DJ MARKET TALK: Cisco Gets It Done At Margins
Edited by Thomas Granahan Of DOW JONES NEWSWIRES (Call Us: 201-938-5299; All Times Eastern)
4:30 (Dow Jones) An early glance at Cisco's (CSCO) 3Q results shows better-than-expected earnings but flat sales. Pro forma earnings of 11 cents a share beat First Call
consensus by 2 cents. Sales of $4.82 billion - roughly flat with 2Q - missed First Call view of $4.86 billion and were at low end of company's forecast range. A big
improvement in pro forma gross profit margins: 63.1% in 3Q vs. 57.6% in 2Q and 54.5% a year earlier. (PDL)
4:27 (Dow Jones) Medical-device-company investors may have noticed that a number of companies in the sector lost ground Tuesday, with some falling rather sharply.
Heart-device makers Medtronic (MDT) and Guidant (GDT) both fell more than 3%. However, analyst Thom Gunderson of U.S. Bancorp Piper Jaffray saw no fresh news to
justify the losses, and instead blamed them on general weakness in the healthcare sector, noting losses in pharmaceutical company stocks. (DMR)
4:17 (Dow Jones) What would it take to cast a more positive light on Knight Trading Group (NITE), the stock and options trading firm that has been struggling with market
conditions and management changes? Bear Stearns' Daniel Goldberg has a neutral rating on Knight shares, but says he would consider "revisiting our rating upon the
occurrence of one or more of the following catalysts:" the appointment of a new CEO, further clarity on market-structure issues, or a "take out." He says the possibility of
the latter can't be ruled out, despite the toll that the move to penny stock-price increments has had on the profits of market makers such as Knight. "With the push towards
vertical integration, we would not be surprised to see a deal - especially at the current depressed (stock) price level." Knight declined to comment. Knight shares closed up
0.8% at $5.10, a shade above their 52-week low of $4.79. (GFC)
4:03 (Dow Jones) Another disappointing day for the major averages, which hold true to form and sell off late. Fed says essentially nothing the Street didn't see coming,
while data earlier Tuesday - it seems like it was days ago - was pretty robust. DJIA closes with small gain, but drops 100 points in last hour-and-a-half or so. Techs remain
a wreck, and we'll see what Cisco can do tonight to turn that around. DJIA gains 20 to 9829, Nasdaq Comp loses 5 to 1573, and S&P 500 eases 3 to 1049 (preliminary).
(TG)
3:49 (Dow Jones) Robertson Stephens believes there is strong physician demand for Cytyc's (CYTC) ThinPrep Breast test, but the stock is "way oversold." Robbie also
notes the company has a number of milestones lurking that should "help Cytyc to gain some upward momentum." As for Cytyc's proposed purchase of Digene, analyst
Wade H. King wrote that Cytyc is "working aggressively to meet all FTC requirements." King maintains a buy rating. Shares up 10.3% to $15.40. (NBB)
3:44 (Dow Jones) Prudential says Pfizer (PFE) has about 229,000 outstanding asbestos claims which have grown at a quickening pace over the last couple of years.
