Trading Points
09:13 ET AOL Time Warner (AOL) 43.31: Robertson Stephens resumes coverage with a LT ATTRACTIVE, but sets estimates below company's guidance and says weak ad market, lack of visibility in film business, and integration challenges are likely to put pressure on the stock and it can be bought at lower levels.
09:10 ET Cadence Design (CDN) 17.65: Hearing from sources at Robertson Stephens that although CDN will most likely meet revised estimates when it reports tonight, lowered guidance is likely. Past two weeks has seen evidence of a spending deceleration on design automation; negative environment will affect Mentor (MENT) and Synopsys (SNPS) too. Could be about 15% downside in these stocks and would not be buying the stocks on the weakness.
09:08 ET Lehman on Hardline Retailers : Lehman Bros lowers ests for HD and LOW; believes that sales continue to be weak; cites consumer confidence at 5-year lows, significantly higher levels of consumer credit, and believes unemployment is poised to move higher; also thinks sales for both HD and LOW quarter to date are below plan. LOW: Q1 est to $0.53 from $0.56, and 2001 est to $2.36 from $2.40. HD: Q1 est to $0.25 from $0.26, and 2001 est to $1.23 from $1.25.
09:08 ET Opening Indications : S&P futures -3.4, or 8.4 pts below fair value; Nasdaq 100 pre-market indicator -35. Seeing continued improvement in opening indications through the morning; firming in Cisco and Cisco-related stocks reflects the growing sentiment that Cisco news might reflect a bottom (despite lack of supporting evidence).
09:05 ET Upside Earnings Surprises : The energy sector continues to deliver strong quarterly results, with Enron (ENE) and Diamond Offshore (DO) announcing earnings this morning that exceeded estimates by 7% and 17%, respectively... Pharm Product (PPDI) beat by 4% and announced a 2-for-1 stock split... EarthWeb (EWBX) reported cash earnings for the qtr of $0.04 a share, vs loss of $0.11 anticipated by Wall Street... Also issuing upside surprises were: JNJ, SGP, MAR, PMTC, CORR.
09:02 ET Tektronix (TEK) 25.69: USB Piper Jaffray initiates coverage with a NEUTRAL rating and $28 target. Says company is well positioned to gain share in selected communications test and measurement markets, but near-term fundamental challenges exist due to weak end market conditions.
08:59 ET EXFO (EXFO) 30.43: USB Piper Jaffray initiates coverage with a BUY rating and $38 target. Calls EXFO the leading pure play provider of fiber optic test and measurement solutions; expect continued share gains driven by new product introductions.
08:53 ET 40 Best Ideas : Morgan Stanley Dean Witter deleted Broadcom (BRCM) from their Competitive Edge 40 Best Ideas list and added PepsiCo (PEP).
08:52 ET Gapping Up : Very little interest on the buy side of the market this morning following dismal outlook issued by Cisco. One of the few stocks trading higher in pre-market is GoAmerica (GOAM), which has advanced 3% on news that Fujitsu PC will offer company's wireless service for its notebook computers. Unable to find a single Nasdaq 100 component that is trading in positive territory at this point. On a more positive note, the Nasdaq futures contract has more than halved its morning losses.
08:51 ET Brocade Comms (BRCD) 24.29: Those looking for the next networking shoe to drop will be eyeing BRCD; like CSCO, it has an April quarter end and is also subject to the slowdown in corporate IT spending. We have also seen warnings from other storage players recently, including EMC and NTAP last week. BRCD is trading down 1 pt pre-market.
08:46 ET RF Micro Device (RFMD) 17.86: Thomas Weisel Partners initiates coverage with a MKT PERFORM rating; calls RFMD well positioned, cites relationships with Nokia and Qualcomm.
08:40 ET Campbell Soup (CPB) 29.65: Banc of America Securities upgrades to MKT PERFORM from Underperform based on better-than-expected sales trends; expects company to raise guidance after recent IRI data that was released yesterday showed a 10% volume gain in the company's core soup segment. FY01 estimate raised to $1.75 from $1.40, price target is $31.
08:37 ET Unisys Corp (UIS) 14.25: SG Cowen downgrades to NEUTRAL from Strong Buy. Firm cites lack of visibility as impetus for the downgrade. Q1 earnings were in line, but poor hardware and systems integration orders mandate estimate cuts. Now looks for modest revenue growth this year, virtually all in services. Firm scales back its 2001 EPS est to $0.90 and believes this figure could be optimistic.
08:36 ET Arch Coal (ACI) 33.78: Morgan Stanley Dean Witter raises 2002 EPS estimate to $2.55 and price target to $40; still room for more upside due to continued strength in the coal market; fundamentals still improving, cycle hasn't peaked. Calls ACI their favorite coal idea due to its high earnings leverage to changes in the coal price and its significant market position in the Powder River Basin, which is where growth in the industry has been trending.
08:35 ET Opening Indications : S&P futures -8.2, or 13.2 pts below fair value; Nasdaq 100 pre-market indicator -45. CPI and Housing Starts data close to expectations and have no market impact. Cisco and related stocks leading the pre-market declines.
