From Briefing.com: 10:12AM Nasdaq Composite gaps higher, pulls back (COMPX) : -- Technical -- The index gapped sharply higher and shortly thereafter began to pull back. The index is still clinging to a favorable tone but has declined more than 1% off the high. The recent extension of the dip leaves the index hovering slightly above support at the recent highs (1043/1042). As long as this barrier holds, the short term damage will be limited. A move through resistances at 1952 and 1956 is needed to improve the pattern of the pullback. Next support is at 1935 and 1930
9:42AM Unterberg comments on INTC implications : The firm comments on INTC implications for the following semiconductor companies in its universe: MRVL, BRCM, GSPN, ASYT/RTEC. MRVL should feel a positive impact as PC units, particularly in the mobile space were up more than expected. BRCM and GSPN also could benefit from higher portable/notebook units given momentum in WLAN 802.11g. ASYT/RTEC getting mentioned due to management's 2004 300mm focus and 90nm healthy and ready to ship, which is contrary to rumors the co was encountering problems with the technology.
9:07AM Gapping up/down : Pre-market movers of note include INTC +6% (beats on top and bottom lines, target raised to $40 at Merrill Lynch), AMD +5% (in sympathy with INTC), GM +1% (beats by $0.13), SNDK +6% (blows out the consensus, raises rev outlook), VSNT +28% (renews pact with IBM), SCOX +26% (started with a Buy at Deutsche; target $45), IONA +16% (beats by $0.06), TMTA +14% (up with INTC), TALK +11% (retires in full its remaining $12.5 mln debt held by AOL, discloses that AIG purchases shares), TER +7% (reports in line), LEXR +7% (secondary play to SNDK)... On the downside, HDI -4% (beats on EPS, but revs a little light), LUME -15% (audit committee to conduct independent investigation), GERN -4% (files 5 mln share offering), STJ -2% (beats by $0.02, on light revs).
8:45AM Novellus upped to Buy from Hold at Berean Capital (NVLS) 37.42: Novellus upped to Buy from Hold with a price target increased to $42 from $40 at Berean Capital. The firm believes the following: the semiconductor capital equipment industry is on the cusp of a secular growth, the stock has some upside and will be buoyed by industry outlook and playing to expectations based on the bookings growth and a P/B for NVLS of 2.75x versus its peers at 3.2x, the industry outlook for bookings is positive and should provide earnings and top line momentum. The analyst notes the Q4 order swing to 5-10% was due to a last minute $10-12 million order from MU for Sabre tools and SMIC jumping in and ordering 300mm tools.
8:41AM ESS Tech tax exemption ruling to have favorable impact on earnings (ESST) 12.07: Co announces that license and royalty fees from MediaTek have received favorable tax treatment from the Taiwanese government. This favorable ruling reduces the withholding tax rate on the $45 mln in license income, which had been recognized in Q2 of 2003, increasing Q3 earnings by an estimated $0.12 per diluted share.
8:27AM Exar Corp beats by a penny, ex items, guides Q3 in line (EXAR) 16.08: Reports Q2 (Sep) non-GAAP earnings of $0.04 per share, excluding an asset impairment write-down, $0.01 better than the Reuters Research consensus of $0.03; revenues fell 14.7% year/year to $16.2 mln vs the $16.0 mln consensus. Co also guides Q3, sees EPS of $0.03-0.04, vs the R.R. consensus of $0.04, and revenues of $16-17 mln vs an estimate of $17 mln.
8:24AM Linear Tech upgraded at Wedbush Morgan (LLTC) 42.00: Wedbush Morgan upgrades to Buy from Hold following stronger than expected earnings; firm says they are quite confident that growing mobile PCs, high-end cell phones, consumer electronics, and automotive will accelerate rev growth and will allow it to exceed the still conservative consensus ests of $737 mln for FY04 and $884 mln for FY05; target is $50.
7:34AM Intel target raised to $40 at Merrill Lynch (INTC) 31.08: Merrill Lynch reiterates their Buy rating and raises their target to $40 from $32 after the co beat Q3 ests last night; firm says the stock looks significantly undervalued at 26x their new 2004 est of $1.20 (up from $1.00), and they see solid ASPs, falling depreciation, and little real competitive threat from AMD for the intermediate term.
9:43AM Intel (INTC) $31.08 +0.28 Last night, Intel published Q3 results that underscore the extradordinary operating leverage underpinning their businesses. The company posted fully diluted EPS of $0.25 on revenue of $7.8B, up 20.4% year-over-year. The combination of higher revenue and lower processor unit costs drove gross margin to 58.2%, up from 48.8% in Q3:02 and 50.9% in Q2:03. Management did not see any evidence of inventory buildup in end-market channels, indicated the company gained 1% point in market share, and guided for Q4 revenue of $8.1B-$8.7B and gross margin of around 60%. As we stated in our earnings preview, we think Intel's investments in process technologies and product development positions the company to capture share across product and geographic markets, and will lead to substantial yield enhancements and efficiencies and reflect on the gross margin line. Intel's Q3 results and guidance reflect the phenominal leverage within their businesses. The company is well on target to achieve our year-over-year revenue growth of 10% and gross margin of 56% for C03, and 15% top-line growth and gross margin of 59% for C04. Please visit the Stock Brief page for our analysis of Q3 results by market segment and an analysis of growth, margin and valuation drivers.Ping Yu, Briefing.com
9:28AM The Technical Take : The steady march higher continued on Tuesday with all the market averages establishing fresh intrasession and closing 52-wk highs. Volume increased on the move but this was not surprising given the weaker semi-holiday type trade noted on Monday. Overall it has been a stellar performance of late (Nasdaq Comp up nine out of last ten) and it is hard to find fault but if you were going to nit-pick, we would like to see volume stronger than it has been as the indices push to new highs.
Little on the sector front that presents any concerns either as strength continues in economically sensitive groups such as banking, housing and cyclical have been pacing the way. On the downside we have seen pressure of late in oil service, drug and gold which of course are not key leadership groups. The one tech sector that is also in the underperforming category is telecom (XTC) but the sector has not broken down but instead is merely trending near the mid-point of its now four month trading range. For this morning we have a strong upside bias in the semi sector (Semi HOLDRs up 3.8% pre-market) in the wake of the Intel news.
Nasdaq Composite: Given the strong performance in the key semi sector it is no surprise to see the pre-market readings for the tech dominated Nasdaq pointing to a gap higher opening. The initial area of interest is in the 1960/1964 area which marks weekly highs as well as a Fibonacci extension target. While there is not a complete void of subsequent resistances, there is relatively little of interest thereafter until the 1980 and 1985/1987 levels in front of the psych barrier at 2000. The market does not move up in a straight line and as mentioned it is already up nine out of the last ten sessions |
