MARKET TALK: EMC Trying To Make 2Q, But Could Be Tough
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
10:59 (Dow Jones) Wit SoundView says it has been looking for a reason to
upgrade EMC, but instead it's finding "substantial near-term pressures."
Company has been taking a number of actions to make quarter, but Wit
believes EMC will have tough time meeting expectations for fundamental
earnings growth. (TG)
10:47 (Dow Jones) No real surprise that stocks treading water in front of
Fed's move. DJIA up 45 at 10520, Nasdaq higher by 5 to 2069, and S&P 500
adds 1 to 1218. There seems to be growing sentiment in general that the Fed
has lost its ability to maneuver the economy. Well, the dynamics have no
doubt changed a lot over the past decade or so, but don't write off the
Fed's impact just yet. To say the cuts to date haven't impacted the stock
market ignores the fact that the first loosening in January should only now
be starting to get felt in the economy, let alone the other four eases that
came after. And you can't blame the Fed for causing the bear market with
rate hikes in 1999 on one hand and then say its cuts mean next to nothing
now. (TG)
10:35 (Dow Jones) Level 3's (LVLT) 9 1/8% notes due 2008 are up a point to
41 bid after it announced a deal with Microsoft (MSFT) to provide Internet
access. More importantly, says a trader, is talk that a major equity fund
manager had bought $100 million each of Level 3 and Exodus Communications
(EXDS) bonds. With the telecom names attracting "smart money" interest from
investors who don't normally buy bonds, the trader said "people are feeling
a little better" about buying them. Exodus' 11 5/8 due 2010 are up almost 2
points to 36.7 bid. (RTB)
10:18 (Dow Jones) Though a half-point Fed rate cut today might cause a bit
of steepening in the Tsy yield curve, it won't likely mark the beginning of
a new trend, says UBS Painewebber strategist Mike Ryan. "We continue to
expect the next major shift in the curve to be a flattening," he says. (SV)
10:09 (Dow Jones) The latest reading from the Conference Board showed
consumers still worried about the current job market - but growing more
optimistic about future job market. The rebound in consumer expectations
predicting better earnings for consumer cyclical companies, supporting
Deutsche Banc Alex. Brown's recommendation to overweight that sector. (TG)
9:57 (Dow Jones) Taking its first step towards reorganizing under
bankruptcy, USG received speedy interim court approval to use funds under
its debtor-in-possession financing. The ruling gives USG the ability to
access $150 million in financing until a final hearing is scheduled on the
$350 million DIP facility. The company filed for Chapter 11 protection
Monday because of mounting asbestos litigation. (TB)
9:41 (Dow Jones) Conservative movement at the FDA leads CSFB analyst David
Maris to push the launch of Inhale Therapeutic's (INHL), Pfizer's (PFE) and
Aventis' (AVE) inhaled insulin off a year until 2003. As a result, Maris is
lowering his revenue and earnings forecasts for Inhale to a loss of $1.38 a
share on revenues of $72 million from a loss of 75 cents on revenues of $117
million in 2002 and to a loss of 51 cents a share on revenues of $176
million from earnings of 4 cents on revenues of $209 million in 2003.
However, he notes that a regulatory filing and shortened review is possible
by the end of the year. (BMM)
9:34 (Dow Jones) Nymex crude futures expected to open 50 cents a barrel
lower, extending overnight losses posted after API reported across-the-board
builds in U.S. petroleum inventories. DOE/EIA data show no change in crude
levels, but traders are focusing on EIA's report of another big build in
gasoline stocks. Gasoline futures fell to a new 2001 low in overnight trade,
75.40 cents a gallon. August crude, down 51c at $26.47 on Access, has
support at $25.75-$25.85; resistance is seen at $27. (MXF)
9:26 (Dow Jones) UBS Warburg analyst Don Young says Palm (PALM) management
has gone from being way too bullish on outlook for demand to way too
bearish. That said, he adopts management's 10%-15% year-over-year unit
guidance even though he thinks 25%-30% is a more likely range. Also says
Palm's liquidity "crisis" is over, as sales momentum coincides with improved
asset management and better cash visibility. Reiterates strong buy, $11
price target. (TG)
9:20 (Dow Jones) The MBA refi index fell 6% to 1497.8 for the week ended
June 22. Aside from those holiday-shortened weeks, the reading is the lowest
level so far this year, indicating a waning refinancing wave. The purchase
index also fell 5.8% to 332.4 for the week. (JSX)
9:04 (Dow Jones) Merrill's Henry Blodget sees another "solid" quarter for
Amazon.com (AMZN) when company reports 2Q on July 23. He's comfortable with
cash position, sees revenue in consensus range of $650M-$700M, and says
there is some upside potential to operating loss view of 20c a share. Keys
to look for in quarter are revenue, operating EPS, a strong balance sheet,
and company's comfort with revenue targets and reiteration of its ability to
hit operating profit in 4Q. Reiterates accumulate rating. (TG)
8:51 (Dow Jones) Reg FD has something to do with this, but it's notable
nonetheless: First Call says 587, or 66%, of the 886 companies providing
earnings previews this quarter said they would miss views. In the year ago
quarter, according to Anderson & Strudwick's Kent Engelke, 146 firms, or
55%, of preannouncements were negative. By the way, quarterly profits are
expected to fall by 17% - three months ago that number was at 6.3%. (TG)
8:40 (Dow Jones) Merrill analyst Judah Kraushaar said the announcement by
his employer that it will miss 2Q expectations will cause angst among
investors in the securities industry, but that's no reason to be down on the
sector. Kraushaar feels "no need to meaningfully alter our estimates for
Merrill Lynch's major peers at this time," adding he's already factored into
his estimates a deterioration in equity trading revenue in the second and
third quarters, flat debt trading and no material recovery in investment
banking fees before the fourth quarter. (CUB)
8:34 (Dow Jones) Lehman's Dan Niles says keep avoiding Xilinx (XLNX) and
Altera (ALTR) until there is clear evidence of positive turn in demand. Says
North American channel remains weakest, but Europe is starting to roll over.
Estimates come down on both, and he keeps market perform rating on each.
(TG)
8:30 (Dow Jones) The waiting is over. All of the numbers have been digested,
the opinions have been formed, and now it's time to pull the trigger. Yes,
after all of the speculation, the time has come for the NBA draft. Before
that, though, there's the small matter of a rate cut and, more importantly,
a clue on the direction of future monetary policy. Considering the market
hasn't told the Fed what to do, this one will be fun. The guess here is a
quarter point, with some accommodative language. And don't forget, Greenspan
will be delivering an address on energy tomorrow night in Chicago.
Meanwhile, Xilinx (XLNX) and Vitesse (VTSS) were among the bigger tech names
to warn. Dean Foods (DF) tops views, Disney (DIS) cut at Goldman. Stock
futures flat. (TG)
(END) DOW JONES NEWS 06-27-01
11:00 AM
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