09:14 ET Opening Indications : S&P futures -10.5, or 12.5 pts below fair value; Nasdaq 100 pre-market indicator -46. Still looking at a
lower open, but haven't seen much movement in the past half hour.
09:12 ET Microsoft (MSFT) 72.06 +0.68: -- Update -- Goldman Sachs analyst Rick Sherlund out with mixed comments on MSFT
ahead of this morning's conference call - says that the early release of XP is a positive but thinks that company may not experience the
upgrade cycle that some are expecting because of compatability issues with XP and other software.
09:08 ET Genomica (GNOM) 4.00: Prudential downgrades to HOLD from Accumulate due to lack of visibility after the company posted
disappointing Q1 results. Price target cut to $4 from $5.
09:08 ET Northrop Grumman (NOC) 91.50: Prudential believes that company's bid for Newport News would be disastrous for NOC if
successful; thinks that NOC is attempting to take advantage of potential anti-trust issues for General Dynamics (GD) by bidding the same
price that it bid for Newport News.
09:07 ET NVIDIA Corp (NVDA) 87.06: Morgan Stanley's Mark Edelstone maintains STRONG BUY rating; while emphasizing that
long-term story remains intact, Edelstone says that NVDA should begin to consolidate its explosive gains. Stock off over 3 pts pre-market to
83.75.
09:00 ET Ulticom (ULCM) 26.05: ABN AMRO initiates coverage with an ADD rating and $30-31 price target; believe that Ulticom can
continue to grow even in the face of a downturn in telecom equipment spending.
08:57 ET Wireless Initiations : Bear Stearns initiates coverage on four rural wireless stocks: Dobson (DCEL 16) and Western Wireless
(WWCA 44.66) with BUY ratings and targets of $29 and $56; Rural Cellular (RCCC 37.04) with an ATTRACTIVE and $47; US Cellular
(USM 64.16) with a NEUTRAL and $66. Bear positive on rural carriers as they face less competition and capture high-margin roaming
revenue.
08:56 ET Amdocs Limited (DOX) 61.80: ABN AMRO initiates coverage with a BUY rating and $75 price target; Amdocs has a high
degree of recurring revenue and good visibility to future revenues.
08:55 ET Gapping Up : Pre-market action dominated by selling of names that ran up yesterday in hopes of improved outlook at
Cisco. Tepid tone of Cisco (-6.5%) call is weighing on the communications chip stocks this morning (AMCC -7%, PMCS -5%, BRCM
-5%)... One of the few names trading to the upside is WebMD (HLTH). Stock has managed a 5.5% advance in response to HLTH's
report of a 2-cents-better loss and new AOL alliance.
08:54 ET Portal Software (PRSF) 5.28: ABN AMRO initiates coverage with a HOLD rating; believe investors will reward Portal after
seeing ample evidence that it can recover its former growth rates in both revenues and operating EPS. Portal is fairly valued at current price
levels.
08:44 ET Bank One (ONE) 37.46: Bernstein downgrades to MARKET PERFORM from Outperform; cuts both FY01 and FY02 EPS
estimates by a dime to $2.55 and $3.00 due to expectation of higher credit card losses related to bankruptcies and rising unemployment.
08:43 ET Willamette (WLL) 48.56: Company's Board of Directors unanimously voted to reject Weyerhaeuser's (WY) revised $50 per
share offer as inadequate and not in the best interests of shareholders; says Weyerhaeuser has only made offers for Willamette when stock
prices are temporarily depressed.
08:40 ET Opening Indications : S&P futures -10.9, or 12.9 pts below fair value; Nasdaq 100 pre-market indicator -43. The Cisco
aftermath grows more negative, with most brokerage firms making cautious comments on both Cisco and its suppliers.
08:38 ET Cree (CREE) 24.49: Banc of America Securities upgrades to STRONG BUY from Buy and raises price target to $35 from
$25, or 50 times its CY02 EPS estimate of $0.65; cites channel checks in Asia and new products; says Cree has positioned itself to see
significant growth coming out of the economic slump.
08:36 ET Affiliated Computer (ACS) 69.74: Deutsche Banc Alex. Brown initiates coverage with a STRONG BUY and $85 target; says
ACS is a growth company (20% LTGR), with a high predictability of earnings (89% recurring revenue).
