U.S. manufacturers are starting to hit their strides this spring, according to new data from the Census Bureau. Durable goods orders rose 2.6% in March from February, notably better than the 2% increase expected by Econoday; the strong demand is a positive leading indicator for U.S. industrial production. While the S&P 500 Index (^GSPC -0.58%) advanced modestly on the good news, investors in Xilinx (XLNX), Biogen Idec (BIIB -1.53%), and Qualcomm (QCOM -2.53%) didn't seem to care much about durable goods. The S&P 500 added three points, or 0.2%, to finish at 1,878.
Xilinx plunged 9.1% today as the chipmaker took a hit from disappointing quarterly results. While sales came in above expectations at $617.8 million, trumping Wall Street forecasts by $5.8 million, earnings per share, or EPS, was $0.53 in the fourth quarter, just missing the $0.55 EPS analysts expected. Forecasting roughly the same quarterly revenue in the current period was enough to earn Xilinx a downgrade from Credit Suisse, which stamped the stock with a "neutral" rating. The company doesn't expect its clients, which range from aerospace companies to high-frequency traders to telecoms, to start shelling out much more for its products anytime soon; if high-frequency trading starts facing more scrutiny from regulators in the near future, Xilinx sales could feel the pressure, as well.
Biotech stocks fell by about 1% today on average. But Biogen Idec wasn't content to be average, slumping 3.9% by day's end. The diversified dru-maker reported first quarter results yesterday before the bell, only to curiously see no reaction from the market. After sleeping on it, investors decided to sell the stock en masse. While Biogen Idec does trade at a lofty 37 P/E multiple, a stock with this sort of growth potential never comes cheap. Tecfidera, its MS treatment, absolutely flew off the shelves in the first quarter, hauling in revenue of $506 million, a 27% jump from the quarter before. It's pipeline also looks appealing, with a hemophilia B drug Alprolix set to debut in May.
A woman blissfully uses a Qualcomm-enabled device. Source: Qualcomm website
A theme is starting to develop here. Having faithfully read the previous three paragraphs, you might suspect that quarterly results had something to do with Qualcomm's unsightly 3.5% slip today. You'd be right, of course. Not only did Qualcomm sales disappoint last quarter, but it forecast both revenue and earnings for the current quarter that lagged analyst forecasts. As much as investors care about the track record, they're buying into the future, not the past, and Qualcomm didn't impress on either front. On the face of it, the company is in an enviable position as the largest cell phone chip supplier in the world. With smartphones only beginning to gain meaningful market share in China, investors had banked on substantial growth fueled by Asian demand last quarter, but a slow rollout affected results.
