POSTED below just a few stories propping up around the net. Seems like a change in sentiment has indeed occurred. Since stock trading is 80% psycology anyway, I would now start to look for pscycological key support levels. The next big one will be a NAZ close above the 2000 for example. Would ask VELO if we do close above 2000, where would the next resistance level be, and start building up long positions on the spread.
SH Preview @ the Bell: Nortel, Silicon Storage to Influence Next Week's Trading
SHfn / - A lingering rumor might boost Nortel Networks [NT]. A rosy outlook could send shares of Silicon Storage Technology [SSTI] soaring. "It feels more and more like a low has been set," says one analyst. Here's a rundown of expected earnings and economic releases for next week and a review of Friday's market action.
SHfn Preview of the Upcoming Trading Day and Today's Highlights
April 12, 2001
Market Preview for Next Week
Nortel Networks [NT]
Better times could be ahead for suffering shareholders of Nortel Networks. Shares of the Canadian telecom equipment giant surged 15% Friday on rumors of a report emanating from CIBC World Markets, which stated the company's inventories were falling on greater demand for its products. CIBC confirmed it had written a memo for internal use mentioning rumors that one of Nortel's component suppliers said Nortel's component inventories had become more normalized. Nortel, though, wouldn't confirm the rumor.
Rambus [RMBS]
Rambus after Thursday's close reported second-quarter earnings of $0.08 a share, compared with $0.04 during the same quarter last year. Analysts polled by First Call expected $0.11 a share. Rambus edged lower in after-hours trading.
Silicon Storage Technology [SSTI]
Silicon Storage Technology late Thursday reported a first-quarter profit of $0.06 a share, missing Wall Street forecasts by a penny. The company, though, said its situation is improving. SSTI soared 23% in after-hours trading.
Handspring [HAND]
After Thursday's close, Handspring reported a pro forma loss of $0.06 a share, in line with analysts' expectations. Revenue surged 261% from the year-ago period.
DoubleClick [DCLK]
DoubleClick late Thursday reported a smaller first quarter loss but warned of a large loss in 2001 instead of an expected profit. DoubleClick's shares fell 13% in after-hours trading.
Western Gas Resources [WGR]
After Thursday's close, Standard & Poor's announced Western Gas Resources will replace Comdisco [CDO] in the S&P MidCap 400 Index after Monday's close. Also, Webb (Del) [WBB] will replace Immune Response [IMNR] in the S&P SmallCap 600 Index.
IDEC Pharmaceuticals [IDPH]
IDEC Pharmaceuticals after Thursday's close said it expects its first-quarter earnings to exceed Wall Street expectations. IDEC's shares surged 15% in after-hours trading.
Powerwave Technologies [PWAV]
Powerwave Technologies late Thursday reported a first-quarter loss of $0.15 a share. Analysts were expecting a loss of $0.06 a share.
Shares of Symbol Technologies [SBL]
Shares of Symbol Technologies are expected to split 3-for-2 based on Monday's closing price.
Word On The Street
"It feels more and more like a low has been set," says Bill Schneider of UBS Warburg. "It gives people some confidence that, when we get an upmove, it is okay to jump on board. We haven't had that in a while."
Selected Expected Earnings Releases for Monday
Consensus Estimates vs. Last Year
Automatic Data Processing [ADP] Q3 $0.48 vs. $0.42
Bank of America [BAC] Q1 $1.12 vs. $1.33
Citigroup [C] Q1 $0.70 vs. $0.78
Eaton [ETN] Q1 $0.98 vs. $1.75
First Union [FTU] Q1 $0.62 vs. $0.85
Eli Lilly [LLY] Q1 $0.73 vs. $0.63
New York Times [NYT] Q1 $0.37 vs. $0.47
Reliant Energy [REI] Q1 $0.70 vs. $0.47
Vitesse Semiconductor [VTSS] Q2 $0.10 vs. $0.13
Wrigley [WWY] Q1 $0.36 vs. $0.33
from: Briefing.com...for Monday...
Updated: 16-Apr-01
General Commentary
They're back!!!
Just when everyone was reading the sector its last rites, techs powered the Nasdaq's most impressive rally in months... In fact, the index was up every day this week - the first time in seven months that the Nasdaq had strung together four straight up days... Even if volume wasn't spectacular, the 14% four-day gain was.
