Tag - Mot

Small-cap stocks threw a gasket in the final hour of trading Friday, giving back a lion’s share of Thursday’s stunning rally off new bear market lows while finishing with the lowest weekly close since August 2003. Slumping tech stocks, dreadful retail sales and a risk-averse mentality took a toll on a market that is starting to get a penchant for wicked afternoon volatility. The Russell 2000 (NYSE:IWM) closed down 34.71, or 7.07% at 456.52 and is now down 40% for 2008, while the Dow is off 36% for the year and the S&P 500 is down 41%.

Small caps entered the day on a mildly weak note, unable to graft higher on modest gains in Europe and Asia and seemingly not able to revive the manic bargain-hunter push from Thursday afternoon. A big part of the problem is that no matter how hard investors try to write off ugly economic data, at some point the blows wear down psychology, kind of like a fighter who’s been absorbing body shots for several rounds.

The latest stinger on the data front was this morning’s retail sales report, which posted the largest October decline on record (the series only dates back to 1992). The slide was 2.8%, well below the forecast for a decline of 1.5%, but perhaps a little closer to the “worst case” scenarios that were floating about. It doesn’t help matters that consumer spending appears to be falling off a cliff into the holiday season and a fresh batch of earnings reports from retail firms simply added to the spending worries.

The S&P Retail Index tumbled about 7% today as a recurring theme played out for stores that we all frequent from time to time – everything from apparel to home improvement to electronics – they all basically warned that forward projections were at risk as the U.S. economy lurches through the recession. Speaking of recession, eurozone economists beat the official U.S. designators to the punch by . . .

Small-cap stocks extended the morning rout into midday trading, pulled down by renewed worries about the economy following the worst decline in October retail sales on record, which only heightens fears about consumer spending moving into the key holiday season. At 2:16 p.m. ET, the Russell 2000 (NYSE:IWM) was down 4.29%, on target for the third-lowest daily close in more than five years and the lowest weekly close since August 2003 despite the dramatic recovery explosion from Thursday.

Energy and technology stocks were among the dominant drags on the market, with the Energy SPDR off nearly 5% and the tech-laden Nasdaq 100 down about 4.5%. Within the tech arena, anything tied to the cell phone business was getting hammered following Nokia’s warning that sales would fall far below expectations in coming months. Nokia Corporation (NYSE:NOK) was down 12%, Motorola Inc. (NYSE:MOT) was off 8% and QUALCOMM Inc. (Nasdaq:QCOM), the largest mobile phone chip maker, was down 6%.

Back on the commodities theme, crude oil prices were down about $1.60 a barrel, as worries about global demand persist. Despite the pullback on energy prices, commodities overall were hanging in there today, with the Commodity Research Bureau Index basically flat at mid-session. In general, commodities are way oversold and the U.S. dollar tone is mixed today (up versus euro, down versus yen).

As for retailers, today just isn’t pretty. The S&P Retail Index is down 6% and a host of name-brand companies released earnings today that were either disappointing, or even when solid for the third quarter reflected downward guidance for the coming quarter. Nordstrom Inc. (NYSE:JWN) was down 8%, JC Penney Company Inc. (NYSE:JCP) was down 9% and although the pain was intense for apparel oriented retailers, there was plenty of agony to go around; for instance, home improvement retailer . . .

It’s been a rollercoaster ride thus far for small caps, most recently trending deeper into the red along with the S&P 500 and the Dow after a gloomy weekly unemployment claims report and a weaker-than-expected read on GDP dragged equities lower. 

At 12:46 p.m. ET, the Russell 2000 (NYSE:IWM) was down 3.44, or 0.48%, at 715.42, while the Dow down 0.98%, or 113.01, at 11,470.68.

The weekly claims number, reported this morning, spiked more-than-expected to 448,000 from last week’s 404,000 level. The claims number, which was substantially above the median forecast of a decline to 395,000, was pushed higher by an emergency unemployment program. The number was the single largest weekly claims figure in more than five years. Although this survey was taken after the numbers were collected for Friday’s monthly employment release, it has heightened jitters ahead of the Labor Department’s release tomorrow. 

The second-quarter number for GDP, also out this morning, wasn’t comforting either. The nation’s domestic growth clocked in at 1.9% for the second quarter, below the forecast of 2.3%. Additionally, GDP for the past 3 years was revised downward. Fourth quarter GDP was reduced to minus 0.2%, the first decline in quarterly GDP since 2001.

"The revisions were ugly and will fuel the recession debate," Andy Busch, global foreign exchange strategist for BMO Capital Markets, said in an email. "Today's numbers were a big disappointment and will rev up the doom-gloom crowd to call for the end of the world. July was brutal. Let's hope we can focus on the Olympics -- I'm still expecting/hoping to see a stabilization occur in August without the massive swings July presented."

