4. OVERVIEW OF TECH SECTOR EARNINGS
AGILENT EARNINGS CLIMB BUT MISS ESTIMATES
QUARTER F1Q03 F1Q04 %CHG.
REVENUE $1.4B $1.6B +16
NET INCOME -$370M $70M N/A
EPS -$0.78 $0.14 N/A
Fiscal first quarter ended 01/31/04
Reported 02/17/04
AGILENT TECHNOLOGIES (A, $33.72), a maker of testing and measurement
equipment, turned around a year-ago loss in the fiscal first quarter and
increased revenues 16%. Excluding $30 million in one-time restructuring
charges, the company would have earned $105 million. The results matched
its earnings forecast, but were well under analyst estimates of 22 cents.
On the earnings miss, investors sent the stock down 4%. Total orders rose
30% from a year earlier, helped by a 55% increase in demand for
semiconductor equipment and 75% jump in orders for automated testing
equipment. The company expects current quarter earnings of 20-25 cents,
excluding further restructuring charges, on revenues of $1.7 billion.
BEA SYSTEMS PUTS UP STRONG NUMBERS
QUARTER F4Q03 F4Q04 %CHG.
REVENUE $250M $280M +10
NET INCOME $35M $40M +11
EPS $0.08 $0.09 +13
Fiscal fourth quarter ended 01/31/04
Reported 02/19/04
BEA SYSTEMS (BEAS, $13.48), a transaction management software company, had
a great quarter and year. For fiscal year 2004, earnings increased 40% to
$120 million, or 28 cents a share, from $85 million, or 20 cents. Revenue
rose 8% to $1 billion. Last summer the company released a new version of
its popular Web Logic software. It has been gaining momentum and grabbing
market share ever since. The software is used in large-scale applications
like government systems that give citizens secure access to their health
records. Major corporations throughout the world are adopting the
software to manage their service-oriented architectures. We see good
things for this company. The financials are solid and the customer roster
reads like the Fortune 500 list. Revenue this quarter is expected to grow
15% from a year ago to $270 million.
NET EARNINGS UP AT NETWORK APPLIANCE
QUARTER F3Q03 F3Q04 %CHG.
REVENUE $230M $300M +30
NET INCOME $20M $40M +100
EPS $0.06 $0.11 +83
Fiscal third quarter ended 01/31/04
Reported 02/17/04
Network storage company NETWORK APPLIANCE (NTAP, $21.77) posted record
earnings and revenues in the fiscal third quarter as sales of software and
high-end storage hardware grew. The company forecast fiscal
fourth-quarter earnings of 12 cents and expects revenues to increase 8%
over last quarter.
What is unique about this earnings report, as well as the report from
Agilent, is that they include January operations. And they are
impressive, clearly showing increased corporate IT spending so far this
year. Gains at Agilent show that companies are increasing spending on R&D
and new product development. Profit growth at Network Appliance shows
companies are growing and that they need to keep pace with increasing
business by updating their systems solutions. Both point to further
improvements in IT spending in 2004 and 2005.
APPLIED MATERIALS MOVES TO A PROFIT
QUARTER F1Q03 F1Q04 %CHG.
REVENUE $1.1B $1.6B +48
NET INCOME -$65M $80M N/A
EPS -$0.04 $0.05 N/A
Fiscal first quarter ended 01/31/04
Reported 02/18/04
APPLIED MATERIALS (AMAT, $21.21), the largest provider of chip making
equipment and materials, provided a turnaround story in the Tech sector.
Revenues in the first fiscal quarter increased nearly 50% over the year
earlier. New orders jumped 30% from the previous quarter, and 65% from
the year earlier, to $1.7 billion. The largest regional increase came
from Southeast Asia and China. The thing to take out of this is that the
Chip sector is clearly improving. Demand for chips is on the rise and the
source is worldwide demand for commercial and consumer electronics.
UNCERTAINTY AT CIENA
QUARTER F1Q03 F1Q04 %CHG.
REVENUE $70M $65M -7
NET INCOME -$110M -$75M +31
EPS -$0.25 -$0.16 +36
Fiscal first quarter ended 01/31/04
Reported 02/18/04
Optical Networking solutions company CIENA (CIEN, $5.96) provided one of
the least transparent earnings reports we've seen this season. Excluding
one-time items, the company still had a loss of 8 cents a share. We
didn't see much of anything good here. The company simultaneously
announced it is acquiring two private companies in an effort to diversify
from its core optical networking business and into broadband networking
equipment. It is spending more than $600 million in stock for the
companies, prompting analysts to wonder about the company's focus. It
looks desperate to us. The purchases make five in the past three years.
It is struggling to keep up with competitors like NORTEL NETWORKS (NT,
$7.60) and CISCO SYSTEMS (CSCO, $22.75). Both are far more viable than
Ciena.
CUSTOMER DEFECTIONS PUSH QWEST TO A LOSS
QUARTER 4Q02 4Q03 %CHG.
REVENUE $3.7B $3.5B -6%
NET INCOME $2.7B -$305M N/A
EPS $1.61 -$0.17 N/A
Fiscal Third Quarter ended 12/31/03
Reported 02/19/04
Telecom QWEST (Q, $4.28) swung to a fourth-quarter loss that was more than
double analyst estimates. Growth in the long distance and internet
businesses was offset by a drop in local telephone sales. The company
lost 4% of local telephone customers. On the plus side, the company
signed a deal to provide nationwide cellular service through the Sprint
PCS network. It will start offering the service to customers next month.
Qwest is the fourth largest phone company in the U.S. and the leading
Telecom in 14 states. But its size isn't helping much, and we doubt
re-selling Sprint PCS wireless service will turn things around. The
company needs to take more drastic action, and until it does we urge you
to steer clear.
NEXTEL PROFITS NOT SO BAD
QUARTER 4Q02 4Q03 %CHG.
REVENUE $2.3B $3.0B +30
NET INCOME $1.5B $640M -57
EPS $1.38 $0.56 -59
Fourth quarter ended 12/31/03
Reported 02/19/04
Fourth-quarter income at Wireless carrier NEXTEL COMMUNICATION (NXTL,
$27.55, down 1.07) appeared to be off by nearly 60%, but year earlier
earnings were boosted $1.24 a share from the sale of wireless services in
Latin American and the Philippines. Excluding all one-time items, the
company earned 48 cents, compared to 21 cents a year earlier. Nextel
added 550,000 subscribers in the quarter to reach a total of 13 million.
In 2003, the company had revenues of $10.8 billion, up from $8.7 billion
in 2002. Excluding one-time items, profits came in at $1.5 billion, or
$1.45 a share, up from $240 million, or 27 cents a share. This year, the
company expects to earn more than $2 a share and add 1.8 million
subscribers. Along with Verizon Wireless, this is another Wireless
carrier that could benefit from the distraction caused by Cingular's
purchase of AT&T Wireless.
==========================================
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Thank you for reading THE BULL MARKET TECHNOLOGY INVESTOR.
Todd Shaver
Editor in Chief
Editor@BullMarket.com
THE BULL MARKET TECHNOLOGY INVESTOR
United States of America
Over 640,000 subscribers and growing!
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