FYI, ART
Updated: 06-Jul-01
Last Update: 09:24 ET
Trading Points
Comprehensive coverage on Short Stories, analysis on Story Stocks
09:24 ET Openwave (OPWV) 28.93: KDDI reports 107K new mobile subscribers for June vs May additions of
152.8K.
09:19 ET AsiaInfo (ASIA) 19.21: Awarded contract to support China Unicom's national data network backbone
expansion (China UniNet); contract is valued at over $20 mln.
09:07 ET Gapping Up/Down : TTWO +4% (reaffirms guidance for Q3 and Q4)... Gapping Down: BSQR -25%
(contract losses)... TKLC -20% (earnings warning)... MCDT -12% (downgrades; EMC warning)... SBUX -4.5%
(disappointing June revenues)... Stocks being dragged down by EMC preannouncement include EMLX -9.5%, NTAP
-7.5%, QLGC -7%, BRCD -7%, VRTS -5%.
09:05 ET JPM on Opticals : JP Morgan H&Q downgrades Ciena (CIEN 34.54) and Corvis (CORV 3.97) to
LONG-TERM BUY from Buy; says 2001 service provider capex is overstated and expects spending could be down
15-18% year/year.
08:56 ET Interst. Bakeries (IBC) 17.28: -- Update -- Reports Q4 net of $0.30 a share, 13 cents above consensus, vs
yr-ago net of $0.12. Sales rose 2.7% to $820 mln.
08:49 ET Take-Two (TTWO) 16.32: Gaming software company reaffirms previously issued financial guidance for Q3
and Q4.
08:47 ET Alcoa (AA) 40.78: Dow component reports Q2 net of $0.49 a share, 4 cents above consensus, vs yr-ago EPS
of $0.47.
08:41 ET Federated (FD) 38.01: Bear Stearns upgrades to BUY from Attractive; says that weak results through the
rest of the year are discounted after the recent slide in FD's share price, and that FD will be one of the best positioned
department store retailers when consumer spending rebounds.
08:41 ET Network Appliance (NTAP) 12.67: -- Update -- Thomas Weisel Partners slashing FY02 estimate to $0.02
from $0.20 to reflect pricing concerns. Maintains Mkt Perform rating.
08:37 ET Economic Data : Notable in the Employment Report: the aggregate hours index - a monthly proxy for GDP -
fell at a 1.4% annual rate in Q2, offering evidence that Q2 GDP will reveal a decline.
08:36 ET Longs Drug (LDG) 23.41: Reduces JulQ earnings estimate to $0.28-$0.30, compared to consensus of $0.36;
cites significantly lower than expected same-store sales.
08:35 ET Opening Indications : The S&P futures at 1215, trade eleven points under fair value, while the Nasdaq 100
pre-market indicator is -25.4 points. Markets have weakened slightly on the release of the June Employment Report.
08:31 ET Economic Data : -- Update -- Nonfarm payrolls fell 114K, weaker than the consensus estimate of a 40K
decline; unemployment rate rose a tenth to 4.5% vs 4.6% consensus; the average workweek was unchanged and hourly
earnings rose 0.3%, both in line with consensus. Revisions to past data were relatively small. Overall, this report was
weaker than expected, but not dramatically so.
08:24 ET McDATA (MCDT) 21.60: -- Update -- CSFB downgrades to HOLD from Buy following warning by EMC.
Reduces FY01 est. to $0.25 from $0.30 and FY02 to $0.44 from $0.61.
08:22 ET CIENA Corp (CIEN) 34.54: Lehman Brothers cuts FY02 revenue estimate to $2.44 bln from $2.70 bln, or
growth of 40% vs management's current 45-65% guidance; cites lower expectations for long-haul DWDM sales; cuts
price target to $50 from $80 and says investors should wait until after the July qtr conference call to purchase shares.
08:14 ET Siliconix (SILI) 31.43: Parent company Vishay (VSH) announces that exchange offer to acquire the
remaining SILI shares it does not already own has expired without an acceptable number of shares tendered. "We
conditioned our offer for Siliconix on the tender of a majority of the publicly held shares so that the public stockholders of
Siliconix would decide whether Siliconix should be taken private at this time."
