Portfolio down 1.23%, Dow down 0.03%, Nasdaq up 0.66%, S&P500 up 0.29%, J-Blimps up 0.5%, Fuel cells/Alt Energy down 2.9%, Gorilla Hunters down 1.4%, Gilder2001 down 1.4%,
NYSE Volume: 1.3 bln...Adv: 1436...Dec: 1411
Up Volume 703.85 Down Volume 542.66
Nasdaq Volume: 2.55 bln...Adv: 2074...Dec: 1740 Strong volume
Up Volume 1388.61 Down Volume 676.20 Briefing had closing numbers incorrect, day 2 of 2/1
Put/Call ratio 0.53 (Range 0.37 to 0.53) Too bullish at open.
VIX 24.56 up. When it runs below 20, usually a good time to take some profits.
Sector Watch
Breakout of the day
DOT ($DOT) 421.86 +13.23 +3.24% INKT rose on takeover speculation. PRSF up 37.73% on AOL billing win rumor, but only announced it has secured a deal with Tellme Networks.
Collapse of the day
Gold ($XAU) 48.75 -2.18 -4.28% Ho, ho, ho. Day two in the collapse category. Placer Dome (PDG: news, msgs) said it sees “no prospect of a significant rise in the price of gold.” Placer will write down the accounting value of its gold reserves to $300 from $325 an ounce. Also, its estimate on the proved and probable gold reserves was cut by 30 percent. Placer will take a $116 million charge for a previously announced write off, as well as other charges amounting to $209 million. “While we were expecting the gold price to move higher, weakness in demand and other fundamentals has increased the risk that the current gold price environment could prevail for some time," said Placer Dome President and CEO Jay Taylor. The volume of gold reserves will be cut by a further five percent if long-term gold prices fell to $275 an ounce as central banks sell and demand weakens. Taylor said the company is pursuing cost-reduction initiatives and “other initiatives.”
One stock
NTAP down 16.57% Two downgrades based on EMC comments hit the stock. We are becoming a bit more cautious on NetApp mostly due to macro market conditions. We believe the storage market has migrated more quickly than expected to a centralized environment, favoring more complete solutions (including the high, mid and low end). We believe NetApp could be challenged in such an environment and feel it is prudent to pull back a bit from the stock due to its recent run up. * We are moving from a 1H rating to a 2H rating. * We will follow up later this morning with a more detailed note.
Goldman Sachs said on Wednesday that it lowered its investment rating on Network Appliance to outperform from recommend, citing high valuation and softening demand in key markets.
"We emphasize that our action is not reflective of a change in our positive view of NTAP's (Network Appliance) prospects in the storage networking market," Analyst Laura Conigliaro said in a research note.
"While NTAP is expanding its exposure to new markets and gaining traction in existing ones, we are unable to convince ourselves that the gains here are enough to offset the likely slowing in telco and dot-coms for the near term," the research note added. Conigliaro's note scaled back expectations for the next several quarters on Network Appliance, but that acceleration and upward revisions are possible for fiscal 2002. Laura is the same analyst that asked the CEO of NTAP at the last quarterly conference call: "EMC says you are roadkill, game over, do you feel like roadkill?"
Merrill Lynch also issued a note saying: "Our surveys have indicated that dot.com/telco demand for NAS (Network Appliance) could be weak" but added that this weakness should be offset by strength in the enterprise market. The firm said the dot.com/telco weakness could "eliminate incremental earnings and revenue growth" in the short-term but the stock is well-positioned further out.
Note: Let the earnings speak for themselves.
Portfolio Watch
SDLI down 0.83% Announced push back of merger for DOJ processing
NETE up 8.56% off strong SEBL report for sector
SCMR down 10.34% on GLW comments
Shopping List
KOPN (Cyberdisplay leader, re-entry around $10, Feb 13)
At $16 Chart: Breakout. Blocks: 7/2 pos for day 1, 12% volume
Note: CNXT news was poor. KOPN is at more of the risk of a decline if CC is bad since most of the volume is retail.
