RECAP & STOCKS TO WATCH FOR WEDNESDAY, 1-3-01
It was a New Year and the same old song today as tech stocks dove 7.2%, the 7th worst percentage loss ever. The very same analysts that were high on tech just recently were tripping over each other today to downgrade anything tech related. Leading the way was Robertson Stephens, who slashed ratings on a number of storage, infrastructure, and security companies including CacheFlow (CFLO), Quest Software (QSFT), EMC (EMC), Inktomi (INKT), Veritas (VRTS), Network Appliance (NTAP), Network Engines (NENG), Net IQ (NTIQ), and VeriSign (VRSN). The bright spot in the slide was the Semiconductor Index (SOX), which was buoyed by strength in Intel (INTC), KLA-Tencor (KLAC), and Applied Materials (AMAT).
The NAPM report, which is based on a survey of purchasing executives at 300 industrial companies, added fuel to traders’ nervousness about a recession. The indicator came in at 43.7, much lower than the expected 47, and the lowest number since 1991. A number below 50 signals a contraction in the manufacturing sector, while a number above that means manufacturing is expanding. The significance in today’s report is that it’s signaling that we’re possibly already in a recession.
The Nasdaq Composite tumbled 178 points to close at 2,291. Volume was 1.9 billion shares, with 52 stocks making new highs compared to 131 new lows. Blue chips followed the techs as the Dow, held down by a 9% drop in shares of General Electric (GE), lost 140 points to finish at 10,646. Volume on the Big Board was 1.1 billion shares, with 185 stocks making new highs compared to 28 new lows.
While the earnings calendar is light this week, First Call pointed out that the pre-announcement season is still underway and that last year, 43% of the warnings for Q4 came after Jan 1.
From a technical standpoint, support on the Nasdaq Composite stand at 2,200 and 2,000, with resistance at 2,400 and 2,600. Chart of the Nasdaq Composite on a weekly basis:
tradewindsonline.net
Efficient Ntwrks (EFNT): Company warns for Q2; sees revenue of $100-102 mln, cites two key customers not placing anticipated orders during the quarter. Stock was halted and traded down to the mid-7’s after reopening.
JDA Software (JDAS): Company warns for Q4; sees revenues of about $43 mln and earnings per share ranging from $0.02 to $0.04 a share, ($0.07 to $0.09 a share excluding amortization of intangibles); consensus mean estimate is $0.21. JDAS cites the delay of certain software licenses to future periods.
Turnstone Sys (TSTN): Company warns for Q4; sees net revenue substantially below previous estimates due to continuing weakness in its CLEC customer base. TSTN expects to report net revenue of $26.0 to $28.0 mln for the quarter and expects to take $13.0 to $15.5 mln of special charges to increase its inventory reserves and bad debt reserves; the company expects to report an operating loss of $12.0 to $14.0 mln. Excluding special charges, Turnstone expects an operating profit of $2.0 to $3.0 mln. Current consensus mean is $0.08 per share.
American Power (APCC): Company warns for Q4; sees $0.22-0.25; current EPS estimate is $0.30. The company now expects revenues to be in the range of $395 to $400 million, including approximately $11 million in incremental revenues from the fourth quarter acquisition of Airflow Company; cites the underlying IT market and general economic conditions as weaker than originally anticipated. |
