Semiconductors Fall

Elena
20 Jan, 2006
New York City

U.S. stocks opened lower, hurt by lackluster earnings reports from Citigroup and General Electric, as well as disappointing outlook from Motorola and rising oil prices. Motorola reported Q4 better-than-expected profit, but missed sales growth estimates. GE posted adjusted earnings of 55 cents a share, matching estimates, but revenue figures disappointed. Citigroup posted Q4 30% profit rise, but adjusted earnings of 98 cents missed estimates.

U.S. MARKET AVERAGES

Surging oil prices, mixed earnings from Dow components General Electric Co. and Citigroup Co., and disappointing outlook from Motorola sent stocks lower Friday.

GE ((GE)) posted adjusted quarterly earnings of 55 cents per share, up from 54 cents per share last year, matching expectations. Revenues for the period came in at $40.7 billion, a 3% increase compared to last year''s mark of $39.7 billion, below the estimates for revenue of a little more than $42 billion. GE also lifted the low end of its 2006 earnings forecast.

Citigroup ((C)) reported a 30% rise in Q4 net profit to $6.93 billion, or $1.37 a share, though adjusted earnings of 98 cents a share missed forecasts of $1 a share.

Motorola ((MOT)) reported Q4 earnings of 47 cents per share, up from 26 cents per share last year, including a gain of 12 cents per share for special items. Analysts had expected earnings of 34 cents per share. The company reported sales growth of $10.4 billion, missing estimates of $10.5 billion increase. Motorola predicted earnings of 27 to 29 cents per share for the next fiscal period on sales of between $9.3 and $9.5 billion.

The semiconductor sector was among the worst performers in early trading, as Xilinx ((XLNX)) and Motorola ((MOT)) sell off in the wake of their quarterly reports. The airline sector also posted weakness on rising oil prices.

Energy stocks extended recent gains, benefiting from the rise in oil prices. The oil service sector climbed over 3%, stretching a multi-year high, boosted by Schlumberger ((SLB)), which gained more than 4% on earnings news.

In the first hour of trading, the Dow declined 41.08, or 0.38%. The Standard & Poor''s 500 index was down 2.27, or 0.18%, and the Nasdaq composite index fell 3.62, or 0.16%.

Bonds rebounded, with the yield on the 10-year Treasury note sliding to 4.35% from 4.37% late Thursday.

MOVERS AND SHAKERS

AMCOL International Corp ((ACO)) said that Q4 net income rose to $8.6 million, or 28 cents a share, from $6.3 million, or 20 cents a share, a year ago on a revenue growth of $134.6 million, from $113.2 million a year ago, after strong performances, especially from the company's environmental segment. The stock climbed 11.1%.

Genesis Microchip ((GNSS)), maker of image processing systems, reported Q3 earnings of $7.37 million, or 20 cents a share vs. a net loss of $1 million, or 3 cents a share a year ago. On a pro forma basis, earnings came in at 27 cents a share compared with 9 cents a share last year. Revenue rose 59%, to $74 million from $48.3 million, and gross margin was 48.9% vs. 44.9%. Analysts had forecast earnings of 24 cents a share on revenue of $75 million. The stock dropped 10.3%.

Ford Motor Co ((F)) may cut 25,000 or more jobs over 4 years as part of a restructuring plan to stem North American losses. The company is expected to announce the jobs cuts on Monday. The company’s shares fell 2.4%.

Cree Inc ((CREE)), semiconductor maker, reported Q2 29% earnings drop of $17.7 million, or 23 cents a share from $25 million, or 32 cents a share last year, with 3 cents a share in stock option expense included. Revenue rose 10%, to $105.6 million from $96.1 million. Analysts had expected earnings of 26 cents a share on revenue of $108 million. The stock declined 5.7%.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks closed in the positive Friday, despite the rising oil prices. Stocks were boosted by gains on Wall Street on the back of strong quarterly results, released by major companies. The Nikkei rose 0.8% to 15,820.96,lifted by broad-buying of bank, tech and mining stocks. Across the region, South Korea’s Kospi gained 0.8%, Taiwan’s Weighted index added 0.3%, and Singapore’s Straits Times climbed 0.55%.

European stocks traded largely higher at mid-day, supported by higher close of U.S. markets overnight, gains in the oil and gas sectors, as well as updates from Swisscom and LVMH. The leading gainer was London’s FTSE 100, up 0.6%, followed by the French CAC 40 rising 0.5%. The German DAX 30 slipped 0.1%.

OIL, METALS, CURRENCIES

Crude oil prices climbed over $67 a barrel on supply concerns, raised by continuous tensions in Nigeria and Iran. Light sweet crude for February delivery gained 27 cents to $67.10 a barrel. London Brent climbed 56 cents to $65.79.

European gold prices climbed. In London gold traded at $559.25, up from $552.20. In Zurich the precious metal traded at $559.95, up from $547.05. In Hong Kong gold rose $7.20 to close at $557. Silver opened at $9.04, up from $8.95.

The U.S. dollar traded mixed against the major currencies. The euro was quoted at $1.2076, down from $1.2094. The dollar bought 115.30 yen, down from 115.44. The British pound was quoted at $1.7587, up from $1.7583.

EARNINGS NEWS

Schlumberger Ltd, ((SLB)), provider of oilfield services, reported that Q4 net income doubled to $1.08 a share, up from 55 cents a share in the same period a year ago, topping analysts’ forecasts for earnings of 96 cents a share. Operating revenue jumped 31% to $4.02 billion.

Citigroup, ((C)), banking firm, reported Q4 earnings advanced 30% to $1.37 a share on a $2.1 billion after-tax gain on the sale of its asset-management lines. Profit from continuing operations dropped 3% to 98 cents a share. Analysts’ estimates for $1 a share for the quarter. Revenue came in at $20.78 billion.

General Electric Co, ((GE)), conglomerate, reported Q4 net income of 29 cents a share, compared with 53 cents a share in the year-ago period. After adjustments, the company’s profit came to 55 cents a share, matching the average analyst estimate. GE stated revenue in Q4 advanced 3%. GE also lifted the bottom end of its 2006 earnings outlook, based partly on strong growth in Asia and developing markets, to $1.94 to $2.02 a share from $1.92 to $2.02 a share.

KeyCorp, ((KEY)), multi-line financial services provider, reported Q4 net income of 72 cents a share, up from 51 cents in the year-ago period on 11.2%, revenue growth, beating analyst estimate of 67 cents a share. The company expects earnings to be in ranges of 67 cents to 71 cents a share for the first quarter and $2.80 to $2.90 a share for all of 2006, as opposed to analysts'' averages of 66 cents and $2.80 a share, respectively.

Alltel Inc ((AT)), telecommunications carrier, reported Q4 net income of 66 cents a share, down from 89 cents earned in the same period the previous year despite 21% revenue growth. On an adjusted basis, the company earned 77 cents a share in Q4, missing analyst estimate of 83 cents a share.

Regions Financial Corp, ((RF)), banking services, posted Q4 earnings of 55 cents a share, including after-tax merger-related and other costs of 7 cents a share, up from 50 cents a share in the year ago period. If not for items, the company posted Q4 earnings of 62 cents a share, in line with analyst estimate.

Johnson Controls, ((JCI)), provider of automotive interiors, reported Q1 earnings of 85 cents a share, down slightly from 87 cents a share a year-ago, beating analyst estimate of 83 cents a share. On a continuing operations basis, the company earned 86 cents a share in Q1, up from last year''s 81 cents a share. Sales advanced to $7.53 billion from $6.62 billion in the same period a year earlier.