RECAP & STOCKS TO WATCH FOR THURSDAY, 12- 21-00
The best word to describe today’s action is “Bloodbath” for anyone who dared to go long and hold, as the Nasdaq Composite and the Dow both lost over 7% each today. Led by an earnings warning from Foundry Networks (FDRY), the tech sell-off was broad and deep, affecting almost all sectors, but especially brutal in the Internet, computer software, and networking sectors. It may be time to start using the word “Capitulation
The Nasdaq Composite fell to its lowest level since March 1999, and finished with a 178- point loss to close at 2,332. Volume was a very heavy 2.8 billion shares, with 53 stocks making new highs compared to 927 new lows. Blue chips felt the bleeding as well as the Dow lost 265 points to finish at 10,318. Volume on the Big Board was 1.4 billion shares, with 192 stocks making new highs compared to 203 new lows.
The Nasdaq and the SOX indices closed just off their session lows. Another late recovery failed miserably, opening the floodgates for more selling on Thur. Nevertheless, there are signs that the Nasdaq is trying to find a bottom. The index has dropped over 54% since its all-time high set on March 10, and is on track to finish with its worst year ever. With disappointing earnings and tax-loss selling, buyers see no need to step in and try to pick a bottom, especially given the free-fall today. One positive factor is that the Market Volatility Index (VIX), a contrarian indicator that measures investor “fear,” reached levels that we haven’t seen since Oct. The VIX touched over 36 (the neutral zone is 22-28) indicating that traders are showing a high level of fear and throwing in the towel. Contrarians use the VIX to help them know when it’s time to enter the market.
From a technical standpoint, with the break of 2,500 and 2,350, support on the Nasdaq stands in the 2260 to 2200 range.
Nasdaq Comp on a weekly basis: tradewindsonline.net
Earnings Spotlight: 3Com Corp (COMS) reports earnings on Thur.
Research In Motion (RIMM): Reports Q3 earnings of $0.02 a share, $0.01 better than the First Call consensus of ($0.01), vs year-ago earnings of $0.05; revenues rose 160.2% to $61.63 mln from a year-ago of $23.69 mln.
Palm Inc (PALM): Reports Q2 earnings of $0.05 a share, $0.01 better than the First Call consensus of $0.04, vs year-ago earnings of $0.03; revenues rose 102.0% to $522.19 mln from a year-ago of $258.56 mln.
Liberate Tech (LBRT): Reports Q2 loss of $0.07 a share, $0.10 better than the First Call consensus of ($0.17); revenues rose 93.1% to $11.73 mln from a year-ago of $6.07 mln. Company raises guidance for Q3; sees revenues of $12 to $13.5 mln, and per share loss of $0.12-0.14 vs ($0.18) estimate.
RealNetworks (RNWK): Company warns for Q4; sees EPS of about $0.02; current EPS estimate is $0.04. Revenue is expected to be in a range of $58 to $60 mln. Company cites slowing technology spending.
AT&T (T): Company warns that it sees revenue growth of 2.5-3%, compared to previous guidance of 4-5%. Company sees EPS of $0.26-0.28; current EPS estimate is $0.31. AT&T will also cut its quarterly dividend from $0.22 to $0.0375.
Micron Tech (MU): Reports Q1 earnings of $0.58 a share, $0.08 worse than the First Call consensus of $0.66, vs year-ago earnings of $0.60; revenues rose 15.6% to $1.83 bln from a year-ago of $1.58 bln.
Conexant (CNXT): Company warns for Q1; sees loss of $0.05-0.10 pere share; current EPS estimate is $0.11; expects revenue for the quarter to be in the range of $400 to $425 mln, down approximately 20% from its previous outlook. CNXT cites slowdown in worldwide demand for its personal networking products. |
