09:45 ET Sector Watch: Retailers : Group is strong out the gate following improved same-store sales and positive guidance issued by several leaders in the sector. Pacing the advance are: GPS (+13%), ANF (+10%), AEOS (+7%), KSS (+7%), COST (+4%), LOW (+4%).
09:42 ET Sector Watch : As expected the semiconductor index (SOX) is pacing the way on the upside (+4%) with the other tech sectors such as networking (+2.6%), Internet (+2.6%) and software (+1.6%) also posting strong gains. Investors are fleeing gold (-1.4%) with energy, healthcare,airline and utility also on the defensive.
09:31 ET Quaker Oats (OAT) 97.80: The USA Today is reporting that FTC staff will recommend that the agency go to court to block Pepsi's (PEP) acquisition of OAT, citing concerns that the deal will reduce competition in the sports-drink market.
09:23 ET Gapping Up : Semiconductor equipment sector leading the market to the upside, as stocks react to Morgan Stanley upgrades: LRCX (+9%), KLAC (+7%), NVLS (+7%), AMAT (+6.5%)... Digital Island (ISLD) shares surge 66% in pre-market on announcement of ad delivery deal with MSN... Also trading up going into the open are: ICGE (+14%), UAXS (+11%), PLCE (+10%), FIBR (+9.5%).
09:22 ET Ceragon (CRNT) 3.29: Morgan Stanley downgrades to NEUTRAL from Outperform; says industry visibility has been significantly impacted due to the financial problems of several customers and capital spending cuts by others. Price competition will likely intensify in the microwave radio market, particularly for mobile wireless backhaul applications.
09:21 ET Brocade Comms (BRCD) 44.53: USB Piper Jaffray analyst Ashok Kumar maintains his NEUTRAL rating and negative stance on BRCD; says that company's competitive upgrade program makes no sense and that Brocade is a laggard in the new world of heterogeneous switched networks. Kumar says that OEMs such as EMC and SUNW will hold more leverage than Brocade in determining the future of the storage networking market. Kumar has been negative on BRCD since downgrading last year on May 22 (when split-adj price was 54.66).
09:08 ET StorageNetworks (STOR) 16.80: Dain Rauscher upgrades to BUY-Speculative from Neutral, increases ests, and sets $28 price target; believes that despite economic uncertainty, enterprises are actively looking for storage and cost-cutting solutions; has confidence in STOR's mkt position as the only storage service provider with mgmt and infrastructure services.
09:08 ET Nortel Networks (NT) 15.80: -- Update -- Hearing from sources at Robertson Stephens that the firm sees Nortel exiting the DSLAM (digital access line access multiplexer) business, and that this could be negative for NT suppliers CTLM (NT was 9.7% of 2000 revenues) and GSPN (NT was 11.2% of 2000 revs).
09:05 ET DMC Stratex (STXN) 7.97: Morgan Stanley downgrades to NEUTRAL from Outperform. Payment terms competition is intensifying, price competition is next, likely to intensify over the next several quarters. Firm lowers FY02 revenue and EPS estimates from $363 mln and $0.26 to $359 mln and $0.21, respectively.
09:00 ET L-3 Comms (LLL) 81.70: Wall St Journal reports this morning that L-3 is targetting larger acquisitions as the defense industry consolidates; mentions Harris (HRS 29.42), ITT's (ITT 44.24) defense operations, and Rockwell's (ROK 43.59) avionics and communications business as possible targets.
08:56 ET ADVO, Inc (AD) 34.00: CSFB upgrades direct mail marketing company to BUY from Hold based on current valuation levels and a greater degree of confidence in revised estimates; believes company can achieve 10-15% EPS growth over the next 3-5 years.
08:52 ET Take-Two (TTWO) 16.18: USB Piper Jaffray initiates coverage with a BUY rating and $22 price target; cites attractive valuation, strong revenue, earnings and sector growth expected.
08:52 ET The Gap (GPS) 28.80: Reports a 2% decline in April same-store sales; says Aprils comps were better than expected given the stronger performance at Gap and particularly at Old Navy; based on April results, expects Q1 earnings of $0.12-$0.13 (mean $0.11).
08:51 ET Opening Indications : S&P futures +12.3, or 10.3 pts above fair value; Nasdaq 100 pre-market indicator +38. Market benefits from three factors: Morgan Stanley chip equipment upgrade, unexpected ECB rate cut, and sharp 41K decline in initial claims.
