Close Dow +17.16 at 9730.96, S&P +8.88 at 1128.18, Nasdaq +39.85 at 1922.38: Positive developments in terms of earnings and guidance last night, industry reports, and favorable comments/upgrades from the Street this morning set the stage for a strong performance in the tech sector. Topping its estimate was Novellus (NVLS +9.4%) in the semi sector. JP Morgan responded with an upgrade of the semi equipment stocks. The firm suggested that the bottom is in and the worst is over with the pullback this month bringing valuations down to more reasonable levels. Included in the upgrade were: AMAT, KLAC, TER and VSEA. In the storage sector Emulex (EMLX +14.3%) topped estimates and also provided upside guidance for the next quarter, FY02 and FY03. Also helping to underpin the semi sector was the better than expected SEMI book-to-bill data. The industry report suggested that there are some indications that capacity utilization and unit volume output have improved from the 2001 lows.
5:47PM QLogic (QLGC) 51.02 +2.86: -- Update -- On call, company says visibility is "somewhat limited" but sees 3%-8% sequential sales growth for the next few quarters....DSOs improved to 41 days vs 46 days in SepQ....Inventory turns improved to 4.6x vs 3.5x in SepQ...SCSI division will grow more slowly than Fibre Channel, but SCSI will still grow over the next two quarters....stock at 48.06.
5:44PM QLogic (QLGC) 51.02 +2.86: -- Update -- On conference call, company sees MarQ revenue growth of 3%-8% sequentially (translates to $86-$90 mln) vs Multex consensus of $88.3 mln.Company expects EPS in MarQ of $0.18-$0.22 vs Multex consensus of $0.20....stock at 48.60.
5:30PM KLA-Tencor (KLAC) 50.75: -- Update -- On their Q2 earnings conference call, the CFO projected Q3 orders should grow 10% sequentially with revs of approx $330-$350 mln, with EPS of $0.14-$0.16, about in line with rev est of $343.06 mln but lower than EPS consensus of $0.17.
5:19PM ESS Tech (ESST) 19.91 +1.31: Reports Q4 (Dec) earnings of $0.37 per share, $0.11 better than the Multex consensus of $0.26; revenues fell 10.5% year/year to $83.3 mln vs the $73.8 mln consensus.
5:14PM Broadcom (BRCM) 45.38 +1.83: -- Update -- Company says two largest customers in Q4 were Motorola (MOT) at 18% of sales and Cisco (CSCO) at 10.4% of sales...headcount increased by 59 to 2,807....stock at 41.95.
5:10PM KLA-Tencor (KLAC) 53.00 +5.14: -- Update -- On their Q2 earnings conference call, the CEO says worst is behind industry, citing: better holiday consumer/PC sales, chip inventories coming into balance, chip prices showed relative strength in Dec, utilization is constrained in foundries, capacity for 0.18 micron is above 80%, and in general customer biz is geting better. Expects modest sequential increase in order patterns for the March qtr, and expects orders to improve in the 2H02.
5:10PM Broadcom (BRCM) 45.38 +1.83: -- Update -- On call, company says "visibility has improved slightly -- probably back to pre-Sep 11 levels"....For Q2, expect mid-single digit sequential sales growth vs 3%-4% sequential growth in Q1...DSOs improved sharply to 23 days from 36 days in Q3.....inventory turns improved to 20.85 vs 15.7 last qtr...stock at 42.01.
5:06PM Broadcom (BRCM) 45.38 +1.83: -- Update -- On conference call, company says it expects Q1 sales +3%-4% sequentialy (translates into $234-$236 mln), which is better than Multex consensus of $231.4 mln. Company expects to post a loss of $(0.10) which is the same as consensus. Company expects gross margin to improve to 50% vs 49% in Q4....stock at 42.54.
4:57PM Advanced Micro (AMD) 16.70 +0.41: Co announces its intention to commence an offering of $500 mln of Convertible Senior Debentures.
4:56PM SanDisk Corp (SNDK) 13.63 +0.82: -- Update -- On call, says it is cautiously optimistic about improving performance in 2002 based on following factors (1) very strong Q4 sales in retail channel (2) Industrial/telecom customers showing signs of life (3) price declines appear to be moderating and (4) cost reductions being made to return to positive gross margins... SNDK +2.46 at 16.09
4:50PM Cirrus Logic (CRUS) 17.95 +1.24: Company reports Q3 net loss of $0.21 per share, $0.01 better than the consensus; reports Q3 revenues of $77.0 mln versus the consensus estimate of $73.3 mln; for Q4 expects revenue in the range of $81-$83 mln versus the current consensus estimate of $76.7 mln; sees Q4 net loss in the range of $0.11-$0.15 per share versus the current consensus estimate for a net loss of $0.16 per share.
4:36PM QLogic (QLGC) 51.02 +2.86: Reports Q3 (Dec) earnings of $0.20 per share, $0.01 better than the Multex consensus of $0.19; reports Q3 revenues of $83.6 mln versus the current consensus estimate of $83.5 mln; no formal guidance issued with report.
