Banks down, techs up today equals good news for earnings season that begins next week

Today the U.S. stock market is paying attention to sectors. Technology is up. Financials are down. I think that’s good news for investors are we head into earnings season with Alcoa (AA) kicking off third quarter reports after the close on Tuesday, October 11.

Today, as of 2:30 p.m. New York time the Technology Select Sector SPDR (XLK) is up 1.9%. That performance is a major reason that the technology heavy NASDAQ Composite, up 1.69%, is out performing the Standard & Poor’s 500 and the Dow Jones Industrial Average today.

The Financial Select Sector SPDR (XLF), on the other hand, is headed in the other direction, down 0.2% today.

So why is today’s performance by these two sectors good news? Because it shows that investors might be able to push fear to the side for long enough to pay attention to earnings for the next few weeks. I expect financial stocks to deliver disappointing earnings for the third quarter and for technology stocks to surprise to the upside.

For that to turn into actual movements in stock prices, though, investors have to actually pay attention to the results.

Big banks are looking at hits to earnings coming at them from every direction. Read more

Update Marvell Technology Group (MRVL)

After the market closed yesterday (March 4) Marvell Technology Group (MRVL) reported fourth quarter fiscal 2010 earnings of 40 cents a share (excluding items). That was 3 cents a share above the official Wall Street consensus. Revenue climbed 64% from the fourth quarter of fiscal 2009 to $843 million, just a tad above analyst consensus. Strength came in storage (sales up 5%) and networking (sales up 10%).

The best news in the current quarter, however, came on gross margins, which climbed 2.2 percentage points to hit 60%. That’s an all-time high for the chip company and is significantly above the 58.6% gross margin expected by Wall Street.

Normally the first quarter of the company’s fiscal year—the quarter that ends in April—shows a 7% to 10% seasonal decline in sales. In that context Marvell Technology Group’s guidance to Wall Street for a flat to 2% decline in that quarter counts as a sign of major continuing strength for the company. So too does the company’s increase in gross margin targets going forward to 58% to 60%. That indicates that Marvell believes the new margins are sustainable and the savings from its cost reduction program aren’t based on one-time gimmicks.

The conference call wasn’t completely sunshine and buttercups, however.  Read more

Buy Marvell Technology Group (MRVL)

Buy Marvell Technology Group (MRVL)

Marvell Technology Group (MRVL) is in the right markets at the right time. (For more on what those markets are see my post http://jubakpicks.com/2010/01/19/get-your-portfolio-ready-for-the-profitless-global-economic-recovery/ )

 Storage has always been the company’s core business—and it still makes up about 50% of its revenues. That’s projected as a hot sector in fiscal 2011 (The company’s 2011 fiscal year begins with the April quarter.) with revenue growth for the company forecast at 18% year-over-year by Kaufman Brothers. That’s above projected 12% to 15% growth in PC units sold for 2010, a result of the company’s continued gains in market share.

But as good as prospects for that business are, it’s growth in sales of embedded chips to the producers of consumer products from cell phone handsets to eBooks, and net books that make the stock a buy now. The company’s new Read more