From Briefing.com: 4:15 pm : The S&P 500 settled lower by 0.8% after early strength turned into afternoon weakness.
Today's headline event came in the form of Ben Bernanke's testimony before the Joint Economic Committee. During his remarks, Chairman Bernanke said premature tightening of monetary policy could stall the pace of recovery. This followed weeks of conflicting remarks from FOMC members, which sparked speculation regarding possible changes to the Fed's policy course.
However, those voices were echoed again by the afternoon release of the FOMC minutes from the May 1 meeting. The minutes indicated that some members expressed their willingness to slow asset purchases as early as June, provided economic conditions warrant the change.
Equities spiked at the start of Chairman Bernanke's testimony, but sellers made their presence known this afternoon as the major averages slumped to session lows.
While the afternoon decline occurred around the release of FOMC minutes, the move was isolated to the stock market as the 10-yr yield held near its session high of 2.04%, and the Dollar Index maintained its gain of 0.4% near 84.25.
The utilities and telecom sectors led to the downside as traders continued to dump income-oriented names. Including today's 1.6% decline, the utilities sector is down 5.0% month-to-date.
Elsewhere, the energy space lost 1.2% as crude oil declined 2.1%. The energy component ended at $94.18 per barrel, and weighed on the growth-sensitive sector.
Another commodity-related group, materials, ended among the laggards as steelmakers underperformed. The Market Vectors Steel ETF (SLX 42.61, -0.59) settled lower by 1.4%.
Cyclical sectors felt the brunt of the afternoon weakness. Similarly, the Dow Jones Transportation Average was unable to escape the selling as the bellwether complex settled lower by 1.6%.
Only consumer staples and health care were able to settle near yesterday's closing levels. The health care space was supported, in part, by Pfizer (PFE 29.30, +0.52) after the company announced plans to split off its animal health business Zoetis (ZTS 33.55, +0.51).
The CBOE Volatility Index (VIX 14.08, +0.71) ended near its highest level of the day as today's selloff increased near-term volatility expectations.
Reviewing today's economic data, existing home sales improved modestly in April, but still fell short of the 5.00 million barrier. Sales increased to 4.97 million from an upwardly revised 4.94 million (from 4.92 million) in March. The Briefing.com consensus expected home sales to increase to 4.98 million.
Also of note, the weekly MBA Mortgage Index fell 9.8% after declining 7.3% in the prior week.
Tomorrow, weekly initial claims will be reported at 8:30 ET while the March FHFA Housing Price Index and April new home sales will be released at 9:00 ET and 10:00 ET, respectively.DJ30 -80.41 NASDAQ -38.82 SP500 -13.81 NASDAQ Adv/Vol/Dec 634/2.11 bln/1872 NYSE Adv/Vol/Dec 658/854.7 mln/2381
3:35 pm : Commodities slid lower this afternoon post-FOMC minutes. Crude oil futures slid down near $94 barrel, precious metals and copper sold off and natural gas ended near the unchanged line.
Crude oil was as high as $96.19/barrel, but sold off over $2/barrel and fell as low as $94.02/barrel. June crude oil ended the day $1.85 lower at $94.25/barrel. June natural gas lost $0.01 at $4.18/MMBtu.
Sellers came out in the afternoon, causing gold and silver to extend losses. June gold fell $17 to $1384.30/oz, while July silver fell $0.19 to $22.42/oz. July copper gained two cents to $3.38/lb.DJ30 -110.05 NASDAQ -52.34 SP500 -18.71 NASDAQ Adv/Vol/Dec 604/1872.8 mln/1951 NYSE Adv/Vol/Dec 610/598 mln/2445
5:24PM Analog Devices prices $500 mln 2.875% senior notes offering; announces redemption of 5.00% senior notes due 2014 ( ADI) 45.55 -1.01 : Co announced that it has priced an offering of $500 million aggregate principal amount of 2.875% senior unsecured notes due June 1, 2023. The offering is being conducted pursuant to an effective registration statement under the Securities Act of 1933. Analog Devices intends to use approximately $393 million of the net proceeds from this offering to fund the previously announced redemption of $375 million aggregate principal amount of its 5.00% senior unsecured notes due 2014 on June 6, 2013, the redemption date selected by Analog Devices. Analog Devices intends to use the remaining net proceeds for general corporate purposes, which may include repurchases of common stock under its stock repurchase program, acquisitions, dividend payments and capital expenditures. This offering is expected to close on June 3, 2013. The joint book-running managers for the offering are J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, and the co-managers are Goldman, Sachs & Co., Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC.
4:33PM Semtech reports EPS in-line, beats on revs; guides Q2 EPS in-line, revs in-line ( SMTC) 36.33 -0.41 : Reports Q1 (Apr) earnings of $0.46 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.46; revenues rose 39.3% year/year to $162.4 mln vs the $158.65 mln consensus. Non-GAAP gross profit margin for the first quarter of fiscal year 2014 was 61.6 percent.
