From Briefing.com: Caution may have been our watchword on Friday, but it certainly wasn't the market's watchword on Monday. Once again, the tech sector led a broad-based advance in which the only stumbling block, reportedly, was an erroneous sell order of the e-mini S&P 500 futures contract that caused a late-day retreat. Otherwise, the feel-good vibe that has driven the Nasdaq to a series of new 52-week highs persisted.
As has been the case of late, there wasn't any one item that prompted the advance. Instead, several items left participants feeling good about taking long positions. In no particular order, they included a Merrill Lynch upgrade of Intel (INTC 24.02 +0.68) to Buy from Neutral, an article in The Wall Street Journal discussing the possibility that chip makers may be gearing up for increased demand, Yahoo!'s (YHOO 32.20 +0.01) acquisition of Overture Services (OVER 24.05 +2.54), and the encouraging earnings reports from Bank of America (BAC 83.46 +0.58) and Citigroup (C 47.12 +0.97).
For the most part, there was little angst ahead of Greenspan's testimony on monetary policy and the economic outlook on Tuesday and Wednesday and the litany of tech earnings reports that will start hitting the market in full force when Intel (INTC) reports its results after the close on Tuesday.
The Reuters Research consensus EPS and revenue estimates for Intel stand at $0.13 and $6.71 bln, respectively. Judging by the manner in which Intel has traded, the market is expecting nothing but good news from Intel on both the reporting and guidance fronts. Put another way, expectations are high for the chip giant and there is little room for disappointment. Then again, maybe there will be if Fed Chairman Greenspan takes an upbeat approach to characterizing economic prospects. We'll know more by the close on Tuesday, but as of now, the market continues to see the economic glass as half full. Accordingly, tech participants continue to find reason to rationalize the strong advance off the March lows.
Key tech companies scheduled to report their results this week include Intel (INTC; after the close Tues.), Motorola (MOT; after the close Tues.), Seagate Technology (STX; after the close Tues.), Teradyne (TER; after the close Tues.), EMC Corp. (EMC; before the open Wed.), Advanced Micro Devices (AMD; after the close Wed.), Apple Computer (AAPL; after the close Wed.), IBM (IBM; after the close Wed.), Nextel (NXTL; before the open Thurs.), Nokia (NOK; before the open Thurs.), SAP AG (SAP; before the open Thurs.), Unisys (UIS; before the open Thurs.), Microsoft (MSFT; after the close Thurs.), PeopleSoft (PSFT; after the close Thurs.) and LM Ericsson (ERICY; before the open Friday).
For the rundown of consensus estimates for each company, and others, you'll want to visit Briefing.com's Earnings Calendar. Our In Play page will be your best source for all of the breaking headlines on actual earnings reports.-- Patrick J. O'Hare, Briefing.com
6:00PM Monday After Hours price changes vs. 4pm ET levels: The tone of the after-hours session is slightly positive in an extension of today's gains in the cash market. Currently, the S&P 500 futures are trading 0.7 points above the fair value of 1002, while the Nasdaq futures are 3 points above the fair value of 1297.
Aiding in the relative outperformance of the Nasdaq futures is the better-than-expected earnings report from SupportSoft (SPRT 8.85 +0.92), provider of service and support automation software solutions. SPRT reported Q2 (Jun) earnings of $0.06 per share, $0.03 better than the Reuters Research consensus of $0.03. Revenues of $12.6 mln were above the consensus of $12.4 mln and up 33.2% year/year. Going forward, the company sees Q3 (Sept) earnings of $0.05-0.07 per share (consensus of $0.03) and FY03 earnings of $0.15-0.20 per share (consensus $0.13).
The earnings report from Rambus (RMBS 18.34 -0.56), developer of chip-to-chip interface products and services, proved to be more disappointing. Specifically, RMBS missed the Q3 (Jun) EPS consensus estimate by a penny with its reported earnings of $0.04 per share. Revenues, however, checked in at $29.2 mln, above the consensus of $28.3 mln and up 4.0% year/year.
Also under pressure in the after-hours session is Alloy (00C0 7.80 -0.15), a media, marketing services and direct marketing company. ALOY announced its plan to offer $60 mln in principal amount of its Convertible Senior Debentures due 2023 to be used for potential future acquisitions in merchandising and sponsorship businesses, as well as for working capital, capital expenditures and general corporate purposes. Separately, the company reaffirmed its previous guidance of May 29, calling for a Q2 (Jul) loss of $0.02-0.06 per share (consensus of $-0.05).
In other news, the nation's largest source of financing for home mortgages, Fannie Mae (FNM 71.90 +0.52), announced that its Board of Directors voted to increase the company's quarterly dividend on its common stock by $0.06 to $0.45, an increase of over 15%. According to the CFO, Timothy Howard, the dividend increase reflects management's confidence in the strength and sustainability of the cash flows of FNM's business and recognizes an increased investor focus on dividend payouts in the wake of the reduction in the tax rate on dividends. FNM reports Q2 (Jul) earnings tomorrow morning. The market expects the company to check in with earnings of $1.87 per share on revenues of $3.36 bln.
Speaking of earnings, their floodgates get unhooked tomorrow, with reports from the likes of ACN, FBF, FRX, JEF, JNJ, MYG, MER, STT, TRAD, and WFC. On the economic front, look for July's NY Empire State Index report at 8:00 ET and the Retail Sales report at 8:30 ET. Additionally, Chairman Greenspan is scheduled to testify in front of the House Financial Services Committee starting at 10 ET tomorrow.
