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Old 01-07-2004, 09:42 AM
jjgold jjgold is offline
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Default Tech Report Wednesday

The technology sector showed its resilience again as it bounced back from some early profit taking on Tuesday and finished the session at yet another 52-wk high. The inclination to take some money off the table in the early-going was a reflex reaction to the sizeable gains on Monday and, in turn, was a natural response to some weaker than expected economic data that included the ISM Services Index for December (58.6 vs consensus of 60.8) and the Factory Orders report for November (-1.4% vs consensus of -1.5%).

For all intents and purposes, though, the data merely served as a convenient excuse to do some selling as there was nothing alarming, nor too terribly surprising, in the reports themselves. To that end, a level of 58.6 is still a strong reading for the ISM Services series and the Factory Orders data, which is comprised of the already released durables data, along with nondurables data, was essentially dated information that doesn't typically have much market impact.

Fittingly, the negative reaction to the data was short-lived and the tech sector soon mounted a rebound try that gained some momentum when Nasdaq Composite found support in the 2042/2040 area. In Briefing.com's Technical Take column, which is available to Platinum subscribers, it was noted that if support held in that area during early session downticks, the index would be positioned for an upside extension. That is, in fact, what played out as the Nasdaq trended higher for the remainder of the day, paced by leadership in the technology arena that was spearheaded by the software, semiconductor, telecom and telecom equipment stocks.

The spread between advancing issues and declining issues at both the NYSE (1724 vs 1579) and the Nasdaq (1808 vs 1409) wasn't nearly as wide as what was seen on Monday, but there was notable interest in Nasdaq-listed issues as volume topped 2.2 bln shares for the second day in a row.

Electronics Boutique (ELBO 27.17, +10.9%), which narrowed its Q4 guidance, was a winning standout in the tech sector along with Nortel Networks (NT 4.76, +3.03%), which was upgraded to Outperform from Neutral at Soundview. Gateway (GTW 4.34, -12.85%), meanwhile, was down on its luck after cautioning investors that it expects to report a Q4 operating loss at the low end of its previous guidance range. Early indications suggest JDA Software (JDAS 14.43, -3.54, -19.7%) will fill the role of tech sector pariah on Wednesday as its stock is down nearly 20% in extended action following a warning from the company that Q4 sales and earnings results are expected to fall short of current consensus estimates since it failed to close a number of deals that it had expected to by the end of the quarter.--
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Old 01-07-2004, 09:42 AM
jjgold jjgold is offline
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Default RE: Tech Report Wednesday

Computer Systems & Peripherals
Apple Computer (AAPL) 22.09 -0.08: The Wall Street Journal reported that Apple Computer was expected to introduce a new iPod that costs much less than its current $299 entry-level model. Analysts believe Apple could price the new iPod as low as $200. The co declined to comment on any new products it may be introducing this week, expected to be announced at the MacWorld conference in San Francisco.

IBM (IBM) 93.06 +0.01: The Wall Street Journal reported IBM's South Korean unit has sparked inquiries by the U.S. Justice Dept and the S.E.C. in light of a bribery and bid-rigging scandal. IBM said it has fired three executives of IBM Korea last week, just before they were indicted over the weekend along with 45 other individuals and companies. The case centers on the sale of IBM computers and services to Korean government agencies and state businesses.

Komag (KOMG) 19.76 +4.52: Before the open, company issued upside preannouncement for Q4 (Dec), sees revenues in excess of $117 mln, consensus $111 mln, says this "could result in diluted earnings per share in excess of $0.60" in Q4, consensus estimate is $0.29... although this may not be comparable, as operating results include $1 mln one-time gain.

Overland Storage (OVRL) 21.53 +1.78: Before the open, company raised Q2 pro forma EPS outlook to $0.25 from $0.22 and revenue forecast to $67 mln from $60 mln -- Reuters consensus $0.22 and $59.78 mln. OVRL cited strength in O.E.M. and branded sales for upside guidance.

