From Briefing.com: It was a tale of two sessions Thursday, and unlike Wednesday's trade, the session didn't have a bullish conclusion. On the contrary, the market rolled over in the afternoon and kept on rolling to finish at its lows for the day. Why it did is a bit of a mystery, but per usual, there wasn't a shortage of explanations.
One of the most popular explanations for the sell-off was that Smith Barney rained on the market's parade by executing a large sell order of S&P futures. Other speculation revolved around the possibility of the terror alert level being raised, and there was even a report that the market was spooked (which is a stretch) by the fact that a single engine plane flew directly over President Bush's motorcade in Philadelphia.
Whatever the actual cause, it interrupted a winning session that had its roots in another batch of decent earnings news and a sense of relief that initial claims dipped below 400K for the first time in 23 weeks. A sub-400K reading is interpreted as a sign of an improving employment situation. Cheered by that consideration, the market rallied on the news, but considering it was only the first time in 23 weeks that claims were below 400K, it is arguable that the market over-reacted to the report. That's not to say the report wasn't encouraging, but one week does not a trend make.
The tech sector, for its part, was not immune to the selling pressure, and ultimately, ended up pacing the retreat. That stands to reason since it has been the biggest gainer during the rally off the March lows; and conceivably, there is some frustration at the inability to rally further off the encouraging earnings news. At this juncture, though, the risk of a correction is real since the market had already discounted much of the good earnings news before the actual reporting period. Hence, with sentiment and volatility indicators at levels that suggest significant upside over the near-term will be hard to come by, Briefing.com has been advocating a more cautious approach to the market, and the tech sector in particular, for the past few weeks.
As has been typical of late, the bulk of technology companies reporting after Thursday's close either met, or beat, consensus estimates. eBay (EBAY 115.74 +1.60) is at the top of the list in that regard, having posted another impressive quarter of top- and bottom-line growth. For good measure, EBAY raised its guidance and declared a 2-for-1 stock split. However, consistent with the view that much of the good news has been priced in already, shares of EBAY were trading more than 5 points lower in Thursday's extended action, setting the stage for a weaker start to Friday's trade.
For further detail on earnings news, be sure to visit Briefing.com's In Play, Earnings Calendar, and Guidance pages.--- Patrick J. O'Hare, Briefing.com
6:28PM Thursday After Hours price levels as of 4 pm ET: The after hours session picked up where the regular session left off - that is, headed lower. A rumor mill run amuck - with talk of Smith Barney selling S&P 500's futures contracts and a possible lowering of the terror alert level to Yellow (Elevated) tonight - has overtaken the extended session, where an array of better than expected June quarter earnings reports have been discounted. Presently, the S&P futures, at 978, are 3 points below fair value, while the Nasdaq 100 futures, at 1245, are 11 points below fair value.
Tonight's headliner, eBay (EBAY 110.54 -5.20), kept its winning streak very much alive with Q2 (June) EPS that nearly doubled to $0.37 from $0.19 a year ago. The former was ahead of the Reuters Research consensus estimate by $0.02. Revenues rose 91% to 509.3 mln, while total listings increased 55% to 225 mln. EBAY also raised its FY03 EPS (Dec) guidance to be as high as $1.31, and increased its net sales forecast to be as high as $2.075 bln, both of which were above consensus estimates. The company capped off its tremendous Q2 report with the announcement of a two-for-one stock split, payable August 28, 2003 to stockholders of record on August 4, 2003.
Coffee king Starbucks (SBUX 25.50 -0.89) also had a strong June quarter, growing its Q3 (June) top-line by 24% to $1.04 bln. EPS was a penny ahead of the consensus estimate of $0.16. Looking ahead, SBUX said it expects Q4 (Sept) EPS of $0.17, and revenue growth of approximately 20% - both forecasts were roughly in line with consensus estimates. SBUX also said it targets FY03 (Sept) EPS of $0.67 (consensus of $0.67) and FY04 (Dec) EPS of $0.83-0.85, including a $0.02 benefit of having a 53rd week in FY04 (consensus of $0.81).