BreezeCOM (BRZE) (162% growth rate, Present PE 80 or so. Jan 23) Reports Q3 earnings of $0.11 a share, $0.02 better than the First Call consensus of $0.09; revenues rose 162.1% to $29.01 mln from a year-ago of $11.07 mln; re-entry $10)
Note: At $15 Chart: uo on low volume. Blocks: 1/0 even for day 2, Volume%: 0
EMC (leading SAN company Earning Jan 23 re-entry at $55-59)
At $79, Chart: flat. Blocks: 150/171 neg for day 3, Volume%: 60
IDA (profitable trouble free utility with fuel cell play, re-entry $30)
At $40. Chart: basing after collapse. Very odd chart pattern like six dojis in a row: Blocks: 0/0 even for day 1. Volume%: 23
TXCC (chip company good growth for years, 3.7B cap is low for solid growth industry, reentry in at $32-39, good CC posted here)
At $49, Chart: pullback. Blocks: 4/7 neg for day 1. Volume %: 15
NVLS (leader in the speciality area of chip making, reentry at $26)
At $44, Chart: basing. Blocks: 29/22 neg for day 3. Volume%: 19
Probably a good short bet for a couple of points
EXTR (Good earnings in a tough market, Re-entry at $30)
At $50 Chart: Small gap up, still low volume. Blocks 34/27 pos for day 2. Volume %: 20
EMLX (good earnings report, re-entry at $50)
At $103, Chart: down on low volume. Blocks: 52/63 neg for day 4. Volume %: 20
SONS ( good earnings, reentry on pullback at $25) Prudential reiterates STRONG BUY rating and price target of $55 and raises price target to $55 from $45 citing continued strength and emerging leadership position in the VoIP markets.
At$40, Chart: Basing, Blocks: 32/55 neg for day 3 Volume %: 67
Note: the VoIP is scary.
OPWV (very unexpected profit)
At $70. Chart: Parabolic Blocks: 69/87 neg for day 2, Volume %: 20
Hmmmm, Much selling into the run.
BRCM ( I like the vision and market share dominance, retry at $110)
At $124. Chart: big red volume. Blocks: 174/223 neg for day 2. Volume %: 17
Note: Robertson Stephens says last night's report was good, but expresses concern about sustainability of growth, which has been fueled by acquisitions. Microtune (TUNE) files suit against Broadcom for patent infringement. Suit alleges that Broadcom's BCM 3415 microchip infringes Microtune's United States Patent No. 5,737,035
Watch List things to watch but not trade
QQQ at $67, Chart: good sideways movement after consolidation of gains. Blocks: 311/344 neg for day 1. Volume%: 61
DuPont (DD) 42 1/16: Posts Q4 net of $0.47 a share, a penny above the First Call mean. Company anticipates challenging economic condition experienced in 2nd-half 2000 to continue into the 1st-half of 2001.
Note: Down six days in a row. Maybe a buy if the prices gets in the $35 range.
Lucent Tech (LU) up 4.32%: Reports Q1 loss of $0.30 a share, $0.03 worse than the First Call consensus of ($0.27), vs year-ago earnings of $0.33; revenues fell 26.1% to $5.84 bln from a year-ago of $7.91 bln. Company announces a restructuring plan that includes a one-time charge in the range of $1.2 to $1.6 bln in 2Q01, a headcount reduction of approximately 10,000 employees, increased use of outsource manufacturers, and a $400 mln capital spending reduction. Merrill Lynch reiterates NT NEUTRAL. Says given the weakness in revenues in the quarter, as well as the fact that gross margins were 5 points below firm's expectations, lowers EPS forecast for 01 from d$0.15 to d$0.40.
Note: The cost cutting is always popular as action was demanded. Change without results is meaningless though.
Qwest Comms (Q) 44 5/8: Reports Q4 earnings of $0.16 a share, $0.02 better than the First Call consensus of $0.14, vs year-ago earnings of $0.11; revenues rose 9.9% to $5.02 bln from a year-ago of $4.57 bln;
Note: Need to hear the capex on this one.
