From Briefing.com: 1:48PM Agilent (A) 16.52 +2.92: Shares are on a surge today due to faster swing towards profitability demonstrated in last night's higher than expected Q402 earnings of breakeven vs. Multex consensus of loss of $0.12. Although company reaffirmed Q103 guidance, on conference call CEO stated that orders improvement is not expected until Y03. Analysts are, likewise, cautious despite blow-out earnings report. Lehman Brothers remains concerned that fundamentals could erode more sharply in near-term than company forecasts; thinks significant multiple appreciation will only come from several quarters of sustained cash flow generation; maintains Equal-weight rating and price target of $14. Soundview Technologies thinks modest growth still limits share appreciation; maintains Neutral rating and $15 price target. Banc of America is more optimistic; thinks company's revised operating program is not fully reflected by Y03 EPS consensus of $0.04; maintains Buy rating with price target of $22.
1:38PM Celestica reiterates Q4 guidance, does not expect uptick this quarter (CLS) 15.03 -0.81: A source listening to the CLS presentation at the Lehman semi conference tells us that the co reiterated Q4 guidance of $0.13-$0.21 in EPS and $1.7-$1.9 bln in sales; however, co also said they have limited visibility from high-end customers, don't see any seasonality, and are not expecting an uptick this qtr.
1:16PM Micron spikes on guidance rumor (MU) 13.96 -0.11: Stock saw a noticeable spike in recent trading, due we're told to a rumor that the co will raise guidance during tomorrow's presentation to the Lehman semi conference; however, we would be skeptical of this, as yesterday there was similar chatter that TXN would guide higher, which turned out to be false.
12:58PM Hewlett-Packard (HPQ) 16.62 -0.24: Shares of this leading technology company are tracking the rest of the sector lower in today's relatively quiet session. However, look for trading to heat up considerably in HPQ over the next couple of days, as company is due to release earnings after tomorrow's close.
Street is expecting HPQ to report a pro-forma gain of $0.22 on revenues of $17.3 bln... While the EPS figure would represent an improvement over the year-ago period (for the combined companies), sales would actually be off by about 5%... Just another example of how tech firms are becoming more efficient operationally during this very difficult industry climate. Toward that end, look for HPQ to announce additional cost-cutting measures in its post-release conference call, as industry conditions remain soft.
As is often the case, the headline numbers will take a back seat to the company's outlook for the next couple of quarters. Traders were given a hint of what to expect on this front the other day when Executive VP Peter Blackmore noted that HPQ sees IT budgets in 2003 similar to that of 2002, with a possible pick up in spending late in the year. In other words, any gains to the bottom-line with again be driven more by further improvements in operating efficiencies than by an increase in end user demand.
Investors will also be looking to see how company is faring in its battle with IBM and others in the server/services markets; and analysts will be sure to grill management on the potential threat to its printer business from Dell. Dell recently entered the printer market, and if it does for printers what it did for PCs then margins are certainly going to come down across the board. And that's bad news long-term for HPQ, as company derives the vast majority of its operating profit from its printing and imaging business.
HPQ is an enormous player in technology and how its sees the next couple of quarters shaping up could play a key role in dictating the near-term direction of its stock, as well as the sector. It is Briefing.com's contention that while conditions aren't likely to improve much for HPQ over the near-term, they also aren't likely to get any worse. Put another way, from a macro-perspective the worst is behind HPQ. Consequently, any additional improvements in operating efficiencies will simply put company in better position to exploit the eventual pick-up in demand.
Briefing.com doesn't profess to know when the PC cycle will ramp higher again, but we do know that all those PCs added prior to the Y2K scare are now getting long in the tooth. Don't expect a massive wave of new buying, but the further we push away from that buying binge the closer we get to the next uptick in the PC market. And a more streamlined HPQ will have the muscle to reap the benefits once conditions finally improve.
Technically, the stock will remain an attractive turnaround candidate as long as it remains above key support in the 15-14.5 area (see chart)... If this floor holds in the days following the earnings report, then stock will be in good position to make an intermediate-term run at 20+. -- Robert Walberg, Briefing.com
11:56AM Broadcom (BRCM) 15.66 -0.51: Morgan Stanley reiterates Overweight rating and price target of $30 after company's customer and product announcements at COMDEX; believes penetration of enterprise blade server and wireless networking markets should help drive meaningful growth in Y03; thinks announcement demonstrates execution of BRCM's strategy of becoming leading supplier to broadband and enterprise networking markets. Despite upbeat note, shares are 3.2% in the red in today's session.
