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Opening View: DJIA, SPX Head Modestly Lower as Bulls Take a Breather

APKT is bracing for a drop after offering lackluster earnings guidance

by 1/4/2012 8:20:35 AM
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After ushering in the New Year on a high note, the bulls are poised to take a breather this morning. Europe has once again emerged as a focal point, as Wall Street eyes rising bond yields in Spain, and preparation for a visit by international debt inspectors in Greece. Just yesterday, the latter country cautioned that it could exit the euro zone, should a second bailout fall through, and warned that more austerity measures could be on the horizon. On the home front, meanwhile, Americans have turned their attention to Iowa, where Mitt Romney eked out a victory over Rick Santorum in last night's Republican caucus. Ahead of the bell, the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) are set to give back a portion of yesterday's gains.

Dow, S&P and Nasdaq futures

In earnings news, Acme Packet (APKT - 31.81) offered relatively weak fourth-quarter and full-year guidance, citing "uncertainty in the North American service provider market." Specifically, the company projected an adjusted quarterly profit of 26 cents to 28 cents per share on revenue of $84 million to $86 million. Analysts, on average, were calling for a per-share profit of 37 cents on sales of $93 million. Likewise, APKT cut its full-year earnings guidance to a range of $1.03 to $1.05 per share, and trimmed its revenue outlook to $308 million to $310 million. Previously, the firm had forecast earnings of $1.14 to $1.18 per share on sales of $315 million to $320 million. At last look, APKT is bracing for a 20% drop out of the gate.

Team, Inc. (TISI - 29.90) banked a fiscal second-quarter profit of $10.3 million, or 50 cents per share, an impressive 28% jump over last year's profit of $8.1 million, or 41 cents per share. Excluding items, earnings arrived at 53 cents per share. Revenue was also on the rise, jumping 19% to $158.3 million. The results came in stronger than forecast, as analysts, on average, projected a profit of 49 cents per share on $154.1 million in sales. Furthermore, the Texas-based construction company raised its full-year 2012 guidance to a range of $1.55 to $1.70 per share on $585 million to $610 million in revenue. As a point of contrast, analysts are calling for earnings of $1.61 per share on sales of $589.2 million. In pre-market trading, TISI is pointed 4.4% higher.

Finally, Progress Software (PRGS - 19.80) reported fourth-quarter net income of $11.7 million, or 18 cents per share, down 45% from $21.3 million, or 31 cents per share, in the year-ago period. Excluding items, earnings came in at 34 cents per share, compared to 47 cents per share in the year prior. Meanwhile, revenue fell by 6.1% to $136.3 million. Analysts, on average, were expecting an adjusted profit of 33 cents per share on revenue of $133.5 million. Looking ahead, PRGS is expecting fiscal first-quarter earnings of approximately 25 cents per share on revenue of around $120 million, falling short of Wall Street's prediction for a profit of 38 cents per share on revenue of $132 million. Ahead of the bell, PRGS is pointed 8.6% lower.

Earnings Preview

Today's earnings docket will also feature reports from Sonic (SONC), Resources Connection (RECN), UniFirst (UNF), and WSI Industries (WSCI). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Factory orders are slated for release today. Thanks to Monday's holiday, the ADP private-sector payrolls report and weekly crude inventories will hit the Street one day later than usual, on Thursday. Also on tap are the ISM services index and weekly jobless claims. Finally, we wrap up the holiday-shortened week on Friday with the Labor Department's monthly report on nonfarm payrolls and the unemployment rate for December.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,101,665 call contracts traded on Tuesday, compared to 605,685 put contracts. The resultant single-session put/call ratio arrived at 0.55, while the 21-day moving average was 0.70.

NYSE and Nasdaq summary

Volatility indices

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