From Briefing.com: Investors maintained a modest positive bias ahead of Friday's jobs report. The optimism is centered on the belief that job growth is poised to pick up after a sluggish start. Consensus is at 123K, partly reflecting the end of the California grocery worker strike. Refer to the Economic Calendar page for the reporting schedule and analysis.
Tech shares led the market higher for a fifth session but the positive bias was less pronounced among large cap semiconductor shares. The Briefing.com Tech Index (BTI) gained 0.9% while the Philadelphia Semiconductor Index (SOXX 487.03 -0.54) edged lower 0.1%. Advancers led decliners 1.6:1 on the BTI but matched decliners 1:1 on the SOXX; BTI advancers rose 2.8% and decliners fell 1.9% while SOXX advancers added 1.0% and decliners slipped 0.9%.
The Nasdaq Composite (IXIC 2000.63 +8.06) rose 0.4% during the session, the Dow (DJI 10381.70 +52.07) gained 0.5% and the S&P (SPX 1127.00 +4.53) added 0.4%.
Ebix (EBIX 14.97 +2.77) jumped 23% after the supplier of software and e-commerce solutions to the insurance industry posted Q4 results.
ATI Technologies (ATYT 16.30 +0.30) reports before the open on Wednesday and Manugistics Group (MANU 6.33 +0.00) after the close.
We remain modestly bullish on tech over the long-term and continue to advise caution near-term given high expectations for revenue growth and margins expansion priced into shares. Visit the Story Stocks page tomorrow for analysis of ATYT's Q2 results and daily for the latest thinking on investment ideas across industry sectors.
Refer to the bottom of the Tech Stocks page for performance by sub-sector.--Ping Yu, Briefing.com
6:03PM Tuesday After Hours prices levels vs. 4 pm ET: The same mildly positive tone in stocks has been extended in the after hours, where the S&P futures, at 1126, are 1 point above fair value and the Nasdaq 100 futures, at 1448, are flat with fair value. Like the regular session before it, tonight's session has been virtually devoid of corporate news announcements and thus the futures indications have hung around fair value.
The below table lists some of the more interesting announcements, and the stocks' reactions:
After Hours Mover % Change Move Reason for Move
Alloy (ALOY) -3% Media and market services company reports a Q4 (Jan) loss of $0.14 per share, $0.03 worse than the Reuters Research consensus estimate, and also falls short on the top-line; Alloy adds that it sees a FY04 loss of $0.25-0.40 on revenues of $430-450 mln as compared to the market's expectation of a loss of $0.14 on revenues of $422 mln
Elan Corp (ELN) -2% Biopharmaceutical company announces an agreement with Eisai Co for the purchase of Elan's interests in Zonegran (zonisamide) in North America and Europe; Under the terms, Eisai will pay Elan approximately $130 mln; Elan believes this better aligns its research strategy
ON Semiconductor (00C0) -6% Supplier of data management semiconductors raises its Q1 (Mar) revenue outlook to sequential growth of 8% (approximately $300.8 mln versus the consensus of $293.5 mln) based on an increase in average selling prices; The company's other announcement of the night - that it is proposing a $260 mln offering of convertible senior subordinated notes - has overshadowed this news
Teva Pharmaceutical (TEVA) +1% Specialty pharmaceutical company commences the initial commercialization of its Oxycodone Hydrochloride ER Tablets, the generic equivalent of Purdue Pharma's OxyContin® Controlled Release Tablets; Teva won the ANDA for the drug on Mar 24, which sent the stock higher by 1%
USANA Health Sciences (USNA) -9% Manufacturer of weight management products says it expects Q1 (Mar) EPS to be slightly below its earlier expectations, although FY04 (Dec) earnings should be at the high end of the company's previous forecast; Company cited higher than expected expenses for the Q1 warning; Market is unforgiving, especially after USNA slipped below its 50 and 200-day moving averages
Tomorrow, the events, economic, and earnings calendars offer an array of things for investors to nibble on. Consumer electronics rivals Best Buy (BBY) and Circuit City (CC) will be reporting their Q4 (Feb) numbers, the February Factory Orders and March Chicago PMI Index are on deck for economic data, and Bear Stearns (BSC), Freddie Mac (FRE), and Goldman Sachs (GS) are having their annual meetings.
