From Briefing.com: 4:15 pm : Equities began the day on a down note after Moody's cut France's sovereign rating to ‘Aa1' from ‘Aaa.' In addition, disappointing earnings from Hewlett-Packard (HPQ 11.71, -1.59) contributed to the cautious sentiment. The major averages managed to break into positive territory by midday, but tumbled to fresh lows as Federal Reserve Chairman Ben Bernanke spoke in front of the Economic Club of New York. During his remarks, Mr. Bernanke commented on the fiscal cliff by saying that if a resolution is not reached, the economy would slide into recession. In such case, the Federal Reserve would be powerless as the Chairman does not believe the Fed has the tools necessary to deal with that eventuality. The S&P 500 followed the early afternoon slide with another climb towards the unchanged level before ending with a gain of 0.1%.
The technology sector lost 0.6% and was the weakest performer of the day. Among tech bellwethers, Apple (AAPL 561.15, -4.58) shed 0.8% after yesterday's rally resulted in a 7.2% gain. Elsewhere, Intel (INTC 19.52, -0.73) fell 3.6%.
Looking at tech earnings, Hewlett-Packard slumped 12.0% after reporting mixed results. During the fourth quarter, the computer assembler earned $1.16, which was $0.01 ahead of the Capital IQ consensus estimate. However, the company's revenue missed expectations after declining 6.7% year-over-year, to $29.96 billion. In addition to the results, investors were drawn to another point of interest in the quarterly report. The report included an $8.8 billion charge related to serious accounting improprieties and misrepresentations by Autonomy Corporation before it came under Hewlett-Packard's control. Following the earnings release, ISI Group downgraded HPQ to ‘neutral' from ‘buy.'
Elsewhere, Agilent Technologies (A 36.28, -1.23) beat on earnings and reported in-line revenue. The stock settled lower by 3.3% after the company issued cautious guidance as it sees first quarter earnings and revenue below analyst expectations.
Also of note, SanDisk (SNDK 36.84, -0.46) slid 1.2% after reports suggested the company may face antitrust claims over some of its NAND drives.
The Dow Jones Transportation Average saw a marginal loss as airlines outperformed. Delta Air Lines (DAL 9.68, +0.13) and Alaska Air (ALK 41.82, +0.29) were the top performing carriers, seeing respective gains of 1.4% and 0.7%. The relative strength in airlines was a by-product of today's action in oil. The energy component settled lower by 2.4% after early headlines out of the Middle East indicated Israel and Hamas are nearing a cease-fire.
On the downside, four railroads within the transportation average underperformed. CSX (CSX 19.52, -0.16) lost 0.8% after Avondale downgraded the stock to ‘market perform' from ‘outperform.' Meanwhile, Norfolk Southern (NSC 56.91, -1.12) was the worst performing rail operator, down 1.9%.
Quick service restaurants were in focus after reporting their quarterly results. Krispy Kreme Doughnuts (KKD 9.31, +1.77) soared 23.5% after beating on earnings and revenue. During the third quarter, the company earned $0.12, which was $0.04 ahead of the Capital IQ consensus estimate. In addition, the revenue of $107.1 million also beat expectations. The earnings report also contained upbeat guidance as the company sees its full-year 2013 and 2014 earnings ahead of analyst expectations. As a result of the strong report, shares of Krispy Kreme were bid to levels not seen since September of last year.
Meanwhile, Bob Evans (BOBE 35.06, -1.28) lost 3.5% after missing on both the top and bottom lines. In the earnings release, the company also indicated it is exploring strategic alternatives for its Mimi's Cafe business segment.
Today's economic data spotlighted housing. October building permits were reported at 866,000. The reading was below the prior month's rate of 890,000, and fell short of the 870,000 expected by the Briefing.com consensus.
On the other hand, housing starts hit an annualized rate of 894,000 units. This number was well ahead of the 840,000 expected by the Briefing.com consensus, and it represented an increase from prior month's reading of 863,000.
Homebuilders and providers of building materials outperformed due to upbeat housing starts data. PulteGroup (PHM 16.75, +0.85) jumped 5.4% and Ryland Homes (RYL 34.28, +1.92) surged 5.9%. Among building material suppliers, Masco (MAS 16.31, +0.87) rose by 5.6% and NCI Building Systems (NCS 11.85, +0.64) rallied 5.7%.