Sun Microsystems (SUNW) 5.03 +0.33: Merrill Lynch raised estimates after positive field checks and to reflect a sequential currency boost of 220 bps. Firm's DecQ rev est goes to $2.85 bln from $2.74 bln (Reuters consensus $2.748 bln); firm's loss est goes to -$0.03 from -$0.04 (consensus -$0.04). Merrill's checks, though not complete, suggest Sun Micro experienced a strong qtr close; says after three yrs of postponement, it appears co's installed base is beginning to upgrade.

Networking
Brocade (BRCD) 6.63 +0.33: Lehman Brothers upgraded from Equal-weight to OVERWEIGHT. Target $6 to $7.50. Believes that sentiment is overly pessimistic, revenues are poised to accelerate, and that margins should expand.

Internet
Digital Impact (DIGI) 2.71 -0.28: Before the open, company announced that it has been advised by Institutional Venture Partners that IVP will distribute the majority of its investment in Digital Impact, approx 2.4 mln shares, to its partners following the close of business today. IVP has been an investor in Digital Impact since 1998.... Separately, the co reaffirmed its previous DecQ guidance of revs at $11.2-$11.8 mln and EPS of $0.00-$0.01.

EBAY (EBAY) 65.16 +0.54: PiperJaffray increased estimates as domestic and international listings over the last four weeks were stronger than anticipated. Q4 revs go to $641.9 mln from $618.2 mln. Its 2004 rev estimate goes to $3.02 bln from $2.92 bln. and EPS to $1.06 from $1.02. Yesterday, the co increased its listing fee structure, which the firm estimates will amount to a 15%-20% increase in U.S. listings revenues. This is the first rate increase in two years. A recent concern of the co's model has centered on competing platforms, such as search, as an alternative customer acquisition channel. While this concern cannot be dismissed, its strong listing growth suggests that there are no immediate threats. The firm increases its price target to $71 from $60 based on 35x 2004 EBITDA.

Loudeye (LOUD) 2.60 +0.33: Roth Capital initiated coverage of LOUD with a Buy rating and $3.20 target. Firm cited the following factors: 1) the co has several large, consistent customers (Amazon, MSN.com, Yahoo), 2) the legitimate sale of licensed music downloads and the increasing use of rich media in interactive marketing platforms is opening up a substantial mkt opportunity for digital media outsource specialists such as LOUD, 3) firm sees expanding gross margins, 4) co's $20 mln cash can support the current burn rate for at least two years, and 5) firm notes that any positive news in the sector prompts buying of LOUD shares.

priceline.com (PCLN) 18.80 -0.83: Thomas Weisel downgraded from Outperform to PEER PERFORM. Cited soft visitation, competition, timing of new ads, and potential retail cannibalization.

Retek (RETK) 10.70 +0.80: RBC Capital Markets upgraded from Sector Perform to OUTPERFORM. Cited expected excellent Dec qtr performance, improving outlook, profitability expansion, and attractive valuation.

Selectica (SLTC) 4.60 +0.28: Before the open, company issued upside preannouncement for Q3 (Dec), sees bottom-line coming in at a loss of $0.02 to breakeven, Reuters consensus is a loss of $0.09; SLTC sees revenues $10-11 mln, consensus $9.2 mln.

Yahoo! (YHOO) 47.24 +0.34: The Wall Street Journal reported that Yahoo! is plotting to recapture the hearts and mice of Web users with a three-pronged assault on Google's dominance. First, Yahoo is expected to dump Google as the primary search technology on its site within a few months, which is a move that could come around the time Google is preparing a long-awaited I.P.O. Second, Yahoo wants to combine personalization and customization features to extend the usefulness of searches. Third, it plans to expand its use of "paid inclusion," whereby it frequently surveys a participating merchant's sites for the most up-to-date information and includes those findings in users' search results. YHOO has spent over $2B last year buying Overture and Inktomi and now it is beginning to roll out offerings stemming from those acquisitions.

