Capital IQ Consensus Estimate of $7.27; revenues rose 39.0% year/year to $28.27 bln vs the $29.28 bln consensus, 63% of rev from outside U.S. Co issues upside guidance for Q1, sees EPS of $9.30 vs. $8.97 Capital IQ Consensus Estimate; sees Q1 revs of $37.0 bln vs. $36.64 bln Capital IQ Consensus Estimate. Q4 gross margins of 40.3% vs Street est of 39.9% and 38.0% guidance; 17.07 mln iPhones sold in Q4 vs Street est of ~21 mln; 11.12 mln iPads sold in Q4 vs Street est of ~12 mln; reports 4.89 mln Macs sold in Q4 vs Street est of ~4.5 mln. "Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline."
4:18PM Cree reports EPS in-line, revs in-line; guides Q2 EPS below consensus, revs in-line (CREE) 27.78 +1.17 : Reports Q1 (Sep) earnings of $0.25 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.25; revenues rose 0.2% year/year to $269 mln vs the $268.7 mln consensus. Co issues mixed guidance for Q2, sees EPS of $0.25-0.28 vs. $0.34 Capital IQ Consensus Estimate; sees Q2 revs of $300-320 mln vs. $307.87 mln Capital IQ Consensus Estimate.
4:13PM Intel beats by $0.06, beats on revs; guides Q4 revs above consensus; increases buyback by $10 bln to $14.2 bln (INTC) 23.40 +0.12 : Reports Q3 (Sep) earnings of $0.69 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $0.63; revenues rose 28.2% year/year to $14.23 bln vs the $13.84 bln consensus; non-GAAP gross margin -170 bps YoY to 64.4%. Co issues upside guidance for Q4, sees Q4 revs of $14.2-15.2 bln vs. $14.21 bln Capital IQ Consensus Estimate; gross margin percentage: 65%, plus or minus a couple percentage points. Q3 PC Client Group revenue of $9.4 bln, up 22 percent YoY. Data Center Group revenue of $2.5 bln, up 15% YoY. The co generated ~$6.3 bln in cash from operations, paid cash dividends of $1.1 bln, and used $4.0 bln to repurchase 186 mln shares of common stock. Intel's board of directors also voted to increase the co's buyback authorization by $10.0 bln, raising the total unused balance to $14.2 bln at the end of the third quarter. The co also completed a senior notes offering of $5.0 bln primarily for the purpose of repurchasing stock.
4:09PM Juniper Networks reports EPS in-line, beats on revs; guides Q4 EPS in-line, revs below (JNPR) 21.41 +1.01 : Reports Q3 (Sep) earnings of $0.28 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.28; revenues rose 9.3% year/year to $1.11 bln vs the $1.09 bln consensus. Co issues guidance for Q4, sees EPS of $0.32-0.36 vs. $0.36 Capital IQ Consensus Estimate; sees Q4 revs of $1.16-1.22 bln vs. $1.23 bln Capital IQ Consensus Estimate. "The third quarter unfolded as we anticipated, and we achieved the performance objectives we had set for the September quarter... We will continue to carefully manage our expense structure with a focus on investing prudently in the resources that support our growth agenda and maintain our commitment to innovation."
4:08PM Yahoo! beats by $0.04, reports revs in-line; guides Q4 revs in-line (YHOO) 15.47 -0.23 : Reports Q3 (Sep) earnings of $0.21 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $0.17; revenues fell 4.6% year/year to $1.07 bln vs the $1.07 bln consensus. Co issues in-line guidance for Q4, sees Q4 revs of $1125-1235 vs. $1.21 bln Capital IQ Consensus Estimate... In order to create more financial certainty, Microsoft (MSFT) and Yahoo! recently agreed to extend the RPS Guarantee in the U.S. and Canada through March 2013.
4:03PM Powerwave sees Q3 rev of $75-79 mln vs $170.11 mln Capital IQ Consensus Estimate (halted) (PWAV) 1.46 +0.01 : Our third quarter revenues were impacted by several factors, which included a significant slowdown in spending by North American network operators, a significant reduction in activity with our original equipment manufacturing customers, coupled with further weakness in several international markets, including Western and Eastern Europe, and the Middle East... From a global perspective, we believe that the current economic environment has caused operators to reduce or postpone their spending plans for the near term while they evaluate the macro-economic pressures in each individual market. The Middle East market has been significantly impacted by the political unrest throughout the region. In addition, in the North American market we believe that the uncertainty arising from the government's recent opposition to the proposed merger of AT&T and T-Mobile, has led to delays in spending as these operators re-evaluate their capital spending plans. All of these factors, combined together, have had a significant impact on our third quarter revenues. While near term visibility remains difficult in our markets, we continue to believe that the long-term demand for improvements in wireless infrastructure remain strong, as global demand for data continues and wireless network operators continue to promote their plans to improve existing coverage and add additional capacity, in the form of 4G capabilities, to wireless networks across the globe. We believe that Powerwave remains positioned to build upon and capture the long-term growth opportunities that are in the wireless infrastructure marketplace." Stock is halted.
ARM and TSMC (TSM) announced that they have taped out the first 20nm ARM Cortex-A15 MPCore processor.
