From Briefing.com: Market participants were back in full force on Monday and they picked up where they left off before heading home for the holidays. In other words, they returned in a bullish frame of mind and continued to show a keen interest in owning technology stocks.
Feeding their appetite was research firm SG Cowen, which upgraded a host of technology issues. Altogether SG Cowen upgraded 11 companies with ties to the technology sector, including Microsoft (MSFT 28.14, +2.51%), Dell (DELL 35.22, +2.71%), Applied Materials (AMAT 23.52, +6.43%) and KLA-Tencor (KLAC 59.24, +4.96%), all of which were upgraded to Strong Buy from Outperform.
Beyond the favorable tone in Monday's research, a positive earnings pre-announcement for Q4 from Siebel Systems (SEBL 15.39, +10.01%), an affirmation of FY03 guidance from Nextel (NXTL 28.94, +3.88%), and an encouraging report on worldwide semiconductor sales in November succeeded in keeping sellers sidelined.
Not surprisingly, semiconductor and semiconductor equipment stocks led the broad-based advance that was accented by a 3.6% gain in the Philadelphia Semiconductor Index (SOXX). We should add that SG Cowen had a hand in that advance, too, as the firm said it thinks, based on their model, which suggests around 35% capex growth in 2004-05, that it is still not too late to play the 2004-05 semi cycle.
From a macro viewpoint, Fed Governor Bernanke laid the groundwork for Monday's broad market rally with a speech over the weekend that suggested the Fed wasn't likely to raise rates anytime soon. That consideration served as an effective catalyst for buying decisions that saw the market start the day on an upward path that it continued on into the close. Volume at the NYSE was moderate with 1.58 bln shares trading hands, but noticeably heavy at the Nasdaq where volume topped 2.3 bln shares. In brief, it is a new year, but the same bullish attitude persists. -- Patrick J. O'Hare, Briefing.com
6:03PM Monday After Hours prices levels vs. 4 pm ET: Buying enthusiasm has cooled in the after hours trade following the regular session's impressive performance, in which the major indices all finished at new 52-week highs. Corporate news flow tonight has been mostly positive, but with the market having run up 1.2% today, buyers have been selective in their investment decisions. Presently, the S&P futures, at 1120, are 2 points below fair value, and the Nasdaq 100 futures, at 1496, are flat with fair value.
The following is a list of companies making headlines tonight, and the reasons behind the stock's resulting move:
After Hours Mover % Change Move Reason for Move
California Micro Devices (CAMD) +12% Analog semiconductor company guides Q3 (Dec) higher for the second time, now expects EPS of $0.08-0.10 on revenues of $16.8-17.2 mln; Management will be presenting tomorrow at 10 ET at the Needham Growth Conference; Stock is up 112% in the past year
Finish Line (FINL) +1% Atheltic footwear retailer meets Reuters Research consensus EPS and revenue estimates in its Q3 (Nov) report; Stock has more than doubled in the past year, but valuation is still compelling at 14.0x estimated FY05 (Feb) earnings
Gateway (00C) unch Computer hardware maker says it will report a Q4 (Dec) operating loss at the low-end of its previous range, and also puts revenues below the consensus forecast; Warning confirms that GTW continues to lose market share to DELL and HPQ
Starbucks (SBUX) +3% Specialty coffee retailer preannounces Q1 (Dec) EPS better than the Street's estimate, and also increases its FY04 (Sept) EPS outlook; Management credits a 'holiday season that was Starbucks's best in years'; SBUX shares are up 42% since we recommended them in late April
Transwitch Corp (TXCC) +21% Mid-cap semiconductor integrated device company ups its Q4 (Dec) revenue projection to $6.5-7.0 mln (consensus of $5.4 mln) citing stronger demand across its product lines; Competitors of TXCC include the likes of AMCC, CNXT, IFX, PMCS, and TQNT
Tomorrow, the earnings calendar is light, and the economic calendar features two reports: November Factory Orders and December ISM Services, both of which will be released at 10 ET. Descriptions of both reports, as well as the market and Briefing.com's estimate, are available on the Economic Calendar.
For more detail on these, and other developments, be sure to visit our Stock Market Update and Daily Sector Wrap. -- Heather Smith, Briefing.com
3:52PM Sleep Well Santa : Presumably, Santa Claus settles in for a long winter's nap the day after Christmas. When it comes to the stock market, though, that isn't the case. If Santa holds true to form, he keeps right on working and delays his nap until after the close of trading on the second session of the new year, for it is that day - which happens to be today - that marks the end of a period affectionately referred to on Wall Street as the Santa Claus rally.
As a reminder, this rally period encompasses the last five trading days of the prior year and the first two trading days of the new year. Since 1969, that seven day span has been good for an average gain of 1.7% in the S&P 500 and it has had a negative return in only 8 years (1977, 1979, 1981, 1984, 1990, 1992, 1993 and 1999). That will remain the case, too, for Santa Claus decided to pay a visit to Wall Street once again this year.
At its current level (1121.22), the S&P 500 is up 2.2% for the seven sessions that began on Dec. 24.
