pdated: 12-Jul-01
Last Update: 11:15 ET
Trading Points
Comprehensive coverage on Short Stories, analysis on Story Stocks
11:15 ET Micron Tech (MU) 39.44 -0.06 (-0.2%): -- Update -- Company issues press release announcing intention
to raise approx. $450 mln the issuance of warrants to purchase its common stock.
11:09 ET Sector Watch: Biotech : -- Technical -- Index (BTK at 514) working on a three day losing streak with
IDPH news (-12.7% on weaker sales) not helping. Index off as much as 9.7% during this period. Some strength
noted (IMNX +3.6%, BTGC +2.3%, CRA +1.8%, MLNM +1%, AFFX +0.8%) but index needs to sustain a run
through resistance near 518 to improve short term tone. Failure leaves vulnerable to supports at 503/500 and 495. If
breakdown does occur, technicals suggest a solid bounce from support levels is possible.
11:00 ET Floor Talk : Micron Technology (MU 39.34 -0.16) shares have fallen precipitously over the past 20
minutes. Traders attributing sell off to rumors that the DRAM chip maker will price a $450 mln warrant offering tonight.
10:46 ET XO Comms (XOXO) 1.64 +0.04 (+2.5%): Inks a three-year service contract worth more than $10 mln
with MAXIMUS (MMS) to provide local and long distance communications services in each of MAXIMUS' 200+
U.S. locations.
10:31 ET Yahoo! (YHOO) 18.10 +1.07 (+6.3%): -- Update -- Technical -- Edging off high after probing 20/50
day simple ma between 18.4/18.9 in wake of earnings report. Initial support at 17.8/17.6 followed by 17.45. YHOO
has reacted to above averages on numerous occasions during the near three month consolidation with sustained action
above needed to bolster the outlook for at least a retest of the range top near 21.
10:19 ET UAL Corp (UAL) 34.51 -0.05 (-0.1%): US Airways rejects proposal from UAL that merger agreement
between the companies be mutually terminated; asks for a formal response from the DOJ. In keeping with its
obligations under the merger agreement, UAL will continue to pursue the transaction during this period.
10:16 ET Microsoft (MSFT) 71.03 +4.53 (+6.8%): -- Update -- Technical -- Tech bellwether gaps higher on sales
news but runs into a solid short term resistance in the 71.6/72 area (62% retracement of recent slide and chart
barrier). First support at 70.65/70.60 with a secondary short term floor between 69.9/69.6.
10:12 ET PanAmSat (SPOT) 35.51 -1.73 (-4.6%): -- Update -- Merrill Lynch lowers long-term rating to
ACCUMULATE from Buy; cites reduced earnings visibility, the reduction of growth from NET/36 and strengthened
competition in the global FSS marketplace.
10:01 ET KLA-Tencor (KLAC) 50.51 +2.55 (+5.3%): -- Technical -- Extends initial advance but now facing a
solid short term resistance in the 51/51.35 area. Possible for some consolidation near this barrier to regroup. Initial
intraday supports are at 49.8/49.2. Next resistance at 52.5/52.6.
10:00 ET Sector Watch: Chips : Philadelphia Semiconductor Index (SOX) surges 5.5% in early trade. Advance
being paced by communications chip stocks, with particular interest in wireless telecom suppliers following Motorola's
relatively upbeat comments: RFMD (+19%), PWAV (+15%), TQNT (+15%), SAWS (+14%), ANAD (+13%).
09:55 ET Cisco Systems (CSCO) 17.67 +0.97 (+5.8%): -- Update -- Technical -- Surges off the open but stymied
near 17.8 resistance (July 10 high, 20 day simple ma). Initial resistance on a break near 18.1 with a trendline off the
May/June highs at 18.6.
09:49 ET Nasdaq Composite : -- Technical -- Gaps higher but currently holding below a chart barrier in the
2040/2045 area. Momentum and indicators in the bull camp but work still needed to suggest that the this is more than
a bounce within a multi-month consolidation. Intraday supports are in the 2025/2020 area followed by 2010. Next
solid resistance comes into play near 2060 (gap/retracement).
