From Briefing.com: 6:19PM Monday After Hours price changes vs 4pm ET levels: There were several companies that reported earnings results after the close, but there was one company that carried more weight than all the rest. Enter IBM (IBM 80.37 +0.30), affectionately referred to as Big Blue, which fell a penny shy of the consensus EPS estimate for Q1 (Mar), but surprised on the upside with its top-line performance and said it is on track to meet the average EPS and revenue estimates for FY03.
The initial reaction to IBM's news was on the enthusiastic side of things as its stock jumped more than $1.00 in extended action. The stock pulled back, however, after the company declined on its conference call to reaffirm consensus EPS estimates for Q2 (Jun). It is worth noting that IBM added that analysts shouldn't read too much into the fact that it didn't reaffirm that guidance.
That point notwithstanding, the futures market isn't too fired up by tonight's events as the S&P futures, at 885, are 1 point above fair value while the Nasdaq 100 futures, at 1047, are 3 points below fair value.
Chip equipment company, Novellus Systems (NVLS 26.25 -1.10), is partially to blame for the weakness in the Nasdaq 100 futures as it provided Q2 (Jun) EPS guidance of $0.05 that was four cents below the current Multex consensus estimate. At the same time, management acknowledged that the war and SARS have led to very tentative behavior on the part of its customers and that it had seen a significant decrease in forecasted bookings in the last two weeks. For Q2, NVLS expects bookings of approximately $188 mln, shipments of $215 mln, and SAB 101 revenues of $238 mln.
5:30PM IBM comments on Q2 prospects (IBM) 80.75 +0.68: -- Update -- In response to question, IBM says it has a good pipeline of activity in Q2, and is working with clients to sign deals, but declines to reaffirm consensus estimates for Q2 (June) -- IBM says analysts "should not read too much into this."
4:59PM IBM says Global Services pipeline is "strong," especially in financial services (IBM) 81.30 +1.23:
4:52PM IBM offers details on Q1 earnings miss (IBM) 79.92 -0.15: -- Update -- On call, IBM attributes earnings shortfall to, among other things, income from retirement-related plans, a decline in real-estate related income, and a drop in IP revenues.
4:47PM Novellus guides Q2 below consensus (NVLS) 27.35 +0.70: On call, says there has been a significant decrease in Q2 (Jun) bookings projections in last two weeks... now expects bookings of approx. $188 mln, shipments of $215 mln, and SAB 101 revenues of $238 mln (Multex consensus is $238.97 mln); Q2 EPS expected to be $0.05 (consensus $0.09)... notes erosion of gross margins associated with product mix
4:42PM IBM gives color on Q1 revenues (IBM) 79.92 -0.15: -- Update -- On call, IBM says Q1 (Mar) revenue was negatively impacted by its exit of unprofitable businesses, and a 5% drop in actual PC sales.
4:38PM IBM says its comfortable with full year EPS and revenue consensus estimates (IBM) 79.92 -0.15: -- Update -- On call, IBM says it is on track to meet the average analyst EPS and revenue estimate for FY03 (Dec)... Multex consensus estimates are pegged at $4.32 and $88.01 bln, respectively, for 2003.
4:36PM IBM resumes trading; flat response (IBM) : -- Update -- IBM -0.10 vs the 4 pm ET close to 79.92
4:12PM IBM misses by a penny, revs top consensus (IBM) 80.07 halted: Reports Q1 (Mar) earnings of $0.79 per share, $0.01 worse than the Multex consensus of $0.80; revenues rose 11.3% year/year to $20.07 bln vs the $19.86 bln consensus.
4:08PM IBM headline number is $0.79, consensus $0.80 (IBM) 80.07 halted: -- Update -- There is no press release available yet, so it isn't clear whether the numbers are comparable... more to follow.
3:10PM IBM Earnings Preview (IBM) 79.73 +0.97: IBM reports its Q1 quarterly announcement after the close today with Multex consensus earnings of $0.80 per share with revenues of $19.9 bln. The general consensus by analysts suggests its earnings announcement should be in line with expectations. Due to issues of seasonality associated with a robust Q4, the company's revenues should be down sequentially with most analysts looking for a modest single digit sequential increase in revenues going into Q2. In a Fulcrum preview, the analyst cites concern over the possibility of the company's pension issues still being underfunded suggesting "further contributions may still be necessary". In addition, the pension income will no longer help EPS as it did in 2002 for a total of $0.21. During the co's last three earnings announcements, the stock has had mixed reactions with -5.5%, 11.2%, and 1.9% for its Q4, Q3 and Q2, respectively.
4:44PM Novellus slides on earnings report (NVLS) : -- Update -- NVLS -0.48 vs the 4 pm ET close to 26.87
4:42PM Novellus expects outlook for Q2 to be down from Q1 (NVLS) 27.35 +0.70:
4:09PM Novellus beats by a penny (NVLS) 27.37 +0.72: Reports Q1 (Mar) earnings of $0.08 per share, $0.01 better than the Multex consensus of $0.07; revenues rose 9.6% year/year to $238.4 mln vs the $234.2 mln consensus; shipments of $235.2 mln in Q1 represent an increase of $44.2 million or 23.1% compared to Q4 of 2002. Deferred revenue at the end Q1 was $127.0 million, a decrease of $3.1 mln or 2.4 % from $130.1 mln at the end of Q4 of 2002
4:07PM Rambus reports in line with consensus estimates (RMBS) 15.67 +0.23: Reports Q2 (Mar) earnings of $0.05 per share, in line with the Multex consensus of $0.05; revenues rose 19.4% year/year to $28.1 mln vs the $27.5 mln consensus.
