From Briefing.com: The rally caps were left on the hooks on Tuesday as the technology sector fell prone to profit taking efforts. Briefing.com wasn't necessarily surprised by the action given the sector's overbought condition, but at the same time, we can admit that had the tech sector enjoyed another winning session we would have had a similar lack of surprise. After all, the table pounding from analysts of late has been a crutch for momentum traders, and on Tuesday, the analysts were back with more bullish commentary on some high-profile names.
In particular, Deutsche Securities upgraded Cisco (CSCO 20.78 -0.08) to Buy from Hold, UBS upgraded Motorola (MOT 11.20 -0.08) to Buy from Neutral, Prudential upgraded STMicroelectronics (STM 26.45 -0.70) to Overweight from Neutral, Wachovia upgraded JDS Uniphase (JDSU 4.20 +0.19) to Outperform from Market Perform, and three firms upgraded Research In Motion (RIMM 34.55 +6.31) following the company's upward revision to its fiscal Q2 (Aug) guidance.
Nokia (NOK 16.00 -1.07) was another spotlight company following its mid-quarter update before the start of trading. Although the mobile communications company indicated that it expected Q3 earnings to be at the high end or slightly above its previously stated guidance, it also stated that it still expects Q3 mobile phone sales to be flat to slightly down on a yr/yr basis. The latter was enough to facilitate some broader selling interest that predominated throughout the day with the exception of a mid-morning rebound try.
Volume at the Nasdaq was heavier on Tuesday (2.23 bln shares) than it was for the rally on Monday (2.04 bln shares), decliners led advancers, and down volume outpaced up volume by nearly a 3-to-2 ratio. For the most part, Tuesday looked to be no more than a day of profit taking. It was an orderly showing that, frankly, was overdue. However, the inability to move higher in the face of bullish analyst commentary is likely to raise some eyebrows as such action can be construed as a sign of a near-term top. Whatever way you choose to look at it, we would continue to suggest lightening tech positions at these levels.-- Patrick J. O'Hare, Briefing.com
6:17PM Tuesday After Hours price levels vs. 4 pm ET levels: The after hours trade has taken its cue from the regular session in that profit-taking has reigned supreme. Such activity has been exacerbated by in-line quarterly outlooks from Texas Instruments (TXN 24.50 -0.82) and Xilinx (XLNX 31.50 -0.60). Several analysts had expected the semiconductor companies to revise their guidance higher, and when they failed to do so, they incited a selling drive in the tech sector. Presently, the Nasdaq 100 futures, at 1366, are 5 points below fair value and the S&P futures, at 1022, are 1 point below fair value.
To begin, Texas Instruments narrowed its Q3 (Sept) growth forecasts that were issued on July 23. The company said that revenues should come in between $2.39-2.49 bln, at the upper end of its previous range of $2.29-2.49 bln. The Reuters Research consensus estimate, strikingly, was set at $2.4 bln. As for EPS, management said that it should come in at $0.07-0.09 (consensus of $0.09), excluding a $0.13 per share contribution from the company's previously announced sale of 24.7 mln shares of Micron Technology common stock.
Xilinx, meanwhile, left its Q2 (Sept) projections unchanged. The company continues to look for revenues that are flat to slightly up sequentially from $313.3 mln (consensus of $316.3 mln), and EPS that is flat to slightly up sequentially from $0.14 (consensus of $0.15). XLNX shares have also fallen in the after hours, due in part to First Albany and JP Morgan upgrades yesterday and today, respectively, that translated into solid gains over the period.
As a result of the lackluster earnings outlooks, shares of chip equipment companies like AMAT, KLAC, and NVLS have traded lower.
Elsewhere, Proxim Corp (00C0 2.01 -0.33) has also provided an update on business conditions. The provider of broadband, wireless access products and access cards said it sees a Q3 (Sept) pro forma loss of $0.03-0.05 per share, which includes two non-recurring expense items totaling ($0.02) per share, or a GAAP loss of $0.02-0.04. It added that revenues should be approximately $33 mln as compared to the consensus of $35 mln. Given the uninspiring guidance, PROX shares have slumped 14% in the extended session.