08:36 ET Exodus Comms (EXDS) 10.12: Web hosting company gives details of previously announced cost reduction measures; plans to
reduce its workforce by approx 15%; reduction will result primarily from attrition and consolidation of operations.
08:27 ET EMCORE (EMKR) 36.70: First Union downgrades to BUY from Strong Buy based solely on valuation; would look to
upgrade on information that points to substantial upward earnings revisions.
08:24 ET Applied Materials (AMAT) 52.60: Morgan Stanley lowering estimates ahead of company's May 15 earnings report; reduces
2001 est. to $1.05 from $1.40 and 2002 to $0.90 from $1.15 (consensus est. are $1.47 and $1.73). Firm maintains Q2 est. of $0.32, but
believes AMAT will struggle to break even in Q3... Maintains Outperform rating and holds to mantra for sector: "Buy by August."
08:19 ET Coca-Cola Entprs (CCE) 17.71: Banc of America Sec initiates coverage with a MKT PERFORM rating; says CCE needs
growth from soft-drink core and needs to demonstrate consistent volume and profit trends; visibility on these fronts will take several quarters
to emerge.
08:17 ET Pepsi Bottling (PBG) 44.00: Banc of America Sec initiates coverage with a BUY rating and $48 target price; says favorable
product/channel mix, cost efficiency improvements and modest volume growth in 2001 should enable PBG to post positive results.
08:16 ET Cisco Semi Fallout : Merrill Lynch reiterates Neutral ratings on AMCC, BRCM, CNXT, PMCS, VTSS after Cisco indicated
that there would be little to no market for its excess inventory in secondary market b/c there is already an oversupply of components. This
supports firm's earlier view that inventory levels in the communications equipment supply chain are still at an all time high.
08:16 ET Morgan Stanley Model Portfolio : Changes to US Model Portfolio: Adding 1% in Amgen (AMGN); increasing position in
Schlumberger (SLB) from 1% to 2%; Removing HCA-The Healthcare Company (HCA) and Triton PCS (TPCS) from the portfolio.
08:14 ET PepsiCo (PEP) 44.99: Banc of America Sec initiates coverage with a BUY rating and $52 target price; believe PEP will continue
to deliver predictable, top-tier results.
08:12 ET Coca-Cola (KO) 46.57: Banc of America Sec initiates coverage with a MKT PERFORM rating. Analyst says to buy in to KO,
would have to believe new advertising and new management structure will achieve simultaneous success -- we are reluctant to do so and
expect additional operating disappointments over the next 12 months.
08:12 ET Akamai Tech (AKAM) 10.33: Bear Stearns starts coverage with a NEUTRAL rating; firm concerned about the achievability of
management's guidance, especially in the face of a difficult economy and the demise of myriad dot-coms.
08:09 ET Triad Hospitals (TRI) 27.15: Lehman downgrades to BUY from Strong Buy on concerns of near-term hiccups associated with
the integration of recent acquisition of Quorum Health Group; also concerned that the Quorum assets have deteriorated further since the deal
was originally announced in Oct.
07:56 ET Cisco Systems (CSCO) 20.61: -- Update -- First Union downgrades to MKT PERFORM from Buy. Firm believes that an
appropriate P/E multiple range to place on a company with a 20% growth rate is 20-30x forward earnings, which implies a trading range of
$10-$15.
07:53 ET Pru Cuts EMS Stks : Prudential downgrades SCI Systems (SCI) and Plexus (PLXS) to HOLD from Accumulate on view that
upside will likely be limited by current valuations. Firm maintaining Strong Buys on JBL, FLEX, CLS.
07:52 ET Opening Indications : S&P futures -6.8, or 8.8 pts below fair value; Nasdaq 100 futures lock-limit -42. Have seen further
erosion in the futures in the past half hour; market continues to put an increasingly negative spin on Cisco report - CSCO now 19.32 from
roughly 19.70 last night.
07:46 ET Forest Labs (FRX) 59.33: Company expected to release data on Escitalopram at the APA meeting in New Orleans today.
Thomas Weisel is confident that the data will show a trend towards increased safety and a faster onset of action for Escitalopram and that it
is possible the data will show statistical superiority of Escitalopram over Celexa.
