From Briefing.com: 4:15 pm : The major equity averages finished the day mixed but near highs, spending the day recovering from a disappointing ISM Index, which knocked the wind out of stocks at 10:00 ET. The S&P 500 closed with a 0.3% gain and the Nasdaq Composite finished 0.6% higher. However, the Dow Jones Industrial Average was the laggard today, finishing 0.1% lower as Industrials and Materials stocks weighed.
Before the open, there were there were several major deals announced. Quest Software (QSFT 27.82, +0.01) was acquired by Dell (DELL 12.39, -0.12) for $28 per share, representing only a slight premium to Friday's closing price for Quest since the deal that had been widely rumored prior to this morning's announcement... Bristol-Myers Squibb (BMY 36.02, +0.07) will acquire Amylin Pharmaceuticals (AMLN 30.70, +2.50) for $31.00 per share in cash, representing an aggregate purchase price of ~$5.3 billion and 10% premium to Friday's closing price for Amylin. The total value of the transaction, including Amylin's net debt and a contractual payment obligation to Eli Lilly (LLY 42.99, +0.08) together totaling about $1.7 billion, is ~$7 billion... Additionally, Brightpoint (CELL 9.01, +3.60) will be acquired by Ingram Micro (IM 17.55, +0.08) for $9.00 per share in cash, representing a 66% premium to Friday's closing price for Brightpoint... Micron (MU 6.55, +0.24) finished higher by 4% after acquiring Japanese chip maker Elpida for about $750 mln... Finally, Lincare (LNCR 41.34, +7.32) will be acquired by The Linde Group for $41.50 per share in cash, representing a 22% premium to Friday's closing price for Lincare. The total consideration of the transaction will be $4.6 billion.
After a modestly higher open, equities saw a negative reaction to a disappointing ISM Index reading, which slipped below 50.0 for the first time since July 2009. The index fell from 53.5 in May to 49.7 in June. The Briefing.com consensus expected the ISM Index to fall to 52.2. The start of a contraction cycle in manufacturing is notable, but the data have been teetering on the edge of a contraction for quite some time. A better than expected construction spending reading was a slight offset, as it jumped 0.9% in May after increasing an upwardly revised 0.6% in April. The Briefing.com consensus expected construction spending to increase 0.2%. The pickup in construction was driven primarily by growth in the private residential construction sector.
Equities moved lower on the econ data, while treasuries saw buying interest send the 10-year note yield down 9 bps to 1.57%.
Since this morning's data, equities have been range-bound in quiet, pre-holiday trading conditions. The afternoon was uneventful.
No companies reported earnings after tonight's close, and none are scheduled to report earnings tomorrow.
Keep in mind that U.S. markets close early tomorrow and will be closed all day on Wednesday for the Fourth of July holiday. Markets will resume their normal hours on Thursday. Select retailers are expected to report June Sales before the market re-opens. Also note that the Bank of England and the ECB will issue new policy statements on Thursday morning. There is also an abundance of employment data due out on Thursday and Friday, highlighted by Friday's June Employment Report from the government. Next week, Alcoa (AA 8.62, -0.13) kicks off earnings season on Monday after the close.DJ30 -8.70 NASDAQ +16.18 SP500 +3.35 NASDAQ Adv/Vol/Dec 1601/1.8 bln/900 NYSE Adv/Vol/Dec 2151/736 mln/904
3:30 pm : Crude oil was under selling pressure for all of pit trade. The energy component popped to a session high of $84.42 per barrel following headlines suggesting that Iran lawmakers are drafting a bill to propose blocking the Strait of Hormuz for oil tankers. However, the move was short lived as oil immediately consolidated and later fell to a session low of $82.06 per barrel. Crude spent the afternoon session inching higher and settled floor trade with a 1.5% loss at $83.71 per barrel.
Despite struggling in negative territory and touching a floor session low of $2.74 per MMBtu, natural gas was able to erase today's losses as buyers stepped in during afternoon action and settled pit trade unchanged at $2.82 per MMBtu.
Gold and silver came off their respective pit session lows of $1589.00 per ounce and $27.31 per ounce that were set in morning action and trended upwards as the stronger dollar consolidated. The metals reduced most of their losses so that gold settled 0.4% lower at $1597.70 per ounce while silver finished with a loss of 0.6% at $27.50 per ounce.DJ30 -46.09 NASDAQ +4.35 SP500 -1.07 NASDAQ Adv/Vol/Dec 1305/1411 mln/1186 NYSE Adv/Vol/Dec 1826/470 mln/1185
5:30PM Cadence Design acquires Sigrity, a signal and power integrity technology provider, for ~$80 mln (CDNS) 11.22 +0.24 : Co announced it has acquired Sigrity, Inc., a leading signal and power integrity technology provider. The acquisition was completed on July 2, 2012 at a purchase price of approximately $80 million. Primarily due to the impact of purchase accounting rules on deferred revenue and the transition to a ratable license model for Sigrity products, the transaction is expected to be slightly dilutive to fiscal 2012 earnings per share, and then slightly accretive for 2013. Cadence expects that the transition of Sigrity's business to Cadence's ratable business model, and the amortization of Sigrity's deferred revenue will be substantially complete by the end of fiscal 2013. The transaction is not expected to impact Cadence's previously disclosed profitability goals for fiscal 2013.
4:41PM TranSwitch: Richard J. Lynch appointed as new Chairman (TXCC) 1.09 -0.01 : Co announced that effective today, the Board of the Company has appointed Mr. Richard (Dick) J. Lynch as the new Chairman of the Board and Chairman of the Executive Committee. Mr. Lynch was the Chief Technology Officer of Verizon Communications and, before that, of Verizon Wireless. He now runs a consulting and advisory business.