08:48 ET Teva Pharm (TEVA) 57.40: Study results demonstrate that multiple sclerosis (MS) patients receiving Copaxone experienced sustained reductions in disease activity and disease burden as measured by magnetic resonance imaging (MRI).
08:43 ET Nortel Networks (NT) 15.80: Wall St Journal article reports that some investors are beginning to worry about Nortel's dwindling cash position, which was down to $1.8 bln on March 31; article speculates that company will have to tap the capital markets for more cash.
08:41 ET American Eagle (AEOS) 39.59: After the close, retailer reported a 22.7% increase in U.S. same store sales for April.
08:39 ET Regeneration Tech (RTIX) 13.31: Banc of America Securities downgrades to BUY from Strong Buy and lowers target price to $17 citing issues with RTIX's BioCleanse system which is in violation of the rules against contamination occurring during processing; reduces 2001 earnings est. to $0.24 from $0.29.
08:38 ET Merrill on ECB : Merrill Lynch suspects that catalyst for the surprise 25 bp rate cut by the ECB was very weak output and new order data in Germany that was published earlier this week. Feels that market is right to interpret this as good news, as it means that the Fed is no longer doing all the work. Still regards monetary policy in the Eurozone as inappropriately tight compared to the rest of the world; would continue to underweight European equities.
08:34 ET Powerwave Tech (PWAV) 17.50: Morgan Stanley downgrades to NEUTRAL from Outperform on diminished visibility and concerns fundamentals are worse for 2Q01 & 3Q01 than they were in 1Q01; says 3G concerns haven't been alleviated and stock has rallied without fundamental improvement; lowers 2001 EPS est. to ($0.02) on revs. of $356 mln, down from $0.05 and $397mln. 2002 EPS est. of $0.52 on revs. of $525 mln, down from $0.70 and $625 mln.
08:34 ET Jobless Claims : Initial claims for the week ended May 5 fell 41K to 384K. Consensus for total jobless claims was 416K.
08:32 ET Earthgrains (EGR) 25.33: JP Morgan downgrades to MKT PERFORM from Buy as shares have risen to within 10% of $27 price target; valuation appears to appropriately reflect its earnings growth prospects.
08:31 ET FreeMarkets (FMKT) 11.70: Company issued press release late last night announcing a the filing of an amended Form 10-K with the SEC; company plans to reissue its financial statements for fiscal 2000 in order to reclassify revenue earned under FreeMarkets' service contract with Visteon Corp. As previously announced, FMKT has been in discussions with the SEC regarding the classification of fees earned under its service contract with Visteon.
08:30 ET Triad Hospitals (TRI) 24.70: Merrill Lynch upgrades to NT BUY from Accumulate and places on the FOCUS ONE list. Acquisition of Quorum is consistent with Triad's strategy and plays well into the strengths of the management team. Price target is $36.
08:24 ET Trizec Hahn (TZH) 15.90: Salomon Smith Barney upgrades to OUTPERFORM from Neutral reflecting view that TZH's new CEO is successfully executing a strategic turnaround and building investor confidence.
08:23 ET First Data (FDC) 65.85: Morgan Stanley upgrades to STRONG BUY and raises price target to $85 citing higher conviction in the growth outlook for Western Union, FDC's largest and most profitable business; specifically cited Western Union's: 1) unmatched global distribution; 2) brand recognition and trust; 3) solid pricing power; 4) global growth potential; 5) higher U.S. competition.
08:22 ET Digital Island (ISLD) 2: MSN selects Digital Island to deliver all of its online advertisements. Digital Island will deliver more than 860 million ads per day worldwide, including ads on MSN eShop, Search and Hotmail, as well as on the MSNBC.com Web sites and MSN's Instant Messenger service.
08:20 ET Solly on Semis : Salomon Smith Barney says evidence of a bottom in the equipment sector and up the foodchain is becoming apparent in the March-June timeframe. At the first day of the firm's Semiconductor Conference equipment companies reiterated guidance across-the-board. Thinks investors should use dips to establish positions.
