>>> What to look at today :

US Market closed slightly positive helped by Yellen nomination (unable to regain its 100d MA)...Dow 200d MA was a support for the market...Nasdaq Underperform heavily because of Biotech perf...FED Minutes were not a surprised...main point is that FOMC participants expected some tapering this year...VIX @ 19.6 (-3.6%)...Brazil +0,45% (rate raises by 50bps to 9,5%)...- Japan machine orders at 3-month high as govt raises assessment on the sector; 30-yr JGB auction seeing fairly strong demand... Nikkei +1%...Shanghai -1%...more concerns over shadow banking

Eur$ 1,3498...S&P Fut +0,45%...

Keep an eye on :

- AZA IM : Italy May Provide EU150m in Alitalia Cap Increase, Union Says - EAD FP : Japan Airlines 787 Returned to Moscow After Electrical Problem, Exec: Order book for the A330F units at 43; confident of new orders by end of the year - GIVN VX : Givaudan 3Q Sales Miss Estimates, Confirms Mid-Term Outlook - GLE FP : CEO: Europe is much better than a year ago; not need to raise more capital - CNBC - KD8 GY : Kabel Deutschland Sees FY Rev. Growth 5%-6%, Had Seen Abt. 8% - LAD LN : speculation that Playtech's founder Teddy Sagi acquired a close to 3% stake - MB IM : Fondiaria, Units Sell Mediobanca Shrs for EU135.2m (23.1m shares, 2,68%) - NOK1V FH : Finnish Retail Investors Sell Nokia Shares, Kauppalehti Reports - RMG LN : Royal Mail Shares to Be Priced at 330p, Top of Range: BBC Link - RR/ LN : Rolls-Royce Motor Expects Asia Market Share to Grow Further: CEO - SZU GY : Suedzucker Reiterates Outlook, Reiterates Sees Risk From Ensus - TIT IM : Telecom Italia Says No Process Ongoing to Sell Tim Participacoes - Versace : KKR, Blackstone Said to Consider 20% Stake in Versace, WSJ Says

>>> Asia Update

Asian Market Update: Brazil raises SELIC rate by 50bps, BOK stands pat as expected; Australia unemployment falls as more leave the labor force

***Observations/Insights*** - Signs of thaw in budget stalemate help break a string of consecutive losses in US equities; Obama said to have held more talks with lawmakers from both parties at the White House, while House Budget Committee Chairman Paul Ryan spoke of ending the stalemate without ACA attachment to the budget; US equity futures are up 7 handles above 1,655 and USD is higher across the board on tentative signs of progress. - Brazil Central Bank raises SELIC target by50bps as expected; Decision unanimous, said to ensure slower inflation in 2014. - Bank of Korea leaves rates on hold at 2.50% as expected; Maintains 2013 GDP target at 2.8% but lowers 2014 projections by 0.2pts to 3.8%; BOK Gov Kim noting inflation would remain low for time being and negative output gap for economy will narrow. - Australia employment data mixed - net change at 3-month highs and unemployment rate falls to 5.6%, but look inside the numbers reveals a 7-year low in participation rate; Press speculating Australia is a strong quarterly inflation data print away from RBA turning more hawkish. - Japan machine orders at 3-month high as govt raises assessment on the sector; 30-yr JGB auction seeing fairly strong demand.

***Economic Data*** - (BR) BRAZIL CENTRAL BANK (COPOM) RAISES SELIC TARGET RATE BY 50BPS TO 9.50%, AS EXPECTED - (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 2.50% (AS EXPECTED); FIFTH STRAIGHT PAUSE - (AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: 9.1K (3-month high) V 15.0KE; UNEMPLOYMENT RATE: 5.6% V 5.8%E; PARTICIPATION RATE: 64.9% V 65.0%E (matches 7-year low) - (AU) AUSTRALIA OCT CONSUMER INFLATION EXPECTATION: 2.0% V 1.5% PRIOR - (NZ) NEW ZEALAND SEPT BUSINESS NZ MANUFACTURING PMI: 54.3 V 57.1 PRIOR - (JP) JAPAN AUG MACHINE ORDERS M/M: 5.4% V 2.5%E (3-month high); Y/Y: 10.3% V 8.5%E - (JP) JAPAN AUG TERTIARY INDUSTRY INDEX M/M: 0.7% V 0.4%E (3-month high) - (JP) JAPAN SEPT TOKYO AVERAGE OFFICE VACANCIES: 7.9 V 8.2 PRIOR - (JP) Japan investors sold ¥2.22T in foreign bonds last week (record amount; first net sale in four weeks) vs bought net ¥672.1B in prior week; Foreign Investors sold ¥27.1B in Japan stocks (1st net sale in five weeks) v bought net ¥341.4B in prior week - (JP) JAPAN SEPT BANK LENDING EX-TRUSTS Y/Y: 2.3% V 2.3% PRIOR (rises for 24th straight month); BANK LENDING INCL TRUSTS Y/Y: 2.0% V 2.0% PRIOR - (PH) PHILIPPINES AUG EXPORTS: $4.6B V $4.8B PRIOR; Y/Y: 20.2% V 20.0%E

