From Briefing.com: 08:45 ET More on MOT Co's chief operating officer comments that overall, Q3 was a strong quarter for co and one that "signals some positive momentum in key aspects of our business." Outgoing CEO Galvin says the "combination of clear business portfolio choices and these stronger third-quarter financial results represent substantive early indication of a reinvigorated Motorola and they show the potential for continued profitable growth momentum."
08:40 ET MOT Motorola tops consensus for Q3, issues favorable guidance for Q4 (13.79) -- Update -- Co reports Q3 EPS ex-items of $0.06 a share, $0.03 better than the Reuters Research consensus. On a GAAP basis, co earned $0.05. Sales rose 5% to $6.83 bln (consensus $6.44 bln). For Q4, co sees EPS ex-items of $0.11-0.15 on sales of $7.5-7.8 bln -- consensus $0.12 and $7.426 bln.
08:28 ET CREE Cree upgraded to Buy at Needham (20.77) -- Update -- Firm is revising its rating to Buy from "under review" based on lowered risk after the former CEO dropped his securities-fraud claim and the special committee found no evidence of allegations. Firm introduces a price tgt of $23. (Briefing.com note: CREE is currently trading down 1.4% in reaction to a SoundView downgrade; see 07:23 comment).
7:56AM Applied Materials estimate raised above consensus (AMAT) 20.75: Piper Jaffray raises their FY04 EPS est to $0.50 from $0.45 (above consensus of $0.46) based on their belief that the co's rev plan for 1H04 has solidified and that product improvement design efforts should provide an incremental boost to gross margins; firm believes that orders looming in 1H04 from Samsung, TSM, Renasas, Elpida, and Matsushita could provide incremental rev strength by mid-2004.
7:54AM Qualcomm CEO sees no abnormally high handset inventories -- Reuters (QCOM) 44.31: In a Reuters interview, CEO Irwin Jacobs said he sees no abnormally high handset inventories ahead of the key year-end selling season, because Chinese carriers have mostly gotten rid of their stockpiles and that he sees steady quarterly sales growth in the next fiscal year, as the chip maker prepares for increased competition and more advanced phones. When asked if he expected another bumper year of 30 percent revenue growth, he said much depended on growth in developing countries like China and India, but also on the adoption of third generation (3G) networks in Europe, Japan and South Korea.
7:51AM Intel competitors stepping up competition -- WSJ (INTC) 30.43: The Wall Street Journal reports competitors of INTC are "stepping up" their attacks this week at the Microprocessor Forum, in San Jose, CA. The latest chips attack markets outside Intel's PC stronghold. TMTA plans to strike back this fall with Efficeon, which is a chip that is expected to be about 50% faster than the Crusoe and top Pentium M in performance at similar energy-consumption levels. SUNW and Fujitsu plan to put two microprocessor brains, dubbed cores, on their forthcoming chips, and exploit a technology called "multi-threading," in which chips execute parallel strings of instructions known as threads to head off Intel's Itanium 2 in high-end server systems.
7:47AM SanDisk announces adverse court ruling in Ritek patent case (SNDK) 72.95: Co announces that the U.S. District Court for the Northern District of California granted defendant Ritek Corporation's motion for summary judgment of non-infringement. In its order, the court found that the accused Ritek CompactFlash memory cards did not infringe on SanDisk's patent. SNDK says the order does not affect the validity of the patent. License obligations under SanDisk's existing licenses are not impacted by the court ruling and, accordingly, the company does not expect royalty income to be affected. SNDK plans to appeal the ruling.
7:47AM Lehman upgrades select software stocks : Lehman raises their view of the Infrastructure & System Mgmt Software group to Positive from Neutral based on their belief that Q3 was a strong qtr for the bulk of the software universe as close rates have increased and the overall environment is gently improving, and consequently their confidence in Q3 results is high and they believe that the software sector is well positioned for a strong Q4. Firm upgrades VRTS and CA to Overweight from Equal-Weight, and upgrades BMC to Equal-Weight from Underweight. In a separate note, firm upgrades SNWL to Overweight from Equal-Weight based on their belief that the co is in the early stages of a turnaround, which should gain speed in 2004.
7:42AM Powerwave: CIBC comments on Nortel exposure (PWAV) 7.20: Based on firm's most recent channel checks, CIBC now believes that it was too conservative about the downside risk to firm's 2004 est; however, near term outlook is strong. Firm now believes that 32%-50% of PWAV revenue for '04 is at risk of being lost to internal NT production of both GSM and CDMA power amplifiers; firm is unable to see how PWAV would be able to offset the potential loss of revenue with growth in 3G and at carriers. While PWAV may be able to save its NT business, firm believes it would need to concede to significant price concessions in order to keep it, which would then permanently damage the gross margins of the co below previously expected levels.
7:34AM Micron downgraded at BofA (MU) 12.78: Banc of America downgrades to Neutral from Buy and cuts their target to $11 from $19; firm says recent checks into the Taiwan spot mkt indicate DRAM spot prices continue to decline, and OEM contract pricing for DRAM in the second half of Oct is likely to remain flat with the first half; while we may be a few weeks away from the peak of the DRAM purchasing cycle, firm believes the ongoing weakness in DRAM spot prices as well as plentiful supply in that marketplace are strong negative indicators.
