From Briefing.com: Weekly Recap - Week ending 09-Dec-11Stocks closed out the week on a strong note, helping the broad market book another weekly gain. Europe remained the primary topic of trade.
Traders took early cues from Europe, where the region's major bourses bounced because of the focus on news that eurozone officials agreed to tighter fiscal controls and also to make funds available to the International Monetary Fund for use in the rapid deployment of the European Financial Stability Facility, rather than the challenge of establishing changes to the eurozone treaty. Given the dissension and dysfunction that has been displayed so often during recent months, the eurozone summit was generally regarded as a step in the right direction. That helped drive the EuroStoxx 50 more than 1% higher, but the euro only gained 0.2% to end the session at $1.338.
Reports of progress in Europe were complemented by encouraging inflation data from China, which reported sharp declines in both CPI and PPI for November. Domestic data featured the preliminary Consumer Sentiment Survey for December from the University of Michigan. It improved to a six-month high of 67.7.
Equities traded with strength amid the hope that the macro picture might improve because of Europe's efforts to shore up its precarious financial and economic conditions, while cooler inflation in China could mean that the country can curb inflation without sacrificing economic growth.
Although buying was broad based, financials spent most of the session out in front of the rest of the market. The sector settled the session 2.3% higher with help from banking plays and diversified financial institutions.
Industrials were slower in their ascent, but the sector also scored a strong gain of 2.2%. General Electric (GE 16.84, +0.53) was a leader in the space after the conglomerate announced a dividend increase that many took as a sign of confidence in cash flow.
Other corporate news was less encouraging. Both Texas Instruments (TXN 29.94, +0.02) and DuPont (DD 45.04, -1.48) cut their outlooks, but those reports were generally shrugged off by a market that remained fixated on the events in Europe.
The broadly positive bias displayed by stocks stayed intact all session, helping the major equity averages settle the session near their highs. Share volume may have been light, but stocks still cut prior session losses to give the S&P 500 a near 1% weekly gain.
The bounce on Friday helped stocks offset part of the prior session's slide, which was the worst one-day drop for the stock market in about two weeks. To little surprise, that decline was driven by a mosaic of headlines from Europe. Participants were hardly surprised that the European Central Bank (ECB) cut its target lending rate, but there was a negative response to news that the vote was not unanimous and that ECB became more cautious in its economic outlook. The tone certainly wasn't helped by the European Banking Authority report that capital shortfalls increased in their latest stress test.
News that the ECB will extend collateral eligibility to asset-backed securities was overshadowed, as was the latest weekly initial jobless claims tally. Initial jobless claims totaled 381,000, which is less than the 395,000 initial claims had been widely expected.
Mid-week trade kept stocks mired near the neutral line as participants were reminded about the headline risk associated with Europe when it was learned that analysts at S&P were focusing on the European Union's top-notch credit rating. Tuesday trade was lackluster amid an absence of economic data and material corporate announcements.
Action this week began with a solid gain on Monday, when traders took encouragement from a decline in the borrowing costs of Italy and Spain -- a tacit sign of increased confidence in the two countries -- after Italy unveiled a new austerity plan. It was also learned that the ECB intends to inject one trillion euros for use in additional bond buying. Reports that Germany's Merkel and France's Sarkozy were making concerted efforts to lead Europe through its crises were also taken positively, although analysts at S&P put Germany and France on "creditwatch negative," while also placing all 17 euro nations on ratings downgrade watch. Little was made of the November ISM Services Index, which eased to 52.0 from 52.9 in the prior month and failed to meet the Briefing.com consensus estimate of 53.4.
Index Started Week Ended Week Change % Change YTD %
DJIA 12019.42 12184.26 164.84 1.4 5.2
Nasdaq 2626.93 2646.85 19.92 0.8 -0.2
S&P 500 1244.28 1255.19 10.91 0.9 -0.2
Russell 2000 735.02 745.40 10.38 1.4 -4.9
1:35PM Hewlett-Packard announced it will contribute the webOS software to the open source community (HPQ) 28.33 +0.67 : Co plans to continue to be active in the development and support of webOS. By combining the innovative webOS platform with the development power of the open source community, there is the opportunity to significantly improve applications and web services for the next generation of devices.
10:36AM Motorola Mobility confirms German Court rules in favor of Motorola Mobility in Apple (AAPL) litigation (MMI) 38.88 +0.04 : Co confirmed that the court in Manheim, Germany has ruled that Apple's European sales company, Ireland-based Apple Sales International, is infringing one of Motorola Mobility's core cellular communications patents related to data packet transfer technology (GPRS) through its sales of the iPhone and iPad devices. The Court granted Motorola Mobility's requests for an injunction and damages.
