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Old 12-22-2003, 10:18 AM
jjgold jjgold is offline
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Default Tech Reports Monday

Tech shares opened the day higher on Friday but gave ground almost immediately, entering negative territory within fifteen minutes of the opening bell. Investors tried to bid shares higher midway through the morning session but gave up after thirty minutes. The selling pressure steadily increased, peaking just before 3:00pm ET when buyers stepped in to erase half of the day's losses. At session's end, theBriefing.com Tech Index was down 0.1%. Decliners outnumbered advancers 1.3:1 with decliners shedding 2.1% and advancers gaining 2.6%. The Philadelphia Semiconductor Index (SOXX 489.84 -3.88) slipped 0.8%. Decliners outnumbered advancers 3.3:1 with decliners falling 1.2% and advancers rising 0.9%. For the week, tech shares ended lower despite the broad market finishing higher (see Weekly Wrap). The Briefing.com Tech Index was down 1.0% while the SOXX was lower by 1.3%.

Looking ahead, there are few scheduled items on the corporate calendar that will help drive shares higher. On Monday, Research In Motion (RIMM 44.77 -0.58) is due to report Q3 results after the close; on Tuesday, Micron Technology (MU 12.33 +0.27) is slated to publish Q1 results after the close. The schedule is a bit fuller on the economic calendar. Look for November Personal Income and Spending, GDP and the Michigan Revised Consumer Sentiment on Tuesday, and Durable Goods, Initial Unemployment Claims and New Home Sales on Wednesday.

Trading is likely to be thin, and as a result, volatile ahead of the Christmas and Hannukah holidays. Look for daily spreads to widen. We remain moderately bullish on technology shares over the long-term and would take advantage of the volatility to buy into quality, attractively priced names / sell richly priced shares into strength as part of a rebalancing of the tech portion of the portfolio to a neutral market weight (Please visit the Story Stocks page for the latest thinking on investment opportunities across market sectors, including tech
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Old 12-22-2003, 10:18 AM
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Computer Systems & Peripherals
ATI Tech (ATYT) 14.62 -0.08: Before the open, reported Q1 (Nov) earnings of $0.19 per share, $0.01 better than the Reuters Research consensus of $0.18; revenues rose 40.0% year/year to $469.7 mln vs the $457.3 mln consensus. Company sees Q2 revenues of $430-470 mln, consensus $424 mln.

SanDisk (SNDK) 60.99 +3.26: Goldman Sachs upgraded SanDisk (SNDK) to Outperform from In-Line, citing the following factors: 1) Q1 ests are conservative, with the potential for upside due to very strong sell-through of Digital Cameras, 2) stock usually peaks 8-9 months before a cyclical earnings est and margin top (however, cyclical supply demand concerns for NAND flash won't materially affect the NAND pricing outlook until early 2005), 3) a deep Dec share price swoon has often been followed by a significant Jan rally, and 4) relative valuation is attractive at 23.4x their 2004 est vs the group at 33.3x.

Viisage (VISG) 3.43 -0.03: David Drucker, Press Secretary, Illinois Secretary of State Office states that: "The relationship between the State of Illinois and Viisage is a productive, ongoing partnership... We believe the events surrounding the indictments [of former IL governor George Ryan and consultant Lawrence Warner] have no impact on our ongoing relationship with Viisage. Moreover, at no time has Viisage been negatively implicated with respect to this matter and there has been no assertion of impropriety." VISG had a formal consultative relationship with Warner's firm National Consulting Company from 1997-2002, and paid the firm fees of about $800,000. Upon learning of the indictment of Warner in 2002, VISG President and CEO Bernard Bailey terminated the co's contract and relationship with National Consulting Company and Warner.

Wave Systems (WAVX) 1.50 -0.31: Co announced that the SEC has commenced a formal investigation into certain matters relating to WAVX. The SEC's investigative order, received by the co on Dec 17, 2003, relates to certain public statements made by WAVX during and around Aug 2003, as well as certain trading in WAVX's securities during such time.

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Old 12-22-2003, 10:18 AM
jjgold jjgold is offline
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Networking
There was no news of note in the Networking industry.

Internet
Ariba (ARBA) 3.06 +0.17: RBC Capital upgraded Ariba (ARBA) to Outperform from Sector Perform based on the following: 1) improving macro spending trends; 2) evidence of improved sales execution; 3) improving balance sheet metrics; and 4) attractive valuation. The firm says Ariba is on track to meet or moderately beat the firm's DecQ estimates. The firm is aware of 3 large transactions that have closed and a couple more that are on track to close by the end of Dec. With the stock down 15% since early Nov, it is now trading at a discount to its peers. The firm maintains its 12-mo price target of $4, predicated on a 3.3 multiple of enterprise value to calendar 2003E revenues, which is in line with the average multiple of profitable peers.