Although the weak GDP number and claims took the limelight today, there was some hopeful economic news in the abyss. The Chicago Purchasing Managers report came in stronger than expected. PMI was 50.8, above the forecast of 49 and above 50 for the first time since January.

For the first time in awhile, gyrations in crude oil prices were not the focal point. Crude sold off this morning, after spiking over $4 Wednesday, and continues to tread in the red. A barrel of light sweet crude slipped $2.40 to roughly $124 mid-session.

The economic reports managed to smother uplifting merger and acquisitions news. Bristol-Myers Squibb Co. (NYSE:BMY) made a bid to acquire ImClone Systems Inc. (Nasdaq:IMCL) ...

Small-cap stocks fell hard this morning, pulled down by soft economic data, a global rout in equities, record lows in the U.S. dollar and a sobering outlook from central bank leaders. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was down 13.92, or 2.09%, at 650.59, the lowest level seen since March.

In Senate testimony this morning, Federal Reserve Chairman Ben Bernanke will address the economy and monetary policy. In a release of the advance text, Bernanke said that the financial markets remain under “considerable stress” and that consumer spending was likely to be “restrained” in coming quarters. The immediate response to the Bernanke text headlines was that stock markets extended the morning slide.

The stock market was already taking a beating in after-hours trading before a fresh batch of economic data came out on the weak side ahead of the opening. On the inflation front, the PPI headline figure came in at plus 1.8%, which was well ahead of the forecast for a rise of 1.3% and the year-over-year figure was a sobering plus 9.2%, the largest rise since June 1981. On the consumer spending ledger, the news was also dour, with June retail sales up just 0.1%, well down from the median forecast for a rise of 0.4% as car sales notched their biggest drop in more than two years. Even when excluding autos, June sales were up just 0.8%, which also missed the forecast for a rise of 1%.

Retail sales in May were strong, and although this month’s figure missed the estimate, it was still a decent number. The problem is that May and June sales were temporarily boosted by government stimulus checks and the strength is seen as temporary from most analysts. “Despite recent strength, consumers are slowly and grudgingly succumbing to job losses, high energy prices, the housing meltdown and the financial market turmoil,” Steven Wood, chief economist with Insight Economics, . . .

When Motorola (NYSE:MOT) caught the cold shoulder of cell phone buyers as the faddishness of its RAZR line faded, Multi-Fineline Electronix Co. (Nasdaq:MFLX) felt the chill.

At one point, the Anaheim, Calif., maker of flexible printed circuit technology relied heavily on Motorola, which had accounted for nearly 90% of Multi-Fineline Electronix’s sales. It was Multi-Fineline’s flexible wizardry that enabled Moto to deliver the ultra-sleek RAZRs that consumers craved.

The RAZR nicks and cuts are healing at Multi-Fineline, commonly known as M-Flex, amid a management restructuring and other changes. It was a rather quick turnaround: in the January through March quarter of 2007, the company warned of a sales shortfall.

Having learned from that painful lesson, Multi-Fineline Electronix is broadening its customer base to makers of cell phones, hand-held devices and smart phones, while eyeing potential growth in medical devices and other specialties. Despite the demand rollercoaster created by the retrenching U.S. economy, the company has three quarters of positive results under its belt.

Analysts who follow M-Flex apparently didn’t find a lot to fault when results for the fiscal second quarter came out May 6. According to a Thomson Reuters survey, two of the five analysts polled have Multi-Fineline as a “buy,” with the other three calling it a “hold.”

Shares of M-Flex have held steady around $20 in recent weeks, which is less than a third of the highs seen in March 2006, when the stock topped $67. Multi-Fineline shares hit a 52-week high of $24.14 on March 12, and a low of $9.70 on Aug. 3. The Thomson median price target is $23. Shares closed Monday at $20.19.

Founded in 1984, Multi-Fineline has become a leading provider of flexible-circuit technology. M-Flex also provides end-to-end services to electronics companies, from design to production and assembly. Most manufacturing takes place in China, where it has some 800,000 square feet around Suzhou. Construction is beginning this month on a new plant that will expand capacity in about a year by $30 million in monthly sales on top of the $64 million in current monthly sales capacity.

Following the May 6 release of results for the three months ended March 31, M-Flex shares shot up 12%, and for good reason. The company said in the fiscal . . .

Stocks managed to climb higher midday after seeing a sell off earlier in the session, as investors digested a slew of economic data and mixed earnings reports.

At 12:45 p.m. ET, the Russell 2000 (NYSE:IWM) had gained 8.44, or 1.19%, at 716.55, while the Dow surged 135.07, or 1.06%, to 12,898.29.

At 10 a.m. ET, the Census Bureau reported new homes sales in March plummeted to an annual rate of 526,000, the lowest level in 16.5 years, sending stocks cascading lower this morning. Sales were below the 585,000 that economists were forecasting and represented a 36.6% plunge from the March 2007 level of 830,000, and a 8.5% slide below the revised February rate of 575,000.

