From Briefing.com: Close Dow -130.50 at 10501.85, S&P -11.51 at 1154.07, Nasdaq -35.09 at 1862.03: The market was heading into the session with a minor head of steam but this was wiped out during pre-market action due to a weaker than expected February Retail Sales report and various negative research calls and warnings. Investors had grown accustomed to a steady stream of better than expected data and Retail Sales clearly bucked the trend. The market failed to shake off this negativity, with prices drifting slowly lower amid relatively low volume throughout the day. The calls prior to the open from the Street focused on the tech sector, with semi equipment downgraded by Morgan Stanley on valuation; stocks affected by the call were KLAC, NVLS, LRCX, ACLS, LTXX, TER and VSEA. Other tech-related negative news came from JP Morgan, with estimate cuts on Intel (INTC -4.9%) and Advanced Micro Devices (AMD -9.2%); Salomon was cautious on the PC sector; and Goldman Sachs' IT survey suggested that a significant spending rebound was unlikely. The focus during the afternoon was on the Greenspan speech which some traders read as being slightly less optimistic than his recent Congressional testimony. The Fed Chairman focused on potentially subdued growth in household spending going forward which, coupled with the weaker sales data, was enough to prevent any late session bargain-hunting from developing. Not surprisingly, the semiconductor sector paced the way on the downside but we also saw a sizeable retreat in networking, Internet, software, wireless and telecom. Outside of tech, there was a sharp reversal in oil services from early highs and declines in airline, paper, broker/dealer, banking and gold. Volume was on the lighter side and this along with the fact that the market had advanced substantially over the last few weeks may have contributed to the impact of the various reports/news. Market internals maintained a moderately negative bias throughout the day.DJTA -1.5%, DOT -3.3%, Russell 2000 -0.7%, SOX -3.9%, S&P Midcap 400 -0.6%, NYSE Adv/Dec 1393/1779, Nasdaq Adv/Dec 1497/2014
3:44PM Semi Cap Equip : Thomas Weisel is more positive on group in intraday note and reiterates their sector Overweight rating; names KLAC, AMAT, and AEIS as their favorite names. Believes the increasingly positive news flow (wafer prices are being raised, fact that UMC and TSM are suggesting that capex budgets will be revised upward) will be bigger focus than valuation concerns. Stresses sector is in classicial industry turn; recent data from VLSI Research suggests that the level of capacity "in the pipeline" at the foot of this cycle is at a much lower level than has been the case at the start of the last several cycles, all of which were relatively steep.
3:07PM Microchip (MCHP) 41.48 +1.05: Yesterday, MCHP announced that revenues for the Mar qtr are tracking toward $145 mln, at the high-end of co. guidance of 1-2% seq. growth. Analysts remain enthusiastic on stock. Bank of America believes fundamentals are improving and the EEPROM market is stabilizing; notes shares currently trade at a 23% discount to the group. Merrill Lynch expects the strong bookings environment to continue into the June qtr; believes co's consistent mkt share gains should allow it to continue to outperform the sector. Robertson Stephens bucks the trend and remains cautious on MCHP's near-term prospects, pending better visibility into the rate at which customer inventory levels are reduced and end mkt demand improves.
2:28PM Lucent Tech (LU) 5.10 -0.55: LU announced yesterday it now expects Q2 revenues to show a seq. modest-to-10% improvement basis vs. previously announced guidance of seq. improvement in the top line of 10-15%; analysts react cautiously to warning. In pre-open notes, Robertson Stephens believes the co. suffers from weak competitive product positioning, unattractive prospects for return on capital, and poor visibility. Goldman Sachs emphasizes (1) LU will mostl likely undergo another restructuring and (2) AGR.A is more closely tied to the co's liquidity issues than investors expect. Soundview is more optimistic and maintains their Buy rating on the stock and would by buyers in the $5-6 range.
12:51PM Novellus (NVLS) 50.00 -1.80: Banc of America positive on NVLS in mid-day note as firm's channel checks suggest that in the last two weeks order flow at Novellus has been very strong; thinks management will report orders at high end of guidance ($130-150 mln). Firm notes that NVLS is at high end of a trading range, and would accumulate in $40-45 range. Stock is rated Buy with long-term target price of $60; moving estimates higher due to improving outlook (new FY02 EPS estimate $0.17; FY03 estimate $1.20); moving break-even up one quarter to June '02 (current Multex consensus $0.02 loss).
6:25PM Lucent Tech $1.75 bln convertible priced (LU) 4.92 -0.73: -- Update -- Dow Jones reporting company's $1.75 bln convertible priced at 7.75%.
4:27PM Anadigics guides higher for Q1 (ANAD) 12.07 -0.73: Company issues upside preannouncement for Q1 (Mar); sees net loss of $0.38 per share versus the current consensus estimate for a net loss of $0.40 per share; cites increased demand in the first quarter, particularly for its CDMA wireless products.
4:11PM NVIDIA Corp rumor (NVDA) 53.60 -0.99: -- Update -- We are hearing an unconfirmed rumor that NVDA may have lost a design win to rival ATYT, which may prompt estimate cuts for NVDA.
3:27PM Lam Research lifted by rumor of major order win (LRCX) 26.95 -0.60: -- Update -- Stock pushesto highs of the day amid rumors that co has disclosed an order for 40+ systems with total value of roughly $100 mln. Worth noting that Lam Research was one of the companies participating in a Prudential Bus Tour today.
3:16PM Lam Research pops on rumor of contract win for 42 etching tools (LRCX) 26.95 -0.60:
12:29AM Novellus estimates raised at BofA, order flow strong (NVLS) 49.92 -1.89: -- Update -- Banc of America says that channel checks indicate that order flow in the last two weeks has been very strong, and that mgmt will report orders at the high end of the guidance range; firm believes that the strength is due to INTC, TSM, UMC, IBM, Samsung, and STM. Raises FY02 est to $0.17 from $0.07, FY03 to $1.20 from $1.11, and moves break-even point up one qtr to June. Price target is $60, and recommends accumulating shares in the $40-$45 range.
9:25AM Advanced Micro estimates cut at JP Morgan (AMD) 15.75: In addition to their estimate cuts for INTC (see 7:32 comment), JP Morgan cuts AMD's Q2 rev/EPS ests to $885 mln/($0.03) from $903 mln/($0.01), but retains 2002 est of $3.71 bln/(0.05). Firm is turning more cautious on AMD, as they anticipate INTC will initiate very aggressive price cuts in both April and May, which will likely pose a significant threat to AMD's mkt share position.
9:13AM Microsemi price target cut to $25 by UBS (MSCC) 20.20: UBS Warburg lowers price target to $25 from $40 based on relative valuation pressures among comparable semiconductor peers and also uncertainties surrounding the company's restructuring of its worldwide sales organization.
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Thanks for the kind words Crossy. I've been moderating my losses with short term trading gains on the short side of (IDTI) so it has actually been a pretty good week in spite of the CREE situation. In fact CREE closed much higher than I thought it would so I could not be happier in light of the warning.
RtS |
