From Briefing.com: 6:09PM Wednesday After Hours prices levels vs. 4 pm ET: After months of relatively eventless extended sessions, investors finally have something to chew on - earnings pronouncements from heavy hitters like Yahoo! (YHOO) and Dell (00C0). All of the numbers have been noticeably ahead of analyst estimates, putting an end to the regular session's dismal mood. Presently, the S&P futures are at 1148, 9 points above fair value, and the Nasdaq 100 futures are at 1502, 17 points above fair value.
The below table lists those and other notable news items, as well as the stocks' reactions:
After Hours Mover % Change Move Reason for Move
Allstate (ALL) +1% Insurance company issues better than expected Q1 (Mar) EPS guidance; Sees EPS at $1.38-1.42 as compared to the Reuters Research consensus estimate of $1.16; Cites 'higher property-liability earned premium, lower claims due to favorable auto and homeowners loss frequency trends, and lower catastrophe losses'
Dell (DELL) +3% Personal computer maker raises its Q1 (Mar) revenue outlook by $200 mln, putting projections at $11.4 bln versus the Street estimate of $11.2 bln; Dell continues to expect EPS at $0.28, in line with the market expectation; The company only reaffirmed its Q1 outlook during its regular mid-qtr update on Feb 12, and this upward revision should serve as a source of support for the Nasdaq tomorrow
Electronic Arts (ERTS) -1% Video game maker's President & COO (John Riccitiello) resigns effectively immediately to start a private equity business; Larry Probst will continue as CEO and assume interim responsibility for Riccitiello's duties while the company evaluates candidates; News comes right after Merrill Lynch downgraded ERTS to Neutral from Buy - citing valuation - today
Genentech (DNA) +3% Biotech giant shows considerable upside to the consensus top and bottom-line estimates in its Q1 (Mar) report; On conference call, says EPS growth of 20-25% in FY04 (Dec) is 'possible;' Briefing.com has been positive on DNA since early July, and the stock has advanced 45%
Research in Motion (RIMM) -3% Designer of wireless solutions surpasses the Q4 (Feb) Reuters Research EPS estimate by $0.06 on revenues that rose 37% to $210.6 mln; Also announces a 2-for-1 stock split; Issues upbeat EPS guidance for Q2 (Mar) and Q3 (Aug); Stock has soared 620% in the past year - leading investors take profits
Yahoo! (YHOO) +10% Internet company tops the Street's EPS estimate by $0.02 in its Q1 (Mar) report; Revenues also impress, spiking 94% to $550.1 mln (consensus of $501.1 mln); Board of Directors also approved a 2-for-1 stock split; On call, Yahoo! guides Q2 (June) revenue to $580-615 mln (consensus of $534.7 mln) and operating cash flow to $210-235 mln; AMZN is up 3% in the after hours
Tomorrow, the market has General Electric (GE) on the earnings calendar along with Abbott Labs (ABT). March same store sales from retailers and two economic reports - weekly initial claims and February Wholesale Inventories - are also on tap.
For more detail on these, and other developments, be sure to visit our Stock Market Update and Daily Sector Wrap. Heather Smith, Briefing.com
5:39PM Yahoo! raises '04 Free Cash Flow Outlook to $735 mln from $665 mln (YHOO) 48.35 -0.42: -- Update -- Stock up 4.75 to 53.10 after hours
5:37PM Yahoo! comments on outlook (YHOO) 48.35 -0.42: -- Update -- On call, says it expects Q2 revenue, ex-TAC, to be $580-615 mln; expects operating cash flow in Q2 to be $210-235 mln... raising yr-end target for paying relationships to 8.0 mln from 7.5 mln... YHOO +4.73 at 53.08 after hours
4:33PM Yahoo! beats by $0.02, ex items, raises Y04 guidance, approves 2-for-1 stock split (YHOO) 48.35 -0.42: Reports Q1 (Mar) earnings of $0.13 per share, excluding one-time gain from unredeemed third party loyalty program points that expired during qtr, $0.02 better than the Reuters Research consensus of $0.11; revenues rose 94.4% year/year to $550.1 mln, excluding traffic acquisition costs, vs the $501.1 mln consensus. Co also guides, sees Y04 revenues of $2.41-2.52 bln, excluding traffic acquisition costs, vs the R.R. consensus of $2.23 bln. Co's Board approves two-for-one split of co's common stock, payable May 11, 2004 to stockholders of record on April 26, 2004.
