BRCM ST/DT SS 1000 shares at 19 - From Briefing.com: 1:40PM Market Volume : Volume stats are somewhat unusual today. NYSE volume skews towards the heavy side with more than 1 billion shares traded to this point in the session -- it remains lighter than experienced last week. Nasdaq volume is on the lighter side by any measure with just over 900 million shares traded -- Nasdaq is on pace to approach 1.5 billion shares on the day.
1:09PM Cisco Systems revs seen at low end of guidance-- Buckingham (CSCO) 12.93 -0.41: Buckingham Research downgrades to NEUTRAL from Accumulate and cuts price target to $12 from $25 (based on 25x CY03 earnings vs 35x before). Firm expects CSCO to post in-line EPS, but revs at the low end of guidance. Firm's channel checks indicate that CSCO is shipping product right up until the end of the qtr (which ends today), an indication of weaker than expected sales... CSCO is scheduled to report Aug. 6.
12:26PM General Electric to expense stock options (GE) 31.25 -0.35: GE estimates that under current accounting rules, expensing options will reduce 2002 net income by less than $0.01 per share; the expense will increase to about $0.03 per share over the next 3-4 years. Also, among other compliance measures, Chairman and CEO Immelt and CFO Sherin signed and filed sworn statements with the SEC affirming the SEC filings made by the co in 2002.
10:38AM Nasdaq drops to session's worst levels : -- Technical -- Index holding towards its lows on light total volume traded and notably bearish internals -- declining volume outpaces advancing volume by a margin of 6 to 1. Currently testing support at 1312/1314, look for subsequent support just over 1300 and additional floors at 1295 and 1287. To the upside, watch for initial resistance at 1320/1322 followed by additional overhead at 1330.
10:00AM Chicago PMI 51.5% in July; weaker than 56.5% consensus : The Chicago PMI fell to 51.5% in July from 58.2% in June; this was significantly lower than the 56.5% consensus. If replicated in the national ISM index, this could be cause for concern, though regional indexes such as Chicago and Philly are often more volatile than the national index.
7:47AM Cree upped to Strong Buy from Buy at CIBC (CREE) 15.84: CIBC World Mkts upgrades to STRONG BUY from Buy, citing improved fundamentals. Upgrade follows report last night of in-line Q4 results. Firm raising numbers due to expected continued strong sequential growth in 2003, given increasing mkt demand and share gains. Price target goes to $23.50 from $25 (8x CY03 revs)... Stock trading at $15.80 in pre-market.
7:44AM Goldman Sachs raises global equity weighting : Goldman Sachs raises their global equity weighting to 65% from 60%, saying that global equities are very attractively valued relative to bonds; believes that the sectors most likely to lead the mkt turnaround are the higher-beta casualties of the downturn: technology, telecoms, and insurance.
1:03PM Nvidia (NVDA) 11.29 -4.93: One sure way to displease the investment community is to guide estimates higher, only to issue a material earnings warning several weeks later... Such actions create a lack of trust between management and shareholders/analysts that can take many months to heal... It is this breach of confidence which is responsible for the market's severe reaction to Nvidia's surprise warning... Company, which had remained optimistic in its last call, announced that a much weaker than expected PC market would result in sales of only $410-$430 mln vs. consensus estimate of $552 mln (range was $497-$590 mln)... Excess supply and shifts in product mix (toward lower end products) also contributed to the shortfall... NVDA plans to take a "significant" write-off of inventory in the quarter... Including this charge, company now expects results to be "at or above break-even." The street was looking for a gain of $0.40... As we noted in our ill-timed report on the stock yesterday, NVDA shares had tumbled by nearly 78% from their 52-wk highs amid growing concern over the sluggish PC market, pace of Xbox sales and increased competition... Clearly, the market had built in the possibility of bad news... However, the longer the company went without providing any cautionary comments/bearish guidance, the more investors began to look at the stock as a relative bargain - especially once the market tone began to improve... Should note that over the past few quarters - a very difficult period for the industry - NVDA never issued a warning... To the contrary, the company guided estimates higher in April and May of this year... Looking further back, company had met, or exceeded, consensus numbers in each of the last 13 quarters... Given its earnings history and the severe sell-off prior to last night's warning, it was easy to see why investors started to nibble on the assumption that additional downside risk was minimal... And had the warning been less severe (revenues 26% below estimates is a huge miss), the reaction wouldn't have been so ugly... But when you combine the scope of the miss with the emerging questions about management's veracity you get today's 30% drop in the stock price... An overreaction? Probably. Though many of us were shocked and angered by the announcement - Briefing.com obviously included in that group - if we step back and take emotion out of the equation, and just look at the numbers, the story isn't as bad as it first seems... At $410 mln, sales for the quarter will be down by nearly 30% sequentially (the ugly part) but up by 58% year-over-year... Assuming the company continues to see business slow, and that revenues fall by 10% sequentially in Q3 and Q4 - a pretty ugly and unlikely scenario given seasonal bias - NVDA would end the year with sales of about $1.7 bln... That's well below the $2.2 bln expected prior to last night, but still up 24% versus the prior year - and this during one of the ugliest years for tech companies... With the stock now at $11.27, the price/sales ratio using the $1.7 bln figure is 1.0x - a relatively low valuation for a industry leader with a strong product profile enjoying 24% top-line growth... Right now the problem is one of faith - investors have lost their faith in management... Most likely it will take a couple quarters of hitting numbers for company to win back investor confidence... During that period, NVDA could have a hard time doing any better than keeping pace with the market... Once macro-conditions improve, however, Briefing.com maintains that NVDA will be well positioned for strong growth and significant capital appreciation as they remain the dominant player in an attractive segment of the business.
