Portfolio down 0.03%, Dow down 0.42%, Nasdaq down 3.34%, S&P500 down 1.15%, Gilder down 4.8%, Meisler down 3.8%, J-Blimps down 4.3%, Fuel cells/Alt Energy down 3.4%
NYSE Volume: 1.04 bln...Adv: 1137...Dec: 1685
Up Volume 395.59 Down Volume 617.86
Nasdaq Volume: 1.86 bln...Adv: 1321...Dec: 2629 Been nice if over 2.0B
Up Volume 385.18 Down Volume 1435.79 7/8 days of 2/1 decline
Put/Call ratio 0.76 (Range 0.54 to 0.76) Not much fear despite carnage in the tech sector. Milder than yesterday.
Sector Watch
NYSE Comp. ($NYA) 650.36 -3.19 -0.49% Still nestled halfway in the 50/200 stack.
Nasdaq Comp. ($COMPQ) 3240.53 -115.03 -3.43% The magic number everyone is watching is 3042.7. The spring low.
Nasdaq 100 ($NDX) 3188.29 -130.61 -3.94% Leaders out paced the sector. 2897 was the spring low for this. Unlike the Composite, the summer high in late August beat the July high. This divergence of leaders vs. pack is the hope for only another 5-7% more pain.
The energy sector was up on crude’s hop of $1.29 a barrel today and harsh talks in the Mideast.
Energy (XLE) 33.48 +0.73 +2.23%
Natural Gas ($XNG) 230.89 +8.59 +3.86% Cold snap here had many upping the thermostat this weekend.
Oil ($XOI) 543.68 +12.75 +2.40%
Oil Services ($OSX) 131.21 +3.96 +3.11%
The Techs were down
Techs (XLK) 42.87 -1.30 -2.94%
Comp. Tech ($XCI) 1173.37 -35.82 -2.96%
Disk Drives ($DDX) 124.71 -3.25 -2.54%
Hardware ($HWI) 311.91 -12.59 -3.88%
Internet ($IIX) 455.27 -17.05 -3.61
DOT ($DOT) 597.32 -18.97 -3.08%
Semis ($SOX) 706.51 -79.45 -10.11% Downgrades plus ELGS warnings setting in sector.
Financial (XLF) 26.82 -0.80 -2.90% Down on fears of junk bond losses and earnings shortfalls in the brokers
Banks ($BKX) 828.61 -28.67 -3.34%
Broker Dealers ($XBD) 584.38 -17.52 -2.91%
Drugs ($DRG) 413.39 +9.32 +2.31% Safe haven play
Portfolio Watch
SSTI down 6.04% Company withdraws registration statements relating to a secondary stock offering and a convertible debenture offering, citing market conditions.
PTEN up 10.23%. Oil up. PTEN up.
PHA up 3.00% Drugs were higher today.
KEM down 7.38%. Hmm. Perhaps, if tech grinds to a halt, then there are no capacitor shortage. Nah.
C down 3.09% down with other oin the sector.
SLAB up 4.06% Surprising.
ACCD down 1.42% Company working with Microsoft (MSFT) to develop the IP voice and visual communications solution to be integrated into Microsoft Outlook and Exchange Server.
Other stocks
BVSN up 6.62% Now up 26% in two day. Only three days to give it back.
Morgan Stnly DW (MWD) down 10.51% Company tells CNBC that losses in its bond portfolio have been greatly exaggerated.
Note: We heard it all before. Huge volume.
Akamai Tech (AKAM) down 4.98%: Stumbles into the red after Merrill Lynch lowers long-term rating to ACCUMULATE from BUY
Note: got the upgrade a day or so ago.
Very bearish article on the telecom spending issue. Have to digest it. businessweek.com
Chip Downgrades: Although Lehman Brothers expects both Altera (ALTR -7 3/8) and Xilinx (XLNX -13 1/8) to deliver upside earnings surprises, firm believes that revenue growth rates for the next two quarters are likely to slow noticeably. Sees this as a two-quarter problem as opposed to cyclical downturn.