09:38 ET Interwave Comm (IWAV) 0.70 +0.01 (+1.4%): Announced that in partnership with Hitron Technologies,
company has signed a multi-phased, multi-million dollar agreement with Taiwan's largest cellular operator. Chunghwa
Telecom will use interWAVE's GSM Network-In-A-Box cellular solution to establish a cellular infrastructure that
connects Taiwan's island communities into the public service telephone network.
09:38 ET Sector Watch : Strong start as expected with the software (+4.9%), Internet (4.7%), networking
(3.2%), semiconductor (+3.1%) and computer-hardware (+2.9%) sectors pacing the way higher on the back of
favorable sales/earnings news. Disk drive, fuel cell and broker/dealer also on the rise. Losing sectors being led by oil
service, biotech, gold, drug and utility issues.
09:26 ET Merrill Ups BJ/COST : Merrill Lynch upgrades shares of membership warehouse clubs BJ's
Wholesale (BJ) and Costco Wholesale (COST) to NT BUY from Accumulate.
09:23 ET Pixelworks (PXLW) 22.27: Stock ticks up 10% in pre-market following announcement that Sanyo has
selected the Pixelworks' ImageProcessor ICs and software to power a full range of advanced display products.
09:20 ET Wet Seal (WTSLA) 29.75: Retailer reports a 0.6% decline in June comps and reduces Q2 outlook to
$0.20-$0.23 (consensus $0.27)
09:18 ET FDA Chatter : Sources at Cowen telling us that the firm has mentioned reports that Transkaryotic (TKTX)
general counsel Michael Astrue is on the short list to be the next FDA Commissioner; Cowen believes this would be
good news for the industry.
09:12 ET McAfee.com (MCAF) 12.10: JP Morgan upgrades to LONG-TERM BUY from Market Perform as
company hits profitability; introduces FY02 estimates of $75.8 mln and $0.19 EPS, says estimates are conservative.
Stock trading up to 13.25 pre-market.
09:10 ET Gap Inc (GPS) 25.90: Reports a 7% decline in June same-store sales. Company says June comps were
in-line with its expectations, but margins fell below plan due to aggressive markdowns.
09:07 ET Yahoo! (YHOO) 17.03: -- Correction -- Earlier 8:53 comment should have said Wit SoundView, not
Robertson Stephens. However, Robertson Stephens made similar comments to the effect that Yahoo is expensive and
online advertising remains weak.
09:06 ET Gapping Up : IMNR +27% (positive study data on HIV treatment)... NMTC +15% (tops estimates, raises
guidance)... RFMD +15% (benefiting from positive comments by MOT)... SONS +13.5% (tops estimates, contract
win)... TXCC +12% (also helped by MOT comments)... CMGI +12% (appoints former Bertelsmann exec to CFO
post)... YHOO +9% (earnings)... MSFT +6.5% (raises rev. guidance).
09:01 ET Tenet Healthcare (THC) 54.99: Following earnings report, Salomon Smith Barney upgrades to BUY
from Outperform with a $67 price target, says it's late but not too late to get into stock. ABN AMRO reiterates its
BUY rating and ups FY02 EPS estimate to $2.80 from $2.60; says company can sustain mid-high teens growth rate.
08:58 ET Sonus Networks (SONS) 18.93: -- Update -- Prudential estimates that BellSouth (BLS) deal could
translate into revenues of $3-$5 mln in Q4. Calls this an important RFP win in which LU, CSCO, and NT were
competing.
08:53 ET Yahoo! (YHOO) 17.03: -- Update -- Hearing from sources at Wit SoundView that the firm remains
cautious on YHOO, sees little upside to estimates given industry trends, and continues to feel the company is
overvalued relative to its media peers.
08:51 ET Motorola Fallout : Bear Stearns' Ripple Effect comments on implications of MOT report; says biggest
surprise was orders and revenue weakness in CATV business, which could be disappointing news for BRCM, TUNE,
ANAD, SFA, and HLIT. Improvement in handset business could be bad for competitors NOK and ERICY as MOT
is gaining share, but good for AHAA and QCOM.
08:51 ET SanDisk Corp (SNDK) 23.04: Tokyo District Court rules in favor of SanDisk K.K by denying a petition
filed by Mitsubishi Denki seeking an injunction to stop the sale of CompactFlash memory cards sold by SanDisk K.K.
in Japan.
