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From Briefing.com: 6:57PM Swing Trader: SFA, ACI, WFMI : -Technical- A wild day in the markets as they started off gapping lower, rally above Monday's highs and then trend lower into the close. Market Breadth was Negative as Decliners outpaced Advancers about 2.19 to 1 and New Lows continue to exceed New Highs. Volume also continues to swell on down days. Check out The Technical Take for detailed index action...(continued)

5:26PM Metrologic Inst misses by 6 cents, issues in-line guidance (MTLG) :Reports Q1 (Mar) earnings of $0.17 per share, $0.06 worse than the Reuters Estimates consensus of $0.23; revenues rose 18.1% year/year to $46.9 mln vs the $48 mln consensus. Co issues in-line guidance for FY05, sees EPS of $0.98-1.10 vs. $1.04 consensus; sees FY05 revs of $206-216 vs. $212.29 mln consensus. Co expects gross margins to be 44-46% for the full year 2005.

4:46PM Actel beats by a penny (ACTL) :Reports Q1 (Mar) earnings of $0.08 per share, $0.01 better than the Reuters Estimates consensus of $0.07; revenues rose 4.5% year/year to $44 mln vs the $43.9 mln consensus. The co believes that Q2 revs will be flat to up slightly sequentially (consensus $44.8 mln). Gross margin is expected to be about 59%.

4:38PM Corning beats by a penny; guides Q2 higher (GLW) 12.56 -0.04:Reports Q1 (Mar) earnings of $0.17 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.16; revenues rose 24.4% year/year to $1.05 bln vs the $1.05 bln consensus. Co issues upside guidance for Q2, sees EPS of $0.17-0.19 vs. $0.15 consensus; sees Q2 revs of $1.08-$.13 bln vs. $1.11 bln consensus.

4:33PM MKS Instruments beats by $0.05, ex items; guides above consensus (MKSI) :Reports Q1 (Mar) earnings of $0.15 per share, excluding non-recurring items, $0.05 better than the Reuters Estimates consensus of $0.10; revenues fell 4.2% year/year to $127.4 mln vs the $120 mln consensus. Co issues upside guidance for Q2, sees EPS of $0.14-0.17 vs. $0.09 consensus; sees Q2 revs of $124-129 mln vs. $117.75 mln consensus.

4:32PM Coherent beats by $0.05, ex items (COHR) :Reports Q2 (Mar) earnings of $0.31 per share, excluding non-recurring items, $0.05 better than the Reuters Estimates consensus of $0.26; revenues rose 4.3% year/year to $131.2 mln vs the $128.8 mln consensus.

Close Dow -91.34 at 10151.13, S&P -10.36 at 1151.74, Nasdaq -23.34 at 1927.44: The majority of earnings reports were again stronger than expected, but widespread consolidation amid mixed economic data countered optimistic quarterly results and closed nearly every sector in negative territory... Stocks opened lower ahead of economic data, but even after new home sales for March surged 12.2% to a new record of 1.43 mln units (consensus 1.19 mln), while April consumer confidence basically matched economists' forecasts with a reading of 97.7 (consensus 98.0), the recovery effort was short-lived...

After all, while the upbeat housing data suggested ongoing economic strength, subdued confidence data - which fell for the third consecutive month to a five-month low - fed concerns about a weakening economy... And the waning sentiment, coupled with just a few quarterly disappointments, was enough to underpin a firmly bearish bias into the close and sideline continued validation that Q1 operating EPS growth will come in closer to 13% (instead of around 8%)... Lockheed Martin (LMT 59.90 +0.15), in addition to raising FY05 guidance, was one of the 22 (out of 31) S&P companies that beat expectations this morning...

Other notable companies posting better than expected earnings included COH, CFC, FPL, MHP, SLB, SO and X... But the trading range mentality in the wake of yesterday's rally left the indices susceptible to profit taking and placed even more focus on Dow component DuPont's (DD 47.03 -1.55) discouraging report, as all but three components on the blue chip index closed lower...