Ariba (ARBA) 3.06 +0.17: RBC Capital upgraded Ariba (ARBA) to Outperform from Sector Perform based on the following: 1) improving macro spending trends; 2) evidence of improved sales execution; 3) improving balance sheet metrics; and 4) attractive valuation. The firm says Ariba is on track to meet or moderately beat the firm's DecQ estimates. The firm is aware of 3 large transactions that have closed and a couple more that are on track to close by the end of Dec. With the stock down 15% since early Nov, it is now trading at a discount to its peers. The firm maintained its 12-mo price target of $4, predicated on a 3.3 multiple of enterprise value to calendar 2003E revenues, which is in line with the average multiple of profitable peers.

GoAmerica (GOAM) 0.39 -0.08: Obtained $14.5 mln in private placement commitments. Following its financing (see previous comment), co said it expectes 2004 rev of $12-13 mln, with a goal of quarterly net income profitability by the end of that year. The co said it expects 2005 rev of $16-18 mln, with a goal of net income as a percent of revs in excess of 10%.

Interwoven (IWOV) 12.54 +0.05: Pacific Growth initiated coverage with an Overweight rating, citing the following factors: 1) firm believes the co has significantly strengthened its product portfolio and competitive positioning with the iManage and MediaBin acquisitions, 2) firm believes EMC's acquisition of Documentum provides a positive disruption for both IWOV and the rest of the ECM vendors, as Interwoven is presented with an opportunity to capture customers and partners who do not wish to be locked in to a hardware-centric vendor, 3) new mgmt team is extremely focused on achieving profitability, 4) firm believes IWOV is well-positioned to benefit from Sarbanes-Oxley initiatives, and 5) stock trades at a discount to peers. Firm believes IWOV could eventually trade up to $16.50.
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Old 12-22-2003, 10:19 AM
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Semiconductor
Cypress Semi 20.91 +0.11: UBS upgraded Cypress Semi (CY) to Buy from Neutral and raised their target to $27 from $26; firm believes that two of the co's main product lines (SRAM and USB) are strong, and that yesterday's increased guidance signals strength in CY's USB product line, as demand is strong in its Consumer end mkt and pricing appears to be firming.

Semi Equipment
Ultratech (UTEK) 27.45 -0.08: Berean Capital provided commentary after the co released an 8-k filing after the close yesterday. The firm suggests despite 4Q03 revenues expected to be flat due to pushouts, it should help 1Q04. The firm notes, as other recent pronouncements have shown, it expect strong orders in 1H04 into bump processing for LCD and Flat Panel Displays. Berean believes the Flat Panel Industry is growing at 40-50% every quarter, and increasing capacity requirements at the LCD packaging players such as Aptos, ChipMos, IST and other Taiwanese and Japanese packaging houses, will result in strong orders for bump lithography steppers. The firm believes the Taiwanese and Japanese manufacturers have been slow to increase capacity and as flate panel display prices rise and demand increases, there will be a pick up in orders for packaging equipment. Berean reiterated its BUY rating and price target of $40, as order momentum to the Asia-Pacific picks up.
American Technology Research reiterated their Buy rating on the semi equipment sector after the Nov book-to-bill ratio climbed to 1.04 from 1.01 sequentially; firm says improving end-mkt demand in notebook PCs and cell phones, and early signs of a recovery in the network and telecom sectors, are fueling demand for semi equipment orders; and although equipment orders have been improving since the summer, firm says orders are just beginning to outpace sales which we expect to continue through 2004 and beyond. In addition, firm notes that checks with Mattson (MTSN) and Asyst (ASYT) indicate the co's are seeing higher order growth rates than the larger semi equipment makers.


Ultratech (UTEK) 27.45 -0.08: Berean Capital provided commentary after the co released an 8-k filing after the close yesterday. The firm suggests despite 4Q03 revenues expected to be flat due to pushouts, it should help 1Q04. The firm notes, as other recent pronouncements have shown, it expect strong orders in 1H04 into bump processing for LCD and Flat Panel Displays. Berean believes the Flat Panel Industry is growing at 40-50% every quarter, and increasing capacity requirements at the LCD packaging players such as Aptos, ChipMos, IST and other Taiwanese and Japanese packaging houses, will result in strong orders for bump lithography steppers. The firm believes the Taiwanese and Japanese manufacturers have been slow to increase capacity and as flate panel display prices rise and demand increases, there will be a pick up in orders for packaging equipment. Berean reiterated its BUY rating and price target of $40, as order momentum to the Asia-Pacific picks up
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Old 12-22-2003, 10:19 AM
jjgold jjgold is offline
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Semi Equipment
Ultratech (UTEK) 27.45 -0.08: Berean Capital provided commentary after the co released an 8-k filing after the close yesterday. The firm suggests despite 4Q03 revenues expected to be flat due to pushouts, it should help 1Q04. The firm notes, as other recent pronouncements have shown, it expect strong orders in 1H04 into bump processing for LCD and Flat Panel Displays. Berean believes the Flat Panel Industry is growing at 40-50% every quarter, and increasing capacity requirements at the LCD packaging players such as Aptos, ChipMos, IST and other Taiwanese and Japanese packaging houses, will result in strong orders for bump lithography steppers. The firm believes the Taiwanese and Japanese manufacturers have been slow to increase capacity and as flate panel display prices rise and demand increases, there will be a pick up in orders for packaging equipment. Berean reiterated its BUY rating and price target of $40, as order momentum to the Asia-Pacific picks up.
American Technology Research reiterated their Buy rating on the semi equipment sector after the Nov book-to-bill ratio climbed to 1.04 from 1.01 sequentially; firm says improving end-mkt demand in notebook PCs and cell phones, and early signs of a recovery in the network and telecom sectors, are fueling demand for semi equipment orders; and although equipment orders have been improving since the summer, firm says orders are just beginning to outpace sales which we expect to continue through 2004 and beyond. In addition, firm notes that checks with Mattson (MTSN) and Asyst (ASYT) indicate the co's are seeing higher order growth rates than the larger semi equipment makers.