In keeping with the downbeat economic news, durable goods orders for the month of March declined for the third consecutive month, decreasing $0.7 billion or 0.3% to $212.2 billion, the U.S. Census Bureau said this morning. This is the longest succession of decreases since the last recession in 2001.

In contrast, applications for unemployment benefits fell by 33,000 to 342,000 for the week ended April 19, the Census Bureau also reported this morning. It should be noted that the weekly claims figures are often volatile, and even though today’s headline number was better than the forecast, the claims numbers still point to extensive layoffs and a rise in the unemployment rate.

Small-cap stocks are expected to open lower Thursday, in line with a decline in overnight values. The Russell 2000 (NYSE:IWM) was down about 0.9% in after-hours action, which would translate to an opening for the cash index near 702.00. However, stock index futures were starting to slice into overnight declines after Weekly Claims data came in better than expected, which could lessen the opening dip in small caps as well. The overnight dip was tied to soft earnings from headline names Amazon.com (Nasdaq:AMZN), Motorola (NYSE:MOT) and Starbucks (Nasdaq:SBUX).

Before the regular opening, the market received the first batch of economic data since Tuesday’s existing home sales, which could also provide some fuel for trading action in addition to the ongoing focus on earnings results. The weekly claims numbers were better than expected at 342,000 versus the forecast of 375,000, but the durable goods data came in at -0.3%, which was worse than the +0.1% estimate. In . . .

Consumers are cutting the cord, severing the tether to the landlines that once were mandated to talk to the world. No longer are they feeling beholdin’ to AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) or any of the other traditional providers of Plain Old Telephone Service.

Viva la revolution cellular.

Admittedly, wireless services are not without shortcomings. Dropped calls are not completely a thing of the past, but recent technology developments, combined with a network buildout by the carriers, are making strides in minimizing callus interruptus.

One of the hotter technologies under development is known as “femtocell,” and an 8-year-old Massachusetts company, Airvana Inc. (Nasdaq:AIRV), is working to help take it mainstream. Think of it as something akin to a cell tower of your very own: rather than depending on an outside signal that might fade inside a building, the femtocell is a small base station that delivers cellular communication over a broadband Internet connection. Adding range in the home to the home on the range — or in the condo complex — could help popularize 3G wireless services in the important U.S. market.

Airvana has a portfolio of network infrastructure products based on Internet Protocol technology, which provides the missing link between wireless service . . .

Over the last decade or so, large PC makers and Western IT giants have invested heavily in the Middle Kingdom, helping China become a major center of computer manufacturing. But the nation's success in the hardware arena has yet to trickle into the software side of the business. That is destined to change.

China's software and technology services industry revenues grew to nearly $14 billion in 2007, an almost 25% increase over the previous year, according to the Ministry of Information Industry. And the Chinese government and domestic software players are committed to gaining a foothold in global markets.

While no homegrown firms currently poses a real threat to the United States’ and India's dominance in software and tech services, one little-known Chinese technology outfit can’t be ignored.

Meet VanceInfo Technologies Inc. (NYSE:VIT), one of China's leading offshore software development and information technology services companies. The firm, which was incorporated in April 2004 and went public in U.S. markets in December 2007, develops software products and provides a broad range of services for software systems, including research and development, application development and maintenance, enterprise solutions, quality control, and globalization and localization. VanceInfo primarily serves corporations based in China, Japan, the United States and Europe, focusing on high-growth industries such as technology, manufacturing, financial services, telecommunications, retail and distribution. Its clients include Microsoft Corporation (Nasdaq:MSFT), IBM Corp. (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), Citibank Inc. (NYSE:C) and Motorola, Inc. (NYSE:MOT).

The company has grown its business through acquisitions. In September 2006, it snapped up Beijing Prosoft Software Technology Co., Ltd., followed by the IT services arm of Beijing SunBridges Technologies Development Co., Ltd. in December 2006. In March 2007, it bought out Beijing Innovation Technology Co., Ltd., an IT service provider specializing in R&D services. In May of last year, it acquired a 75% stake in Shanghai Solutions Software Co., Ltd. and purchased an additional 48.99% of the equity interest of Worksoft Japan Inc. Finally, last July, it acquired Beijing Chosen Technology Co., Ltd., a firm that provides various services similar to VanceInfo's.

On March 10, Huawei Technologies, a leading Chinese telecom firm that reviews and ranks its vendors, gave VanceInfo its highest rating for R&D services vendors, a testament to the acceptance rate, timely delivery and management stability of VanceInfo's projects. As the top-ranked company, VanceInfo will . . .

A recent changing of the guard in management and the board of directors of a little-followed microcap network device play suggests an emerging value situation worth investigating.

Irvine, Calif.-based Lantronix, Inc. (Nasdaq:LTRX) has remained a story of unfulfilled potential for its shareholders in recent years. The $56 million market capitalization company is a leading player in the emerging device networking market. Lantronix’s secure communication solutions provide remote access, management and control of virtually any electronic device via the Internet. The company’s products are used in markets ranging from security, industrial and building automation to medical, financial, government, consumers electronics and appliances.