Two of the blue chips providing some solace on a down day were International Business Machines (IBM 75.40 +0.79), which announced a $5 bln share buyback and boosted its dividend by 11%, and American Express (AXP 51.55 +0.58) which matched expectations with a 19% increase in Q1 earnings... With regards to sector strength and weakness, all 10 economic sectors closed lower... Pacing the way lower was Materials (-1.9%), due in part to DuPont's disappointment as well as weakness in Steel (-3.6%) and a strong dollar... Technology was also weak across the board, led lower by a 3.6% drubbing in Computer Hardware, which sold off after Lexmark (LXK 67.79 -11.06) missed forecasts and issued disappointing Q2 guidance...

Weakness in Semiconductor (-0.7%) also contributed to the Nasdaq's 1.2% decline, but losses were arguably minimized by a solid Q1 report from Altera (ALTR 21.07 +1.82)... Financial, Health Care and Industrials were also influential leaders to the downside while investors could not even get defensive about Consumer Staples in a down market... Energy was also under pressure amid falling oil prices ($54.20/bbl -$0.37) and a sell-the-news reaction to strong earnings from the likes of BP, SLB, BJS and OXY while interest-rate sensitive Utility also lost ground... Treasurys were weak after new home sales jumped to record levels, as the benchmark 10-year note finished down 4 ticks to yield 4.26%...

Homebuilding (+1.1%), however, was strong following the unexpected surge in new home sales while Biotech (+0.01%) barely held onto the tiniest of possible gains after Genentech (DNA 72.41 +2.98) reported that its drug Herceptin met certain targets in a breast-cancer trial...DJTA -1.9, DJUA -1.1, DOT -1.8, Nasdaq 100 -1.2, Russell 2000 -1.5, SOX -0.7, S&P Midcap 400 -1.0, XOI -1.4, NYSE Adv/Dec 1059/2228, Nasdaq Adv/Dec 917/2162

9:26AM Gapping Down :Gapping down on disappointing earnings/guidance: INTX -39% (also Smith Barney and Deutsche downgrades), ZOLL -18%, ATHR -15%, FBR -13%, SLAB -12%, LXK -10% (down in sympathy: HPQ -3.5%), HYDL -10.5%, MVK -9%, NTY -7%, INFS -6.6%, TARO -6.4%.

9:20AM Gapping Up :Gapping up on strong earnings/guidance: LIFC +10%, BMHC +8.3%, DASTY +6.1%, COGT +5.1%, BYD +4.9%, PVN +4.7%, CFC +4.5%, IFLO +4.2%, ISSI +4.2%, X +3.4%, ALTR +2.3% (also UBS upgrade), IMCL +1.8%.... Other News: DNA +8.4% (positive Phase III Herceptin data, up in sympathy: PDLI +3.2%), PECS +35% (to be acquired by Nortel), INCX +7.8%, SIMG +7% (co's CFO becomes a director), POZN +6.3% (extends recent rally), MSTR +5% (2 upgrades).... Under $3: RDCM +14% (reports Q1), SMRA +11% (reports Q1), VVUS +9% (Announces Promising Results of Avanafil Nitrate Interaction Study), OSCI +8%.

1:52PM Wm. Wrigley Jr. Co. (WWY) 67.23 +2.75: Wrigley's shares soared after the world's largest gum manufacturer chewed its way through the first quarter besting consensus by almost a nickel. The company reported an 18% year/year rise in earnings to $131 mln, or $0.58 per share. Sales jumped 17% y/y to $950.4 mln, again ahead of consensus. The upside was attributed, in part, to the weaker dollar adding +3% and acquisitions +6%. Wrigley would be pleased by the upside move in shares, but it has made perfectly clear it does not care about external expectations, only those of its shareholders, as it focuses on long-term growth, or what it calls "generational growth" not quarterly results. Nevertheless, its shareholders would be pleased by the strong revenue and earnings growth achieved this quarter. One the best moves the company made in its recent history, which actually dates back to the late 1800's, was its acquisition of certain confectionery businesses of the Joyco Group. The deal, closed in Q1 FY04, gives Wrigley access to some of the biggest and fastest growing markets in the world. Joyco held a number one market share position in bubble gum China, India, and Spain. Along with either the number one or two positions in those countries for deposited candy and candy lollipops. It also provided the company with manufacturing facilities, suppliers, and additional brands. Even though Wrigley does not break out Joyco's addition to earnings, it continues to be a positive additive to growth.

