Wal-Mart, Intel And Their Bleak Forecasts

This post is from CNBC producer Robert Hum:

S&P futures are flat, but they have gyrated in a 20-point range this morning. Up about 10 points early in the session, futures moved nearly 20 points lower, before bouncing off those lows following Wal-Mart’s earnings beat.

However, futures have once again have given up some of those gains, as they try to find direction this morning. Both the Dow Industrials & S&P 500 are within striking distance of their multi-year closing lows set on October 27. The Nasdaq Composite closed at a new low yesterday.

Wal-Mart’s Q3 earnings of $0.77 per share slightly exceeded the analysts’ estimate of $0.76, as sales grew 7.5% from a year ago. However, the company cut its full-year guidance due to the strengthening dollar. The dollar—as reflected by the U.S. Dollar Index—has risen 22% since its July low, hurting the repatriation of overseas profits for U.S firms with large multinational operations. The company estimates that dollar appreciation will hurt its Q4 EPS by $0.06. Preliminary Q4 guidance of $1.03-$1.07 falls below the analysts’ estimate of $1.11.

Fellow Dow component Intel also issued a bleak forecast, sending its shares down 5% pre-open. The company dramatically slashed its Q4 revenue guidance to a range of $8.7 billion-$9.3 billion from previous guidance of $10.1 billion-$10.9 billion amid “significantly weaker than expected demand.” This new guidance falls far below the analysts’ estimate of $10.4 billion. Additionally, the company expects its gross margin to be around 55%, down from its prior expectation of 59%. The company’s stock may open near a 12-year low.

    • Intel's "Dramatic" Warning—Was It Really A Surprise?

Similarly, National Semiconductor cut its sales outlook for its current quarter on declining orders. For Q2, the company expects revenues of $420 million-$425 million, down from its prior guidance of $470 million-$480 million. Analysts are expecting Q2 revenues of $461 million. The company also announced it will cut 5% of its workforce.

In other news:

Weekly jobless claims rose higher than expected to 516,000; its highest level since 2001. Three-Month U.S. Dollar Libor rose for the first time today in over a month. The rate rose to 2.14875% from 2.1325% yesterday, but still significantly off its 2.81875% high on October 10.

MBA mortgage applications rose 11.9% last week as mortgage rates fell. The 30-year fixed rate fell too 6.24% from 6.47% last week.

    • New Jobless Claims Pass 500,000 to 7-Year High

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