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Old 01-06-2004, 09:59 AM
jjgold jjgold is offline
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Default Tech Reports Tuesday

Market participants were back in full force on Monday and they picked up where they left off before heading home for the holidays. In other words, they returned in a bullish frame of mind and continued to show a keen interest in owning technology stocks.

Feeding their appetite was research firm SG Cowen, which upgraded a host of technology issues. Altogether SG Cowen upgraded 11 companies with ties to the technology sector, including Microsoft (MSFT 28.14, +2.51%), Dell (DELL 35.22, +2.71%), Applied Materials (AMAT 23.52, +6.43%) and KLA-Tencor (KLAC 59.24, +4.96%), all of which were upgraded to Strong Buy from Outperform.

Beyond the favorable tone in Monday's research, a positive earnings pre-announcement for Q4 from Siebel Systems (SEBL 15.39, +10.01%), an affirmation of FY03 guidance from Nextel (NXTL 28.94, +3.88%), and an encouraging report on worldwide semiconductor sales in November succeeded in keeping sellers sidelined.

Not surprisingly, semiconductor and semiconductor equipment stocks led the broad-based advance that was accented by a 3.6% gain in the Philadelphia Semiconductor Index (SOXX). We should add that SG Cowen had a hand in that advance, too, as the firm said it thinks, based on their model, which suggests around 35% capex growth in 2004-05, that it is still not too late to play the 2004-05 semi cycle.

From a macro viewpoint, Fed Governor Bernanke laid the groundwork for Monday's broad market rally with a speech over the weekend that suggested the Fed wasn't likely to raise rates anytime soon. That consideration served as an effective catalyst for buying decisions that saw the market start the day on an upward path that it continued on into the close. Volume at the NYSE was moderate with 1.58 bln shares trading hands, but noticeably heavy at the Nasdaq where volume topped 2.3 bln shares. In brief, it is a new year, but the same bullish attitude persists.
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Old 01-06-2004, 09:59 AM
jjgold jjgold is offline
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Computer Systems & Peripherals
DELL 35.22 +0.93: SG Cowen upgraded to Strong Buy from Outperform, as its core IT survey suggests a likely recovery in corporate PC upgrades; firm also cites prospects for secular share take in consumer PC/consumer tech and share gains in enterprise, as well as valuation at just 21x its 2005 EPS est.

Gateway (GTW) 4.98 +0.16: After the close, said it expects to report an operating loss at the low end of its previous EPS guidance range, and revenue of approx $880 mln, compared with its previous guidance of $925-975 mln -- Reuters Research consensus is $963 mln. EPS guidance does not include the impact of previously announced restructuring and transformation costs, which are currently estimated to be apprx $42-45 mln, (original projection was $50-60 mln).

Mobility Elec (MOBE) 7.11 -1.85: Before the open, company guided below consensus for Q4 (Dec), sees revenues coming in "approximately $1.0 million to $1.3 million less than the Company's previous guidance of about $15 million", Reuters consensus is $16.3 mln. Because of revenue shortfall, company will not make previous earnings projection of $0.00-0.01, consensus is $0.01.

Neoware Systems (NWRE) 10.60 -3.05: Before the open, company guided Q2 revenues of $15 mln, vs the Reuters Research consensus of $17.86 mln.

Novatel Wireless (NVTL) 6.84 +0.94: After the close, company reported Q4 (Dec) revenues will be between $9.6-9.8 mln, in line with previous guidance (no estimates are available). Revenue growth was driven primarily by the introduction of Co's next generation UMTS products, which began shipping in late December.

ScanSource (SCSC) 46.65 +0.53: After the close, company said it expects Q2 revenues of $283-290 mln, vs the Reuters Research consensus of $261.1 mln.

Networking
Foundry Networks (FDRY) 27.47 +0.77: SG Cowen upgraded to Strong Buy from Outperform after its survey suggested IT spending to increase in 2004; firm believes signs of an emerging LAN equipment upgrade cycle are forming, the group has seen several years of underinvestment in network infrastructure after the Y2K upgrade cycle, and the general uptake in advanced networking technologies such as voice-over-IP, wireless LANs, and networked storage has driven the need for a more robust core networking infrastructure.