08:14 ET Alpharma (ALO) 25.85: UBS Warburg downgrades to HOLD from Buy; says that company's earnings
prospects are closely tied to financial picture for its largest customers such as Conagra, Tyson, and Pilgrims Pride, but
that many of these companies will see lousy Q2 results; cuts FY01 and FY02 EPS estimates to $1.48 and $1.75 from
$1.65 and $1.90.
08:10 ET Advanced Micro (AMD) 28.64: -- Update -- Given weak pricing environment, Salomon Smith Barney
lowering Q2 est. to $0.04 from $0.27, 2001 to $0.75 from $1.30, and 2002 to $1.05 from $1.75. Thinks that stock has
downside risk to $19 (2x book value) and upside to $40.
08:06 ET Goldman on Enterprise Systems : Goldman Sachs analyst Laura Conigliaro says that this quarter is
showing similar or deteriorating trends compared with Q1; says US is stabilizing but incremental negatives are Europe,
spending by tech companies, currency effects, and deeper pricing discounts. Lowers numbers again on BRCD, IBM,
NTAP, and SUNW.
08:05 ET Emulex (EMLX) 35.82: -- Update -- CSFB downgrades to HOLD from Buy based on company's earnings
multiple of 100x firm's FY02 estimate. Trimming FY01 est. to $0.61 from $0.63 and FY02 to $0.36 from $0.54.
08:04 ET Opening Indications : S&P futures at 1216, trade 10 points below fair value while Nasdaq 100 futures at
1735, trade 31 points under fair value. Markets lower on warnings from AMD and EMC.
07:59 ET Brocade Comms (BRCD) 40.77: -- Update -- CSFB downgrades to HOLD from Buy amid fear that
current slowdown in IT spending will stall SAN deployments over the coming quarters; believes that the continued erosion
in OEM subsystem pricing will soon ripple through the entire SAN food chain. Reduces Q2 est. to $0.42 from $0.48.
07:57 ET Starbucks (SBUX) 21.92: Company's 3% increase in May comps was within firm's range but revenues (up
19% vs est. +22%-24%) were light for the third straight month. Expects lower coffee prices to buoy Q3/Q4 results but
firm shaving FY02 forecast by 2 cents (to $0.56) to reflect lower revenue. Firm sees valuation pressure likely.
07:51 ET EMC Corp (EMC) 30.03: -- Update -- Merrill Lynch reduces near-term rating to NEUTRAL from Buy to
reflect the negative impact of continuing hardware pricing pressure, and both domestic and European deteriorating
macro-economic demand. Cutting FY01 est. to $0.36 from $0.70 and FY02 to $0.49 from $0.98. Does not see any
near-term catalysts to drive shares higher in this economic environment.
07:47 ET McDATA (MCDT) 21.60: Merrill Lynch lowers near-term rating to ACCUMULATE from Buy due to
weaker than anticipated EMC operating results. EMC is McData's largest customer, and can account for over 70% of its
revenue. Firm cutting FY01 est. to $0.24 from $0.32 and FY02 to $0.61 from $0.71.
07:31 ET BSQUARE Corp (BSQR) 8.77: Reaffirms revenue guidance for Q2 but discloses that two significant
contracts have recently been cancelled. In addition, company warns of a material reduction in revenue from its
relationship with Microsoft.
07:27 ET Opening Indications : This morning's fair value figures -- S&P 500 fair value:1226; closed 4 pts below fair
value. Nasdaq 100 fair value: 1766; closed 8 pts below fair value. Current indications: S&P 500 futures are -6.10, or 10.1
pts below fair value. Nasdaq 100 is -26.5, or 34.5 pts below fair value... Market hit by another round of earnings
warnings -- EMC, AMD, BMC.
07:23 ET RadioShack (RSH) 30.42: Reports a 4% increase in June same-store sales. Reports that it has agreed to
purchase Microsoft's 25% preferred minority interest in RadioShack.com LLC for $88 mln in cash.
