From Briefing.com: Thursday's market action underscores just how great and deeply baked are growth expectations for tech companies. Up modestly in initial trading, tech shares ended the day mixed despite an unexpectedly strong 7.2% growth in U.S. GDP, with decliners marginally outpacing gainers. As much as investors were reassured that economic conditions support aggressive growth expectations, the high GDP figure raised the specter that rates will be heading north sooner rather than later. So it is, what fiscal policy gives with one hand, monetary policy may have to take with the other. Investors will be wrestling with this issue. Briefing.com, for its part, sees the Fed policy triggers of unemployment and core inflation holding any tightening off until the second half of 2004. For added perspective, please visit the Fed Brief page which is available to Professional Subscribers.
Despite a modestly undervalued broader market, with tech valuations already pricing in double digit growth rates and margins expansion, there are few justifications for material gains across tech shares. In this context, the next few weeks is shaping up to be very much a traders' market, driven by technicals and relative value as investors sort through the fundamentals. It will be an interesting January effect indeed. Over the coming weeks, we'll identify both trading ideas as well as compelling investment opportunities.--Ping Yu, Briefing.com
5:53PM Thursday After Hours price levels vs. 4pm ET: The tone of trading has improved noticeably in the after hours trade, where a set of better than expected quarterly reports have lifted the spirits of traders. Presently, the S&P futures, at 1049, are 3 points above fair value, while the Nasdaq 100 futures, at 1424, are 5 points above fair value.
Stock of John Hancock (JHF 34.68 +0.03) has edged slightly higher following the financial company's encouraging Q3 (Sept) report. EPS rose 22% year/year to $0.66 (Reuters Research consensus of $0.63) on revenues that increased 14% to $2.49 bln. Management commented "we expect this positive growth trend to continue as our new universal and variable life offerings are more broadly distributed."
Brightpoint (CELL 29.22 +3.00) shares have also turned in a strong performance - up 11% - in response to the distributor of wireless handsets and accessories's Q3 (Sept) report. The company reported net income of $4.8 mln, or $0.26 per diluted share, which was ahead of the consensus expectation by $0.09. Revenues also rose 58% to $534 mln. As one of the world's largest distributors of mobile phones, Brightpoint competes with other electronics equipment distributors, including IM and TECD.
A few stocks have bucked the upbeat tone of the extended session. Conexant (00C0 6.05 -0.04), for one, has traded lower following its worse than expected Q4 (Sept) report. The semiconductor solutions company reported a net profit of $0.01, which was a penny below the Reuters Research estimate. Revenues increased 9% sequentially and 24% from 4Q02's result to $164.7 mln, and Conexant said that it saw 1Q04 5% sequential revenue growth, to $170-175 mln. Wall Street's conensus forecast was set a bit below that, at $176.25 mln. Peer companuies of CNXT include the likes of ADI, AMCC, BRCM, GSPN, MXIM, PMCS, and VTSS.
One of Conexant's competitors, GlobeSpan Virata (GSPN 6.39 -0.58), has also weakened off its September quarter report. Q3 net income improved to $0.06 per share, compared with a loss of ($0.09) per share in the prior year period and the consensus expectation of $0.05. Revenues for the provider of integrated circuits and software increased 33% sequentially to $98.8 mln versus Wall Street's consensus of $99.0 mln. Traders have used the better than expected report as a reason to sell into the stock's 55% rally off its March lows.
Tomorrow, the market will once again contend with a number of economic reports. September Personal Spending & Income, as well as the revision to the October Michigan Consumer Sentiment figure, will shed light on the consumer, whereas the Chicago PMI Index will provide insight into manufacturing. The market expects most of these reports to hold steady with, or improve from, the last month's reading. For the consensus estimate, as well as Briefing.com's own forecast, be sure to visit the Economic Calendar.
For complete coverage on these, and other developments, be sure to visit Briefing.com's In Play, Earnings Calendar, and Guidance pages.-- Heather Smith, Briefing.com
4:48PM Sipex beats by $0.06, cautious about Q4 (SIPX) 9.87 -0.41: Reports Q3 (Sep) loss of $(0.07) per share, $0.06 better than the Reuters Research consensus of $(0.13); revenues were flat year/year at $16.5 mln vs the $16.3 mln consensus. Co says it has entered Q4 with a weak backlog position especially in Asia. While co feels fairly comfortable about Q1, Q4 could be challenging in term of revenue growth due to holidays and the co's focus on improving gross profit. Co expects Q4 revenue of $16.5-$17.5 mln vs R.R. consensus of $18 mln (one analyst).
4:39PM Skyworks beats by a penny, ex items, guides Q1 above consensus (SWKS) 10.74 +0.26: Reports Q4 (Sep) pro forma loss of $0.07 per share, excluding amortization of intangible assets and restructuring charges, $0.01 better than the Reuters Research consensus of ($0.08); revenues fell 0.5% year/year to $150.0 mln vs the $150.1 mln consensus. Co also guides Q1, sees profit of $0.01 vs the R.R. consensus of a loss of $0.01.
4:37PM Conexant reports a penny, guides (CNXT) 6.09 -0.11: Reports Q4 (Sep) earnings of $0.01 per share, $0.01 worse than the Reuters Research consensus of $0.02, in line with First Call consensus of $0.01; revenues rose 23.7% year/year to $164.7 mln vs the $163.5 mln consensus. Company sees Q1 revenues of $170-175 mln, Reuters consensus is $176.25, First Call consensus $174.5 mln.
