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Old 12-09-2003, 10:00 AM
jjgold jjgold is offline
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Default Tech Reports Tuesday

Tech shares opened flat to modestly higher before heading south after the first hour of trading on Monday. Prices stayed below Friday's close for most of the day, bottomed around 3:00pm ET before buyers intervened to narrow the gap. At session's end, tech shares closed on average down 0.5%. Decliners outpaced advancers 1.3:1 with decliners shedding 2.6% and gainers adding 2.3%.

After the close, REMEC (REMC 11.06 +0.03) reported Q3 revenue that came in ahead of consensus, EPS that missed consensus and issued a strong F05 outlook, Texas Instruments (TXN 28.24 -0.12) raised Q4 guidance, and Akamai Technologies (AKAM 10.98 -0.52) very modestly increased Q4 revenue guidance.

REMC beat consensus revenue estimate by 8.3% despite a difficult pricing environment. Management is seeing good recovery within telecom infrastructure market but ASPs (average selling prices) remain under pressure. Book-to-bill came in at a record 2.3:1. Signaled to intent to hold firm on ASPs. Provided mixed near-term and bright longer-term outlook. Guided for Q4 revenue of $109.3-114.5MM (+5-10% Q/Q) vs. consensus at $102.1MM and breakeven vs. consensus EPS at $0.03. F05 revenue is expected to come in at $500MM vs. consensus at $438.2MM. Each quarter is expected to be profitable. Full year net income margin is expected to come in the mid-single digits or ~$0.42 vs. consensus at $0.32. Would buy on weakness. Please visit the Story Stock page on Tuesday for a review of Q3 results.

TXN management is seeing strength across geographies with wireless markets stronger than expected. Strong wireless performance driven by both favorable ASPs (average selling prices) and unit growth. In the semiconductor space, would continue to focus on TXN as well as Analog Devices (ADI 46.60 -0.56) and Intel (INTC 31.64 -0.46). Companies have strong competitive profiles, above industry average growth prospects, and high operating leverage business models.

AKAM slightly increased Q4 revenue from $42-44MM to $43-45MM. Consensus is at $40.9MM.

Do not expect the FOMC (Federal Reserve Open Market Committee) to increase rates during Tuesday's meeting. Please visit the Big Picture page for why we think the Fed will sit tight and our latest thinking on the economy and stock market
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Old 12-09-2003, 10:01 AM
jjgold jjgold is offline
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Computer Systems & Peripherals
IBM (IBM) 91.20 +0.56: Co announces it is the first to successfully apply a novel approach in nanotechnology to aid conventional semiconductor processing, potentially enabling continued device miniaturization and chip performance improvements. It avoids the high cost of tooling changes and the risks associated with major process changes.

Identix (IDNX) 4.90 -0.04: Co announced that it is part of a team led by SchlumbergerSema that has been selected by the UK Passport Service to provide the technology for the UKPS six-month trial of biometric enrollment. SchlumbergerSema is the information technology business segment of Schlumberger Limited.

IDX Systems (IDXC) 26.77 +1.62: Company has teamed with British Telecom in bid to deliver clinical IT systems and services to the United Kingdom National Health Service (NHS) for the London region. IDX expects to finalize a definitive subcontract agreement over the coming weeks to provide its clinical information system tech to BTY.

SanDisk (SNDK) 66.34 +1.99: Company reaffirmed guidance for Y03 (Dec), reiterating guidance projection made on Oct 15, when it said revenues will "exceed $1.0 billion", Reuters Research consensus is $1.01 bln. SNDK says Thanksgiving promotions went well, sees "high bookings for our products, and the pricing environment remains benign. Retail promotions in the US over the Thanksgiving weekend were very well received and associated sell-through exceeded our expectations."

Networking
Cisco Systems (CSCO) 24.29 +0.54: Legg Mason upgraded Hold to BUY. Target $29. Raised their FY04-05 ests above consensus based on their belief that macro factors and new initiatives to incorporate video into the co's IP telephony portfolio will boost top line growth to higher levels than previously expected; firm also believes that Cisco will be rewarded with a higher P/E multiple that is closer to the broadband equipment group avgs (around 40x) as it executes to a higher growth rate after more than two years of flat revs. Target is $29.