For more detail on these, and other developments, be sure to visit our Stock Market Update and Daily Sector Wrap. Heather Smith, Briefing.com
5:11PM ON Semiconductor announces proposed offering of $260 mln sr notes (ONNN) 8.45 +0.28: -- Update --
5:09PM ON Semiconductor files shelf registration of approx 111.8 mln shares of common stock (ONNN) 8.45 +0.28: --Update-- Co files registration statement with the SEC relating to the offer, from time to time, of up to approx 111.8 mln shares of common stock by TPG Advisors II Inc., a selling stockholder.
4:49PM ON Semiconductor raises Q1 guidance (ONNN) 8.45 +0.28: Co sees Q1 revenue to grow sequentially by 8% (approx $300.8 mln), previously expected 5-6% revenue growth, Reuters consensus is $293.5 mln. Based on current visibility, co expects that average selling prices will increase by more than 1% in Q1, and continue to increase in Q2.
10:28AM KVH Industries tests support at last wk's gap (KVHI) 14.40 -1.44: -- Technical -- Stock gapped aggressively higher on March 25 but no follow through developed over the next two sessions. Today is has gapped to the downside and is currently vacillating near the bottom of last week's gap at 14.30 (session low 14.37). Next supports, if follow through develops today, are at 14.20 and 14.07 with the 11 month low from earlier in the month at 13.51.
9:37AM SWIR: Sierra Wireless tgt raised to $40 from $32 at CIBC 34.91 +0.47: According to firm industry fundamentals in Sierra Wireless' (SWIR) core PC Card market continue to improve, and firm thinks there is upside to its F04/F05 AirCard forecasts as a result of a continued ramp in EV-DO activity and stronger than expected European 3G datacard services rollout and carrier commitment. CIBC raises tgt to $40 from $32 and increases '04 est to $0.50 from $0.49and '05 to $1.01 from $0.78.
9:35AM TFS upgraded at Roth; target $8 6.17 -0.03: Roth Capital upgrades Three Five Systems (TFS) to Buy from Neutral and raises their target to $8 from $4.50; after a year of turmoil and repositioning, firm says the co is on track to improve gross margins and rev growth.
9:02AM Intergraph Corp: settles patent litigation with Intel (INGR) 20.39: INTC announced it has settled the remaining issues in a patent infringement suit pending relating to Intel's Itanium microprocessors. Under terms of the settlement INTC and INGR will move for dismissal of the case with prejudice. Under terms of the current settlement INGR has granted Dell Inc. certain licenses to INGR's patents and agreed to dismiss INGR's separate pending litigation against Dell. This agreement gives Dell a license to all Intergraph-owned patents, and covers past, present and future Dell products. Dell has a unique indemnity agreement with INTC that Dell claims obligates INTC to indemnify the company from patent infringement claims in the litigation which relate to combining INTC microprocessors and other components in Dell systems. INTC disagrees with Dell's interpretation of the agreement, but has decided to remove the current dispute from the courts and resolve the disagreement privately. INTC will pay $125 mln to INGR by April 5 and $25 mln in each of the next four quarters. Intel expects some portion or all of the $225 mln will reduce earnings in 1Q04.
8:50AM BofA starts EMC with a Buy, NTAP with a Neutral : Banc of America initiates coverage on EMC (EMC) with a Buy rating and $17 target; firm believes that EMC will continue increasing the amount of software and services rev it generates as a percentage of total rev, which will drive improving gross and operating margins; firm also says the stock is attractive at 26x their 2005 est. Firm also initiates coverage of Network Appliance (NTAP) with a Neutral rating and $21 target; firm believes that NTAP is focusing on the right issues (investing to broaden its services and channel reach), but such investments will likely lead to lower gross and operating margins; firm also believes valuation is rich at 35x their CY05 est, given the co's approx 20% long-term EPS growth rate potential as well as declining margins.
Infineon (IFX) 14.29 +0.29 : Upgraded to Overweight from Underweight at Morgan Stanley. Firm also raised their industry view on European Semis to Attractive from In-Line, as they believe the recent pull-back in the group provides an attractive entry point for investors.
Dresdner Kleinwort downgraded to Hold from Add as a result of slower than expected resumption of notebook demand in the near term. Furthermore, firm expects normal seasonality in the PC market and as a result sees no immediate catalyst for upside in stock performance. Firm cut Q2 est to $0.25 from $0.29, FY04 to $1.17 from $1.24 and FY05 to $1.44 from $1.48. Reuters Research consensus estimates $0.27, $1.23 and $1.45.
