Briefing Blurbs:
Trading Points
10:02 ET Chicago PMI : Chicago Purchasing Managers Index falls to 35.0 from 43.2, well below the 44.0% consensus. (lowest level since March 1982)
09:56 ET March Mich Sentiment : University of Michigan Sentiment survey released a few minutes early. March sentiment comes in at 91.5, above 90.5 consensus. February revised to 90.6 from 91.8... Equities fall to fresh morning lows.
09:50 ET TMP Worldwide (TMPW) 38 29/32 +31/32 (+2.5%): -- Update -- Momentum crowd attempts early push after stock is mentioned by Munder Internet fund manager (during CNBC interview) as example of Internet company that will be able weather the economic slowdown. TMPW runs the Monster.com online recruiting board.
09:46 ET Market Action : Using Cisco Systems (CSCO +1/16) as an indicator this morning. After gapping up, stock has just made new morning low. Seeing reversal in several of the top names, pulling Nasdaq (-2) into the red for first time today... Areas of strength: drugs/genomics (HGSI, MLNM, AMGN), retailers (SBUX, HD, WMT, TGT, COST) and oil drilling/services (RIG, HAL, CHV)
09:42 ET Sector Watch : Opening weakness in chip equipment makers, as PRI Automation (PRIA) earnings warning hits the group: KLAC -2, NVLS -2, AMAT -2... Semi capital equipment, in conjunction with chip makers such as Micron (MU -3.5), weighing on the SOX, which has retreated 3.2% in early trading.
09:38 ET Waste Connections (WCNX) 28 1/2 -3 3/16 (-10%): Gaps down after announcing sale of $115 mln in Convertible Subordinated Notes. The Notes will be convertible into WCNX shares at a price of $38.03 per share.
09:34 ET IBP, Inc (IBP) 22.79: -- Update -- Indicated to open between $17 and $19 following withdrawal of acquisition bid by Tyson.
09:28 ET Pre-Market Movers (Nasdaq 100) : RNWK +8%... BVSN +6%... IMNX +6%... PALM +4%... TMPW +3%... MEDI +2%... CSCO +2%... NTAP +2%... BRCD +1.5%... JNPR +1%... MSFT +0.8%... Losers: CIEN -4%... QLGC -3%... NVLS -1%... XLNX -1%.
09:19 ET Wireless Facilities (WFII) 6 11/32: -- Update -- CSFB downgrades from STRONG BUY to BUY based on a rapid scale-back in carrier project rollouts; says in the near-term, we see potential for losses until expenses can be readjusted.
09:11 ET Opening Indication : Equity futures have inched lower since Personal Income report at 8:30ET, but still trading above fair value. S&Ps holding in 9 1/2 pts above fair value. Nasdaq Pre-Market Indicator in positive territory by 8.5 pts. Thin trade in pre-market suggests little conviction behind equity futures and more volatility off the open.
09:11 ET Thomas Weisel Starts Semi Foundries : Thomas Weisel Partners initiates coverage of three foundries with MKT PERFORM ratings: Chartered Semi (CHRT), United Micro (UMC), Taiwan Semi (TSM). Foundries benefit from increased outsourcing with integrated device manufacturers (IDMs). Despite the current downturn within the industry, demand for new communications, multimedia and consumer ICs will likely resume in late 2H01 into CY02; foundry wafer shipments will likely bottom in 2QCY01.
09:06 ET Redback Ntwrks (RBAK) 12.11: Banc of America Sec. cuts FY01 earnings forecast to $0.28 from $0.50, citing challenging environment for SMS product line and delays in DSL deployment; firm lowers price target to $25 from $100.
09:04 ET Sycamore Ntwks (SCMR) 9 29/32: Banc of America Sec. reducing FY01 est. to $0.18 from $0.23 and FY02 to $0.22 from $0.33; cites global deterioration in telco spending; believes existing customers are cash strapped and new wins are difficult; calls CIEN a formidable competitor.
09:01 ET EMC Corp (EMC) 29.00: Thomas Weisel Partners says channel checks suggest EMC will not make their current quarter. Firm cuts Q1 estimates to $2.3 bln revenues and $0.19 EPS from $2.5 bln and $0.21 (consensus EPS is $0.21). FY01 revenue estimate cut from $12.0 bln to $11.4 bln, EPS from $1.02 to $0.93; FY02 revenue estimate from $15.7 bln to $14.9 bln, EPS from $1.33 to $1.25.