***Fixed Income/Commodities/Currencies*** - JGB: (JP) Japan MoF sells ¥546.3B in 1.8% (1.8% prior) 30-yr notes; Avg yield: 1.630% v 1.803% prior; Bid to cover: 4.07x v 3.87x prior - (JP) BoJ to buy ¥150B in corporate bonds on Oct 17th - (CN) PBoC to inject CNY48B in 14-day reverse repos today; Injects net CNY33B this week v injected CNY150.1B prior - (NZ) New Zealand sells NZ$200M in 2015 bonds, avg yield 4.5557%

- USD higher across the board, notably rising above 97.70 on the yen and 0.9120 on CHF; EUR and GBP down 30pips against the greenback around 1.3490 and 1.5920 respectively; AUD and NZD seeing most pronounced damage against the greenback - AUD/USD spiked above 0.9470 after unemployment rate drop but since declined to 0.94 handle; NZD/USD down 60pips below 0.8250, a 1-week low.

***Speakers/Political/In the Papers*** - (CN) China Bank of Communications (BoCom) chief economist Lian: China banks' non-performing loan (NPL) ratio may rise to 1.5% v 1.0% in June; Sees bad loan to rise in next 2-3 quarters - (CN) China Premier Li Keqiang: China is paying attention to US debt issue - Xinhua - (CN) IMF's Zhu: High debt levels in China is of concern; recent slowdown is positive as it will serve to rebalance the economy - (HK) Hong Kong Fin Min Tsang: Sees no need to change the HKD peg to USD, remains the most logical arrangement

- (NZ) RBNZ research sees 1-4% cut in housing price growth due to LVR next year - (EU) ECB Pres Draghi: Govts must ensure sovereign debt stays risk free - press conf - (US) House minority leader Pelosi: Have not heard short-term offer discussed - press conf - (US) PIMCO's Gross said to have maintained treasury holdings steady in Sept as bond market rebounds - (US) US Labor Dept announces economic data reports will not be issued as scheduled; release of CPI, PPI, Import data that had been scheduled for the next few days have been postponed due to govt shutdown - financial press

- IDC: Worldwide Q3 PC shipments totaled 81.6M units; -7.6% y/y v -9.5%e - Gartner reports worldwide PC shipment fell 8.6% in Q3; The 'Back-to-School' sales quarter experienced its lowest PC volume since 2008

***Equities*** Market Snapshot (as of 03:30 GMT): - Nikkei225 +0.8%, S&P/ASX -0.3%, Kospi -0.1%, Shanghai Composite -0.9%, Hang Seng -0.9%, Dec S&P500 +0.4% at 1,654, Dec gold -0.2% at $1,304, Nov crude oil +0.1% at $101.67/brl

US markets: - CTXS: Reports prelim Q3 $0.68-0.69 v $0.73e ($0.72-0.73 prior), Rev $710-712M v $737Me ($730-740M prior); -13.1% afterhours - BBRY: Said to be more open to breakup of the company; Fairfax Financial may be unable to come up with funding or partners for full $4.7B buyout; -1.6% afterhours - CVX: Issues interim Q3 update: Q3 earnings to be lower than Q2 (implies Q3 EPS <$2.77 v $3.10e); -0.8% afterhours - HES: Agrees to sell its US East Coast and St. Lucia terminal network for $850M to Buckeye Partners; -0.4% afterhours - NKE: Forecasts FY15 Rev $30B v $29.8Be (top prior $28-30B range), sees FY17 Rev at $36B; reaffirms long-term model of high single-digit rev growth, mid-teens EPS; +0.4% afterhours - GILD: To Stop Phase 3 Study 116 of Idelalisib in Chronic Lymphocytic Leukemia Early Because of Positive Risk-Benefit; +3.0% afterhours - CHTP: FDA to review NORTHERA (droxidopa); panel date set for Jan 14th; +9.0% afterhours

