Morgan Stanley Says Semi Revenues Will be Ugly
Edited by Ray Hennessey
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
10:30 (Dow Jones) Morgan Stanley analyst Mark Edelstone warned Monday that
semiconductor investors should brace themselves for another "sharp"
sequential decline in revenue for the second quarter. The analysts, who
trimmed his estimates on Intel (INTC), Broadcom (BRCM), Lattice
Semiconductor (LSCC), and Xilinx (XLNX), said year-over-year revenue growth
will continue to fall until Aug. or Sept. and remain negative until the
first quarter of '02 or early in the second quarter of '02. On a bright
note, Edelstone said that easier earnings comparisons, stronger economic
fundamentals and the completion of the current inventory correction, will
enable chip companies to have sequential revenue growth sometime in the
second half of the year. (DLF)
10:22 (Dow Jones) The low-$50 level for Kohl's (KSS) stock marks an interim
bottom for the stock, and presents a rare opportunity to buy it at a decent
price, says Donald Trott, an analyst at Jefferies. Kohl's will add 17 new
stores in the Northeast to its sales base in April. And given that Kohl's
apparel sales are mostly concentrated in basics, it won't have to take heavy
markdowns in April, Trott says. If April's weather is decent, comp sales
could increase in the high-single digits, he says. That could set the stock
rolling "back to the high $60s over the next several months," Trott says.
(JMC)
10:14 (Dow Jones) Merrill Lynch's (MER) move to increase the interest rate
spread at its Merrill Lynch Banks could help its bottom line, but drive away
some customers, says Amy Butte, a Bear Stearns analyst. Butte says the
interest rate changes could generate as much as 38 cents a share for the
firm on an annual basis as it moves to increase its private client margins
by 20% by 2003 and renew its focus on $1 million-plus clients. However,
Butte said there is the potential for a client "backlash" and some
competitors will likely use the opportunity to gain market share. (CUB)
10:05 (Dow Jones) June Nasdaqs reopen weaker after hitting limit down and
triggering trading curbs. Now at 1683, but has already tested a key support
area of 1673, floor traders said. (ZHS)
10:01 (Dow Jones) Drug maker Eli Lilly (LLY) beat first-quarter earnings
views by a cent on strong sales of antipsychotic Zyprexa and its
diabetes-care franchise, as well as other older drugs that have begun to
wane like Prozac. One of the keys to Lilly's near-term success is its
ability to handle generic competition for Prozac and branded competition for
Zyprexa. As long as it can maneuver these battles, Lilly can likely attain
whatever it wants, said HKS & Co. analyst Hemant Shah. The drug maker guided
the Street to an earnings range of 73 cents to 75 cents a share for the
second quarter, above consensus of 71 cents, and reiterated 2001
expectations of $2.75 to $2.85 a share. Analysts are expecting $2.81 a share
for the year. (BMM)
9:53 (Dow Jones) Plug Power's (PLUG) new management appears to be "following
the path of least resistance" on the road toward commercialization of its
residential fuel cell, says Lehman analyst Daniel Ford, after Plug's analyst
meeting last week. The strategy appears to be working. Not only will the
company's first products hit the market in the third quarter, which is
sooner than expected, it also expects to post a narrower-than-expected loss
of between $1.60 to $1.70 this year, Ford says. Although Plug has enough
cash to make it through the second quarter of 2002, it plans to raise $80
million in cash by the third quarter, he says. (CCC)
9:50 (Dow Jones) June Nasdaqs have come under pressure in morning trade,
hitting first limit down of 42 points. A 10-minute trading period is in
effect, following which, if the contract trades below limit, a two-minute
trading halt will be observed. The next limit is 85 points. (ZHS)
9:47 (Dow Jones)- Don't count an upgrade for semiconductor stocks by Richard
Bernstein, Merrill Lynch's chief quantatitive analyst who considers measures
like the value of assets, projected sales patterns and the cost of capital.
"It's premature," Bernstein says. Commodity prices continue to decelerate
and semiconductor stocks have never gone sustainably up in such an
environment, Bernstein says. (KJT)
9:41 (Dow Jones) Bank of New York (BK) saw improved first-quarter results
despite a decline in the equity markets thanks to its fee-based businesses.
Gains in securities servicing, private client and foreign exchange drove
profits 13.6% higher to $384 million, or 52 cents a diluted share, which was
in line with Wall Street's outlook. (CUB)
9:34 (Dow Jones) More companies are outsourcing their oilfield compression
activities providing a steady, strong revenue stream for Hanover Compressor
(HC), a compression equipment rental company, says Lehman's Jim Crandell.
Crandell started coverage of Hanover Monday with a buy rating and a 12-month
price target of $44. The stock closed Thursday at $35.24. (CCC)
9:28 (Dow Jones) Traders expect a quiet start to stock futures Monday
following the Easter weekend. "As long as we stay above 1178, we'll maintain
the up trend," said one floor trader referring to S&Ps, even as the contract
traded lower in O/N. (ZHS)
9:27 (Dow Jones) Retailers still smarting, even as warmer weather allegedly
making its way across the country. (New York-area residents can expect
"chilly" weather Tuesday, papers say.) UBS Warburg's Richard Jaffe and
Howard Tubin say delay to spring means markdowns to clear spring
merchandise, so margins suffer. UBS trims estimates but says the good news
is some stocks are values and will be among first to rebound in an economic
turnaround. Lowers 1Q EPS forecasts for AnnTaylor (ANN), Gadzooks (GADZ),
Intimate Brands (IBI), Limited (LTD), Pacific Sunwear (PSUN) and TJX (TJX).
(GMC)
9:20 (Dow Jones) Don't rule out an interest rate cut this week, says Peter
Hooper, chief economist at Deutsche Banc Alex. Brown. The combination of
consumers being caught up in the slowing economy and the crush of poor
earnings (200 S&P companies report this week) may be to much for the Fed to
ignore, Hooper says. (KJT)
9:13 (Dow Jones) Companies are doing a lot less manufacturing, and that's
good news for some stocks, says Thomas Galvin, chief market strategist at
Credit Suisse First Boston. The U.S. "capacity utilization rate" fell below
80% in February, for only the sixth time in 30 years. On average stocks rose
16% in the six months after such a dip and 20% over 12 months, Galvin says.
He said beneficiaries may include Alcoa (AA), Duke Energy (DUK) and Wal-Mart
(WMT). (KJT)
9:05 (Dow Jones) Prudential upgraded Exelixis (EXEL) to strong buy from
accumulate, believing the genomics testing company is undervalued and that
there are several key products milestones on the horizon. Analyst Charles
Duncan says he expects "new corporate collaboration newsflow could pique
investor interest," particularly from two strategic deals over the next 12
months. Price target is $14. (RJH)
8:56 (Dow Jones) In many ways, WebVan (WBVN) was the perfect archetype of
the Internet world. It was tapped to wipe out an existing sector -groceries
- attracted oodles of venture-capital money, and wooed a respective,
real-world CEO, Andersen Consulting's George Shaheen. Now, it rivals only
the Titanic as a metaphor for a catastrophe. The business plan is suspect,
the stock trades for pennies, and Shaheen has taken one of the last life
boats out. (RJH)
-0-
(MORE) DOW JONES NEWS 04-16-01
10:30 AM
*** end of story *** |
