From Briefing.com: 5:22PM Juniper Networks trading up 1 point in after hours following upside guidance (JNPR) 21.26 +0.97:-Update- JNPR is currently trading at 22.24 afterhours.
5:05PM Seagate Tech beats by $0.08, guides JunQ above consensus (STX) 17.34 +0.57:Reports Q3 (Mar) earnings of $0.45 per share, $0.08 better than the Reuters Estimates consensus of $0.37; revenues rose 41.9% year/year to $1.97 bln vs the $1.87 bln consensus. Co issues upside guidance for Q4 (Jun), expects revenue and earnings "to be comparable" to MarQ. Using MarQ results, it expects EPS of $0.45 vs. $0.35 consensus; sees Q4 revs of $1.97 bln vs. 1.85 bln consensus.
4:47PM MIPS Techs reports in-line (MIPS) :Reports Q3 (Mar) earnings of $0.09 per share, in line with the Reuters Estimates consensus of $0.09; revenues rose 33.4% year/year to $16.8 mln vs the $16.6 mln consensus.
4:31PM Juniper Networks beats by $0.01 (JNPR) 21.26 +0.97:Reports Q1 (Mar) earnings of $0.16 per share, $0.01 better than the Reuters Estimates consensus of $0.15; revenues rose 100.4% year/year to $449.1 mln vs the $440.5 mln consensus. JNPR reports gross margin 68.1% vs 68-69% co guidance.
4:26PM SigmaTel beats by $0.03, ex items; guides above consensus (SGTL) :Reports Q1 (Mar) earnings of $0.67 per share, excluding non-recurring items, $0.03 better than the Reuters Estimates consensus of $0.64; revenues were unchanged from the year-ago period at $99.3 mln. Co issues upside guidance for Q2, sees EPS of $0.48-0.57 vs. $0.40 consensus; sees Q2 revs of $86-95 vs. $80.82 mln consensus.
4:26PM Intel beats by $0.03, issues upside guidance (INTC) 22.63 +0.42:Reports Q1 (Mar) earnings of $0.34 per share, $0.03 better than the Reuters Estimates consensus of $0.31; revenues rose 16.2% year/year to $9.4 bln vs the $9.31 bln consensus. INTC reports gross margin 59% vs 57% Street expectations. Co issues upside guidance for Q2, sees Q2 revs of $8.6-9.2 bln vs. 8.91 bln consensus. Co sees Q2 gross margin approx 56%; now sees 2005 gross margin 59%, vs 58% prior guidance. Co says R&D spending expectation unchanged at approx. $5.2 bln and raises Capital Spending outlook to $5.4-5.8 bln from $4.9-$5.3 bln.
4:20PM INTC trades up $0.60 in after hours; Semi Equips run on Intels raised CapEx guidance: KLAC +1.75, LRCX +0.60, NVLS +0.55, AMAT +0.40 :
Close Dow +56.16 at 10127.41, S&P +6.80 at 1152.78, Nasdaq +19.44 at 1932.36: The bulls returned, as eased inflation fears, strong quarterly earnings and low bond yields sparked a broad-based rally that lifted all 10 economic sectors... Kicking things off on a positive note were better than expected Q1 earnings and encouraging Q2 guidance from Texas Instruments (TXN 24.14 +1.22), which helped mitigate worries about slowing profit growth and improved sentiment throughout technology... While investors continued to sift through more earnings reports, they were awarded with a better than expected March PPI report...
While the overall March PPI rose 0.7% (consensus 0.6%), the core rate on March PPI was up only 0.1% (consensus 0.2%), suggesting that inflationary pressures remain well contained and that the Fed has reason to maintain its measured approach to tightening (i.e. in 25 bp increments)... The upbeat data renewed buying interest in both stocks and bonds, underpinning a bullish bias and providing investors with an ample opportunity to find bargains in an arguably oversold market... Treasurys closed near session highs, as the benchmark 10-year note finished up 19 ticks to yield 4.19% - its lowest closing level since Feb 17...