07:21 ET Veritas Software (VRTS) 62.26: Reuters reports that Veritas said in a telephone interview that they would
stick to previous guidance despite a Thursday warning by storage leader EMC Corp. "What I can tell you categorically is
that we have no intention of warning," stated CEO Gary Bloom when asked if the company is comfortable with EPS
estimates for the quarter.
07:16 ET Interst. Bakeries (IBC) 17.28: Nation's largest baker, often rumored to be a takeover target, could fetch a
higher premium given the hefty price Sara Lee recently paid for competitor Earthgrains, reports Business Week. One
newsletter editor thinks the stock is worth $25-$30, and says that a major Mexican company is said to be interested in
acquiring Interstate.
07:11 ET AFC Enterprises (AFCE) 19.90: Hedge fund manager thinks that AFCE could surge 50% over the next
6-12 months, according to Business Week. Thinks the owner of Popeye's Chicken & Biscuits, Church's Chicken,
Cinnabon bakeries, and Seattle's Best Coffee will see its shares lifted by unit/sales growth and its low valuation.
07:00 ET Cooper Cos (COO) 47.95: Contact-lens maker highlighted in the latest edition of Business Week as a
potential takeover candidate. The article lists Johnson & Johnson (JNJ) as a possible suitor.
06:52 ET Advanced Micro (AMD) 28.64: After the close, chip maker slashed EPS guidance for Q2 to $0.03-$0.05 vs
consensus est. of $0.27. AMD's revenues for the qtr ended July 1 were $985 mln, down 17% yr/yr and approx 9% below
consensus. According to AMD, demand for flash memory devices was and continues to be weaker than anticipated...
Stocks to watch in sympathy include competitor INTC, box maker's DELL, CPQ, GTW, and semi equipment names such
as AMAT, NVLS, KLAC.
06:41 ET EMC Corp (EMC) 30.03: After the close, company warned that Q2 earnings will come in between
$0.04-$0.06 vs consensus of $0.18. EMC sees revenues of approx. $2 bln (mean $2.46 bln). Stocks to watch in sympathy
with EMC include MCDT(A), EMLX, BRCD, QLGC, NTAP.
06:33 ET webMethods (WEBM) 15.76: Company lowers Q1 revenue outlook to $55 mln (Multex consensus $61.4
mln); sees loss for the qtr of $0.09-$0.10 vs red ink of $0.02 anticipated by analysts. Company planning to reduce staffing
levels by 15%.
06:19 ET U.S. Markets : S&P futures trading at 1216, 10.0 points below fair value, Nasdaq 100 futures trading at 1738,
28.0 points below fair value. The 30-year bond is down a tick at 5.742%. The dollar is a tad firmer against the yen, but
weaker against the euro.
06:19 ET European Markets : FTSE -1.32%, DAX -1.22% -- European shares sharply lower in the face of another
round of tech carnage. Sector hit by a flurry of earnings warnings yesterday from blue-chip names such as EMC, AMD
and BMC. Chipmakers hit hard following the AMD warning. Infineon at all-time lows, while ARM has lost more than
10%, touching levels not seen since October of 1999. Telecom hit again with Goldman lowering earnings estimates for
Nokia and Alcatel. EMC warning weighing heavily on software and computer services. Capital spending concerns still
very much in vogue following the recent Marconi warning.
06:17 ET Asian Markets : Nikkei -2.39%, Hang Seng -1.58% -- Asian stocks down big. Chip-related shares such as
Samsung and Advantest underperformed on the back of yesterday’s warning from Advanced Micro Devices (AMD).
Sector also hit by news that the Semiconductor Association of Japan expects semiconductor manufacturing equipment
orders to Japanese makers to fall by 25% y/y in fiscal year 2001. Nikkei fell to its lowest level since mid-March, with
Sony now at 22-month lows. Investors seen moving into selected defensive names. Even resilient autos came under
pressure. Korea off 2.5% at nearly two-month lows. Samsung off 5%, while Hynix lost almost 7%. Singapore and
Taiwan also weaker, but Taiwan was cushioned by government buying. |
