From Briefing.com: The lack of downside news, optimism over a strong Q3 and below average participation on a holiday and ahead of peak earnings season helped the indices move higher on Monday. The Dow gained 89.70 to end the session at 9764.38, the S&P 7.29, for a close of 1045.35, and the Nasdaq 18.53 to close at 1933.53. Tech stocks were generally strong. Within tech, top percentage gainers included Anadigics (ANAD 5.94 +0.79), which rose 15.3% after the company announced mid-day that it was shipping production volumes of its state-of-the art chips to LG Electronics for Verizon's camera phone, ECI Telecom (ECIL, 4.63 +0.48), which gained 11.6% after Veraz Networks, a ventured funded in part by ECIL, announced a new softswitch and media gateway platform for IP-based networks that will allow carriers to program services on the fly, saving weeks to months in development time, and Red Hat (RHAT 12.97 +2.19) and Open Text (OTEX 43.56 +3.07), which increased +20.3% and 7.6% respectively following positive comments from a sell-side firm that innovations within open source and enterprise software will help drive IT spending.
Optimism over a strong Q3 continues to buoy markets. Investors should take this opportunity to review holdings, assess valuations against company fundamentals and adjust portfolios, particularly in technology, where valuations often price in growth and margin expectations significantly above actuals as of the last reported quarter, thereby leaving little upside or margin for either a miss on top-line growth or operating improvements.--Ping Yu, Briefing.com
6:05PM Monday After Hours price levels vs. 4pm ET: The buying frenzy in the regular session has settled down, leaving the S&P futures, at 1044, flat with fair value, and the Nasdaq 100 futures, at 1418, 1 point above fair value. A number of quarterly earnings reports that have been coolly received by Wall Street has weighed heavily on the after hours trade.
To begin, video retailer Hollywood Entertainment (HLYW 16.80 -1.12) has announced Q3 (Sept) net income of $0.32 per diluted share, which exceeded the company's guidance of $0.30 but matched the Reuters Research consensus estimate. Same store sales increased 7% and fueled a 9% rise in total revenues, to $402 mln. That figure, however, was a bit shy of the consensus expectation of $408.8 mln. Due in part to that, the stock has sold off 6% in the extended session, and its losses have pressured shares of related companies BBI and MOVI.
Lubrizol (LZ 33.15 -0.29) stock has also traded lower in response to some disappointing surrounding its earnings pronouncement. The global chemical company lowered its FY03 (Dec) EPS guidance to $2.00-2.10 from $2.20-2.30 (consensus of $2.27). Managwment noted that demand for its finished lubricants has weakened since issuing its original outlook in July, and said that weaker-than-expected volume across most geographic markets is anticipated to continue through year-end. Competitors of LZ include the likes of CVX, EY, SC, and XOM.
Among the biggest losers, though, in tonight's trade is SonoSite (00C0 15.14 -4.59). The stock has nose-dived 23% after the provider of point-of-care, ultrasound imaging systems cut its Q3 (Sept) forecast. Management said that it looked for a net loss of $0.02-0.04 per share as compared to the Reuters Research estimate calling for a profit of $0.03. The company also announced that revenues should be approximately $20 mln (consensus of $22.5 mln) due to lower than expected US government orders attributed to year-end budget constraints and a sales force transition in the visual procedures markets.
Tractor Supply (TSCO 37.19 +0.29) is one company that has reported better than expected numbers. The largest retail farm and ranch store chain delivered an 11% rise in Q3 (Sept) EPS to $0.30, which was $0.02 ahead of both the consensus estimate and Tractor Supply's guidance on September 30. Net sales grew 24%, to $361.2 million, in line with Wall Street's consensus. Briefing.com would note that management raised its sales forecast, but not its EPS guidance, in September, owing to aggressive pricing during the quarter that suggested to us that sales momentum was not as strong as the figure might indicate.
Looking to tomorrow, the September quarter earnings' floodgates will be released, with noteworthy companies such as Bank of America (BAC), Delta (DAL), Johnson & Johnson (JNJ), and Merrill Lynch (MER) reporting their numbers before the market opens. For complete coverage on these, and other developments, be sure to visit Briefing.com's In Play, Earnings Calendar, and Guidance pages.-- Heather Smith, Briefing.com
Close Dow +89.70 at 9764.38, S&P +7.29 at 1045.35, Nasdaq +18.22 at 1933.53: The major averages spent the entirety of the session in positive territory as traders geared up for today's start of what is expected to be a strong Q3 earnings season... Motorola's (MOT 13.84 +0.05) Q3 report this morning supported this notion as the company checked in with EPS of $0.06, $0.03 above the consensus...
