tons of downgrades for tech leaders... not a good sign:
from briefing.com
also check this:
briefing.com
Updated for: December 16, 1997
Please note: Briefing.com is provided as an information service only. Charter Media, Inc. and Briefing.com do not make specific trading recommendations or provide individualized investment advice. Readers should make investment decisions based on thorough research and their own investment criteria. See Disclaimer.
General Commentary
Techs ended Monday's session mixed, with bargain hunting lifting the chip equipment and disk-drive stocks while a rash of downgrades pressured the computer stocks lower... On the plus side, market psychology appears to be improving a bit as noted by the modest buying interest in the most battered stocks... On the downside, the sector's big name leaders continue to take a beating... Last week Oracle, Compaq, Intel and Applied Materials suffered technical breakdowns... Added to the list Monday were Dell and Lucent... Though the former remains well above pivotal support at 70, the stock's inability to break resistance at 103 7/8 on most recent advance is troubling... As long as the industry leaders continue to falter any recovery tries will prove short-lived.
This week's earnings news off to a bad start, as Solectron reported a gain of $0.38, two cents below the street's estimate... Micron Technology and Micron Electronics also missed the street's estimates in posting gains of $0.04 and $0.01, respectively... Pattern of missed earnings/earnings warnings indicates that we have yet to see bottom in tech sector... Too early to do any bargain hunting... Other notable names reporting earnings this week are Jabil Circuits (T), SpeedFam (W), Adobe (Th) and 3Com (Th)... For more detailed info, see Briefing's Earnings Calendar
Computer Systems & Peripherals
Brief: PC makers finally beginning to crack under the weight of sector bearishness and Asian contagion... Concern that Asia's financial woes will result in slower PC sales prompted BA Robertson Stephens analyst to downgrade his ratings on Compaq, Dell and Hewlett-Packard to l/t attractive, market perform and attractive... SoundView also cut its earnings estimate on CPQ for FY98 to $3.45 from $3.88... BA Robertson Stephens reiterated its l/t attractive rating on Seagate... Firm cut its rating on Quantum to attractive from buy...Goldman Sachs downgraded Stratus to market perform from market outperform... Micron Electronics posted earnings for the quarter of $0.01, five cents below estimates and well below year ago levels... Average selling prices for desktop and notebook PCs down 10% and 30%, respectively due to intense price competition in industry and inventory build-up... Noted that inventory problems still exist in notebook segment... Rising SG&A expenses also hurt comparisons... Stock which has been slaughtered during recent tech bloodbath likely to keep moving lower.
Computer Networking
Brief: Bay Networks slid another 9/16 despite being upgraded by AG Edwards from accumulate to buy... Rest of the sector was also narrowly mixed... Cisco recaptured 15/16 of Friday's 6+ point decline... Rebound was unimpressive and stock should resume slide... Next support is at 68 1/8 (Oct. low).
Computer Software & Services
Brief: A change of pace in the software group as internet stocks were the big losers while the rest of the sector staged a modest rebound... Winners led by Computer Sciences, Computer Associates and Broderbund... Losers included AOL, Yahoo! and Netscape... Evidence of just how negative the street is getting on the tech sector was news that BA Robertson Stephens had downgraded Microsoft to l/t attractive from buy... SoundView cut FY98 estimates for Adobe to $2.50 from $2.59... Earnings downgrades in sector likely to become more commonplace if assumptions concerning a slowdown in PC growth come true... With valuations in this sector still quite high, software stocks are vulnerable to a sizable markdown.
Semiconductor:
Brief: Chips reflected the broad tone in the tech sector, as the group ended Monday's session mixed... Intel, Altera and Texas Instruments led the winners, while Analog Devices, Linear Technology and Cypress Semiconductor led the losers... The latter warned that it will miss street's Q4 estimates... Expects to post earnings of $0.00 to $0.01 vs. estimates of $0.10... Revenues expected to come in closer to $140-$143 mln, not the $152-$155 mln street projected.... Cited timing problems in shipping SRAM products by qtr end cut-off... Earnings woes for industry to continue Tuesday, as Micron Technology reported earnings of $0.04, well below street estimates... For more on how the stock will open today, see Short Stories.
Semiconductor Equipment
Brief: Despite a wave of ratings downgrades from SoundView and BT Alex.Brown, group staged a recovery on light bargain hunting... Applied Materials, Watkins-Johnson, Novellus and Lam Research all ended with gains of one point or more... For info on ratings downgrades, see Briefing's Upgrades/Downgrades page... Brooks Automation (BRKS) also posted a solid gain despite giving an earnings warning... Company cited higher than expected product development spending in connection with company's introduction of its new atmospheric product line and to delays associated to introduction... Merrill Lynch downgraded to l/t attractive n/t neutral from l/t and n/t buy ratings.
Telecommunications Equipment
Brief: Not a lot of news in the group... Industry was mixed, with Lucent posting a decline of 2 3/16... Nearing pivotal support... Northern Telecom also dropped more than 2 points... Andrew Corp was day's big winner, gaining 1 1/16... BellSouth selected Lucent to provide hardware, software for company's "800" network.
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