10:04AM Semiconductor Hldrs ETF edges off support zone (SMH) 30.33 -0.17 : Noted a support zone at 29.95/29.83 for the SMH in The Technical Take. This marked some congestion and the top of its late Nov gap. The SMH was hit early (TXN guidance) but after reaching 29.81 it has put together a rebound. The top of today's gap is at 30.40 with unchanged at 30.50.
6:41AM Lattice Semi announced it has entered into a definitive agreement to acquire SiliconBlue Technologies for ~ $62 mln in cash (LSCC) 6.58 : Co announced it has entered into a definitive agreement to acquire SiliconBlue Technologies. Under terms of the agreement, Lattice Semiconductor will pay ~$62 million in cash for SiliconBlue Technologies. The acquisition is subject to standard closing conditions, with a targeted close in the fourth quarter of 2011. Lattice Semiconductor ended the third quarter of 2011 with a cash, cash equivalents and short-term marketable securities balance of $267.2 mln.
6:37AM Lattice Semi lowers revenue guidance to a sequential revenue decline of 14-17% vs a decline of 4-9% prior guidance and 7.3% decline Capital IQ consensus (LSCC) 6.58 : Expectations for both gross margin percentage and total operating expenses are unchanged from prior guidance, at ~ 59% plus or minus 2% of revenue, and ~$35.6 million, including ~$1.0 mln in restructuring charges, respectively. Lowered guidance due to further softening of demand primarily in the communications business in December.
Semiconductor Manufacturing International (SMI) announced it entered into an agreement with Elpida Memory settling all pending arbitration claims and counterclaims relating to the parties' Amended and Restated 200mm Wafer Products Business Agreement. Under the terms of the Settlement Agreement, the co will pay Elpida $21 mln.
TE Connectivity (TEL $32.36 +0.30) reaffirmed guidance for the first quarter with EPS of $0.68-0.72 versus the $0.70 consensus and revenues of $3.4-3.5 billion versus the $3.44 billion consensus. The company reaffirmed guidance for fiscal year 2012 with EPS of $3.10-3.40 versus the $3.27 consensus and revenues of $14.3-14.9 billion versus the $14.68 billion consensus.
Leap Wireless (LEAP $9.96 +0.60) announced that it has entered into definitive agreements to acquire 12 MHz of 700 MHz A block spectrum in Chicago from Verizon Wireless (VZ) for $204 million and to sell Verizon Wireless excess PCS and AWS spectrum in various markets across the U.S for $188 million. This additional spectrum in the Chicago area will supplement the 10 MHz of spectrum Leap currently operates in Chicago. The companies anticipate that both transactions will close simultaneously, subject to regulatory approvals and other customary closing conditions. The sale of spectrum in these transactions will not impact Leap's operations in its existing operating markets. In addition, Leap's non-controlled, majority-owned venture, Savary Island Wireless, has also entered into a definitive agreement with Verizon Wireless to sell AWS spectrum in various markets for $172 million, subject to regulatory approvals and other customary closing conditions.
Texas Instruments (TXN $30.26 +0.03) was upgraded to Mkt Outperform from Mkt Perform at JMP Securities and the firm set a target price at $36 based on the emergence of favorable cycle indicators and their belief in the co's ability to drive upside margin leverage going forward.
Needham raises their Novellus (NVLS $36.56 +0.96) tgt to $40 from $37 following the mid quarter update. The firm prefers co over mid/large-cap semi equipment stocks for its strong positions at leading capex spenders, low exposure to second-tiered DRAM customers, improved leverage of its financial model and aggressive buyback program.
09:36 am Texas Instruments Down After Lowering Q4 Guidance Late Yesterday ( TXN)
Texas Instruments (TXN $28.61 -1.31) is trading notably lower this morning after lowering its fourth quarter guidance after the close yesterday in its mid-quarter update.
The company reduced fourth quarter earnings guidance to $0.36 to $0.40 vs. the $0.46 consensus, down from $0.43-0.51 prior guidance. Revenue guidance was reduced to $3.19 billion to $3.33 billion consensus, versus the $3.406 billion Capital IQ Consensus Estimates, down from $3.26 billion to $3.54 billion prior guidance.
The reductions are due to broadly lower demand across a wide range of markets, customers and products, except for Wireless applications processors. |