North American sales rose 7% including a 5% rise in the US and a 28% jump in Canada. US growth was driven by its Orbit and Extra Brands, while strong shipments and the weaker dollar piloted growth above the border. In Europe, sales rose 16% with particular strength in Eastern Europe and its acquisition of Joyco, which contributed one third of the sales gain. WWY acquired Cafosa, the company’s chewing and bubble gum base business along with Joyco’s divisions in France, Italy, Poland, and Spain. In Asia, sales jumped 39% led by double-digit growth in China for its DoubleMint® and Extra brands, along with strong growth trends in Taiwan and Vietnam. Again, Joyco accounted for a third of the sales progress.

As the cost of goods sold grew in-line with sales, gross margins improved 20 basis points to 56.5%. Wrigley noted that favorable product costs were offset in part by the impact from Joyco and its current margins. SG&A expenses also rose almost 17% keeping operating margins flat y/y. Global unit volume growth and currency benefits were restrained by investment in IT, R&D, brand building, and selling infrastructure.

Coming off a weak fourth quarter, Wrigley righted itself regained momentum generating strong top and bottom line growth. Considering the quarter's upside, Wall Street analysts are likely to raise expectations for the rest of the year. Keeping with its long-term view, Wrigley does not provide guidance targeting 9-11% earnings growth. Currently, consensus estimates are looking for an 11% growth rate this year in earnings, followed by 12% next. The outlook remains quite bubblelicious driven by new product launches and growth prospects within the Joyco operations. Risks remain the integration of that very acquisition along with its most recent purchase Altoids. Shares are trading at 27.5x forward earnings a bit rich for its peers in the processed food group, but still below its 5-year historical average of 30.5x. ---Kimberly DuBord, Briefing.com

12:14PM BJ Services Co (BJS) 54.01 -0.19: Increased activity within the energy patch generated strong top and bottom line growth for the world's sixth largest oilfield services company, BJ Services. Strong drilling activity in Canada, along with improving Middle Eastern and North Sea markets drove earnings in Q2 to $0.66 per share -a nickel ahead of consensus estimates. The strong demand environment and pricing gains generated 23% year/year revenue growth to $795.9 mln - 4% above expectations. Consolidated revenues for the quarter grew 8%, sequentially. The growth was broad-based across each of its three segments including US/Mexico Pressure Pumping Services up 4% q/q and 31% y/y, International Pressure Pumping Service jumped 16% q/q and 14% y/y, and finally its Other Oilfield Services unit rose 5% q/q and 21% y/y.

Operating margins expanded by 260 basis points to 20.2% just since last quarter and 310 basis points from the prior year. The margin improvement was far reaching with positive contributions from each of its business segments. The robust environment resulted in strong cash flow generation, which the company has used in part to boost its capex budget and buy back stock. BJS is forecasting a capex budget of $290 mln for the year with $77.7 mln spent during the first quarter. It has continued to return value back to its shareholders through share buybacks totaling $37.8 mln during Q2, aimed at repurchasing another $209.6 mln throughout the year.

An improved pricing environment and higher drilling activity boosted revenues within its US/Mexico Pressure Pumping Service unit. The average rig count in the area grew by 3% q/q and 14% y/y. Operating margins expanded by 100 basis points from Q1 to 30%, up substantially over the last year from 25%. Its Other Oilfield Services unit, which includes completion fluids and tools, process and pipeline services, casing and tubular services, doubled its operating margins from the first quarter. BJ noted that all its services experienced revenue growth with the exception of seasonal decline in process and pipeline services.

