Sun, TI Come Up Short
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Stocks soared Monday on signs of improvement in the credit markets and hopes for a new economic stimulus plan, but earnings reports from Sun (NASDAQ: JAVA) and Texas Instruments (NYSE: TXN) after the close reminded investors that the economy will likely get worse before it gets better.
TI shares fell more than 5% in after-hours trading after the company missed analysts' estimates just about every way imaginable: third-quarter earnings, sales and gross margins were just below estimates, while the company's fourth-quarter earnings and sales guidance was well below forecasts.
"We entered the third quarter with a cautious view of the economy and its impact on our markets. Revenue was weak, as expected, because consumers and corporations reduced their spending in this uncertain economy," stated TI CEO Rich Templeton.
Still, the company said it sees opportunity in the smartphone, analog and embedded processing markets.
Sun lost 4% in late trading after saying it will report a much wider than expected loss on lower than expected sales. Sun's sales of roughly $3 billion will come in both below estimates and the year-ago quarter's $3.22 billion.
"Sun and its customers are seeing the impact of a slowing economy," CEO Jonathan Schwartz said in a statement.
Sun's full report and conference call will be held Oct. 30.
Also after the close, SanDisk (NASDAQ: SNDK) reported a 20% drop in sales and a big loss, but JDA Software (NASDAQ: JDAS) beat estimates.
And those are just the first of many tech sector earnings reports due out this week. Apple (NASDAQ: AAPL), VMware (NYSE: VMW) and Yahoo (NASDAQ: YHOO) will report Tuesday night. Amazon (NASDAQ: AMZN), EMC (NYSE: EMC), AT&T (NYSE: T) and Citrix (NASDAQ: CTXS) will report on Wednesday, and Microsoft (NASDAQ: MSFT) will be the headliner after the close on Thursday.
SanDisk fell during Monday's trading session after agreeing to sell 30% of the current manufacturing capacity of the companies' joint ventures to Toshiba.
Ericsson (NASDAQ: ERIC) soared 15% after beating estimates.
Research in Motion (NASDAQ: RIMM) fell 8% on negative analyst comments, while Applied Materials (NASDAQ: AMAT) and Cisco (NASDAQ: CSCO) benefited from analyst upgrades.
WebMD (NASDAQ: WBMD) soared and HLTH (NASDAQ: HLTH) plunged after the companies' merger deal was terminated.
The Nasdaq surged 58 to 1770, the S&P rose 44 to 985, and the Dow gained 413 to 9265. Volume declined to 5.25 billion shares on the NYSE, and 2.07 billion on the Nasdaq. Advancers led by a 29-5 margin on the NYSE, and 21-7 on the Nasdaq. Upside volume was 87% on the NYSE, and 85% on the Nasdaq. New highs-new lows were 8-105 on the NYSE, and 5-105 on the Nasdaq.