2:51PM Rambus Earnings Preview (RMBS ) 15.54 +0.09: Rambus reports its Q2 quarterly announcement after the close today with Multex consensus of $0.05 per share with revenues of $27.5 mln. While coverage of the stock is fairly limited, a Sterling analyst believes the company could beat its bottom line estimates by a penny. The reason for the analyst's positive outlook on EPS can be attributed to his belief of Rambus royalty revenues being tied to the rate of growth in the PC industry, which IDC currently estimates between 8%-12% for 2003. In addition, the co. has been active on its contract revenue business, which is derived from new products. In general, analysts expect no real surprises on the call given all of the coverage the co has received with respect to its legal woes and technology updates. During the co's last three earnings announcements, the stock has reacted positively with increases of 1.4%, 5.0% and 8.1%, for its Q2, Q1 and Q4, respectively.
9:56AM Sector Watch: Semiconductor : -- Technical -- Index (SOX at 299, +0.5% ) attempting to bounce off support at 296/295 which has held for the last three sessions in a row (late March low, 50 day sma) with gains in MXIM +0.9%, LLTC +0.9%, XLNX +0.6%, AMD +1.1% helping to underpin. Weakness noted in MOT -1.2%, MU -1.1%, LSCC -0.3% and TER -0.5%. Short term resistance for the index is at 302/303 with the 200 day sma at 308.68 today.
9:51AM Plexus Corp cut to Neutral at RW Baird (PLXS) 8.97 -0.02: The downgrade from Outperform is based on firm's more cautious approach on sector given weakness in capital and consumer spending, continued underutilization of capacity and current valuation. Price target goes to $9 from $12.
8:31AM Lam Research may fall short on orders - Fahnestock (LRCX) 11.10: Although Fahnestock expects LRCX to report in-line operating results when they report on Wednesday, firm believes that orders could fall short of guidance since foundry order activity remains slow; in addition, firm believes that potentially weaker orders from memory producers could result in lower orders next qtr. Target is $11.
8:30AM Dupont Photomask estimates, target cut following warning (DPMI) 18.31: Lehman is one of several firms adjusting estimates following Friday evening's earnings warning. DPMI provided Q3 guidance of approx. $76.1 mln in revs (consensus $81 mln) and forecast a net loss of $1.42-$1.47 (including items); for Q4, DPMI forecast revs of $80-$84 mln (consensus $87 mln). Warning leads Lehman to adjust its FY03 est to -$2.49 from -$2.14 and lower price target to $23 from $28. Firm notes that the warning was a disappointment b/c it was the result of circumstances that were, at least in large part, under co's control.
1:06PM Chart Watch -- QCOM : We highlighted this tech bellwether in a Chart Watch Story on April 2nd as the issue broke below an important chart point in the 35.70/35.50 area. As a quick refresher, Qualcomm (QCOM 33.10) was hit in the wake of a Merrill Lynch note. At the time the firm said Samsung's and NOK's new internally-developed chips are a clear negative for the company, as they loosen QCOM's grip over the CDMA chip manufacturing industry; while near-term risk for QCOM is minimal, longer-term if Samsung decides to completely halt its chip purchases from QCOM, QCOM's revenue would decline by 19.2%; also cited concerned that other co's could potentially follow this path of internal chip production.
At the time we suggested that a period of consolidation was possible in the wake of the substantial slump on that day and the stock was indeed able to stabilize for several sessions. The key from a chart perspective was whether it would be able to build value back above the chart point mentioned above. On April 7th it gapped higher but spent just roughly one minute minute above this barrier before backtracking. Shortly thereafter the 200 day and the support zone in the 33/32.90 area were breached.
From a positive standpoint QCOM has bounced near support at its Sep 2002 high at 31.07 (also approximates 62% retrace of Aug/Dec rally) and is vacillating slightly above the 32.90/33 area again. The next step to improving the recent negative bias would a sustained push above this level and the 200 day sma (black line at 33.53 today) amid stronger volume. Resistances thereafter are at 33.95/34.13 (April 08 gap), 34.30 (chart congestion) and 34.50 (38% retrace of March/April slide. QCOM is scheduled to report Q2 earnings after the close on April 23. The EPS consensus estimate is $0.36 vs the year ago of $0.20.
-- Jim Schroeder, Briefing.com
11:02AM Technical Levels: For the better part of last week, we harped on the same general theme -- 'the immediate bias is consolidative, while the broader technical outlook remains bullish.' Now there were instances of volatility last week, with gaps higher off the open both Monday and Friday. Yet in the aggregate, the price action had many of the mind numbing characteristics associated with healthy consolidation. Towards the tail end of the week, the Nasdaq was straining to make 1.2 billion total shares traded.
This first chart is a fifteen-minute chart of the Nasdaq in which each bar on the chart represents the opening and closing levels for each fifteen-minute time frame. In essence, this chart provides a detailed view of the price action over the preceding three sessions. Note this chart illustrates when and where several notable levels were observed -- many of the pivot points we've been looking towards are drawn in.
Yet this view also gets at the price action towards the tail end of last week. You can see the Nasdaq made two separate attempts at resistance in the vicinity of 1387 to 1390. Each test of this area failed, and the index subsequently sold off to favor support in the vicinity of 1350. Also note those 'tests' of the 1390 area really weren't that formidable. Each test occurred in a matter of two to four bars, with the balance of the trade activity favoring the lower half of that trading range.
As separate point, note the index lifted somewhat off that second test of the 1350 area. By Friday's close, the Nasdaq had edged just above its 20-period exponential moving average on this fifteen minute time frame.
For details on our broader view of the Nasdaq, please click here to visit Briefing.com's Stock Brief page. -- Mike Ashbaugh, Briefing.com
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