08:48 ET Atmel Corp (ATML) 10.89: Morgan Stanley downgrades to NEUTRAL from Outperform following
earnings warning last night. Believes that weaker demand rather than significantly lower pricing contributed to most of
the q/q revenue decline. However, believes that pricing pressure will likely escalate in the next couple of qtrs.
08:41 ET Hot Topic (HOTT) 31.49: Trades off 3% in pre-market after retailer reported a disappointing 1.8%
increase in June same-store sales. Company remains comfortable with Q2 estimate of $0.18.
08:36 ET StorageNetworks (STOR) 10.51: Dain Rauscher Wessels downgrades to NEUTRAL from
Buy-Speculative; cites channel checks which confirm weakening demand and lengthening sales cycles, pricing pressure,
and potential negative impact from channel partner EXDS.
08:35 ET Motorola (MOT) 15.67: -- Update -- On call, company said it expects overall industry handset shipments
of 400-425 mln in 2001, lower than the 425-475 mln estimated on its Q1 conference call.
08:33 ET Motorola (MOT) 15.67: -- Update -- Company expects sales to increase by approximately 5%
sequentially in Q3 to $7.898 bln vs consensus of $8.522 bln...The company expects to incur a loss of several cents per
share in Q3 vs Multex consensus of $(0.01). For Q4, Motorola expects another sequential increase in sales of
approximately 5%, and expects to be slightly profitable vs consensus of $0.10.
08:32 ET L-3 Comms (LLL) 68.00: Salomon Smith Barney upgrades to BUY from Outperform with a $94 price
target; attributes recent sell-off to concerns about budget surplus erosion impacting defense spending, Salomon
disagrees and expects public support to drive higher defense spending.
08:32 ET Economic Data : Initial claims rose 42K to 445K in the July 7 week, far above the 390K consensus;
should note however that this was for the holiday week and that the Labor Dept often has difficulty seasonally adjusting
data for the holidays; wouldn't read much into this number as a result.
08:23 ET General Electric (GE) 44.61: Company reports Q2 earnings of $0.39 a share, in line with consensus.
Company sees 2001 earnings exceeding $1.45 (consensus $1.47).
08:23 ET Motorola (MOT) 15.67: -- Update -- On conference call, book-to-bill for PCS segment was
1.15-to-1...company is making market share gains as market share for shipments creeped over 15% for the first time
in a while, however, average selling prices were 15% lower sequentially...orders were up 4% sequentially...financial
outlook to follow.
08:21 ET Dow Jones (DJ) 56.95: Posts Q2 net of $0.52 a share, 5 cents above consensus, vs yr-ago EPS of $1.06.
Revenue fell 18% to $484 mln. Anticipates Q3 earnings in the range of $0.20-$0.30.
08:21 ET Opening Indications : Strength in the futures trade persists as the S&P futures, at 1200, are 14 points
above fair value; meanwhile, the Nasdaq 100 Pre-Market Indicator is up 69 points as traders have been encouraged
by the positive sales/earnings news from the likes of MSFT, MOT, YHOO, and SONS
08:20 ET Pepsi Bottling (PBG) 43.53: ABN AMRO downgrades to HOLD from Add; expects sustained increase
in US price competition led by CCE, and does not think that Gatorade will have a meaningful impact on PBG over the
next two years.
08:14 ET Argentina : Argentina's FRB bonds are getting hammered this morning, trading off 6 pts, and the Brazilian
real is under pressure at the open; continued LatAm worries are keeping a bid to US Treasuries this morning and
prompting concerns about the sustainability of the equity rally.
08:14 ET PanAmSat (SPOT) 37.24: -- Update -- Company sees Q3 earnings of breakeven plus/minus $0.02 vs
consensus of $0.13; puts full yr EPS at $0.08-$0.14 vs consensus of $0.21.
08:09 ET PanAmSat (SPOT) 37.24: Company reports Q2 net of $0.02 a share, 2 cents above consensus. SPOT
revises full yr revenue guidance to a range of $825 to $835 mln from $950 mln to $1 bln. Attributes change in guidance
primarily to a reduced forecast of approximately $100 mln in sales-type lease revenues for the balance of 2001.