Notable movers by sector: - Consumer discretionary: Yunnan Tin Co Ltd 000960.CN -2.2% (Chairman arrested) - Industrials: China Shipbuilding Industry Co Ltd 601989.CN flat (Sept results); JFE Holdings 5411.JP +0.8% (plans to update facilties; FY13 production guidance) Nissan Motor Co Ltd 7201.JP +2.4%, Honda Motor Co Ltd 7267.JP +1.6%, Mazda Motor Corp 7261.JP +2.9%, Toyota Motor Corp 7203.JP +1.1% (Japan autos higher on weaker yen) - Energy: China Petrochemical Sinopec 386.HK -1.9% (bond issuance) - Materials: Newcrest Mining Ltd NCM.AU -2.8% (CEO may consider asset sale); Energy Resources of Australia ERA.AU -3.7% (Q3 results) - Technology: China Spacesat Co Ltd 600118.CN +1.3%, Anhui Sun-Create Electronics Co Ltd 600990.CN +2.1% (continues to rise on yesterday's Govt plan) - Financials: Bank of Queensland BOQ.AU +6.9% (FY results); Shimao Property 813.HK +1.3% (Sept results) - Healthcare: Jiangsu Hengrui Medicine Co Ltd 600276.CN -3.6% (Eli Lily theft report); Beijing Tiantan Biological Products 600161.CN +1.2% (WHO adds China vaccine)

(NY Post) Will Lew, Bernanke break laws to save the US?

Jack or Ben may have to break the law to save the country. Barring a breakthrough in the debt-ceiling debacle that began to show some signs of hope late Wednesday, Treasury Secretary Jack Lew and Federal Reserve boss Ben Bernanke are up against it trying to keep the US from defaulting, experts said. If Lew decides to thumb his nose at Congress and issue more debt to pay its creditors, it might violate the Second Liberty Bond Act of 1917, said Garrett Epps, a constitutional law professor at the University of Baltimore. “Because the debt-ceiling law says we can’t borrow more money, then he’s breaking that law,” Epps said. Some Washington insiders and Wall Streeters are talking about a second option to avoid a default: looking to Bernanke to lend money to the Treasury. But, it turns out, under normal circumstances, lending to the US Treasury is illegal under the Federal Reserve Act. But Cullen Roche, founder of the Orcam Financial Group and an expert on monetary policy, believes that in this emergency Bernanke could play a get-out-of-jail-free card. “If the options are default or no default then I think the Fed should exercise what’s called the ‘exigent circumstances’ clause [of the Federal Reserve Act] and lend directly to the US Treasury,” said Roche. “They did this with Bear Stearns and AIG [in the 2007-2008 financial crisis] so I think saving the US government is a bit more important than those two entities. “By having the Fed lend to the US Treasury, you circumvent having the Treasury issue more bonds. In this case the Fed is just issuing loans and crediting the Treasury’s account. And it puts the Fed in the hot seat by being the entity creating the agenda here rather than having the Treasury sell bonds in a normal auction process, thereby breaching the debt ceiling.” Of course, Lew does have a third option, albeit much less palatable: letting the US default on the debt. But even that could be illegal under the 14th Amendment, which holds that “the validity of the public debt” of the US “shall not be questioned.” “If he didn’t pay the debt, he’d be breaking the 14th amendment,” Epps said. “And he’d be violating any number of laws directing him to pay the debt. Anybody having claims against the US would be able to sue the US.” “They have to break a law. Full stop,” a recent Morgan Stanley economics research report concluded when addressing how Lew or Bernanke can deal with coming debts in light of a frozen debt ceiling. Epps and many other scholars think there could be a fourth path around the debt ceiling issue: a presidential edict that claims a default is not permitted. But that’s a long shot, Epps said, because it’s fraught with danger. If President Obama were to try to override Congress to fulfill that commitment, he would likely face impeachment charges from Congressional Republicans, he said.