While the long-term future of the device networking market looks bright, a world here-and-now filled with interconnected devices can’t come soon enough for Lantronix. The company’s annual sales have nudged up only modestly over the past few years, to $55.3 million in fiscal 2007 from $49 million in fiscal 2003. Losses have been reduced over this stretch, but sustained profitability has still proven elusive. This situation could be about to change. Last month, the company announced the appointment of Jerry Chase as the company’s new chief executive. The hiring of Chase follows a year in which the company has also made significant changes to its board of directors. Four of Lantronix’s five directors have joined the board over the past year.

Chase joins Lantronix following a successful previous turnaround stint. From 2004 to 2007, Chase was CEO of digital video equipment maker Terayon Communications. Under Chase, Terayon sold two of its three unprofitable units and grew revenue in its remaining division to $60 million from $24 million. In April 2007, Terayon was acquired by Motorola, Inc. (NYSE:MOT). Chase’s compensation package with Lantronix includes accelerated vesting of a portion of his stock options depending on the stock’s performance, beginning with Lantronix’s share price staying above the $1.50 level on a sustained basis. Lantronix closed at $0.93 a share on Monday, around the middle of a 52-week range of $0.47 to $1.72.

Riddle me this, Batman: what do you get when you cross the density of DRAM with the speed of SRAM and non-volatility of FLASH?

If you don’t know, that’s OK — the answer is a digital memory storage technology that’s still largely in the development stage. It’s called “magnetoresistive random access memory,” or “MRAM,” and those following its evolution say it has the potential to revolutionize electronics as a smaller, faster, more energy efficient and durable way of storing and sending your data, iTunes songs or even digitized Batman reruns — if that’s your thing.

This nanotechnology relies on electron spin rather than charge to acquire, store and transmit information. Albert Fert, the co-recipient of the Nobel Prize for Physics in 2007, recently predicted that MRAM and its offshoots are good candidates to be the “universal” memory of the future. This kind of Holy Grail talk has helped feed market hunger for MRAM’s promise, but there are still plenty of developments, testing and marketing hurdles yet to cross - not to mention the pesky little issue of cost competitiveness.

Companies leading the charge include Cypress Semiconductor Corporation (NYSE: CY), Freescale Semiconductor (NYSE: FSL) — the Motorola Inc. (NYSE: MOT) spinoff, which was the first company to bring the memory to market, IBM Corp. (NYSE: IBM) and last but certainly not least, Eden Prairie, Minn.-based NVE Corp. (Nasdaq: NVEC).

“Spintronics,” as the highly durable applications of this technology are called, is something that has attracted several big chunks of Department of Defense R&D change for NVE. The company has built itself around researching and marketing new uses of the technology for harsh battlefield conditions in addition to medical and industrial applications where absolute reliability is required.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are in the red despite news of the latest corporate deal making.

At 10:13 a.m. ET, the small-cap index had dropped 7.39 points, or 1.06%, to 691.51. The Dow Jones Industrial Average (INDU) was down 98.11 points, or 0.81%, to 12,084.02.

Search engine Yahoo! Inc. (Nasdaq: YHOO) will reject a bid from Microsoft Corp. (MSFT), the Sunnyvale, Calif.-based company announced before the start of trading.

“Microsoft’s proposal substantially undervalues Yahoo!,” the search engine said in a statement.

The deal was initially valued at about $45 billion but has since decreased to about $42 billion as the price of Microsoft’s shares have fallen. The Redmond, Wash.-based software giant is expected to take its offer directly to Yahoo!’s shareholders.

A merger between the two companies would create a more muscular rival to online search and advertising leader Google Inc. (Nasdaq: GOOG).

More mergers and acquisitions news is coming from networking solutions provider Nortel Networks Corp. and telecommunications heavyweight Motorola Inc. (NYSE: MOT), which are in talks to merge their wireless infrastructure divisions, according to The Wall Street Journal.

The Russell 2000 (NYSE: IWM) futures are slightly above their close level on Friday on news of corporate deal-making.

Search engine Yahoo! Inc. (Nasdaq: YHOO) will reject a $45 billion bid from Microsoft Corp. (MSFT), according to news reports over the weekend. The Redmond, Wash.-based software giant will in turn take its offer directly to shareholders.

More mergers and acquisitions news is coming from networking solutions provider Nortel Networks Corp. and telecommunications heavyweight Motorola Inc. (NYSE: MOT), which are in talks to merge their wireless infrastructure divisions, according to The Wall Street Journal.

There are no economic report releases to navigate on Monday, and outside volatility looks calm until we get to Wednesday morning’s Retail Sales report. Look for support Monday at 688 and 680, while resistance is at 712 and 721.

