History was determined to repeat itself yesterday, with the
bulls notching another
Thursday-before-Memorial Day victory
. Ahead of the bell this morning, futures are trading cautiously
higher, as investors await data on personal incomes and spending,
home sales, and consumer sentiment. Elsewhere, pre-market traders
seem to be shrugging off news that Fitch Ratings revised its
outlook on Japan's sovereign debt to negative from stable, as well
as the Group of Eight's (G8) warning that higher commodity prices
could hamper a "self-sustained" global economic recovery.
Furthermore, the Street appears to be taking a couple of poorly
received tech-sector earnings with a proverbial grain of salt, with
OmniVision Technologies (OVTI) and Blue Coat Systems (
BCSI
) both set to drop at the opening bell. Against this backdrop, the
Dow Jones Industrial Average (DJIA ) is lingering about 28 points
north of fair value, while the S&P 500 Index (SPX ) is up
roughly 4.2 points.
In equities news, eBay (EBAY - 30.66), along with its PayPal
Inc. unit, last night sued Google Inc. (GOOG - 518.13) and two
executives for stealing mobile payment-related trade secrets.
Specifically, the companies said former eBay employee Osama Bedier
-- who joined GOOG on Jan. 24 of this year -- recruited PayPal
employee Stephanie Tilenius, thereby breaking contractual
agreement. "By hiring Bedier, with his trade secret knowledge of
PayPal's plans and understanding of Google's weaknesses as viewed
by the industry leader (PayPal), Google bought the most
comprehensive and sophisticated critique of its own problems
available," the suit said. At last check, EBAY is fractionally
higher, while GOOG is lingering near breakeven.
In earnings news, OmniVision Technologies (OVTI - 36.42) said
fiscal fourth-quarter profit soared to $34 million, or 56 cents per
share, from $3.5 million, or 7 cents per share, a year earlier.
Excluding items, OVTI earned 66 cents per share, besting analysts'
expectations by a penny. Meanwhile, revenue jumped 64% to $258.3
million. Going forward, the company forecast current-quarter
earnings of 64 cents to 77 cents per share on sales of $265 million
to $285 million. Analysts, on average, were calling for a fiscal
first-quarter profit of 69 cents per share on revenue of $277
million. At last check, OVTI is poised to drop 4.6% out of the
gate.
Elsewhere, Marvell Technology Group (MRVL - 14.56) said
first-quarter earnings fell a year-over-year 29% to $146.9 million,
or 22 cents per share. Excluding items, per-share earnings docked
at 29 cents, while revenue fell 6.2% to $802.4 million. The results
fell short of expectations, as the Street was anticipating a profit
of 30 cents per share on revenue of $825.6 million. "The first
quarter of fiscal 2012 was a tough one for us," admitted Chief
Financial Officer Clyde Hosein, who said an unexpected product
shift at Research In Motion Limited (RIMM) -- a notable MRVL
customer -- exacerbated weak seasonality. However, MRVL predicted
adjusted second-quarter earnings of 37 cents per share, plus or
minus a couple of pennies, on sales of $870 million to $910
million. Analysts, on average, forecast current-quarter earnings of
34 cents per share on revenue of $875.4 million. In pre-market
trading, MRVL has powered about 8.5% higher.
Finally, Blue Coat Systems Inc. (BCSI - 22.36) said fiscal
fourth-quarter earnings fell a year-over-year 62% to $9 million, or
18 cents per share. Excluding items, per-share earnings fell to 30
cents from 40 cents, in line with analysts' expectations, but on
the low end of the company's own guidance. Revenue dropped 9% to
$120.7 million, lagging the Street's projections for sales of
$121.5 million. After cutting its current-quarter guidance earlier
this month, BCSI once again slashed its estimates last night. Now,
the firm expects to record a fiscal first-quarter profit of 18
cents to 25 cents per share on sales of $110 million to $117
million -- weaker than analysts' estimates for a per-share profit
of 33 cents on $122 million in revenue. Ahead of the bell, BCSI is
bracing for a 10% drop.
Earnings Preview
Today's earnings docket will also feature reports from Graham
Corporation (
GHM
), Mentor Graphics (
MENT
), and SeaDrill Limited (
SDRL
), just to name a few. Keep your browser at
SchaeffersResearch.com
for more news as it breaks.
Economic Calendar
The economic schedule wraps up today with reports on personal
incomes and spending, pending home sales for April, and the final
Reuters/University of Michigan consumer sentiment index for
May.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (
CBOE
) saw 825,387 call contracts traded on Thursday, compared to
501,822 put contracts. The resultant single-session put/call ratio
docked at 0.61, while the 21-day moving average remained at
0.65.
The spring 2011 issue of
SENTIMENT
magazine is now available here.
Overseas Trading
It was a hot-and-cold day for Asian markets. Stocks in Tokyo
declined, with exporters tracking lower as the yen strengthened
versus the U.S. dollar. Sony (SNE) was a notable laggard, after the
PlayStation maker offered a softer-than-expected fiscal-year
earnings forecast. Meanwhile, Hong Kong's Petrochina was a standout
on news of a ramped-up investment from parent company China
National Petroleum. Over in China, small caps continued to blaze
the path lower, while South Korean equities continued to rise on
bargain-hunting. By the close, Hong Kong's Hang Seng added about
1%, South Korea's Kospi rose 0.4%, Japan's Nikkei gave up 0.4%, and
China's Shanghai Composite lost roughly 1% to bring its weekly loss
to a hefty 5.2%.
European stocks are pointed higher at midday, with bank stocks
leading the way. Reports of favorable legislation incited some
optimism, after the
Financial Times
suggested that European banks may be able to dodge some of the
stricter Basel III capital requirements. A spokesman for the EU has
since denied the speculation; nevertheless, upbeat brokerage notes
are providing lift for the group. Citigroup raised its rating on
the banking sector to "overweight," while Societe Generale started
coverage of Barclays, HSBC, Lloyds, and Royal Bank of Scotland with
bullish "buy" endorsements. At last look, the French CAC 40 is up
1.1%, London's FTSE 100 has gained 0.9%, and the German DAX is 0.4%
higher.
Currencies and Commodities
The greenback has continued its slide this morning, with the
U.S. dollar index down about 0.5%. Elsewhere, after backpedaling in
the wake of revived demand concerns on Thursday, black gold has
clawed its way back atop the century mark. At last check, the
front-month crude contract is fractionally higher at $100.26 per
barrel. Meanwhile, gold futures have also bounced back from their
light-volume slump, with the front-month contract adding $2.30, or
about 0.2%, to trade at $1,526 an ounce. In the same vein, silver
futures have rebounded $0.33, or roughly 0.9%, to flirt with $37.66
an ounce.
Unusual Put and Call Activity:
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