08:35 ET Parametric Tech (PMTC) 8.33: Reports Q2 earnings of $0.09 a share, 2 cents above Wall Street views, vs yr-ago EPS of $0.00; company feels that it is prudent to remain cautious in the near term to reflect the overall weakening of the economy.
08:30 ET Economic Data : March CPI rose 0.1%, in line with consensus; core CPI up 0.2%, also in line with economists' views... Housing Starts fell 1.3% to 1.613 mln, a level slightly below the 1.63 mln consensus.
08:29 ET Gateway (GTW) 15.65: Prudential expects the PC maker to miss revenue estimate ($2.06 bln consensus) and guide future outlook lower when company reports earnings on Thursday. End market demand remains weak, particularly in the consumer market. With the shares now trading at 50% of revenue, further downside risk is limited; however see limited favorable catalysts until growth re-accelerates.
08:28 ET Intel (INTC) 26.3: -- Update -- Thomas Weisel downgrades to MARKET PERFORM from Buy. Firm says "Intel Inside" brand is buckling under pricing pressure in stable PC environment. Firm cites a fundamental shift in INTC's branding perception and competitive landscape as rationale for ratings reduction. Believes INTC will aggressively cut prices on the Pentium IV and may lose share in 2001.
08:26 ET Economic Data : CPI and Housing Starts data to be reported at 8:30ET.
08:23 ET LM Ericsson (ERICY) 5.99: Financial Times reports that company is expected to cut 6,000 additional positions. Ericsson described the report as speculation.
08:22 ET Clorox (CLX) 32.58: Prudential downgrades to SELL from Hold. Firm cuts FY02 EPS to $1.50 from $1.60 and establishes a long term estimated EPS growth rate of 5% based on expectations of lower 2% long term sales growth rate. CLX has the highest exposure to categories with significant private label competition where private label sales are growing rapidly. At 21.9x calendar 2001 and 2002 estimates of $1.49 and $1.54, respectively, Clorox is selling at 4x its growth rate; think Clorox stock has downside to $25.
08:16 ET IL Fornaio America (ILFO) 13.06: In discussions with merger partners to reduce the price ILFO shareholders will receive upon consummation of a buyout; expects new price to fall from the $14 per share in cash previously offered, but not less than $12.00 per share in cash; reduced terms to reflect developments in the debt markets that have occurred since the original merger agreement was signed.
08:12 ET Solectron (SLR) 20.90: JP Morgan upgrades to BUY from LT Buy based on expectations that deterioration in fundamentals will trough during the current quarter. Despite low current visibility, risk/reward has turned favorable. Price target is $30.
08:09 ET Salomon on Telecom Equipment : Salomon Smith Barney analyst does not believe there is a strong correlation between Cisco's (CSCO) inventory build and the outlook for Nortel (NT) and other telecom equipment and optical component companies. Expects Nortel's inventory levels to come in better than Cisco's.
08:08 ET Yahoo! (YHOO) 17.62: Appoints Terry S. Semel as new Chairman/CEO; Semel was a 24-yr veteran of Warner Brothers, noted for his time as Chairman/Co-CEO of the company. YHOO also announced that Semel purchased 1 mln shares from the company in a private placement transaction. .
07:59 ET Opening Indications : S&P futures -10, or 15 pts below fair value; Nasdaq futures still limit down at -42, or 78 pts below fair value. Cisco still the big story; this morning's news hasn't done anything to change that, with indications still pointing to weakness at the open as a result.
07:59 ET Global Crossing (GX) 9.85: JP Morgan initiates coverage with a BUY rating and 12-month price target of $29; price target is based on a 10-year discounted cash flow analysis and is supported by firm's analysis of comparable companies.
07:53 ET Sprint FON (FON) 23.41: Posts Q1 earnings from continuing operations of $0.35 a share (excluding gain), 2 cents below the First Call mean, vs yr-ago EPS of $0.50.
07:48 ET Alex Brown Overweights Cable : DB Alex. Brown is starting coverage of the cable sector with an Overweight opinion; initiates CMSCK, COX, CHTR, and MCCC with STRONG BUY ratings and ADLAC, CVC, ICCI with BUY ratings.
07:44 ET Amdocs Limited (DOX) 47.75: Inks 5-yr outsourcing agreement to provide BellSouth Advertising & Publishing with an outsourcing solution for its publishing systems. Terms were not disclosed.
07:35 ET Excite@Home (ATHM) 4.87: -- Update -- ATHM says that if does not achieve targeted expense reductions and raise at least $75-$80 mln by the end of Q2, there would be a material adverse impact on the company's operations and liquidity.
07:34 ET Excite@Home (ATHM) 4.87: -- Update -- Company expects recent acceleration in weakness of the market for online advertising and marketing services to result in significantly lower revenues, greater operating losses and more rapid use of cash than previously forecast for the balance of 2001.
07:29 ET Excite@Home (ATHM) 4.87: -- Update -- Revises Q1 outlook; sees Q1 loss in the range of $0.14-$0.15 (mean loss est $0.13); company has decided to terminate relationship with Cablevision Systems; will look to recover over 20 mln performance-based warrants issued to Cablevision.
