Briefing.com
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General Commentary:
Net mania is back! Bolstered by huge gains in CNET (CNET 208 1/8 +40 1/8), CMG Information Services (CMGI 199 11/16 +47 1/2), eBay (EBAY 171 +21 3/4), Inktomi (INKT 71 +8 1/8), Network Solutions (NSOL 214 9/16 +40), Onsale (ONSL 47 1/4 +15 3/8), uBid (UBID 72 5/16 +9 1/8) and VeriSign (VRSN 119 +14 3/4), techs resumed the leadership role they had abdicated in early February... Dynamic movement in the volatile Internet sector restoring confidence in tech stocks, and bringing daytraders back to the fold.
Techs also got a boost when Intel (INTC 119 5/8 +5) announced that it had reached a proposed settlement with the staff of the FTC on the antitrust litigation... Proposal needs approval from the Commission, which street fully expects... Positive reaction basically a "relief rally" as marketplace wasn't looking forward to another long, contentious, Microsoft (MSFT 159 +4 1/16) like court case.
In a positive sign of things to come, participation expanding, with many second tier names participating in the advance... Poor breadth tools had been a major concern among market followers for weeks now... Though we aren't looking for a/d line to flash buy signal anytime soon, improvement in breadth stats will add fuel to the rally.
Techs really hitting their stride... If recent history is any guide you don't want to get in the way of this rally.
Not much in the way of earnings this week until Thursday when Oracle (ORCL), CMG Information Services (CMGI) and National Semi (NSM) release their results... For consensus estimates, actuals, revenue numbers and year-ago comparisons, see Briefing's Earnings Calendar.
After the close, Advanced Micro Devices (AMD 18 15/16 +1/2) warned that it would report a significant loss in Q1 due to weaker than expected shipments of K6 chips... Plans to cut roughly 300 jobs over next two years... Street already slashed estimates after company pulled out of recent tech conferences... Look for estimates to be cut again... Current consensus is for a loss of $0.09 v. year ago loss of $0.39.
Asian markets close higher.
Industry Briefs
Computer Systems & Peripherals | Networking | Software | Internet | Semiconductor | Chip Equipment | Telecom Equipment
Computer Systems & Peripherals
Box-builders extended their recovery rally as bargain hunters continued to nibble away... Gateway (GTW 71 +2), Apple (AAPL 34 3/8 +1 3/16) and Hewlett-Packard (HWP 69 7/8 +1 3/4) paced the advance... Dell (DELL 45 3/8 +2 11/32), which split 2-for-1, also participated.
CEMs among day's biggest winners... Group had pulled back sharply during sector-wide retreat and now being viewed as decent value play... Solectron (SLR 47 1/8 +4 5/16) and Jabil Circuits (JBL 38 1/16 +4 9/16) were the stocks of choice.
Disk-drive/storage stocks still lagging rest of sector, though EMC Corp. (EMC 111 1/2 +6 15/16) found plenty of buyers... Have yet to get any warnings from group, but based on lousy price performance over past several weeks market sure counting on at least a few negative surprises... Briefing.com not so sure... We expect favorable comparison periods, tighter cost controls and improved demand/supply equation to result in relatively decent quarter... As such, Briefing.com maintains position that group attractive to risk tolerant, aggressive growth investors seeking above average, l/t capital appreciation.
Seagate (SEG 29 1/8 -7/8) announced that it will take a one-time charge in the current quarter of about $50-$60 mln related to restructuring.
Computer Networking
No news of note, just general optimism out of conference being held in CA... Cisco (CSCO 104 9/16 +3 3/4), Ascend (ASND 81 5/16 +2 1/8) and Newbride Networks (NN 27 7/16 +1) only stocks posting sizable gains... As long as sector tone continues to improve, look for CSCO and ASND to remain red hot.
Computer Software & Services
Microsoft (MSFT 159 +4 1/16) and HK Telecom reportedly working together on multimedia applications.
BMC Software (BMCS 40 13/16 +2 5/8) got the thumbs up from market in response to news that company was acquiring New Dimension Software (DDDDF) for nearly $650 mln in cash... Deal expected to be immediately accretive.
Network Associates (NETA 50 +3) jumped on active bargain hunting as stock pulled well off its high despite no real change in fundamental outlook... Relatively light volume only troubling note... For stock to sustain recovery need to see volume exceed 2mln shares per day for awhile.
Parametric Tech (PMTC 17 1/2 +2 1/2) surged nearly 17% on huge jump in volume... Stock received favorable mention in MSN MoneyCentral article... Suggested that undervalued stock could see 37 as long as it stays on track with earnings.
Novell (NOVL 23 5/16 +3 3/16) soared to a new 52-wk high on reports that company is in talks with Compaq to develop a range of cache products... Break of 24-25 range, would leave stock positioned for a test of the 28-30 area over next 6-months.
Internet
See general commentary above for discussion on return of Net mania.
Onsale (ONSL 47 1/4 + 15 3/8) reported that more than 10 mln bids have been placed on its atAuction service.
VerticalNet (VERT 74 11/16 +19 9/16) surged on news that Hambrecht & Quist and Piper Jaffray started coverage with buy ratings... Probably comes as no surprise that investment firms co-managed VERT's IPO on 2/10.
7th Level (SEVL 8 27/32 +3 27/32) up big again Monday as stock continued to gain ground on news that will provide Internet multimedia training to America Online's (AOL 90 7/8 +3 15/16) members through its Tutorials.com... Volume totalled an eye-popping 38 mln shares... Average volume over last 30 days a more pedestrian 876,000.
RealNetworks (RNWK 94 +4 1/2) up in anticipation of stock split announcement.
VeriSign (VRSN 119 +14 3/4) won favor on news that company won government approval to extends its offerings overseas.
Semiconductor
As noted in general commentary, Advanced Micro issued warning after the close... Stock likely to take a hit but selling shouldn't be too bad as news was widely anticipated.
Intel (INTC 119 5/8 +5) rallied after company surprised the street with announcement that it had reached a tentative accord with FTC regarding antitrust case.
Broadcom (BRCM 66 1/2 +12 3/4) was the group's big winner, jumping on news that Morgan Stanley Dean Witter upped its rating to outperform from neutral... Interestingly, Conexant Systems (CNXT), BRCM competitor, also posted big gain on news that Merrill reiterated its near- and long-term accumulate ratings... Stock ended at new all-time high on 3x average volume... After the close, company announced that it expects to exceed street estimates in next two quarters... Sees near break even results in Q2 and return to profitability in Q3... Consensus estimates for two quarters were for losses of $0.08 and $0.03, respectively... Stock headed to 30.
Semiconductor Equipment
Group posted modest, but widespread gains in quiet news day... Winners paced by Asyst (ASYT 18 13/16 +1 7/16), Lam Research (LRCX 34 1/2 + 2 13/16), Teradyne (TER 56 +3) and PRI Automation (PRIA 32 3/16 +1 13/16).... Volume totals remain unimpressive, however.
Telecommunications Equipment
General Instruments (GIC 33 +1 3/4) up ahead of today's analyst meeting.
Andrew Corp. (ANDW 13 3/8 -1) tumbled after company issued earnings warning... Sees Q1 earnings between $0.05 and $0.08... Street had been expecting ANDW to gain $0.23... Look for stock to test key support at 10 3/8 over next 3-to 6-months.
Qwest (QWST 66 1/2 +5 1/8) shot to new all-time high in active trading... Briefing.com expects stock to test 75-80 range over next 12-months. |