>>> Tesla Motors Morgan Stanley reiterates Overweight rating, price target $149

Tesla Motors Morgan Stanley reiterates Overweight rating, price target $149 - Firm argues Tesla cannot be valued on near-term multiple metrics like traditional auto companies given that they expect Tesla to multiply revenues by more than 10x from 2012 to 2016 by nearly 30x by 2020 and around 60x by 2027. They have thus chosen a 15-year time horizon for their DCF which captures the full maturation of the Model S, Model X (and top-hat derivatives) and also the ramp up of its mass market electric vehicle (the Gen 3). Firm has applied a 11% WACC with a range of 9% to 13%. The terminal value, calculated on a midpoint of 10x EV/EBITDA accounts for roughly 50% of the total DCF value across the range of methodologies they have applied to arrive at their $149 PT.

Stock lost 3,4% yesterday, 16,7% on the last 6 trading days

>>> US After Hours

After Hours Summary: CTXS -13.7%, RT -13.0%, CKSW -11.3%, VOXX -6.9% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to news: - ACUR +11.8% (announced settlement of Oxecta patent litigation with Par Pharmaceutical and Impax Laboratories (IPXL)), - CHTP +6.4% (announced FDA Advisory Committee will review NORTHERA (droxidopa) on January 14, 2014), - GILD +3.2% (announced it will stop its Phase 3 study of Idelalisib in chronic Lymphocytic Leukemia early because of positive risk-benefit), - ARUN +1.7% (announced additional $100 mln share repurchase authorization)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: -CTXS -13.7%, RT -13.0%, CKSW -11.3%, VOXX -6.9%, HUBG -4.4%, CVX -1.1%, HELE -0.5%

Companies trading lower in after hours in reaction to news: - CGR -7.2% (announces it will voluntarily delist its common shares from the NYSE MKT), - IMMU -6.8% (announced termination of agreement and return of worldwide rights to veltuzumab for all non-cancer indications), - VMW -3.3% (trading lower following weak earnings guidance from peer CTXS), - CTRP -3.0% (announced proposed offering of $500 mln of convertible senior notes), - BPL -2.3% (commenced public offering of 6.5 mln limited partnership units; to acquire liquid petroleum products terminals from Hess (HES) for $850 mln), - GTN -0.9% (Bloomberg reporting that Sinclair Broadcast Group may seek to acquire the company)

>>>Critical WhatsApp crypto flaw threatens user privacy, res

Critical WhatsApp crypto flaw threatens user privacy, researchers warn

Messages sent over Wi-Fi and other public channels can be decrypted using known methods.

A security researcher said he has found an encryption flaw that makes it possible for adversaries to decrypt communications sent with WhatsApp, a cross-platform smartphone app that processes as many as 27 billion instant messages each day.

WhatsApp developers say messages are "fully encrypted", and company CEO Jan Koum told Ars that Tuesday's vulnerability report is "sensationalized and overblown." But a computer science student at Utrecht University in the Netherlands, and several cryptographers who have reviewed his work, said the app appears to contain long-documented weaknesses, including its use of the same encryption key on both sides of a conversation. As a result, they said, it's not hard for cryptographers to decrypt WhatsApp messages that travel over Wi-Fi networks or other channels that can be monitored.

"You should assume that anyone who is able to eavesdrop on your WhatsApp connection is capable of decrypting your messages, given enough effort," Utrecht computer science and mathematics student Thijs Alkemade wrote in a blog post published Tuesday. "You should consider all your previous WhatsApp conversations compromised. There is nothing a WhatsApp user can do about this... except to stop using it until the developers can update it."

Alkemade posted this follow up that documents the vulnerable crypto scheme in the Android version of WhatsApp. He said he suspects other versions of the app behave similarly. Several cryptographers with no ties to Alkemade who have reviewed the posts said the findings are serious.

"It’s an extremely bad flaw that lots of people know how to exploit," Thomas Ptacek, a recognized security consultant and cryptographer, wrote in discussion on Twitter. "The attacker does not need to be in the middle or to have any influence over the messages." Most recently, Ptacek was one of the researchers behind a heavily attended talk at the Blackhat security conference imploring cryptographers to transition to newer forms of encryption.

For their part, however, WhatsApp officials downplayed Alkemade's assessment.

"WhatsApp takes security seriously and is continually thinking of ways to improve our product," company CEO Koum wrote in an e-mail to Ars. "While we appreciate feedback, we're concerned that the blogger's story describes a scenario that is more theoretical in nature. Stating that all conversations should be considered compromised is inaccurate. Basically, this is sensationalized and overblown. Please report responsibly and do research that goes beyond twitter-sphere. We have a company to run. Back to work."

