comments from Briefings:
General Commentary
Asia's deepening debt crisis, a steady stream of earnings warnings, the upcoming barrage of earnings reports and deteriorating technicals led to widespread selling on Friday... The volume imbalance (down volume outlegged up volume by nearly 8 to 1) and the Nasdaq's move back below 1500 suggest that additional selling is ahead for the already battered tech sector... Chip industry to set the tone for the week, as Motorola, Intel, Advanced Micro, Lattice, Linear and Chips & Technologies among the companies due to release their quarterly results... Market will be paying very close attention to INTC's report due to recent speculation that company might exceed estimates by as much as $0.15... We think this is pie in the sky stuff, but street is desperate for good news... If Intel disappoints the street or makes overly cautious comments regarding future prospects due to Asian contagion group will lead a sector wide retreat... Investors also want to look for news concerning capital spending plans... We suspect a number of companies to join Atmel in trimming back their budgets, which of course is bad news for the chip equipment makers.
Friday's sell-off only exacerbated the market's fragile state... Now is not the time to step back in as momentum is decidedly bearish... Wait for a clear buy signal... You may not catch the bottom but you will significantly reduce the risk of getting caught in a bull trap.
For a complete list of tech companies scheduled to report earnings in the week and month ahead, see Briefing's Tech Earnings Calendar.
Computer Systems & Peripherals
Brief: Group was pummeled on Friday in response to Adaptec's earnings warning... Company announced that weak demand domestically cause for problems... Stock plunged over 14 points on 29.8 mln shares... Dell, IBM, Hewlett-Packard, Digital Equipment and SCI Systems posted losses of 3 points or more... Compaq, and Sun Micro also came under intense selling pressure... Most alarming was the increase in volume on the downside - especially late in the day... After the close Sun Microsystems announced that TCI will incorporate the PersonalJava (TM) platform as a standard software application in the advanced digital set-top boxes... Considered major win for SUNW... Earnings concerns kept disk-drive makers in full retreat... Quantum (-2 1/16) and EMC (-1 7/8) were the big losers.
Computer Networking
Brief: Despite announcement that it was comfortable with its earnings number, Ascend unable to buck bearish trend... Stock fell over 1 point... Other losers included Bay, 3Com, Cabletron, Cisco and Newbridge... As noted on this page last week, Shiva quietly moving higher... Stock added 5/8 on Friday and moved to within fraction of key s/t resistance at 11... Break above ceiling points to retest of 14 area... Volume stats also impressive... Could there be a buyer in the wings?
Telecommunications Equipment
Brief: By now you get the picture... Friday was a bloody day with few exceptions... None of those exceptions resided in the telecom equipment industry... To the contrary, industry was among the hardest hit with Advanced Fibre (-9.3%), ADC Telecom (-7.8%) and PictureTel (-8.6%) pacing the retreat... PairGain nears key support at 14 5/8... Stock has taken a beating in recent months... Insiders actively selling in past month.
Semiconductor Equipment
Brief: Asia, Asia, Asia... Region's growing crisis weighed on sector as did corresponding earnings fears... Average decline among component issues for the session was 6.8%... Horrible technical tone for the entire sector argues strongly against bottom fishing at this point... Biggest loser Friday was Kulicke & Soffa (-13.4%) moving to within 1/8 of its 52-wk low (set 12/15/97). |