08:05 ET AutoZone (AZO) 42.11: Merrill Lynch upgrades to near-term and long-term BUY from near-term Neutral
and long-term Accumulate with a $55 price target; raises estimates by $0.08 this year and $0.15 next year, says
moderation in DIY demand is over, and new initiatives better leveraging existing customer traffic. Also upgrades
O'Reilly Automotive (ORLY 28.75) to near-term and long-term BUY from Accumulate with $35 target.
08:05 ET Rowan Cos (RDC) 20.57: Banc of America downgrades to BUY from Strong Buy after company
reported Q2 earnings that were a penny shy of consensus. Firm reducing Q3 est by 21% to $0.38 from $0.48, 2001
by 16% to $1.30 from $1.55 and 2002 by 36% to $1.50 from $2.35.
07:58 ET QUALCOMM (QCOM) 56.45: Goldman Sachs previews QCOM's quarterly results; says that while
there is risk to this and next qtr's numbers, news flow and business is likely to improve exiting the qtr and the stock
should break out of its trading range once near-term concerns fade; sees encouraging signs about 3G deployment plans
and equipment contracts.
07:55 ET AnnTaylor (ANN) 31.40: Reports a 12.3% decline in June same-store sales; says customers did not
respond well to an over-assortment of bare tops. Company lowers Q2 outlook to $0.20-$0.24 from $0.28-$0.32 and
full yr to $2.16-$2.20 from $2.24-$2.28.
07:52 ET Yahoo! (YHOO) 17.03: -- Update -- Merrill Lynch analyst Henry Blodget upgrades YHOO to
near-term ACCUMULATE from Neutral with a price target in the mid-low 20s over the next 12-18 months; says
company is stabilizing, management turnover has slowed, and costs are under control.
07:51 ET Opening Indications : Little change in the bullish bias as the S&P futures, at 1198, are 12 points above fair
value while the Nasdaq 100 futures, at 1723, are 70 points above fair value... Cash market set for a decidedly positive
open.
07:48 ET IDEC Pharm (IDPH) 61.48: Stock plunged to 45 after hours yesterday following release of lower than
expected Rituxan sales; this morning, Banc of America Securities says $180 mln Rituxan sales was below its $206 mln
forecast, and cuts FY01 EPS estimate to $0.60 from $0.70 and FY02 to $0.95 from $1.09; maintains STRONG
BUY as Rituxan expectations now more realistic.
07:43 ET Agilent Tech (A) 26.87: Bear Stearns upgrades to ATTRACTIVE from Neutral with a $40 price target
on a lowered FY02 estimate of $1.33 (previously $1.76); says the upgrade is based on valuation only and should not
be interpreted as suggesting that the fundamentals have changed in any significant positive manner.
07:41 ET Microsoft (MSFT) 66.50: CSFB upgrades to STRONG BUY from Buy based upon 1) expectations for
an improved PC market over the next 6-12 months, 2) higher ASPs from Windows 2K, 3) significant new product
cycle, 4) robust server-side opportunities, 5) near-term revenue & longer term profit contribution from XBox, and 6)
higher recurring revenue component under new subscription licensing model. Raises target to $100 from $75.
07:38 ET Abbott Labs (ABT) 50.18: Reports Q2 net of $0.45 a share, in line with consensus. Reaffirms full yr
outlook of $1.88 -- sees Q3 net of $0.44 and Q4 of $0.52 vs mean estimates of $0.45 and $0.51 for the periods.
07:33 ET Genentech (DNA) 42.75: ABN AMRO downgrades to ADD from Buy following what firm views as
disappointing sales of Rituxan for the latest qtr. Expects near-term weakness in the stock as Rituxan sales may not
meet some expectations that are in the marketplace.
07:26 ET Opening Indications : This morning's fair value figures -- S&P 500 fair value:1186; closed at fair value.
Nasdaq 100 fair value: 1653; closed 7 pts above fair value. Current indications: S&P 500 futures are +13.7, or 13.7
pts below fair value. Nasdaq 100 is +74.0, or 84 pts above fair value... While several major tech companies
issued comments that are being interpreted as positive (SONS, MOT, YHOO), Microsoft revenue guidance is
the major catalyst behind the strength in the U.S. futures and global equity markets.