- Co issues in-line guidance for Q2, sees EPS of $0.50-0.56, excluding non-recurring items, vs. $0.53 Capital IQ Consensus Estimate; sees Q2 revs of $164.0-$172.0 mln vs. $167.46 mln Capital IQ Consensus Estimate. Non-GAAP gross profit margin is expected to be in the range of 61.0% to 61.5%
4:14PM Hewlett-Packard beats by $0.06, misses on revs; guides Q3 EPS above consensus; raises low end of FY13 EPS guidance; raises dividend 10% ( HPQ) 21.23 +0.12 : Reports Q2 (Apr) earnings of $0.87 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $0.81; revenues fell 10.1% year/year to $27.58 bln vs the $28.03 bln consensus. Upside was "driven by better than expected performance in Enterprise Services and Printing, coupled with the accelerated capture of restructuring savings and improvement in our operations."
HP generated $3.6 billion in cash flow from operations in the second quarter, up 44% from the prior-year period. Inventory ended the quarter at $6.0 billion, down 2 days YoY to 26 days. HP utilized $797 million of cash during the quarter to repurchase ~36.3 million shares of common stock in the open market. HP exited the quarter with $13.6 billion in gross cash.
Co issues upside guidance for Q3, sees EPS of $0.84-0.87, excluding non-recurring items, vs. $0.83 Capital IQ Consensus Estimate.
Co issues upside guidance for FY13, raises EPS to $3.50-3.60, excluding non-recurring items, from $3.40-3.60 vs. $3.45 Capital IQ Consensus Estimate.
HP also today announced that the HP board of directors has declared a regular cash dividend of 14.52 cents per share on the company's common stock, which, as previously announced, reflects a 10% increase in amount compared to the previous quarterly dividend amount.
"After returning more than a billion dollars to shareholders through share repurchases and dividends in the quarter, we improved our operating company net debt position for the fifth successive quarter. By the end of fiscal 2013, we expect our operating company net debt to be below pre-Autonomy levels and approaching our goal of ~zero."
Segment results:
Personal Systems revenue was down 20% YoY with a 3.2% operating margin. Commercial revenue decreased 14%, and Consumer revenue declined 29%. Total units were down 21% with Desktops units down 18% and Notebooks units down 24%.
Printing revenue declined 1% YoY with a strong operating margin of 15.8%. Total hardware units were down 11% YoY. Commercial hardware units were down 5% YoY, and Consumer hardware units were down 13% YoY.
Enterprise Group revenue declined 10% YoY with a 15.9% operating margin. Networking revenue was up 1%, Industry Standard Servers revenue was down 12%, Business Critical Systems revenue was down 37%, Storage revenue was down 13% and Technology Services revenue was down 3% YoY.
Enterprise Services revenue declined 8% YoY with a 2.6% operating margin. Application and Business Services revenue was down 10% YoY, and IT Outsourcing revenue declined 6% YoY.
Software revenue was down 3% YoY with a 19.1% operating margin. Support revenue was up 12% while license revenue was down 23% and services revenue was down 5% YoY.
HP Financial Services revenue was down 9% YoY with a 3% decrease in net portfolio assets and a 24% decrease in financing volume. The business delivered an operating margin of 11.0%.
Axcelis Technologies (ACLS) announced that it has shipped the new Purion M medium current implanter, to a major semiconductor manufacturer located in Asia. The system will be used to develop and manufacture next generation memory and FLASH devices.
ON Semiconductor (ONNN) has collaborated with SRI International and Ball Aerospace & Technologies, a unit of Ball (BLL), to secure funding for the Defense Production Act Title III, Advanced Complementary Metal Oxide Semiconductor Focal Plane Arrays for Visible Sensors for Star Trackers Project.
8:04AM DSP Group announces intent to declassify its Board of Directors, the selection of new Chairman and the proposed adoption of a stock ownership policy ( DSPG) 81.9 : Co announced a plan to declassify its Board of Directors, from three classes of directors to a single class, beginning in 2014. The co also announced that as a move to improve corporate governance Eliyahu Ayalon has decided to resign as Chairman of the Board so that role can be filled by a director who qualifies as an independent director under NASDAQ rules. Mr. Ayalon will remain a member of the Board following his resignation as non-executive Chairman, which will become effective upon the election of his successor.
8:03AM SunPower announces intention to offer $300 mln aggregate principal amount of senior convertible debentures ( SPWR) 21.00 : Co announced that it proposed to offer $300 million aggregate principal amount of senior convertible debentures, subject to market conditions and other factors. The debentures will mature in June 2018. The interest rate, conversion rate, offering price and other terms will be determined by negotiations between SunPower and the initial purchasers of the debentures.
The debentures will be convertible into shares of SunPower's common stock, par value $0.001 per share. Total Gas & Power USA, SAS, a subsidiary of Total S.A. that owns approximately 65% of SunPower's common stock, has agreed to purchase, and the initial purchasers have agreed to sell to Total Gas & Power USA, SAS, $200 million aggregate principal amount of the debentures (assuming that the full $300 million aggregate principal amount is sold).
SunPower intends to use the proceeds from the offering for general corporate purposes, which may include redeeming or repurchasing some of its outstanding debentures and working capital. The debentures are being offered in a private placement only to qualified institutional buyers and to Total Gas & Power USA, SAS, which is an institutional accredited investor.