Turning to the technology space, semiconductor equipment company KLA-Tencor (00C0 51.10 -1.03) met the Reuters Research Q4 (Jun) EPS estimate of $0.15 on revenues that fell 17% to $308.3 mln. Management said we are definitely seeing a number of our customers reporting an upturn in their business, but issued Q1 (Sept) guidance that was below the consensus expectation. Specifically, KLAC said it looks for EPS of $0.16-0.17 and revenues of $310-315 mln, versus the consensus estimates of $0.18 and $330 mln, respectively.
Likewise, Flextronics (FLEX 10.88 -0.32) has also taken a hit in the after hours session over some disappointment related to its earnings report and guidance. The provider of electronic manufacturing services missed the Reuters Research consensus EPS estimate of $0.05 by a penny, and fell short of the consensus revenue estimate of $3.12 bln. FLEX then guided Q2 (Sept) EPS to $0.06-0.08 and revenues to $3.3-$3.5 bln, against the consensus of $0.08 and $3.3 bln, respectively. Competitors of FLEX include the likes of CLS, JBL, SANM, and SLR.
Finally, priceline.com (PCLN 28.34 +3.10) has spiked 12% following its Q2 (June) earnings report that topped the Reuters Research consensus EPS estimate by $0.06. The company then issued Q3 (Sept) EPS guidance of $0.20-0.22, which was above the consensus estimate of $0.16.
For more detail on these, and other after hours developments, be sure to visit Briefing.com's In Play, Earnings Calendar and Guidance pages.---- Heather Smith, Briefing.com
5:28PM KLA-Tencor (KLAC) 52.13 -1.28: -- Update -- On call, management expects orders to be up 5% quarter/quarter. EPS is expected to be in the range of $0.16-0.17 on revenues of $310-315 mln. The consensus estimate is for EPS of $0.18 on revenues of $330 mln.
5:22PM JDS Uniphase correction (JDSU) 3.15 -0.07: Correction- Earlier we reported that JDSU guided Q1 to a $0.02-0.03 profit, this was erroneous. Company guided to a Q1 loss of $0.02-0.03 vs Reuters Research consensus of a loss of $0.03. We have corrected the entry.
4:56PM Virage Logic reports, guides (VIRL) 9.98 -0.12: Reports Q3 (Jun) pro forma loss of $0.07 per share, $0.02 worse than the Reuters Research consensus of ($0.05); revenues fell 21.3% year/year to $9.6 mln vs the $9.6 mln consensus. Pro forma results includes a loan reserve that reduced EPS by $0.02, but Reuters is indicating that comparable actual is a loss of $0.07. Company sees Q4 revenues of $9.7-10 mln, consensus is $10 mln.
4:51PM Kopin beats by $0.01, guides Q3 revs below consensus (KOPN) 6.47 -0.34: Reports Q2 (Jun) loss of $0.01 per share, $0.01 better than the Reuters Research consensus of ($0.02); revenues fell 4.6% year/year to $19.9 mln vs the $19.5 mln consensus. Co also guides Q3, sees revenues of approx $15.9-17.9 mln (sequential 10-20% decrease from Q203 revs) vs R.R. consensus of $22.6 mln.
4:50PM Integrated Silicon beats by $0.03, ex items (ISSI) 6.90 -0.08: Reports Q3 (Jun) loss of $0.18 per share, excluding a $900K ($0.03) restructuring charge, $0.03 better than the Reuters Research consensus of ($0.21); revenues rose 31.1% year/year to $24.3 mln vs the $23.9 mln consensus.
4:45PM Gateway beats by $0.06, reaffirms Q3 guidance in line (GTW) 3.68 -0.11: Reports Q2 (Jun) loss of $0.22 per share, $0.06 better than the Reuters Research consensus of ($0.28); revenues fell 20.4% year/year to $799.6 mln vs the $808.2 mln consensus. Co also reaffirms Q3 guidance, sees loss of $0.19, vs R.R. consensus of ($0.20), and revenues of $874 mln vs estimate of $879.8 mln.
4:44PM Nortel breaks even (NT) 3.05 +0.08: Reports Q2 (Jun) net of breakeven, in line with the Reuters Research consensus of $0.00, missing First Call consensus of $0.01 profit; revenues fell 16.1% year/year to $2.33 bln vs the $2.40 bln consensus.