Palm, Inc. (Nasdaq: PALM) shares are rising in early trading after investment bank JPMorgan Chase & Co. (NYSE: JPM) upgraded the Sunnyvale, Calif.-based smartphone maker to “overweight” from “underweight.” In a note to investors, JPMorgan said it expects Palm to introduce several new phone models during 2008 and stronger-than-projected sales of its Centro smartphone.

Sprint Nextel Corporation’s (NYSE: S) exclusive Centro deal is ending and JPMorgan projects that Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) will introduce their own version of the Windows-based mobile phone. The investment bank also said that a new operating system will be released in late 2008, which will prompt increased product activity in early 2009.

JPMorgan projects a fiscal 2008 loss of $0.38 a share, and a loss of $0.09 per share during fiscal 2009. Wall Street analysts, on average, expect a 2008 loss of $0.17 per share and a 2009 loss of $0.05 per share.

In other news, Palm’s CFO Andrew Brown is scheduled to make a presentation at Thomas Weisel Partners Technology, Telecom & Internet Conference 2008 at 7:25 p.m. ET.

Cell phone-maker stocks rose during Friday’s trading after Motorola, Inc. (NYSE: MOT) said it is contemplating selling or spinning off its struggling handset business.

In morning trading, PALM shares are up 5.48%, or $0.33, at $6.35. Over the last 52 weeks, shares have ranged from $4.25 to $9.93.

The Russell 2000 (NYSE: IWM) went through the roof today as a late rally in financial shares lifted all the major U.S. indices. The small-cap index advanced 21.86 points, or 3.26%, to 693.43. The Dow Jones Industrial Average (INDU) gained 298.98 points, or 2.50%, to 12,270.17.

On a year-to-date basis, the Russell 2000 has lost 9.48%, while the Dow has let go 7.50% and the S&P 500 is missing 8.84%.

Small-cap stocks outpaced their larger brothers today as speculation of more rate cuts fueled the late-session rally.

February fed funds futures overwhelmingly suggest that the U.S. Federal Reserve will vote to lower its target for the federal funds 0.75% during its two-day meeting starting Jan. 29. A reduction of at least 0.50% is seen as a sure bet.

On Tuesday, the Fed lowered the federal funds rate, the rate at which commercial banks make overnight loans to each other, to 3.50% from 4.25%.

Shares representing the financial sector were invigorated and freed themselves of the bears’ grasp. Among the few exceptions was consumer financial services provider First Cash Financial Services, Inc. (Nasdaq: FCFS), which issued a 2008 earnings guidance below analysts’ projections.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices have extended their earlier losses. At 1:43 p.m. ET, the small-cap index had retreated 9.30 points, or 1.38%, to 662.27. The Dow Jones Industrial Average (INDU) had declined 195.18 points, or 1.63%, to 11,776.01.

Stocks small and large have moved deeper into negative territory as investors once again get the economic jitters.

Leading the way down are capital goods, followed by basic materials such as iron and steel. The tech sector, which has been getting the lion’s share of attention today, is also aching.

That’s because Apple Inc. (Nasdaq: AAPL) announced before the opening that it expects slower sales growth for the second quarter, while Motorola Inc. (NYSE: MOT) indicated that it will swing to a loss in the current quarter due to a decline in sales of its mobile devices.

Largely disregarded was news from drug maker Pfizer Inc. (NYSE: PFE). The New York-based company reported before the start of trading that its fourth-quarter profit was $3.6 billion, or $0.52 per share, above Wall Street’s forecasted earnings of $0.47 per share. Chairman and CEO Jeff Kindler attributed the result to cost reductions and the weak dollar.

But overall, pharmaceutical shares are sagging thus far in the session. Retailers are among the few gainers, followed by the transportation sector, represented by trucking and railroad companies.

Elsewhere, the declining stock market and fears of a U.S. recession have combined to lower the price of oil $2.11 to $87.10 a barrel.

The Russell 2000 (NYSE: IWM) has returned to negative territory after a brief foray in the green. At 11:14 p.m. ET, the small-cap index had lost 4.49 points, or 0.67%, to 667.08. The Dow Jones Industrial Average (INDU) had surrendered 116.08 points, or 0.97%, to 11,855.11.

The bears are dominant on Wall Street following news before the start of trading that Apple Inc. (Nasdaq: AAPL) forecasted a slower sales growth for the second quarter and a forecast by Motorola Inc. (NYSE: MOT) that it will swing to a loss in the current quarter due to a decline in sales of its mobile devices.

Among small-cap companies, Bolt Technology Corp. (Nasdaq: BOLT) reported second-quarter fiscal 2008 earnings that missed analysts’ projections. The Norwalk, Conn.-based developer of seismic energy sources and underwater connectors announced earnings of $3.6 million, or $0.42 per share, below the expected $0.68 per share.

However, the result represents a 52% year-over-year increase.

In economic news, the Mortgage Bankers Association reported that its weekly index of mortgage application volume rose 8.3% for the seven days ended Jan. 18, its third consecutive increase. The Washington, D.C.-based trade association’s index hit a level of 981.5, compared with 906.4 one week earlier.