Though company is a "peripheral player" in the sense it wasn't core manufacturer of asbestos particles, the company and others have become deep-pocketed targets for
plaintiffs attorney's with an increase in the number of bankrupt defendants. Prudential says its analysis of financial details reported by other defendants indicates Pfizer
"has a manageable problem on its hands." (TG)
3:30 (Dow Jones) According to federal funds futures prices, market participants see about a 14% chance that the Federal Reserve will hike interest rates by 25 basis
points at the late June Federal Open Market Committee meeting. (CMN)
3:20 (Dow Jones) Lehman Brothers political analysts predict Congress will increase $5.95 trillion debt limit in early June in order "to avoid self-inflicted wounds." (JCC)
3:07 (Dow Jones) Two analysts who follow Nyfix (NYFX) - Adam Townsend of J.P. Morgan H&Q and Justin Hughes of Robertson Stephens - expect the trading-technology
company to report 1Q EPS below the Street's 9-cent consensus. Both note that Nyfix's Millennium stock-trading system has been slow to ramp up. "We estimate 2002
guidance will be below Street consensus, but will still have at least 100% revenue growth year-over-year to $80 million," Hughes says. "We believe the lower guidance will
be largely driven by Millennium." (J.P. Morgan and Robertson Stephens have both done investment-banking work for Nyfix in the past.) Nyfix, which reports 1Q earnings
Wednesday, was recently off 11.1%. (GFC)
2:59 (Dow Jones) "It is notable that the Fed has not chosen to acknowledge the softening in economic data and the deterioration in asset prices of the past five weeks,"
says Ashraf Laidi, at MG Financial. "Such positive outlook means the that the Fed has a reason to remain unfazed by the recent economic cooling, which is supportive for
the dollar." USD is clinging to some of its gains on the day, but is weaker against EUR and JPY than before the FOMC announcement. EUR/USD $0.9150, USD/JPY
127.90. (GMM)
2:47 (Dow Jones) Stocks have eased since the Fed's non-move, though not dramatically - DJIA was up 110, Nasdaq up 12, and S&P 500 up 5 right before the decision.
The actual news and the action in stocks leading up to it doesn't preclude another late selloff, which remains a possibility. Can't forget Cisco after the close. DJIA adds 69
to 9879, Nasdaq Comp up 3 at 1581, and S&P 500 climbs 2 to 1054. (TG)
2:39 (Dow Jones) In terms of positive tone, the FOMC noted that "economic activity has received considerable upward impetus from a marked swing in inventory
investment." They dropped the concern about a lack of capital spending, and the statement did not mention productivity growth at all despite the sharp rise in 1Q
announced this morning. The statement was as balanced as the risks that the FOMC sees. (JM)
2:31 (Dow Jones) "I don't think there are any good alternatives (to the dollar) and so (the dollar's recent slide) isn't a crisis," said Robert McGee at UFJ Bank in NY. EUR is
$0.9140; USD/JPY is Y128.05. (JRH)
2:25 (Dow Jones) There's very little that's different in the language of the statement. This time around, they drop out the phrase indicating that the economy is "expanding
at a significant pace," but they add that the economy is getting "considerable upward impetus" - both of which were tied to the inventory cycle. (MSD)
2:21 (Dow Jones) FOMC decision inspires little reaction in Treasurys, especially since a lot of shorts covered just before the Fed's decision came out. the market is now
largely unchanged vs. Monday, with two-year notes at 3.15% and 10-year note at 5.09%. (SV)
2:17 (Dow Jones) The Fed has met expectations, leaving the funds rate flat at 1.75%, while maintaining its balanced risk assessment. It said: "The information that has
become available since the last meeting of the committee confirms that economic activity has been receiving considerable upward impetus from a marked swing in
inventory investment...Nonetheless, the degree of strengthening in final demand over coming quarters, an essential element in sustained economic expansion, is still
uncertain." (MSD)
2:08 (Dow Jones) The outcome of the FOMC meeting looms, and few are looking for any sort of surprise. The funds rate is widely seen holding steady at 1.75%, and the
committee should continue to signal that policy is accommodative and risks are balanced versus growth and inflation goals. All the Fed's commentary, joined with recent
economic data, points to this as the most likely outcome, and the Fed can wait to prime the markets for what's expected to be the first rate hike at the Aug. 13 FOMC.
Looking for something fun? Check out the roll call vote for signs a member or two may be uncomfortable keeping rates so low. (MSD)
2:01 (Dow Jones) Only 15 minutes to go before the big fed meeting! OK, in actuality the anticipation isn't that great, given that there'll be no move in rates. The bias does
hold some possibilities, but more of the same is probably in order. As for stocks, their rally leading up to the announcement - and their habit of selling off late - may not
bode well for the bulls. DJIA up 90 at 9897, Nasdaq Comp gains 9 to 1587, and S&P 500 climbs 3 to 1056. (TG) |
