From Briefing.com: 6:33PM Monday After Hours prices levels vs. 4 pm ET: Buyers have returned back to the scene after today's sharp pullback. Earnings reports have been mostly upbeat, with a number of companies raising guidance tonight. Presently, the S&P futures, at 1126, are 3 points above fair value, and the Nasdaq 100 futures, at 1466, are 5 points above fair value.
The below table lists the most influential items of the night.
Company Stock Move Reason for Move
Applied Materials (AMAT) 18.61 -0.06 (-0.3%) World's largest semiconductor equipment maker announces it has acquired all of the outstanding stock for Torrex in an undisclosed cash amount; Torrex is credited with pioneering a new class of production-proven manufacturing systems that can process up to 50 wafers at a time in a stacked single-wafer environment; The acquisition will serve customers' cost-sensitive thermal film deposition applications for front-end semiconductor manufacturing
Boeing (BA) 49.43 +0.06 (+1.2%) Defense contractor won the Navy's so-called Multi-mission Maritime Aircraft program, which is worth an estimated $3.9 bln in the development phase but is potentially valued at more than $20 bln'; Boeing will build 115-150 replacement planes for the Navy's fleet of submarine-hunting P-3 aircraftmarine planes; The contract is a huge win for the company as (1) Lockheed Martin (00C -2% ) held it for 40 years and (2) Congress recently shelved Boeing's multibillion dollar Air Force contract for aerial tankers
Quiksilver (ZQK) 22.70 +0.34 (+1.5%) Teen retailer shows upside to the consensus top and bottom-line estimates in its Q2 (Apr) report, and announces Q3 (July) EPS should be $0.28-0.29 and revenues should be $300-305 mln; The Street's estimates were pegged at $0.28 and $285 mln, respectively; Company also issued above consensus estimate guidance for Q4 (Oct); ZQK is up 37% since Briefing.com wrote on them (positively) in Story Stocks Sept 26
Red Hat (RHAT) 21.49 -2.81 (-11.6%) Leading distributor of Linux software says its CFO Kevin Thompson will step down to pursue other interests, and did not immediately name a replacement; Thompson plans to remain with the company during the search for a successor (in which the company has hired an executive search firm); Red Hat has suffered 2 brokerage firm downgrades in the past week ahead of its earnings report on Thurs; Analysts believe any upside to Q1 (May) results is already priced into the stock
Yellow Roadway (YELL) 39.67 +1.97 (+5.2%) Trucking company issues better than expected Q2 (June) EPS guidance for the second consecutive time; Now sees EPS at $0.85-0.90 versus the Reuters Research estimate of $0.74; Management says all of its 'business units continue to perform very well;' YELL is up 5% year-to-date and trades at a relatively low forward P/E multiple of 12.5x estimated FY04 earnings
Tomorrow will be a rather busy day with a number of influential economic and earnings reports, as well as Greenspan's Senate Nomination Hearing, on the calendar. Circuit City (CC) and Lehman Brothers (LEH) are scheduled to report before the open, and Oracle (ORCL) will report after the close. The May CPI and preliminary June Consumer Sentiment reading are among the more notable economic reports.
For more detail on these, and other developments, be sure to visit our Stock Market Update and Daily Sector Wrap. -- Heather Smith, Briefing.com
5:10PM Applied Materials acquire Torrex (AMAT) 18.65 -0.27: Co announced that it has acquired all of the outstanding stock of Torrex for an undisclosed cash amount. This acquisition enables AMAT to serve customers' highly cost-sensitive thermal film deposition applications for front-end semiconductor manufacturing with Torrex's multi-wafer processing technology.
5:01PM Corning reaffirms Q2 guidance (GLW) 12.00 -0.84: Co reiterates its Q2 guidance of revenues in the range of $900-950 mln, with EPS in the range of $0.07-0.09, before special items, Reuters consensus is $913 mln and $0.08, respectively.
4:22PM EMCORE announces distribution agreement with BUPT-GUOAN in China (EMKR) 2.64 -0.17: Co announced an agreement with BUPT-GUOAN Broadband Network Tech to distribute EMCORE's fiber optic cable television and satellite communications products in China. The agreement combines EMCORE's Ortel Division, with its Hybrid Fiber/Coax (HFC) and Fiber-to-the-Premise (FTTP) network architectures, products and technologies, and BUPT- GUOAN, with its domestic sales and support staff and knowledge of China's broadband marketplace.
