Lucent to come in below Street's view
Warning hurts rival Cisco and Nortel, other tech biggies
By Tomi Kilgore & Brenon Daly, CBS MarketWatch
Last Update: 4:48 PM ET Jan 6, 2000
NewsWatch
Market Pulse
NEW YORK (CBS.MW) -- Shares of Lucent were likely to drop in the
Thursday evening session after the company warned it'll come in far below
analysts' expectations because of sluggish software sales and a rocky
product transition.
The networking giant
(LU: news, msgs)
warned that earnings in
its fiscal first quarter will
come in 36 to 39 cents
per share. Wall Street
analysts surveyed by
First Call projected
Lucent would earn 54
cents per share.
Despite the slowdown, Lucent said it expects to be able to boost full-year
earnings 20 to 25 percent over last year's $1.20 per share. That would
put the level at $1.44 to $1.50 per share; analysts were looking for $1.52.
See related story.
Ahead of the warning, Lucent stock dropped 3 3/8 to 69 and was halted
after hours.
Lucent's warning bled over to rivals. Cisco (CSCO: news, msgs) fell 6 to
94 on Island and Nortel Networks (NT: news, msgs) dropped 7 to 78 on
Instinet.
Other tech powerhouses also got clipped. Qualcomm (QCOM: news,
msgs) dropped 11 percent to 140 1/16 during the regular session and fell
to 134 3/16 after hours. Microsoft fell 1 1/2 in the evening session to
108 1/2.
Starbucks said same-store sales in December increased 5 percent. Total
sales increased 25 percent to $224 million. Ahead of the release, shares in
the coffee giant (SBUX: news, msgs) gained 7/8 to 25 1/16 and held that
level on Island.
Pre-market trading
Gateway edged lower in pre-market trading Thursday after the computer
maker warned that sluggish sales to businesses and a crimp in supplies will
leave fourth-quarter results below expectations.
The computer giant
(GTW: news, msgs) fell
7 1/4 from its NYSE
close to 55 in Instinet
trading. In composite
trading late Wednesday,
the stock dropped to a
low of 51 before closing
at 55. The company
said late Wednesday
that it expects to earn 37 cents per share, 7 cents less than analysts
expected. Sales are seen coming in at $2.45 billion, an increase of 6
percent over the same quarter last year.
Gateway blamed the shortfall on a lack of chips and motherboards,
particularly for its low-end PCs. Additionally, sales to large businesses
and government offices slipped 16 percent, hurt by Y2K concerns.
Among other PC makers seeing pre-market
activity, Dell (DELL: news, msgs) dropped gave
up 2 15/16 to 47 and Compaq (CPQ: news, msgs)
lost 3/4 to 27 3/4 in Europe, according to market
makers at Madoff Investment Securities.
And Intel (INTC: news, msgs) slipped 2 5/8 to 81
over the Island ECN. Warburg Dillon Read said
the chip maker's shares, which have held up well
during the recent weakness in the semiconductor
industry, could come under pressure Thursday on
the Gateway announcement.
Cobalt (CBLT: news, msgs) flew 21 1/2, or 205
percent, to 32 over the Island ECN. The company
said late Wednesday that it will launch an online
marketplace for car parts and information.
Motorplace.com will go live at the end of the
month, featuring information from its 12,000 dealer
customers.
ExciteAtHome (ATHM: news, msgs) rallied 2
5/16 to 42 1/4 over Island. The company announced the launch of
FreeWorld, a free Internet access service. The ISP will use technology
from 1stUp.com, which is majority owned by CMGI (CMGI: news,
msgs). Their service will be available through most of the U.S. and
Canada. CMGI shares were down 4 to 279.
Among other Net stocks seeing activity, America Online (AOL: news,
msgs) was 1 5/16 lower at 72 3/4 in Instinet. Amazon (AMZN: news,
msgs) rose 1 7/8 to 71 5/8 and Yahoo (YHOO: news, msgs) fell 6 1/2 to
404 over Island.
