From Briefing.com: 4:15 pm : The major averages ended modestly lower with the S&P 500 shedding 0.3%.
The benchmark average saw an opening loss of 1.2% after Japan's Nikkei tumbled 7.3%. Japanese stocks sold off amid continued volatility in Japanese Government Bond futures as the 10-yr yield spiked almost 16 basis points to 1.002 before the Bank of Japan's JPY2 trillion liquidity injection caused yields to retrace their gains.
Adding insult to injury was news out of China where the HSBC Flash Manufacturing PMI (49.6 actual, 50.5 consensus, 50.4 prior) fell below 50 for the first time in seven months.
All ten sectors began the session with sharp losses before the daylong rebound helped some groups return to yesterday's closing levels.
The utilities sector was the weakest performer, ending lower by 0.8% after a morning flash crash in American Electric Power (AEP 48.28, -0.31) and NextEra Energy (NEE 78.22, -0.94) briefly wiped out more than $33 billion in combined market capitalization.
Meanwhile, other defensively-oriented sectors outperformed the broader market with the telecom space registering a gain.
Cyclical groups were mixed throughout the day as technology and materials made a brief appearance in positive territory.
In the tech sector, major components like Apple (AAPL 442.14, +0.79), Oracle (ORCL 34.23, +0.11), and Cisco Systems (CSCO 23.51, +0.17) held up relatively well while Hewlett-Packard (HPQ 24.86, +3.63) surged 17.2% following its earnings beat on below-consensus revenue. In addition, the computer company guided third quarter earnings above analyst expectations and raised its dividend 10.0% to $0.1452.
Elsewhere, the relative strength in chemical producers overshadowed the weakness of steelmakers as the materials sector ended little changed. Gold miners also outperformed as the yellow metal rose 1.8% to $1391.30 per troy ounce. However, copper fell 1.9% to $3.318 per pound as disappointing Chinese data weighed.
While the Dow and Nasdaq made a couple intraday appearances in positive territory, the S&P was kept from seeing green by the weakness in banks. The financial sector settled lower by 0.6% as most majors registered losses. However, Dow component American Express (AXP 74.69, +0.25) outperformed its peers to end with a gain of 0.3%.
Today's opening losses caused the CBOE Volatility Index (VIX 14.12, +0.30) to spike to 15.11 before the near-term volatility measure returned near session lows as the broader market climbed off its worst levels of the day.
After a one-week shock, the initial claims level dropped back below 350,000. The initial claims level fell to 340,000 for the week ending May 18 from an upwardly revised 363,000 (from 360,000) for the week ending May 11. The Briefing.com consensus expected the initial claims level to fall to 348,000.
Separately, new home sales increased 2.3% to 454,000 in April after a sizable upward revision for March to 444,000 (from 417,000). The Briefing.com consensus pegged new home sales at 425,000.
Inventory levels remain depressed. There is only a 4.1-month supply at current sales rates. During a normal environment, homebuilders try to maintain a 6-month supply. That means construction growth should accelerate from current levels.
Tomorrow, April durable orders and durable orders ex-transportation will be reported at 8:30 ET.DJ30 -12.67 NASDAQ -3.88 SP500 -4.84 NASDAQ Adv/Vol/Dec 1294/1.74 bln/1200 NYSE Adv/Vol/Dec 1251/814.1 mln/1753
3:30 pm :
- July crude oil traded in negative territory today following China's HSBC Flash Manufacturing PMI data that showed a first contractionary reading in seven months. The energy component dipped to a session low of $92.21 per barrel in morning action but managed to erase most of the earlier losses as prices rallied to a session high of $94.35 per barrel heading into the close. Crude oil settled just 0.1% lower at $94.14 per barrel.
- June natural gas opened floor trade in the red but popped into positive territory following inventory data that showed a build of 89 bcf when a build of 91-92 bcf was anticipated. It pulled-back slightly moments later but picked up momentum in afternoon action. It settled 1.9% higher at $4.26 per MMBtu, just below its session high of $4.27 per MMBtu.
- June gold rose for the first time in three sessions as a weaker dollar index and weak China's HSBC Flash Manufacturing PMI data helped support the yellow metal's advance. Although prices dipped to a session low of $1375.20 per ounce in late morning action, gold inched higher for the remainder of the session and settled with a 1.8% gain at $1391.70 per ounce.
- July silver spent most of today's pit trade in negative territory, touching a session low of $22.16 per ounce. It picked up momentum heading into afternoon action and managed to erase all of its earlier losses as it settled 0.1% higher at $22.50 per ounce.
4:13PM Marvell beats by $0.05, beats on revs; guides Q2 EPS in-line, revs above consensus ( MRVL) 11.31 -0.05 : Reports Q1 (Apr) adj. earnings of $0.19 per share, $0.05 better than the Capital IQ Consensus Estimate of $0.14; revenues fell 5.3% year/year to $734.4 mln vs the $721.55 mln consensus. Non-GAAP gross margin for the first quarter of fiscal 2014 was 54.6 percent, compared to 53.2 percent for the fourth quarter of fiscal 2013 and 54.5 percent for the first quarter of fiscal 2013.
Co issues guidance for Q2, sees EPS of $0.17-0.21, excluding non-recurring items, vs. $0.18 Capital IQ Consensus Estimate; sees Q2 revs of $770-810 mln vs. $762.96 mln Capital IQ Consensus Estimate.
