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From Briefing.com: 5:55PM Tuesday After Hours prices levels vs. 4 pm ET: A relatively flat after hours following the regular session's late-day uptick. Presently, the S&P futures, at 1143, are 1 point above fair value, and the Nasdaq 100 futures, at 1494, are 2 points below fair value. Very few companies have come out and made earnings announcements in this quiet extended session.

The below table lists the few that did, as well as their stock's reactions:

Company Stock Move Reason for Move
Aether Systems (AETH) 4.00 +0.30 (+8.1%) Provider of wireless and mobile workforce automation solutions announces it has engaged FBR Investment Management, an affiliate of Friedman Billings Ramsey (FBR), to assist in assembling and managing a leveraged portfolio of mortgage-backed securities; Management said the move was part of an evolving strategy initially designed to increase the yield on its excess cash balances; AETH has a cash balance of $188.5 mln, or $4.30 per share outstanding

Avon Products (00C) 45.40 +0.16 (+0.4%) Consumer products giant raises its EPS outlook for the second consecutive quarter; Now sees Q2 (June) earnings of $0.46 per share, up $0.03 from its prior outlook and up 31% from its result a year ago; As a result, Avon increased its FY04 (Dec) EPS forecast to $1.70 from $1.65; Company stipulates, though, that the revision was the result of a reduction in the effective tax rate to approximately 31% from 35%; Briefing.com reiterated our positive opinion on AVP in Story Stocks June 1

Cache Inc (CACH) 20.25 -1.98 (-8.9%) Women's specialty retailer cut its profit outlook for Q2 (June) and FY04 (Dec) based on slower than expected sales in June (so far); The month's revenues have been sluggish after management decided not to repeat a promotional event, which led to strong sales in April and May; Cache now sees Q2 EPS of $0.39-$0.41 (consensus of $0.43) and FY04 EPS of $1.34-1.38 (consensus of $1.41); The company operates 227 Cache and 28 Lillie Rubin stores, and caters to women ages of 35-55

REMEC (REMC) 7.36 +0.50 (+7.3%) Designer of microwave and millimeter wave subsystems reports a Q1 (Apr) loss of $0.11 per share, which was actually $0.05 better than the Reuters Research consensus estimate; Revenues rose 43% year/year to $116.2 mln (consensus of $111.5 mln) due to 'strong revenues' in the company's wireless systems and defense & space businesses; Pricing pressures, though, in the wireless marketplace have tempered these developments

Tomorrow, there is very little in the way of earnings or economic data, with just April Wholesale Inventories on the calendar. Conferences, however, have picked up significantly in this lull between earnings seasons. News out of presentations are likely to move stocks with not much else going on.

For more detail on these, and other developments, be sure to visit our Stock Market Update and Daily Sector Wrap. -- Heather Smith, Briefing.com

Close Dow +41.44 at 10,432.52, S&P +1.70 at 1,142.12, Nasdaq +2.91 at 2,023.53: The major averages ended up only marginally, but it was a solid day for the stock market...a lower open on profit-taking following Monday's big gains was exacerbated by comments from Federal Reserve Chairman Greenspan that suggested the Fed would raise rates faster than expected it conditions warranted...the may sound obvious, but some took it as a signal that the Fed might be aggressive in tightening...from there, stocks drifted a bit higher, helped by soft oil prices...
when the US government issued a forecast early afternoon that oil prices would drop to $36 a barrel in the third quarter, stocks got a late afternoon boost and the July crude oil contract ended $1.51 lower at $37.15, but the boost to stocks quickly faded...nevertheless, even small gain after the major move yesterday is seen as consolidative and thus supportive...volume was light again, and decliners easily outpaced gainers, so the action was hardly exuberant...there was very little corporate news and the actives list had all the usual suspects with no big movers...NYSE Adv/Dec 1484`/1756, Nasdaq Adv/Dec 1331/1762

8:10AM Entegris started with a Buy at Moors & Cabot; tgt $16 (ENTG) 11.42: Moors & Cabot initiates coverage of ENTG with a Buy rating and $16 target; firm believes that the co will benefit both in the short-term, driven by increasing wafer starts, as well as in the long-term, driven by new fab build-outs related to the semi industry transition to 300mm wafers. Firm feels that the co's mkt share leadership, diverse product offerings, strong customer relationships, and experienced mgmt team provide it with the foundation for growth.

