Software:
Sobering realities for software
One bright spot: Dollar could help tech make Q1 goals
By Bambi Francisco, CBS.MarketWatch.com
Last Update: 11:28 AM ET March 28, 2003
SAN FRANCISCO (CBS.MW) -- Next week could be ugly.
With the final days of this quarter wrapping up, the first days of April could be the start of first-quarter warnings as dismal economic fundamentals overshadow the steady flow of Iraq war news.
"Some software companies could preannounce disappointing results next week," according to Goldman Sachs software analysts.
This could lead to a decline in stock prices as they've been driven up "more by optimism over an upcoming resolution of the conflict with Iraq than by March quarter fundamentals," the analysts wrote. Additionally, some investors believe any disruption in orders will flow into March.
This is an unrealistic outlook, according to the investment bank.
To this end, Goldman Sachs tech team lowered estimates in the March quarter, as well as the June and September quarters.
The analysts cited weak results posted by some software companies in February, such as Oracle, Tibco, J.D. Edwards and Red Hat. Additionally, there is a slower underlying tone of business due to further economic weakness independent of the war.
Goldman Sachs cut estimates for BEA Systems (BEAS: news, chart, profile), Business Objects (BOBJ: news, chart, profile), BMC Software (BMC: news, chart, profile), NetScreen Technologies (NSCN: news, chart, profile), Check Point (CHKP: news, chart, profile), Internet Security (ISSX: news, chart, profile), Mercury Interactive (MERQ: news, chart, profile), Microsoft (MSFT: news, chart, profile), Oracle (ORCL: news, chart, profile), Siebel (SEBL: news, chart, profile), Symantec (SYMC: news, chart, profile), Verisign (VRSN: news, chart, profile), Veritas (VRTS: news, chart, profile), Plumtree (PLUM: news, chart, profile), Nuance Communications (NUAN: news, chart, profile) and SAP (SAP: news, chart, profile).
Shares of most of the companies listed were lower in Friday's trading.
To be sure, one tech strategist points out that the dollar could help tech companies hit their March quarter targets.
"U.S. companies should still post mid-single digit gains on currency alone, assuming the dollar stays at or near current levels," wrote Vadim Zlotnikov, tech strategist at Sanford Bernstein. "Under these assumptions, the positive contribution to currency will have the greatest impact in the current quarter, which may explain the absence of negative earnings preannouncements in the first quarter."
E-tailing sees big drop
While traffic at news sites surged, top retail sites saw a fairly significant drop in audience numbers last week, with travel sites losing the most potential customers.
Overall traffic to leading retail sites fell 8 percent, on average, last week over the prior four weeks, according to latest figures from ComScore. Travel sites were hit hardest. Expedia (EXPE: news, chart, profile) saw traffic plunge 22 percent. Orbitz.com saw traffic drop 12 percent. Travelocity's traffic plunged 17 percent.
Retailers also lost potential customers last week as consumers spent more time on news sites and other extraneous sites with information on the war.
Bestbuy.com registered the largest percentage drop in traffic, down 12 percent. Amazon.com's (AMZN: news, chart, profile) daily audience averaged about 1.9 million for all of last week, which is down 7 percent from the prior four weeks while EBay.com (EBAY: news, chart, profile) saw its traffic numbers slip 3 percent to 6.6 million daily unique visitors.
Early signs of decreased traffic should give investors reason to sell shares of e-tailers that have soared in the last few weeks. |