Internet
SG Cowen upgrades BE and KEA : SG Cowen upgrades BE to Outperform from Mkt Perform, as more positive feedback on 2004 IT spending is bound to benefit BE's financials; firm thinks the combination of gradual utilization rate uptick, improving price realization, and a solid demand environment in North America and Europe could expand BE's depressed margins and ROIC metrics. Firm also upgrades KEA to Mkt Perform from Underperform, saying a more constructive IT spending environment in 2004 is bound to benefit about 50% of KEA's rev base, but they are concerned with the co's exposure to outsourcing.
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Old 01-06-2004, 10:00 AM
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Semiconductor
California Micro (CAMD) 9.75 +0.66: After the close, company raised guidance for Q3 (Dec), company sees EPS of $0.08-0.10 vs Reuters consensus of $0.08 and previous company guidance of $0.06-0.09 on revenues of $16.8-17.2 mln, consensus $16.75 mln, previous company guidance was $16.2-17 mln.

Marvell (MRVL) 38.70 +0.80: Co announced that its Marvell Libertas 802.11g Wireless LAN chipset solution has been selected by NETGEAR (NTGR) for its new 802.11g home networking solutions.

Metrologic (MTLG) 27.52 +0.04: After the close, company raised Q4 revenues to approx $41.0 mln, vs the Reuters Research consensus of $38.7 mln and previously guided (Dec. 31) revs of $38.5-39.5 mln; also sees Y03 revenues of approx $137.3 mln vs the R.R. consensus of $133.4 mln. Co attributes revenue increase to production of scanners at its Blackwood and China facilities and MTLG's ability to ship products during recent holiday season.

Silicon Labs (SLAB) 45.41 +1.11: After the close, company announced the appointment of Dan Artusi as Pres and CEO, effective immediately. Mr. Artusi joined Silicon Laboratories in 2001 and most recently served as the co's Pres and COO. Mr. Artusi succeeds Nav Sooch, who will continue to serve as chairman of the board of directors and work with the management team.

TranSwitch (TXCC) 2.57 +0.25: After the close, company announced that it now expects Q4 revs to be approx $6.5-$7.0 mln, vs previous guidance of $5.3 mln, citing stronger demand across the co's established product lines.

Trident Microsystems (TRID) 15.45 -1.30: Before the open, company issued upside preannouncement for Q2 (Dec), sees earnings of $0.05-0.07 vs Reuters consensus (single analyst) of $0.07 on revenues of $16-16.5 mln, estimate is $15.5 mln. For Q1 (Mar), TRID sees lower revenues due to seasonality in China, expects seasonal effect to be greater due to Dec pull-ins by China TV manufacturers.

TriQuint Semi (TQNT) 7.94 +0.64: Piper Jaffray upgraded to Outperform from Mkt Perform, buoyed predominately by handset-related demand. The firm is more confident in the co's ability to grow the overall business in 2004 with enhanced profitability in 2005. Specific focal areas of strength include CDMA receivers, triplexors, and incremental growth in GSM power amplifiers. In addition, the firm is seeing a resurgence in Foundry business. The firm believes strong sales of CDMA receivers will continue to expand particularly as key customers such as Nokia, continue to grow market share in CDMA. Based on higher FY05 EPS, the firm raises its target to $9 from $7, which is based 30x FY05 EPS of $0.30.

Semi Equipment
ATMI (ATMI) 25.87 +2.47: Adams Harkness transitioned coverage of ATMI and upgraded to Strong Buy from Mkt Perform; firm expects the co to enjoy solid growth in 2004-05, driven by strong wafer demand (up 10%-13% sequentially) and margin expansion as it undergoes its transformation.

KLAC, AMAT, BRKS upgraded at SG Cowen : SG Cowen upgraded KLAC and AMAT to Strong Buy from Outperform and BRKS to Outperform from Mkt Perform, saying it is still not too late to play the 2004-05 semi cycle; firm says their model suggests around 35% capex growth in 2004-05, and they believe that "panicked buying" after 3 years of under-investment could pull 2004 orders forward (+45% wouldn't shock them); despite high expectations, they believe the cycle will still surprise.
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Old 01-06-2004, 10:00 AM
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Software
PeopleSoft (PSFT) 23.77 +0.97: Adams Harkness upgraded to Strong Buy from Buy, raised its Q4 rev est and 2004 rev/EPS ests above consensus, and raised its target to $30 from $24; firm says checks indicate that the co outperformed Q4 targets and that the co enters 2004 with a "very hearty" pipeline that makes a third consecutive Q1 disappointment very unlikely. Also, firm believes the co is beginning to display disproportionate leverage to the mid-mkt and the manufacturing sector, and with continued execution and with less distraction from ORCL's hostile bid, they believe investors should close the valuation gap that exists between PSFT and peers (21x their 2004 est vs 33x for peers).

