From Briefing.com: Tech shares opened Thursday's trading session in a good mood after Cisco Systems (CSCO 22.90 +1.10) offered investors a picture of renewed growth in the moribund service provider and enterprise markets. As with prior tech bellwethers posting good performance for the just ended quarter, CSCO's solid Q1 performance and upbeat outlook only charged the market long enough to move shares higher at the opening bell. Shares quickly lost steam and slipped into the red until about 1:00pm ET before buyers intervened and pushed shares steadily higher. By the close, advancers led decliners almost 2:1, with advancers finishing the day up on average a modest 2.5%, while laggards declined an average of 2.3%.
There is little impetus to sell shares despite generally high valuations in tech as business momentum is moving just beyond the cusp where lack of growth meets growth. By the same token, there is little impetus to buy. What this suggests is shares will continue to vacillate in a relatively narrow channel with a modest upward bias, interspersed with moments of higher volatility as investors seize on individual data points, such as Friday's release of October employment figures, as confirmation of a particular long / short thesis. Have a profitable trading day.--Ping Yu, Briefing.com
5:56PM Thursday After Hours price levels vs. 4pm ET: In an extension of the late-day rally that sent the Nasdaq to a new 52-week high, the after hours trade is sporting an upbeat tone. Presently, the S&P futures, at 1058, are 1 point above fair value, while the Nasdaq 100 futures, at 1447, are 5 points above fair value. A batch of mostly better than expected earnings reports have supported the postivie bias.
NVIDIA (NVDA 19.50 +1.33) has provided the Nasdaq a nice lift following its encouraging Q3 (Sept) earnings report. The fabless semiconductor company turned in EPS of $0.13, excluding charges, that were a penny above the Reuters Research consensus estimate. Revenues rose 13% to $486.1 mln (consensus of $479.6 mln). Competitors of NVDA include the likes of ATYT and INTC.
Entertainment studio Pixar Animation (PIXR 71.00 +0.84) reported Q3 (Sept) EPS of $0.23, which were an impressive $0.10 ahead of the Street's consensus. Revenues came in at $30.2 mln (consensus of $25.0 mln) and fell 71% from 3Q02 as the successful launch of the Monsters, Inc home video fell in the prior year period. Management commented on the full year by saying 'with Finding Nemo making its theatrical debut in many of the larger international territories throughout the fall, Pixar is on-track to have the best year in its history.'
Cypress Semiconductor (00 23.53 +0.47) stock has also received a bid following the small-cap semiconductor company's raised Q4 (Dec) outlook. Cypress increased its revenues and EPS guidance to approximately $230 mln and $0.12 from $224 mln and $0.09, respectively. This is the fourth consecutive quarter that the company has raised its forecasts. CY's competitors include the likes of ALTR, AMCC, AMCC, NSM, STM, TXN, VTSS, and XLNX.
Interactive entertainment software maker Activision (ATVI 14.50 -0.46) has seen its shares decline despite its better than expected Q2 (Sept) report and Q3 (Dec)/FY04 (Mar) revenue projection. The company reported a Q2 net loss of $0.11 (consensus called for a loss of $0.12) on revenues that dropped 31% to $117.5 mln. Activision also said that Q3 revenue should be $390 mln (consensus of $363.5 mln) and FY04 revenue should be $780 mln (consensus of $755.5 mln). The market's disappointment most likely lies in the fact that the company said that it is delaying its DOOM 3 video game to FY05.
Finally, tomorrow's market will take a good deal of its direction from the October employment report, which is scheduled to be released at 8:30 ET. The consensus estimate calls for the unemployment rate to remain unchanged at 6.1%, and for nonfarm payrolls to rise for the second month in a row by 65K. For Briefing.com's own perspective on the important release, be sure to visit the Looking Ahead Story Stock.
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
5:09PM Asyst Earnings Update, beats by $0.04 (ASYT) 19.78 +0.83: -- Update -- Company reports loss of $0.28, excluding amortization and $0.8 mln in restructuring and severance costs, vs the Reuters Research consensus of ($0.32).
4:19PM Asyst wins $26 mln contract (ASYT) 18.95 -0.28: -- Update -- Co announces that it has been awarded a $26 mln order to supply the Automated Material Handling System for a Generation 6 flat panel display manufacturing plant being built in South Korea.
4:17PM Asyst reports, guides Q3 revenues above consensus (ASYT) 18.87 -0.36: Reports Q2 (Sep) loss of $0.41 per share, which includes charges and is not comparable to the Reuters Research consensus of ($0.32); revenues fell 29% year/year to $51.3 mln vs the $50.0 mln consensus. Company sees Q3 revenues up 15% sequentially, which equates to revenues of $59 mln, consensus $56.6 mln. In touch with Reuters for comparable actual.
