From Briefing.com: 11:00AM: As has been the trend of late, traders are using dips as buying opportunities... The Nasdaq has bettered its stance considerably and has pulled into positive territory since the last update... The advance is supported by the networking, computer, software and semiconductor sectors, all of which are now in the green... The resilience of the latter is notable in the face of May's Book-to-Bill ratio of 0.89 (reading below 1 is contractionary)...
This reading is virtually flat with April's reading of 0.90 and means that $89 worth of new orders were received for every $100 of product billed for the month... Admittedly, the semi sector is also being helped by Lehman's upgrade of Vitesse (VTSS 5.61 +0.55), PMC-Sierra (PMCS 13.14 +0.74), and Applied Micro (AMCC 6.35 +0.13) to Equal-Weight from Underweight based on improving fundamentals...NYSE Adv/Dec 998/1974, Nasdaq Adv/Dec 1185/1589
10:36AM Marvell target raised to $36 from $32 at CIBC (MRVL) 32.73 +1.04: The target increase is based on relative valuations and expectations that growth continues in storage and communications businesses. Firm continues to believe that investors remain overly pessimistic towards the GigE controller business.
9:51AM Sector Watch : A weaker start to the day with the biotech (BTK -2%), broker/dealer (XBD -1.7%), Internet (DOT -1%), housing (HGX -1.2%), semi (SOX -1.2%), oil service (OSX -1%), health provider (RXH -1.2%) and banking (BKX -1%) sectors pacing the way. Minor gains being posted in airline and drug.
9:51AM Foundry Ntwks: Buy ahead of quarter -- WR Hambrecht (FDRY) 15.03 +0.16: WR Hambrecht encourages investors to buy shares of Foundry Networks ahead of expected solid June quarter results. Based on firm's most recent checks with sources, firm is becoming increasingly comfortable that Foundry will meet its "high end of the Street" $0.11 EPS on $94.8 million in revenue estimate for the JunQ (consensus $0.10 and $93.14 mln).
9:32AM Adobe Systems: Lackluster NPD data could signal weakness -- Smith Barney (ADBE) 32.15 -0.34: According to firm, ADBE's May revenue results appeared lackluster; believes the month's revenue results could be signaling a relatively weak end to the Q2.
9:31AM Intersil downgraded at JMP (ISIL) 24.55 -0.04: -- Update -- JMP Securities downgrades ISIL to Mkt Perform from Mkt Outperform based on valuation, as the stock is trading near their $25 target.
8:54AM Oracle Call Update (ORCL) 13.35: -- Update -- On call, ORCL says transaction would be immediately accretive for its shareholders and accretive in a year on a GAAP basis. The Co is confident they will prevail with revised price.
7:38AM Oracle survey of PSFT holders suggests $19.50 is the right price (ORCL) 13.35: "In the last few days, Oracle executives have had the opportunity to speak with the holders of a majority of PeopleSoft," commented Oracle CEO Larry Ellison. "Many of those shareholders indicated the prices at which they would tender their shares. Therefore, Oracle is raising its all-cash offer to $19.50 per share."
7:28AM PeopleSoft: Oracle raises bid to $19.50 (PSFT) 17.15: Oracle announces it will raise its cash tender offer for PeopleSoft to $19.50/share, or approx. $6.3 bln. "Oracle remains committed to acquiring PeopleSoft and will not be deterred by management's maneuvers to maintain control of a company they do not own." Oracle still expects the deal to be accretive, excluding the amortization of intangibles.
8:30AM Apple Computer upgraded at Needham (AAPL) 18.19: Needham upgrades to Buy from Hold based on the strength of accelerating iPod sales, a possible rebound in PowerMac sales beginning this fall, and the fact that AAPL is abandoning its long-standing strategy of confining its software to the Mac platform, which will enable the co to target its digital entertainment products and services at the entire mkt. Target is $23.