Bonds also got a boost amid ongoing troubles (i.e. diminished appeal for GM's near junk corporate bonds) at General Motors (GM 26.06 -0.13), which posted a narrower than expected loss; but shares were under pressure all day after the auto maker failed to provide guidance in the wake of its largest quarterly loss (-$1.1 bln) in 13 years...
Meanwhile, the fact that 19 out of 27 S&P companies - from blue chips like Johnson & Johnson (JNJ 68.97 -0.07), which also boosted its FY05 outlook, and Coca-Cola (KO 42.43 +1.46) - beat analysts' expectations, provided the floor of support the market needed to hold onto the bulk of today's gains into the close... Energy (+2.3%) paced the way to the upside, as oil prices surged 3.8% to over $52/bbl... Crude oil futures ($52.29/bbl +$1.92) climbed amid speculation that increasing demand for gasoline heading into the summer driving season will eat into US inventories and hamper refining capacity... Technology (+1.1%) also surged, with a gain of 1.7% in Semiconductor - following TXN's solid quarter and ahead of Intel's (INTC 22.63 +0.42) report after the bell - providing the bulk of strength throughout the sector...
Interest-rate sensitive sectors like Utility (+1.3%) and Financial (+0.3%) also finished higher... The latter got a boost from better than expected earnings from Northern Trust (NTRS 44.71 +0.91), State Street (STT 44.67 +3.48) and Merrill Lynch (MER 54.06 +0.82), which also boosted its dividend 25% and announced a $4.0 bln repurchase... Despite disappointing Mar. Housing Starts (1.837 mln versus estimates of 2.090 mln) and Mar. Building Permits (2.023 mln versus estimates of 2.094 mln), Homebuilding (+0.7%) showed relative strength...
Offsetting factors were lower bond yields, a 56% surge in D.R. Horton's (DHI 28.77 +1.31) Q2 earnings and upbeat analyst comments regarding attractive valuations within the space... Materials (+1.4%) also traded higher, amid strong follow through in Steel and weakness in the greenback... The dollar lost ground against the euro (1.3071) and the yen (106.79) after benign inflation data and a 14-year low in housing starts reinforced slower than anticipated economic growth... Even Health Care and Consumer Discretionary, despite weakness in Retail (-0.4%), inched into positive territory...
Health Care was under pressure throughout most of the session amid weakness in Pfizer (PFE 27.43 -0.17), which posted an 87% decline in Q1 profits - due in part to the Bextra withdrawal - and Boston Scientific (BSX 29.13 -1.62), which warned that sales gains (related primarily to its Taxus stent) will slow in coming quarters... Retail was under pressure in the wake of disappointing April comp guidance from Target (TGT 47.94 -0.68) and uncertainty heading into JC Penney's (JCP 45.50 -1.02) analyst meeting...DJTA +1.3, DJUA +1.4, DOT +1.1, Nasdaq 100 +0.8, Russell 2000 +1.6, SOX +1.7, S&P Midcap 400 +1.3, XOI +1.8, NYSE Adv/Dec 2481/838, Nasdaq Adv/Dec 2075/990
11:02AM Sequenom says it discovered highly informative epigentic markers for Lung Cancer (SQNM) 1.08 +0.07:Co announces that it has developed a process that identifies epigenetic markers that have been used in lung cancer research. Co says the innovative process performs high-throughput DNA methylation analysis based on the co's MassARRAY system.
9:14AM Gapping Up :Gapping up on strong earnings/guidance: EMC +5.5%, TXN +5%, BTU +2.8%, NMSS +19% (also First Albany upgrade), ADTN +8%... Other News: ORPH +21% (to merge with Jazz Pharma), KVHI +16% (announces deal with Cadillac), OXGN +8.2% (announces preclinical data), PKTR +5.3% (Harris Nesbitt upgrade), BOOM +4.4% (bounces after recent weakness), ABLE +4.6%.... Under $3: LU +9.3% (reports MarQ; up in sympathy: TLAB +4.7%, FFIV +2.7%), EMRG +22% (Mad cow report in Japan), ADCT +20% (guides higher), GNTA +14% (preclinical data), ALTI +11.4% (starts shipments of battery electrode nanomaterials), SPAB +11% (rolls out hardware for Space Station), VION +6.5% (completes Phas 2 trial), ENMD +5.6% (presents preclinical data).