Ultratech (UTEK) 27.45 -0.08: Berean Capital provided commentary after the co released an 8-k filing after the close yesterday. The firm suggests despite 4Q03 revenues expected to be flat due to pushouts, it should help 1Q04. The firm notes, as other recent pronouncements have shown, it expect strong orders in 1H04 into bump processing for LCD and Flat Panel Displays. Berean believes the Flat Panel Industry is growing at 40-50% every quarter, and increasing capacity requirements at the LCD packaging players such as Aptos, ChipMos, IST and other Taiwanese and Japanese packaging houses, will result in strong orders for bump lithography steppers. The firm believes the Taiwanese and Japanese manufacturers have been slow to increase capacity and as flate panel display prices rise and demand increases, there will be a pick up in orders for packaging equipment. Berean reiterated its BUY rating and price target of $40, as order momentum to the Asia-Pacific picks up.

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Old 12-22-2003, 10:19 AM
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Telecom Equip
Ceragon (CRNT) 6.60 -0.32: C.O.O left company to "pursue new challenges". Announced the promotion of Udi Gordon as its new Vice President of Research and Development. After more than seven years with Ceragon Networks, Mr. Inon Beracha, Chief Operating Officer and Executive Vice President, Research and Development, has decided to pursue new challenges.

PWAV upgraded at UBS 2.71 +0.08: ADC Telecom (ADCT 2.71 +0.08) Lehman upgraded ADC Telecom to Overweight from Underweight and raised their target to $4.25 from $2; firm says their sense is ADCT is on the verge of stabilizing, they can now quantify Fiber to the Premise opportunities, and returning to 15-20% operating margins seems much more believable; also, firm believes ADCT may dispose of its loss-generating Cuda Cable business, which could prove about $0.05/share accretive per year, and is not in current forecasts.
Openwave (OPWV 10.87 +0.37). Lehman upgraded Openwave to Overweight from Equal-Weight and raised their target to $15 from $13; while recognizing that a near-term acceleration in the co's sales is likely to be modest, they consider Openwave to have the potential to exceed near-term mkt expectations and think the co is well-positioned for growth in 2H04 given carrier focus on sales growth.

Powerwave (PWAV 7.59 +0.42). UBS upgraded Powerwave to Buy from Neutral but cut their target to $9 from $10; firm sees continued margin expansion due to its move to an outsourced manufacturing model, increased direct sales to operators, and continued product design efficiencies; firm also cites the improved outlook for wireless capex spending, and says the Nortel contract loss is likely in the stock.


ViaSat (VSAT) 18.94 +0.24: VSAT announced that it has reached an agreement with SFA relating to the indemnification for costs claimed by VSAT to have been incurred for customer and contract obligations and assets acquired in connection with its acquisition of the SFA satellite networks business in April 2000. Under the terms of the agreement, SFA will pay VSAT $9.0 mln in cash, and the parties will jointly dismiss the litigation concerning the acquisition currently pending between them. Upon receipt of the payment, VSAT expects to record a pre-tax gain of about $6.3 mln, which is expected to add about $0.13 to their results for Q3.

Wavecom (WVCM) 13.26 -3.07: Co lowered its Q4 rev est to EUR57-EUR63 mln from previous guidance of EUR70-EUR78 mln, citing the following reasons: certain distributors have reached maximum levels of product inventory allowed under WVCM's revenue recognition policy, some of WVCM's Asian customers experienced mkt shortages of some key handset components, one of WVCM's main non-handset customers has been experiencing major delays in the implementation of a significant project that involves the use of WVCM modules, and the U.S. dollar continued to weaken against the euro.

Telecom Services
Aether Systems (AETH) 4.58 -0.22: The co announced it has signed a definitive agreement to sell its Enterprise Mobility Solutions division to TSYS. The purchase price for the transaction totals $19 million in cash with the parties involved
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