07:40 ET WebMD (HLTH) 9.05: Announces new agreement with America Online making WebMD the primary provider of healthcare
content, tools and services across several AOL brands.
07:37 ET Aether Systems (AETH) 16.95: Reports Q1 loss of $1.16 a share, 9 cents narrower than consensus; revenues rose 467.7% to
$30.66 mln... ABN AMRO (which rates the stock a Hold) is concerned about the sharp decline in gross margin (to 35% from 48%), and
feels that decline will place downward pressure on the stock. After using approx. $143 mln in cash during the qtr, company left with about
$18 per share in cash.
07:31 ET Teradyne (TER) 35.94: DB Alex. Brown upgrades to BUY from Mkt Perform and sets a 12-month target of $45; while firm's
fundamental call remains unchanged, believes that TER may represent an avenue to start building positions in the group with a more attractive
near-term risk/reward profile; stock trading at a 45% discount to the large-cap front-end names in group vs. 30% prior two cycles.
07:28 ET Broadwing (BRW) 26.50: Lehman upgrades to STRONG BUY from Buy based on firm's view that solid execution, attractive
revenue mix, and industry shift to WL's will drive the multiple higher.
07:23 ET Microsoft (MSFT) 72.06: Company will host a conference call today at 11:30 ET to discuss Windows XP. The dial-in number
is 800-399-0081; passcode: "microsoft windows XP"
07:18 ET Opening Indications : This morning's fair value figures -- S&P 500 fair value: 1265; closed 2 pts below fair value. Nasdaq 100
fair value: 1938; closed 5 pts above fair value. Current indications: S&P 500 futures are -6, or 8 pts below fair value. Nasdaq 100 is -40, or
35 pts below fair value... While Cisco came in a penny above lowered guidance, US and European investors disappointed that company
does not seem to be seeing a meaningful pick up in business.
07:07 ET TMP Worldwide (TMPW) 50.76: After the close, monster.com parent reported Q1 net of $0.18 a share, 3 cents above
consensus. Forecast of Q2 earnings of $0.30 (vs $0.31 consensus) caused the shares to ease 1 pt in extended hours trading. Selloff
contained by company's optimism that full yr consensus of $1.40 will be met.
06:57 ET Myriad Genetics (MYGN) 57.83: Posts a Q3 loss of $0.07 a share, 2 cents narrower than consensus, vs a yr-ago loss of
$0.10. Total product revenues increased 103% to $4.9 mln.
06:43 ET Parthus Tech (PRTH) 13.48: Announces that STMicroelectronics (STM) will license the complete portfolio of Parthus mobile
computing, wireless communications and mobile content application platforms.
06:37 ET Newport News (NNS) 65.00: Northrop Grumman makes an unsolicited bid to acquire the military ship builder for a combination
of stock (75%) and cash (25%) that values NNS at $67.50 per share. The bid challenges a $67.50 per share cash offer made by General
Dynamics (GD) on April 25.
06:13 ET U.S. Markets : S&P futures trading at 1255, 10.0 points below fair value, Nasdaq 100 futures trading at 1900.50, 37.5 points
below fair value. The 30-year bond is up 11 ticks at 5.710%. The dollar is firmer against both the yen and the euro.
06:12 ET European Markets : FTSE -0.85%, DAX -1.31% -- European stocks lower as technology and telecom take another earnings
hit. Selling fueled by Cisco expectations for another decline in sales this quarter. Cisco also noted that European sales have dropped sharply.
Phone equipment makers such as Marconi, Alcatel and Ericsson all underperforming on the back of Cisco. Chipmakers also under pressure
following National Semiconductor’s announcement yesterday that fourth quarter sales will come in below expectations.
06:11 ET Asian Markets : Nikkei -1.43%, Hang Seng +0.33% -- Asian stocks mostly lower with technology shares hit by Cisco. Japan
led the way lower as profit-taking helped to drag the Nikkei down 1.43%. NTT DoCoMo saw another round of better selling ahead of its
after-close earnings release. Korea's Kospi closed 2% lower on reports of heavy program selling. Local selling of telecom and
semiconductor shares also a negative. Singapore's Straits Times Index lost 0.8%, falling for the fourth consecutive session as semiconductor
stocks underperformed following the warning yesterday from National Semiconductor.