2:14PM Finisar (FNSR) 1.75 -0.03: Finisar is a designer and manufacturer of gigabit fiber optic components and subsystems, and network test and monitoring systems for LAN/SAN/Metro data networks. The company sells its transceiver products to the majority of LAN/SAN and telecom equipment vendors. One customer accounted for 10%+ of sales in Q4; top three customers contributed 38% of revenue; top ten customers contributed 63%.

Q4 pro-forma EPS came in at ($0.06) on revenue of $56.995MM (+43.3% Y/Y) vs. Reuters Research consensus at ($0.06) on $57.08MM. Optical subsystems and components revenue increased 45.6% Y/Y to $48.664MM (85% of sales), driven by demand from the LAN/SAN market which contributed $32.8MM in revenue. Network test and monitoring revenue increased 31.0% Y/Y to $8.331MM (15% of sales).

Gross margin declined 522 bps Y/Y to 21.9% but is expected to improve to 30-35% by fiscal year end due to scale economies and a number of cost reduction engineering efforts undertaken over the past few quarters. Operating margin improved 693 bps Y/Y to (21.9%). Operating expense is expected to remain flat at approximately $25MM per quarter or 33% of sales in Q4, with R&D at 18%, sales and marketing at 9% and G&A at 6%.

Guided for Q1 revenue of $58-63MM (+45.8-58.4% Y/Y). Optics revenue is expected to be $49-54MM due to full quarter contribution from Advanced Optical Components and a 3-8% increase across all other optical products. Test and monitoring revenue is expected to be $8.5-9.5MM.

Management believes the company can ramp to $70-80MM in revenue per quarter by Q4, with optics contributing $60-68MM and network tools $10-12MM. Growth is expected to be paced by a 25-30% increase in the LAN/SAN/Metro business, higher growth in the telecom business, and a number of new products that are expected to go into production over the coming quarters. FNSR is in qualification at approximately 50 customers with 10 gigabit XFP transceivers. Telecom equipment OEMs are designing pluggable OC192 solutions into their next-generation systems. In fibre channel, OEMs are working on transitioning from 2 gigabit to 4 gigabit solutions.

The company is issuing 125MM shares to acquire the Infineon's fiber optics business. IFX will own approximately 38% of the combined company, which will have the broadest offering of pluggable optics solutions for LAN, SAN and metro applications, and is expected to generate approximately $80-90MM in optical revenues per quarter and $4-5MM per quarter in pre-tax earnings after eliminating redundant operations. IFX's optics business posted revenues of approximately $32MM for its Q2 ended Mar 31, 2004.

The IFX business gives FNSR a range of products for other datacom applications including fiber optic transceivers for automotive applications, diplexers and triplexers for fiber-to-the-home applications, parallel optic products for high speed telecom back plane connections, a number of 10 gigabit products, and over 450 patent and patent applications which management believes can be mined to develop additional datacom and telecom products.

Acquisition extends FNSR's geographic and customer market reach. FNSR derives almost 90% of sales from North America. The IFX unit derives 55% of sales from Europe and 20% from Asia. There is an 8% overlap in customer revenue.

