It's back: Tech conference madness
But beware random and panic buying ahead of events
By Bambi Francisco, CBS.MarketWatch.com
Last Update: 2:26 PM ET Jan. 4, 2002
SAN FRANCISCO (CBS.MW) -- Some things haven't changed, like seemingly random stock buying before big tech powwows, and the appearance of the word "Internet" in the title of many an investment banking conference.
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Morgan Stanley opens its Internet, Software and Networking Conference on Monday at the Phoenician Resort in Scottsdale, Ariz. It is one of the first i-bank tech gatherings in 2002. But also scheduled for next week is the Macworld Conference & Expo, to be held at the Moscone Center in San Francisco. There, one question will likely be, "So, how many of those IPods sold during Christmas?" And the Consumer Electronics Show kicks off Monday in Las Vegas.
Ahead of next week's events, Internet and tech stocks have been on a roll, partly due to evidence of a recovering economy. Of course, many people remain jobless. The unemployment rate in December increased two-tenths of a percentage point to 5.8 percent, the highest rate since April 1995. See Economics & Politics.
'Panic buying'
Tech stocks have been enjoying solid advances amid optimism that there won't be any bad news at next week's conferences, lest presenting executives be forced to watch a sophisticated investment crowd transform itself into an angry mob, observed Thomas Berquist, an analyst at Goldman Sachs.
Consider Peregrine. The software company issued an earnings warning Thursday, two trading days ahead of its allotted presentation time at the conference on Monday. Shares plunged 36 percent on the news. Berquist predicted that other presenting software companies will also opt to share disappointing news before next week.
With few warnings spilling in, though, analysts are feeling confident companies will meet or beat earnings. "Increased deal activity coupled with aggressive model reductions over the course of 2001 sets the stage for most if not all of our covered companies to at least meet and in some cases exceed December estimates," said Scott Phillips, who covers e-business analytic stocks at Merrill.
While analysts are giving upbeat outlooks, investors appear willing to bet on good news on the earnings front as well. Or they're willing to take any catalyst to get the group moving. Or it's just another day of dart throwing.
"There is a bit of random buying going on," observed Berquist. Indeed, WebMethods (WEBM: news, chart, profile) added 16 percent to $21.96, following Thursday's 17 percent gain after the company formally announced a contract with a government agency that had been a paying customer since the third quarter, according to Berquist. WebMethods said the contract was signed in September of last year.
Peter Cohan of Peter Cohan & Associates suggested that there is some "panic buying" under way. "If such panic buying ensues, watch out for a rapid sell-off at the end of March," he said.
Look no further than Siebel Systems (SEBL: news, chart, profile), one of the favorites in the sector. Shares traded as high as $34.25. They traded off their highs in recent trading.
"Given the ongoing allocation into tech, we're refocusing on our favorite large cap names," wrote Bob Austrian, an analyst at Banc of America Securities, who reiterated his "buy" rating on Siebel. The stock valuation is at 60 times '02 estimates, but for the first time in "a while" the company is expected to meet or exceed quarterly estimates. More importantly, Austrian suggested estimates for 2002 will likely go up. Siebel reports in mid-January.
Shares of Ariba (ARBA: news, chart, profile) sprinted 17 percent on Thursday, and rose another 7 percent in early trading on Friday. Ariba CEO Bob Calderoni is slated to present in Monday's afternoon session. Shares were down 1 percent in recent trading.
BEA Systems (BEAS: news, chart, profile) ran up 7 percent to $18.20 for a total of 17 percent since the start of the year. BEA's CEO speaks on Tuesday.
Over-to MSN
And in the pure-play Net media group, Yahoo's shares have topped $19. Monday's presenters include Terry Semel, CEO of Yahoo (YHOO: news, chart, profile). But Yahoo came under pressure on word Overture (OVER: news, chart, profile) listings will be used by MSN. Yahoo struck a deal late last year to include Overture classified listings on its site. The Overture services could add between $3 million and $5 million in incremental profit for Yahoo in the fourth quarter, according to Justin Baklauf, who took over coverage of the pure-play Internet companies at Merrill Lynch after Henry Blodget resigned.
Also a topic of discussion will be Yahoo's entry into the job placement market. Yahoo's recent bear-hug embrace managed to easily woo HotJobs away from the arms of six-month suitor TMP Worldwide. TMP Worldwide's (TMPW: news, chart, profile) chief operating officer is expected to speak Tuesday.
Homestore.com's (HOMS: news, chart, profile) Stuart Wolff is expected to face investors Tuesday morning in what could be a tense moment. Homestore.com shares remain halted after first being suspended Dec. 21 pending additional information regarding a company audit (see related Net Stocks story). On Wednesday, Homestore.com said it's restating sales related to barter transactions that account for roughly 25 percent of total revenue generated during the first three quarters of 2001.
The Accounting Principles Board Opinion No. 29 governs barter and allows barter revenue to be recorded under certain conditions. As part of a barter transaction, an expense must be recognized as well for the goods or services received. The company was not able to comment on the details of its audit.
Priceline.com (PCLN: news, chart, profile) is on tap to present Monday. Shares inched up to $6.01 in Friday's trading. Travelocity (TVLY: news, chart, profile) gave up 9 percent to $24.95 after the company said fourth-quarter sales would come in lower than had been expected.
Travelocity lost 10 percent to $24.81. Other movers included CMGI (CMGI: news, chart, profile), up 21 percent to $1.94.
So much for Reg FD
In October 2000, Regulation FD, the rules adopted by the Securities and Exchange Commission to address selective or full disclosure, went into effect. Since then, many investment companies have invited reporters to formerly exclusive tech events. The Morgan Stanley conference is closed to the media but available on Webcast. The investment bank would not comment on why media representatives were not invited.
Other companies have different policies. Through its invitations to the media and Webcasting, J.P. Morgan's media policy for its tech conferences is in compliance with Reg. FD.
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