Moving the Market

Abercrombie & Fitch (ANF $40.40 -5.00) reported first quarter earnings of $0.03 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.01. Revenues rose 10.1% year over year to $921.2 million versus the $951.23 million consensus. Total comparable store sales for the quarter decreased 5%. The gross profit rate for the first quarter was 62.6%, 240 basis points lower than last year's first quarter gross profit rate. The decrease in the gross profit rate was driven by a significant increase in average unit cost. Based on first quarter trends, the Company is now projecting same store sales to be down by a mid-single digit percentage on a full-year basis. Notwithstanding lower sales expectations, the Company continues to expect full year diluted earnings per share in the range of $3.50 to $3.75 (versus the $3.56 Capital IQ Consensus Estimate) with lower sales offset by a higher projected gross margin rate, lower expenses, and a lower share count at the end of the first quarter. The Company continues to anticipate opening international Abercrombie & Fitch flagship locations in Hong Kong, Munich, Dublin and Amsterdam in Fiscal 2012. The Company continues to anticipate opening close to 40 international Hollister stores throughout the year. Based on current new store plans and other planned expenditures, the Company continues to expect total capital expenditures for 2012 to be approximately $400 million, predominately related to new stores, store refreshes and remodels.

Industrial production increased 1.1% in April following a downward revision for March from 0.0% to -0.6%. The Briefing.com consensus expected industrial production to increase 0.5%.As expected, a large portion of the increase in production came from a 4.5% increase in utilities output as weather conditions returned to normal. Even though most of the regional manufacturing surveys showed a notable slowdown in production, manufacturing production increased 0.6% in April after declining 0.5% in March. Motor vehicle production, which increased 3.9%, accounted for approximately half of the increase in manufacturing production in April. Motor vehicle assemblies increased from 10.07 million SAAR units in March to 10.65 million SAAR in April. Auto assemblies increased from 3.90 million SAAR to 4.25 million SAAR while light truck assemblies increased from 6.17 million SAAR to 6.42 million SAAR. Mining production increased 1.6% after declining 1.7% in March.

Housing starts increased 2.6% in April from an upwardly revised 699,000 (from 654,000) in March to 717,000. The Briefing.com consensus pegged new starts at 680,000. The April level is nearly 30% higher than a year ago. Housing starts have averaged 710,000 over the last six months and, notably, there has been very little volatility over those last six months. That means that warmer-than-normal weather conditions, which many economists concluded was the main catalyst for the recent housing starts growth, may have been overblown. The details look promising for future growth.Single-family homes increased from 481,000 in March to 492,000 in April. The more volatile multi-family construction increased by roughly the same amount, from 218,000 in March to 225,000 in April. New homes under construction ticked up from 456,000 in March to 457,000 in April. While this was the smallest gain since bottoming in August 2011, the trend of improving construction numbers remained intact.

In earnings last night, SINA (+13.0%) and OPXT (+3.3%) both posted quarterly misses.

In news, FB raised its IPO size by 25%. Among rumors, we are hearing RIMM (+2.6%) takeover chatter making the rounds. 

Among notable analyst upgrades this morning, CSCO (+1.7%) was upgraded to Overweight at Barclays, SINA (+13.2%) was upgraded at Barclays and Credit Suisse and AKAM (+0.2%) was upgraded to Neutral at Citigroup. Also, EPAM (+7.5%) was added to Top Picks Live list at Citigroup While in downgrades, KLAC (-3.8%), LRCX (-5.3%), and NVLS (-5.3%) were downgraded to Underweight at JPMorgan. 

 There are no notable names in tech scheduled to report quarterly results today after the close.

JC Penney (JCP $29.96 -3.36) reported a first quarter adjusted loss of $0.25 per share, excluding non-recurring items, $0.17 worse than the Capital IQ Consensus Estimate of ($0.08).  Revenues fell 20.1% year over year to $3.15 billion versus the $3.47 billion consensus. Comparable store sales for the first quarter declined 18.9%. Gross margin was 37.6 percent of sales, compared to 40.5 percent in the same period last year. Overall, compared to last year, gross margin was impacted by lower than expected sales in the quarter and the impact of taking deeper seasonal markdowns to clear inventory coming out of the fourth quarter of 2011. Additionally, the company announced that it will discontinue the $0.20 per share quarterly dividend. On an annual basis, this will result in cash savings of  approximately $175 million, which will be used to help fund the broad-based transformation plan that JC Penney announced in January. The Company anticipates it will incur additional restructuring charges throughout the fiscal year as it takes aggressive action to further simplify its operations and its infrastructure. In addition, as the Company continues to transform its merchandise assortment to align with its new strategy, the Company may incur additional inventory write-downs as it exits certain lines of merchandise. Co issues downside guidance for fiscal year 2013; earnings per share won't meet $1.59 versus a $1.65 Capital IQ Consensus Estimate.  The Company also reaffirmed non-GAAP earnings per share guidance of $2.16.

SINA (SINA $58.95 +7.27) reported a first quarter loss of $0.21 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of ($0.23). Revenues rose 1.3% year over year to $101.5 million vs the $105.5 million consensus. The Company issued guidance for the second quarter, seeing revenues of $126-129 million, which may not be comparable to the $132.62 million Capital IQ Consensus Estimate; with advertising revenues to be between $103 million and $105 million, representing a year over year increase of 12-14%, and non-GAAP non-advertising revenues to be between $23 million and $24 million, representing a year over year increase of 2-7%. Non-GAAP net revenues and non-GAAP non-advertising revenues exclude the recognition of $4.7 million in deferred license revenue related to SINA's equity investment in CRIC.