From Briefing.com: Stocks opened lower as investors waited for Greenspan's semi-annual report on monetary policy before the House Financial Services Committee on Wednesday but rallied after Greenspan's notes, released at 11:00am ET, indicated that the climate favors sustained economic growth and the Fed remains patient towards raising rates.
The Dow (DJI 10737.70 +123.85) rose 1.2%, the S&P (SPX 1157.76 +12.22) gained 1.1% and the Nasdaq Composite (IXIC 2089.66 +14.33) added 0.7%. Large cap semiconductor led tech shares higher. The Philadelphia Semiconductor Index (SOXX 526.81 +9.87) climbed 1.91%, with advancers outpacing decliners 7.5:1. In contrast, the Briefing.com Tech Index (BTI) rose 1.0%. Advancers led decliners 1.7:1 with advancers rising 3.1% and decliners dropping 2.1%.
Hewlett-Packard (HPQ 23.84 -0.28) fell 1.2% despite affirming Q1 to the high end of guidance. HPQ is one of the more attractively valued names within tech. On a price multiples basis, HPQ trades at 0.93x F04 revenue of $77.9B and 0.88x F05 revenue of $82.9B; 16.6x F04 EPS of $1.44 and 14.7x F05 EPS of $1.62. We think HPQ shares are more fairly valued in the low $30s. We would continue to accumulate shares.
Among today's movers, Novatel (NVTL 16.76 +4.17) jumped 33% after posting a narrower loss and announcing a deal with Verizon (VZ 38.20 +0.60) to provide 3G cards for PCs, Wavecom (WVCM 13.55 +1.92) rose almost 17% after posting Q4 results and Remec (REMC 7.80 -2.58) slumped 25% after missing Q4 expectations and lowering guidance.
Looking ahead to Thursday, Greenspan wraps up his monetary policy report with testimony before the Senate Banking Committee. Analog Devices (ADI 49.99 +1.22), Dell (DELL 33.69 +0.41) and Nvidia (NVDA 24.25 +0.82) report after the close.--Ping Yu, Briefing.com
6:32PM Wednesday After Hours prices levels vs. 4 pm ET: Buyers have disappeared into the woodwork following this session's rally - which sent the Dow to its best levels since June 2001 - off Fed Chairman Greenspan's testimony to the House Financial Services Committee. The FOMC head confirmed that the economy was strengthening, and that inflation remained low enough to allow the central back to remain 'patient' in raising rates.
As of now, the buying frenzy has died down with the S&P futures, at 1156, 1 point below fair value, and the Nasdaq 100 futures, at 1516, 3 points below fair value. Tonight's corporate announcements have come from a wide array of companies, and the below table lists the more notable news items.
After Hours Mover % Change Move Reason for Move
Brocade (BRCD) +3% Computer storage device maker tops the Q1 (Jan) Reuters Research EPS estimate by a penny on revenues that rose 18% to $145.0 mln; Company notes this was the 4th consecutive quarter of improved revenue, gross margin and operating margin; In Briefing.com's earnings preview on In-Play, we profiled two brokerage firms that expected BRCD to come in above estimates
Computer Sciences (CSC) -5% Computer services company beats the bottom-line consensus estimate by a penny, but comes up short on revenues in its Q3 (Dec) report; Management says FY04 (Mar) EPS will be $2.80-2.84 versus the consensus of $2.83; Investors remain unimpressed and take profits from the stock's 5%, 5-day move
InVision (00C0) +4% Provider of explosives detection systems to the Transportation Security Administration shows upside in its Q4 (Dec) and reiterates its FY04 guidance of $310 mln in revenues; Company notes that it is in negotiations with the TSA regarding its initial 2004 equipment order.
Sonus Networks (SONS) -22% Telecommunications equipment maker says that its auditors are investigating how previous revenues were reported, a move that could affect the company's results for 2003 and past years; SONS had sold off 11% in today's regular session in a move Briefing.com highlighted on In-Play
Whole Foods (WFMI) -2% Organic food retailer exceeds the Street's estimates in its Q1 (Dec) report, guides Q2 (Mar) in-line, and raises its outlook for FY04 (Sept); Now sees FY04 EPS at $1.93-2.02 from $1.88-1.96 earlier; As the Reuters Research estimate was set at $1.97, traders lighten positions, owing in part to WFMI's rich valuation at 37x estimated FY04 earnings
Tomorrow, the market will have Dr. Greenspan's testimony to the House's financial counterpart in Senate (the Senate Banking Committee) to contend with, as well as a number of economic reports. December Business Inventories, initial claims for the week of February 7, and January Retail Sales are all due out, and for a preview of the latter, visit the Looking Ahead column. Tomorrow night, Dell (DELL) will be releasing its Q4 (Jan) report.
For more detail on these, and other developments, be sure to visit our Stock Market Update and Daily Sector Wrap.
-- Heather Smith, Briefing.com
5:51PM Staktek Holdings and Infineon reach settlement (STAK) 13.66 -0.69: Co announced that it has reached a settlement of the patent and trade secret lawsuit related to leaded package stacking technologies brought by co against Infineon Technologies. Under the terms of the settlement, STAK and Infineon have agreed to mutually release all claims made against the other in the litigation. Additionally, STAK has granted Infineon a license to its intellectual propertiesat issue in the lawsuit and to other patents in co's leaded package stacking patent portfolio. All other terms of the settlement are confidential.