4:34PM Silicon Storage (SSTI) 8.09 +0.02: Company reports Q4 earnings ex-items of $0.01 per share, $0.01 worse than the Multex consensus estimate -- note that results were in line with the First Call consensus; reports Q4 revenues of $70.8 mln versus the consensus estimate of $76.9 mln; company warns for Q1; expects operating results ranging between breakeven to a net loss of $0.02 per share; expects revenues to drop 3-5% sequentially versus the current Multex consensus estimate of $72.2 mln.
4:27PM Varian Semi (VSEA) 35.48 +2.38: Reports Q1 (Dec) loss of $0.37 per share, $0.02 better than the Multex consensus of ($0.39); revenues fell 65.6% year/year to $77.8 mln which included $28 mln of royalty/license revenue from LRCX, without which revenues would have been roughly in line with the $49.0 mln consensus. Company guides higher for Q2; sees revenues at $45-55 mln vs Multex consensus of $46 mln.
4:25PM DSP Group (DSPG) 23.22 +0.57: Reports Q4 (Dec) earnings of $0.15 per share, $0.01 better than the Multex consensus of $0.14; reports Q4 revenues of $29.2 mln versus the consensus estimate of $28.7 mln; no formal guidance issued with report.
4:22PM KLA-Tencor (KLAC) 51.50 +3.64: -- Update -- Reports Q2 (Dec) earnings of $0.25, a penny better than the Multex consensus of $0.24; revenues were $404.1 mln vs the consensus of $377.6 mln. Company says that it "observed a major trend this quarter that is favorable for our future growth." No specific guidance in pressrelease.
4:20PM SanDisk Corp (SNDK) 13.63 +0.82: Reports Q4 (Dec) loss of $0.23 per share, $0.42 better than the Multex consensus of ($0.65); revenues fell 48.2% year/year to $91.9 mln vs the $66.3 mln consensus.
4:12PM LSI Logic (LSI) 14.31 +0.36: Company issues upside preannouncement for Q1 (Mar); company expects pro forma net loss of $0.14 per share versus the current consensus estimate for a net loss of $0.20 per share; sees revenue growth between 0-3% sequentially.
4:10PM Broadcom (BRCM) 45.38 +1.83: -- Update -- Reports Q4 (Dec) loss of $0.11, a penny better than the Multex consensus of ($0.12); revenues were $226.8 mln vs the consensus of $221.4 mln. No guidance in press release.
4:07PM LSI Logic (LSI) 14.31 +0.36: Company reports Q4 net loss of $0.20 per share, $0.04 better than the consensus estimate; reports Q4 revenues of $406 mln versus the consensus estimate of $409 mln.
4:07PM Avanex (AVNX) 4.25 -0.36: Reports Q2 pro forma EPS of ($0.10), $0.01 better than the Multex consensus; revs came in at $8.3 mln vs consensus of $7.07 mln. Co expects Q3 EPS of about ($0.12) and rev between $9-$10 mln (vs rev/EPS ests of $7.36 mln/($0.11)).
4:06PM Emulex (EMLX) 44.13 +5.53: -- Update -- Company announces that it intends to offer $300 mln in convertible notes in a private placement.
2:08PM QLogic (QLGC) 49.99 +1.83 (+3.8%): -- Technical -- Stock is currently working to clear resistance at 50.00. On a clean break higher, look for subsequent overhead at 50.90 followed by additional resistance at 51.30. The intraday outlook would turn less favorable if it were to break back below its 50-day simple moving average at 49.70.
1:38PM Motorola (MOT) 13.69 +0.16 (+1.2%): -- Update -- Salomon Smith Barney upgrades to BUY from Outperform. Believes co is positioned to outperform its peers based on its internal leverage. MOT is showing traction in its handset division and should see further leverage in semis as utilization rates increase. Firm reiterates its "play the leverage" thesis on stk and maintains 12-month target of $19.
12:59AM Newport Corp (NEWP) 22.25 +0.82 (+3.8%): Announces acquisition of privately held Micro Robotics Systems for $55 mln to $65 mln. NEWP expects the deal to be slightly accretive to 2002 results. Micro Robotics is a manufacturer of fully automated assembly and dispensing systems for the fiber optic communications, microwave and semiconductor equipment markets.
11:40AM Broadcom (BRCM) 44.75 +1.20 (+2.7%): -- Technical -- Stock is demonstrating relative strength on the session, bidding up on stronger than average volume. Look for initial resistance at 45.10 followed by subsequent overhead at its 50-day simple moving average of 45.40. If it can clear 45.40, stock has little resistance until 46.90/47.00 due to the magnitude of yesterday's sell off. We would become more cautious on BRCM's intraday outlook if it were to fail at intraday support around 44.40.
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Along with the IDTI I bought yesterday at 26.29 I also added 1000 shares of TFS at 13.05 and another 1000 shares of CREE at 19.57. We should have been buying ANAD. The number of oversold semiconductors on my screen was 46 last night. I think with the close of the SOX at or near previous support we are poised to head higher again.
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