Marvell (MRVL) 45.19 +2.06 : Harris Nesbitt said they have reason to believe that Marvell's GigE controller for PCI Express, the Yukon EC 88E8050, is beginning to ship with Intel's motherboards in preparation for the PCI Express ramp in the second half of 2004. They believe Intel has decided to replace its proprietary architecture (CSA) solution with not the combined Intel-Marvell solution, but one better for Marvell, the complete MRVL Yukon solution. The firm considers this represents a meaningful opportunity for Marvell by providing at least $30 mln to F2005 numbers and additional potential upside to their F2006 numbers.
Micron (MU) 16.31 +0.11 : Digitimes reported a production slipup has forced Micron to scrap 10,000 8-inch wafers, according to IC distributors in Taiwan. The scrapped wafers would represent 3-3.5 million 256Mbit equivalent DRAM chips, or about 1-1.5% of global monthly capacity. According to the article, Micron Taiwan did not confirm the original Chinese story.
Silicon Labs (SLAB) 53.02 +0.44 : C.E. Unterberg expects Silicon Labs to report upside to firms $106.5M and $0.34 estimates for 1Q04 based on firms recent visit to Asia and its channel checks at CTIA in Atlanta last week. Analyst continues to believe that Samsung, LG and Motorola are gaining share in GSM/GPRS over Nokia due to their clamshell phones and lack of compelling product offering by Nokia. While unit estimates for Nokia still may come through, the other three are already forecasting upside to their numbers in 1Q04. SLAB should benefit from share gains by customers in the near term. The firm maintained street high estimates for C04 and C05 and reiterated Buy/Buy rating.
Silicon Storage (SSTI) 12.80 +0.78 : Co boosted Q1 outlook to $0.10-$0.14 from previous guidance of $0.08-$0.10; now sees revs of $100-$104 mln vs former guidance of $94-$100 mln. Reuters Research consensus estimates for the qtr were $0.09 and $98.33 mln. "While, traditionally, our first quarter results are seasonally weaker than the prior quarter, firming average selling prices across all densities, increase shipments of higher density products and improved manufacturing cost are expected to contribute to stronger results than our previous guidance."
11:53AM Amgen (AMGN) 59.37 -0.18: The bears' case against Amgen (AMGN) has always been the world's largest biotech company does not have the pipeline capable of sustaining its +30% rate of annual earnings growth. This argument has won over many supporters in the past year as the stock has given up all of its gains. The end to FY03 (Dec) - in which total revenues spiked 51% to $8.4 bln - and the focus on FY04 - in which sales are expected to slow to +20% - have kept investors anxious about new products.
Yesterday, Amgen addressed the market's concern by announcing its intent to acquire Tularik (TLRK). Amgen already holds a 21% stake in the niche name, and plans to buy the remaining portion in an all-stock deal by the second half of the year. Tularik is a match for Amgen in terms of focus areas - oncology, metabolism, and inflammation - and will bring five drugs in clinical trials to its ranks.
The market was elated by the news, actually sending AMGN shares higher by 3% in a rare move. Usually the stock of the acquiring company drops as investors ponder whether the deal is a good strategic fit, or if the price paid was too expensive. One could certainly debate the latter in Amgen's case - the roughly $1.3 bln offer represents a 47% premium to TLRK's closing price on Friday.
The fact that the market was willing to ignore all of those points indicates that sentiment on Amgen might be improving. The beefed-up development program - highlighted by one product in Phase II/III trials for the treatment of hepatocellular cancer, three compounds in Phase II trials for gastric and esophageal cancer, rheumatoid arthritis and psoriasis, and type 2 diabetes, and one product in Phase I trials for obesity - has helped put to rest worries about Amgen's future five years down the road.
To be fair, the Tularik acquisition does not solve all of Amgen's problems - most of its drugs are in early-to-mid stage testing - as it still leaves a gap in the company's new drug approvals in 2004-2006. The company will have to depend on its current portfolio - three blockbuster drugs - for most of its top and bottom-line growth.
Looking at the benefits of Amgen's acquisition - promising new drugs that come at a much lower price than the Immunex acquisition two years ago ($10 bln) which netted Enbrel - Briefing.com is more positive on AMGN. Shares have not crept much higher from their 52-week lows, and as such, we believe current levels present a good starting place for long-term investors to dabble in AMGN. We believe a key overhang has been removed from the stock, and expect that the market will begin interpreting Amgen's strong fundamentals - over $5 bln in cash, more blockbuster drugs than any other biotech, a strengthened position in oncology - more positively in the future. Heather Smith, Briefing.com
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Glad you like it Gottfried. They really do a nice job even if they do see more cup and handles than I can find in any kitchen. <g>
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