4:30PM White Elec Designs reports (WEDC) 9.00 +0.17: Reports Q1 (Dec) earnings of $0.07 per share, which includes charges that amount to $230,000, or nearly $0.01. Adding charge back in, company came in in line with Reuters Research consensus of $0.08; revenues rose 10.7% year/year to $25.9 mln vs the $26.5 mln consensus.
4:13PM Broadcom acquires patent portfolio from Cirrus Logic (BRCM) 40.35 +0.00: BRCD announced that it has acquired a portfolio of storage technology patents from CRUS. In connection with the acquisition, BRCM paid CRUS the sum of $18 mln in cash, and no further payments are due under the patent purchase agreement.
3:32PM Emulex discloses settlement of patent dispute with Qlogic (ELX) 26.40 -0.28: -- Update -- Co disclosed in today's 10-Q that on Dec 15, 2003, the co and QLogic tentatively agreed to settle their previously-disclosed patent infringement claims, and mutually release each other from any liability associated with the claims in exchange for payments by QLogic. QLogic will be required to make an upfront payment and pay quarterly royalties associated with the future sales of certain products.
2:55PM HPQ guides in line for Q1 (HPQ) 24.86 +0.74: Co sees Q1 (Jan) EPS of $0.35, ex items, and sales of $19.5 bln, Reuters consensus is $0.35 and $19.4 bln, respectively. Co will report after the close of market on Feb 19th.
12:22PM ANAD: Hearing that Anadigics has won the Centrino power amp business at Intel 7.44 -0.01:
11:44AM Notable Mentions: SFA, HLIT, ARRS, RAD : Communications Equipment: Brean Murray believes that a Comcast/Disney combination would lead to an accelerated emphasis on deploying new video distribution technologies such as High-Definition TV, video-on-demand (V.O.D.), and digital video recorders (D.V.R.'s); firm believes that Scientific Atalanta (SFA 34.54 +0.59) and Harmonic (HLIT 11.91 -0.01) (a leading supplier of gateways using Comcast's V.O.D. deployments) will be prime beneficiaries of Comcast's strategy of dominating the pay TV business; firm also thinks that the battle for Disney will be a distraction to Comcast's VoIP strategy, and that if Comcast is successful in acquiring Disney, deployments of voice would get pushed out even further, which would be negative for supplier Arris (ARRS 10.82 -0.30)... Rite Aid (RAD 5.73 -0.06): Merrill Lynch doubts that a significant bid from RAD for all of Eckerd will be forthcoming (see 7:26 comment); given RAD's slender EBITDA/interest coverage of 2.5x forecast for 2004, firm believes that any involvement here would clearly worsen RAD's finances and potentially make its own survival contingent on a successful Eckerd turnaround.
Sandisk (SNDK) 52.28 +2.03 : The Wall Street Journal reported Sandisk is introducing new cartridges that hold 32 megabytes of data for $14.99, which is about half the price of its prior 32-megabyte cartridges. With that price, and other changes in packaging and marketing, SanDisk hopes to spur cartridge sales.
Analog Devices (ADI) 49.99 +1.22 : Analog Devices (ADI 49.99 +1.22): Ahead of tomorrow evening's earnings report, Bear Stearns said it believes Analog Devices is likely to report a strong January-ending qtr. Firm believes there is upside to the co's previous revenue guidance of 5% q/q growth. Bear Stearns raises FY04 est to $1.40 from $1.30 and FY05 to $1.80 from $1.63 (Reuters consensus $1.33 and $1.85). Firm believes expectations for the stock are generally high and that gross margin leverage is already substantially discounted in the shares.
Integrated Circuit (ICST 27.64 +0.50): Bear Stearns upgraded Integrated Circuit to Outperform from Peer Perform; firm cites anticipated strength in its digital consumer and communications markets, which are higher margin businesses for the company, and a stable outlook for PC clocks; believes that co is gaining considerable traction in the Japanese consumer market, where co has historically not been a strong player. Firm's FY04 est goes to $1.03 from $1.01 and FY05 to $1.20 from $1.11 (Reuters consensus $1.02 and $1.17). Firm's CY04 yr-end tgt is $34, 27.5x CY05 est.
Marvell Technology (MRVL 43.80 +0.59): AmTech initiated Marvell Technology with a Buy and $56 target. The firm said Marvell is a chipmaker with the key competitive advantage of low-power CMOS and SOC designs. The firm believes Street expectations are too low as current business is solid and believes the co's relationship with Intel is much more constructive than consensus in the near term (looking flat to barely down in revs Q/Q) plus will provide for future business. Concerns in the disk drive business should not show up in the financials as the co's end customers are less exposed to the channel (Samsung, Dell, etc.) and the channel drive models are still in a ramp up mode. New market opportunities in WiFi chipsets (already 5% of sales), non-Intel Ethernet customers wins, and Serial ATA (micro drives) are distinct positives. With a CY2005 EPS estimate of $1.60 and an estimated PE of 35x, the firm gets to the $56 target.
August Tech (AUGT) 19.72 +1.82 : Before the open, reported Q4 (Dec) earnings of $0.06 per share, $0.02 better than the Reuters Research consensus of $0.04; revenues rose 127.3% year/year to $14.3 mln vs the $12.7 mln consensus. Co believes "new product momentum and our record backlog supports our expectation for further revenue growth of 5-10% in the first quarter of 2004", Reuters Research consensus is $14.2 mln.
Mattson (MTSN) 12.25 +0.46 : Priced 7.5 mln share offering at $11.50
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