From Briefing.com: Weekly Recap - Week ending 17-May-13
The bulls did their thing again this week, overcoming any concerns about the Fed tapering its asset purchases soon to drive a 2.0% gain in the S&P 500. This week's gain leaves the S&P 500 up 4.3% for the month in what has been a clear decoupling from the "sell in May and go away" couplet.
The week started on a bit of a nervous -- and flat -- note after a weekend article in the Wall Street Journal indicated the Fed has mapped out a strategy for tapering its asset purchases. That view lost its punch, however, with the added indication that the timing of instituting that plan is still uncertain. In brief, the article didn't really tell the market anything it didn't already presume based on prior views communicated in the FOMC Minutes.
Still, the headline itself was enough to cause a pause in the buying action and to overshadow what was a better-than-expected retail sales report for April.
When Tuesday rolled around, buyers were back in action, emboldened by the bullish view of noted hedge fund manager David Tepper of Appaloosa Management. In a CNBC interview before the market opened, Mr. Tepper, who correctly called the market's direction in September 2010, said he is still definitely bullish on the market since all of the evidence in front of him -- an improving economy, attractive valuation, and central bank support -- tells him to be. Mr. Tepper added that the market should not be overly concerned about the Fed tapering and he suggested short sellers will need a shovel to dig out of their graves if the Fed allows the market to party like it's late-1999 again by not tapering its asset purchases.
Market participants took Mr. Tepper's view and rolled with it, rolling over short sellers in the process, on the way to a 1.0% gain in the S&P 500 that day. The influence of that view persisted on Wednesday, as the market padded its gains in the face of a disappointing outlook from Deere & Co. (DE) and weak readings for industrial production in April and the Empire Manufacturing report for May.
Thursday saw a turn in the action, but not until late in the day when the major averages surrendered modest gains that had been posted despite more disappointing economic news that took the form of the weekly initial claims, housing starts, and Philadelphia Fed Index reports.
That battery of reports, while disappointing, joined with a soft CPI report for April to suggest the Fed still has reason to stay on its current policy course. That view facilitated a familiar buy-the-dip trade. However, the major averages retreated on some late profit taking that coincided with a report that San Francisco Fed President Williams said the Fed could perhaps taper its purchases this summer, and maybe even end its program late in the year. That view was pretty much identical to the view he shared in a speech on April 3, so it was a bit of a reach to say those remarks spooked the market. In our estimation, they simply provided a convenient excuse to take some money off the table.
In the same vein, dovish remarks on Friday from Minneapolis Fed President Kocherlakota, who said the FOMC has not yet lowered real interest rate sufficiently, seemed to factor into an afternoon rally that saw the S&P 500 log a tidy 1.0% gain in the final session of the week. Actually, though, the market didn't breakout on Friday until 20 minutes after Mr. Kocherlakota's remarks hit the wires. His views didn't hurt matters, but they weren't the catalyst for the late breakout.
Our sense of things is that the afternoon move on Friday was more of the same with short sellers capitulating in the face of the stock market's resilience to selling interest and bullish participants being further emboldened by the continued leadership of the sectors one would expect to see in a cyclical upturn: financials, energy, industrials, materials, and technology.
The week concluded with the Dow, S&P 500, Russell 2000, S&P 400 Midcap Index, and Dow Jones Transportation Average all achieving new record highs.
| Index | Started Week | Ended Week | Change | % Change | YTD % | | DJIA | 15118.49 | 15354.40 | 235.91 | 1.6 | 17.2 | | Nasdaq | 3436.58 | 3498.97 | 62.39 | 1.8 | 15.9 | | S&P 500 | 1633.70 | 1667.47 | 33.77 | 2.1 | 16.9 | | Russell 2000 | 975.16 | 996.28 | 21.12 | 2.2 | 17.3 |
4:31PM QLogic President and CEO resigns to pursue other opportunitites; co reaffirms Q1 guidance ( QLGC) 9.95 +0.10 : Co announced that Simon Biddiscombe has resigned his positions as president and chief executive officer and also as a director in order to pursue other opportunities. Simon's resignation was effective immediately. The Board has appointed CFO Jean Hu, 49, as CEO on an interim basis. Hu currently serves a senior vice president and chief financial officer. She oversees all company financial matters and will retain her CFO responsibilities during the interim period. The Board will begin an immediate search for a permanent CEO, and the search committee will be led by William M. Zeitler.
The company reaffirms its non-GAAP financial guidance for the first quarter of fiscal year 2014.