Emulex (ELX) 27.00 -0.37: After the close, co announced that it intends to offer $450 mln aggregate principal amount of convertible subordinated notes in a private placement. The co intends to use the net proceeds from the sale of the notes to repurchase up to 1.5 mln shares of common stock concurrently with the offering, to repurchase all or a portion of the co's outstanding 1.75% convertible notes due 2007, and for working capital and general corporate purposes, which may include potential acquisitions.
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Old 12-09-2003, 10:01 AM
jjgold jjgold is offline
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Internet
Akamai Tech slightly raises Q4 & Y03 guidance (AKAM) 10.98 -0.52: After the close, co. said it sees Q4 (Dec) revenue of $43-45 mln (previous $42-44 mln), Reuters estimate is $40 mln and Y03 revenue of $159-161 mln (previous 158-160 mln), estimate is $156 mln.

Ariba (ARBA) 3.00 -0.04: Co announced that Merck (MRK) complemented its Ariba Buyer procurement solution with Ariba Enterprise Sourcing, Ariba Analysis, Ariba Contracts and Ariba Invoice.

China.com (CHINA) 7.95 -0.20: Unit confirmed definitive agreement to acquire Pivotal.

EarthLink (ELNK) 9.39 -0.11: After the close, reaffirmed itsY03 revenue guidance of $1.4 bln, Reuters estimate is $1.4 bln. with Q4 revenues to be comparable to Q3's $347 mln, estimate is $349 mln. Co. announced it expects to add apprx 225K net subscribers, this update represents a change from the previously issued guidance of 100-175K net growth in subscribers and reflects the completion of the acquisition of subscribers from Stargate.net, Inc. as well as continued solid subscriber growth from EarthLink's value and broadband service offerings and improving results in its premium narrowband service line.

Exult (EXLT) 7.01 +0.19: JMP Securities upgraded Exult (EXLT) to Strong Buy from Mkt Outperform, as firm believes the stock is undervalued at 19.5x their 2004 est; firm believes that the recent downward pressure was due to the $100 mln convertible debt offering done the day after the Sept 23 analyst meeting, which was in addition to the selling by BP of a substantial portion of its original strategic investment (at least 3 mln shares) since Sept. Target is $11.

FreeMarkets (FMKT) 5.85 +0.09: Company announced signing of long-term, global agreement with A.B. Electrolux (ELUX); under terms of deal, FMKT will provide ELUX with suite of its solutions. Global deal procedes ELUX's successful use of FMKT solutions in a pilot program in North America.

Yahoo! (YHOO) 42.78 -0.07: Goldman Sachs sees Yahoo's new $5.95/month bring-your-own-access (BYOA) product ("Yahoo! Plus") as a net positive for the co, as it should help drive paying subscriber growth and further increase the user base to be monetized via advertising; on the other hand, firm sees Yahoo's offering as a net negative for Time Warner's AOL division, given that Yahoo! (YHOO) is offering a similar product at 1/3 of the price; firm says the Yahoo! Plus product is very similar to the SBC/Yahoo! service, and similar to the competing products from AOL and MSN, Yahoo! will now be able to provide a nationwide premium BYOA broadband product as opposed to the 30% SBC/Yahoo! footprint
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Old 12-09-2003, 10:01 AM
jjgold jjgold is offline
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Semiconductor
Texas Instruments (TXN) 28.24 -0.12: After the close, raised Q4 outlook--Reuters. Co. expects Q4 (Dec) revenue in the range of $2.64-2.77 bln (previous guidance was $2.49-2.70 bln), Reuters estimate is $2.62 bln and Q4 EPS of $0.18-0.20 (previous guidance $0.14-0.19), which excludes a $0.07 gain on investment, Reuters estimate is $0.17.

Semi Equipment
There was no news of note in the Semi Equipment industry.