For added detail on these, and other developments, be sure to visit Briefing.com's In Play, Earnings Calendar, Economic Calendar, and Guidance pages. -- Victoria Glikin, Briefing.com
4:08PM Rambus misses by $0.01 (RMBS) 18.97 +0.42: Reports Q3 (Jun) earnings of $0.04 per share, $0.01 worse than the Reuters Research consensus of $0.05; revenues rose 4.0% year/year to $29.2 mln vs the $28.3 mln consensus.
3:24PM Rambus Earnings Preview (RMBS) 18.89 +0.33: Rambus reports its Q3 after the close today with Reuters Research consensus estimates of $0.05 per share with revs of $28.3 mln. Sterling analyst expects the co to beat consensus by a penny on the bottom line in light of encouraging contract business during the quarter. He also believes the co will probably not give any color on the looming FTC trial, which is scheduled to be completed at the end of this month. In speaking with Pacific American Securities analyst, he believes the co's numbers should be respectable, but cites concern over next quarter's numbers potentially being weak with regard to RDRAM adoption.
4:02PM Powerwave plans $130 mln convertible offering (PWAV) 7.95 +0.35:
Close Dow +57.56 at 9177.15, S&P +5.72 at 1003.86, Nasdaq +20.91 at 1754.84: Emboldened by twin blow-out Q2 (June) reports from financial giants Citigroup (C 47.16 +1.01) and Bank of America (BAC 83.36 +0.48), buyers kept stocks well-bid until the final hour of trading, at which point, an erroneous sell order in the S&P e-mini futures contracts triggered a noticeable deterioration in the indices... The Dow, Nasdaq, and S&P 500 gave back 56, 12, and 8 points, respectively, as traders used the news as an excuse to book profits from the market's rally...
Nonetheless, the indices still finished the day with moderate gains on account of strong leadership from the financial and semiconductor sectors... While the former group benefited from the aforementioned encouraging earnings reports from BAC and C, the latter surged due to an influx of favorable analyst commentary... Specifically, Merrill Lynch upgraded Intel (INTC 23.97 +0.63) to Buy from Neutral ahead of the chip maker's Q2 (June) report tomorrow night, and Smith Barney Europe upgraded the European semiconductor industry to Marketweight from Underweight...
A Wall Street Journal article similarly suggested that conditions in the beleaguered industry had bottomed, with its contention that customer cautiousness in ordering new equipment to expand capacity might be coming to an end... Other industry groups such as transportation, drug, and retail contributed to the market's rally, and kept the indices above water despite the late-day retreat... The drug shares, in particular, eked out gains in response CIBC's upgrade of Merck (MRK 31.77 +0.33) to Sector Perform from Sector Underperform, and Bear Stearn's upgrade of Johnson & Johnson (JNJ 53.60 +1.72) to Outperform from Peer Perform...
Tomorrow, the June quarter reporting season will kick into high gear, with earnings reports from Fannie Mae (FNM 71.38 +1.03) and Merrill Lynch (MER 51.41 +1.86) before the market opens... The start of Fed Chairman Greenspan's semi-annual Congressional testimony on monetary policy and economic conditions should also command a good deal of the market's attention...Nasdaq 100 +1.2%, SOX +2.9%, NYSE Adv/Dec 1966/1312, Nasdaq Adv/Dec 2060/1153
2:32PM QLogic moves to new 52-wk high (QLGC) 53.46 +2.58: Stock has edged above its previous one-yr high of $53.35 established June 6.
1:03PM Dupont Photomask tests resistance (DPMI) 23.22 +1.12: -- Technical -- The provider of microimaging solutions used in the manufacture of semiconductor and other microelectronic devices has been on the offensive most of the day. Thus far it has tested a trendline resistance at 23.28 leaving it just shy of its July high of 23.35. The next resistance, if able to break through these barriers is at the June high of 23.75. Short interest is 10% of float (15 mln).
12:34PM Entegris -- Company Profile (ENTG) 13.98 +0.29: Entegris (ENTG) is one of the stocks showing up on our low-PEG screen today. The co sells various plastic carriers used to protect wafers when they are being transported within a semi fab, and also sells fluid handling parts to capital equipment manufacturers and OEMs. In recent news, on June 19 the co exceeded Q3 ests as well as its own recently-raised rev guidance, and on June 9 the co filed a 15.5 mln share shelf. Analysts expect the co to grow FY04 (Aug) EPS by 360% to $0.46 (P/E 30.4x), and expect the co to grow FY05 EPS by 67% to $0.77 (P/E 18.2x). Mkt cap: $1.0 bln, float: 39.2 mln shares, avg daily volume: 507k shares, short interest: 6%.
9:31AM Intel (INTC) 24.28 +0.94: Merrill Lynch upgrades Neutral to BUY. Believes the street has underestimated the improvement in gross margin that INTC should realize over coming 6-8 qtrs
9:24AM Pixelworks chip selected for Samsung's latest LCD television (PXLW) 6.55:
8:37AM Chip makers might be gearing up for semi demand -- WSJ : The Wall Street Journal article suggests customer cautiousness in ordering new equipment to expand capacity might be coming to an end soon. The article points to one piece of evidence being factories filling up with TSMC recently reporting its factories operating at 86% capacity in the second quarter, up from 67% in the first quarter. In addition, market research firm Gartner estimates plant utilization at 81% for the entire industry. However, Intel plans to spend between $3.5 bln and $3.9 bln in 2003, which is down as much as 25% from last year. The article also suggests excess optimism is possible with last year being used as an example due to TSMC and other co's placing orders in Spring 2002 only to cancel them by Semicon due chip demand being illusory.
8:37AM Broadcom introduces new Fast Ethernet switch (BRCM) 27.86:
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