From Briefing.com: CSCO Cisco Systems (12.07 +0.71) -- Update -- On call, company addresses concerns of CEO John Chambers or CFO Larry Carter leaving. Chambers and Carter spoke over the weekend. Carter plans to retire next May on his 60th birthday; Chambers hopes to convince him to stay longer... DSOs increased by 2 days sequentially to 21 days... stock at 12.53.
CSCO Cisco Systems (12.07 +0.71) -- Update -- On call, company says book-to-bill was approximately one while inventory turns improved to 7.1x vs 4.6x last year... Sequential product order growth was up in single digits. Seeing weakness in telecom services, especially outside the US... stock at 12.29.
4:51PM Cisco Systems (CSCO) 12.07 +0.71: -- Update -- On its conference call, company says it will certify 10-K filing when it is filed in late September, in accordance with the new Sarbanes law... stock moves up by $0.20 on this disclosure to 12.21.
4:18PM Cisco Systems reports $0.14 per share, two cents ahead (CSCO) 12.07 +0.71: -- Update -- Company reports Q4 pro forma earnings of $0.14 per share, $0.02 better than the Multex consensus; Q4 revs came in at $4.83 bln vs the consensus estimate for revs of $4.88 bln; no guidance included with company's release; also increased its stock buyback by $5 bln to a total of $8 bln (of the total $8 bln, $2 bln has already been repurchased).
4:05PM Maxim Integrated misses by a penny (MXIM) 29.24 +1.14: -- Update -- Reports Q4 net of $0.20 a share, $0.01 worse than the Multex consensus. Revs rose 8.4% sequentially to $280.1 mln (consensus $278.65 mln). MXIM sees Q1 revs up sequentially (consensus $291.1 mln). "We hope, and we see some indications, that the business climate in the coming year is improving so that we can eventually increase our growth consistent with our past performance."
Close Dow +230.46 at 8274.09, S&P +24.97 at 859.57, Nasdaq +53.54 at 1259.55: It was a reversal of fortune on Wall Street today as the major indices traded sharply higher, bolstered by broad-based bargain hunting interest that followed on the heels of three straight days of sharp losses for the major indices... Aiding in the recovery bid was a sense the market had gotten oversold, talk of a German asset allocation shift out of bonds and into equities, and reported enthusiasm over the possibility of further Fed easing...
In Briefing.com's estimation, the attribution given to the latter factor was a bit overdone considering the market was fretting just a short time ago over the idea that further Fed easing would send a disconcerting message about the state of the economy... Moreover, after 475 basis points of easing already, it is somewhat disheartening in Briefing.com's estimation that the market believes the Fed has to ease rates further to promote economic growth... After all, one would have hoped that the aforementioned easing would have put the economy, and the market, in a position where the Fed was now contemplating rate hikes... But alas, it hasn't, so we are reluctant to give much credit for today's rally to rate cut optimism...
If anything, we would put more stock in the assertion that the rally was a rebound from near-term oversold conditions... Prior to today's action, the Dow and S&P had fallen 8.0% and 8.4% in the preceding three sessions while the Nasdaq had plunged 10.3% in the preceding four sessions... In all likelihood, talk of the German asset allocation shift out of bonds and into equities encouraged bargain hunting activity as it prompted investors to reconsider the relationship between stocks and bonds in the U.S. and their return potential at current prices...
Accordingly, it is likely that the market's gains were also fueled by some asset re-allocation trades, not to mention some short covering as the bargain hunting activity gathered steam... At their best levels of the day, the Dow, Nasdaq, and S&P were up 374, 73, and 40 points, respectively... The market ended the session on a relatively weak note, though, as the prospect of today's rally being undermined in quick fashion by a weak earnings report from Cisco (CSCO) tonight prompted investors to take some money off the table...
Cisco, for its part, posted a fiscal Q4 (Jul) pro forma profit of $0.14 per share, two cents ahead of the Multex consensus estimate, on revenues of $4.83 bln (consensus $4.88 bln)... There was no guidance in Cisco's press release, which is what the market is anxiously awaiting to hear on the conference call...DJTA +4.8%, DJUA +3.5%, Nasdaq 100 +5.2%, Russell 2000 +3.7%, SOX +6.2%, S&P Midcap 400 +3.4%, XOI +4.0%, NYSE Adv/Dec 2410/826, Nasdaq Adv/Dec 2412/1013
2:37PM Silicon Image could benefit from HDTV mandate (SIMG) 4.72 +0.18: Thomas Weisel Partners views SIMG as one of the companies that could benefit from FCC stance on HDTV (see 07:34 comment). Believes SIMG's HDMI standard could gain major momentum through the transition to HDTV, and that SIMG could see strong growth from both the set-top box and the television replacement cycles. According to firm, SIMG focuses exclusively on the digital communication between set-tops and DVD players, and digital TVs.
11:23AM Sector Watch: Semiconductor : The beleaguered group, which pushed to its lowest level since Nov 1998 yesterday, is providing strong leadership this morning (SOX at 306 +7.9%). Pacing the way higher are: BRCM +10.1%, ALTR +9.3%, XLNX +9.4%, TER +9.2%, AMD +8.9%, NVLS +8.5%, MU +8.6% and LLTC +8%. Index has edged through congestion (305) and is eyeing next resistance at 308 (38% retrace off July 30 high). Secondary barriers at 311 and 315/316. Posture above intraday support at 302/300 leaves the index well positioned.
8:48AM Dell Computer upgraded at Needham (DELL) 23.11: Needham upgrades to BUY from Hold based on continuing market share gains and the prospect of a rebound in PC shipments beginning in 2003; firm also believes co is poised to benefit from the "inevitable friction" from the HPQ merger; cuts FY03 rev/EPS est to $33.8 bln/$0.75 from $35.4 bln/$0.80 and FY04 to $40.6 bln/$1.00 from $43.0 bln/$1.10. Price target is $33.