In tomorrow's economic data, the weekly MBA Mortgage Index will be announced at 7:00 ET. In addition, weekly initial and continuing claims will be reported at 8:30 ET. Lastly, the final November Michigan Sentiment and October leading indicators will be reported at 9:55 ET and 10:00 ET, respectively.DJ30 -7.45 NASDAQ +0.61 SP500 +0.93 NASDAQ Adv/Vol/Dec 1159/1.53 bln/1282 NYSE Adv/Vol/Dec 1682/644.5 mln/1347
3:30 pm : Crude oil fell deeper into negative territory on reports that Hamas and Israel have agreed to a ceasefire. A stronger dollar index also put pressure on the energy component. Crude fell as low as $86.17 per barrel in afternoon pit action and settled with a 2.9% loss at $86.76 per barrel.
Precious metals were under pressure during today's pit trade as the stronger dollar index and better-than-expected housing data weighed on prices. Gold opened near the unchanged line and spent morning floor action chopping around just below that level. The yellow metal sold off further in afternoon action and brushed a session low of $1722.50 per ounce moments before settling with a 0.6% loss at $1723.70 per ounce. Silver fell off its session high of $33.19 per ounce and touched a session low of $32.86 per ounce. Like gold, it settled 0.6% lower at $32.96 per ounce.
In contrast, natural gas steadily climbed higher after coming off its session low of $3.74 per MMBtu. It closed with a 2.7% gain at $3.83 per MMBtu, just below its session high of $3.84 per MMBtu.DJ30 -27.13 NASDAQ -7.82 SP500 -2.07 NASDAQ Adv/Vol/Dec 979/1.30 bln/1462 NYSE Adv/Vol/Dec 1449/455.4 mln/1589
4:27PM MIPS Tech announces receipt of unsolicited proposal from CEVA, Inc. (CEVA) ( MIPS) 7.04 -0.12 : Co announced that it has received an unsolicited proposal from CEVA, Inc. (CEVA) to acquire all of the outstanding MIPS shares, following the consummation of the proposed patent sale transaction with Bridge Crossing, LLC and the proposed recapitalization, for $75 million in cash. CEVA's proposal is subject to the approval of its board of directors and a brief period of confirmatory due diligence. MIPS had previously announced (on November 5, 2012) that Imagination Technologies Group plc would acquire the outstanding MIPS shares following the consummation of the proposed patent sale transaction with Bridge Crossing and the proposed recapitalization, for $60 million in cash. The MIPS Technologies Board of Directors is evaluating CEVA's proposal and has not made a determination as to whether the proposal is superior to MIPS Technologies' pending transaction with Imagination Technologies. However, the MIPS Technologies Board of Directors believes the CEVA proposal could reasonably be expected to lead to a superior transaction, so it has determined to engage in discussions with CEVA.
Shares are currently halted.
4:00PM Cirrus Logic announces $200 mln share repurchase ( CRUS) 30.34 -0.49 : Co announced that its Board of Directors has authorized the repurchase of up to $200 million of the company's common stock. The repurchases will be funded from working capital and anticipated cash from operations.
1:27PM Intel slides to another new 52-wk low of 19.37 ( INTC) 19.38 -0.87 : Its two year close/intraday lows from Aug 2011 come into play at 19.19/19.16.
9:52AM General Electric: GE Aviation acquires Morris Technologies and Rapid Quality Manufacturing, terms not disclosed ( GE) 20.52 -0.13 : GE Aviation, an operating unit of GE (GE), has acquired the assets of Morris Technologies, and its sister company, Rapid Quality Manufacturing, precision manufacturing companies operating in suburban Cincinnati, Ohio. Terms were not disclosed. The two privately-held companies, with about 130 Cincinnati-area employees, specialize in additive manufacturing, an automated process for creating rapid prototypes and end-use production components.
9:37AM Hewlett-Packard gap down probes its 17 year close low from 2002 at 11.45 then stabilizes -- session low 11.35 ( HPQ) 11.70 -1.61 : The 17 year intraday lows from 2002 are at 10.92/10.75.
