>>>The JNPR guidance upgrade Thursday night was like a chain
reaction through the tech sector. Gains in chip, telecom
and computer stocks pushed the Nasdaq to new 30 month highs.
Investors were delirious despite CNBC running an interview
with the JNPR CEO expressing negative comments. He said
there was not a broad based recovery underway and the JNPR
gains were company specific. He said they were at the right
place at the right time with the right product mix. Nobody
seemed to care.
The JNPR earnings and guidance added tens of billions in
market cap to Nasdaq stocks despite a definite disconnect.
JNPR only had profits of $14 million for the quarter. This
is not a big deal. Their closest competitor Cisco, will
report earnings of more than $1 billion for the same period.
CSCO has a PE of 47 on a trailing twelve month basis and
JNPR has a TTM PE of 236. It drops to 115 using estimated
2005 earnings if you are into forecasting the future.
Obviously the roughly +$50 billion in market cap the Nasdaq
gained on Friday as a result of JNPR earnings is a complete
disconnect from reality. It is a result of investors hearing
what they wanted to hear to justify their bullish view. Is
that wrong?
If the economy is really growing as fast as the earnings
guidance from everyone including JNPR has indicated then
the gains are ok. My only question is what changed from the
Intel, YHOO, QLGC, AAPL, SUNW earnings earlier this week?
They said business was good, but not great. Guidance was
positive just not overly optimistic. Those companies with
the exception of QLGC are bigger than JNPR with a broader
customer base. Why did their guidance not matter and
Juniper's is so critical. It is simple. Investors were
looking for a white knight to carry their flag forward.
JNPR was the hero of the day and was rewarded with a +$7.00
jump in the stock price on volume of 76 million shares. The
Nasdaq traded 2.6 billion shares with the average share
gain of +0.81%.
In the rest of the world WCOM announced it was cutting
another -1700 jobs on top of the -22,000 they have already
cut. Home Depot restated its 2003 guidance to suggest the
4Q was a drag and that same store sales would be lower than
expected. They raised earnings estimates slightly based on
cost cuts and technology upgrades. They warned that growth
in 2004 would be slower than previously expected and HD
was going to cut its pace of new store openings.<<<
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