The following table shows price multiples and Y/Y growth rates for FNSR compared against a broad group of comps within the communications equipment, semiconductors, electronic instruments and controls, and scientific and technical instruments groups. Company *P/SG **P/OPG P/S Y/Y Rev Growth (%)
TTM 2004E 2005E TTM 2004E 2005E
Finisar (FNSR) 2.0 (9.1) 2.1 1.5 1.3 11.5 38.9 17.1
Avanex (AVNX) 1.6 2.1 5.1 3.8 2.9 313.0 5.0 31.8
Bookham (BKHM) 0.6 (5.6) 2.0 1.7 1.5 157.7 15.4 19.4
Exfo Electro (EXFO) 4.0 (20.8) 5.1 4.5 3.8 (5.6) 12.2 20.2
JDS Uniphase (JDSU) 7.4 (38.5) 7.6 7.5 6.4 (15.6) (7.1) 16.8
Molex (MOLX) 1.7 30.3 2.7 2.5 2.2 14.7 20.4 15.3
Oplink (OPLK) 5.7 (29.2) 9.2 8.1 5.9 25.5 52.1 38.9
Stratos Lightwave (STLW) 1.7 1.3 1.5 1.6 1.2 (1.8) (6.1) 40.0
Triquint (TQNT) 1.4 (12.9) 2.2 2.0 1.8 19.5 19.3 11.3
Ixia (XXIA) 2.9 37.3 6.4 5.5 4.7 26.1 23.3 16.8
Spirent plc (SPM) 1.4 35.8 1.4 n/a (31.6) n/a
Communications Eqpt 2.0 31.3 2.6 n/a (3.5) n/a
Semiconductors 2.6 30.6 4.4 18.9
Elec Instr & Ctrls 0.8 n/a 1.1 5.8
Scien & Tech Instr 1.0 16.0 1.4 (1.3)
Blended 1.7 n/a 2.4 4.0
*P/SG Ratio: Normalized Trailing 12 month (Price / Sales) / Growth ratio as of June 04, 2004.
**P/OPG Ratio: Normalized Trailing 12 month (Price / Operating Income) / Growth ratio as of June 04, 2004.

Business momentum is accelerating due to ramp of new products, budding recovery in end markets and the acquisition of IFX's opticals business, which gives FNSR breadth and scale. Limited downside risk with potential for material appreciation but expect only modest upside unless management accelerates and delivers on operating improvements and synergies from IFX acquisition.

FNSR shares trade at a discount to direct comps, in-line with peer groups average and, based on our inverted EVA/DCF model, which factors in IFX business, are priced for sustained mid teens revenue growth from F06 assuming 23-24% operating margin. Eight year historical peak operating margin is 32.1%.--Ping Yu, Briefing.com

11:05AM Cymer (CYMI) 36.15 -1.15: Cymer narrowed Q2 guidance to the lower end of expectations after the close on Monday. The supplier of excimer lasers for deep ultraviolet photolithography semiconductor manufacturing equipment said revenue is expected to be $92.317-94.075MM (+18.8-24.3% Y/Y) vs. prior guidance of $92.317-96.713MM. Reuters Research consensus EPS is at $0.27 on $97.06MM.

Currency adjusted average selling price is expected to remain in the $745K range. The product mix continues to favor krypton fluoride light sources as manufacturers expand 200mm fab capacity. Book-to-bill is expected to be around 1.0. Gross margin guidance is unchanged at 42-46%. Q1 gross margin was 40.7%.

SG&A expense is expected to be $13.5MM vs. prior guidance of $13-14MM. R&D expense is expected to be in the low end of guidance of $14-15MM.

Lithography tool manufacturers accounted for 70% of sales in Q1 (ASM Lithography contributed 31% of sales, Canon 20%, Nikon 19%) and chip manufacturers 30%.