ASML Holding (ASML) 15.81 -1.03: JP Morgan added ASML to their Focus list, citing the following factors: 1) their visit to ASML's facilities gives them renewed confidence in current business conditions, 2) the bill of materials for the Twinscan body will be further reduced by 25% in 2004, in addition to the earlier 25% reduction in 2003, 3) firm expects the value of backlog to rise materially in the June qtr with the inclusion of immersion tools, 4) the co's expected decision to enter into the LCD mkt in Q3, and 5) expected cash generation from low inventory of lenses and customers paying a portion of the price upfront. Target is $19.
Close Dow -75.37 at 10,334.73, S&P -11.21 at 1,125.26, Nasdaq -29.88 at 1,969.99: After a lower open, the market spent the bulk of the session on a track of new session lows... Coming on the heels of a winning last week - which shaped up to be the third consecutive up week for the blue-chip averages - the market spent the entirety of the session in negative territory, with the bulk of the sectors supporting the decline... To that effect, the notable laggards list was replete with influential groups such as hardware, internet, networking, software, telecom, semiconductor, banking, broker/dealer, REIT, gold, drug, retail and transportation...
The coal and grocery retailing stocks were among the few groups to close the session in positive territory, but there was no significant leadership to the upside... The market's negative sentiment was rooted in continued concerns over a more aggressive tightening cycle on the heels of hawkish commentary by Fed Chairman Greenspan and several Fed Presidents last week... In a continuation of May's and last week's trend, volume levels were anemic, speaking to participants' lack of conviction to the market...
The latter was particularly true ahead of tomorrow's CPI report, as well as the PPI report, which should be reported some time this week... The Nasdaq underperformed its blue-chip counterparts on a relative basis throughout the session... Having failed at its 50-day simple moving average (1979.7), the Nasdaq spearheaded the market's decline... Encouragingly, the tech composite was able to close above its 200-day simple moving average at 1967.7, which was tested earlier in the session...
This morning's economic reports didn't have much of an impact on the market, but included the Trade Balance report at -$48.3 bln (consensus -$45.0 bln), the Retail Sales report at 1.2% (in-line with consensus), and ex-auto at 0.7% (consensus 0.6%)... Elsewhere, the bond market pulled back, with the 10-year note down 17/32, bringing its yield up to 4.87%... NYSE Adv/Dec 547/2817, Nasdaq Adv/Dec 820/2347
11:02AM Standard Microsystems (SMSC) 23.26 -0.18: Standard Microsystems reported Q1 EPS of $0.15 on revenue of $53.053MM (+24.2% Y/Y) vs. Reuters Research consensus at $0.15 on $53.21MM.
Product sales increased 18.5% Y/Y to $50.352MM (95% of sales); intellectual property revenue increased Y/Y from $233K to $2.701MM. Networking and connectivity product sales increased over 50% Y/Y. PC product sales contributed 60% of product revenue, with notebook device sales increasing 20% Y/Y.
Gross margin, including intellectual property payment, increased 142 bps Y/Y to 50.3%. Product gross margin declined 97 bps Y/Y to 47.6% to due product mix. Operating margin, including intellectual property payment, increased 178 bps Y/Y to 7.5%. Operating expenses increased primarily due to investments in R&D and marketing personnel, tooling costs for new product developments, and litigation costs.
Guided for Q2 EPS of $0.17-0.21 on $56.0-60.0MM (+15.9-24.2% Y/Y) vs. consensus at $0.21 on $57.02MM. Gross margin is expected to be 48-49%; SG&A to be $11-12MM; R&D to be $11.0-12.0MM.
The following table shows price multiples and Y/Y growth rates for SMSC compared against the semiconductor components group. Company *P/SG Ratio **P/OPG Ratio P/S Y/Y Rev Growth (%)
TTM 2004E 2005E TTM 2004E 2005E
Standard Microsystems (SMSC) 0.9 9.3 1.9 1.9 1.6 37.7 7.8 16.2
National Semiconductor (NSM) 3.2 23.5 3.9 3.2 2.9 18.6 21.8 10.0
Semiconductors 2.6 31.1 4.4 n/a 18.2% n/a
*P/SG Ratio: Trailing 12 month (Price / Sales) / Growth ratio as of June 10, 2004.
**P/OPG Ratio: Trailing 12 month (Price / Operating Income) / Growth ratio as of June 10, 2004.
SMSC shares trade at a discount to peer group. Shares are pricing in sustained upper teens revenue growth from F07 assuming 14-15% operating margin. Catalyst for shares moving higher include greater progress towards operating margin in the teens range. The company has completed much of the investments in R&D and marketing personnel necessary to support business near-term; management does not expect to see increase in operating expense on the same scale as in Q1.--Ping Yu, Briefing.com
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