A 24% revenue increase in Canada generated the bulk of growth within its International Pressure Pumping Services unit. Excluding Canada, Intl revenues were up 10% driven by activity in the North Sea and increased fracturing activity in Russia. Its stimulation vessel in the North Sea, however, did experience a slight decline. This segment experienced a substantial hike in operating margins by 300 basis points just since Q1 to 16%, again mainly driven by Canadian activity. Since last year, revenues have improved in each region including North Sea +36%, Middle East +24%, and Canada +12%.

Looking ahead, BJS expects the strong demand environment to carry through the year. Its Chairman and CEO Bill Stewart said, "We continue to remain optimistic that worldwide activity will remain strong. We have also planned for a normal spring breakup in Canada." The Houston-based company issued in-line guidance for Q3 with earnings of $0.57-0.60 per share, vs. $0.58 consensus. But, for the full year its estimates top expectations with BJS guiding EPS to $2.45-2.55 vs. $2.39 consensus. Considering the earnings acceleration, estimates may prove to be conservative.

Due to the strong demand environment and high energy prices, drilling activity will remain strong throughout the year. There is some seasonality in drilling, which the company spoke of with regard to the spring breakup in Canada where warmer weather reduces activity. The last two quarters set the groundwork for what should prove to be a stalwart year for BJ Services. Q2's strong results outside its main markets, the US and Canada, were impressive. While margin gains in the North American market should lessen concerns of the possible impact of slower growth in rig counts. We remain committed to the name as a suggested holding in our Active Portfolio due to its strong growth prospects in the NA pressure pumping market, continued margin expansion, revenue and earnings acceleration, attractive valuation, and shareholder value. The stock is trading at 22.7x forward earnings vs. other small/mid cap service companies like Smith Intl (00C) 23.7x, Universal Compression Hlds (UCO) 23.4x, and Weatherford Intl Ltd (WFT) 21.7x. ---Kimberly DuBord, Briefing.com

12:05PM SAP AG (SAP) $39.54 - 0.15 (-0.4%) "Let's date for a while longer before we get married." That seems to be the decision that Microsoft and SAP have come to, according to an article in today's Wall Street Journal. The "partnership" appears to be more of a packaging and co-marketing agreement than a true "new product" development agreement. The WSJ article states the project, code-named Mendocino, will be available in the fall.

The actual value-added functionality to be developed is an integration of the SAP financials and ERP software with Microsoft desktop productivity software, such as Excel and Outlook. Many SAP customers already manually import or replicate data into Excel spreadsheets or Outlook calendars; this functionality will simply make the process easier, customizable, and automated.

Why create this new functionality? In most joint-ventures between two giants, the objective for both partners is to leverage the other partners strengths to gain sales that would otherwise not occur. The joint-venture's are like shoehorns that allow you to wear shoes that, without the shoehorn, you could never possibly wear.

However, this deal is interesting because it does not fit that "shoehorn" model. Microsoft has almost zero competition these days for Outlook and Excel. An easy integration with SAP will not be a "make-or-break" feature in a "should-we-buy-Excel" or not. There might be some small incremental revenue possible by providing this feature, but most of it will be upgrade fees, not new sales.

By the same token, an easy integration with Microsoft productivity products will probably not be a major "checklist feature" on the purchase decision for potential new SAP clients. It is nice, but it won't be a deal-breaker type of feature set.

So what is this deal about? It is about positioning SAP closer to Microsoft than to Oracle. It is as simple as that.

We have long argued that Microsoft should buy SAP as the best way to enter the application level of the enterprise software market. That market is the only portion of the software market that will have long lasting value - and, remarkably, Microsoft has very little real presence there (except for the desktop productivity products). Oracle has been working for five years to shift their strategy to the application level: first by making their own products, then by buying Peoplesoft, Retek, and more to come. Microsoft needs to prevent Oracle from becoming a major presence at the application level, if the Redmond giant wishes to remain the most powerful software firm in the industry.

