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Technology Stocks : John, Mike & Tom's Wild World of Stocks -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (2489)	10/17/2001 1:29:06 PM
From: John Pitera	Respond to of 2850

INTC and IBM earnings: Tuesday After Hours price changes vs 4pm ET levels: On the heels of the closing bell, IBM (IBM 106 +4.15) got things rolling, having reported a Q3 profit of $0.90 per share that was a penny better than the consensus estimate. Revenues of $20.4 bln, though, came up a bit short of the First Call consensus estimate of $20.8 bln (Multex consensus $20.92 bln). On its call, IBM said Q4 will be challenging, but that the current EPS estimate for Q4 is reasonable (First Call consensus is $1.35)... Intel (INTC 25.45 +0.49) reported an in-line profit of $0.10 per share for Q3 on revenues of $6.5 bln that were ahead of the Multex consensus estimate of $6.389 bln, and its own expectation that revenues would be just below the mid-point of the $6.2-$6.8 bln range the company originally provided. Looking ahead, Intel provided the same revenue range for Q4, and that has tempered investor enthusiasm as it implies little, if any, sequential growth in what is traditionally the company's strongest quarter; related stocks include AMD, CPQ and DELL... Veritas Software (VRTS 31.99 +2.56) has been gaining ground after hours following a reassuring earnings report and an admission that it remains comfortable with Wall Street's expectations for Q4 (First Call consensus is profit of $0.13 per share and revenues of $356 mln; Multex consensus is $0.14 and revenues of $368.47 mln); related stocks include CA, EMC, HWP, IBM, CPQ, MSFT and SUNW... Rambus (RMBS 12.50 +0.78) is also on the move after it reported a fiscal Q4 net of $0.06 per share, $0.02 ahead of estimates, and announced a share buyback of up to 5 mln shares... Finally, Eli Lilly (LLY 73.75 -5.25) is getting knocked around after an FDA advisory panel split 10-10 on whether to recommend approval of the company's sepsis drug Xigris; a panel recommendation in favor of this key drug had been expected... For more detail on these, and other developments, be sure to visit Briefing.com's In Play, Earnings Calendar, and Guidance pages. Presently, the S&P futures, at 1104, are 4 points above fair value while the Nasdaq 100 futures, at 1427, are 16 points above fair value.-- Patrick J. O'Hare, Briefing.com 18:02 ET **** IBM (IBM) 101.85 -0.15: Apparently, Barry Bonds was not the only giant delivering in September. Big Blue allayed many fears in its conference call after the bell by reaffirming Q4 EPS guidance. Many analysts had expected the company to guide down, however, many analysts had already taken down Q3 and Q4 estimates over the past couple of weeks. Nevertheless, IBM posted a solid quarter in a difficult environment. Also, it gained market share in three important areas in Q3: services, high end servers and software.** IBM truly is an integrated solutions provider. Its diversification attracts customers as it provides a one stop shopping experience with a well capitalized company you know will be around. But it also spreads risk so that one weak area will not hurt profits too much. With IT spending in the condition it's in, it would be tough to argue against its business model....PC sales continued to weaken for IBM, although it had little impact on profits. In fact, overall gross margin increased this quarter to 36.2%, up 80 bp over last year....Bottom line: Company reaffirmed EPS guidance for Q4 and said if GDP improves as it expects next year, IT spending should increase 10%. We're a bit disappointed that Q4 revenue guidance and all 2002 guidance was omitted. However, considering that many had expected a substantial warning for Q4, this report was about as good as anyone could have expected. -- Robert J. Reid, Briefing.com

To: John Pitera who wrote (2489)	10/19/2001 11:29:33 AM
From: John Pitera	Read Replies (1) \| Respond to of 2850

ENE-- the saga......LP led to 1.2 billion equity reduction ------------- Enron Says Its Links to a Partnership Led to $1.2 Billion Equity Reduction By REBECCA SMITH and JOHN R. EMSHWILLER Staff Reporters of THE WALL STREET JOURNAL October 18, 2001 Enron Corp. shrank its shareholder equity by $1.2 billion as the company decided to repurchase 55 million of its shares that it had issued as part of a series of complex transactions with an investment vehicle connected to its chief financial officer, Andrew S. Fastow. Enron didn't disclose the big equity reduction in its earnings release issued on Tuesday, when the Houston-based energy giant announced a $1.01 billion charge to third-quarter earnings that produced a $618 million loss. But the company briefly mentioned it in a subsequent call with security analysts and confirmed it in response to questions Wednesday. As a result of the reduction, Enron's shareholder equity has dropped to $9.5 billion, the company said. In an interview Tuesday, Enron Chairman Kenneth Lay said that about $35 million of the $1.01 billion charge to earnings was related to transactions with LJM2 Co-Investment LP, a limited partnership created and run by Mr. Fastow. In a conference call Wednesday with investors, Mr. Lay said that the 55 million shares had been repurchased by Enron, as the company "unwound" its participation in the transactions. In the third quarter, the company's average number of shares outstanding was 913 million. According to Rick Causey, Enron's chief accounting officer, these shares were contributed to a "structured finance vehicle" set up about two years ago in which Enron and LJM2 were the only investors. In exchange for the stock, the entity provided Enron with a note. The aim of the transaction was to provide hedges against fluctuating values in some of Enron's broadband telecommunications and other technology investments. Mr. Causey didn't elaborate on what form those hedges took. Subsequently, both the value of Enron's stock and the value of the broadband investments hedged by the entity dropped sharply. As a result, Enron decided essentially to dissolve the financing vehicle and reacquire the shares. When Enron reacquired the shares, it also canceled the note it had received from the entity. In addition, Enron was receiving increasing criticism from analysts and major shareholders concerning the apparent conflict of interest involving the role of its chief financial officer in the partnership, from which he stood to make millions of dollars. In July, Mr. Fastow formally severed his connections to LJM. Mr. Fastow has declined to be interviewed. Given all the complexities of the LJM-related financing vehicle and the questions it raised outside the company, "the confusion factor wasn't worth the trouble of trying to continue this," Mr. Causey said. Enron downplayed the significance of the share-reduction exercise. Mark Palmer, an Enron spokesman, described it "as just a balance-sheet issue" and therefore wasn't deemed "material" for disclosure purposes. Jeff Dietret, an analyst for Simmons & Co. in Houston, said that a large reduction of equity could be "a flag for the rating agencies" because it could adversely affect a company's debt-to-equity ratio. Enron said Wednesday that as a result of the equity reduction, its debt-to-equity ratio rose to 50% from 46% previously. On Tuesday, after Enron reported its big quarterly loss, Moody's Investors Service Inc. put Enron's long-term debt on review for a possible downgrade. Moody's said the move was related to "significant write-downs and charges reflecting substantially reduced valuations" in several of Enron's businesses. In recent years, Enron had moved aggressively into broadband telecommunications and the water business, both of which failed to produce expected returns. Enron, which as of June 30 had $33.6 billion in current liabilities and long-term debt, has lately been attempting to shed assets to pay down debt.