As a result of the underlying bullish sentiment, the major averages, as well as the small- and mid-cap indices, were catapulted to new 52-week highs, with the Dow closing above the 9700 level for the first time since June 2002 and the Nasdaq lifting to its best level since March of 2002... The move higher was broad-based and sponsored by the vast majority of the sectors... Among the most influential leaders to the upside were the software, disk drive, biotech, financial, transportation, retail, healthcare, housing, cyclical, and gold groups... The only laggards of note were the oil services and telecom sectors... The breadth figures reflected the favorable market distribution with advancers outpacing decliners and up volume leading down volume... Although volume was relatively light, it was largely attributed to today being a partial holiday...
4:31PM Asyst names new CFO (ASYT) 18.12 +1.17: Co names David L. White as Senior Vice President and CFO, replacing Geoffrey Ribar, whose planned departure was previously announced.
1:37PM Applied Micro upped to Equal Weight at Pacific Growth (AMCC) 5.30 +0.02: The upgrade from Under Weight is based on firm's opinion that co's long-haul comm biz has bottomed and should grow modestly. Firm also believes that recent JNI and IBM switch fabric business should offer the cl additional growth opportunity in the SAN Fibre Channel market. At cash per share of $3.40, and CY:04 EV/revenue multiple of 5x, which is significantly below those of its telecom IC peers, firm views the risk/reward as balanced for AMCC.
11:24AM IBM announces new storage software technology (IBM) 93.22 +0.55: -- Update -- Co announces the availability of the industry's first storage software technology designed to allow customers to easily share millions of data files in a heterogeneous environment and transform the management of data through automation. Based on the "Storage Tank" technology developed by IBM Research, the IBM TotalStorage SAN File System is designed to provide a single, centralized point of control to manage files and databases, which can help simplify administration and result in lower total costs.
11:09AM Nokia may be recepient of largest phone order in CDMA phone history (NOK) 17.33 +0.02: American Technology Research believes that the largest phone order in CDMA phone history has been issued by Verizon Wireless to Nokia. This phone will be launched on 10/14/03 and with a $50 rebate shared by both Nokia and certain channel partners, will cost users only $50. Firm believes the pure size of this order should help Nokia establish some CDMA market share of note and is a net positive for the company. Nokia sources say the order is large enough to ensure a profit despite the low price required to secure the business. However, firm believes that investors may view this as a negative as the $USD denominated deal may translate into lower EUR ASPs when the deal is reported next quarter.
9:57AM Veeco Instruments upped to Buy at D.A. Davidson; tgt $30 (VECO) 22.42 +0.24: Firm upgrades from Neutral based on view of an improving capital 2003 spending environment for thin film head manufacturers in 2004. While timing orders from thin-film head manufactures is challenging, firm believes that bookings acceleration could lead to earnings per share in excess of $1.25 by 2005 and provide upside to firm's 2004 est; says VECO remains attractively valued relative to peers in the metrology and process equipment markets, based on book value and price to forward sales and earnings; firm raises target from $21 to $30, a 35x multiple to its 2004 EPS estimate of $0.87.
9:46AM Trident Microsystems target raised to $22-$25 at CE Unterberg (TRID) 17.51 +0.31: CE Unterberg reiterates their Buy rating and raises their target range to $22-$25 from $13-$15; firm says their tour of Asia convinces them that TRID is the best-positioned digital TV merchant chip supplier globally.
9:32AM Integrated Silicon: Expect Q3 upside on heavy CE exposure -- SG Cowen (ISSI) 12.85 +0.10: Firm believes that its Q3 rev est of $27 mln may prove conservative given heavy consumer electronics exposure (45% of rev) and stabilization in SRAM and DRAM ASPs.
9:21AM Lam Research started with a Buy at Adams Harkness; target $36 (LRCX) 26.24: Adams Harkness initiates coverage of LRCX with a Buy rating and $36 target; firm believes that LRCX has gained significant share in the fast-growing dielectric etch mkt during this downturn, and early customer wins at this stage should lead to strong rev growth when volume orders start to flow; also, LRCX should enjoy tremendous leverage in the next upturn due to outsourcing.
9:19AM Genus Inc started with a Buy at Adams Harkness; target $8 (GGNS) 4.73: Adams Harkness initiates coverage of GGNS with a Buy rating and $8 target; firm says that while chemical vapor deposition continues to be a significant portion of the co's business (close to 50% this year), the co has now positioned itself as a leader in the niche atomic layer deposition equipment mkt, which is expected to drive much stronger growth as the industry moves to sub-90nm geometries.
Supertex, Inc. (SUPX) 20.10 +1.14: After the close, co reported Q2 EPS of $0.03, down from the prior years result of $0.06; revenues of $12.3 mln, down 7% from prior years results of $13.2 mln. No estimates were available for SUPX.
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