SAP is the enterprise application vendor with the largest market share, the strongest revenue growth trends, the broadest suite of products (horizontally within an enterprise), and the best customer retention records. It is the "crown jewel" of the enterprise software market. In many ways, the future of the software industry revolves around what happens to SAP. The longer SAP stays independent, the more time Microsoft, Oracle, and the wannabes-yet-to-be-created-by-megamergers have to establish their presence at the application level. They know it too. Earlier this month, SAP CEO Henning Kagermann was quoted as saying he would consider a merger with Oracle. Today's deal indicates they also want a closer relationship with Microsoft. The best move for Larry Ellison would be to try to acquire SAP, while ORCL still has a higher market cap, and keep Microsoft from it; this deal might motivate faster movement from Larry. SAP, however, has time on its side, and can wait for a premium price. If not paid, SAP might even choose to stay independent, and grow larger than its possible suitors over time. Either way, it makes SAP a great long term investment, particularly now, as overall market conditions are driving the price down.

Robert V. Green

9:05AM Page One - Finding a Reason to Sell : Surprise! After a strong up day, the market has found a reason to sell off.

The market analysts and journalists will always find a plausible reason for a market move, even when there might not really be one. This morning, stock futures indicate a lower open. One purported reason is that European semiconductor stocks are weak. Chip maker Infineon reported weak earnings. Really now, is this German company that barely ever gets noticed so important that it justifies a drop of billions of dollars in US market value and a 6 point drop in the Nasdaq? No, it is not.

The market was vulnerable to selling after yesterday's gains, and the futures would probably be lower regardless. There would have been some other excuse besides Infineon if necessary. The market is simply in a trading range mentality. The whipsaw conditions continue.

There is also positive news today. Oil prices are down, and back below $55 a barrel. There are some good earnings reports. US Steel, Lockheed Martin, McGraw-Hill, Medco Health, Omnicom, and Schlumberger all had good results. Less positively, DuPont, Bowater, and Rockwell Automation produced disappointments. Oh, and a company called Infineon also reported disappointing results.

The only economic reports today will be April Consumer Confidence from the Conference Board, and new home sales data for April. The confidence number, if weak, could be an additional drag on the market today.

Overall, the earnings news remains surprisingly good. The underlying concerns about inflation and weakening economic demand remain a severe constraint on the market, however. The forecast calls for continued choppy conditions.--Dick Green, Briefing.com

9:40AM ICON plc (ICLR) Goldman Sachs downgrades In-Line to UNDERPERFORM . Goldman Sachs downgrades ICLR citing the following: 1) Central lab continues to disappoint; 2) strength of central lab competitor CVD and comments from mgmt highlights challenge in reaching the co's central lab breakeven tgt date of mid '06; and 3) cancellation setbacks in clinical division have strained margins.

9:39AM Take-Two (TTWO) Janco Partners initiates BUY. Target $35.28. Firm believes the co trades at a significant discount to their peer set, has over $300 mln in cash with no debt and has strong revenue and earnings growth potential. Firm believes the co has a strong understanding of their target market and an acute ability to develop games to meet the markets' desires, which they say should serve them and the holders of the co's shares well moving forward.

9:39AM MGM Mirage (MGG) Wells Fargo Sec reiterates BUY. Target $62 to $86. Wells Fargo raises their tgt on MGG saying the co is expected to announce the completion of the acquisition of Mandalay Resort Group today. Firm believes that casino operators with a major presence on the Las Vegas Strip should continue to perform well this year, reflecting strong visitor traffic and improving visitor spending patterns. Firm projects FY06 rev of $7.43 bln and EBITDA of $2.6 bln and reiterates Buy rating.