6:57AM LTX-Credence misses by $0.02, misses on revs; guides Q4 EPS below consensus, revs below consensus ( LTXC) 6.05 : Reports Q3 (Apr) loss of $0.08 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus Estimate of ($0.06); revenues rose 17.9% year/year to $36.3 mln vs the $38.48 mln consensus.
Co issues downside guidance for Q4, sees EPS of ($0.09)-(0.05) vs. $0.05 Capital IQ Consensus; sees Q4 revs of $36-40 mln vs. $45.46 mln Capital IQ Consensus.
"The adoption of Diamondx by new and existing customers is ahead of our expectations. We now have sixteen customers and ~forty applications in either production or development. Changes in the volume ramp of some of our customers' new products have impacted the short term need for additional test capacity. However, we expect sales of Diamondx to accelerate in the back half of the calendar year given current customer forecasts."
1:54AM Atmel confirms appointment of Steve Skaggs as permanent CFO ( ATML) 7.51 : Skaggs had been serving as interim Chief Financial Officer since April 2, 2013.
Analog Devices (ADI) reported second quarter earnings of $0.52 per share, in-line with the Capital IQ consensus of $0.52, while revenues fell 2.4% year/year to $659 million versus the $660.36 mln consensus. The company issued downside guidance for the third quarter with EPS of $0.51-0.56 versus the $0.57 Capital IQ consensus and revenues of $655-685 million versus the $688.16 million Capital IQ consensus.
SolarWinds (SWI) through one of its subsidiaries, SolarWinds Worldwide, LLC entered into an Agreement and Plan of Merger and Reorganization with N-able Technologies International, Inc., a Delaware corporation pursuant to which N-able would become a wholly owned subsidiary of SolarWinds. N-able is a Cloud-based remote monitoring and management and service automation software for Managed Service Providers. The acquisition is being entered into for strategic purposes. Pursuant to the Merger Agreement, SolarWinds would pay $120.0 million in cash at closing subject to certain adjustments set forth in the Merger Agreement . The Merger Agreement provides that $12.0 million of the Closing Cash Consideration will be held in escrow as partial security for the indemnification obligations of the equity holders of N-able.
Intuit (INTU) reported third quarter earnings of $2.97 per share, excluding non-recurring items -- co lowered FY13 EPS to $2.92-2.94 from $2.99-3.04 on April 24 -- $0.04 better than the Capital IQ consensus of $2.93, while revenues rose 13.1% year/year to $2.18 billion versus the $2.18 bln consensus; the company lowered revenue guidance to $2.165-2.175 billion from $2.215-2.275 billion on April 24. The company issued downside guidance for fourth quarter with EPS of $0.03-0.07, excluding non-recurring items, versus the $0.11 Capital IQ consensus and revenues of $702-727 million versus the $727.33 million consensus. "We continue to see strong progress delivering on our connected services strategy across our businesses in the third quarter. TurboTax paid units increased 4 percent, and we expect TurboTax revenue growth of about 4 percent for the fiscal year. While it was a challenging tax season overall, we made progress in several key areas, growing new customers including first-time filers and former tax store customers, and significantly increasing mobile adoption. Activity is already well underway for next year, with an intense focus on product and customer experience. It was another strong quarter across our small business division. The team continues to do great work growing customers in what remains a weak environment for small businesses. Each business in this segment delivered double-digit growth this quarter. Intuit repurchased $92 million of its common stock during the third quarter, totaling $292 million for the first nine months of the fiscal year. At the end of the quarter the current authorization had $1.4 billion remaining for stock repurchases through August 2014.
NetApp (NTAP) reported fourth quarter earnings of $0.69 per share, excluding non-recurring items, $0.01 better than the Capital IQ consensus of $0.68, while revenues rose 0.8% year/year to $1.72 billion versus the $1.76 billion consensus. The company issued downside guidance for the first quarter with EPS of $0.45-0.50, excluding non-recurring items, versus the $0.53 Capital IQ consensus and revenues of $1.475-1.575 billion versus the $1.6 billion consensus. "The fourth quarter was highlighted by a continued strong uptake of clustered Data ONTAP, an expansion of our leadership position in Flash, and double digit growth in branded bookings...We are also pleased to announce enhancements to our capital allocation program, reflecting our confidence in our underlying business as well as our commitment to enhancing shareholder value." Share repurchase program and dividend: The Company is increasing its current stock repurchase program, of which $1.4 billion remains outstanding, by an additional $1.6 billion. The Company plans to complete the aggregate $3 billion program over the next 3 years. NetApp intends $2 billion of repurchases to be completed within the next 12 months, of which $1 billion is planned to be completed during the next 4 months. Additionally, NetApp has initiated a quarterly cash dividend of $0.15 per share of the Company's common stock, which it intends to increase over time. The first dividend will be payable on July 23, 2013 to shareholders of record as of the close of business on July 11, 2013. Resource Realignment: The Company has undertaken a realignment of resources and restructuring which includes a global workforce reduction of ~900 employees. The Company expects to recognize an estimated aggregate $50 - $60 mln pretax charge relating to employee severance and other restructuring charges. |