4:32PM Microsoft announces non-cash accounting charge; as a result of its 2012 impairment review, a write down of its Online Services Division goodwill of ~$6.2 bln is required (MSFT) 30.56 -0.03 : Co announced that it will take a non-cash, non-tax-deductible income statement charge for Q4 of FY12 for the impairment of goodwill in its Online Services Division segment, mostly related to its 2007 aQuantive, acquisition. Under accounting guidelines, cos are required to conduct an annual goodwill impairment test for each business unit. Goodwill arises in an acquisition when the fair value paid for a business exceeds the value of the identifiable net assets. The goodwill in the Online Services Division was substantially the result of the 2007 acquisition of aQuantive.
4:06PM Rambus announces that it has received notification from the International Trade Commission extending the target date for completion of its investigation until July 25, 2012 (RMBS) 5.76 +0.02 : This action was brought by Rambus against LSI Logic, ST Microelectronics (STM) and other Respondents alleging violation of Section 337 of the Tariff Act of 1930. The action is Investigation Number 337-TA-753.
Intellectual Ventures and Silicon Laboratories (SLAB) entered into an intellectual property license agreement providing Silicon Labs with access to the majority of IV's extensive patent portfolio.
O2Micro International (OIIM) announced that it was issued 20 claims under U.S. patent for its circuits and methods for Power Conversion.
8:31AM Quest Software: DELL will acquire QSFT for $28 a share (QSFT) 27.81 : Co announced they have entered into a definitive agreement for Dell to acquire Quest (QSFT). Terms and Closing Under terms of the agreement, approved by the boards of directors of both companies, Dell will pay $28.00 per share in cash for each share of Quest for an aggregate purchase price of approximately $2.4 billion, net of Quest's cash and debt. The transaction is expected to close in Dell's third fiscal quarter, subject to approval by Quest's shareholders and customary conditions.
Mattson Technology (MTSN) announced that it has shipped its Millios millisecond annealing system to a major semiconductor manufacturer.
6:48AM Ixia acquires BreakingPoint for $160 mln in cash (sees deal accretive on non-GAAP basis in first full quarter); raises low end of Q2 rev guidance (XXIA) 12.02 : Co acquires BreakingPoint Systems for $160 mln in cash. The transaction is anticipated to close in 3Q12, and is subject to customary closing conditions and approvals. The acquisition of BreakingPoint enables Ixia to provide an end-to-end solution that monitors, tests, and optimizes converged networks. Without an ongoing security and performance-testing regimen, even the most sophisticated networks and data centers fail to ensure business continuity in the face of crippling cyber attacks and dynamic application conditions. BreakingPoint grew revenue over 40 percent in calendar 2011 to $33.5 million while generating gross margin of 87 percent for the year. For calendar 2012, Ixia expects BreakingPoint's revenue to again grow by more than 40 percent, and anticipates that the BreakingPoint transaction will be accretive to non-GAAP earnings in the first full quarter of operations after the acquisition closes. sees Q2 revs of $87-89 mln from $86-89 mln vs $87.67 mln Capital IQ Consensus Estimate. In addition to this amount, Ixia expects its recent Anue Systems acquisition to add ~$3-4 mln in additional revenue in Q2 for the period from the June 1, 2012 acquisition closing date to June 30, 2012.
6:32AM Micron and Elpida have signed a definitive sponsor agreement for Micron to acquire and support Elpida for ~$2.5 bln in total consideration (MU) 6.31 : Cos have signed a definitive sponsor agreement for Micron to acquire and support Elpida. The agreement has been entered into in connection with Elpida's corporate reorganization proceedings conducted under the jurisdiction of the Tokyo District Court. Under the agreement, 200 bln Yen (~USD $2.5 bln assuming 80 Yen/USD) total consideration, less certain reorganization proceeding expenses, will be used to satisfy the reorganization claims of Elpida's secured and unsecured creditors. Micron will acquire 100 percent of the equity of Elpida for 60 bln Yen (~USD $750 mln) to be paid in cash at closing. In addition, 140 bln Yen (~USD $1.75 bln) in future annual installment payments through 2019 will be paid from cash flow generated from Micron's payment for foundry services provided by Elpida, as a Micron subsidiary. As a result of these payments, all pre-petition debt obligations of Elpida will be fully discharged under the corporate reorganization proceedings. In a related transaction, Micron also announced today a separate agreement with Powerchip Tech, a Taiwanese corporation, and certain of its affiliates to acquire the Powerchip group's 24 percent share of Rexchip Electronics Corporation for ~10 bln NTD (~USD $334 mln assuming 30 NTD/USD). Elpida's assets include a 300 millimeter (mm) DRAM fabrication facility located in Hiroshima, Japan; an approximate 65% ownership interest in Rexchip, whose assets include a 300mm DRAM fabrication facility located in Taiwan; and an assembly and test facility located in Akita, Japan. Together with the Rexchip shares acquired from Powerchip, Micron will control ~89 percent of Rexchip's outstanding shares. The fab assets of Elpida and Rexchip together can produce more than 200,000 300mm wafers per month, which would represent an approximate 50 percent increase in Micron's current manufacturing capacity. Elpida's reorganization plan is currently anticipated to be submitted to the Tokyo District Court for approval in August 2012. The transactions are expected to close in the first half of calendar 2013. Micron's purchase of the Powerchip group's Rexchip shares will occur upon close of the Elpida transaction.
09:17 am LSI Logic initiated with a Buy at Mizuho; tgt $10: . Mizuho initiates LSI with a Buy and price target of $10. The firm says, while near-term demand trends for HDDs appear to be weakening, they believe that recent share price weakness reflects declining investor expectations. Considering LSI's market and product re-positioning over the past several years and observing recent execution successes, they believe that shares are attractively valued ahead of sales and profitability growth. |
