From Briefing.com: 1:12PM New 52-Week Lows : Among the standout names hitting new 52-week lows today are A, AOL, NVLS, FMKT, LRCX, TER, TYC, SUNW, TLGD, KLIC, EGLS, NCR, BRKS, ALTR, NT, LH... List is swamped by Semiconductor Equipment names.
12:39PM Investors chip away at market : Investors are pushing Tech overboard today following rollover in the SOX (-13.3%), which was prompted by reduced CapEx guidance by Taiwan Semi. Investors are now moving up the semiconductor/PC food-chain, not only unloading Semi Equip, but hitting names like INTC (-7.3%), DELL (9.3%), MSFT (-5.6%), LXK (-4.3%).
12:14PM Qualcomm: 3G delays, Taiwan Semi pressure shares-- Lehman (QCOM) 25.75 -3.36: -- Update -- Lehman believes that delays in W-CDMA rollouts (Telefonica delayed this morning) are likely to reduce medium-term opportunities for W-CDMA royalties and chipset sales and may weigh on QCOM shares; believes QCOM may also be seeing some incremental pressure following somewhat uninspiring results from TSM this morning; firm expects QCOM tonight to deliver in-line numbers with mgmt likely to support a sequential uptick in Sept and Dec chipset expectations, although the sector remains challenging near-term.
11:57AM Sector Watch: Semiconductor : -- Technical -- The index (SOX at 321) slumped as much as 9.5% off of yesterday's high and pushed to its lowest level since Dec 1998. Intraday unless able to work back through resistances at 325/327 and then the 332/333 area the short term bias remains negative Next supports are at 310 and the 300 area.
11:23AM Microsoft to hire 5k employees, boost R&D spending (MSFT) 44.61 -1.62: Bill Gates says MSFT expects to increase its employee base by 5,000 over the coming year, and will increase its R&D spending in FY03 by 20% to $5.2 bln, more than 16% of net revenues.
11:13AM Citigroup announces stock repurchase acceleration (C) 30.10 +0.51: -- Update -- Announces that in July it accelerated its stock buyback program, repurchasing nearly $2 bln worth of stock in that month alone.
9:15AM Extreme Networks: cautious comments from Fulcrum (EXTR) 10.04: Fulcrum believes that FDRY's strong results (20% sequential rev growth vs EXTR's 1.8%) support firm's thesis that EXTR will not be able to expand its market share at the rate it needs to in order to achieve current ests.
11:20AM Semi Equipment Makers : It's another ugly day in the market for the semi equipment makers. The Semi Index (SOX 323.27 -30.43) has slumped to a low not seen since December 1998. The SOX has been unable to hold support at 350/340, with the next important area in the 310/300 range. The culprit today is Taiwan Semi cutting its 2002 capex budget. This follows recent cuts from a slew of other chipmakers, including Intel, Advanced Micro Devices, Infineon, Phillips Semiconductor and Motorola. Spending is slowing in part due to continued declines in the equity markets, which has eroded corporate and consumer confidence. Another fear is that IT spending and discretionary spending on electronics will slow or even erode in the seasonally strong second half. While many investors have been expecting a slowdown in orders in the second half of the year and into 2003, CIBC says the worst-case scenario is not fully discounted in the stock prices. The firm says if that scenario plays out, the stocks could fall another 35% to 50%... You're starting to hear the chip equipment makers reflect the cuts. Novellus (NVLS 24.07 -3.20) recently said orders will be down 10% sequentially in Q3, whereas investors had been expecting +5%. However, a fair number have not guided down much. Expect the group to trade sideways until bellwether Applied Materials (AMAT 14.50 -2.05) reports its results and offers its outlook on Aug 13. To this point, AMAT has not really acknowledged the slowdown. In May, the company even said it was seeing a recovery in the semiconductor market. When there are conflicting outlooks, it's always safer to go with the more conservative one. So be careful with the group in the near term as an AMAT bombshell is a possibility in three weeks. Bottom line, the group has been beaten up the last two months setting up more realistic valuations. A nice aspect about the group is that it's truly cyclical, meaning you want to buy these stocks when they are getting kicked around and left for dead -- not in the good times. They always come back. -- Robert J. Reid, Briefing.com
10:14AM Cabot Microelectronics (CCMP) 36.50 +1.75: With the Nasdaq solidly on the defensive this morning, shares of Cabot Microelectronics are posting a healthy gain. In fact, the shares have been higher by as much as 14%, while at the same time surpassing their average daily volume in just the first thirty minutes of trading. The catalyst is the company's strong third quarter results released this morning. In the current environment, most corporate earnings reports are assessed as if they're being graded on a curve. Yet the CCMP results issued this morning were notably strong even if you disregard the challenging macroeconomic climate. Third quarter earnings came in at $0.54 per share, exceeding the Multex consensus estimate by twenty-one cents. On the top line, revenues rose 32.8% to $68.4 million which was also well ahead of the $55.3 million consensus. The strong results were driven by the industry's migration towards copper technology. Cabot's copper product revenue grew 43% sequentially and was two and a half times the amount of copper revenue in the year ago quarter. At the same time, oxide and tungsten product revenues on a combined basis grew 39% sequentially, which represents the first time in six quarters Cabot has experienced growth in these applications. Yet it's also notable that the company's strong results weren't driven by aggressive pricing. Its aggregate gross margin of 53.0% this quarter was up from the 50.0% reported in prior quarter -- management attributes the improved gross margins to higher volumes and improved product mix. From a fundamental perspective, CCMP trades at 22.8x trailing earnings and carries a forward multiple of 16.5x. With projected earnings growth in the ballpark of 45% for fiscal 2003 -- and with the 91% annualized earnings growth reported today -- the downside appears to be limited at current prices. For the longer-term investor willing to contend with any near-term volatility, we view the shares as attractive at current prices. -- Mike Ashbaugh, Briefing.com
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