Beyond.com (BYND: news, msgs) dropped 1 5/32, or 15 percent, to 6
3/8 over Island. The company said after Wednesday's closing bell that it
expects fourth-quarter revenue to be $34 million to $35 million, compared
to Wall Street projections of $50.2 million, according to a survey
conducted First Call. Beyond.com is moving from selling to consumers to
serving businesses. However, losses per share for the quarter are
expected to between 65 and 68 cents, while First Call was estimating a
loss of 76 cents.
Echelon (ELON: news, msgs) surged 4 1/4, or 21 percent, to 24 1/2
over Island. The company announced that a number of big name high-tech
companies were using its technology in their home networking products,
which were being exhibited at the Consumer Electronics Show in Las
Vegas. Among the companies named were Cisco (CSCO: news, msgs),
Microsoft (MSFT: news, msgs) and Sun Microsystems (SUNW:
news, msgs). The home networking products range from electronic door
locks, lighting devices and multi-room audio switching, all utilizing the
Internet.
Sony (SNE: news, msgs) saw its share pricked for a loss of 17 to 233 in
Instinet. The company's president, Nobuyuki Idei, warned in a Reuters
interview that a share price of over 20,000 yen would be considered a
bubble. Based on a recent currency quote, that translates into a dollar
quote of roughly 190 13/16. In Thursday's Tokyo trading, the stock
closed limit down at 25,700 yen per share.
Sensar Corp. (SCII:
news, msgs) gained 1
1/2 to 60 3/4,
according to Madoff.
The company
announced after
Wednesday's closing
bell that its board
approved a 2-for-1
stock split. As of
Wednesday's close, Sensar's stock price has risen about 12-fold in the
past two months. In mid-December, Sensar announceed of the proposed
merger with Net2Wireless. Sensar makes analytical instruments related to
the environmental sciences and defense industry.
Microsoft (MSFT: news, msgs) edged 1 13/16 lower to 112, said
Madoff, while Barnes & Noble (BKS: news, msgs) added 7/16 to 20.
Microsoft said it is set to announce a strategic alliance at the Consumer
Electronics Show Thursday. See full story. The scheduled announcement
comes one day after Microsoft's Bill Gates touted his company's EBook
reader, which can be used to read books that have been downloaded to
hand-held devices. Also, Gates said Microsoft has recently inked an
alliance with Barnes and Noble, but did not disclose terms or details. See
related story.
Separately, China will reportedly ban the use of the Windows 2000
operating system throughout the government, in favor of "Red Flag Linux,"
a system developed by Chinese researchers based on the Linux OS,
Reuters reported. The report, citing the Yangcheng Evening News, said it
would save the government billions of dollars. However, Reuters said that
officials at several government ministries were unaware of the decree.
PeopleSoft (PSFT: news, msgs) was advancing by 7/16 to 18 1/2 in
Instinet. The maker of enterprise management software said early
Thursday that license revenues for its fourth quarter are expected to
increase by up to 40 percent over the sequential third quarter, helping to
offset a 5 percent decline in total service revenues. As a result, earnings
per share for the period should be between 2 and 4 cents. First Call was
estimating a profit of 2 cents.
Celeritek (CLTK: news, msgs) shares pulled back by 3 15/16, or 15
percent, to 22 over Island. The stock surged 52 percent during
Wednesday's regular trading session after the company received a
positive write-up on MSN's MoneyCentral, site which suggested the
company has a lead on rivals in the indium phosphide technology needed
to make faster communications switches for the Internet. However, after
the market closed Celeritek issued a statement saying it does not have an
indium phosphide process nor does it make indium phosphide chips.
March S&P futures (WP=H0: news, msgs) were trading down 9.30 at
1,404.20. That was about 12 1/2 points below fair value, according to
figures provided by HL Camp & Company.
Brenon Daly and Tomi Kilgore are reporters for CBS MarketWatch.
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