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Old 01-07-2004, 09:42 AM
jjgold jjgold is offline
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Default RE: Tech Report Wednesday

Semiconductor
Rambus (RMBS) 33.90 +2.76: American Technology Research reiterated its Buy rating and raised its target to $47 from $35; firm believes that, bureaucratic delays notwithstanding, Rambus (RMBS) will prevail this year on both the "rule of law" front against Infineon and against the standards-setting bodies at the FTC; if this happens, firm says this should set-up their "realistic case" earnings scenarios for CY05 of $1.42, and for CY06 of $1.70. (Firm thinks the Infineon decision should come shortly after Jan 7, and expects an initial decision on the FTC case by Feb 17.)

STMicroelectronics (STM) 28.15 +0.19: Co announced it is sampling the STm8000, a single-chip, audio-video full-duplex codec for the DVD and HDD recorder market. The STm8000 architecture brings audio/video encoding to DVD or HDD recording products and includes state-of-the-art DVD player features. The co cites Techno System Research saying this market will grow dramatically over the next few years, from around 4.5 mln units in 2003 to 12M units in 2004 and 18M units in 2005.

Semi Equipment
August Tech (AUGT) 22.15 +1.68: Before the open, company said it expects to report Q4 revenues of $14 mln, exceeding previous guidance (Reuters Research consensus is $12.7 mln) and Y03 revenues of $40 mln, (Reuters consensus is $39 mln).

Semitool (SMTL) 11.85 +0.56: Before the open, company announced its gross bookings for Q1 will be approx $40 million, double that of the fourth quarter of fiscal 2003. The increase can be attributed to stronger orders from all geographic areas: North America, Europe and Asia.

Therma-Wave (TWAV) 6.04 -0.16: Before the open, company said that, excluding one-time revenue from closure of joint venture, it now sees Q3 (Dec) revenues increasing 5-7% from Q2 levels, reduced from previous company guidance of 10-15% growth. Company reported $14 mln in Q2; 5-7% growth equates to $14.7-14.98 mln, Reuters single analyst consensus is $15.75 mln.

Varian Semi (VSEA) 48.54 +2.46: Lehman upgraded to Overweight from Equal-Weight and raised its target to $58 from $48; firm believes that a capacity-driven capex recovery in the near-term should drive demand for VSEA`s products higher, which should result in positive revisions to consensus FY04 EPS ests; in the intermediate-term, VSEA`s differentiated product strategy should lead to share gains.

Varian Semi guides Q1 outlook higher (VSEA) 48.54 +2.46: Lehman upgraded to Overweight from Equal-Weight and raised its target to $58 from $48; firm believes that a capacity-driven capex recovery in the near-term should drive demand for VSEA`s products higher, which should result in positive revisions to consensus FY04 EPS ests; in the intermediate-term, VSEA`s differentiated product strategy should lead to share gains.... Before the open, company raised its previous outlook for Q1, expects to report EPS of $0.11 (previously Breakeven to $0.08), Reuters Research consensus is $0.06 and expects Q1 revenues to be $100 mln (previously $83-93 mln), Reuters consensus is $89 mln
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Old 01-07-2004, 09:42 AM
jjgold jjgold is offline
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Default RE: Tech Report Wednesday

Software
Advent Software (ADVS) 19.04 +0.29: After the close, company announced that preliminary Q4 (Dec) revenue results are $36.5 mln, above Reuters Research consensus is $34.5 mln.

Anteon (ANT) 36.67 +0.02: Co awarded a six-year contract to provide systems engineering and professional services to the U.S. intelligence community on behalf of the Office of the Secretary of Defense (OSD). The approximate value of the contract, if all options are exercised, is $105 million. Anteon will provide support services primarily in the functional areas of Mission Rehearsal, Homeland Security, and Command, Control, Communications, Computers, Intelligence Surveillance and Reconnaissance.