8:21AM Goldman Sachs comments on Semi Equip Book-to-Bill : May book-to-bill of 0.89 was below the Goldman Sachs 0.91 estimate and slightly above the Street estimate of 0.88. Following the report, Goldman Sachs is reiterating its Attractive coverage view on group and believes that 6-9 month investors should be overweight the group due to increasing signs of cyclical growth beginning in Q3 and still reasonable valuations as per firm's normalized free cash flow based analysis.
8:01AM Intersil WLAN chip selected by 3Com (ISIL) 24.59: Announces that 3Com Corp (COMS) has selected Intersil's PRISM GT Wireless Local Area Networking (WLAN) chip set for their new 3Com OfficeConnect Wireless 11g solution consisting of an access point , gateway and PC card.
7:06AM Early Research Calls : UTSI cut to from Buy to Sell at Deutsche; also cuts MEDI from Buy to Hold on widely expected FluMist approval... ERTS cut to Peer Perform at Bear Stearns... Lehman upgrading VTSS, PMCS, AMCC from Underweight to Equal-Weight on improving fundamentals; also raising price targets on GE, HON,MMM..... Merrill Lynch downgrading LNCR from Buy to Neutral....BofA upgrading DUK from Sell to Neutral; also downgrading BHI from Buy to Neutral..UBS downgrading MAT from Buy to Neutral... JPMorgan initiating coverage on DJ with Underweight saying valuation too rich; also lowering AGN and SSP to Neutral... LEG cut from Neutral to Underperform at CSFB... CNF lowered from Neutral to Underweight at JP Morgan... MCH cut from Outperform to Underperform at Smith Barney... Deutsche Bank reiterating Buy on RHAT with $10 tgt.. Piper Jaffray initiating coverage on SINA with Mkt Perform and $19 tgt... First Albany initiating CTMI with Strong Buy and $25 tgt.
11:22AM Ratings Review - DUK : The analyst community has not been kind to Duke Energy (DUK 20.33 +0.33) in the past of year. According to Briefing.com's Upgrades/Downgrades archive, DUK has been downgraded 16 times for a host of reasons that include uncertainty about the sustainability of the dividend, questions regarding the company's earnings dependability, and concerns about probable debt ratings downgrades. A number of events this week have removed some of the aforementioned overhangs. Fittingly, analyst sentiment has improved somewhat as evidenced by two upgrades of DUK today.
Banc of America upgraded DUK to Neutral from Sell, and JP Morgan upgraded DUK to Neutral from Underweight, both based on a slightly better than expected ratings review from Moody's and DUK's reaffirmation of FY03 (Dec) EPS targets that followed.
Moody cut its rating on Duke Energy to Baa1 from A3 and Duke Capital to Baa1 from A3, and assigned both divisions stable outlooks. Banc of America, for one, was surprised that Duke Energy was not cut by two notches, and that the outlook did not move to negative. Encouraged by Moody's belief that DUK's "credit metrics appear to be solidly investment grade," Banc of America and JP Morgan emphasized that this key uncertainty has been removed from DUK, although potential earnings weakness remains.
In light of such words, Banc of America and JP Morgan's upgrades were certainly not ringing endorsements of the stock, but merely an admission that there are less negative catalysts that could pressure DUK in the near-term. The provider of electric and natural gas in North Carolina and South Carolina entered 2003 with an aggressive plan aimed at rebuilding shareholder confidence following 2002's probe into its activities in the California energy markets, and reports of 'inappropriate accounting' and 'improper trading.' DUK has scaled back its exposure to the merchant energy business, and recalibrated the level of risk it assumes in trading activities. DUK also turned in a better than expected Q1 (Mar) report, and maintained its FY03 EPS forecast of $1.36-1.60 and previously stated annual dividend of $1.10 per share.