CYMI trades at a premium to the semiconductor capital equipment group and to direct comp Coherent, reflecting the company's commanding 85% share of the worldwide market for light sources. The following table shows price multiples and Y/Y growth rates for CYMI compared against COHR and the semiconductor capital equipment group. Company *P/SG **P/OPG P/S Y/Y Revenue Growth
TTM 2004E 2005E TTM 2004E 2005E
Cymer (CYMI) 3.5 (68.5) 4.5 3.1 2.5 (2.6%) 55.0% 25.2%
Coherent (COHR) 1.3 (25.7) 1.9 1.6 1.4 6.6% 24.2% 17.2%
Semi Cap Eqpt 2.2 89.3 3.0 n/a (0.2%) n/a
*P/SG Ratio: Normalized Trailing 12 month (Price / Sales) / Growth ratio as of June 04, 2004.
**P/OPG Ratio: Normalized Trailing 12 month (Price / Operating Income) / Growth ratio as of June 04, 2004.

The growth phase of the semiconductor capital equipment cycle typically lasts approximately four years, with capital spending growth peaking by the second year. Management forecast the revenue opportunity for light sources, consumables and services to increase from approximately $380MM in 2003 to over $800MM in 2006 and to decline in 2007. Gross margin is expected to peak in the lower to mid 50% range and operating margin in the lower 30% range.

CYMI shares, based on our inverted EVA/DCF model, are priced for sustained lower 20% revenue growth from C07 assuming 20% operating margin, which are above management expectations and defy historical performance/sustainable long-term rates.--Ping Yu, Briefing.com

9:09AM Texas Instruments (TXN) 26.16: Texas Instruments updated Q2 guidance after the close on Monday. EPS is expected to be $0.24-0.26 on revenue of $3.170-3.290B (+35.5-40.7% Y/Y) vs. prior guidance of $0.23-0.26 on $3.085-3.325B. Reuters Research prints consensus at $0.25 on $3.233B.

Management commented that demand is strong across a range of semiconductor products, and educational calculators are enjoying seasonal growth but declined to provide specifics on end market trends. Unit volumes are trending up and lead times and backlogs are generally stable.

Semiconductor revenue is expected to be $2.725-2.825B vs. prior guidance of $2.650-2.850B; sensors & controls revenue to be $0.285-0.295B vs. $0.280-0.300B; and educational & productivity solutions revenue $0.160-0.180B vs. $0.165-0.175B .

The following table shows price multiples and Y/Y growth rates for TXN compared against the semiconductor components group. Company *P/SG Ratio **P/OPG Ratio P/S Y/Y Revenue Growth
TTM 2004E 2005E TTM 2004E 2005E
Texas Instruments (TXN) 2.5 26.0 4.1 3.4 2.9 20.9% 32.1% 15.6%
Analog Devices (ADI) 3.8 21.1 7.6 6.4 5.3 26.3% 36.8% 21.7%
Linear Technology (LLTC) 7.2 15.8 16.0 15.2 11.1 26.4% 27.4% 36.7%
Maxim Integrated Circuits (MXIM) 6.2 18.0 11.9 10.9 8.1 15.4% 24.8% 35.3%
Micrel (MCRL) 3.8 92.6 5.7 4.5 3.7 7.1% 32.7% 21.5%
National Semiconductor (NSM) 2.5 29.2 4.1 3.8 3.1 10.2% 17.7% 22.0%
Semiconductor Components 2.6 30.6 4.4 n/a 18.9% n/a
*P/SG Ratio: Normalized trailing 12 month (Price / Sales) / Growth ratio as of June 04, 2004.
**P/OPG Ratio: Normalized trailing 12 month (Price / Operating Income) / Growth ratio as of June 04, 2004.

We commented in the Q1 review, Story Stocks, April 15, 2004, that upside is limited given the relatively high revenue growth and operating margins priced into TXN shares. We suggested taking profits and waiting for a 10-15% pullback. Shares pulled back over 16% following the Q1 review but have traded higher over the past two weeks and are now off just over 8%. Management's comments on stable lead-times and backlog are reassuring that recovery continues to unfold but we would continue to hold off given valuation.--Ping Yu, Briefing.com

http://biz.yahoo.com/mu/story.html