Either xor

Alkemade said cryptographers have already devised attacks that exploit the type of mistakes made in the WhatsApp apps. He cited this research paper from 2006, which made it possible to decrypt short messages in seconds with 99-percent accuracy when researchers could predict small parts of the plaintext hidden inside the encrypted payload. The technique works by analyzing "example data" so that messages can be predicted accurately. The analysis took several hours but only needed to be performed once.

"The described algorithm probably took days, if not weeks, to implement, Alkemade wrote in an e-mail. "But the implementation they've written should be general enough to work for WhatsApp messages, too."

What's more, instant messages usually contain hidden headers and greetings such as "Sup?" or emoticons such as ";-)". That means much of the plain-text included in most WhatsApp messages may already be known or easily guessed.

The attack works by passively observing an encrypted message passed between a phone and server. The adversary then collects later messages and combines them using the exclusive or (xor) mathematical operation. The result: much of the plaintext can be plucked out of the encrypted streams. Similar attacks were developed in the 1990s to defeat the Microsoft-developed Point to Point Tunneling Protocol, which remains widely used in many products despite the availability of off-the-shelf exploits. WhatsApp appears to be making a similarly critical mistake by repeating the same key passing two or more messages through the same RC4 cryptographic algorithm, Matt Green, a professor specializing in cryptography at Johns Hopkins University, told Ars.

"It's a well-known problem if you use the same key to encrypt two different messages—that means if you generate the same RC4 bits, and you're xor'ing them with two different messages," he said, "then the attack that you can run is you can just take both of the resulting cipher texts, and you can xor them together, and ... all the RC4 bits vaporize. They cancel out, and they leave you with the xor of the two different messages that you encrypted."

FT : IMF says start of Fed tapering threatens $2.3tn bond losses

Monetary tightening in the US threatens to expose financial excesses and vulnerabilities that could wipe trillions of dollars off bond markets, the International Monetary Fund warned on Wednesday. If the Federal Reserve’s likely move to start scaling back its asset purchases or fallout from a possible US failure to lift its ceiling on public debt raise long-term interest rates by 1 percentage point, the IMF’s Global Financial Stability Report (GFSR) estimates that the market losses on bond portfolios could reach $2.3tn. In a world of heightened financial stability risks, demonstrated by the flight to safety from emerging markets in the summer, the fund is concerned that large elements of the world’s financial system remain vulnerable to stresses that might ensue as the extraordinary policies of the post-crisis period are scaled back. Describing the process of normalising US monetary policy as "unprecedented and complex", José Viñals, financial counsellor to the IMF, said that "containing longer-term interest rates and market volatility has already proven to be a substantial challenge". The fund estimates the potential damage from a spike in long-term bond yields from investor fire-sales, a loss of liquidity in certain markets such as real estate investment trusts and contagion could lead to large losses. In addition, the fund’s GFSR warned that if the US were to default on some of its obligations after a failure to raise its debt ceiling, it "could seriously damage the global economy and financial system".

The potential consequences of higher long-term interest rates need to be managed carefully, the IMF said, requiring focus by the US authorities on ensuring a smooth exit. This needs a "a clear and well-timed communication strategy by the Federal Reserve to minimise interest rate volatility, as well as effective execution in line with economic developments". The prospect of higher interest rates also raises the possibility of capital flight from emerging economies, which the fund says are "highly vulnerable to sudden outflows that would further strain liquidity conditions". "The episodes of financial market turmoil in the second and third quarters of 2013 underscore that some emerging market economies need to address macroeconomic imbalances, enhance policy credibility and rebuild policy space to reduce vulnerabilities as financial conditions normalise," it added. Outside the immediate concerns over the US debt ceiling and vulnerability to sudden interest rate rises, the GFSR also attempts to assess the vulnerability of banks in the eurozone’s periphery to weak companies to whom they have lent. The IMF said that a vicious circle between weak companies that found it difficult to service their debt was undermining the health of banks, forcing them to raise interest rates and further weakening the corporate sector in Italy, Spain and Portugal. In prepared remarks, Mr Viñals said that even if bank lending rates to companies were common across the eurozone, "a persistent debt overhang would remain, amounting to almost one-fifth of the combined corporate debt of Italy, Portugal and Spain". According to IMF estimates, this would be sufficient to absorb a large proportion of future bank profits in these countries and require additional buffers of capital in Portugal and Italy. The fund called for urgent action to assess the bank-by-bank vulnerabilities in the European bank asset quality review and credible backstops, preferably on a eurozone-wide basis, to recapitalise vulnerable institutions. For this, it urged eurozone countries to make concrete progress towards achieving banking union in a way that would reassure markets about the stability of banks and the credibility of backstops to their capital.