“Refinance applications are up 92% since the beginning of November and purchase applications are up 7%,” said Jay Brinkmann, vice president of Research and Economics, in a statement. “With tighter credit conditions we do not know how many of these applications will become loans, but it is clear that borrowers are responding to the 40 to 80 basis point drop in rates we have seen since Nov. 2 across products.”

The Russell 2000 (NYSE: IWM) is up while the other major U.S. indices are falling on disappointing news from major tech sector players.
 
At 10:21 a.m. ET, the small-cap index had added 1.65 points, or 0.25%, to 673.22. The Dow Jones Industrial Average (INDU) had lost 46.58 points, or 0.39%, to 11,924.61.

A sell-off is on hand this morning as investors react to news of an unimpressive second-quarter sales guidance from Apple Inc. (Nasdaq: AAPL).

The Cupertino, Calif.-based company said that sales growth will slow to 29% in the second quarter, down from a pace of 35% growth seen in the first quarter. The forecast unleashed fears of a pullback in consumer spending, further contributing to worries of an economic recession.

Consumption is about 70% of U.S. gross domestic product.

Otherwise, Apple reported that its first-quarter profit was $1.58 billion, or $1.76 per share, compared with $1 billion, or $1.14 per share, a year earlier. That’s above Wall Street’s projections.

Contributing to the bearish mood is Motorola Inc. (NYSE: MOT), which forecasted that it will swing to a loss in the current quarter due to a decline in sales of its mobile devices. Analysts were expecting to see a profit.

The Russell 2000 (NYSE: IWM) futures are down sharply and the small-cap index will open with a drop.

Helping fuel the bearish mood is Apple Inc. (Nasdaq: AAPL), which forecasted after the close on Tuesday that its second-quarter sales growth will slow to 29% from the 35% growth seen in the first quarter.

The reason: the Cupertino, Calif.-based company does not expect to be able to sustain previously strong sales of its trademark iPod.

Otherwise, Apple reported that its first-quarter profit was $1.58 billion, or $1.76 per share, compared with $1 billion, or $1.14 per share, a year earlier.

Contributing to the pessimism is Motorola Inc. (NYSE: MOT), which forecasted that it will swing to a loss in the current quarter due to sluggish demand for its mobile devices.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Globecomm Systems, Inc. (GCOM), up 14%.
• Corinthian Colleges, Inc. (COCO), up 11% despite news on Tuesday that it has lowered its 2008 guidance.
• Pharmasset Inc. (VRUS), up 6%.

Biggest percentage losers:

• First Cash Financial Services, Inc. (FCFS), down 22% on news of a decline in fourth-quarter profit.
• Charlotte Russe Holdings, Inc. (CHIC), down 9%.
• Hoku Scientific, Inc. (HOKU), down 9% on news of a fiscal fourth-quarter sales guidance below Wall Street’s expectations.

Entropic Communications
www.entropic.com
(Nasdaq: ENTR)
Scheduled for Dec. 3
$765.9 million post-money valuation

In this day and age, we have so many machines—televisions, computers, telephones—to keep us entertained, but there is an increased desire for devices that have content compatibility, which isn’t easy. That’s where Entropic Communications comes in.

The company designs semiconductors to handle multimedia home networks. It’s a fabless semiconductor company, which means that another company handles the manufacture and distribution of the chips. This reduces Entropic’s capital requirements. Because semiconductor equipment isn’t cheap, the outsourced manufacturing more than makes up for the loss of operating control that goes along with it. In April of 2007, Entropic acquired RF Magic, which had a complementary portfolio of home networking products.

Entropic’s semiconductors are purchased by electronics manufacturers to put in televisions, digital video recorders, modems and other devices that pull video from coaxial cable. In 2006, Entropic and RF Magic combined drew 31% of their $67.7 million in revenue from Actiontec Electronics, Inc., 23% from Motorola, Inc. (NYSE: MOT) and 11% from CalAmp Corp. (Nasdaq: CAMP). This customer concentration forms one risk, but that’s less worrisome than the risk of cable companies and customers standardizing around a competing home networking technology, such as Ethernet, xDSL, or WiMax.

Neither Entropic (founded in 2001) nor RF Magic (founded in 2000) is profitable, which is no surprise given the early-stage nature of the underlying technologies. The combined companies raised more then $124 million from five different venture capital firms. None of these are selling shares on the IPO and they’ll control 36% of the company after the IPO, which values their stakes at $275.7 million. Some shareholders, including some managers and small venture firms, are selling all or part of their holdings in the IPO. Most of the proceeds will go to general corporate purposes, keeping the company going until its products catch on and it stops losing money.

The small-cap index (NYSE: IWM) closed in the red on news of generally negative economic reports. The Russell 2000 lost 4.74 points, or 0.58%, to 806.11. The Dow Jones Industrial Average (INDU) dropped 3.33 points, or 0.02%, to 13,671.92.