Salomon Smith Barney also downgrading Altera (ALTR) and Xilinx (XLNX), reducing both stocks to OUTPERFORM from BUY. Still More Chip Downgrades : -- Update -- Prudential downgrades Altera (ALTR 40 7/8) to ACCUMULATE from STRONG BUY and lowers price target to $45 from $72.
Note: Something fishy here. ALTR down 27.23%, XLNX down 21.09%. I don’t follow ALTR, but XLNX cut was unwarranted.
Natl Disc. Brokers (NDB) up 88.86% Online broker has received an offer from an affiliate of Deutsche Bank offering to acquire all of the outstanding capital stock of the company for $49 per share in cash; also reports that it had received inquiries from other companies with regard to either a strategic merger or acquisition;
Note: Weak Euro buying weak broker. Tis odd.
Lucent Tech (LU) after hours Company warns for Q4; sees $0.17-0.18 EPS versus the consensus estimate of $0.27. Sees revenues of $9.3-9.4 bln; Lucent cites three factors for the warning: lower than expected revenues and margins in the optical systems business, higher reserves for bad debt in the emerging service provider market, and larger than expected decline in circuit switching business. Of these, the first and third have been problems for Lucent all year and appear to be company-specific, but the second is something that recently hit Ciena (CIEN) as well and could be a factor for other optical equipment vendors. Some significant Lucent suppliers are being hit in after hours trading, changes vs close: JDSU -4, GSPN -2, PLXS -2 5/16. VTSS shares continue their slide after hours as a result of the LU warning. Lucent is VTSS' largest customer and represented 18% of sales in FY99
Note: May be a good day to bottom fish opticals.
PacifiCare Hlth (PHSY) afterhours: Company warns for Q3; sees loss of $0.10 to breakeven; current EPS estimate is $1.91. Higher-than-anticipated commercial and Medicare health care costs were cited;
Note: Another reason I hate the sector.
IBM down 2.68% - plans to build a 2.6B chip plant in NY state.
Note : Good news for those chip equipment makers who win.
Shopping List
I think I will track the ones close to buy points to save time.
Caterpillar (CAT) down 3.44%
UAL down 0.30% (#1 airline, at four year low, target $35)
Integra LifeSciences (IART) up 4.50% (pre-announced upside) District Court rules in favor Integra LifeSciences in patent infringement case. The judgement upholds a March 17 ruling that awarded Integra $15 mln in damages.
Note: Missed the pitch over the plate. Missed the suit. $15M not earthshaking. MPPP saw worse.
PRSF down 2.67% (Leading billing software company plagued by insider sells re-entry $30)
Holding $35 area very well again.
AMD up 1.68% (historic 30% rev growth and pe of 22 INTC is 42 pe and 17% growth, falling knife. Need to see relative strength work up to 50. Re-entry at $20)
KOPN down 14.44% (Leading mfr of Cyberdisplays, 50% dependent on CNXT, $20 entry point)
Collapsed today
CYTC down 2.16% (thinprep leader in pap smear alternative, off 50% of its high, what bugged me, re-entry $28)
SDLI down 3.69% (Great quarter last time, $250 would be great re-entry)
SCMR down 9.91% (Optical leader off 50% in a month, re-entry at $55) Company announces optical switching venture with Corning (GLW).
Watch List
ADI (have to get near $70 to buy, pre-announce good quarter)
Wow at $69. Price is right, time is not.
MCDT (Want re-entry in low $90, BRCD quarter expected)
At $87. Same as ADI
CREE (LED king $80 re-entry target 136pe, 85% rev growth rate)
At $102
NTAP (NAS king, $65 re-entry target, 631pe, 123% rev growth)
At $116
JNPR ($130 for re-entry)
$205
AMAT (This is the premier semi-equipment company. If it comes close to the lows of $36, I will pounce.)
Justice Department launches investigation into the semiconductor equipment maker's licensing practices.
At $49
A (optical and pteomics play down low, $40 re-entry)
At $49
MTSN (I like Brad Mattson as a manager who has not sold his shares in the decline. Re-enrty at $11)
At $11.