09:00 ET Opening Indications : S&P futures +4, or 9 pts above fair value. Nasdaq 100 futures +12, or 13 pts above fair value. Seeing a continued erosion in the futures through the morning, but still positive and still relatively quiet.
08:55 ET Gapping Up : Seeing a pre-market double in shares of "environmentally friendly" packaging manufacturer EarthShell (ERTH) after company announced that its hinged-lid containers for the Big Mac has met product performance targets and has received final approval by McDonald's... RealNetworks (RNWK) experiences 9% pop on WSJ report that company negotiating a licensing agreement with 3 major record companies... Also attracting interest: IMNX +7.5%, BVSN +7.5%, LEON +6%, PALM +3%.
08:52 ET WorldCom (WCOM) 19 1/16: Thomas Weisel Partners initiates with a BUY; believe WCOM is the most likely "legacy" long distance provider to be successful in executing a turnaround due to their great collection of global assets. Believe WCOM is attractive up to about $23 per share and investors should aggressively buy in the $15-$17 range.
08:48 ET BEA Systems (BEAS) 26 3/16: SG Cowen says to expect a relief rally on Sun Micro's (SUNW) retraction of application server bundling plans. With a PEG of about 1.0 and P/E of 67x calendar 01 estimates, BEAS shares are reasonably valued but not inexpensive relative to software leaders in the past.
08:47 ET AT&T (T) 22.35: Thomas Weisel Partners downgrades from BUY to MKT PERFORM and lowers their breakup valuation estimate from $31 to $23. Says the two business units of AT&T that investors have been buying AT&T to get post-breakup (AT&T Wireless and AT&T Broadband), should be given lower valuations given exposure to economic cycles. Substantial execution risk in AT&T as they try to break up the company, release shareholder value, and turn around a fundamentally troubled business.
08:40 ET PRI Automation (PRIA) 17 15/16: -- Update -- Says current industry downturn is causing a number of its to delay placing orders; changes occurred late in the quarter, preventing company from shifting its build schedule quickly enough to replace them with other orders in backlog. PRIA planning to lower costs by reducing workforce by 370 employees or 20%.
08:39 ET Wal-Mart (WMT) 50.62: Banc of America Securities upgrades from MKT PERFORM to BUY; cites proven success in the food dept, advises buying on pullback into the $40s.
08:36 ET PRI Automation (PRIA) 17 15/16: Semiconductor equipment maker sees a Q2 loss of $0.40 to $0.45 vs previous guidance for a profit of $0.15-$0.20 (mean est. $0.17). Company attributes shortfall to reduced capital equipment spending in the semiconductor industry.
08:35 ET Imax Corp (IMAX) 3 1/8: Goldman Sachs downgrades to MKT PERFORM from MKT OUTPERFORM; believes that uncertainty surrounding the current reorganization of the exhibition industry creates a lack of visibility for IMAX's core business.
08:33 ET Opening Indications : S&P futures +5, or 10 pts above fair value. Nasdaq 100 futures +16, or 17 pts above fair value. Still positive, but with a continued erosion since early this morning.
08:33 ET Calpine (CPN) 55.92: Merrill Lynch raises estimates after yesterday's analyst meeting; FY01 raised from $1.60 to $1.90, FY02 from $2.00 to $2.40. 5-year EPS growth rate projection is now a range of 30%-35%. 12-month price target is $78, up from $60.
08:32 ET Economic Numbers : February Personal Income rises 0.4%, in line with forecasts. Personal spending increase of 0.3% was also in line. Seeing no reaction in the equity futures.
08:32 ET Foundry Networks (FDRY) 7 7/8: Foundry appears to issue a stealth warning last night in its 10-K filing: "We...continue to receive a lower than anticipated amount of product orders for Q1 2001 as a result of decreased or delayed capital spending by existing and prospective customers and the slowing U.S. economy...we expect our selling prices and gross margins to decrease as a result of our increased efforts to compete aggressively and maintain sales levels. As a result, we may not be able to sustain or increase profitability on a quarterly or annual basis in the future."
08:29 ET SkyWest (SKYW) 19 7/16: Salomon Smith Barney upgrades from NEUTRAL to BUY based on valuation and insulation from slowing economy. Firm however, cuts estimates due to revenue split agreement with Delta (DAL). FY02 cut from $1.43 to $1.30 nand FY03 from $1.75 to $1.65. Firm feels potential Delta strike already priced in.
08:27 ET Cysive (CYSV) 4 1/16: Company to eliminate 90-95 positions or approx. 30% of its current workforce; sees annualized cost savings from these actions of $8-$10 mln.