9:03AM Tellabs will resume repurchase of common shares ( TLAB) 2.72 : Tellabs intends to actively repurchase its common stock under an existing Board of Directors authorization, previously announced on Nov. 8, 2007. The company may repurchase up to $224.6 million (about 22.5% of shares outstanding at the Nov. 19, 2012, closing price) under the previously announced repurchase program.
8:07AM Best Buy misses lowered expectations by $0.09, reports revs in-line; lowers FY13 FCF guidance ( BBY) 13.75 : Reports Q3 (Oct) earnings of $0.03 per share, excluding non-recurring items, $0.09 worse than the Capital IQ Consensus Estimate of $0.12 (Co on Oct 24 warned about Q3 results, consensus was $0.36 at the time); revenues fell 3.5% year/year to $10.75 bln vs the $10.72 bln consensus.
The Domestic segment revenue was $7.7 bln and declined 4.7% YoY. The Domestic segment revenue decline reflected a 4.0 percent comparable store sales decline and the impact of store closures. Best Buy recorded revenue of $431 mln in its online business, with growth in excess of 10 percent, and registered positive comparable store sales growth in mobile phones, appliances and tablets/eReaders. This growth was more than offset by comparable store sales declines in notebooks, gaming, digital imaging and televisions. The co believes that tablet and notebook comparable store sales were negatively impacted by slower consumer purchasing in anticipation of major product launches. Excluding restructuring charges primarily related to previously announced store closures, the Domestic segment operating income for the three months ended November 3, 2012 declined to $50 mln ($16 mln on a GAAP basis) from $249 mln in the prior-year period. The decline was due to a lower gross profit rate, higher SG&A expense and lower revenue.
Lowers FY13 guidance: The co currently expects to generate free cash flow in the range of $850 mln to $1.05 bln for fiscal 2013. This amount compares with the co's previously communicated range of $1.25 to $1.5 bln that had been provided on August 21, 2012.
The co is planning to announce revenue results for the nine weeks ending January 5, 2013 (fiscal Nov and Dec) on January 11, 2013.
"In line with trends experienced over the last three years, Best Buy's third quarter financial performance was clearly unsatisfactory."
7:39AM Hewlett-Packard continues to drop on disappointing earnings/guidance and disclosure of Autonomy accounting improprieties ( HPQ) 13.30 : HPQ now trading -8% around 12.20.
HPQ is a Dow component, and Dow futures have given up around 20 pts on the news, now -15 on the day.... S&P futures have seen a slight downtick as well, now around 3 pts off their highs.
7:38AM Hewlett-Packard beats by $0.01, misses on revs; guides Q1 EPS below consensus; reaffirms FY13 EPS guidance; takes $8.8 bln impairment on Autonomy acquisition upon discovering accounting improprieties ( HPQ) 13.30 : Reports Q4 (Oct) earnings of $1.16 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $1.15; revenues fell 6.7% year/year to $29.96 bln vs the $30.48 bln consensus.
HP recorded a non-cash charge for the impairment of goodwill and intangible assets within its Software segment of ~$8.8 billion in 4Q12. The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge.
Co issues downside guidance for Q1, sees EPS of $0.68-0.71, excluding non-recurring items, vs. $0.85 Capital IQ Consensus Estimate.
Co reaffirms guidance for FY13, sees EPS of $3.40-3.60, excluding non-recurring items, vs. $3.48 Capital IQ Consensus Estimate.
HP also utilized $124 million of cash during the quarter to repurchase ~7.6 million shares of common stock in the open market.
Q4 Business Group Results
- Personal Systems revenue was down 14% YoY with a 3.5% operating margin. Commercial revenue decreased 13%, and Consumer revenue declined 16%. Total units were down 12% with both Desktops and Notebooks units down 12%.
- Printing revenue declined 5% YoY with a 17.5% operating margin. Total hardware units were down 20% YoY. Commercial hardware units were down 15% YoY, and Consumer hardware units were down 22% YoY.
- Services revenue declined 6% YoY with a 14.2% operating margin. Technology Services revenue was down 4% YoY, Application and Business Services revenue was down 7% YoY, and IT Outsourcing revenue declined 6% YoY.
- Enterprise Servers, Storage and Networking (ESSN) revenue declined 9% YoY with an 8.3% operating margin. Networking revenue was up 7%, Industry Standard Servers revenue was down 7%, Business Critical Systems revenue was down 25%, and Storage revenue was down 13% YoY.