4:31PM Varian Semi beats by $0.02; guides in line for Q1 (VSEA) 46.28 +1.11: Reports Q4 (Sep) earnings of $0.03 per share, $0.02 better than the Reuters Research consensus of $0.01; revenues fell 11.4% year/year to $84.8 mln vs the $83.7 mln consensus. Co. sees Q1 (Dec) EPS of breakeven to a gain of $0.08 estimate is $0.06 and revenues in the range of $83-93 mln, estimate is $90 mln.
4:12PM Integrated Silicon beats by $0.04 (ISSI) 14.30 -0.69: Reports Q4 (Sep) loss of $0.09 per share, $0.04 better than the Reuters Research consensus of ($0.13); revenues rose 48.5% year/year to $30.0 mln vs the $26.8 mln consensus.
4:12PM GlobeSpan Virata beats by $0.01 (GSPN) 6.98: Reports Q3 (Sep) pro forma earnings of $0.06 per share, $0.01 better than the Reuters Research consensus of $0.05; revenues rose 108.4% year/year to $98.8 mln vs the $99.0 mln consensus.
4:03PM Virage Logic reports in line with consensus, ex items (VIRL) 9.97 +0.47: Reports Q4 (Sep) loss of $0.03 per share, ex items, in line with the Reuters Research consensus of ($0.03); revenues fell 18% year/year to $9.9 mln vs the $9.9 mln consensus.
Close Dow +12.08 at 9786.61, S&P -1.17 at 1046.94, Nasdaq -3.87 at 1932.69: Today did not produce the action many had hoped for... Specifically, a batch of strong economic reports, including the advance Q3 GDP report at 7.2% (consensus 6.0%), its highest level since 1984, along with the Initial Claims report at 386K, which brought the 4-week average to 389K and was telling of a stabilizing job market, failed to materialize a rally...
Truth is, the major averages got off to a solid start, but technically driven selling, as well as the realization that the market has tacked on 1.9-3.8% for the major averages in the last three session, curbed buying interest despite the strong economic data... Accordingly, the major averages spent most of the day vacillating around the flat line and closed with only small changes to show for the day's activity... Despite valuation concerns, exacerbated by the major averages' encroachment and subsequent failure to clear their respective 52-week highs, Briefing.com maintains our view that underlying fundamentals for the stock market remain bullish and stocks remain the best available investment vehicle at this juncture... Among today's leaders to the upside were the cyclical, semi equipment, and advertising sectors...
Laggards of note included the oil & gas services, healthcare, consumer finance, insurance, and homebuilding groups... The bond market closed the session in the red across the yield curve, with the 10-year note down -13/32, bringing its yield up to 4.35%...NYSE Adv/Dec 1640/1640, Nasdaq Adv/Dec 1460/1693
3:08PM Skyworks Earnings Preview (SWKS) 10.71 +0.23: Skyworks reports its Q4 after the close with Reuters Research consensus earnings of a loss of $0.08 per share and revs of $150.1 mln. CIBC made a bullish call on the name on Tuesday suggesting that stock be accumulated ahead of earnings. Firm believes that demand improved throughout the SeptQ and has continued to get better into the first few weeks of the DecQ. Accordingly, firm raised its Q4 est to ($0.03) from ($0.05), which puts firm at the high end of the range and well above consensus; CIBC's rev est went to $159.2 mln from $154.2 mln, also well above consensus
10:08AM Transmeta initiated at Rodman & Renshaw with Outperform and $6 target (TMTA) 4.07 +0.17: Rodman & Renshaw initiates coverage of TMTA with an Outperform and a price target of $6. In the firm's opinion, the co's Efficeon/TM8000 will gain entry into the mainstream mobile PC market. Most important to the success of the company is entry into the 12-to 14-inch screen notebook space. Firm expects numerous positive announcements regarding design wins by OEMs to drive the shares over the near-term. The firm forecasts 2004 and 2005 sales and EPS of $90 mln and ($0.30) and $200 mln and $0.10, respectively.
9:22AM MCDTA: Qtr uncertain, preannouncement possible -- RBC (MCDTA) 12.28: RBC Capital Mkts believes that the OctQ is uncertain and that a preannouncement is possible in the near future. Despite generally strong demand, EMC appears to have slowed shipments of MCDTA directors in recent weeks in an attempt to drive price concessions. MCDTA appears to not be bending to EMC's pressure, resulting in what appears to be a serious impasse. Firm maintains Outperform rating on stock, but advises investors to take a cautious stance over the next wk.
Brooks Automation (BRKS) 27.09 +1.13: Before the open, reported Q4 (Sep) loss of $0.19 per share, $0.07 better than the Reuters Research; revs fell 20.8% year/year to $81.7 mln vs the $81.6 mln consensus. The co is guiding Q1 pro forma earnings loss to be unchanged and GAAP earnings of a loss in the range of $0.28 to $0.35 per share and with revs flat from the Sept quarter. "The timing of several large projects that impact our revenues are scheduled to close at the end of the December quarter and may push into the March quarter. As a result, we are guiding revenues for the December quarter to be flat sequentially from the September quarter." The consensus rev est for Q1 is $90.63 mln, implying sequential growth of 11%.
finance.yahoo.com |