On a year-to-date basis, the Russell 2000 has increased 2.37%, while the Dow has added 9.60% and the S&P 500 has gained 6.90%.

A volatile day of trading saw small-cap stocks switching from positive to negative territory as investors digested news of the latest economic reports and some earnings news.

The Russell 2000 futures were pointing to a moderately bullish opening following Motorola Inc.’s (NYSE: MOT) announcement that it swung to a third-quarter profit and released a better-than-expected outlook for the fourth quarter.

But small caps spent only a few minutes in the green after the opening, weighed down by news that orders for durable goods fell 1.7% in September, according to the U.S. Commerce Department. Economists were expecting a rise of 1.5% following a downwardly revised drop of 5.3% in August.

However, orders for non-defense capital goods excluding aircraft, a key measure of business investment, added 0.4% after a rise of 1.8% in August.

The major U.S. indices were down but started climbing when the Census Bureau announced that sales of new homes increased 4.8% to an annual pace of 770,000 in September, defying projections of a drop.

The Russell 2000 (NYSE: IWM) is in the green as news of a surprisingly bullish housing report offset generally negative economic reports.

At 10:42 a.m. ET, the small-cap index had gained 2.41 points, or 0.30%, to 813.26. The Dow Jones Industrial Average (INDU) had added 16.67 points, or 0.12%, to 13,691.92.

The small-cap futures were higher before the opening on news that Motorola Inc. (NYSE: MOT) reported its first profit in 2007. The Schaumburg, Ill.-based telecommunications giant also announced a better-than-expected outlook for the fourth quarter.

In economic news, orders for durable goods, which are intended to last at least three years, fell 1.7% in September, according to the U.S. Commerce Department. Economists were expecting a rise of 1.5% following a downwardly revised decline of 5.3% in August.

On the plus side, orders for non-defense capital goods excluding aircraft increased 0.4% after a rise of 1.8% in August. That measure is a key barometer of business spending and today’s reading is a sign that businesses are continuing to spend money on capital equipment despite the uncertain U.S. economic environment.

Elsewhere, the number of U.S. workers applying for jobless benefits fell less than expected for the week ended Oct. 20, the U.S. Labor Department said before the start of trading. Unemployment claims declined 8,000 to 331,000, while economists were calling for a much larger drop of 17,000.

The Russell 2000 (NYSE: IWM) futures are higher and the small-cap index will likely open in positive territory.

The earnings season continues to march on, with attention this morning focused on Motorola Inc. (NYSE: MOT). The Schaumburg, Ill.-based telecommunications giant reported a third-quarter profit, its first in 2007, and announced a better-than-expected outlook for the fourth quarter.

In other news, orders for durable goods, which are intended to last at least three years, fell 1.7% in September, according to the U.S. Commerce Department. Economists were expecting a rise of 1.5% following a revised decline of 5.3% in August.

Silver lining came in the form of a 0.4% increase in orders for non-defense capital goods excluding aircraft, after a rise of 1.8% in August. That measure is a key barometer of business spending.

At 10 a.m. ET, the U.S. Commerce Department will release the numbers on new homes sales in September. Economists are expecting to see a decline.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Transcend Services Inc. (TRCR), up 17% on news of record third-quarter earnings.
• iRobot Corp. (IRBT), up 14% on news of a higher 2007 revenue outlook.
• ZOLL Medical Corp. (PLCE), up 12%.

Biggest percentage losers:

• Spartan Motors Inc. (SPAR), down 19% on news of a decline in third-quarter profit.
• Heelys Inc. (HLYS), down 11% on news of a lower third-quarter outlook.
• Triad Guaranty Inc. (TGIC) down 10% on news of a third-quarter loss.

The Russell 2000 (NYSE: IWM) and the Dow lost ground as news of a strike at General Motors weighed heavy on investors’ minds. The small-cap index fell 7.31 points, or 0.90%, to 805.80. The Dow Jones Industrial Average (INDU) dropped 61.13 points, or 0.44%, to 13,759.06.

Workers at General Motors Corp. (NYSE: GM) took to the street today as the automaker failed to reach a labor agreement with the United Auto Workers.

The nationwide strike is the first in more than 30 years at the Detroit-based company and comes at a time when the troubled GM is trying to cut costs and raise its head above water after two years of steep losses.

The dispute revolves around GM’s need to reduce labor and health-care costs and the UAW’s focus on protecting the benefits of 73,000 members who work at the company’s U.S. production facilities. Union leaders declared a willingness to continue negotiations and most observers expect the dispute to be resolved quickly.

News of the strike emboldened the bears and scared away the bulls.

Otherwise, the day began with futures pointing up and stocks poised to rise following news that tech sector heavyweights have received analyst upgrades.

The Russell 2000 (NYSE: IWM) and the Dow (INDU) are trading near the flat line following news of upgrades in the tech sector.