8:01AM Broadcom partners with Ninetendo for next generation gaming system (BRCM) 27.81 :Co announces a strategic partnership to provide wireless technology for Nintendo's next generation gaming systems. Nintendo's next generation console (codenamed "Revolution") will feature an advanced wireless platform that integrates multiple technologies.
9:18AM Teradyne (TER) Wells Fargo Sec downgrades Buy to HOLD. Wells Fargo downgrades TER as they anticipate lowered guidance on Wed following earnings. Through their channel work, they are hearing that new orders remain weak. They note the order environment has improved only modestly at the end of March, but believe it was not enough to build much backlog. They say the environment for Teradyne to turn profitable appears to be eroding. From a micro perspective, they believe without a significant increase in backlog in 1H, they can no longer support our 2H05 estimates. From a macro perspective, firm sees only slow semiconductor growth this year.
9:16AM Trident Microsystems (TRID) Needham & Co initiates BUY. Target $22. Firm says the co is the only semiconductor pure play on digital TVs, which they expect will likely be the next big product cycle in consumer electronics. They say boasting first mover advantage in the digital TV SoC market and strong design win momentum with tierone multi-national and Chinese OEMs, they believe TRID should experience strong rev growth over the next two years. They say with F3Q05 results in-line and with mgmt guiding for 20-25% sequential rev growth in each of the next three qtrs, firm recommends immediate accumulation of TRID shares.
9:14AM Sonus Networks (SONS) WR Hambrecht downgrades Buy to HOLD. Target $3. While firm continues to believe that this shortfall may be partially due to the Co's enhanced conservatism regarding revenue recognition subsequent to its 2004 restatement, the repetitive nature of mgmt's apparent inability to forecast its quarterly revenue with any semblance of accuracy over the past few quarters leaves firm's uncomfortable, at best, with firm's 2005 and 2006 estimates. Consequently, despite Co's growth potential firm feels the stock will be relegated to a trading range in the near-term.
1:29PM The Coca-Cola Company (KO) 42.52 +1.54: The market was expecting a rocky start for the world's leading non-alcoholic beverage company, but Coke turned out a solid result for the first quarter beating estimates. Coke reported earnings of $0.47 per share, excluding non-recurring items, down year/year but above consensus by $0.04. What the market will be focused on was the positive unit case volumes increase of 3% and gross profit margins up 4%. Further assisting the upside came from equity and other income along with a lower tax rate (24% vs. 25% forecasted). Out of the gate, Coke was faced with a challenging Q1 with two less selling days during the quarter, compared to an extra four days last year. Further, this was the first quarter of management's planned incremental marketing spending plan of $350-400 mln in 2005.
Revenues rose 4% to $5.3 bln vs. $5.15 bln consensus driven by currency gains (+4%) and structural changes (+1%), as pricing and product mix resulted in a 1% negative impact. Worldwide unit case volumes again were up 4%, including a similar gain internationally. Growth was broad-based with unit case volumes up across each of its product segments. In carbonated soft drinks volumes rose 2% with international up 3%, while non-carbonated jumped 4%. The latter segment enjoyed strong growth in North America in juice drinks up 16% and internationally with teas/coffees up 6% and sports drinks up 18%. The water segment posted strong results with case volumes up 8% gaining market share with its Dasani water brand. As expected, SG&A expenses rose up 12%. The only caveat for the quarter was roughly flat EBIT.
Within its North America segment, unit case volumes and net revenues were flat. Coke noted the flat topline was due to a 2% decline in gallon sales and two fewer shipping days. Higher marketing expenses lowered operating income by 11%. Overall, carbonate soft drinks fell 1% citing soft category trends. But diet and light drinks maintained strength posting positive unit case growth. Non-carbonated beverages (POWERade and Dasani) enjoyed double-digit unit case volume growth and share gains. Minute Maid premium chilled orange juice drove overall juice case volume by 4%. New products include the release of Coke with lime along with Dasani Flavors. Coke noted the launch of its Full Throttle energy drink ahead of schedule already achieving 70-80% availability in just 6-weeks.