10:18AM Technical Levels : A look at the six-month chart on the Nasdaq illustrates the current picture relatively well. The markets have had several consecutive good days now in the wake (or in the midst) of a massive 28-month bear market. Yet maybe 'several consecutive good days' understates it. The Dow is now almost 1,000 points off its worst levels in a matter of just four sessions. At the same time, the Nasdaq has climbed 150 points off its lows in the same time frame. So those are gains of about 13.3% and 12.8% respectively -- again in just four days. Now all of the sudden, the question is whether the indices are bloated at current levels. They just managed what would be a great year's return in less than a week. With that kind of gain under our belt, how are the markets situated from the standpoint of sentiment? Seasonally, August isn't the greatest time for a rally which we touched on in our last review. Volume tends to be dry and market catalysts are limited as well. Yet more importantly, the markets may have some economic data to contend with in the near term. Consumer Sentiment came in weaker than expected yesterday and second quarter GDP just grew at a pedestrian 1.1%. Without making a qualitative judgment as to how the markets should react, it's worth being aware of these issues in the context of a market that has just climbed 13% in four days. So rather than focus on straight technical levels here, just be aware that the indices may be due for a little consolidation at this point -- some 'backing and filling' if you will. For traders seeking relative strength, note that the Biotech sector (BTK) and the Pharmaceuticals (DRG) have experienced notable buy interest of late. In fact, the BTK may be the only major sector to have already put in place a higher second low -- the bullish configuration is easier to view on the chart. The DRG is notable, to a lesser extent, based on the magnitude of its recent move higher. -- Mike Ashbaugh, Briefing.com
9:22AM GDP : The meager 1.1% GDP growth in Q2 will no doubt prompt speculation about a double dip recession or at least a substantial slowdown in the economy. Resist the temptation. GDP numbers are quite volatile from one quarter to the next, and the underlying message from the Q1 and Q2 reports was the same: a sluggish economic recovery is underway. Let's look at the key economic stories of this recovery, and see if they have changed with today's report. 1) A resilient consumer. The consumer has carried this recovery even as business investment has faltered. After 9/11, there was a huge surge in spending tied to 0% auto financing. It has been impressive to see spending hold up well even after that surge; growth in Q1 and Q2 was 3.1% and 1.9%, very respectable numbers following the 6.0% Q4 spike. The consumer's resilience is also seen in the residential investment number, where Q2 saw 5.0% growth after a huge 14.2% jump in Q1. 2) Inventory rebuilding. We knew that the economic numbers early in the recovery would be boosted by inventories, and indeed that was the case. Take out inventories, and final sales rose 4.2% in Q4 and 2.4% in Q1, but fell 0.1% in Q2. That Q2 decline doesn't mean we're back in recession - much of the qtr-to-qtr volatility is just noise, but it does indicate that the underlying pace of this recovery is sluggish, averaging just 2.2% over the past three qtrs. 3) Weak business investment. After the investment bubble of 1998-2000, we anticipated a very slow return to growth in business investment. That has been the case, but the good news is that the turn appears to be near: investment was down 10.9% in Q4, 5.8% in Q1, but just 1.6% in Q2. That's still a decline, but the trend is encouraging. Furthermore, tech stock fans will be happy to note that equipment and software investment ended a six quarter string of declines with a 2.9% increase. Today's GDP report only confirms what we have believed all year: the economy is recovering, but the pace of recovery will remain frustratingly slow. Consumers are more cautious but still increasing their spending, while businesses are still cutting back on spending but at a slower pace. Get used to reports like today's - it's likely that we'll be seeing more of these unimpressive but at least positive GDP growth rates in the quarters ahead. - Greg Jones, Briefing.com
9:20AM Stocks to Watch : The futures are pointing to a weak open as they have headed lower since the release of the weaker than expected GDP report. However, some bullish analyst calls are helping including Goldman Sachs upping its global equity weighting but the warnings keep coming... Nvidia (NVDA 16.22) is down 25% in the pre-market as it guides much lower. The graphics chipmaker now expects Q2 revs to fall sequentially to a range of $410-$430 mln. vs Multex consensus of $551.86... In a surprise deal, IBM (IBM 71.79) announces the acquisition of PricewaterhouseCoopers' global business consulting and technology services unit. SoundView sees a modestly negative EPS impact pressuring the stock near-term. Bear Stearns says it could be perceived as a negative for Hewlett Packard (HPQ 13.86), Sun (SUNW 3.98) and EMC (EMC 7.90). UBS Warburg views the deal as a negative development for EDS (EDS 35.19) and Computer Sciences Corp. (CSC 38.00)... KLA-Tencor (KLAC 40.34) guided lower last night...
12:55PM Qualcomm (QCOM) 27.18 -0.40: Shares dropped about 5% yesterday on talks and note by Bear Stearns indicating that QCOM's ests may be endangered by Motorola (00C) developing its own CDMA chipset, which QCOM currently supplies. Having talked with MOT executives, Wachovia Securities is not concerned about QCOM's competitive position and market share for CDMA chipsets; reiterates Strong Buy rating. Goldman Sachs believes co. remains on track for double-digit sequential revs growth guidance issued during earnings; maintains Recommended List rating. Although still in the red, QCOM is trading about 3% off of its yesterday's lows.
finance.yahoo.com^SOXX+^IXIC+^VIX&d=t
RtS |
