From Briefing.com: After six-and-a-half hours of trading, the major indices ended Wednesday pretty much where they began the day. Although they did close the session in negative territory, the losses, frankly, were negligible relative to the sizable gains achieved on Tuesday. Lending to the market's resilience was the underlying bullish sentiment that was fueled by the strong Housing Starts and Building Permits data and the decline in long-term rates.
The drop in rates was somewhat counter-intuitive given the strong economic data, but allegations of intervention by the Bank of Japan, new corporate and agency supply that was readily absorbed, and talk of curve flattener trades contributed to the favorable price action in the Treasury market.
As for the equity market, it took some comfort in the encouraging data, but at the same time, it was held in check by reports of Hurricane Isabel's impending arrival, calls for NYSE Chairman Dick Grasso's resignation, and a batch of disappointing earnings updates from the likes of DuPont (DD 42.47 -1.50), The New York Times (NYT 42.87 -1.65), and Jack In the Box (JBX 19.86 -2.93).
Before you start thinking you're on the wrong page, rest assured that this is the Tech Stocks page. The detail above is simply a roundabout way of saying there wasn't much happening in the tech sector on Wednesday. There was little in the way of notable calls from the analyst community, little in the way of actionable headlines, and little in the way of conviction on either the buy side or the sell side. The tech sector, if you will, simply took a breather, but given the run it has had of late, that is to be expected. Look for economic data to set the tone for Thursday's trading as the Initial Claims, Leading Indicators, and Philadelphia Fed Index are all scheduled for release.-- Patrick J. O'Hare, Briefing.com
6:20PM Wednesday After Hours price levels vs. 4pm ET: A sluggish after hours trade that mirrors the regular session as the S&P futures, at 1025, are 1 point above fair value, and the Nasdaq 100 futures, at 1381, are also 1 point above fair value. A few earnings warnings/misses have curtailed buying interest in the extended session.
To begin, CKE Restaurants (CKE 6.66 -0.54) , the owner of Carl's Jr and Hardee's restaurants, missed the Reuters Research consensus EPS estimate by a penny at $0.10. Revenues rose 2% to $333.7 mln, due in same store sales increases of 2.3% and 1.0% at Carl's Jr. and Hardee's restaurants, respectively. As a result, the stock has slumped 8%, and taken with it competitors such as JBX, MCD, and WEN.
One company, however, that preannounced to the upside was footwear maker Vans (VANS 10.32 +1.22). The company said it looked for Q1 (Aug) EPS results to be approximately $0.04-0.07, excluding charges, above it previous guidance of $0.58. In addition, Vans said that FY04 non-GAAP guidance for its base business would be approximately $0.47-0.52 as compared its previous guidance of $0.35-0.40. The Reuters Research consensus estimates were set at $0.58 and $0.38, respectively.
As for actual earnings reports, Global Payment (00C 37.63 -1.32) announced Q1 (Aug) EPS grew 13% to $0.44. That figure was a penny ahead of the consensus estimate, something Briefing.com predicted would happen. The company went on the reaffirm its FY04 (May) revenue guidance of $542-562 mln and EPS of $1.57-1.64, in line with the Reuters Research estimates of $574.7 mln and $1.62, respectively.
Herman Miller (MLHR 22.60 -1.10) also had encouraging news for investors, reporting Q1 (Aug) EPS of $0.11, a penny ahead of the consensus estimate. Revenues fell 7% to $324.5 mln while operating expenses continued their year-over-year improvement. The furniture company said it expected Q2 (Nov) EPS in the range of $0.12-0.18, excluding items (consensus of $0.16), and revenues of $330-350 mln, which was below the consensus expectation of $375 mln. Consequently, shares of MLHR have fallen 5% in the after hours.
Tomorrow's market will pay careful attention to initial claims for the week of September 13, and the Philadelphia Fed Index for August. The market expects weekly jobless claims to decline by 12K to 410K, and the Philly Fed Index to drop to 18.0 from 22.1.
For more detail on these, and other after hours developments, be sure to visit Briefing.com's In Play, Earnings Calendar, Guidance, and Economic Calendar pages. -- Heather Smith, Briefing.com
3:38PM Intersil -- Analyst Day Preview (ISIL) 28.18 -0.51: Tomorrow morning ISIL is scheduled to webcast their Analyst Meeting presentation at 8:30 AM ET. Thomas Weisel believes that the co is tracking at or above the high end of its Q3 sequential rev growth guidance of 3-5% (EPS guidance is $0.15), and would not be surprised if the co raises its guidance during the analyst day; firm also believes that the qtr is tracking well due to seasonal strength in PCs and the secular shift toward notebooks, an area in which ISIL has been gaining share with its power mgmt products, and thinks that the co's Elantec unit (about 24% of Q2 sales) has been gaining momentum in the optical storage area. SG Cowen also thinks Q3 sales are tracking to at least the higher end of mgmt's guidance, and expects the co to address new opportunities in power mgmt outside of the desktop (where the co faces increasing competition from ADI and SMTC), and expects ISIL to discuss the recent foundry services agreement with IBM and its future manufacturing strategy.
12:44PM Standard Micro upped to Buy at Craig-Hallum (SMSC) 24.05 +0.95: The upgrade from Neutral follows yesterday's upside earnings report. Firm believes SMSC is benefiting from a strong PC market for both mobile and desktop PC's and also experiencing strong demand in its higher margin non-PC I/O biz. Firm raises its 2004 rev est to $213.7 mln from $178.4 mln and boosts its 2004 EPS est to $1.09 from $0.25. Firm introduces a price tgt of $32 (25x CY05 est).
11:40AM Nasdaq Composite positive but slips off high (COMPX) 1888: -- Technical -- Generally positive but choppy trade thus far today. The index failed near resistance highlighted in the The Technical Take (1896--50 month exp mov avg) with intraday supports now at 1882/1880 area and 1875. Continued posture above these levels leaves the door open for another upside foray with initial resistances at 1900 and 1908. It takes slide below 1865/1861 to inflict chart damage to the favorable pattern of the last few days.
9:44AM Advanced Micro Q4 looking up -- Oppenheimer (AMD) 12.27 +0.03: Oppenheimer says that Intel spent almost no time discussing the imminent launch of its next generation desktop processor codenamed Prescott at its Developer Forum, and many industry participants felt Prescott systems would appear very late in Q4, essentially missing the holiday selling period; if Prescott ships late in Q4, firm believes that this is positive for AMD's Athlon 64 and Athlon XP processors, and as a result the outlook for AMD's Q4 is looking up.
9:39AM Asyst defended by Adams Harkness (ASYT) 15.31 -0.08: --Update-- Adams Harkness reiterates their Buy rating and $20 target after the co's CFO resigned for personal reasons; firm is not concerned about accounting issues, and continues to like the ASYT story and recommends that investors take advantage of any weakness in the stock to buy it.
9:07AM Mattson started with a Buy at Needham (MTSN) 9.28: Needham initiates coverage with a Buy rating and $14 target; firm says the co has recently completed the final stages of a major restructuring and they believe the benefits to profitability should become apparent next year; also, the co stands to benefit from spending recoveries in DRAM, Japan, and foundry, and firm notes that the stock trades at a compelling relative valuation.
Transmeta (TMTA) 3.06 +0.76: Announced a collaboration where NVIDIA has agreed to develop its highly integrated media communications processors for Transmeta's next generation Efficeon processor, enabling multimedia and graphics capabilities for a wide range of mobile PC platforms.
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