Power-One (PWER) 49 51/64: Reports Q4 earnings of $0.27 a share, $0.01 better than the First Call consensus of $0.26, vs year-ago earnings of $0.12; revenues rose 129.6% to $169.71 mln from a year-ago of $73.92 mln;
Note: Always forget to DD this one
Veritas Software (VRTS) after hours: Reports Q4 earnings of $0.19 a share, $0.02 better than the First Call consensus of $0.17, vs year-ago earnings of $0.12. Revenue of $370.1 million, represented an increase of 64% over last year's fourth quarter revenue of $226.2 million;
Note: Cap too high for 64% growth
Corning Inc (GLW) after hours: Reports Q4 earnings of $0.34 a share, $0.06 better than the First Call consensus of $0.28, vs year-ago earnings of $0.17; revenues rose 52.2% to $2.08 bln (vs consensus of $2.05 bln) from a year-ago of $1.37 bln; company sounding more cautious about future citing "some softness due to ongoing issues with capital availability" but only widens guidance range for Q1 to $0.28-0.31 from $0.29-0.30. Revenue guidance of $1.9-2.0 bln is consistent with current $1.95 bln consensus
Note: Going to be a punishing day with the opticals. CC in the morning
SDL Inc (SDLI) after hours - Reports Q4 earnings of $0.53 a share, $0.04 better than the First Call consensus of $0.49, vs year-ago earnings of $0.17; revenues rose 199.3% to $175.60 mln (vs consensus $171 mln) from a year-ago of $58.68 mln;
Note: Great numbers. CC Notes by Pat Mudge. Message 15240725
Highlights:
- FO was up 265% sequentially
- 59% came from international, vs. 50% year ago. We saw 100% growth in Asia Pacific
- Eight customers over $10M in revenues vs. 1 a year ago.
- We’ll reach $1B in sales in 2001
Akamai Tech (AKAM) after hours: Reports Q4 loss of $0.61 a share, $0.07 better than the First Call consensus of ($0.68); revenue was over $37 mln (vs estimate of $35.7 mln), up 37% from third quarter and up almost 1,300% from same period the year before;
Note: Big rev disappointment regardless of estimates.
CC Notes from RB
- firm to generate more than $240 million in revenue in 2001, compared with about $90 million in revenue last year.
- cash-earning losses in 2001 should drop to as low as $140 million, down from previous guidance for the year of as much as $170 million.
- plans to cut capital spending to $100 million to $120 million, down from previous guidance of as much as $170 million.
- had 1,337 recurring customers, those that have a contractual ongoing monthly relationship, up from 1115 in the prior quarter and higher than the 1300 estimated
- Capital expenditure forecast of 120, versus previous forecast of 160 million.
- EBITDA losses are narrowing, capital efficiency is rising rapidly, and the balance sheet is healthy,'' said Chief Financial Officer Timothy Weller.
Foundry Networks (FDRY) after hours: Reports Q4 earnings of $0.17 a share, $0.05 better than the First Call consensus of $0.12, vs year-ago earnings of $0.12; revenues rose 90.6% to $105.11 mln (vs $103 mln consensus) from a year-ago of $55.14 mln; company sees Q1 revenues of $100-110 mln, consistent with street estimates of $105 mln. Report was better than had been projected in company's December pre-announcement; company also announces 5 mln share buyback program;
Note: Still a sequential decline in revenues and earnings so beating lowered forecasts is not enough.
SanDisk Corp (SNDK) after hours: Reports Q4 earnings of $0.41 a share, $0.04 better than the First Call consensus of $0.37, vs year-ago earnings of $0.15; revenues rose 114.6% to $177.66 mln (vs est. of $202.5 mln) from a year-ago of $82.77 mln. Company warns for Q1; expects Q1 product revenues 15% - 20% below the just completed quarter, and EPS approximately in line with Q1 results of a year ago (Q1 last year was $0.21, current Q1 estimate is $0.33);
Note: A surprise warning.
Kana Comms (KANA) after hours: Reports Q4 loss of $0.37 a share, $0.17 worse than the First Call consensus of ($0.20); revenues rose 557.0% to $42.43 mln (vs est of $46.51 mln) from a year-ago of $6.46 mln;
Note: No surprise as it was a second tier eCRM play.
Newport Corp (NEWP) after hours: Reports Q4 earnings of $0.36 a share, $0.03 better than the First Call consensus of $0.33, vs year-ago earnings of $0.10. Sales for the quarter more than doubled to $86.7 mln from $42.3 mln a year ago. Q1 sales for the company's base businesses are expected to be flat with the fourth quarter of 2000;
Note: Flat revs is warning.