Chips stocks led the recovery - even while earnings news remained negative... Rallying in the face of bad news is one of the best signs that the bottom is in... Much of the credit for the week's 23% gain in the SOX index goes to SSB analyst, Jon Joseph, who upgraded the sector on the assumption that the industry would trough over the next few months, and that the stocks typically rally in advance of a fundamental turnaround... While investors can debate his outlook all they want, what isn't debatable is that Joseph's bullish call stemmed the tide of negative news (if only temporarily), and made it easier for investors to look beyond the Q1 nightmare to a time (Q3) when conditions will be better.
Optical networking stocks were also big winners as Juniper (JNPR 50.38 +7.62) and Redback (RBAK 17.7 +1.86) managed to deliver results which were considerably better than the markets worst fears... Given all the negativity heading into earnings season, that's all it took to jumpstart the bulls and send the stocks soaring... Thursday's winners included JNPR, RBAK, Sonus (SONS 19.91 +2.20), New Focus (NUFO 16.63 +4.40), Corvis (CORV 8.2 +1.45), Ciena (CIEN 55.98 +7.05), Cisco (CSCO 17.98 +0.58) and Nortel (NT 16.60 +2.12)... All but NT, enjoyed significant jumps in volume along with the big gains.
The rise in volume also a good indication that institutions are beginning to rotate back into techs... And as we've discussed over the past few days, the further the Nasdaq runs, the more portfolio managers will fear being left behind, the more money will flow back into the group, the more shorts will be forced to cover, and the higher the index will go.
The bullish cycle is just beginning.
While it could be derailed by negative earnings/guidance from IBM (IBM), Intel (INTC), Microsoft (MSFT), Sun Microsystems (SUNW), Nortel (NT), etc., all of which report results in the week ahead, we doubt it.
Last week we transitioned from pre-announcement to earnings season, this week, we transition from sell the rallies to buy the dips.
See Briefing.com's Earnings and/or Tech Earnings Calendars for full list of companies scheduled to report results this week/month.
Robert Walberg
Industry Briefs
Computer Systems & Peripherals | Networking | Internet | Semiconductor | Semi Equipment | Software | Telecom Equip | Telecom Services
Computer Systems & Peripherals
Industry Members
Handspring (HAND) 14.15 +2.10: After the close, this provider of the Visor personal organizer reported a Q3 loss of $0.06 a share, in line with the First Call consensus; revenues rose 260.8% to $123.82 mln from a year-ago of $34.32 mln; continued expansion in the U.S. retail and reseller markets and new distribution channels in Italy, Australia and New Zealand contributed to the strong quarter... However, sees slow September quarter reducing total year sales by about 5%... Q2 sales and earnings were guided to lower-end of previous rangesof $130-$136 mln and loss of $0.06 to $0.08... Traders should also note rise in inventories, which could, along with intense competition, put downward pressure on margins going forward.
Natl Instruments (NATI) 32.17 +1.33: After the close, posted Q1 earnings of $0.28 a share, $0.01 worse than the First Call consensus of $0.29, vs year-ago earnings of $0.24; revenues rose 14.9% to $108.08 mln from a year-ago of $94.11 mln.
Network Appliance (NTAP) 16.68 +0.12: Merrill Lynch downgrades to NEAR TERM ACCUM/LONG TERM ACCUM from NEAR TERM BUY/LONG TERM BUY after company warned for Q4 yesterday; 4Q01 EPS estimates reduced from $0.11 to $0.02 and revenue estimates reduced from $320 million to $225 million; firm says that strategically NTAP is well positioned, especially if it executes on its DAFS initiative.
Research In Motion (RIMM) 28.27 +6.34: JP Morgan upgrades to BUY from LONG TERM BUY rating and price target of $52; says results and guidance confirm that RIM is in a high-growth sweet-spot relating to the sale of mobile data solutions to large corporations; management addressed investor anxieties head-on, citing momentum, wins, and new initiatives in each case.
Networking
Industry Members
Redback Ntwrks (RBAK) 17.7 +1.86: Rallies sharply off 14.90 low on trading floor rumors that Cisco (CSCO 17.98 +0.58) will make a bid for the company... Briefing.com notes that rumor makes very little sense, as CSCO already has competitive products to RBAK's SMS product line, and Cisco's Cerent division was spun off from the same company as Redback's Siara division. In short, Redback doesn't have any technology that Cisco needs, making an acquisition highly unlikely.
Internet
Industry Members
Art Tech Grp (ARTG) 5.59 +0.39: Company to reduce workforce by 12% or 150 employees. Additional cost-saving measures will include real estate consolidation and reductions in salaries and consultant contracts.