Europe, Eurasia, and Middle East unit case volumes fell 1% with net revenues flat. Weakness in Germany, India, and NW Europe was offset by double-digit growth in Emerging Markets. Price increases, lower gallon sales, and fewer shipping days offset positive currency benefits. Again, higher marketing and operating expenses lowered income by 7%. Coke expects Germany to remain a challenging market throughout the year due to its Mandatory Deposit legislation. Double-digit growth in China and single-digit gains in Japan boosted Asian unit case volumes by 3% offsetting weakness in India and the Philippines. Sales, currency benefits, and pricing resulted in a 8% rise on the topline. Latin America and Africa were the only segments to show positive operating income, both up 7% with case volumes up 6% and 10%, respectively.
Cash from operations increased 18% to $1.4 bln. Coke continues to drive shareholder value through raising it dividend during the quarter by 12% to 2.73%. It also plans to repurchase at least $2 bln in stock throughout 2005.
The market is responding positively to these results pushing the stock up over a $1.50 in early trading. This is a solid start considering the challenging quarter. Unit volume growth is at the low end of its long-term target, but it's definitely encouraging showing Coke's progress. This will be a transition year for Coke, as it faces numerous issues including increasing pricing in North America, difficult y/y comps in Japan, and structural changes in Germany. It's all about execution, operating leverage, and driving volume growth. Thus far, Chairman and CEO Neville Isdell has instilled renewed market confidence for Coke's outlook. We remain committed to the name considering the limited downside, discounted valuation, and positive outlook over the long-term considering Coke's vast growth opportunities within its reach. Shares are trading at 20.6x forward earnings vs. its 5-year historical average of 28.8x. ---Kimberly DuBord, Briefing.com
12:43PM Financial Services Stocks There is an interesting pattern in the earnings reports of the financial services stocks that reported earnings before the open today. There were seven major financial firms comprising three regional banks, two investment services firms, and two money center banks. The two money center banks either met or fell short of estimates, but all of the others bet estimates by large margins. Mellon, in fact, beat earnings estimates by 63%.
The following table summarizes the earnings of these stocks (source for estimates: Reuters). Company Stock Industry Earnings, $ Estimate, $
Wells Fargo WFC Money Center Bank 1.08 1.09
US Bancorp USB Money Center Bank 0.57 0.57
Northern Trust NTRS Regional Bank 0.63 0.60
State Street STT Regional Bank 0.67 0.61
M&T Bank MTB Regional Bank 1.70 1.62
AmSouth Banc ASO Regional Bank 0.47 0.46
Mellon Financial MEL Investment Services 0.72 0.44
Merrill Lynch MER Investment Services 1.21 1.17
The implication, of course, is that you cannot think of all financial services stocks as "in the same boat." It is tempting to view the current environment of rising interest rates, a slowing economy, and a stagnant equity market as "bad for financials." In a general sense, that is usually true. But as the above earnings report show, the money center banks are the firms most driven by the largest trends in the industry. Other types of financial firms can be driven by trends that are components of the overall industry and perhaps uncorrelated with the industry wide trends. For example, the current very strong market for investment services in the mergers and acquisitions segment is a strong driver for Merrill Lynch, but is entirely unrelated to interest rate trends. In addition, it is a very minor driver for US Bancorp and Wells Fargo, even though both have investment banking divisions.
Can industry wide deductions be drawn from today's sample of just eight firms? That might be a stretch, but by the time the market closes tomorrow, 15 more financial firms with representation from the various industries, will have reported. These include: SOV, WM, ABK, BK, CINF, CIT, CMA, JNS, JPM, NITE, NYB, PJC, COF, ET, JKHY.
For a summary of the estimates for these 15 stocks and the various industries within the financial services sector represented by these stocks, see the Ahead of the Curve column, to be published later this afternoon. Robert V. Green |
