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jjgold 01-12-2004 11:22 AM

Tech Reports Monday
It was shaping up to be a perfect week for the Nasdaq, but by the late afternoon on Friday, the urge to take some profits proved to be just too great. Comparatively speaking, though, the Nasdaq, which fell 0.63%, still fared better than the Dow and S&P, which dropped 1.26% and 0.89%, respectively, on Friday.

Of course, everyone will be quick to blame the weaker than expected December employment report for the losses, but when it comes to the technology pullback, we ain't buying it. After all, if participants were truly unnerved by the jobs data, the tech sector would have never rebounded from its early losses. As was the case throughout the week, all the early dip did was encourage renewed buying interest, and before long, the technology sector had steered the Nasdaq back to positive territory. Heck, it was up a tidy 13 points, or 0.6%, at its highs for the day, which were established around 13:30 ET or roughly 5 hours after the release of the employment report.

No, if anything undid the sector on Friday, it was simply the realization that the tech sector can't possibly maintain its sizzling pace. To that end, the Nasdaq at its high this past Friday, was up approximately 107 points, or 5.3%, from where it began the week. Thus, participants understandably elected to take some money off the table going into the weekend, cognizant that the sector is due for a period of consolidation, which is a natural occurrence following a quick, and substantive, surge.

Beyond that, there's really not that much more to read into it at this point. --

jjgold 01-12-2004 11:23 AM

RE: Tech Reports Monday
Computer Systems & Peripherals
Apple Computer (AAPL) 23.00 -0.36: The Wall Street Journal reported HPQ plans to resell Apple Computer's iPod music player and promote its online music store. H-P also said it will develop its first "digital hub", which is a device that would act as a central server for entertainment devices. According to Apple CEO Steve Jobs, Apple will manufacture a version of the device for H-P that will be blue, rather than the original white design for iPod, and will carry H-P's logo.

CIBC starts coverage of Storage Networking : CIBC expects '04 and '05 to be decisive years for the storage networking industry. By the end of 2004, firm expects to see a very different market, presenting both opportunity (high-volume growth) and challenges (aggressive pricing and full-bore competition from CSCO. Firm expects to see much faster price declines and higher volume shipments than most forecasts. Believe consensus estimates imply too little loss of market share for MCDT and BRCD. Firm sees MCDT as better positioned than its peer BRCD to weather the next several quarters. As such, starts coverage of MCDT with a Sector Perform and BRCD with a Sector Underperform.

Commerce One (CMRC) 1.56 +0.32: Before the open, company said it sees Q4 (Dec) revenues of approximately $5.5 mln, Reuters single analyst consensus is $5.3 mln.

RealNetworks (RNWK) 6.12 -0.01: Company and IBM announce that they will collaborate to provide services to content providers who want to launch their own Internet video and audio businesses. Real Networks will provide their media server and player software, IBM will contribute its e-commerce, transaction and database expertise. Deal announced at Consumer Electronics Show in Las Vegas

jjgold 01-12-2004 11:23 AM

RE: Tech Reports Monday
Deutsche upgrades SLAB, RFMD : Deutsche Bank upgrades Silicon Labs (SLAB) to Buy from Hold and RF Micro (RFMD) to Hold from Sell, as its checks over the past few days suggest Q1 handset and component demand will likely be better than normal on a seasonal basis.

Texas Instruments (TXN) 31.78 -0.07: The Wall Street Journal reported the co is expected to announce Friday a pact with Vonage Holdings Corp, which is the nation's biggest provider of Internet-based phone service, to produce software and chipsets for equipment that would enable such calling. Currently, people who want to use Vonage's service have to get an additional piece of equipment from the company to enable calling. The new Texas Instruments design could mean that Vonage's Internet calling capabilities would come built into equipment such as cable or direct-subscriber-line modems.

Semi Equipment
Kulicke & Soffa (KLIC) 15.10 +0.15: Co reiterated that it expects Q1 revs to be around the high end of around $150 mln (plus or minus 5%).

CyberGuard (CGFW) 10.00 +0.55: CE Unterberg initiated coverage with a Buy rating and $14 target. The co's focus on the high-end security market is likely to enable the co to post top line growth ahead of the industry average. The market for high-end security products is likely to grow from $700 mln in 2003 to $1 bln in 2006. CyberGuard has been able to show steady top-line growth and gain market share due to its focus on high-end enterprise customers and govt agencies. The firm's $14 target represents a multiple of 35x the firm's initial CY05 earnings of $0.40.

Infosys (INFY) 98.14 -0.44: Before the open, reported Q3 (Dec) earnings of $0.54 per share, $0.03 better than the Reuters Research consensus of $0.51; revenues rose 37.9% year/year to $275.9 mln vs the $262.4 mln consensus. Company sees Q4 EPS of $0.55 vs consensus of $0.53 on revenues of $290-293 mln, consensus $277.7 mln.

jjgold 01-12-2004 11:23 AM

RE: Tech Reports Monday
Telecom Equip
Lucent (LU) 3.70 -0.18: Morgan Stanley downgraded from Overweight to EQUAL-WEIGHT. Firm cites valuation, based on the stock's 50% run since last fall.

SafeNet (SFNT) 36.06 +1.43: Janney Mntgmy Scott upgraded from Hold to BUY. Target $34 to $40. Believes co is on track for solid Q4, citing its federal govt business remains strong as the govt's tight spending has started to ease.

Somera (SMRA) 2.18 +0.40: Pacific Growth upgrades to Equal Weight from Underweight due to what firm sees as an improving outlook for the Company. Firm notes that it believes the upgrade is occurring early in the process of co's recovery.

TEKELEC (TKLC) 17.51 -0.53: Raymond James downgraded from Strong Buy to OUTPERFORM. Cites valuation, as stock is near their $20 target and fact that co's core SS7 biz is traditionally back-end loaded on quarterly basis.

UTStarcom (UTSI) 37.40 -3.94: Before the open, company guided for Y04 (Dec) to reflect dilution of offering announced Thursday night, now sees Y04 EPS of $1.87-1.92, down from previous company guidance of $1.92-1.95; UTSI now sees revenues of $2.5-2.55 bln, up from previous company guidance of $2.4-2.5 bln, consensus $2.53 bln.

Telecom Services
AT&T (T) 21.06 -0.92: Deutsche Bank downgraded to Sell from Hold based on its belief that the current share price does not reflect the deteriorating business fundamentals; firm believes that the RBOCs business model can be rebuilt, but firm says this case cannot be made for AT&T, as the rebuilding of its business is far more challenging and it is facing steeply negative longer-term growth rates. Target is $17.

NII Holdings (NIHD) 96.51 +4.32: Legg Mason reiterated BUY. Target $92 to $122. Cites stronger than expected Mexican sub growth and currency-adjusted growth in Mexican ARPU.

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