9:37AM Corcept Therapeutics (CORT) Harris Nesbitt initiates OUTPERFORM. Target $15. Firm thinks the co's lead product Corlux has compelling commercial potential, with projected rev of $200 mln by 2010. They note of the 15 mln people in the US with depression, approximately 20% (3 mln) have P.M.D. with half (1.5 mln) diagnosed. Firm assumes that Corlux achieves a mkt price of $3,000 per course of therapy and is commercialized using a "controlled" distribution like Mifeprex, and launches with a modest 50-person salesforce yielding significant operating leverage. They anticipate significant value creation for CORT shareholders over the next 12-18 months.

9:35AM Rightnow Tech (RNOW) Robert W. Baird downgrades Outperform to NEUTRAL. Target $15 to $12. Baird downgrades RNOW following Q1 results. Firm also cuts their FY05 ests, based on mgmt's outlook for the coming year's business activity and increased expense assumptions associated with the pending acquisition of Convergent Voice.

9:34AM Eagle Hospitality Properties Trust (EHP) Legg Mason upgrades Hold to BUY. Target $10.5. Firm says the stock is currently yielding 7.8%, 460 bps higher than the lodging REIT sector average of 3.2%, and 260 bps above the Morgan Stanley REIT Index average weighted yield. Firm thinks the lodging industry is in the midst of a strong recovery. They note Marriott Intl and LaSalle Hotels, 2 cos that have reported 1Q05 results, have increased guidance and firm expects similar announcements from other lodging companies.

9:33AM Cogent (COGT) Needham & Co upgrades Hold to BUY. Target $30. Needham upgrades COGT following Q1 results that beat their estimates. Firm believes the outlook remains positive with the co signing a number of new and follow-on deals in the qtr. They note that the upward trend of the fundamentals has been mirrored by the inverse trend in the stock with the shares are down 30% since the start of the year. Firm says the current valuation of a cash adjusted P/E of 38x appears much more reasonable to them and note that while the stock is certainly not cheap, they believe it is appropriate for a co with COGT's growth prospects.

9:31AM Micron (MU) Moors & Cabot upgrades Hold to BUY. Target $10 to $13. Moors & Cabot upgrades MU saying that MSFT's Longhorn update at WinHEC in Seattle yesterday suggests to them that DRAM content may go up substantially in the coming year as PC OEMs prepare for this next generation launch. Firm says that Longhorn's DRAM requirements of 512 MB "plus" is more than they expected, as it indicates that the baseline configuration (without bells and whistles) will not work properly with 512 MB. Firm says the DDR2 transition and Longhorn logo program in 2H05 provide a solid bridge for DRAM stability throughout 2005 as investors digest the implications of Longhorn prospects for 2006 and beyond.

9:30AM Providian (PVN) Raymond James upgrades Mkt Perform to OUTPERFORM. Target $20.5. Fulcrum upgrades PVN following Q1 results, saying a lower than expected provision for credit losses and improving credit quality more than offset the slight rev miss. Firm says their expectation is that the co will continue to be able to grow receivables at a strong clip, even with the headwinds of a slowing U.S. credit card mkt.

9:28AM Apple Computer (AAPL) AmTech Research reiterates HOLD. Target $46 to $40. Amtech cuts their AAPL as their checks indicate a continued trend toward lower iPod ASPs. Firm says many of their contacts indicate more aggressive efforts from CREAF, Sony, and Samsung in the MP3 space, particularly in flash and lower capacity microdrives. While they continue to believe that AAPL is well-positioned in the MP3 space and with a Mac upgrade cycle helped by Mac O.S. X Tiger, firm remains concerned about high investor expectations and increasing competitive pressures.

9:26AM Identix (IDNX) JP Morgan upgrades Underweight to NEUTRAL. Firm says they see growing international demand for face recognition solutions relating to border control and civil ID programs. They believe demand is being catalyzed by the pending adoption of machine-readable passports that incorporate face biometrics for 1-to-1 matching and document authentication. They think the co's win-rate appears to be high, though contracts are of modest scale.