>>> Chevron Corp Issues interim Q3 update: Q3 earnings to be lower than Q2 (implies Q3 EPS <$2.77 v $3.10e)

Chevron Corp Issues interim Q3 update: Q3 earnings to be lower than Q2 (implies Q3 EPS <$2.77 v $3.10e)

- Comments: earnings for the third quarter 2013 are expected to be lower than in the second quarter. Upstream results for the third quarter are projected to be slightly higher than the prior quarter while downstream earnings are expected to be significantly lower. Second quarter earnings included foreign exchange gains of approximately $300M, compared to similarly sized losses anticipated for the third quarter. The interim update contains industry and company operating data for the first two months of the third quarter. >

- UPSTREAM: U.S. net oil-equivalent production was slightly lower, primarily due to planned turnaround activity across multiple assets in the Gulf of Mexico. International net oil-equivalent production was modestly higher compared to the second quarter, reflecting less turnaround and maintenance activity related to several different assets worldwide.

- DOWNSTREAM: U.S. refinery crude-input volumes were slightly higher as the Richmond, California refinery resumed normal operations during the second quarter, but the increase was mostly offset by planned maintenance activity at the El Segundo, California refinery. International refinery crude-input volumes increased following maintenance activity early in the second quarter.

>>> Gartner reports worldwide PC shipment fell 8.6% in Q3; The 'Back-to-School' sales quarter experienced its lowest PC volume since 2008

Gartner reports worldwide PC shipment fell 8.6% in Q3; The 'Back-to-School' sales quarter experienced its lowest PC volume since 2008 - Worldwide PC shipments totaled 80.3 million units in the third quarter of 2013, an 8.6 percent decline from the same period last year, according to preliminary results by Gartner, Inc. This marks the sixth consecutive quarter of declining worldwide shipments. - Consumers' shift from PCs to tablets for daily content consumption continued to decrease the installed base of PCs both in mature as well as in emerging markets. A greater availability of inexpensive Android tablets attracted first-time consumers in emerging markets, and as supplementary devices in mature markets. - HP and Lenovo have been virtually neck and neck for the top global position in the PC market. Lenovo took the lead, as it did last quarter, but the upcoming holiday sales season will be a key battlefield for both companies. Lenovo accounted for 17.6 percent of global PC shipments in the third quarter, and HP had 17.1 percent of shipments, according to preliminary results. - Weakness in the Chinese market continued to affect Lenovo's overall growth. However, strong growth in the Americas, as well as EMEA, offset the declining PC shipments for Lenovo in the Asia/Pacific market. HP recorded positive shipment growth in 3Q13 for the first time since 1Q12. With the exception of Latin America, HP's growth exceeded the average growth across all regions. - Dell's PC shipments exceeded growth rate averages across all regions. Acer's shipments declined 22.6 percent compared with a year ago, as a reduction in netbook shipments impacted overall PC shipment results. Acer has heavily sought opportunities in other device markets. Asus saw PC shipments decline 22.5 percent. Asus has clearly shifted its focus from PCs to tablets. Asus' tablet shipments were nearly equal to its mobile PC shipments in 3Q13. - In the U.S. market, PC shipments totaled 16.1 million units in the third quarter of 2013, a 3.5 percent increase from the same period last year, registering the second consecutive quarter of shipment growth after six quarters of decline. Low inventory from the first half of 2013, and the introduction of new models with Intel's Haswell and new form factors brought the sell-in shipment up compared with a year ago.

- "The positive U.S. results could mean that seasonal strength and channel fill for new product launches in 3Q13 finally overcame the structural decline," Ms. Kitagawa said. "Even though 3Q13 shipments were compared with artificially weak 2Q13 because of inventory control for the Windows 8 launch at the time, the 3Q13 results imply the U.S. market may have passed the worst declining stage, which started in 2010. The shrinking installed base of PCs has also passed the steepest decline phase because the structural change has progressed fairly quickly. Tablets will continue to impact the PC market, but the U.S. PC market will see a more moderate decrease rather than a steep decline in the next two years."