At 10:00 a.m. ET, the small-cap index had lost 2.67 points, or 0.33%, to 810.44. The Dow Jones Industrial Average was down 8.78 points, or 0.06%, to 13,811.41.

With little coming out on the economic front, investors are taking a cue from analysts’ upgrades of major tech sector players.

Shares of Apple Inc. (Nasdaq: AAPL) are rising after Citi Investment Research, the research arm of financial services giant Citigroup Inc. (NYSE: C), raised its target price. Citi cited lower cost estimates and an upbeat outlook for upcoming product launches.

Mobile device maker Motorola Inc. (NYSE: MOT) is looking good after RBC Capital Markets upgraded the Schaumburg, Ill.-based company to “outperform” from “sector perform.”

Adding to the upbeat news from the tech sector, EMC Corp. (NYSE: EMC) a maker of data-storage computers and software, was upgraded by both Citigroup and Bear, Stearns & Co. (NYSE: BSC).

Elsewhere, shares of General Motors Corp. (NYSE: GM) are looking up due to speculation that the Detroit-based automaker will be able to reach a new labor agreement with the United Auto Workers and avoid a strike by the union’s 73,000 members.

The Russell 2000 (NYSE: IWM) futures are higher and the small-cap index is likely to move up following news of analysts’ upgrades.

With little in the way of economic news, investors are focusing their attention on bullish developments in the tech sector.

Shares of Apple Inc. (Nasdaq: AAPL) are rising after Citi Investment Research, the research arm of financial services giant Citigroup Inc. (NYSE: C), raised its target price. Citi cited lower cost estimates and an upbeat outlook for upcoming product launches.

Mobile device maker Motorola Inc. (NYSE: MOT), is also enjoying a pre-market bump after RBC Capital Markets upgraded the Schaumburg, Ill.-based company to “outperform” from “sector perform.”

Adding to the upbeat news from the tech sector, EMC Corp. (NYSE: EMC) a maker of data-storage computers and software, was upgraded by both Citigroup and Bear, Stearns & Co. (NYSE: BSC).

Not all that long ago, the term wireless applied specifically to voice communications. But as is understood by anyone who has discovered the texting feature on their cell phones, the global positioning systems in their cars, or attends company conferences remotely from a laptop in their local Starbucks, wireless voice technology today is just one of a multitude of wireless applications.

The term wireless in the year 2007 applies to the transmission of voice, video and data and covers a long and growing list of uses from accessing the Internet over a handheld device to preventing theft of truck cargo by implanting a GPS device in the trailer. Quite simply, the industry is booming.

Wireless technology helps corporate executives work more effectively on the road, keeps blue collar workers more efficient in the field, and is providing a lot more entertainment options for the living room, the car and the daily subway commute.

The sheer number of wireless devices and applications as well as potential users makes it difficult to even measure the size of the market.

One good statistic is that consumer spending on wireless technologies is projected to exceed spending on wireline, or fixed wire services by the year 2010. And anecdotally, there is growing evidence that more and more consumers prefer using their cell phones for text and entertainment data than to talk. That shift is spurring demand for new wireless technologies.

All the companies that years ago made money selling traditional land-line telephone equipment today are pouring resources into wireless networks, and in recent years many of these industry giants have grown even larger through mergers and alliances. France’s Alcatel merged last year with Lucent Technologies – resulting in Alcatel-Lucent (NYSE: ALU) -  while Nortel Networks Corp. (NYSE: NT) formed a partnership with Microsoft Corporation (Nasdaq: MSFT) to build wireless technologies for corporations. Cisco Systems, Inc. (Nasdaq: CSCO) has increasingly been investing in Internet gear to allow for the delivery of voice, video and data to wireless devices, and Motorola Inc. (NYSE: MOT) is actively acquiring smaller businesses that make technologies to enable wireless communications.

Napster, Inc. (Nasdaq: NAPS), the formerly notorious music-sharing company that now bills itself as “the most popular on-demand music subscription service in the world,” is positioning itself to become the leading content provider for music-enabled cell phones, CEO William Gorog said in a conference call after the close of Wednesday’s trading.

“We have never had greater excitement,” Gorog said on the call. “We believe our base of on-demand music subscribers is greater than all other on-demand subscription services combined.”

In the first quarter of 2008 ending June 30, the company expects revenues of $31 million, from $28.1 million the prior year, on improved gross margins and lowered operational expenses, CFO Nand Gangwani said on the call. The company predicts a net loss between $6 million and $7 million, or $0.14 a share, Gangwani said. This would be an improvement on the first quarter 2007 loss of $9.8 million, or $0.26 a share.

CEO Gorog forecasted an industry shift from standalone MP3 players to music-enabled cell phones.

“In 2008, music-enabled cell phones will easily eclipse sales of MP3 players,” Gorog said. “In the near future, most consumers will own a portable device that is compatible with Napster.”