5:01PM Dell Computer increases guidance for Q1 (DELL) 34.82 +0.13: Co will raise guidance for Q1 revenue, reiterate expectations for resulting earnings and detail a significant increase in near-term stock repurchases during a meeting with investors, analysts and reporters. Co now anticipates fiscal Q1 sales to reach $11.4 bln, $200 mln higher than guidance Dell provided on Feb.12, Reuters consensus is $11.2 bln. Co continues to expect EPS of $0.28, in line with Reuters. Co expects to spend about $1.1 bln to repurchase common stock during a 3 month period, up from a planned $600 mln.
4:29PM Research In Motion earnings color (RIMM) 107.98 -1.80: -- Update -- In company's Dec 22 press release, it issued guidance of adjusted EPS, excluding the patent litigation charge, of $0.45-0.55. Analysts' estimates are on an adjusted basis, and the $0.56 actual compares to the adjusted, ex items Reuters consensus of $0.50. RIMM also issued GAAP guidance, which included the patent provision, of $0.30-0.40. RIMM's GAAP actual of $0.46 is comparable to, and exceeds this guidance.
4:26PM RIMM: Speaking to an analyst who covers RIMM; he says they beat by $0.06:
4:23PM Research In Motion beats by $0.06 (RIMM) : Reports Q4 (Feb) adjusted earnings of $0.56 per share, $0.06 better than the Reuters Research consensus of $0.50; revenues rose 36.8% year/year to $210.6 mln vs the $207.0 mln consensus. Company sees Q1 EPS of $0.56-0.66, before the effect of the previously announced 2 for 1 split, vs Reuters consensus of $0.56. For Q2 company sees EPS of $0.64-74 vs consensus of $0.62.
Close Dow -90.66 at 10,480.15, S&P -7.65 at 1,140.51, Nasdaq -9.66 at 2,050.24: The market spent the entirety of the session in negative territory in a reversal of last week's sweeping gains and undermined by a variety of concerns ranging from geopolitical, to corporate, to inflationary... More specifically, Iraq came back into focus due to the conflict's escalation over the last couple of days... Separately, Q1 earnings season got off to a rather uninspiring start with an earnings miss from Alcoa (AA 34.75 -1.75) and a downward estimates revision from Seagate Technology (STX 14.96 -0.63)...
Finally, the price of crude oil rallied (up $1.18 at $36.15/bbl) after the U.S. Department of Energy report indicated that supplies declined 2.1 mln barrels in the week of April 2... Accordingly, the major averages slipped at the onset of the session and spent the bulk of the afternoon drifting sideways with moderate losses... Given the modest volume totals, thought, the last hour of trade proved to be volatile as short-covering and geopolitical rumors lifted the major averages to their session highs, but only to be crushed again as Secretary of Defense Donald Rumsfeld held a press conference concentrated on the escalation of violence in Iraq...
Leadership to the upside was limited through most of the session, including the oil & gas services, and real estate operations groups... Laggards of note were easier to come by and included the retail, chemical, aluminum, casino & gaming, and computer storage sectors... Elsewhere, the bond market was little changed, with the 10-year note down 2/32, bringing its yield up to 4.16%...NYSE Adv/Dec 1610/1687, Nasdaq Adv/Dec 1561/1559
10:48AM Transwitch (TXCC) 2.98 +0.43: Transwitch raised Q1 guidance after the close on Tuesday. The designer of VLSI (very large-scale integration) semiconductors for the telecom and networking equipment markets forecast revenue of $7.5-8.0MM (+83.0-95.2% Y/Y) vs. prior guidance of $6.5MM and Reuters Research consensus at $6.5MM.