4:00PM Veeco Instruments receives NASDAQ notice regarding late form 10-Q filing ( VECO) 36.84 +0.30 : As previously announced, this Form 10-Q, as well as the Company's annual report on Form 10-K for the year ended December 31, 2012 and quarterly report on Form 10-Q for the quarter ended September 30, 2012, could not be filed timely because the Company is reviewing the timing of the recognition of revenue and related expenses on the sale of certain of its products. The accounting review was announced on November 15, 2012. The Company does not expect to regain compliance with NASDAQ's requirements for continued listing by May 20, 2013. As a result, the Company intends to request a hearing before the NASDAQ Listing Qualifications Panel to request additional time to regain compliance with NASDAQ's requirements for continued listing and to request that NASDAQ allow the Company's securities to remain listed on The NASDAQ Global Select Market until such time as the hearing process concludes and any resulting exception period expires.
12:40PM Brooks Automation announces selection by Tohoku Medical Mega Bank for multiple automated sample management systems ( BRKS) 9.90 +0.10 :
AMD +1.8% (rebounding from yesterdays drop on Goldman downgrade)
Dell (DELL) reported first quarter earnings of $0.21 per share, excluding non-recurring items, $0.14 worse than the Capital IQ consensus of $0.35, while revenues fell 2.4% year/year to $14.07 billion versus the $13.49 billion consensus. Given the company's announcement on Feb. 5 of a definitive merger agreement to take Dell private, the co is not providing an outlook for Q2. Enterprise Solutions Group revenue was $3.1 billion, a 10% increase. Operating income for the quarter was $136 million, a 71% increase. Dell server and networking revenue increased 16% as the company gained share in the calendar first quarter. Dell networking continued to deliver strong growth, with a 24% revenue increase, including a 46% growth in the company's Force10 business. Dell storage revenue declined 10%. Dell Services revenue grew 2% to $2.1 billion driven by an 11% increase in revenue for infrastructure, cloud and security services. Support and deployment revenue increased 2% and applications and business process services declined 15%. Operating income was $370 million, a 10% increase. Dell Software revenue was $295 million, resulting in an operating loss. Dell enhanced its software capabilities during the quarter, investing in additional sales capability and research and development. Consistent with the company's business strategy when it acquired Quest Software, this business is on track to be accretive to earnings in the first quarter of fiscal year 2015. End User Computing revenue was $8.9 billion in the quarter, a 9% decrease. Operating income for the quarter was $224 million, a 65% decrease. Dell desktop and thin-client revenue declined 2%, mobility revenue declined 16%, and software from third parties and peripherals revenue declined 6%.
Aruba Networks (ARUN) reported third quarter earnings of $0.11 per share, $0.01 worse than the Capital IQ consensus of $0.12, while revenues rose 11.5% year/year to $147.1 million versus the $146.17 million consensus.
Brocade (BRCD) reported second quarter earnings of $0.17 per share, excluding non-recurring items, $0.02 better than the Capital IQ consensus Estimate of $0.15, while revenues fell 0.9% year/year to $538.78 million versus the $539.62 million consensus. "Our storage area networking revenues did not meet our original expectations for Q2 due to short-term slowing in the storage market and execution challenges at certain of our large OEM partners. I believe the longer-term market opportunity for our SAN products continues to be favorable, supported by the fact that our Gen 5 (16 Gbps) Fibre Channel products exceeded 50% of our shipments of directors and switches in the quarter," said Lloyd Carney, CEO of Brocade. "Also in Q2, Brocade experienced strong year-over-year growth of our IP networking product sales highlighted by the performances of our Ethernet fabric, routing, and refreshed campus LAN portfolios. We were also able to increase profitability in a challenging environment."
Autodesk (ADSK) reported first quarter earnings of $0.42 per share, excluding non-recurring items, $0.03 worse than the Capital IQ consensus of $0.45, while revenues fell 3% year/year to $570 million versus the $583.4 million consensus. The company issued downside guidance for the second quarter with EPS of $0.39-0.44, excluding non-recurring items, vs. $0.51 Capital IQ Consensus Estimate; sees Q2 revs of $550-570 million versus $597.00 million Capital IQ consensus. The company lowered FY14 guidance for fiscal year 2014 with revenue growth of 3%, which equates to approximately $2.38 billion versus the $2.44 billion Capital IQ Consensus Estimate, down from growth of 6%, which equates to ~$2.45 billion.