AKAM (leader in sector, huge lockup of 50M coming in Oct., May go into the $20s as holders want to cash in some money)
At $41
INKT (leader in internet caching, bargain at $80)
At $90
10/5/00 Thoughts. Maybe next Wednesday we can see a 5% Nasdaq drop and recovery. I choose this date because MOT, YHOO, SEG, and BGEN all report Tuesday evening. These four expeditionary scouts of tech often give guidance of the season to come. I don’t see a great CC coming out of anyone these four. The market herks and jerks with over reaction. Maybe the markets will overreact severely with numerous downgrades then. The crash of 1998 ended quietly with an October rally on the lows. Also, I remember last year around the second week of this month that tech fell 10% or so and the end was pre-anounced heavily. Will watch the put/call ratio as ever mindful that too much bear is being sheepish in the wrong direction.
MOT - Company reports EPS of $0.26, in line with the consensus mean estimate. Revenues were $9.5 bln;
Sales in key PCS segment of $3.2 bln, less than consensus of $3.6 bln; key handset operating margin of 5.7%, in middle of consensus range of 5.5%-6.0%. Total sales of $9.5 bln, less than consensus of $9.9 bln. Strong Q3 broadband sales helped mitigate weak PCS segment with sales of $917 mln, a surprising 15% higher than consensus of approx. $800 mln and up 47% yoy. Broadband operating margin was 17%, same as Q2. Semiconductor segment sales of $2.1 bln, in-line with consensus on operating margin of 9%, up from 8% in Q2.
Note: Cell phone sector companies must be sick. I was remembering that MOT broadband was cable modems. Had some parts shortages in the spring. Have to check those notes.
YHOO - Reports Q3 earnings of $0.13 a share, $0.01 better than the First Call consensus of $0.12, vs year-ago earnings of $0.07. Revenues were $295.5 mln, above consensus views in the $280-285 mln area, compared to net revenues of $155.9 mln in the year-ago quarter, an increase of 90%; Q3 operating margin was 36.1%, down from 37.6% last quarter, but still in the upper half of the company's 32-38% guidance range. ; number of advertisers fell by 225 sequentially and pure play dot-com advertising (which makes up 40% of total) fell by $10 mln. Decker said that Yahoo does not normally break down what industries its advertisers represent. This past quarter, however, she disclosed that pure-play Internet companies accounted for 40 percent of all ad spending, down from 47 percent in the previous quarter.
While the percent of ad spending from dot-coms declined, Decker said, Yahoo got a larger portion of ad money from non-Internet firms, including a number of large, established companies.
. Yahoo is not significantly changing future guidance, but did note that the depreciating euro could hurt more in Q4 and sales/marketing expenses will be ratcheted higher relative to revenues. Yahoo!'s traffic increased to 780 million page views per day on average during September, compared to an average of 680 million page views per day in June 2000. Yahoo! Japan's traffic, which is included in these page view totals, increased to more than 112 million page views per day during September from more than 85 million per day in June 2000. Yahoo! Europe's traffic, also included in total page views, reached 41 million page views per day on average in September...."
Note: If any company should have had a reason to blow rev est, it was this one. Still law of big numbers catching up to it. 49B marketcap, 273 P/E and 90% growth rate. It must come down 50% to be a buy.
SEG - Reports Q1 earnings of $0.26 a share, $0.05 better than the First Call consensus of $0.21, vs year-ago earnings of $0.07. Revenue was $1.75 bln;
Note: Quite the surprise. No seemed to care. !.6B was the best revs in the last five quarters. EPS weaker than Jun00 and Jun99. Odd.
BGEN - Reports Q3 earnings of $0.44 a share, $0.01 better than the First Call consensus of $0.43, vs year-ago earnings of $0.39. Revenues were $233.8 mln;
Note: More talk on this thin pipeline.
Summary
The savages are rounding the high flyers up for a tech BBQ. Today was a good move toward the bottom. Tomorrow’s open is the clue. Best scenario is Nasdaq lock limit down 120 points and a rally up. Otherwise, we wait some more. I was thinking last week we would have been positive ahead of earnings but did not get it. Still feel another 5% to go. The put/call ratio should have gone higher not lower. MTSN, KOPN, MCDT, ADI all triggered buys, but knife on Nasdaq is red hot and no POSITIVE news yet to reverse course. Maybe AMCC or AMD after hours.
Jack |