Turning to the broader market, Furniture Brand (FBN 28.31 -0.10) stock has also dropped following the furniture maker's second consecutive warning for Q3 (Sept). The company said that Q3 EPS should check in at $0.34-0.35, below the consensus expectation of $0.40, due in part to mixed business in July. Consequently, FY03 (Dec) should also fall shy of the consensus EPS estimate, with management saying it sees $1.78-1.82 as compared to the consensus of $1.90. Competitors of FBN include the likes of ETH and LZB.
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
5:40PM Xilinx reaffirms Q2 outlook (XLNX) 32.29 unch: -- Update -- In its mid-quarter update, XLNX said it expects its Q2 (Sept) revenues to be flat to slightly up sequentially, consistent with prior guidance... In Q1 (June), XLNX reported revenues of $313.3 mln... The Reuters Research consensus estimate is set at $316.3 mln... As for EPS, XLNX reitierated its expectation of flat to slightly up sequentially from $0.14 (consensus of $0.15).
3:25PM Xilinx Mid-Q Preview (XLNX) 32.11 -0.18: Xilinx is scheduled to provide a mid-quarter update after the close. JP Morgan upgraded the stock from Neutral to Overweight ahead of the update due to a bottoming in wireline spending which is roughly 50% of revenues. Firm's checks indicate the co's Q2 is tracking roughly in line with expectations with the analyst expecting the co to maintain its revenue guidance of flat to slightly up sequentially. Soundview believes the transition to UMC manufacturing should be complete in the qtr and its V-II Pro shipments have picked up to meet or exceed expectations. The firm reiterated its neutral rating on the stock.
4:40PM Texas Instruments updates Q3 business outlook in line with consensus (TXN) 25.32 -0.71: -- Update -- Company guides Q3 EPS of $0.07-0.09, excluding a $0.13 per share contribution from previously announced sale of 24.7 mln shares of MU common stock, vs the Reuters Research consensus of $0.09. Co also narrows its expected revenue range to upper half of prior outlook, to $2.39-2.49 bln from $2.29-2.49 bln; R.R. estimate is $2.4 bln.
Close Dow -79.09 at 9,507.20, S&P -8.47 at 1,023.16, Nasdaq -15.19 at 1,873.43: Stocks opened lower on classic profit-taking...the selling was modest after the strong session yesterday, and the indices managed a minor rally mid-morning...there was very little broad, market moving news today, and certainly not much bearish news...Home Depot (HD 32.15 -1.60) was downgraded by Goldman Sachs, and the whole retail sector took a hit...late in the day, Yahoo (YHOO 34.99 -0.55) fell after a presentation at a Merrill Lynch conference in which the company essentially reiterated their outlook...
bullish news came from Research in Motion (RIMM 34.55 +6.31) which got two upgrades after saying revenue and earnings would be stronger than expected...McDonald's (MCD 23.59 +0.24) got favorable analyst comments after reporting strong August same-store sales...the bond market could also have been seen as a plus, with the 10-year note rallying 18/32...but none of that mattered as sellers led the way, possibly exhibiting caution ahead of the September 11 anniversary, or simply lightening positions on profit-taking...the Nasdaq booked 2.1 billion shares traded, but activity was light for the NYSE as only 1.3 billion shares traded hands...
the action today was not disconerting given how far the market has run...NYSE Adv/Dec 1218/2022, Nasdaq Adv/Dec 1252/1937
12:09PM ON Semiconductor announces 34.8 mln share offering (ONNN) 5.50 +0.04: -- Update -- Offering will be made under the co's existing shelf registration.
11:31AM REMEC targets raised at Needham and Merriman Curhan (REMC) 11.73 +1.05: --Update-- Needham raises tgt to $14 from $8 after co reported strong quarterly results. The $14 tgt is based on REMC achieving roughly a peer group avg EV/sales multiple of 1.9x firm's fiscal 2005 rev est of $427 mln. Merriman Curhan Ford boosts its tgt to $20 from $10 on view that REMC is gaining share and that revs should continue to post sequential growth for the foreseeable future. On that basis, firm believes REMC could command a 3x sales multiple accorded to other growth companies. The $20 tgt is based on 2.7x projected FY05 sales of $430 mln.