Applied Materials (AMAT) reported second quarter earnings of $0.16 per share, ex items, $0.03 better than the Capital IQ consensus of $0.13, while revenues fell 22.3% year/year to $1.97 billion versus the $1.92 billion consensus. The company issued guidance for the third quarter with EPS of $0.16-0.20 versus the $0.19 Capital IQ consensus and revenues of slightly QoQ (Q2 Sales $1.97 billion Q3 Capital IQ consensus: $2.12 billion) Applied generated orders of $2.27 billion, up 7 percent from the prior quarter, with Silicon Systems Group orders up 14 percent from the first quarter and Display orders up 41 percent sequentially. Net sales were $1.97 billion, up 25 percent sequentially. Gross margin was 43.2% on a non-GAAP adjusted basis, up from 39.8 percent in the prior quarter reflecting higher net sales and lower inventory charges. GAAP gross margin was 41.0 percent. For the third quarter of fiscal 2013, Applied expects net sales to be up slightly from the previous quarter. "For the second quarter in a row, Applied had strong order performance of over $2 billion...We are seeing increasing pull from some of our largest strategic customers for our key enabling technologies. We remain committed to driving profitable growth." Guidance Details: Applied expects net sales to be up slightly from the previous quarter. The company expects non-GAAP adjusted EPS to be in the range of $0.16 to $0.20. The non-GAAP adjusted EPS outlook excludes known charges related to completed acquisitions of ~$0.04 per share but does not exclude other non-GAAP adjustments that may arise subsequent to this release.
07:40 am Autodesk shares fall 6% following miss on earnings
Autodesk (ADSK $37.30 -2.48) reported first quarter earnings of $0.42 per share, excluding non-recurring items, $0.03 worse than the Capital IQ consensus of $0.45, while revenues fell 3% year/year to $570 million versus the $583.4 million consensus. The company issued downside guidance for the second quarter with EPS of $0.39-0.44, excluding non-recurring items, vs. $0.51 Capital IQ Consensus Estimate; sees Q2 revs of $550-570 million versus $597.00 million Capital IQ consensus. The company lowered FY14 guidance for fiscal year 2014 with revenue growth of 3%, which equates to approximately $2.38 billion versus the $2.44 billion Capital IQ Consensus Estimate, down from growth of 6%, which equates to approximately $2.45 billion. 07:39 am Applied Materials shares little changed following beat on EPS
Applied Materials (AMAT $14.56 -0.10) reported second quarter earnings of $0.16 per share, ex items, $0.03 better than the Capital IQ consensus of $0.13, while revenues fell 22.3% year/year to $1.97 billion versus the $1.92 billion consensus. The company issued guidance for the third quarter with EPS of $0.16-0.20 versus the $0.19 Capital IQ consensus and revenues of slightly QoQ (Q2 Sales $1.97 billion Q3 Capital IQ consensus: $2.12 billion) Applied generated orders of $2.27 billion, up 7 percent from the prior quarter, with Silicon Systems Group orders up 14 percent from the first quarter and Display orders up 41 percent sequentially. Net sales were $1.97 billion, up 25 percent sequentially. Gross margin was 43.2% on a non-GAAP adjusted basis, up from 39.8 percent in the prior quarter reflecting higher net sales and lower inventory charges. GAAP gross margin was 41.0 percent. For the third quarter of fiscal 2013, Applied expects net sales to be up slightly from the previous quarter. "For the second quarter in a row, Applied had strong order performance of over $2 billion...We are seeing increasing pull from some of our largest strategic customers for our key enabling technologies. We remain committed to driving profitable growth." Guidance Details: Applied expects net sales to be up slightly from the previous quarter. The company expects non-GAAP adjusted EPS to be in the range of $0.16 to $0.20. The non-GAAP adjusted EPS outlook excludes known charges related to completed acquisitions of ~$0.04 per share but does not exclude other non-GAAP adjustments that may arise subsequent to this release. 07:37 am Dell shares little changed following miss on earnings
Dell (DELL) reported first quarter earnings of $0.21 per share, excluding non-recurring items, $0.14 worse than the Capital IQ consensus of $0.35, while revenues fell 2.4% year/year to $14.07 billion versus the $13.49 billion consensus. Given the company's announcement on Feb. 5 of a definitive merger agreement to take Dell private, the co is not providing an outlook for Q2. Enterprise Solutions Group revenue was $3.1 billion, a 10% increase. Operating income for the quarter was $136 million, a 71% increase. Dell server and networking revenue increased 16% as the company gained share in the calendar first quarter. Dell networking continued to deliver strong growth, with a 24% revenue increase, including a 46% growth in the company's Force10 business. Dell storage revenue declined 10%. Dell Services revenue grew 2% to $2.1 billion driven by an 11% increase in revenue for infrastructure, cloud and security services. Support and deployment revenue increased 2% and applications and business process services declined 15%. Operating income was $370 million, a 10% increase. Dell Software revenue was $295 million, resulting in an operating loss. Dell enhanced its software capabilities during the quarter, investing in additional sales capability and research and development. Consistent with the company's business strategy when it acquired Quest Software, this business is on track to be accretive to earnings in the first quarter of fiscal year 2015. End User Computing revenue was $8.9 billion in the quarter, a 9% decrease. Operating income for the quarter was $224 million, a 65% decrease. Dell desktop and thin-client revenue declined 2%, mobility revenue declined 16%, and software from third parties and peripherals revenue declined 6%. |
