From Briefing.com: General Commentary - Investors retreated to the sidelines Tuesday. Tech shares were, on average, flat even though decliners outnumbered advancers by 1.4:1. Advancers rose 3.1% while decliners dropped a more modest 2.3%.
After the close, Xilinx (XLNX 37.06 -0.39) modestly raised Q3 guidance, Flextronics (FLEX 15.25 -0.42) reaffirmed Q3 guidance, and SEMI released the results of its bi-annual Capital Equipment Consensus Forecast based on interviews conducted between October and November.
Semiconductor equipment manufacturers are forecasting Y/Y revenue growth of 8% for 2003, accelerating to 39% for 2004, moderating to 18% for 2005 and contracting by 6.6% for 2006. Revenue is expected to come in at $21.4B for 2003, $29.6B for 2004, $35B for 2005 and $32.7B for 2006. The industry is expected to contract during 2006 as new capacity installs enter production.
Wafer process equipment is forecast to rise 38.6% to $19.8B in 2004; other front-end equipment by 32.7% to $2.1B; test equipment by 40.4% to $5.5B; assembly and packaging equipment by 40.3% to $2.2B.
Note the valuation for most companies within the semiconductor equipment space already price in growth expectations that exceed the survey results over a longer forecast period. We would focus on:
ASM International (ASMI, 19.48 +0.04): ASMI has one of the broadest product portfolios covering both front- and back-end equipment. One of the more reasonably priced companies on a price multiples basis. Trades at 1.5x Reuters Research consensus C03E revenues of $636MM and 1.2x C04E revenue of $820.3MM; 51.3x C04 EPS of $0.38.
Listed below are a few short-term trading ideas; names that have dropped below their lower volatility band or risen above their upper volatility band. The volatility bands represent the normal low and high trading range for a given company, and serve as general entry/exit points. Shares that trade below or above the bands will generally revert to the mean/normal range. Note that during periods of high volatility, or in the event of material news, a company's share price may move significantly beyond the bands.--Ping Yu, Briefing.com
Names that have dropped below their lower volatility bands and may rebound:
Company (Ticker) Close Lower Band Upper Band
Bell Microproducts (BELM) 7.93 7.99 9.04
Lecroy (LCRY) 15.72 16.31 17.46
Magyar Tavkozlesi (MTA) 15.99 17.08 17.64
PalmSource (PSRC) 24.10 24.80 26.94
Names that have risen above their upper volatility bands and may consolidate:
Company (Ticker) Close Lower Band Upper Band
Comtech Telecommunications (CTCO) 34.30 30.84 33.97
Eclipsys (ECLP) 13.03 8.29 10.20
Equinix (EQIX) 28.21 19.57 23.88
FARO Technologies (FARO) 27.42 20.51 24.06
ParthusCeva (PCVA) 9.27 6.60 7.99
Rambus (RMBS) 30.33 21.95 25.46
6:06PM Tuesday After Hours prices levels vs. 4 pm ET: A few technology companies released their mid-quarter updates in tonight's session, and the effects of which have been rather inconsequential for the broader market. Specifically, Xilinx and Flextronics gave updates on their business, and for the most part, they were in line (to even above) the market's expectation. The after hours trade is slightly higher due in part to that, with the S&P futures, at 1067, 1 point above fair value, and the Nasdaq 100 futures, at 1436, 3 points above fair value.
Xilinx (XLNX 37.55 +0.49) said that Q3 (Dec) sales should be up 6-9% sequentially, which equates to roughly $334-344 mln and is above the Reuters Research consensus estimate of $329 mln. The programmable logic devices semiconductor company also said that gross margins remain on target at approximately 62%. Competitors of XLNX include the likes of ALTR and LSCC.
As for Flextronics (FLEX 14.78 -0.47), the electronics manufacturing services provider made no change to the Q3 (Dec) outlook it offered on its Q2 (Sept) conference call. Management had put revenues at $3.60-3.90 bln and EPS at $0.13-0.15. On tonight's call, management noted that its designs business had returned to profitability, and that network services were seeing signs of growth. Despite this, shares of FLEX have given back 3% in a likely profit-taking move following the stock's 69% year-to-date run. Related companies of FLEX include the likes of CLS, JBL, SANM, and SLR.