- Software revenue grew 14% YoY with a 27.2% operating margin, including the results of Autonomy. Software revenue was driven by 9% license growth, 9% support growth, and 48% growth in services.
- HP Financial Services revenue grew 1% YoY as a 3% increase in net portfolio assets was offset by an 11% decrease in financing volume. The business delivered a 10.8% operating margin.
Microsemi (MSCC) announced VIZIO has utilized Microsemi's LED backlight driver for its E-Series 60-inch and 70-inch Class Razor LED Smart TVs.
Brocade (BRCD) Reports Q4 (Oct) earnings of $0.17 per share, $0.03 better than the Capital IQ consensus of $0.14, while revenues rose 5.1% year/year to $578 mln vs the $565.95 million consensus. Q4 2012 GAAP gross margin was 62.4% and non-GAAP gross margin was 64.8%, compared with 59.5% and 62.9% in Q4 2011, respectively. The year-over-year improvement in gross margin was due to higher revenue, favorable product mix, and lower fixed costs. "Q4 was an excellent quarter for Brocade and a strong ending for fiscal year 2012 during which we established a number of company records including revenue, net income, and operating cash flow...Our product portfolio across all areas of our business is the strongest it has ever been and we are driving industry transformation in emerging areas of growth including virtualized data centers, cloud computing, and software-defined networking. We believe Brocade is well-positioned for continued growth in fiscal 2013."
Agilent (A) reported fourth quarter earnings of $0.86 per share, $0.06 better than the Capital IQ consensus of $0.80, while revenues rose 2.3% year/year to $1.77 billion versus the $1.76 bln consensus. Co issued downside guidance for the first quarter with EPS of $0.65-0.67 versus the $0.76 consensus and revenues of $1.68-1.70 billion versus the $1.72 billion consensus.
Nuance (NUAN) reported fourth quarter earnings of $0.51 per share, excluding non-recurring items, $0.03 better than the Capital IQ consensus of $0.48, while revenues rose 22.7% year/year to $490.1 million versus the $495.62 mln consensus. "Across our markets, Nuance's ability to deliver customized voice and natural language solutions that understand user intent drove record bookings in fiscal 2012 and continues to drive unprecedented customer interest, positioning us well for growth in fiscal 2013."
Hewlett-Packard (HPQ) reported fourth quarter earnings of $1.16 per share, excluding non-recurring items, $0.01 better than the Capital IQ consensus of $1.15, while revenues fell 6.7% year/year to $29.96 billion versus the $30.48 billion consensus. HP recorded a non-cash charge for the impairment of goodwill and intangible assets within its Software segment of ~$8.8 billion in 4Q12. The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge. HP also utilized $124 million of cash during the quarter to repurchase ~7.6 million shares of common stock in the open market. The company issued downside guidance for the first quarter with EPS of $0.68-0.71, excluding non-recurring items, versus the $0.85 consensus. The company reaffirmed guidance for fiscal year 2013 with EPS of $3.40-3.60, excluding non-recurring items, versus the $3.48 consensus. Personal Systems revenue was down 14% YoY with a 3.5% operating margin. Commercial revenue decreased 13%, and Consumer revenue declined 16%. Total units were down 12% with both Desktops and Notebooks units down 12%. Printing revenue declined 5% YoY with a 17.5% operating margin. Total hardware units were down 20% YoY. Commercial hardware units were down 15% YoY, and Consumer hardware units were down 22% YoY. Services revenue declined 6% YoY with a 14.2% operating margin. Technology Services revenue was down 4% YoY, Application and Business Services revenue was down 7% YoY, and IT Outsourcing revenue declined 6% YoY. Enterprise Servers, Storage and Networking (ESSN) revenue declined 9% YoY with an 8.3% operating margin. Networking revenue was up 7%, Industry Standard Servers revenue was down 7%, Business Critical Systems revenue was down 25%, and Storage revenue was down 13% YoY. Software revenue grew 14% YoY with a 27.2% operating margin, including the results of Autonomy. Software revenue was driven by 9% license growth, 9% support growth, and 48% growth in services. HP Financial Services revenue grew 1% YoY as a 3% increase in net portfolio assets was offset by an 11% decrease in financing volume. The business delivered a 10.8% operating margin. |