07:21 ET SmartForce (SMTF) 29.72: Reports Q2 earnings of $0.06 a share, a penny above consensus. Raises
2001 earnings target range to $0.30-$0.32 (consensus $0.30) and reaffirms revenue and earnings targets for 2002.
Separately, SMTF announces agreement with KPMG Consulting to co-develop a customized e-Learning solution for
customers implementing e-Procurement strategies based on Ariba B2B eCommerce Solutions.
07:17 ET Wireless Stocks Started : Robertson Stephens initiates coverage of the wireless services industry. Started
with Strong Buy ratings were PCS, NXTL, and LWIN. Firm initiates AWE, USM, and WWCA with Buy ratings.
Believes stocks could see some momentum if they execute against their expectations, provide some clarity regarding
their upgrade to the next generation wireless networks, if 2.5G services start to become real later in 2001, and if the
current spectrum cap is lifted.
07:10 ET Polaroid (PRD) 1.92: Receives waiver of loan covenants from its bankers. Hires Dresdner Kleinwort
Wasserstein and Merrill Lynch & Co. to assist the company in an exploration of strategic alternatives, which could
include a sale of assets, a merger or sale of the company, and/or a strategic partnership. PRD said it will not make
certain upcoming interest payments on its bonds.
07:03 ET Napro Biotherapeutics (NPRO) 10.60: Company overturns Bristol-Myers Squibb (BMY) European
patent relating to methods of administering paclitaxel, the active ingredient in BMY's anticancer drug, Taxol. The
European Patent Office ruled that this patent is now invalid.
06:55 ET Enron Corp (ENE) 49.10: -- Update -- Plans to significantly reduce its broadband cost structure to match
the reduced revenue opportunities currently available.
06:51 ET Enron Corp (ENE) 49.10: Company reports Q2 net of $0.45 a share, 3 cents above consensus, vs yr-ago
EPS of $0.34. ENE confident in achieving consensus earnings of $1.80 in 2001 and issues guidance of $2.15 for 2002
(consensus $2.12).
06:43 ET First Union (FTU) 33.16: Reports Q2 earnings of $0.66 a share, 3 cents above consensus, vs yr-ago net
of $0.73.
06:37 ET Tyco Intl (TYC) 50.50: Company reaffirms both Q3 and full year ests; company says "it is comfortable that
it will at a minimum meet expectations for the third quarter and, based on current business trends, will achieve its stated
targets for the full year.
06:23 ET U.S. Markets : S&P futures trading at 1202.50, 16.5 points over fair value, Nasdaq 100 futures trading at
1739.50, 86.5 points over fair value. The 30-year bond is down 10 ticks at 5.707%. The dollar is firmer against both
the yen and the euro.
06:22 ET European Markets : FTSE +1.90%, DAX +1.87% -- European stocks higher with most bourses up more
than 1.5% today. Markets up for the first time in eight sessions. Support coming from better than expected news from
both Microsoft and Motorola. Closer to home, France’s STMMicroelectronics said that profits and sales should
increase in the fourth quarter. Banks also faring well, reversing yesterday’s losses with the Goldman upgrade of
Deutsche Bank. Blue chips such as Nokia, SAP, Marconi and Alcatel all seeing better buying interest. Diageo hit by
weak sales at its Burger King unit on the back of dampened beef demand. Plenty of skepticism surrounding the
sustainability of today’s gains. Fund managers still hesitant to put cash to work.
06:21 ET Asian Markets : Nikkei +3.36%, Hang Seng +1.06% -- Asian stocks sharply higher on favorable news
out of the US from the likes of Microsoft, Motorola and Yahoo. Japan posted its biggest one-day gain in two months.
Electronics machinery makers pulled the Nikkei higher with Sony tacking on almost 6%, while Hitachi, NEC and
Toshiba all posted impressive gains. Brokerage also fared well, but exporters were hit by the recent strength in the yen.
Korea jumped more than 1% as semiconductor standouts Samsung Electronics and Hynix Semiconductor each rose
roughly 4%. Hong Kong bounced from a three-month low with computer maker Legend Holdings gaining more than
5%. Taiwan and Singapore rose 1.9% and 0.5% respectively. |