10:10AM Rudolph Tech receives multi-million dollar order from major Taiwanese manufacturer (RTEC) 23.82 -0.21: The seven-tool order spans three of the Company's product lines -- MetaPULSE for metal-film metrology, S-ultra for transparent-film metrology and WaferView for macro defect inspection.
9:35AM Nanometrics upgraded at Needham (NANO) 8.90 +0.39: Needham upgrades to Buy from Hold, as firm believes that the co's long-standing presence in Japan (30% of sales) should translate into healthy exposure to the growth in equipment spending expected to come from that region; also, checks indicate that the optical CD technology is being adopted by chipmakers, and NANO is one of only four companies that stands to benefit from this trend. Target is $12.
9:34AM Applied Materials testing resistance (AMAT) 22.31 +0.09: -- Technical -- Stock ran to resistance at its Aug high yesterday (22.34) and is back for another try in early action today.
9:34AM Silicon Labs tgt goes to $60 from $45 at Morgan Stanley (SLAB) 49.25 -0.11: After recent channel checks and data pts from NSM, RFMD, TXN and other wireless competitors, Morgan Stanley raises its 2003-04 estimates and boosts price tgt to $60. Firm's street high estimates of $0.95 and $1.15 for 2003-04 go to $1.01 and $1.25.
8:37AM ON Semiconductor raises Q3 revenue growth outlook (ONNN) 5.46: Raises Q3 revenue guidance from flat with Q203 revenues to 1-2% growth sequentially. ONNN reported revenues of $256.2 in Q2, so 1-2% growth implies revenue guidance of $258.8-$261.3 mln vs Reuters Research consensus of $257.5 mln. Company cites strength in August booking trends, growth in backlog, strength in wireless and consumer businesses for increased guidance.
STMicroelectronics (STM) 26.45 -0.70: Prudential upgraded to Overweight from Neutral-Weight, as firm expects the co to benefit from positive product and market cycles in the near-term due to: 1) higher-value 2.5G cell phones, 2) new CDMA products, and 3) growth in the consumer, broadband, and auto markets; also, STM trades at a 15% P/E discount and a 29% P/S discount to its closest peer TXN, despite having a similar growth and profitability profile. Raises target to $33 from $22.
Fairchild Semi (FCS) 18.26 -0.94: CIBC downgraded to Sector Underperform from Sector Perform primarily on valuation. The stock is up nearly 40% in the last 30 days and now up 76% YTD (vs 62% for the SOX). At 39x '04e EPS, the shares appear fully valued, especially considering historical multiples. Firm says investors got excited when FCS reaffirmed sales guidance for Q3, however, it's still a decline of 4%-6%. FCS is not keeping pace with industry growth as in the past, possibly loosing market share.
National Semi (NSM) 33.80 +0.22: announced purchase of 7.5 mln shares through private transaction... This purchase was done pursuant to co's $400 mln buy-back program.
Silicon Labs (SLAB) 49.48 +0.12: After recent channel checks and data pts from NSM, RFMD, TXN and other wireless competitors, Morgan Stanley raised its 2003-04 estimates and boosted price tgt to $60. Firm's street high estimates of $0.95 and $1.15 for 2003-04 go to $1.01 and $1.25.
Advanced Micro (AMD) 12.28 -0.17: Co announced the addition of the AMD Opteron processor Models 846 and 146 to its lineup of evolutionary server and workstation chips. Both processors provide leading-edge 32-bit application performance while allowing businesses to transition to 64-bit applications as their needs require
ARM Holdings (ARMHY) 5.64 -0.09: JP Morgan out of London upgraded to Overweight from Neutral; increasing lead times for flash memory products and recent strong data from handset component suppliers should benefit ARMHY's royalties as as well as improve license potential as the capex cycle starts to improve; also, firm believes that the microprocessor forum in Oct will see new product launches by partners as well as ARMHY, and royalties are poised for strong growth on the back multi-core handsets, storage, consumer, and automotive products.
biz.yahoo.com |