Broadbase Sftwr (BBSW) 1.08 +0.16: After the close, provider of customer-focused eService, eAnalytic and eMarketing applications reports Q1 loss of $0.22 a share, $0.01 better than the First Call consensus; revenues rose 106.8% to $13.03 mln from a year-ago of $6.30 mln.
DoubleClick (DCLK) 12.01 -0.61: After the close, reported a Q1 loss of $0.08 a share, $0.01 better than the First Call consensus; revenues rose 4.4% to $114.87 mln from a year-ago of $110.06 mln; warns Q2 will be a loss of $0.05-0.07, current First Call estimate is a loss of $0.02; expects revenues of approximately $100-105 mln.
Inforte Corp (INFT) 8.08 +0.08: After the close, company warns Y01 will be $0.07-0.22 per share vs current First Call estimate of $0.27, cities the macroeconomic environment.
webMethods (WEBM) 26.45 +1.35: Company's Board of Directors approves a voluntary stock option exchange program for its employees. WEBM employees will have the opportunity to cancel outstanding stock options granted on or before March 31 with an exercise price of $40.00 or more. The exercise price of the new options will be based on the fair market value of webMethods' common stock at the time of grant.
Semiconductor
Industry Members
Analog Devices (ADI) 42.37 +3.37: Chip maker guided down Q2 outlook to a range of $0.31-$0.33 vs $0.41 mean estimate; pegs sales of $600-$620 mln, up 3%-7% from the yr-ago and off 20%-22% sequentially (mean sales est. for the qtr was $705 mln). Believes that its shipments to OEM customers are running below their consumption levels, which is bringing down their inventories; also encouraged by what appears to be a stabilization in distributors' shipments to their customers... While company expects Q3 revenues to decline another 5% sequentially, ADI thinks that Q3 could be its trough qtr, with revenues showing modest sequential growth in Q4.
Atmel Corp (ATML) 10.82 _0.71: Company warns Q1 (Mar) will be approximately $0.12 per share, current First Call estimate of $0.16; company says that given the current business environment, it believes that Q2 sales will be slightly lower on a sequential basis, in the mid-single digit range.
Communications Chip Downgrades : JP Morgan downgrades the following Comm chip names to HOLD from LT BUY: PMCS, VTSS, BRCM.. Firm lowers rating on AMCC to HOLD from BUY.
Elantec Semicon (ELNT) 33.91 +1.71: After the close, company reports Q2 net of $0.20 a share, in line with the First Call consensus, vs year-ago of $0.14; revenues increased 53% to $30.6 mln from $20 mln in the year-ago; warns Q3 will be $0.10-0.12 per share vs $0.21 First Call mean.
Intel (INTC) 28.12 +0.60: Heard from sources at Lehman that analyst Dan Niles sees high-end Pentium IV pricing falling to as low as $250; processors currently priced at $625 per unit, and Intel is expected to lower prices to $525 on Sunday... Niles apparently saying that moves will impact revenues under pressure.
Micron Tech (MU) 46.41 +4.81: Trading floor sources told us that MU is making bullish comments while making marketing rounds with Bear Stearns in Boston; company apparently seeing good demand for DRAM and a working down of inventories. In addition, predicting that Samsung will try to raise price on 128MHz DRAM shortly.
Rambus (RMBS) 19.53 +1.29: After the close, posted Q2 earnings of $0.08 a share, $0.03 worse than the First Call consensus of $0.11, vs year-ago earnings of $0.04; revenues rose 99.1% to $31.25 mln from a year-ago of $15.69 mln; anticipates an overall decline in Q3 total revenues from current licensees next quarter by 20% sequentially... Stock trading at 18.27.
RF Micro Device (RFMD) 17.85 +3.92: Wit SoundView upgrades to STRONG BUY from BUY; cites contract wins from QCOM and MOT; feels that news also a positive for Amkor Technology (AMKR).
Silicon Storage (SSTI) 7.86 +0.86: After the close, posted Q1 earnings of $0.06 a share, a penny worse than the First Call mean, vs yr-ago net of $0.11; excluding inventory write-down, company would have earned $0.09 for the quarter; SSTI expects revenue and EPS to increase by 5-10% sequentially (EPS estimate is $0.06), noting that the situation has improved slightly since March. This may be first chip company to actually forecast rising sales and earnings... Should be positive for sector.
Semi Equipment
Industry Members
Merrill on Semi Equip : Merrill Lynch says that Lam (LRCX 28 +3.43) sequential order decline of 60% was far below the 35% decline expected by Merrill; firm now expects Applied Materials (AMAT 49.47 +3.44) to see a 40-45% sequential decline in the Apr qtr to $1.2-1.3 bln vs prior estimate of $1.7 bln. Merrill also notes that its industry estimate of a 26% q/q decline in Q1 was far too conservative.