PUMATECH (PUMA) 5.30 +1.21: Before the open, company revised guidance based on planned integration of Synchrologic into Pumatech's overall operations, now sees Q2 EPS at breakeven to profit of $0.01 (ex items), vs the Reuters Research consensus of $0.01, and revenues of $9.8-10.2 mln, vs an estimate of $8.8 mln; sees pro-forma Q3 of breakeven to profit of $0.01 (ex items), vs the R.R. consensus of $0.01, and revenues of $12.5-13.5 mln, vs an estimate of $10.4 mln.

Red Hat (RHAT) 19.57 +1.20: After the close, company announced that it intends to offer, subject to market and other conditions, $400 million of convertible senior debentures due in 2024. RHAT intends to use the net proceeds from this offering for general corporate purposes, including possible acquisitions of complementary businesses and technologies and the expansion of its international operations.

Siebel Systems (SEBL) 15.39 +1.40: Before the open, company issued upside preannouncement for Q4 (Dec), sees EPS of $0.08 vs Reuters consensus of $0.06 on revenues of $365 mln, consensus $350 mln, previous revenue guidance called for $335-350 mln. Q4 license revenues are now expected to be approximately $150 mln, previous license revenue guidance called for $120-140 mln.

TALX Corp (TALX) 22.45 -0.31: Before the open, company guided below consensus for Q3 (Dec), sees EPS of $0.17-0.19, which includes $0.02-0.03 in legal, severance costs, accrual for severance, Reuters consensus is $0.23. TALX cites lower than previously anticipated revenue growth and incremental costs related to internal review, restatement and severance, slowdown in the mortgage market.

Telecom Equip
ADTRAN (ADTN) 32.68 +1.35: After the close, company reported Q4 (Dec) revenue would be apprx $113.4 mln, Reuters consensus is $108.5 mln. EPS are estimated to be in the range of $0.24-0.25, split effected. ADTRAN Chairman and CEO Mark Smith stated, "Revenue for the fourth quarter was higher than anticipated as we observed the positive effect of market share gains accompanied by abroad based increase in enterprise demand. The preliminary fourth quarter results culminate a year in which new products for new markets began to contribute significantly to our revenue stream, as were turned to revenue growth and to our normal operating model."

Adv Fibre Comm (AFCI) 19.95 +0.02: After the close, said it is going to acquire North American Access unit of Marconi for $240 mln in cash

Corning (GLW) 11.01 +0.74: William Blair upgraded to Outperform from Mkt Perform, saying the co should gradually recognize the benefits of restructuring in 2004; also, its LCD Unit will provide reasonable growth and boost profitability, and although debt remains a concern, cash flow from operations should be positive in 2004.

DSP Group (DSPG) 26.33 +1.06: Company announced that due to increased demand for its products, Q4 revs would approximate $38 mln, vs previous guidance of $33.0-$35.0 mln. Co says this revenue increase together with improving gross margins would result in stronger than expected diluted Q4 EPS of $0.19-$0.21 (consensus is $0.16).

Telecom Services
AT&T Wireless (AWE) 8.03 -0.05: Merrill Lynch downgraded to Neutral from Buy based on valuation; also, firm thinks that AWE was the most aggressive with regard to pricing during Q4, and does not take a lot of comfort in the slower than expected porting activity, as they believe that porting among corporate customers is more likely to occur during 2004.

Nextel (NXTL) 28.94 +1.08: Reaffirmed Y03 EPS of $1.15 or more; Reuters consensus is $1.18... net subscriber additions of 2.2 mln.

NII Holdings (NIHD) 84.79 +8.54: Co announced that it will report year-end 2003 net subscriber additions of approx 215,000, exceeding its previously announced guidance by 20%. The Co also reaffirmed its previously announced guidance for overall financial performance for 2003. As a result of the solid performance in the quarter, co added approx 215,000 subscribers to its network in 2003, a 20% increase as compared with 2003 guidance of 180,000 net subscriber additions and a 43% increase as compared with original 2003 guidance of 150,000 net subscriber additions
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