Management cited strong demand across product lines. The company exited Q1, which ended March 31, 2004, with a book-to-bill greater than 1.0.
TXCC shares are, based on our inverted EVA / DCF model, priced for sustained lower 20% revenue growth from C06 assuming steady Y/Y improvement to 25% operating margin.
Revenue growth expectations reflect the company's numerous design wins, including over 74 for ethernet over SONET products, and are in-line with market forecasts for the semiconductor industry and TXCC's end markets. The majority of design wins are from the company's 400 existing customers and are expected to go into production over the coming quarters but TXCC is not expected to reach profitability until 2005. Operating margin reflected in our model is above management's near-term target of 13-15% and below historical peak of 35%.
Shares trade at a premium to peer group. The following table shows price multiples and Y/Y growth rates for TXCC compared against direct comps and the semiconductor components group. Company *P/SG Ratio **P/OPG Ratio P/S Y/Y Revenue Growth
TTM 2004E 2005E TTM 2004E 2005E
Transwitch (TXCC) 4.1 3.6 11.4 9.1 6.8 42.5% 24.7% 34.8%
Applied Micro Circuits (AMCC) 13.1 2.1 18.3 14.8 8.4 (6.9%) 26.6% 76.8%
Cirrus Logic (CRUS) 3.5 (23.6) 3.4 3.5 2.8 (32.3%) (25.0%) 22.2%
Broadcom (BRCM) 4.4 (22.0) 8.1 5.4 4.6 48.7% 50.3% 16.3%
LSI Logic (LSI) 1.8 (17.5) 2.1 1.9 1.6 (6.8%) 15.2% 12.2%
STMicroelectronics (STM) 2.1 66.1 2.9 2.4 2.1 14.6% 21.9% 12.3%
Intel (INTC) 3.5 17.3 6.0 5.2 4.7 12.6% 14.7% 10.9%
Semiconductor Components 3.0 55.0 4.7 14.7%
*P/SG Ratio: Trailing 12 month (Price / Sales) / Growth ratio as of April 02, 2004.
**P/OPG Ratio: Trailing 12 month (Price / Operating Income) / Growth ratio as of April 02, 2004.
Shares enjoying relatively strong investor support on positive outlook and strong business momentum but upside is limited for this name unless management materially accelerates sustainable growth, improves operating margin and achieves profitability. We would wait for at least a 15-20% pullback before revisiting TXCC. LSI and STM are more reasonably priced names.--Ping Yu, Briefing.com
9:24AM Seagate Technology (STX) 15.59: Seagate Technology lowered Q3 guidance after the close on Tuesday. The manufacturer of hard disc drives for computers and consumer electronics guided for EPS of $0.06-0.08 vs. prior guidance of $0.20-0.30 and Reuters Research consensus at $021.
Management cited supply imbalance and the company's more concentrated customer base for the lower guidance, which comes despite the company having confirmed Q3 guidance to the low end of expectations on March 2, 2004. At that point, management attributed the revised forecast to lower than expected shipment of hard drives into the enterprise and mobile markets.
The following table shows Q2 industry shipments in millions of units, management's initial, revised and current expectations for the total available market, and estimated market share by segment. Segment Q2 Shipments Guidance Mkt Share
Initial as of 03/02 Current as of 03/02 Current
Personal Storage 53.0 47-48 47-48 46-47 32-34% 31%
Mobile Storage 16.3 16-17 14-15 13-13.5 10% 8%
Enterprise Storage 5.8 5.5 5.0 5.2 46-47% 48%
Factoring in today's weakness, STK shares have declined over 22% since the company's Q3 guidance (Story Stocks, March 3, 2004) when we advised investors to hold off buying shares until after a 10-15% pullback. Shares are down over 36% since the Q2 preview (Story Stocks, January 20, 2004) when we first advocated waiting for a pullback, citing competition and valuation concerns.
Shares are now, based on our inverted EVA / DCF model, priced for sustained lower teens revenue growth from F06 assuming flat operating margin.