Briefing.com, like Banc of America and JP Morgan, is similarly encouraged by DUK's efforts year-to-date, but retains a somewhat cautious stance considering the early stages of DUK's turnaround initiatives and the fact that Standard & Poor's kept the outlook of Duke Energy, Capital, and Trading and Market at negative late last night. Nonetheless, DUK's reassuring guidance and the conclusion of Moody's three-month ratings review have, understandably, helped boost DUK's stock as they are anecdotal signs that there will be an easing of the bearish sentiment that started DUK on a downward spiral beginning in April 2002. --Heather Smith, Briefing.com
11:01AM Ahead of the Curve: Oracle (ORCL) 18.22 +1.07 (+6%) Larry gets tough. The bid for PeopleSoft is increased to $19.50 and he sues the board. Peoplesoft CEO Craig Conway was originally successful in convincing the media that the Oracle bid was simply intended to frustrate the Peoplesoft bid for J.D. Edwards and was not a serious bid for the company. (Craig - give your PR guy a raise.)
The real problem for all of these guys is that the market has matured. The great technology boom in enterprise is over - possibly for a long time. It is now time to put up the fences and settle down. That means establishing competitive positions in the customer base. Oracle, which is dominant at the tools level of software, is not dominant at all at the application level. To remain a major player in the enterprise market - the only really profitable software market - you must have an essential application. Oracle has tried to grow into the this level in various ways over the past three years - but with little success. They have tried business decision tools, supply chain management, CRM, application servers (ASP), and even IT infrastructure outsourcing. All are designed to get into the enterprise as an irreplaceable component of the enterprise business. That is the only long term future for software vendors. Databases are replaceable - it will get easier over time - and Larry's great fear is that they migrate to - we can imagine Larry choking on the words - to Bill.
That means the battle for dominance at the application level is the most important issue for Oracle - and all software vendors. The king of this market is SAP. They run the financials for most major enterprises in America. They have tried to integrate HR services into their system, with only minimal success. PeopleSoft dominates that arena. SAP has also tried, with some success, to integrate CRM into their application, with little success. Seibel dominates that arena.
Oracle's bid is real. It is essential. If Larry fails at getting PeopleSoft, which is very possible, he will be even more motivated to acquire an application level player. The most likely candidate is Seibel Systems (00C0). Although the personalities are very difficult in this match, the collapse of the CRM market (down 25% in the past twelve months), might make Tom Seibel more interested in selling. The following table (which appeared in the Gartner Group press release of June 12) outlines market share for the CRM market.Company Stock 2002 Market Share 2001 Market Share
Seibel SEBL 24.9 28.5
SAP SAP 15.9 10.9
PeopleSoft PSFT 4.3 3.9
Oracle ORCL 4.3 5.5
Amdocs (Clarify division) DOX 3.2 3.8
Larry has to do something or SAP will own everything in five years. The Ahead of the Curve approach would never recommend a position in Seibel Systems based on fundamentals, because the market is weakening. But the secular trend of consolidation can be powerful. Seibel is clearly the next best target for Oracle if Larry fails at PeopleSoft. A speculative position in Seibel based on this premise might be warranted, although it should be noted that this entire battle for PeopleSoft has not sent the price anywhere near its 52 week high. - Robert V. Green, Briefing.com
9:23AM Morning Set-Ups : New intraday and closing highs for the S&P 500 and the Dow on Tuesday amid higher volume readings but breadth statistics were mixed. Despite the upside extension the averages accomplished relatively little after the morning push, faltered a bit into the close and based on the pre-market readings are headed for the slightly weaker start today. There are calls of overvaluation and overextended but the market has raised no warnings flags yet in terms of volume/breadth or price action.
S&P 500 Levels: The index failed to work through initial resistance highlighted here yesterday at 1015 during morning and afternoon rally attempts and is currently positioned to test short term supports at 1009 and 1007 in the early going. Intraday failure to sustain a push back through the 1011/1012 area after the anticipated opening downticks would leave the door open for another wave of short term pressure. If this scenario does develop, the next support is in the 1004/1003 area. Next resistance on an upside extension is in the 1018/1020 area.
Dow Industrial Levels: The Dow also fell just shy of initial resistance mentioned at 9360/9370. First support today is in the 9295/9285 area and will be watching the 9320/9325 zone for an indication of the underlying strength of the market today. Secondary support is at 9270/9260.
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Gottfried, thanks so much for updating your charts for us. Also thank you for continuing to post the BPNDX info.
RtS |