08:22 ET Timberland Co (TBL) 54: In 10-K filing with the SEC (March 28), footwear maker predicts that a continued increase in leather prices (due to diseases impacting European cattle) could have an adverse impact on the company's financial performance... UBS Warburg maintaining estimates; while potential for increased risk, would note that leather prices have been volatile over the years and TBL has been able to adjust style and price around these changes.
08:20 ET Deere & Co (DE) 36.85: ABN AMRO cuts estimates due to anemic non-agricultural markets and increasing evidence of weakening agricultural equipment market. Q2 EPS estimate cut from $0.80 to $0.55 and FY01 from $2.05 to $1.80; maintain HOLD rating.
08:14 ET Rio Tinto PLC (RTP) 69.25: Lehman Bros initiates coverage with a BUY rating and $82 12-month price target. Firm says Rio Tinto's revenues are tied to commodities which will rise in price over the next two years. In particular, copper and Powder River Basin coal prices.
08:10 ET C-COR Electronics (CCBL) 7 15/16: Expects to post a loss for the current qtr of $0.14-$0.16 vs ($0.01) anticipated by analysts. CCBL sees loss of $0.14-$0.16 in June qtr vs $0.03 profit expected by Wall Street.
08:06 ET Opening Indications : S&P futures +6, or 11 pts above fair value. Nasdaq 100 futures +16, or 17 pts above fair value. Futures slipping a bit in quiet trading, but still a positive tone.
08:05 ET MicroStrategy (MSTR) 3 5/16: Merrill Lynch assumes coverage with a downgrade to NEUTRAL from ACCUMULATE based on fundamentals and concern that further price erosion is possible.
08:02 ET IBP, Inc (IBP) 22.79: -- Update -- Company "shocked" by Tyson's decision not to proceed with merger. IBP does not believe Tyson has any valid basis to discontinue or terminate the merger agreement. Commenting on the Tyson legal complaint, IBP says it will take all appropriate steps to protect the rights of the company and shareholders.
07:50 ET Prof. Detailing (PDII) 51 15/16: WR Hambrecht blames 15% decline in stock yesterday on two-week old FDA drug marketing warning letter; believes selling overdone, noting that FDA frequently issues these types of warning letters; sees good chance of upside to firm's 2001 estimates if PDI lands a new contract for its 500 reps.
07:45 ET Opening Indications : S&P futures +7, or 12 pts above fair value. Nasdaq 100 futures +25, or 26 pts above fair value. Still not much action pre-market, though American Express (AXP 38.96) has traded up over 3 pts on the Business Week report of potential interest from Citigroup (C). Alongside ongoing rumors of an Allianz/Dresdner deal in Germany, the C/AXP talk could reignite merger speculation in the financial sector.
07:44 ET Sealed Air (SEE) 35.70: Projects Q1 net of $0.35-$0.40 vs $0.47 mean estimate. Company's food packaging sales are being affected by disruption in meat supply caused by the recent outbreak and continuing spread of foot-and-mouth disease and concerns over mad cow disease in parts of Europe; says these issues are likely to adversely affect results beyond Q1.
07:35 ET Robbie on EMS, Storage : Robertson Stephens beating up a couple of already-beaten up sectors: downgrades the following EMS companies to BUY from Strong Buy: FLEX, SCI, CLS; cites worsening end-market demand. Also reducing estimates some storage sector stocks: BRCD, JNIC, EMLX, QLGC, ZOOX. This move follows warnings in the past two days from ZOOX and JNIC.
07:35 ET Micron Tech (MU) 45.25: After the close, DRAM chip maker reported a Q2 loss of $0.01 a share, 2 cents narrower than Wall Street views. Revenues fell 8.1% to $1.07 bln... ABN AMRO reiterating BUY rating on stock this morning; believes pricing could be up significantly in the 2nd-half vs depressed level of Q1; comforted to note that only MU and IFX are increasing their DRAM capital investment in CY01.
07:32 ET Opening Indications : S&P futures +7, or 12 pts above fair value. Nasdaq 100 futures +28, or 29 pts above fair value. Quiet morning thus far; not see much movement in the futures pre-market.
07:30 ET Hughes Electronics (GMH) 18.95: Reuters reporting that GMH Chairman Michael Smith told investors at a Morgan Stanley conference that News Corp's offers to buy the company are not as good as the press has reported. "There's not enough value in the deal," Smith went on to say.
