After Hours Summary: GPRO down -24% following guidance; AMBA down 11% in sympathyAfter Hours Gainers:
Companies trading higher in after hours in reaction to news: MTN +3.3% (Season-to-date lift ticket rev +19.4%; expects to exceed EBITDA guidance), KBH +1.6% (authorized the repurchase of up to 10 mln shares of its outstanding common stock).
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: GPRO -24.2%, AMBA -11.2% (in sympathy with GPRO), ATML -0.1%
Companies trading lower in after hours in reaction to news: BRG -0.2% (filed ~2.262 mln share Class A common stock offering by selling stockholders).
Closing Market Summary: Indices Trade Lower on Growth ConcernsThe major averages ended their midweek session sharply lower with the tech-heavy Nasdaq (-3.4%) trailing the S&P 500 (-2.5%). Equity indices surrendered their opening gains amid continued growth concerns that also pressured crude oil from its overnight high. Including today's tumble, the benchmark index has surrendered 7.5% since the beginning of 2016 while the Nasdaq has slid 9.6%.
Overnight, oil advanced from yesterday's low with better than expected December trade data from China contributing to the advance. China's trade report showed a surplus of $60.1 billion versus the expected $51.3 billion. Despite the beat, this represented the sixth consecutive month of year-over-year declines in exports. While this was not good enough to boost China's Shanghai Composite (-2.4%), it was sufficient in helping the battered commodity rally.
At the beginning of our trading day, oil was up more than 3.0%, contributing to early strength in equities. The energy-component would lose momentum shortly after the open once the weekly EIA gasoline inventories showed a build of 8.438 million barrels. WTI crude showed a loss of 1.1% before ending its pit session unchanged at $30.43/bbl. On a related note, crude inventories rose 0.243 million barrels compared to an expected increase of 2.504 million barrels.
Another reminder of the persistent growth concerns came from rail company CSX (CSX 22.35, -1.35), which issued lower 2016 guidance when it reported Q4 earnings after yesterday's close. The company cited global and industrial slow down trends that would affect their core business, leading to an expected decline in year-over-year earnings. The transports reeled from this guidance, evidenced by the 3.7% decline in the Dow Jones Transportation Average which is now down 10.5% on the year. Fellow rail company Norfolk Southern (NSC 71.44, -4.49) suffered a 5.9% decline while Avis (CAR 27.19, -2.11) posted the worst loss in the index, falling 7.2%.
Sectors like, consumer discretionary (-3.4%), health care (-2.9%), technology (-2.8%), financials (-2.6%), and industrials (-2.3%) paced the retreat while utilities (UNCH), telecom services (-1.1%), consumer staples (-1.7%), and energy (-1.8%) outperformed.
Once again, today's retreat saw the biggest losses among names that enjoyed strength in 2015. To that point, discretionary component Netflix (NFLX 106.56, -10.02) sank 8.6% following a report from ITG Research which revised revenue estimates for the company, citing domestic subscriber weakness. Elsewhere in the space, Amazon (AMZN 581.81, -36.08) declined 5.8%.
Switching to the technology space, large-cap constituents Facebook (FB 95.44, -3.93) and Alphabet (GOOGL 719.57, -25.77) showed relative weakness with respective declines of 4.0% and 3.5%. Fellow large-caps Microsoft (MSFT 51.64, -1.14) and Apple (AAPL 97.39, -2.57) fared better than the sector, but could not stay out of the red. Elsewhere in the space, the high-beta chipmakers underperformed, evidenced by the 3.1% decline in the PHLX Semiconductor Index.
Looking at the health care space, biotechnology showed relative weakness with a decline of 5.4% in the iShares Nasdaq Biotechnology ETF (IBB 280.14, -16.06).
Treasuries ended their day near their highs with the yield on the 10-yr note lower by four basis points at 2.07%.
Trading volume remained heavy with more than a billion shares changing hands at the NYSE floor once again.
Today's economic data included the MBA Mortgage Index, the December Treasury Budget, and the Federal Reserve;s January Beige Book.
- The MBA Mortgage Index showed a seasonally adjusted increase of 21.3% in mortgage applications.
- The December Treasury Budget showed a deficit of $14.4 billion.
- The Treasury data are not seasonally adjusted, so the December deficit cannot be compared to the November deficit of $64.6 billion.
- Total receipts in December were $349.6 billion while total outlays were $364.1 billion.
- Receipts were $14.3 billion more than December 2014 receipts while total outlays were $30.6 billion more than December 2014.
- The yearly deficit increased by $16.3 billion to $477.8 billion.
Tomorrow, weekly initial claims (consensus 275k) and December import/export prices will be released at 8:30 ET.
- Russell 2000 -11.1% YTD
- Nasdaq -9.6% YTD
- S&P 500 -7.5%
- Dow Jones -7.3%
oMT NA to issue 137.9M in new ordinary shares after conversion of outstanding 6% Mandatorily Convertible Subordinated Notes due 15 January 2016
On 15 January 2016 of 137,967,116 new ordinary shares of the Company (the "New Shares") upon conversion of the 88,182,131 outstanding 6% Mandatorily Convertible Subordinated Notes due 15 January 2016 (the "Notes"). Following this issuance, the share capital of the Company will amount to EUR 7,453,441,006.98 represented by 1,803,359,338 Shares.For the 1,817,869
Notes previously converted at the option of their holders, the Company has delivered a total of 2,275,026 treasury shares.
GoPro - Guides Q4 R$435M v $513Me; Guides FY15 R$1.6B v $1.7B; Cuts 7% of workforce
- Fourth quarter revenue reflects lower than anticipated sales of its capture devices due to slower than expected sell through at retailers, particularly in the first half of the quarter. Fourth quarter revenue includes a $21M reduction for price protection related charges resulting from the HERO4 Session repricing in December. Non-GAAP gross margin for the fourth quarter of 2015, excluding the impact of price protection and a charge of between $30M and $35M to cost of revenue for excess purchase order commitments, excess inventory, and obsolete tooling is anticipated to be between 44.5% and 45.5%. Non-GAAP gross margin for the fourth quarter of 2015 is anticipated to be between 34.5% and 35.5%. Non-GAAP operating expenses for the fourth quarter of 2015 are estimated to be between $150.0M and $152.5M. Cash, cash equivalents and marketable securities at December 31, 2015 totaled approximately $475M.
- Zander Lurie Appointed to GoPro Board
Zander has resigned from his role as Senior Vice President of GoPro Entertainment and has been appointed to serve on GoPro's board of directors. Mr. Lurie has deep experience working with Internet-based business models across digital and traditional media. At GoPro Entertainment, he built a team dedicated to pursuing new formats and revenue streams from user-generated content and the Company's large cache of digital entertainment. Prior to GoPro, he served as an executive at CBS Corp. which he joined with the acquisition of CNET Networks where he served as CFO and head of Corporate Development. Mr. Lurie began his career in the technology investment banking group at J. P. Morgan where he led equity transactions and mergers and acquisitions in the Internet sector.
- Reallocation of Resources
Over the past two years, GoPro's headcount has grown by more than 50% annually, to more than 1,500 employees at the end of 2015. To better align resources to key growth initiatives, GoPro has implemented a reduction in its workforce of approximately 7 percent. The Company estimates it will incur approximately $5M to $10M of restructuring expenses in the first quarter of 2016, substantially all of which will be severance costs.