08:19 ET Park Place Entrmnt (PPE) 11.70: Robertson Stephens upgrades to BUY from LT Attractive with a $15 12-month target price. PPE management has responded quickly to EBITDA shortfalls. At Bally's/Paris, a change in hotel managers has improved the customer mix (reducing tour and travel exposure) and room yield. In Mississippi the negative comparisons will, at the very least, stabilize in the balance of 2001.
08:14 ET Wet Seal (WTSLA) 29.15: Retailer expects Q1 results to exceed the high end of the analysts' estimates. Reports a 9.3% increase in April same-store sales.
08:14 ET Aether Systems (AETH) 15.73: CIBC World Markets initiates with a HOLD. Analyst believes that management's current goal of becoming EBITDA positive by 3Q02 is in doubt due to the overall market condition and due to the significant cost controls that are required. Trading at 4.1x 2001 revenue estimate of $158.8 mln and 2.2x 2002 est. of $289.3 mln, AETH's comparable wireless software universe is currently trading at 3.1x 2001 revenues.
08:09 ET Advanced Micro (AMD) 28.15: CSFB starts coverage with a BUY rating; says the PC market is increasingly driven by the best combination of cost and performance, this is precisely what AMD offers. Never before has AMD been able to truly go toe-to-toe against Intel in both technology and pricing and come out not only unscathed, but in a stronger position than before.
08:07 ET Cisco Systems (CSCO) 19.13: Company and AOL Time Warner (AOL) expand technology agreement; terms of the agreement enable AOL to double the capacity and coverage of the AOL Transit Data Network by adding routers from the Cisco 12400 family; companies also to team on product development.
08:03 ET Gadzooks (GADZ) 17.21: Retailer reduces Q1 view to range of $0.24-$0.25 vs consensus estimate of $0.29; cites poor weather and generally weak traffic patterns; puts Q2 earnings at $0.21-$0.22 (mean $0.28) and full yr EPS at $1.52-$1.56 (mean $1.66).
07:59 ET J.C. Penney (JCP) 20.54: Company comfortable with analysts' estimates for Q1. Reports a 3.8% increase in April department store sales.
07:57 ET AnnTaylor (ANN) 31.25: Reports a 1.2% increase in April same-store sales. Continues to see Q1 earnings of $0.33-$0.37 and Q2 net of $0.28-$0.32 vs mean estimates of $0.33 and $0.29.
07:55 ET Chip Equipment Companies : Hearing from sources at Morgan Stanley that firm is upgrading large-cap semiconductor capital equipment companies; firm said to raise AMAT, KLAC, ASML, LRCX, NVLS, TER to STRONG BUY from Outperform... Firm feels that train has left the station and recent pullback creates a buying opportunity; sees upside of 40% or more over next 12-18 months.
07:51 ET ECB Cuts a Quarter : European Central Bank lowers rate for refinancing bids by 25 basis points to 4.50% and marginal lending rate to 5.50% from 5.75%. US equity futures rally on the unexpected rate cuts... S&Ps now trading 12 pts above fair value, and Nasdaq futures are lock-limit up.
07:51 ET Opening Indications : S&P futures +9.8, or 7.8 pts above fair value; Nasdaq 100 futures +34, or 25 pts above fair value. Positive tone intact, but no movement in the futures over the past half hour.
07:43 ET Guidant Corp (GDT) 37.30: Robertson Stephens upgrades to BUY from LT Attractive; believes that shares are oversold currently, and that long-term investors here have an excellent opportunity to build a position in a franchise interventional cardiology company.
07:40 ET Children's Place (PLCE) 24.40: Reports a 10% increase in April same-store sales. Raises Q1 outlook to approx. $0.45 a share, compared to current consensus of $0.38.
07:38 ET Pacific Sunwear (PSUN) 24.59: Announces resignation of COO Mark Hoffman to pursue other business interests. Separately, company reports a 4.1% decline in April same-store sales. Continues to see Q1 earnings of $0.11 (consensus $0.10).
07:35 ET Computer Assoc (CA) 29.12: WSJ reports that the Securities and Exchange Commission is investigating possible insider selling by a half-dozen employees. Investigation centers on stock trades made prior to the company's July 1998 earnings warning. CA's shares tumbled 31% the following day. According to a CA spokesman, none of the employees were in a position to have material nonpublic information.