================================================================================
BEFORE THE OPEN (Updated throughout the hour)******
Akamai Tech (AKAM) 10.33: Bear Stearns initiates coverage with a NEUTRAL; in near term, firm is most concerned about the
achievability of management's guidance, especially in the face of a difficult economy and the demise of myriad dot-coms; long term, firm
believes company's engineering prowess and enormous addressable markets are attractive and leveragable assets; could warm up to the
stock in the event of additional funding availability, a stabilization in the macro economy and a slowdown in customer churn, and greater
visibility into new product adoption.
Fisher Scientific Int'l. (FSH) 27.58: Goldman Sachs initiates coverage with a RECOMMENDED LIST rating and price target of $38;
firm cites company's sustainable mid-teens organic earnings growth potential; marquee corporate franchise built on 100 year trade name;
attractive vertical integration strategy; strong equity incentive for managers to create shareholder value; and potential for upside revision to
firm's EPS outlook.
Scios (SCIO) 26.65: Announces its entry into a research collaboration with Medtronic (MDT) to study the effects of Scios'
investigational agent Natrecor in combination with Medtronic's heart failure devices and implantable infusion systems; see press release.
Broadwing (BRW) 26.50: Lehman Brothers upgrades to STRONG BUY from BUY; believes an industry shift to WL's, solid execution,
and an attractive revenue mix should all drive the multiple higher as the winners in broadband services become more apparent in the next
several quarters.
Fox Entertainment (FOX) 23.50: Reports Q3 loss of $0.01 a share, $0.02 better than the First Call consensus of ($0.03), vs year-ago
earnings of $0.03; revenues rose 5.3% to $2.00 bln from a year-ago of $1.90 bln; strong video and DVD sales from both new and library
titles more than offset new release losses and marketing spending; see press release.
PepsiCo (PEP) 44.99: Banc of America Sec initiates coverage with a BUY rating and price target of $52 as firm believes PEP will
continue to deliver predictable, top-tier results; firm forecasts 2001 EPS of $1.66.
News Corp (NWS) 38.15: Reports Q3 earnings of $0.12 a share, $0.01 better than the First Call consensus of $0.11, vs year-ago
earnings of $0.18; revenues rose 0.9% to $3.27 bln from a year-ago of $3.24 bln. "We are greatly encouraged by our businesses' ability to
withstand the soft advertising market and we are as confident as ever that our strong brands, compelling products and global distribution
network ideally position us for sustained growth," said CEO; see press release.
Coca-Cola (KO) 46.57: Banc of America Sec initiates coverage with a MARKET PERFORM; firm says that to buy in to KO, would
have to believe new advertising and new management structure will achieve simultaneous success - firm is reluctant to do so and expects
additional operating disappointments over the next 12 months.
Sun Microsystems (SUNW) 19.86: Announces the availability of its new Java Advanced Imaging 1.1 software; the new version is
available worldwide and users and developers can download the imaging software for free from Sun's Java web site; systems vendors can
also license the use of Java Advanced Imaging software directly from Sun; see press release.
Northrop Grumman (NOC) 91.50: Aerospace and defense company announces that it has offered to acquire Newport News
Shipbuilding (NNS), citing concerns that the previously announced merger agreement between Newport News and General Dynamics
(GD) would create an unhealthy monopoly, resulting in an unacceptable and anticompetitive consolidation of the U.S. shipbuilding industry;
Northrop has offered to match General Dynamics' offer of $67.50 per share for all outstanding shares of common stock of Newport
News, payable 75% in Northrop Grumman stock and 25% in cash; see press release.
WebMD (HLTH) 9.05: Announces comprehensive strategic alliance with America Online that allows for WebMD to be the primary
provider of healthcare content, tools and services across several key America Online brands, including AOL, AOL.COM, CompuServe,
and Netscape.com; see press release.
Cisco Systems (CSCO) 20.38: First Union Sec downgrades to MARKET PERFORM from BUY as Q3 results and outlook were
roughly in line with company's revised guidance; firm believes that an appropriate P/E multiple range to place on a company with a 20%
growth rate is 20-30x forward earnings, implying a trading range of $10-$15.