4:43PM KLA-Tencor reports in line with consensus. (KLAC) 52.13 -1.28: Reports Q4 (Jun) earnings of $0.15 per share, in line with the Reuters Research consensus of $0.15; revenues fell 17.4% year/year to $308.3 mln vs the $308.9 mln consensus.
4:41PM Conexant beats by $0.02, guides in line (CNXT) 5.05 -0.05: Reports Q3 (Jun) earnings of $0.01 per share, $0.02 better than the Reuters Research consensus of ($0.01); revenues rose 7.7% year/year to $151 mln vs the $158.0 mln consensus. Company says it expects it "expect to double our pro forma operating profit" in Q3, consensus is $0.02.
4:31PM Advanced Energy beats by a penny, guides. (AEIS) 19.75 +0.51: Reports Q2 (Jun) loss of $0.18 per share, $0.01 better than the Reuters Research consensus of ($0.19); revenues fell 7.3% year/year to $62.9 mln vs the $58.1 mln consensus. Company sees Q3 EPS loss of $0.11-0.13 on revs of $65-68 mln, vs R.R. consensus of ($0.08) & $61.7 mln, respectively.
4:30PM Western Digital beats by $0.02, ex-items (WDC) 11.70 -0.57: Reports Q4 (Jun) earnings of $0.21 per share ex-items, $0.02 better than the Reuters Research consensus of $0.19; revenues rose 25.8% year/year to $680.3 mln vs the $658.5 mln consensus.
4:23PM TriQuint Semi reports in line, ex items, guides Q3 below consensus (TQNT) 4.62 -0.25: Reports Q2 (Jun) pro forma loss of $0.11 per share, excluding $42 mln non-cash lease termination charge, in line with the Reuters Research consensus of ($0.11); revenues rose 18.9% year/year to $72.8 mln vs the $72.7 mln consensus. Co guides Q3, sees loss of $0.08-0.11, vs R.R. consensus of ($0.07), and revenues of $70-74 mln vs estimate of $74.7 mln.
4:20PM Varian Semi beats by $0.01, guides in line (VSEA) 35.40 -0.06: Reports Q3 (Jun) earnings of $0.04 per share, $0.01 better than the Reuters Research consensus of $0.03; revenues fell 12.6% year/year to $82.8 mln vs the $83.3 mln consensus. Company sees Q4 revenues $78-88 mln, consensus $87 mln
4:17PM Zoran beats by $0.04, guides Q3. (ZRAN) 23.50 -0.38: Reports Q2 (Jun) earnings of $0.18 per share, $0.04 better than the Reuters Research consensus of $0.14; revenues rose 31.6% year/year to $44.7 mln vs the $43.7 mln consensus. Co sees Q3 EPS, ex-items, of $0.31-$0.33 vs R.R. consensus of $0.31.
4:16PM Flextronics misses by a penny, issues guidance (FLEX) 11.20 -0.21: Reports Q1 (Jun) earnings of $0.04 per share, $0.01 worse than the Reuters Research consensus of $0.05; revenues fell 0.6% year/year to $3.11 bln vs the $3.12 bln consensus. Expects Q2 pro forma EPS of $0.06-$0.08 on $3.3-$3.5 bln in sales (consensus $0.08 and $3.3 bln), and expects Q3 EPS of $0.11-$0.15 on $3.5-$3.9 bln in sales (consensus $0.13 and $3.8 bln).
4:16PM Adv Fibre Comm beats by $0.02, ex items (AFCI) 15.47 -0.61: Reports Q2 (Jun) core earnings of $0.09 per share, excluding ($0.05) in certain items, $0.02 better than the Reuters Research consensus of $0.07; revenues fell 3.8% year/year to $83.0 mln vs the $81.3 mln consensus.
4:13PM JDS Uniphase beats by a penny (JDSU) 3.13 -0.09: Reports Q4 (Jun) loss of $0.02 per share, $0.01 better than the Reuters Research consensus of ($0.03); revenues fell 27.6% year/year to $160.6 mln vs the $161.2 mln consensus. Co guiding Q1:04 non-GAAP EPS loss of $0.02 to $0.03 per share and revs in the range of $145-$155 mln vs. Reuters Research consensus earnings of ($0.03) per share and revs of $165.8 mln.