Software
Industry Members
BEA Systems (BEAS) 33.27 +0.46: Salomon Smith Barney downgrades to OUTPERFORM from BUY; cites three reasons: 1) pricing pressure from IBM; 2) IBM not as good but available option 3) IBM customer loyalty... Firm cuts price target to $40 from $70 and reduces FY02 outlook to $0.36 from $0.43.
Cadence Design (CDN) 19.30 -0.06: After the close, announces that it is acquiring all of the assets of the emulation division of Mitsui Bussan Digital, a wholly owned subsidiary of Mitsui and Co; financial terms of the agreement were not disclosed.
Echelon Corp. (ELON) 14.80 +1.16: After the close, this developer of LonWorks networks reports Q1 net of breakeven, in line with the First Call consensus; revenues rose 10.0% to $12.59 mln from a year-ago of $11.44 mln; gross margin for the quarter ended was 61.9%, compared with 58.4% for a yaer-ago.
Infosys Tech (INFY) 56.5 +1.0: W.R. Hambrecht upgrades to BUY from MKT NEUTRAL rating and price target of $65; says Infosys added 37 new customers in recent quarter, which is a record for company and implies it is gaining market share due to its value proposition and reputation for quality.
Microsoft (MSFT) 62.18 +2.14: Heard from sources that Lehman thinks there is risk to Microsoft's earnings this quarter; could be a penny or so light.
Telecom Equip
Industry Members
Corvis (CORV) 8.2 +1.45: Light Reading reported that Corvis has leased new facilities for its work on a new grooming switch; this would be a high port count optical switch with an electrical switching fabric that competes with Ciena's (CIEN) CoreDirector product. Corvis's current switch is all-optical with a small port count and targets a different market... Separately, CIBC analyst believes that there will be upside to Corvis numbers when the company reports on Apr 26; says BRW and WCG have been strong and Qwest (Q) has been surprisingly above expectations; CIBC had included Qwest in its Q3 estimates but believes some Qwest orders may be seen in the June qtr.
Juniper Networks (JNPR) 50.38 +7.62: Prior to open posted Q1 net of $0.25 a share, in line with Wall Street views, vs yr-ago net of $0.03; revenues increased 420% to $332.1 mln, slightly below the $336 mln estimate. On conference call, company warned for Y01 and now expects earnings in range of $0.90-1.00 vs current EPS estimate of $1.06; guided Q2 revenues lower to flat at about $332 mln vs consensus of $375 mln; sees Q2 EPS of $0.25 vs consensus of $0.26... News prompted CSFB to make some cautious comments; said that EPS guidance of $0.90-1.00 for the year may be too high as carrier budgets for the second half have not been set and visibility is therefore limited; believes short-covering largely responsible for Thursday's rally... Separately, CIBC Wrld Mkts upgraded to STRONG BUY from BUY on valuation and margin improvement; says stock is the one compelling growth story in networking; also taking down EPS estimate for FY02 to $1.28 from $1.31 and price target to $55 from $80... Stock added 49% last week.
Nortel Networks (NT) 16.60 +2.12: Heard from trading floor sources that their is research in the market that Nortel is down to a normalized 6 weeks of WDM component inventory, from 12+ weeks in Jan. While investors may focus on the declining inventories as a bullish factor, there is still some question about component pricing. Indication is that component suppliers such as JDSU and GLW are being hit on price and that numbers might have to come down after JDSU reports on April 26... Circulation of this research has created a major short-squeeze in NT shares.
Powerwave Tech (PWAV) 13.42 +1.60: After the close, posted a Q1 loss of $0.15 a share, $0.09 worse than the First Call consensus of loss of $0.06, vs year-ago earnings of $0.16; revenues fell 29.7% to $72.98 mln from a year-ago of $103.85 mln; experienced significant order quantity reductions during the quarter and delivery push-outs for the majority of our 2G single-carrier products; the slowdown in the wireless communications sector caused delays in purchasing decisions at the network operator level.
Telecom Services
Industry Members
Allegiance Telecom (ALGX) 16 -0.1: Dain Rauscher Wessels upgrades to STRONG BUY (Aggressive) from BUY; with low public-market valuations in the CLEC space, firm believes companies that continue to execute, are fully funded, and demonstrate a path to profitability are well positioned; firm has a price target of $21. |
