Bill today looked encouraging on this great follow thru of gap support on Ndx. This bounce may last other day or two then a mild pull back. Bullishness should come after this with higher lows and then very possibly the breakout of the upper trend line This could be it for the techs , new economy stocks!
The Dow looks like it's in trouble now, Imo.
Qualcomm (QCOM): 59.66 +0.07: The march goes on. Qualcomm posted yet another
solid quarter with EPS coming in at $0.22, one penny better than consensus. However,
the real story is on the revenue line as total sales hit $640 mln vs consensus of $609 mln
driven by much stronger than expected chipset sales. This latter point is impressive as
many chip companies have been describing difficult pricing conditions recently. SepQ
looks solid as QCOM expects revenue to increase by roughly 10% sequentially, or $704
mln, a good bit higher than consensus of $680 mln. The higher estimate even assumes
moderately lower shipments of Mobile Station Modem (MSM) chips in SepQ. If the
company expects to hit the revenue number, the licensing business is expected to be
very strong in SepQ. Mgmt confirmed this during the Q&A portion of call.....Well, this
would not be a QCOM note without discussing China. On the call, the company was
positive on the prospects there, especially given the fact that Beijing was awarded the
2008 Olympics. Qualcomm signed its first three license agreements with Chinese
manufacturers in JunQ and is seeing the impact of China Unicom's deployment in China
with strong infrastructure chip shipments and orders from several manufacturers....Also,
some were concerned about the company's recent decision not to spin-off of its CDMA
chipset business (QCT). QCOM announced the spin-off a year ago mostly to protect the
company's CDMA licensing business (QTL). However, since QCOM has now secured
multiple cross-licensing agreements providing QCT with access to GSM patents, the
company no longer needs to separate QCT to protect QTL. The most notable
cross-licensing agreement was the recent Nokia deal. So don't worry about it....While the
company lowered its forecast of CDMA phones expected to be sold in calendar 2001 to
75 mln from the mid-80 mln range and a corresponding 15% annual decrease in average
selling prices of CDMA phones, the company more than compensated by saying it
expects SepQ to be the trough. DecQ will be helped a lot thanks to stronger sales of the
1X 3G chipset. Bottom line, QCOM continues to impress. At this point, China seems to
be more of a matter of when rather than if. We expect the SepQ to be an even more
impressive conference call as the outlook for next year should be great. -- Robert J. Reid,
Briefing.com
18:46 ET Thursday After Hours: price changes vs 4pm ET levels: Today's rally in the
telecom equipment group notwithstanding, investors know not to expect much in the way
of good news from most of those companies. JDS Uniphase (JDSU 8.12 -1.35) served up
a telling reminder of that after the close when it missed fiscal Q4 EPS estimates by a
wide margin, announced the reduction of an additional 9000 jobs, indicated Q1 revenues
would be below its prior guidance of $450 mln, and said it was not providing guidance for
Q1 or future periods. That slate of bad news is weighing heavily on its already-depressed
stock price; related companies include GLW, LU, NT, ALA and CIEN... Staying in the
telecom realm, Qualcomm (QCOM 62.75 +3.09) is receiving much better treatment after
it topped fiscal Q3 consensus estimates for its top- and bottom lines, affirmed its comfort
level with Q4 pro forma net of $0.25, which is in line with current consensus, and said it
sees 2001 pro forma net of $1.04 EPS vs consensus of $1.03; related stocks include
NOK, ERICY and MOT... Another notable winner after hours is Verisign (VRSN 52
+4.83), which reported Q2 EPS of $0.25, $0.11 better than the First Call consensus on
revenues of $231.2 mln that were in line with the First Call consensus... Amgen (AMGN
62.33 +4.61) also up sharply after topping consensus estimates by $0.02 per share on
better than expected Neupogen sales and re-affirming FY01 sales and EPS
estimates...Starbucks (SBUX 19.49 +0.49) is gaining some ground, too, as investors
seem to be pleased not only by the fact that SBUX was able to meet the fiscal Q3
consensus estimate of $0.12 per share, but that it was reassuring with its guidance,
saying it expects 2002 earnings of $0.56-$0.58 (consensus $0.57) and same-store sales
in the low single digits; related stocks include AFCE and PEET... For more detail on
these, and other after hours developments, be sure to visit Briefing.com's Short Stories
and Earnings Calendar pages. Presently, the S&P futures, at 1208, are in line with fair
value while the Nasdaq 100 futures, at 1679, are 5 points below fair value..
18:44 ET Exodus Communications (EXDS): 1.08 -0.09: The earnings report shows up
even worse than we expected when we wrote on July 9 about eventual Exodus
bankruptcy. Forget about the "beats expectations" angle. The debt is the important item
to focus on. Gross margin is just $73 million (after factoring out asset impairment
charges). Interest payments are $75 million. That leaves nothing to run the business.
Forget EBITDA numbers. They are totally irrelevant. It makes no sense to talk about
earnings before interest, when interest consumes everything. Exodus is roughly in the
situation that you might be if you owed more in mortgage payments than your take home
pay. There is less than nothing left after paying interest for Exodus to run its business.
The conference call is full of analysts carefully avoiding discussing this incredible
situation. Perhaps they are positioning themselves for the investment banking business
that Exodus will be looking for shortly. With guidance of cash of only $200 million by the
end of the year, it is clear they need more cash, and they indicated a desire to raise as
much as $300 million more. But what institution would buy stock at this level? Who
would buy Exodus bonds? These are terrible times for raising money, and there is little
chance of terms like their last bond offering (5 1/4% convertibles at $22 a share). It would
be ironic if Exodus had to stoop to such desperate debt terms as a death-spiral deal,
which guarantees that lenders will not lose money, at the expense of current
shareholders. Frankly, unless you believe in incredibly strong revenue growth, for which
there is no evidence, it looks to us at Briefing.com like a no-way out situation for Exodus.
With just $466 million in cash, and a cash burn rate of $140 million a quarter, they just
don't have much time. Any rally in the stock is likely to be very short lived, as this is
about as dark an income statement as you will ever see for a company with more than $1
billion in revenues. - |