That is an encouraging performance in its own right and, in turn, it is a hopeful consideration for 2004 as Santa's failure to show, according to the Stock Trader's Almanac, tends to precede bear markets or times when stocks could be purchased later in the year at much lower prices. Accordingly, the market is keen on seeing a Santa Claus rally because, if nothing else, it serves as a confidence booster that tends to induce a positive tone in the initial stages of a new trading year. -- Patrick J. O'Hare, Briefing.com
4:55PM Gateway expects to report Q4 EPS and revenues at the low end of previous guidance (GTW) 4.98 +0.16: Co expects to report an operating loss at the low end of its previous EPS guidance range, and revenue of approx $880 mln, compared with its previous guidance of $925-975 mln -- Reuters Research consensus is $963 mln. EPS guidance does not include the impact of previously announced restructuring and transformation costs, which are currently estimated to be apprx $42-45 mln, (original projection was $50-60 mln).
4:34PM TranSwitch boosts Q4 forecast (TXCC) 2.57 +0.25: Co announces that it now expects Q4 revs to be approx $6.5-$7.0 mln, vs previous guidance of $5.3 mln, citing stronger demand across the co's established product lines.
4:27PM Silicon Labs names Artusi Pres and CEO (SLAB) 45.41 +1.11: Co announces the appointment of Dan Artusi as Pres and CEO, effective immediately. Mr. Artusi joined Silicon Laboratories in 2001 and most recently served as the co's Pres and COO. Mr. Artusi succeeds Nav Sooch, who will continue to serve as chairman of the board of directors and work with the management team.
4:19PM Varian Semi chosen as high current ion implant supplier to UMC (VSEA) 46.08 +2.29:
4:17PM Novatel Wireless reports preliminary Q4 revenues are in line with guidance (NVTL) 6.84 +0.94: Co reports Q4 (Dec) revenues will be between $9.6-9.8 mln, in line with previous guidance (no estimates are available). Revenue growth was driven primarily by the introduction of Co's next generation UMTS products, which began shipping in late December.
4:10PM California Micro raises guidance (CAMD) 9.75 +0.66: Company issues raises guidance for Q3 (Dec), company sees EPS of $0.08-0.10 vs Reuters consensus of $0.08 and previous company guidance of $0.06-0.09 on revenues of $16.8-17.2 mln, consensus $16.75 mln, previous company guidance was $16.2-17 mln.
4:09PM Metrologic increases Q4 & Y03 sales guidance (MTLG) 27.52 +0.04: Company raises Q4 revenues to approx $41.0 mln, vs the Reuters Research consensus of $38.7 mln and previously guided (Dec. 31) revs of $38.5-39.5 mln; also sees Y03 revenues of approx $137.3 mln vs the R.R. consensus of $133.4 mln. Co attributes revenue increase to production of scanners at its Blackwood and China facilities and MTLG's ability to ship products during recent holiday season.
12:43PM Nasdaq Composite back near morning high (COMPX) 2031 +24.50: -- Technical -- The index ran to resistance mentioned in The Technical Take at 2030/2035 this morning and edged back slightly. While able to retest this area (minor new session high of 2034.22) again in recent trade it remains range bound slightly below this ceiling. Next resistances of interest, if able to sustain a breach, are at 2052 (weekly barriers) and 2059/2065 (post 9/11 closing high, Dec 2001 high). Short term supports are at 2027, 2022 and 2015.
11:38AM 200 Day Alert -- KVH Industries (KVHI) 23.30 -2.69: -- Technical -- Stock extends losses following early negative comments (see 09:54 update). Currently it is hovering just above support at its 200 day simple mov avg at 23.24 (session low 23.30).
11:27AM DSP Group sees higher revenues and earnings for Q4 (DSPG) 26.70 +1.43: Co announces that due to increased demand for its products, Q4 revs would approximate $38 mln, vs previous guidance of $33.0-$35.0 mln. Co says this rev increase together with improving gross margins would result in stronger than expected diluted Q4 EPS of $0.19-$0.21 (consensus is $0.16).
10:45AM New High Profile -- Tegal Corp (TGAL) 3.03 +0.26: Nanotechnology stocks are running today (TINY +18%, ALTI +14%, NGEN +8%). A small cap name that is not as well known as the others in the sector is Tegal Corp., which set a new 52-week high today. The co makes etching scanners which are used to make computer memory chips that use nanotechnology. The technology Tegal supports may be an alternative to the memory found in most computer devices... The co is small, but sales in SepQ grew 20% to $3.2 mln.and more importantly, the co is approaching profitability, reporting a non-GAAP loss of $(0.08) vs $(0.33) a year ago. Mkt cap $52 mln, 15.5 mln float, 808K avg daily volume.
TranSwitch (TXCC) 2.57 +0.25 : After the close, company announced that it now expects Q4 revs to be approx $6.5-$7.0 mln, vs previous guidance of $5.3 mln, citing stronger demand across the co's established product lines.
ATMI (ATMI) 25.87 +2.47 : Adams Harkness transitioned coverage of ATMI and upgraded to Strong Buy from Mkt Perform; firm expects the co to enjoy solid growth in 2004-05, driven by strong wafer demand (up 10%-13% sequentially) and margin expansion as it undergoes its transformation.
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