The following table shows price multiples and Y/Y growth rates for STX compared against peers in the computer systems and peripherals group. Company *P/SG Ratio **P/OPG Ratio P/S Y/Y Revenue Growth
TTM 2004E 2005E TTM 2004E 2005E
Seagate Technology (STX) 0.8 8.1 1.1 1.1 1.1 3.0% 0.2% 2.6%
Maxtor (MXO) 0.4 14.3 0.5 0.5 0.5 8.1% 5.0% 5.5%
Western Digital (WDC) 0.6 11.8 0.8 0.8 0.8 18.9% 9.2% 3.7%
Komag (KOMG) 0.5 5.3 1.6 1.1 1.0 52.8% 43.4% 6.5%
Computer Systems & Peripherals 1.0 19.0 1.4 10.1%
*P/SG Ratio: Trailing 12 month (Price / Sales) / Growth ratio as of April 02, 2004.
**P/OPG Ratio: Trailing 12 month (Price / Operating Income) / Growth ratio as of April 02, 2004.
STX shares trade at a premium to direct comps despite today's pullback. Flip-flop on guidance, poor execution and market share loss weakens management credibility and is likely to dampen investor interest.
We would wait for at least another 15-25% decline, on top of today's pullback, or signs of accelerating growth, stabilizing market share and improving execution before buying STX shares. We would focus on Komag (KOMG 19.08), which is highlighted in the Relative Value Ideas Focus List (Story Stocks, March 1, 2004).--Ping Yu, Briefing.com
8:40AM Electro Scientific Industries (ESIO) 24.80: Electro Scientific Industries posted Q3 results after the close on Tuesday. The provider of manufacturing equipment for the electronic equipment, passive components and semiconductor markets published EPS of $0.34, including $0.18 of tax benefits, on revenue of $58.77MM (+85.8% Y/Y) vs. Reuters Research consensus at $0.12 on $60.22MM.
Semiconductor Group revenue increased 143.6% Y/Y to $37.068MM (63% of sales). Electronic Interconnect Group revenue increased 45.2% Y/Y to $9.140MM (16% of sales). Passive Components Group revenue increased 24.1% Y/Y to $12.562MM (21% of sales).
Gross margin improved Y/Y from a loss to 39.7% vs. guidance for low to mid 40%. Operating margin improved to 7.5%.
Guided for Q4 revenue of $55-65MM (+144.7-189.2% Y/Y) on orders of $60-70MM. Gross margin expected to improve to mid to upper 40%.
ESIO shares are, based on our inverted EVA / DCF model, priced for sustained lower 20% revenue growth from F06 assuming steady Y/Y improvement to 20% operating margin.
Revenue growth expectations are materially above historical performance and runs contrary to the industry's highly cyclical business cycle. Operating margin reflected in our model is above management's target and historical average of 15% but below peak operating margin of 30%.
The following table shows price multiples and Y/Y growth rates for ESIO compared against peers in the electronic instruments & controls group. Company *P/SG Ratio **P/OPG Ratio P/S Y/Y Revenue Growth
TTM 2004E 2005E TTM 2004E 2005E
Electro Scientific Industries (ESIO) 6.6 (32.3) 4.7 3.6 2.4 (24.2%) 42.1% 49.7%
GSI Lumonics (GSLI) 2.0 (124.6) 3.2 2.3 2.2 16.7% 38.1% 6.3%
Cognex (CGNX) 4.8 56.0 10.2 7.6 5.9 31.6% 34.0% 29.0%
Electronic Instruments & Controls 0.9 (110.4) 1.1 3.9%
*P/SG Ratio: Trailing 12 month (Price / Sales) / Growth ratio as of April 02, 2004.
**P/OPG Ratio: Trailing 12 month (Price / Operating Income) / Growth ratio as of April 02, 2004.
ESIO shares trade above fair value on a discounted cash flow basis and at a premium to peer group. We would wait for at least a 20-30% pullback, on top of today's decline, before revisiting name.--Ping Yu, Briefing.com
finance.yahoo.com |