AFTER THE CLOSE (08-May-01)******
Microsoft (MSFT) 72.06 +0.68: Company appoints Raymond V. Gilmartin, chairman, president and chief executive officer of Merck
(MRK) to its Board of Directors; see press release.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Call ends (finally). Stock at 19.68 after hours.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Q&A dragging on without any new revelations. It's amazing how little we learned on
this call: guidance for the Jul qtr didn't change, there was no useful guidance for FY02, and there were indications that both the enterprise
and service providers businesses were still declining. In short, no new bad news, but perhaps more importantly, none of the recent hints of
good news on the enterprise front were validated by Cisco. It looks like we're in for another quarter of waiting, with few positive catalysts.
Stock remains lower after hours at 19.75.
After Hours Movers : Nasdaq-100 After Hours Indicator currently trading down 23.27....stocks on the move (change vs.
close)....NSM trading down 1.50...TMPW trading down 1...HLTH trading up 1/4.
California Power : California has now moved into a Stage 3 power alert, indicating that rolling blackouts are imminent if not already
underway.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Despite Morgan Stanley's optimism on the enterprise front this morning, we aren't
hearing it from Chambers this afternoon; he notes continued pressure on enterprise spending in some key sectors (high tech, financial,
manufacturing), and avoids saying that he has seen any improvement in enterprise business. Stock at 19.65.
SBA Comms (SBAC) 29.30 -3.15: Wireless communications infrastructure company reports Q1 loss of $0.38 a share, $0.03 worse
than the First Call consensus of ($0.35); revenues rose 74.0% to $52.96 mln from a year-ago of $30.43 mln. Steven E. Bernstein,
CEO, noted that, "By doubling our leasing revenues and tower cash flows for the quarter ended as compared to the prior comparable
period, we continue to move the revenue stream to more of a recurring nature"; see press release.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Regarding the options pricing issue, Chambers says that Cisco does not reprice
options. As for new options, Cisco still expects to issue options in the May time period, with the price to be determined after the market
has digested the earnings report.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Further guidance for the July quarter: gross margins will remain in the low-mid 50%
range. Company refuses to offer any FY02 guidance, but does say that revenues will likely be in the relatively wide range of
current analysts' estimates. Q&A now beginning. Stock about 1 pt lower after hours at 19.70.
Newport News (NNS) 65.00 -0.01: The Wall Street Journal is reporting that Northrop Grumman (NOC) is preparing a rival bid for
NNS. General Dynamics (GD) offered $67.50 per share in cash plus assumption of $500 mln in debt for a total deal value of $2.6 bln.
WSJ reporting that NOC is prepared to match GD's bid.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Cisco sees July qtr revenues flat to down 10% -- same guidance as offered with the
April 16 preannouncement. Company is assuming that capex will stabilize in Asia and that consumer spending in the US will not deteriorate
significantly.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Finally...guidance: Cisco does see a number of positive indications that suggest a
bottom is possible in the next 1-2 quarters, but cautions concerning low visibility.
Morton's Restaurant (MRG) 25.75 -0.05: Announces that its Board of Directors has determined to evaluate the full range of
strategic alternatives, including a potential sale of the company. Company also announced that it expects revenues and operating results
to be adversely affected in Q2, and is freezing the issuance of stock options to senior executives and suspending the stock repurchase
program. Last Tuesday, MRG received a takeover offer from BFMA, a holding company lead by Carl Icahn.
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- Chambers defends his 30-50% long-term growth projections for Cisco's markets,
but doesn't offer any compelling new evidence for the forecast. Stock has been fading throughout the call; now at 19.62. Still no guidance...
Cisco Systems (CSCO) 20.61 +1.36: -- Update -- CFO offers more detail on inventory writedown of $2.25 bln; biggest chunk of
inventory was in non-memory semis, such as ASICs and DSPs ($900 mln), then optical components ($450 mln), and memory products
such as SRAM and flash ($300 mln). Cisco says most inventories are customized for Cisco and the others have little market value and
therefore does not expect to achieve significant income from selling its excess. Finally, Cisco allays fears of future accounting gimmicks by
noting that the excess inventories are stored and tracked separately, and if they are used in the future, they will not benefit pro forma
earnings numbers.
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