07:24 ET Enron Corp (ENE) 59.44: Reports Q1 net of $0.47 a share, 2 cents above Wall Street views, vs yr-ago EPS of $0.40; ENE increasing its 2001 guidance to $1.75-$1.80 (consensus $1.75).
07:13 ET Market Indications : This morning's fair value figures -- S&P 500 fair value: 1187; closed Monday at 5 pts below fair value. Nasdaq 100 fair value: 1664; closed Monday 36 pts below fair value... Cisco earnings warning is weighing on market this morning, pushing Nasdaq futures lock-limit down at -42; S&P futures are currently trading 17 pts below fair value... Cisco fallout expected to hit comm chip stocks, contract manufacturers and Cisco competitors in the networking and telecom spaces.
07:09 ET Eastman Kodak (EK) 43.50: -- Update -- Posts Q1 net of $0.52 a share, in line with Wall Street views. Due to general economic weakness, company deciding to withdraw its full yr guidance of $4.50-$4.90; company issues relatively wide Q2 forecast of $1.00-$1.30 (consensus $1.27); plans to reduce workforce by 3000-3500 jobs.
07:03 ET American Tower (AMT) 20.30: Company expects Q1 revenue and cash flow results for the tower rental and services segments to fall near the high end or to exceed its previously disclosed outlook; sees satellite and fiber network access revenue and cash flow within its previously disclosed outlook; continues its cautious view of the services segment, widening the expected services cash flow range to $55-$70 mln for the full yr.
06:55 ET Intel (INTC) 26.3: WSJ reports that chip maker's aggressive pricing measures could ignite a price war in the industry. According to the publication, Intel will move to cut prices on some of its high-end chips by 50%-60% by month's end. Intel had been expected to cut prices by about 20%.
06:48 ET Excite@Home (ATHM) 4.87: WSJ reports that company is expected to name Patti Hart as its new Pres/CEO, in an effort to focus on its Internet access business. Hart previously served as CEO of DSL access company Telocity. ATHM has been searching for a CEO since September.
06:42 ET COR Therapeutics (CORR) 26.89: Reports a Q1 loss of $0.05 a share, a penny narrower than Wall Street views, on a 21% increase in revenues to $22.78 mln. Company reaffirms full yr guidance of EPS in the $0.35-$0.37 range (consensus $0.34).
06:35 ET Verizon Comms (VZ) 52: Receives clearance from the Federal Communications Commission (FCC) to offer long-distance telecom services in Massachusetts. VZ hopes to next gain approval in New Jersey.
06:20 ET U.S. Markets : S&P futures trading at 1168.50, 18.5 points below fair value, Nasdaq 100 futures trading at 1586, 78.0 points below fair value. The 30-year bond is up 16 ticks at 5.644%. The rest of the curve is also sharply higher with the weakness in global equities. The dollar is stronger against the euro, but has lost a good deal of ground against the yen.
06:19 ET European Markets : FTSE -1.68%, DAX -2.78% -- European stocks sharply lower in response to last night's profits warning from Cisco. Market also dragged lower after Royal Philips Electronics said that it will "likely" lose money this quarter and cut as many as 7K jobs. Phone equipment stocks such as ALA and NOK hit hard on the back of the Cisco news, while VOD suffered from Deutsche Bank's decision to cut its earnings forecasts for the company by 14.9% for 2001, 10.8% for 2002 and 17.9% for 2003. Chip companies like IFX, STM, and ASML also lower following yesterday's negative comments from Morgan Stanley analyst Mark Edelstone. Oil stocks have fared well today following the recent explosion at a Conoco refinery in northeast England.
06:18 ET Asian Markets : Nikkei -1.42%, Hang Seng -2.95% -- Asian stocks surprisingly mixed last night on the heels of the Cisco warning. Tech and electronic issues led the Nikkei lower, though paper and electricity shares did cushion some of the downside pressures. However, export shares were hit late in the session on the back of a fairly pronounced rally in the yen. Shares in Hong Kong were off nearly 3%, with banking giant HSBC and telecoms such as China Mobile and China Unicom leading the way lower. Singapore's Straits Times Index fell 1.7% with Cisco-related stocks such as Venture Manufacturing, off 10%, and Datacraft, off nearly 9%. Taiwan ended only a tad lower, as early weakness in the semis was said to be reversed with investors bargain hunting in the issues, while Korea's Kospi was able to close 1.1% higher.
01:34 ET Winstar Comms (WCII) 0.35: Company announced that it did not make aggregate interest payments of approximately $75 million on its senior debt securities, which were due on April 16, 2001... WCII has retained The Blackstone Group to advise it on restructuring its debt, and the company is considering all appropriate actions, including the possibility of a reorganization under Chapter 11 of the U.S. Bankruptcy Code.
01:27 ET Texas Instruments (TXN) 33.01: Company set to announce layoffs of at least 2,000 workers as soon as Tuesday, reports Wall Street Journal. |