Software
Autodesk (ADSK) 23.50 -0.03: Reuters reporting that company announced it expects sales in China to grow by more than 30 percent in next three years on strong demand from architects and engineers.

Cerner (CERN) 37.40 -4.39: Not selected for contracts in North East or London regions. Co announced that while it continues to be a finalist in all three of the remaining regions, it was not selected in either the North East or London regions. "We obviously are disappointed by the announcement... piece of feedback that we received indicated that Cerner not only met or exceeded the rigorous technical requirements that were set forth, but also was the clear choice of the clinician community. In the end, we are left to assume that other factors were determining."

Descartes (DSGX) 2.71 +0.05: Company announced acceptance by the Toronto Stock Exchange of the purchase by 3078393 Nova Scotia Company, a wholly-owned subsidiary of DSGX, through facilities of the TSX, under normal course issuer bid, from time to time over next 12 months, up to an aggregate of $3.6 bln principal amount of its remaining outstanding 5.5% convertible debentures due June 30, 2005.

Electronic Data Systems (EDS) 23.00 -0.20: Thomas Weisel Partners reported that over the weekend, the London press said the board of the UK Inland Revenue recommended to the Treasury that it replace EDS and Accenture (ACN), the incumbents, as its outsourced service provider. The firm says this was not a total surprise, and has a potential EPS impact $0.02-$0.03. The more significant implications of a potential loss is that it may further tarnish EDS's reputation in the marketplace as they compete for other large deals, particularly for other government deals in the UK and Europe. The firm continues to believe this stock is fully priced at 22x the its 2004 EPS estimate of $1.05.

Entrust (ENTU) 4.13 -0.03: Co announced an agreement with Unisys Corp (UIS) for Unisys to make the complete suite of Entrust offerings available as part of its security solutions. The agreement is under the auspices of the Entrust TrustedPartner Program.

Telecom Equip
Alvarion Ltd (ALVR) 10.80 -0.60: Company announced that its solutions have been selected by China Telecom (CHA) for deployment in four Chinese provinces. CHA selects 4 vendors including Alvarion's O.E.M. partners in China, BISC and Datang Telecom.

Comtech Telecom (CMTL) 27.17 -5.32: CE Unterberg downgraded Comtech Telecom (CMTL) to Short-Term Mkt Perform from Buy ahead of Q1 results tomorrow, primarily due to valuation; firm says the shares are up by over one-third in the past 3 months and discount better than published ests, and yet it is unlikely the co will beat this qtr's ests by as wide a margin as it has beaten the prior 3 qtrs. Target is $36-$40.

Motorola (MOT) 13.17 -0.18: Wells Fargo Sec downgraded Buy to HOLD. Believes that without leverage potential from semi biz, MOT would begin to more closely resemble Nokia due to greater handset exposure.

Polycom (PLCM) 21.50 +0.48: Co and Avaya Inc (AV) will collaborate to jointly develop and market new Internet protocol (IP) -- telephony-enabled video solutions that will make desktop and group video communication as simple as a phone call. The companies also said Avaya plans to sell and service Polycom products globally -- significantly expanding the companies' existing strategic reseller relationship in North America.

REMEC (REMC) 11.06 +0.03: After the close, reported Q3 (Oct) loss of $0.07 per share, vs the Reuters Research consensus of ($0.02); operating income was reported as $2.2 mln (which equates to approx a loss of $0.04, although this may not be comparable to consensus); revenues rose 75.3% year/year to $104.1 mln vs the $96.1 mln consensus.

Sorrento Networks (FIBR) 3.21 +0.45: Company guided Q3, sees revenues of approx $6.7 mln led led by new orders from recently acquired LuxN products.

Terayon Comm (TERN) 4.57 +0.02: Before the open, company reaffirmed Q4 guidance, sees loss of $0.07-0.09, vs the Reuters Research consensus of ($0.09), and revenues of $40-43 mln vs an estimate of $40.3 mln and the First Call consensus of $42.0 mln.

Telecom Services
There was no news of note in the Telecom Services industry.
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