07:23 ET Service Corp (SRV) 4.34: Provider of "death care" services seen as a potential takeover target, according to Business Week. Money manager interviewed for the article says that SRV has been receiving takeover nibbles from several groups, including two leveraged-buyout outfits and two major financial-service companies. One investment banker puts a value on the company of $7-$8 per share under a buyout scenario.
07:18 ET Opening Indications : S&P 500 futures +6.5, or 11.5 pts above fair value. Nasdaq 100 futures +28, or 29 pts above fair value. Still more warnings this morning, but like yesterday there are no blockbusters, allowing for a positive tone pre-market.
07:12 ET Critical Path (CPTH) 1 9/16: Company announces that it is providing the French postal service with the messaging technology for a new email service. The contract between CPTH and La Poste was signed in Q4 of last year.
07:08 ET Motorola (MOT) 14.52: Wires reporting late yesterday that company acknowledged an informal SEC inquiry into Motorola's discussions with analysts this month, after which many analysts reduced their estimates on MOT; this is one of the first SEC tests of reg FD (ironically, MOT did not issue a press release regarding this SEC news).
07:03 ET Earnings Warnings : Plexus (PLXS) sees Q2 of $0.26-$0.28 vs $0.34 mean... Wireless Facilities (WFII) warns that results will decline from previously estimated levels... Genesis Microchip (GNSS) sees Q4 loss of $0.15-$0.17 vs $0.11 profit forecast by analysts.
06:58 ET American Express (AXP) 38.96: Citigroup (C) Chairman Sandy Weill is determined to make a play for America Express, reports Business Week. A money manager interviewed for the article thinks that Morgan Stanley Dean Witter and American International Group are also in pursuit of AmEx.
06:53 ET Fair Value : This morning's fair value figures -- S&P 500 fair value: 1156.5, or -5.0 vs yesterday's close. Nasdaq 100 fair value: 1579, or -1 vs yesterday's close. Current indications: S&P 500 futures are +6.5, or 11.5 pts above fair value. Nasdaq 100 is +32, or 33 pts above fair value.
06:53 ET IBP, Inc (IBP) 22.79: After the close, Tyson Foods (TSN) announced that it has called off the merger with IBP based on concerns regarding IBP's financial statements. Tyson says it was inappropriately induced to enter into the merger agreement and claims a right to rescind or terminate the merger agreement and to receive compensation from IBP. Tyson has begun legal proceedings seeking relief.
06:47 ET Akzo Nobel N.V. (AKZOY) 42 3/16: Reuters reports that company's Organon unit is withdrawing its anesthetic Raplon from the market after reports that five patients died while being given the drug, citing FDA officials.
06:41 ET Cirrus Logic (CRUS) 15 9/16: Supplier of analog and DSP chip solutions warns that Q4 earnings will post in the $0.04-$0.08 range vs $0.28 mean estimate; cites shift in product mix toward its lower-margin magnetic storage business. For June qtr, company predicts EPS of $0.10-$0.15 (mean $0.22).
06:37 ET RealNetworks (RNWK) 6 3/8: WSJ reports that company is negotiating with Warner Music Group, Bertelsmann's BMG Entertainment and EMI Group to license their music for RNWK's planned online music subscription service. RNWK is offering an ownership interest in the planned subscription service to the record companies.
06:33 ET U.S. Markets : S&P futures trading at 1167.50, 11.5 points over fair value, Nasdaq 100 futures trading at 1608.50, 29.5 points over fair value. The 30-year bond is up 4 ticks at 5.486%.
06:32 ET European Markets : FTSE +0.89%, DAX +0.66% -- European stocks are higher across the board, with advancers outnumbering decliners by a roughly 2 to 1 ratio. Banks such as ABN Amro, Standard Chartered and HSBC all outperforming, with insurance stocks such as Axa also seeing better buying. Telecom and tech still having some trouble however, while Goldman cut earnings estimates for this year on BASF, Europe’s biggest chemical company. SAP AG, Europe’s biggest business software maker, down after announcement that it will purchase portal business software maker TopTier for $400 million in cash.
06:32 ET Asian Markets : Nikkei -0.56%, Hang Seng +0.65% -- Asian stocks mixed, but weaker tone still fairly prevalent. Japan down despite early fiscal year-end bargain hunting. Japanese economic data once again disappointing. Korea down 0.11% with won declines raising concerns about foreign liquidation. Taiwan off 0.62% with the recent pre-announcement of a 12.5 bp rate cut fueling a round of profit-taking. Hong Kong one of the few bright spots with better WTO-induced buying of Chinese-related shares reported. However, Pacific Century CyberWorks was hit extremely hard once again. |