7:32AM Microsoft increases job postings -- Piper Jaffray (MSFT) 28.91: -- Update -- Piper Jaffray says Microsoft has significantly stepped-up its hiring efforts. Specifically, the company currently advertises 2,173 open US positions, up 28% from July 25. Job posting data supports the firm's belief that Microsoft will extend its music download offerings (currently limited to Europe) into the US. With increased hiring in a number of new product areas (including security and business intelligence), firm believes that Microsoft remains focused on fleshing out its newest efforts.
7:23AM Soundview upgrades Altera, downgrades Texas Instruments and Cree : Soundview upgrades ALTR to Outperform from Neutral based on their belief that a fundamental shift is taking place in favor of the co; firm's industry sources are bullish about ALTR's rev potential in 2004-05 resulting from current design win activity, and firm notes that ALTR trades at a 2% discount to XLNX vs a historical 6% premium. Firm also downgrades TXN to Neutral from Outperform based on valuation, and downgrades CREE to Underperform from Neutral based on their belief that the co will experience faster than normal blended ASP declines, which will translate into gross margin pressure; maintains CREE target of $15.
7:13AM Cisco Systems router chosen by Verizon (CSCO) 9.08: Co announces that Verizon has selected the Cisco 12000 Series Router platform for its national IP VPN network. It will be part of Verizon's expanded network to deliver Layer 3 IP/MPLS Virtual Private Networks to Verizon's enterprise customers.
7:09AM Motorola to release earnings this morning in reaction to Moody's downgrade (MOT) 13.79: Co announces that it will be releasing Q3 results today before the opening of trading as a result of the announcement on Friday afternoon by Moody's of a downgrade in the credit rating of Motorola. Co has made this decision to provide investors a more complete perspective as they evaluate their view of the co. MOT hold its conference call to discuss results at 5ET. MOT had been scheduled to report tomorrow evening.
7:02AM Pixar shares look richly priced -- Barron's Cover Story (PIXR) 71.56: Barron's cover story cites concerns over Pixar's shares, which seem priced for "continued perfection." The stock trades for a lofty 40x projected 2003 profits of $1.75 a share and for 55x estimated 2004 earnings of $1.30 a share. Pixar is expected to generate $235 million in revenues this year, up from $201 million in 2002, resulting in a high price/sales ratio of 18. While the success of "Nemo" and investor optimism has increased the stock 26% since late-May, several analysts have been bearish on the stock. Michael Savner of Banc of America Securities believes the peg fair value for Pixar in the low 60s, and Rich Bilotti of Morgan Stanley carries a price target of 45. The article suggests its shares appear to be richly priced and already discount a positive outcome for a new distribution deal and future movies being as successful as "Nemo". In addition, it is somewhat of a stretch to value a co at $4 billion with a library of just five films that will be able to produce just one movie annually at least through 2007.
6:57AM Imclone and Bristol-Myers BLA accepted for Erbitux, also granted priority review (IMCL) 42.00: ImClone and Bristol-Myers (BMY) announced late Friday evening that the FDA has notified ImClone Systems that it has accepted for filing and review the co's Biologics License Application (BLA) for the use of Erbitux (cetuximab) in combination with irinotecan for the treatment of patients with EGFR-expressing irinotecan-refractory metastatic colorectal cancer. As requested, the application also has been granted priority review designation by the FDA. (Briefing.com note: Although the acceptance of the BLA was widely expected it could provide some buying interest in companies with similar drugs in the pipeline, namely ABGX and OSIP; note that IMCL shares advanced 2.90 pts Friday in reaction Ryan Beck note indicating that BLA acceptance would occur within a few days; see Briefing.com archive).
6:47AM Early Research Calls : Smith Barney downgrading EBAY to Sell from Hold, seeing downside risk to $48... SoundView upgrading ALTR to Outperform from Neutral; also downgrading TXN to Neutral from Outperform and downgrading CREE to Underperform from Neutral... BofA upgrading DKS to Buy from Neutral; also downgrading MU to Neutral from Buy, cutting tgt to $11 from $19... JP Morgan adding TAP.B to Focus List with $21 tgt... Piper Jaffray raising 2004 estimates on AMAT.
6:39AM European Summary : European indexes showing solid gains paced by Royal Philips Electronics (PHG), SAP AG (SAP) and Nokia (NOK) on optimism they'll signal improving sales when they release earnings this week. Vodafone Group Plc (VOD) and Microsoft Corp. (MSFT) said they would jointly promote among software developers the creation of applications that easily work on both mobile phones and personal computers. EMI Group Plc, the world's No. 3 record company, fell 2 percent after the London-based Sunday Times reported the company may drop its plan for the $1.5 billion takeover of AOL Time Warner's (AOL) record unit because of proposed fees from lenders, Bloomberg reporting. The dollar rose for a second day in three against the euro in London trading... UK +0.72%, France +1.16%, Germany +1.74%
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