1:06AM Benchmark Elec updates impact of Thailand flooding; expects that the flooding of its Ayudhaya facility will have a significant impact on its revenues and operations for Q4 (BHE) 14.23 : Co announces that flood waters breached the south-side levee protecting the industrial park and the waters have now inundated the Benchmark campus. The Company has extended its suspension of operations in Ayudhaya. The co has begun utilizing capacity in the Asia Pacific region, including re-starting its Korat, Thailand facility, to support the transfer of customer production. The co expects that the flooding of its Ayudhaya facility will have a significant impact on its revenues and operations for the fourth quarter. Benchmark has insurance coverage for the flood/water damage to its facility and also carries business interruption coverage.
Last night, IBM (IBM 178.13 -8.46) reported third quarter earnings of $3.28 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $3.22, while revenues rose 7.8% year/year to $26.16 million versus the $26.25 billion consensus. The company issued upside guidance for fiscal year 2011 with EPS to at least $13.35, excluding non-recurring items, from at least $13.25, versus the $13.30 consensus. Gross margin +140 bps YoY to 46.8%. Total Global Services revenues increased 8% (2%, adjusting for currency). Global Technology Services segment revenues increased 9% (3%, adjusting for currency) to $10.3 billion. Global Business Services segment revenues were up 6% (flat, adjusting for currency) at $4.8 billion. Revenues from the Software segment were $5.8 billion, an increase of 13% (8%, adjusting for currency). Software pre-tax income of $2.2 billion was up 12% year over year.
EMC (EMC $23.82 +1.14) reported third quarter earnings of $0.37 per share, $0.01 better than the Capital IQ Consensus of $0.36, while revenues rose 18.2% year/year to $4.98 billion versus the $4.93 billion consensus. The company issued upside EPS guidance for fiscal year 2011 with EPS of to exceed $1.48 versus the $1.48 consensus and fiscal year 2011 revenues of to exceed $19.8 billion versus the $19.88 billion consensus. The company expects to repurchase $2 billion of the common stock in 2011.
2:06 pm S&P Tech Sector Showing Modest Gains, Lagging Broader Markets
The tech sector is trading modestly higher today, trailing gains in the broader market. Semiconductors are showing relative strength in the tech space, however, with the Philly Semi Index trading 1.1% higher. NVDA (+2.5%) is a notable leader in that chip index. Among other major indices, the S&P 500 is trading 0.3% higher, while the NASDAQ is trading 0.1% higher The QQQ, meanwhile, is trading up 0.6% on the session. Among tech bellwethers, IBM (-5.1%) is under notable pressure.
In earnings last night, IBM (-5.1%) reported a Q3 EPS beat with in-line revenues and raised FY11 guidance. Elsewhere, VMW (+6.0%) posted a beat and upside guidance. Also, IM (-7.8%) issued downside guidance, while SFSF (-0.7%) issued upside guidance. This morning, CHKP (+0.7%) and EMC (+5.1%) posted Q3 beats.
In news, NUAN (-2.1%) announces proposed $600 mln offering of senior convertible debentures, but did raise Q4 guidance.
Among notable analyst upgrades this morning, TEL (+0.1%) was upgraded to Overweight at JP Morgan. Also, VMW (+6.0%) was added to Conviction Buy List at Goldman.
In downgrades, MOLX (+1.3%) was downgraded to Neutral at JP Morgan, VMW (+6.0%) was downgraded to Hold at Jefferies, and IBM (-5.1%) was downgraded to at BMO Capital and FBN Securities.
AAPL (+0.2%), INTC (+0.3%), JNPR (+3.2%), and YHOO (-1.3%) are the notable names in tech set to report results today after the close.
09:52 am IBM Tops Third Quarter Expectations; Raises Guidance (IBM)
BM (IBM $177.76 -8.83) reported third quarter earnings of $3.28 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $3.22.
Revenues rose 7.8% year/year to $26.16 billion versus the $26.25 billion consensus.
In fiscal year 2011, the company raised EPS guidance to at least $13.35, excluding non-recurring items, up from at least $13.25, versus $13.30 Capital IQ Consensus Estimate.
Gross margin +140 bps YoY to 46.8%. Total Global Services revenues increased 8% (2%, adjusting for currency). Global Technology Services segment revenues increased 9% (3%, adjusting for currency) to $10.3 billion. Global Business Services segment revenues were up 6% (flat, adjusting for currency) at $4.8 billion. Revenues from the Software segment were $5.8 billion, an increase of 13% (8%, adjusting for currency).
Software pre-tax income of $2.2 billion was up 12% year over year. Revenues from the Systems and Technology segment totaled $4.5 billion for the quarter, up 4% (1%, adjusting for currency) from the third quarter of 2010. Systems and Technology pre-tax income was $318 million, an increase of 8% year over year. The Americas' third-quarter revenues were $10.9 billion, an increase of 7% (6%, adjusting for currency) from the 2010 period. Revenues from Europe/Middle East/Africa were $8.0 billion, up 9% (flat, adjusting for currency). Asia-Pacific revenues increased 10% (1%, adjusting for currency) to $6.5 billion. |