Moving out of the technology space, women's retailer Chico's FAS (00C 39.34 +0.34) has traded higher following its latest impressive earnings report. Chico's Q3 (Oct) net income rose 67% from the prior year period to $0.30 per share (consensus of $0.27) and revenues increased 53% to $210.6 mln. The company also released its November same store sales numbers tonight - the figure jumped 16% as compared to the company's guidance for low double-digit growth and the Briefing.com consensus estimate of +12.6%. Platinum users can now visit Briefing.com's Same Store Sales calendar for complete coverage of monthly comparable store sales.
Walt Disney (DIS 22.57 -0.01) released select tidbits out of its two-day Board of Directors meeting. Following the resignation of Roy Disney and Stanley Gold - two opponents of CEO Michael Eisner that have openly questioned his leadership, Disney elected CEO of Sybase (SY) John S. Chen as a new independent director, effective January 2004. The company also declared an annual cash dividend of $0.21 per share, which brings its dividend yield to approximately 0.9%.
Finally, shares of Crossroads Systems (CRDS 3.56 +0.91) - a small-cap company that provides enterprise data routing solutions for open system storage area networks - have skyrocketed 34% after the company turned in a better than expected Q4 (Oct) report. Crossroads also announced a cross-licensing arrangement covering access control technology with Hitachi (HIT).
For complete coverage on these, and other developments, be sure to visit Briefing.com's Stock Market Update and Daily Sector Wrap pages. -- Heather Smith, Briefing.com
4:35PM Xilinx guides DecQ revs above consensus (XLNX) 37.06 -0.39: Co sees Q3 (Dec) sales up 6% to 9% sequentially which computes to $334-$344 mln vs Reuters Research consensus of $329 mln.
3:26PM LRCX raises order guidance 33.02 +0.82: Berean Capital comments that Lam Research (LRCX) has raised its order guidance for the DecQ to 20-25% (firm notes that it had estimated 20%). Berean expects KLAC to do the same, and thinks component suppliers such as AEIS, MKSI and MYK should do well.
2:39PM New High Profile -- Harris & Harris Group 8.89 +0.79: Notable price momentum in nanotechnology plays ahead of NANO Commerce 2003 conference that kicks off Dec 9 in Chicago. Among the names finding interest ahead of the conference are ALTI +30% (highlighted here as an Unusual Volume name yesterday), NANX +20% and JMAR +16%. Another intriguing name in the group is Harris & Harris (TINY), a publicly traded venture capital company that makes initial investments exclusively in "tiny technology," including nanotechnology. The co's first investment in "tiny" technology was Nanophase (NANX). The co sold its interest in Nanophase in 2001 and invested part of the proceeds in privately held Nantero, Inc., a Harvard University spin-off developing a high density, nonvolatile random access memory chip using nanotechnology. The co's last 12 initial private equity investments have been in tiny-technology enabled companies.
11:04AM Moors and Cabot on ASML implications for CYMI 46.69 +0.36: Moors & Cabot suggests that ASML's higher backlog announcement and positive guidance for anticipated year-end shipments further bolsters the firm's outlook on its supplier, CYMI. Firm believes CYMI is at an inflection point of a strong ramp in revenues and earnings for 2004, and notes that CYMI's highly-leveraged operating model provides upside potential to its earnings ests for 2004-05. Firm says Cymer is also likely to witness an upside to orders this qtr as well, and says CYMI remains their top mid-cap pick on a fundamental basis.
9:56AM Amtech says JanQ expectations too high for PLAB; reits Hold on DPMI : AmTech believes Photonics will meet OctQ expectations when they release on Dec 10, but current expectations for JanQ are too high. The Street has not factored in the heavily loaded holiday season in the quarter where a 5% sequential sales decline is more likely. The firm maintains its Buy rating given better longer term industry fundamentals but believes resetting expectations could prompt a stock sell-off post earnings release.... Firm reiterates its Hold rating on DuPont Photomasks given its execution concerns and its distant visibility to breakeven by DecQ of 2004.
9:41AM SLAB reiterated Buy at CE Unterberg 49.05 +0.08: CE Unterberg reiterates its Buy rating and $54-$60 price target on Silicon Labs (SLAB). This marks the firm's fifth consecutive upward estimate revision in 2004 numbers which goto $420 mln and $1.27 for sales and EPS, up from $400 mln and $1.22. The firm believes that with 13 new products underway, SLAB's ROI on its R&D efforts will pay off handsomely in next 2-3 years.
RF Micro Device (RFMD) 11.47 -0.40 : Co announced production shipments of the RF3133 PowerStarTM power amplifier module to LG Electronics for use in the LG G4010 and LG G4050, which are LG's first GSM/GPRS handsets targeted at the US market.
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