RECAP & STOCKS TO WATCH FOR WEDNESDAY, 1-31-01
Blue chips rallied today in anticipation of a 50 basis point rate cut at the conclusion of the FOMC meeting on Wednesday. Tech stocks churned near unchanged throughout the session, pressured by the hardware and Internet sectors. Then one standout area was the chip sector, with the Semiconductor Index (SOX) putting in a 2% gain.
The Nasdaq Composite finished unchanged to close at 2,838. Volume was 2.0 billion shares, with 122 new highs compared to 21 new lows. Blue chips rallied on Fed “anticipation” as the Dow added 179 points to finish at 10,881. Volume on the Big Board was 1.1 billion shares with 201 stocks making new highs compared to 4 new lows.
Consumer confidence, which Alan Greenspan signaled last week during his Senate Budget Committee speech that he’ll closely watch, fell to its lowest level in 4 years. At 114.4, the figure was much lower than the expected 125.4 level, and less than December’s 128.6 level.
With a 50 basis point cut so widely anticipated, we will be watching to see if the markets have a “buy the rumor, sell the news” reaction, and act accordingly.
From a technical standpoint, the Nasdaq Composite is possibly forming another “evening star” on the daily chart, indicating a short-term reversal. Support on the Nasdaq Composite stands at 2,700-2,680, with resistance at 2,900-3,000. Support on the Semiconductor Index (SOX) stands at 675, the index’s 20-day Moving Average, with resistance in the 750 area.
The Semiconductor Index on a daily basis: tradewindsonline.net
Earnings Spotlight: This week is another heavy earnings week with the following companies scheduled to report: AOL Time Warner (AOL), StorageNetworks (STOR), Digital Lightwave (DIGL), Maxim Integrated (MXIM), PeopleSoft (PSFT), WebMethods (WEBM) on Wednesday, and Avocent (AVCT), Sprint FON (FON), Incyte Pharms (INCY), Silicon Storage (SSTI) on Thursday.
Amazon.com (AMZN): Reports Q4 loss per share of $0.25, $0.01 better than consensus estimate, versus a pro forma net loss of $0.55 per share in the prior year period. Q4 sales were $972 million, an increase of 44 percent over net sales of $676 million in the fourth quarter of 1999. Company will cut 1,300 jobs (15% of workforce) and warns for Q1. Sees revenues of $650-700 mln.vs current consensus mean of $799.2 mln. Sees 20-30% 2001 sales growth. Gross margin is expected to be between 21 percent and 23 percent of net sales. Company still sees pro forma operating profitability by Q4 2001, but suggests drastic expense cuts and greater cost controls given that revenue growth is now expected to be only 20-30% versus prior estimates of 40% growth.
Applied Materials (AMAT): Company warns for Q1, which ended on Jan 29. Sees results below targets, citing telecom inventory buildups. Revs will be 7-10% below previous guidance of $2.9-2.95 bln. Current First Call EPS estimate is $0.74
Adobe Systems (ADBE): Company warns for Q1, saying it is experiencing a slow-down in some geographic market areas, primarily in the United States. No numbers were given.
Adv. Fibre Comm (AFCI): Reports Q4 earnings of $0.24 a share, $0.08 better than the First Call consensus of $0.16, vs year-ago earnings of $0.09. Revenues rose 40.2% to $116.10 mln from a year-ago of $82.80 mln.
F5 Networks (FFIV): Reports Q1 loss of $0.47 a share, $0.01 better than the First Call consensus of ($0.48), vs year-ago earnings of $0.18. Revenues rose 29.0% to $24.73 mln from a year-ago of $19.17 mln. Sees Q2 revenue in the range of $26 to $28 million with a loss before taxes and any one-time charges of $0.22. Current Zacks estimate is $0.20.
PeopleSoft (PSFT): Reports Q4 earnings of $0.13 a share, $0.04 better than the First Call consensus of $0.09, vs year-ago earnings of $0.04. Revenues rose 33.7% to $497.78 mln (vs $462 mln consensus) from a year-ago of $372.28 mln.
Altera (ALTR): Company's January business update leaves Q1 guidance unchanged from previously announced guidance for 5% decline in revenues vs Dec quarter. Further downward guidance had been expected by most analysts, so this is good news for both ALTR and Xilinx (XLNX).
New Focus (NUFO): Reports Q4 net of $0.04, $0.07 better than the Zacks consensus of $(0.03). Revenues rose 395% to $33.9 mln from a year-ago of $6.8 mln. On conference call, company was upbeat about 2001. Raised fiscal 2001 revenue guidance sharply from $150 million to $240 million, and also expects to be profitable by Q3. |