Captiva Software (CPTV) 12.46 +0.47: Before the open, company issued preannouncement for Q4 (Dec), sees earnings of $0.10-0.12 per share vs Reuters consensus of $0.10 on revenues of $15-16 mln, estimate $15 mln.

EDS (EDS) 24.54 -0.68: AP reported that Congressional auditors have recommended that the government overturn a contract potentially worth $860 million to Electronic Data Systems Corp. after a complaint by a lower bidder, Lockheed Martin Corp. The auditors said the federal Department of Housing and Urban Development failed to support why EDS's proposal to build and maintain a nationwide technology system was better than the cheaper Lockheed Martin bid.

JDA Software (JDAS) 17.97 -0.17: After the close, company said it expects Q4 rev/GAAP EPS of $55 mln/$0.00-$0.01, vs consensus of $59.2 mln/$0.10. Co stated that it did not close a number of deals that had been anticipated to close in Q4, although none of th deals were lost to competitors. Sequential regional performance was mixed, with the Americas up slightly from the third quarter 2003, while Europe and Asia Pacific were both down substantially compared to third quarter 2003.

Kronos (KRON) 38.18 -5.16: Ahead of its presentation at the Needham Growth Conference, co said it expects both revs and earnings for Q1 at the low end of current guidance. KRON says "business did not close as expected due to the way our quarter-end aligned with the holidays"; company maintains FY04 guidance.... (On Oct 28, company issued split adjusted guidance of $0.23-0.26 on revenues of $99-102 mln, Reuters consensus are $0.25 and $101.8 mln, respectively.)

Roxio (ROXI) 5.00 +0.14: Before the open, company said Q3 (Dec) operating results are on track with most recent guidance. ROXI also announced it ended calendar year with approximately $40 mln cash balance.

SAP AG (SAP) 45.00 +0.62: Fulcrum downgraded from Buy to NEUTRAL. Cited valuation, as firm believes the stock is fully-valued in the mid $40s.

Telecom Equip
Arris Group (ARRS) 8.58 +0.99: Before the open, company issued upside preannouncement for Q4 (Dec), sees $0.01-0.06 profit vs Reuters consensus of a loss of $0.04, now sees revenues of $126-129 mln, consensus $113.4 mln.

Catapult (CATT) 18.69 +2.66: Before the open, company raised its Q1 (Dec) guidance, saying revs will be "approximately 5 - 6% above the previously reported estimate of $10.4 mln". This equates to $10.9-11.02 mln. No revenue estimates available.

Nortel (NT) 4.76 +0.14: Soundview Technology upgraded from Neutral to OUTPERFORM. Target $2.5 to $6.00. Firm believes that NT's 2004 1X EV-DO revenue prospects in the United States have brightened. Also raised its target on Neutral-rated Lucent (LU 3.28 -0.02) to $3.50 from $2.75.

Telular Corp (WRLS) 8.15 +1.50: Before the open, company reported that since Sept1, 2003, it has received purchase orders totaling $25.3 mln for business with Latin American wireless network operators in Argentina, Colombia, Dominican Republic, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Puerto Rico and Venezuela. Company reported that it shipped $9.5 mln of the orders in the fourth calendar quarter of 2003.

Telecom Services
SBC (SBC) 27.12 +0.07: Expects solid growth in DSL, long distance in 2004

Sprint PCS (PCS) 6.01 +0.12: Co said the PCS Group expects to add approx 1 mln subscribers to the PCS network in Q4. Customer churn is expected to be 2.7%. Gross additions are expected to be slightly better than 1.65 mln in Q4. With these results, total year-end subscribers using the PCS network are expected to be over 20 mln. The FON Group expects just over 300,000 DSL subscribers at year end. Total subscribers for Sprint Complete Sense, Sprint's competitive local service initiative, are expected to be approximately 280,000.
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