11:53AM Agilent CEO says orders won't improve until mid-2003 (A) 16.45 +2.85: Traders citing Bloomberg say that A's CEO said in a Bloomberg radio interview that orders are flat and will not show improvement until at least mid-2003; says next few qtrs will be "fairly tough".
11:24AM Qualcomm (QCOM) 37.17 -1.22: Wedbush Morgan initiates coverage with Hold rating; although somewhat warranted, thinks valuation is too expensive relative to market comparables; foresees possibility of slight channel inventory correction or moderation of demand within Y03. For long term, firm thinks QCOM is a "winner"; however, due to valuation and near-term concerns, recommends investors remain on sidelines until valuation becomes more compelling or until there's evidence of greater visibility with regard to CDMA2000 subscriber uptake in Q103. Although valuation concerns are nothing new for this tech giant, shares are 3.2% down on cautious note.
10:58AM NVIDIA follow-up (NVDA) 14.53 +0.56: More color on the 09:49 comment. Bloomberg.com is reporting that NVDA's CEO thinks company could exceed Q4 estimates. "We guided to those numbers, and we're cautiously optimistic that we will exceed those numbers,'' Huang said in an interview with Bloomberg Radio."
10:06AM Nasdaq Composite Intraday : -- Technical -- Index attempting to stabilize after initial flurry of selling. Failure to work back at least back through the 1387/1390 area, however, leaves the door open to further short term downticks. Next support comes into play between 1372 and 1368 (50% retrace of recent run, bottom of Nov 14 gap) followed by 1360 (62% retrace).
9:34AM Technical Levels : So you'll never guess where the index topped out yesterday. After opening at 1,422.5, the Nasdaq pushed as high as 1,425.4 intraday, before backing off to close towards its lows of the session. Now for quite some time, we've been looking towards resistance in the range of 1,419 to 1,423 as an important near-term test for the index. In fact, we've had an eye on that area for several weeks now -- since October 17th to be specific. So as it turns out once again, the top of 'the body' on yesterday's candlestick -- its opening level -- failed to break that 1,423 level.
Yet when you look at where the index closed, that level is notable to a lesser extent as well. The Nasdaq finished yesterday's session at 1,393.7 which matched up relatively well with the lower end of our first support point in the somewhat broad range of 1,394 to 1,401 -- this is a level we identified in our review yesterday. All in all, the indices continue to be acting well technically.
Now we already mentioned that the Nasdaq closed towards its lows of the session -- this serves as a bearish near-term signal. Yet the market internals painted a more neutral picture. Total volume comfortably exceeded 1.6 billion total shares traded which is on the strong side, though far from extreme. At the same time, declining volume outpaced advancing volume by an 8.9 to 7.5 margin. That's reasonably close to parity -- yet it's also worth noting that on an intraday basis, advancing volume was actually leading declining volume by about 3 to 2, even with the indices posting comfortable losses. So the current price action continues to fit with our consolidative bias within the context of a broader move higher. Put another way, yesterday's session did little, if anything, to alter the near-term technical picture.
For those traders operating on a shorter-term basis, the technical story continues to be relatively simple. Look for initial support at congestion in the area of 1,377 to 1,380 -- that's followed by additional support at 1,360 which represents the bottom of a former gap created on November 4th. On the off chance 1,360 would fail, look for another notable floor in the range of 1,347 to 1,350. Broadly speaking, all this suggests the index should have notable near-term support in the vicinity of 1,347 to 1,360.
To the upside, look for notable initial resistance at our former support point in the range of 1,394 to 1,401. That's followed by another notable level at 1,411 -- which just claimed two consecutive closes -- and even more significant overhead in the range of 1,419 to 1,423 which we've already addressed ad nauseam. If the Nasdaq should successfully navigate the 1,423 level, look for less significant but notable resistance in the range of prior chart congestion at 1,448 to 1,452. -- Mike Ashbaugh, Briefing.com
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