4:44PM Cypress Semi guides Q4 above consensus (CY) 23.06 unch: Company issues upside preannouncement for Q4 (Dec), now sees EPS of $0.12 (ex items), vs the Reuters Research consensus of $0.10 and prior pro forma guidance of $0.09, and revenues of $230 mln vs an estimate of $224 mln and previously guided revs of $224 mln.
3:10PM NVIDIA -- Earnings Preview (NVDA) 18.24 +0.14: NVidia is scheduled to report Q3 results after the close today, with consensus standing at $0.12 in EPS and $479.6 mln in sales. Merrill Lynch sees the co making $0.11 and $483 mln, which is near consensus owing to seasonal strength in XBox shipments as well as strong PC demand; however, firm believes that Q4 will likely be weak (firm sees Q4 EPS of $0.05 and $436 mln in sales, well below consensus of $0.12 and $479 mln) as a result of further mkt share loss to ATYT, the continuing shift to notebooks, and a seasonal decline in XBox processors. On the other hand, RBC Capital expects NVDA to make $0.13 in EPS on $482.8 mln in sales, but sees little that will improve the gross margin outlook for several qtrs, while Q3 should see a peak in higher-margin X-box contribution, followed by a decline in Q4.
2:39PM Semitool: Oppenheimer reits Buy rating; raises tgt to $15 from $9 (SMTL) 11.65 +1.80: Oppenheimer raising its FY04 est to $0.25 from $0.07 based on improving margins and increasing FY05 est to $0.79 from $0.48 (Reuters Research consensus for FY04 is $0.22 and for FY05 is $0.63). Firm says that SMTL's improving margins and reduced operating expenses are expected to produce an expansion of operating margins to 18% by 2005. On this assumption, firm values stock at 4x estimated 2005 gross profits of $3.75 a share and has raised its 12-month price target to $15 from $9.
1:10PM Maxim Integrated presents long-range plan at investor meeting (MXIM) 49.90 -0.36: See press release for details. Note that stock quickly sold off from $50.25 to $49.53 immediately following the release of this information.
9:32AM Cisco results positive for Micromuse - Raymond James (MUSE) 8.46 +0.01: Raymond James maintains their Strong Buy rating and $11.50 target on MUSE, saying last night's CSCO report (MUSE's largest OEM channel partner) provides investors with a positive macro data point for MUSE; firm says CSCO cited solid growth in the service provider mkt, which is MUSE's historical strength, and is seeing "early signs of spending" by service providers domestically and abroad; in addition, CSCO posted strong growth in its advanced technology mkts (which include IP telephony, optical, storage, wireless LAN, security, and home networking), and firm believes IP telephony and wireless network deployments drive demand for MUSE's network mgmt products in the long run.
Aeroflex (ARXX) 11.63 +1.25: Before the open, reported Q1 (Sep) earnings of $0.05 per share, $0.01 better than the Reuters Research consensus of $0.04; revenues rose 23.0% year/year to $81.7 mln vs the $79.5 mln consensus. Company sees Q2 EPS of $0.07, ex items, vs consensus of $0.06.
Amkor (AMKR) 19.12 -0.55: Prices 7 mln share offering at $19.
3:00PM Looking Ahead - Employment Report : There's no way around it. In looking ahead, you can't look past the October employment report. You can't look past it for the simple reason that the employment report offers the best monthly glimpse of the economy.
As always, if you want to catch a glimpse of Briefing.com's expectations for the report, you can do so by visiting our Economic Calendar and clicking on the link for any one of the core components of the report (i.e. nonfarm payrolls, unemployment rate, hourly earnings, or avg. workweek). Consensus estimates can also be found on the calendar, but to save you a few clicks of the mouse, they are as follows: nonfarm payrolls +65K; unemployment rate 6.1%; hourly earnings +0.2%; and avg. workweek 33.8 hours.
The nonfarm payrolls number will be the focal point as the market is eager to see continued evidence of job creation. Accordingly, a decline of any size will be viewed as disappointing and should set the stage for an opening retreat in the equity market. A decline would indeed be a surprise, though, given the pickup in final demand and production, and the improving trend in weekly initial claims. We would add, too, that weekly claims were down in the employment survey week of Oct. 18 and that the sub-400,000 trend in initial claims suggests that October payrolls will post another small gain.
A small gain (i.e. anything less than 100K), of course, will be dismissed by skeptics as statistically insignificant, but there can be no denying that any gain is psychologically important as it provides added foundation for repudiating the jobless recovery argument.
Last month, the statistically insignificant 57K increase in nonfarm payrolls prompted a broad-based rally in the stock market. Sizable gains tomorrow in the event of a similar increase, and/or a notable revision downward to the September number, may be harder to come by as the market has been anticipating an encouraging report. We think the market will receive one, and what's more, we think the market would remain resilient in the event of a disappointment knowing that employment is a lagging indicator and that it is inevitable that payroll gains will soon become statistically significant with 4.0%+ GDP growth. For more on that very issue, you'll want to read The Big Picture brief written earlier this week. -- Patrick J. O'Hare, Briefing.com
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