07:29 ET Opening Indications : This morning's fair value figures -- S&P 500 fair value: 1259; closed 2 pts below fair value. Nasdaq 100 fair value: 1885; closed 9 pts below fair value. Current indications: S&P 500 futures are +9, or 7 pts above fair value. Nasdaq 100 is +35, or 26 pts above fair value. Tone has been decidedly positive throughout the morning; talk of a morning upgrade in the chip equipment sector contributing to strength in the Nasdaq futures.
07:23 ET Openwave (OPWV) 36.90: -- Update -- Company updates financial outlook; revises calendar yr forecast to $0.43 a share; continues to expects quarterly revenues to grow at a 10%-20% sequential rate, resulting in CY01 revenues of approx. $640 mln.
07:20 ET Openwave (OPWV) 36.90: Enters definitive agreement to acquire Avogadro, a telecommunications software infrastructure developer for 2.7 mln shares of OPWV stock. Avogadro is developing an instant messaging product to provide communication service providers the ability to deliver next generation communications services in a multi-device environment.
07:16 ET Level 3 Comms (LVLT) 15.49: Signs new agreement to provide additional broadband transport capacity to France Telecom (FTE) in N. America. France Telecom to lease a 2.5-gigabit per second circuit from Level 3 between New York and California using Level 3's (3)Link Private Line service.
07:08 ET BOE Cuts Rates : The Bank of England reduces its benchmark rate by 25 basis points to 5.25%; cites slower Q1 growth and uncertain global economy; this is the BOE's third cut this yr.
07:02 ET Avnet (AVT) 25.10: Acquires privately held electronic components distribution company Sunrise Technology Ltd. Terms of the deal were not disclosed. AVT expects the acquisition of the Chinese company to be slightly accretive to earnings, effective immediately.
06:56 ET Flextronics (FLEX) 28.48: WSJ reports that the contract manufacturer has emerged as the most likely buyer of two Lucent manufacturing plants, in a deal that could raise between $600 and $900 mln for LU. Details of the deal are expected to be ironed out within the next 4-6 weeks.
06:48 ET Universal Access (UAXS) 4.10: Company reiterates forecast for Q2 and reaffirms revenue, profitability, and cash flow targets for the full year. Continues to expect to reach operating cash flow break even in Q1 2002 and to achieve positive EBITDA and operating cash flow in Q2 of 2002. UAXS has no current plans for any offerings under the shelf registration statement filed April 27.
06:42 ET FelCor Lodging (FCH) 22.10: Announces acquisition of MeriStar Hospitality Corp (MHX 21.45) for $1.1 bln in cash and stock, plus the assumption of $1.6 bln in debt. Terms of the deal call for MHX holders to receive $4.60 per share in cash and 0.784 shares of FCH, bringing the combined value to approx. $21.92 per MHX share.
06:35 ET EMC Corp (EMC) 40.98: Company board of directors authorizes the repurchase of up to 50 million shares of its common stock. Purchased shares will be available for various corporate purposes, including stock options.
06:17 ET U.S. Markets : S&P futures trading at 1264.70, 5.7 points over fair value, Nasdaq 100 futures trading at 1896, 11.0 points over fair value. The 30-year bond is down a tick at 5.669%. The dollar is little changed against the yen, but weaker against the euro.
06:16 ET European Markets : FTSE +0.17%, DAX +1.04% -- European stocks mostly higher with Germany outperforming. Gains largely fueled by an earnings-driven rally in old economy stocks. BMW, Germany’s third largest automaker, reported that first quarter net income rose to 409 mln euros from 87 mln in the year earlier period on sales of 9.4 bln. Air France and Carlsberg also provide more earnings optimism. Oil stocks have resumed their run-up today, though British Telecom has been somewhat of a drag following plans to raise 5.9 bln pounds by selling new shares.
06:15 ET Asian Markets : Nikkei -0.48%, Hang Seng +0.14% -- Asian stocks mixed, but Japan down again after NTT DoCoMo reported that profit growth will take a hit this year on the back of increased competition. DoCoMo’s ratings cut by Nomura, while other high-tech and bank issues suffered from a pronounced lack of investor interest, particularly on the part of foreign accounts. Taiwan’s TWSE Index closed at its lowest level in four months on the back of semiconductor weakness. Korea’s Kospi pushed a tad higher with retail and foreign buying in the futures outweighing weakness in steel and banking stocks. Daewoo surge also a plus following reports of a GM-bid as early as next week. |