Under the share repurchase program, Marvell repurchased ~20 million shares for a total of $200 million in the first quarter of fiscal 2014. Over the past eleven quarters, Marvell has repurchased and retired ~204 million shares, or about 29 percent, of its outstanding shares.
"Our results in the first quarter were at the high-end of our guidance mainly due to better than normal seasonal demand and share gains in our storage and networking end markets. Starting in the second quarter of fiscal 2014, we expect many of our investments and key initiatives across all of our end markets to produce tangible results. More specifically, we expect growth to be driven by increased traction in areas such as mobile handsets, tablets, connectivity and SSDs."
4:07PM Silicon Labs appoints Bill Bock President, John Hollister CFO ( SLAB) 42.90 -0.51 : Co announced that its interim CFO and board member, Bill Bock, will be returning to the management team on a permanent basis as president. John Hollister, the company's vice president of business development, will be promoted to senior vice president and CFO, replacing Mr. Bock in that role. The changes will be effective June 30.
Analyst comments: SANM -3.6% (downgraded to Sell from Hold at Deutsche Bank), ARMH -2.7% (downgraded to Neutral from Outperform at Exane BNP Paribas, FLEX -0.7% (downgraded to Hold from Buy at Deutsche Bank)
7:22AM DSP Group issues 'setting the record straight' white paper on Starboard's May 13, 2013 presentation ( DSPG) 7.68 : Co said that it has filed the following White Paper with the SEC that sets the record straight on a number of factually inaccurate statements and misleading data points in Starboard's May 13, 2013 presentation. It states: 'We believe that Starboard's presentation filed on May 13, 2013 contained a large number of factually inaccurate statements and misleading data points in its attempt to gain support for its slate of hand-picked nominees to DSP Group's Board... Starboard's claims that the Company's operating performance has been "abysmal" are entirely false and ignore our recent operating success.... Our growth strategy is working although Starboard will not admit to this fact... Starboard claims that DSP Group's spending on R&D and acquisitions have "destroyed shareholder value." This claim also is false and, as we show below, they use inconsistent and incorrect data to try to make their point.... If Starboard was truly committed to ensuring that "alternative viewpoints are allowed to be introduced and properly considered in the DSP Group's boardroom," they would have accepted the Company's generous offer of two additional Board seats, giving them a total of four of the ten seats, along with significant committee representation, including two of four seats (including chairmanship) on the Compensation Committee and two of five seats (including chairmanship) of a proposed Strategic Committee."
7:20AM DSP Group: Starboard issued earlier open leeter to DSP shareholders; states 'recently announced corporate governance changes are reactionary and do not go far enough' ( DSPG) 7.68 : Starboard Value, one of the largest shareholders of DSP Group beneficially owning approximately 10.1% of its outstanding common stock, issued an open letter yesterday after the close to DSP shareholders following the co's recent announcement of proposed corporate governance changes. Letter states 'Earlier this morning, DSP announced its intent to declassify its Board of Directors (the "Board") beginning in 2014, its intent for Patrick Tanguy to replace Eliyahu Ayalon as non-executive Chairman, and its intent to adopt a stock ownership policy for members of the Board. While these actions appear to be a long overdue improvement in corporate governance, the manner in which they were announced clearly demonstrates a failure in corporate governance at DSP and is a cause for great concern.... So it appears that these changes, which have already been publicly announced, were not reviewed and formally approved by the full Board. To be clear, the selection of a new Chairman of the Board should be a decision of the full Board. A well functioning Board should meet and discuss significant changes in corporate governance policy and changes to the leadership of the Board.... As one of the largest shareholders of DSP, our interests are directly aligned with yours. We urge all shareholders to vote on the WHITE proxy card today to support the election of new, truly independent directors, who will represent all of our collective interests on the Board."
AMD (AMD) launched three new additions to its 2013 A-Series and E-Series Mobile Accelerated Processing Unit lineup delivering solutions ideally positioned to address today's evolving PC market with dramatically increased performance and power efficiency, as well as a portfolio of unique user experiences, and superior gaming and graphics
Hewlett-Packard (HPQ) reported second quarter earnings of $0.87 per share, excluding non-recurring items, $0.06 better than the Capital IQ consensus of $0.81, while revenues fell 10.1% year/year to $27.58 billion versus the $28.03 billion 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. The company issued upside guidance for the third quarter with EPS of $0.84-0.87, excluding non-recurring items, versus the $0.83 Capital IQ consensus. The company issued upside guidance for fiscal year 2013 with raised EPS to $3.50-3.60, excluding non-recurring items, from $3.40-3.60 versus the $3.45 Capital IQ consensus. 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%.
Semtech (SMTC) reported first quarter earnings of $0.46 per share, excluding non-recurring items, in-line with the Capital IQ consensus of $0.46; revenues rose 39.3% year/year to $162.4 million vs the $158.65 million consensus. Non-GAAP gross profit margin for the first quarter of fiscal year 2014 was 61.6 percent. The company issued in-line guidance for the second quarter with EPS of, $0.50-0.56, excluding non-recurring items, versus the $0.53 Capital IQ consensus and revenues of $164.0-$172.0 million versus the $167.46 million Capital IQ consensus. Non-GAAP gross profit margin is expected to be in the range of 61.0% to 61.5% |