4:13PM PCLN lifts 7% in after hours; JDSU slides 3.8% :
4:05PM Newport beats by $0.02 (NEWP) 15.86 -0.17: Reports Q2 (Jun) loss of $0.05 per share, $0.02 better than the Reuters Research consensus of ($0.07); revenues fell 21.5% year/year to $33.8 mln vs the $34.7 mln consensus. Co. sees Q3 EPS to be between a loss of $0.02 to a gain of $0.02, R.R. consensus is a loss of $0.04.
4:05PM Microsemi beats by $0.01, guides in line (MSCC) 15.87 -0.42: Reports Q3 (Jun) earnings of $0.05 per share, $0.01 better than the Reuters Research consensus of $0.04; revenues rose 4.8% year/year to $50.5 mln vs the $50.1 mln consensus. Company sees Q4 EPS of $0.04-0.06 vs consensus of $0.06.
Close Dow -81.73 at 9112.51, S&P -7.01 at 981.60, Nasdaq -17.73 at 1701.45: A rumor mill that was running in overdrive with talk ranging from a Smith Barney sell order in S&P futures contracts, to a (possible) lowering of the terror alert level from Yellow (Elevated) tonight, squashed the stock market's advance today... Indeed, the market spent all of the morning and most of the afternoon firmly in positive territory, anchored by a slew of encouraging Q2 (June) earnings reports and a bullish data point for the labor market...
Initial claims for the week of July 19 fell 29K, to 386K (consensus of 415K), and ended a 22-week losing streak of claims above the 400K mark, a level indicative with payroll declines... As for today's earnings reports, most of them checked in above consensus estimates and were consistent with this reporting season's track record of exceeding Wall Street expectations (see Briefing.com's Stock Brief)... Computer Associates (CA 25.15 +2.91), Symantec (SYMC 46.89 +4.29), and Veritas Software (VRTS 30.28 +2.37) were among the plethora of names that topped Reuters Research estimates and also raised guidance... Consequently, the market rallied at the open under the influential leadership of the technology sector...
Homebuilding, internet, auto, and casino shares also exhibited noteworthy strength, although their momentum was undercut by some selling activity in biotech stemming from Biogen's (BGEN 38.55 -2.63) announcement that its Phase III induction trial of Antegren, a drug for Crohn's Disease, did not meet the primary endpoint... Nonetheless, the market still put together a respectable move higher, with the Dow, Nasdaq, and S&P 500 showing gains of 87, 22, and 10 points, respectively, at their peaks...
All of that changed, however, when the aforementioned rumors hit the trading room floors around 14:15 ET, and incited a broad-based selling drive... A Drudge Report of a plane flying directly over President Bush's motorcade in Philadelphia also contributed to the profit-taking activity... The indices quickly fell through a series of key support levels, and their technical deterioration kept the selling interest steady through the close - where the market finished at its lows of the day...NYSE Adv/Dec 1598/1660, Nasdaq Adv/Dec 1478/1669
3:35PM KLA-Tencor Earnings Preview (KLAC) 52.26 -1.16: KLA-Tencor reports its Q4 after the close with Reuters Research earnings consensus of $0.15 per share and revs of $308.9 mln. CSFB believes the co should perform in line with potential upside in EPS given better cost controls. Fahnestock believes the CFO's comments at SEMICON last week were encouraging given his reaffirmation of guidance and suggestions of orders and Q1 bookings being above targets. The analyst believes a significant number of new product introductions will enable the co to grow faster than the overall equipment market.
12:21PM Pac Growth reits Overweight on Genesis Microchip (GNSS) 13.18 +0.04: Pacific Growth reiterates their Overweight on GNSS, saying the stock is undervalued at a PEG ratio of 0.4x and 1.1x EV/Sales; in addition, firm believes concerns regarding the closure of the GNSS/PXLW merger are overblown as the originally identified strategic synergies remain intact, and firm does not see the resignation of GNSS's CEO or the opinion issued in the SIMG lawsuit as materially impacting a combined entity.
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