VeriSign (VRSN) 81 1/2 +7: Reports Q4 earnings of $0.21 a share, $0.10 better than the First Call consensus of $0.11, vs year-ago earnings of $0.04; revenues rose 613.1% to $197.35 mln (vs estimate of $188.4 mln) from a year-ago of $27.68 mln;
Note: Good numbers until you realize growth slowed to 10% sequentially
Exodus Comms (EXDS) 28 3/16 +2 3/16: Reports Q4 loss of $0.13 a share, $0.03 better than the First Call consensus of ($0.16); revenues rose 176.6% to $280.39 mln (vs $276 mln consensus) from a year-ago of $101.39 mln. Company guides 2001 revenue estimates higher to $2.0-2.3 bln from prior guidance of $1.8 bln, but gross margins are guided sharply lower to 29-32% from 36-39% and Q1 EPS is also guided lower as a result to a loss of $0.26-0.27 from the current consensus of ($0.17), cites dot-com weakness
Note: Still red balance sheet, good revs jumps
JNI Corp (JNIC) 25 1/2 -1 5/16 : Reports Q4 earnings of $0.19 a share, in line with the First Call consensus of $0.19, vs year-ago earnings of $0.05; revenues rose 112.9% to $30.67 mln from a year-ago of $14.41 mln. EPS should be in the range of $0.80 to $0.85 for 2001. Current Zacks consensus mean is $0.82
Note: revs basically flat sequentially, avoid.
Intl Rectifier (IRF) 48 15/16 +2 3/16: Reports Q2 earnings of $0.71 a share, $0.05 better than the First Call consensus of $0.66, vs year-ago earnings of $0.23; revenues rose 56.7% to $268.07 mln from a year-ago of $171.10 mln. Company expects to add $5 to $15 million of revenue sequentially and generate gross margins of 45 to 50% on the incremental sales;
Note: Revs and EPS up ~5% and will lower sequentially. avoid.
Peregrine Sys. (PRGN) 23 15/16 +13/16: Reports Q3 earnings of $0.15 a share, $0.01 better than the First Call consensus of $0.14, vs year-ago earnings of $0.08; revenues rose 131.9% to $156.61 mln from a year-ago of $67.54 mln;
Note: Revs up 10%, EPS is profits vs. three red Qs in a row. Interesting
McDATA (MCDT) 61 1/2 -7 3/4: Reports Q4 earnings of $0.11 a share, in line with the First Call consensus of $0.11, vs year-ago earnings of $0.02; revenues rose 103.9% to $78.33 mln (vs consensus of $75 mln) from a year-ago of $38.41 mln;
Note: Good rev and EPS jumps of ~30% q2q, BRCD should do well.
Canada's Sierra Wireless (SWIR) said fourth-quarter earnings slipped to $727,000, or 4 cents a share, from $1.5 million, or 10 cents a share for the same quarter a year earlier. The average estimate of analysts surveyed by First Call was 2 cents a share. Revenue in the period more than tripled to $22 million from $6.9 million. The wireless technology component maker also raised its targets for the next two quarters, anticipating earnings of 5 cents a share for both the first and second quarters of 2001.
Note: A good wireless quarter. On Seybold’s list. May need to DD this one.
UBS Warburg reduced its price target on Powerwave Technologies (PWAV: news, msgs) to $31 from $51, following up its decision to downgrade shares of the Irvine, Calif., RF power amplifier firm on Monday. The firm cited disappointment with Powerwave's quarterly results, concern about the deployment of third-generation wireless systems, and increased competition. "Industry model is changing as power amplifier vendors are forced to lower prices due to increased competition, pressure from OEM vendors as a result of aggressive equipment pricing, and competition against internal solutions," the firm said in a research note to clients. "Multiples in the sector will likely compress in near-term." Nortel also amended an agreement with Powerwave. Nortel is expected to generate a minimum of $140 million in 3G revenue for Powerwave during 2001. Last year, Nortel accounted for $202 million, or 45 percent, of Powerwave’s $450 million in total revenue, with 3G products just a portion of that.
Note: I missed the quarterly, but this doesn’t look good.
MLNM CC notes Message 15240474
Summary
The news from the war last was good, the table was set to feast on the bear, but someone forgot to tell you the agenda changed. Good news is bad and bad news is good. And you love Big Brother.
“This market is !@#$ing nuts” Dale Weaver today.
Well, that about sums it up. The only way not to lose is to avoid the game. Tonight's earnings calls not good other than SDLI. GLW's comments will hit sector like NTAP downgrades today.
Jack |
