From Briefing.com: 7:13PM Weekly Wrap :
Accounting worries resurfaced today and put a damper on what had otherwise been a constructive week... IBM slid nearly 5% on a New York Times Story which questioned big blue's accounting of a recent transaction, suggesting that the company should have reported the proceeds as a one-time gain rather than as intellectual property income and licensing royalties... Report was not the first to question IBM's accounting methods, but it came at a time when investors are particularly sensitive to even the hint of a problem.
Another tech company, Nvidia (NVDA), also got whacked to the tune of 7.7%... Despite posting much better than expected earnings on Thursday night, investors dumped the stock on news that company had embarked on an internal accounting probe following an inquiry by the SEC... SEC questioning whether company improperly shifted revenue from Q1 2001 into quarters two and three... How company recorded reserves during Q400 and Q101 is also under review.
Debt concerns also continued to plague the market, with this week's high profile downgrade being Gap Inc. (GPS)... S&P and Moody's downgraded company's debt to junk status due to concerns over slowing sales, sluggish economy and challenging retail environment... Briefing.com found it a bit ironic that the downgrade came in the very week that Retail Sales rose by a much stronger than expected 1.2%.
Not all the news was bad, however... Dell (DELL) reported solid earnings; Halliburton won a temporary stay on nearly 200,000 asbestos claims; Kulicke & Soffa (KLIC) noted stronger than expected demand; and Applied Materials (AMAT) posted decent earnings.
Market internals also improved during the week, with advancers generally outlegging decliners and new highs outpacing new lows.
Basically, market torn between s/t anxiety over accounting/debt issues on the one hand and encouragement over the l/t improvement on the economic/earnings fronts... Look for the tug-of-war to continue in the holiday shortened week ahead.
Earnings reports of note include Wal-Mart (WMT), DaimlerChrysler (DCX), Aetna (AET), JC Penney (JCP) and BEA Systems (BEAS)... Meanwhile, look for more good economic news out of the Housing Starts, Claims and LEI data.
Close Dow -98.95 at 9903.04, S&P -12.30 at 1104.18, Nasdaq -38.18 at 1805.19: The major averages finished lower on Friday as weaker than expected consumer confidence data fueled sell pressure. Specifically, the University of Michigan consumer sentiment index fell to 90.9 in February from 93.0 in January. The current conditions component of the index -- which measures consumer attitudes about their present financial condition -- rose to 97.2 in February from 95.7 in January. Yet at the same time the expectations index, which tracks attitudes about the year ahead, fell to 86.8 this month from 91.3 in January. The consumer confidence numbers were surprising to many investors as data was released earlier in the week indicating Retail Sales excluding autos rose a strong 1.2%... Separately, the Producer Price Index or PPI edged higher by 0.1% in January versus the consensus estimate for a 0.2% increase. The core rate, excluding food and energy prices, dropped 0.1% versus the consensus expectation for a 0.1% rise. Yet with weakness in the economy and a lack of pricing power at present, inflation is not a primary concern for investors, limiting the impact of Friday's PPI report...
On the earnings front, Dell Computer (DELL) traded lower after reporting an in line fourth quarter profit of $0.17 per share. On the topline, Dell reported revenues of $8.06 billion which edged out the consensus expectation for sales of $7.85 billion. Going forward, Dell sees first quarter earnings of $0.16 per share which matches the current consensus estimate. Nonetheless, investor enthusiasm was held in check as the company expects first quarter unit volume and shipments to be down 3-5% on a sequential basis...
Next week, investors are looking towards events on both the economic front and the corporate earnings schedule. On the economic front, look for the Consumer Price Index or CPI to be released on Wednesday. On the earnings front, look for Wal-Mart (WMT) and Medtronic (MDT) to report on Tuesday, followed by DaimlerChrysler (DCX) which is set to report on Wednesday. For a complete list of what to expect please visit Briefing.com's Earnings Calendar and Economic Calendar.DJTA -0.1%, DJUA -1.0%, Nasdaq 100 -2.6%, Russell 2000 -0.3%, SOX -1.8%, S&P Midcap 400 -0.9%, XOI +0.4%, NYSE Adv/Dec 1550/1539, Nasdaq Adv/Dec 1415/2050
5:42PM NVIDIA put on credit watch with negative outlook by S&P (NVDA) 57.35 -4.81: -- Update -- After the close, S&P put NVDA's debt on review with a negative outlook. Stock traded down to 56.10 after hours following this news, but it should be noted that company is not heavily dependent on debt; yesterday's report showed $300 mln in convertible notes outstanding and $791 mln in cash.
1:26PM Cabot Micro Intraday -- Technical -- (CCMP) 57.31 -1.98: -- Update -- Highlighted the potential for a breakout of its two week range yesterday which was seen late in the session and extended today. Lower end of target zone at 57 has held thus far but intraday need a recovery back through 57.90/58 to improve tone. Failure leaves the door open to fresh pullback lows with the next support in the 56/55.50 congestion area.
12:32AM Xilinx upgraded by Robertson Stephens; co expected to raise guidance (XLNX) 39.32 -0.31: Has held up relatively well on an intraday basis on a generally weak day in tech. Contributing to relative strength is an intraday upgrade by Robertson Stephens to STRONG BUY from Buy. According to firm, base station manufacturers have begun placing orders again. Firm expects XLNX to raise guidance on March 5th. Robertson Stephens increasing its '02 estimate to $0.28 from $0.27 and '03 to $0.47 from $0.40.
9:46AM Kulicke & Soffa says demand is better than expected (KLIC) 16.63 +0.55: -- Update -- We are hearing that KLIC just concluded a very bullish conference call, during which they indicated that demand is looking stronger than expected. Watch peers TER and CMOS for a possible positive reaction to the news.
9:41AM Lehman: digital set-top makers threatened by slowing cable subs : Lehman said in a pre-open note that the rate of cable subscriber growth will slow, which should represent a challege to digital set-top box makers such as SFA and MOT. Briefing.com notes that any slowdown in this group may also delay BRCM's return to profitability as well.
9:16AM NVIDIA defended by TWP; inquiry may present buying opportunity (NVDA) 62.16: -- Update -- Thomas Weisel believes SEC inquiry presents likely buying opportunity. Firm believes that revenues in question were from the development of Xbox and co acted more conservatively than necessary given the Xbox was unannounced and unknown if it was to succeed. Items in question were less than 5% of sales and none extend to the present... NVDA shares have rebounded to $59.15 in pre-market.
7:34AM Kulicke & Soffa plans to file $250 mln shelf registration (KLIC) 16.08:
7:14AM CSFB upgrades memory, microcontroller stocks : CSFB upgrades ATML, CY, IDTI, MCHP, MU, and SSTI to BUY from Hold; firm believes that memory and microcontroller stocks are at or near a bottom in quarterly revs, channel checks indicate severe average selling price declines in flash and EEPROM are likely over, quoting activity for these products has increased considerably, lead-times for some high-density flash and multi-chip offerings are already increasing, and inventory at major OEMs is down significantly.
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