A post from vikeswon on Yahoo....
Last week and the week ahead
10-Jul-10 07:37 am
Lack of a negative preannouncement and a highly over sold stock has caused the shorts to back off. Judging from their gang bang on XRXTX after a strong report and outlook, they will probably let STX rise before the call and then try to retest the previous lows with a trading orgy after the call.
Option expirations on Friday may limit upside for STX since a close at $14 on Friday will kill off the most in-money puts and calls.
As far as last week goes, Noble Financial modestly lowered their numbers for STX & WDC to the lower end of Company guidance given at their April earnings calls. Noble remains upbeat citing numerous indications that the demand for storage has picked up and should be strong, see below.
BOM lowered their June EPS to $0.78, but whacked their Sept outlook by 20 cents to $0.73 citing margin pressures. BOM's assumption of lower margins flys in the face of seasonal trends where margins and pricing firm during September, strong channel demand, and expectations of laptop component shortages latter this year,
Another point opposing BOM's view of significantly lower September margins was Avian Research's report a few weeks ago citing relatively positive September OEM contract price negotiations, see link.
messages.finance.yahoo.com.
Well despite the best hopes of the shorts and most of the I-Bank bozos slashing their June estimates for STX and WDC, there has been NO NEGATIVE PREANNOUNCEMENT.
Imagine, all the red faces when STX & WDC report!
The spineless buy side continues to be obsessed with Europe. That paranoia along with the seasonal short in the drive stocks has produced a total disconnect from reality, as seen by:
1. STX and WDC WILL REPORT RECORD RESULTS FOR THE JUNE QTR.
2. Despite the best effort of shills like Kumar and Schwab at Craig Hellum, drive inventories have seen a significant draw down since the end of April and channel pricing has been firming over the last 3 weeks, as it usually does this time of year.
3. Laptop PC manufacturer, Quanta, just reported a record June preceeded by a strong April.
4. XRTX just posted record results and guided higher, while stating storage demand was strong including EUROPE.
5. Last week, MSFT reported impressive demand for Windows 7.
6. In mid-June, the major laptop PC makers projected 10-15% unit growth for their September quarter.
7. NTAP, HPQ, ORCL, and Accenture all recently voiced a positive outlook for storage/PCs.
8. Expectations of component shortages in 2H10.
As I noted previously, the September outlook will trump the June results. Due to the sour mood of the market and the reaction to XRTX's strong report, Luczo and Coyne may sandbag the September outlook and latter in the quarter provide a more upbeat outlook. |
