Ciena (CIEN-NNM)
by Blue Stone Capital (73, Dec. 20)
3/2. We are revising our earnings estimates downward based on Ciena's approximately $2.6 billion acquisition of privately-held Cyras Corp., a fiberoptics equipment manufacturer with metropolitan (local-telephone-company focused) product. Ciena expects the acquisition to be dilutive to earnings in the FY01 and suggested that consensus estimates could decline to about 50 cents from 70 cents. Our estimate for fiscal '01 moves to 46 cents from 62 cents; we were below consensus.
Extreme Networks (EXTR-NNM)
by SG Cowen (49, Dec. 20)
Neutral. Foundry miss casts cloud over comparable companies. Slowing economy will make it more difficult for companies in markets with low barriers to compete against the larger, diversified incumbents. While it may prove to be the strongest of its peer group, the stock looks expensive as group valuation is reset. Downgraded from Buy.
Yahoo (YHOO-NNM)
by SG Cowen (32, Dec. 19)
Neutral. Weak advertising environment ominous. With traditional (Time Warner) and Internet (DoubleClick) media companies preannouncing fourth-quarter results, it is becoming more difficult for Yahoo to escape the pressure. One of three scenarios is likely: it preannounces fourth quarter (likely this week); meets Q4 consensus estimate but guides Street down for 2001 (when they report 1/8); or preannounces Q1 results in late March. With the stock at $32, we think the upside/downside calculation is in favor of potentially shorting the stock: If Yahoo does not preannounce this week, stock is likely to remain in its current trading range of $30-$35. If it does preannounce, we think the stock could see the low to mid-$20s.
International Business Machines (IBM-NYSE)
by SG Cowen (86, Dec. 21)
Strong Buy. Remain optmistic re above-consensus EPS. IBM far better positioned entering 2001 than at the outset of 2000. Contract backlog for flagship support services operations will likely be up 40%-50% entering 2001, which should facilitate a step-up to midteens growth in 2001. Significantly less cyclical vulnerability than widely assumed by investors. Still foresee 17%-18% EPS growth next year to $5.30, well above the consensus. Price target: $160. |