11:09AM Cisco Systems (CSCO) 12.11 +0.75: All eyes will be on Cisco as it reports its fiscal Q4 (July) results after the bell. However, the key will be the networking giant's guidance for the current quarter and fiscal year. The stock has been trending lower the last few sessions as analysts are cautious about what the company will say. Yesterday, Lehman changed its rating to Equal Weight from Strong Buy with a price target of $14-$15. It's not only CSCO shareholders who are eagerly waiting the report. As the world's largest provider of network equipment, Cisco is an important indicator of the health of IT and telecoms markets generally. At the beginning of 2002, there was hope for a rebound in network equipment in the second half of the year. However, a number of major telecom names have recently said their cap-ex budgets will fall. Some analysts now expect only a flat year for 2003 as a flat year with a recovery not expected until 2004. Cisco has also been hit by rumors that CEO John Chambers or CFO Larry Carter will announce plans to leave the company today. This would be a blow for Cisco as they are highly regarded on Wall Street. Finally, investors have also been concerned for some time about Cisco's accounting practices given its large number of acquisitions, so in the wake of the numerous accounting scandals, investors have been getting even more nervous. This is especially the case as management recently said it would not sign off on the company's financial report and meet a looming SEC deadline. However, Cisco has a non-standard fiscal year so it has several more weeks to meet the SEC requirement... As for tonight, Cisco is expected to post EPS of $0.12 for Q4 and to give guidance of flat or only slightly higher revenue for Q1 (Oct). If Cisco's guidance is more bullish than expected, it would probably trigger a rare rally in hard-hit tech stocks. Be sure to monitor Briefing.com's InPlay page for live updates from the call. -- Robert J. Reid, Briefing.com
10:18AM Dell Computer (DELL) 23.81 +0.70: Shares of Dell Computer have gotten a lift this morning following an upgrade out of Needham to Buy from Hold. Admittedly, this may not be the biggest analyst call -- but it is a favorable one -- which is becoming more and more uncommon in the technology space. Needham has based its upgrade on Dell's 'continuing market share gains', as well as the prospect of a rebound in PC shipments beginning in 2003. The firm also believes Dell is poised to benefit from the 'inevitable friction' emanating out of the recent Hewlett-Packard/Compaq merger. However, note that in the same research note, the firm has cut its fiscal 2003 revenue and EPS estimates. So that's Needham's view in a nutshell, and we have a few additional thoughts both pro and con. First off, DELL's relative strength from a technical perspective has been notable, particularly over the prior six months. Much of its recent strength can be attributed to management's efforts to diversify its product base, with recent endeavors into the storage space showing perhaps the most promise. Dell has already made positive comments regarding its partnership with sector leader EMC, and indicated it's targeting more complex offerings at the higher end of the market. Just be aware that Hewlett Packard (HPQ) -- the company suffering from the alleged 'inevitable friction' -- may look to EMC as its next acquisition. Such a deal would provide HPQ with its own high-end storage line and would undoubtedly disrupt EMC's relationship with Dell. From a fundamental perspective, shares of DELL trade at 30.6x estimates for the current year (i.e. projecting out two quarters). This multiple isn't entirely disconnected from reality given the underlying dynamics in its business -- Dell is gaining market share, it has broadened its product offering, and it is moving towards higher end markets. As we mentioned previously, these favorable changes are likely the source of its relative technical strength. Yet at 30.6x current year estimates, Dell is also far from a screaming value. With the notably weak broad market environment, be aware that one misstep in management's efforts to redirect the business may result in a memorable day of trading for new investors to the stock. -- Mike Ashbaugh, Briefing.com
9:09AM Stocks to Watch : The futures are pointing to a strong open as traders look for bounce after three straight days of losses. There are few big movers, mostly overall decent gains as analysts are quiet and there is little corporate news... All eyes will be on Cisco Systems (CSCO 11.36) as it reports tonight after the bell. The networking giant's guidance will affect many other stocks and the overall market. CSCO +2.4%... Dell Computer (DELL 23.11) gets upgraded at Needham based on continuing market share gains and the prospect of a rebound in PC shipments beginning in 2003
3:48PM Merrill on Semis : Firm's checks indicate that motherboard order activity has slowed again since news of Intel's (INTC 17.41 +1.53) September 1st price cuts broke late in July; firm believes order delays until new pricing schedule takes effect will result in a worse than seasonal August, but stronger than seasonal September motherboard build and a very back-end loaded Q302. If historical patterns hold, firm expects street prices for INTC and Advanced Micro (AMD 8.27 +0.70) MPUs to remain steady until last two weeks of August, at which point they will start declining ahead of list cuts.
1:55PM Thomas Weisel on Wireless Equipment : Having analyzed recent handset industry data, firm refutes concerns of "The Big 5" losing market share, confirming that Nokia (NOK 11.21 +0.45), Motorola (MOT 10.92 +0.61), Samsung, Siemens (SI 43.25 +2.64), and Ericsson (ERICY 0.78 -0.01) have increased market share from 75% (in Q301) to 82% (in Q202) at expense of Tier 2/3 players. Although firm remains cautious on wireless handset vendors given potential weakening in consumer spending, believes "the sky is not falling". Firm's Market Perform ratings on Qualcomm (QCOM 25.80 +2.05) and MOT reflect consumer spending risk, especially in light of their relatively higher valuation; firm rates NOK Attractive, given its historically low valuation and prospect for sequential growth in next couple of quarters. |
